<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MARCH 1, 2000
ATLANTIC GULF COMMUNITIES CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8967 59-0720444
- --------------------------------------------------------------------------------
(State or Other Juris- (Commission File (IRS Employer
diction of Incorporation) Number) Identification No.)
4800 N. Federal Hwy, #105E
Boca Raton, Florida 33431
- --------------------------------------------------------------------------------
(Address of Principal (Zip Code)
Executive Offices)
561-620-0029
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
2601 South Bayshore Drive, Miami, Florida 33133-5461
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
On March 1, 2000, Atlantic Gulf Communities Corporation and certain of its
subsidiaries (collectively, "Atlantic Gulf") entered a service agreement with
Broad River LLC ("Broad River") (the "Service Agreement," a copy of which is
attached as Exhibit 10.1 hereto), pursuant to which Broad River has agreed, and
has agreed to cause Richard Ackerman ("Ackerman"), who is a member and manager
of Broad River, to perform the duties and assume the titles of Atlantic Gulf's
President and Chief Executive Officer ("CEO").
SERVICE AGREEMENT. Pursuant to the Service Agreement:
1. As of the December 1, 1999, Atlantic Gulf retained Broad River, and
Broad River agreed to cause Ackerman, to perform the duties and assume the
titles of Atlantic Gulf's President and CEO.
2. Broad River has agreed to provide these services, and to cause Ackerman
to devote his full business time and attention to performing Broad River's
obligations, from December 1, 1999 through November 30, 2001 (the "Initial
Service Period"). The Initial Service Period will be extended for successive one
year terms so long as neither Broad River nor Atlantic Gulf gives timely notice
of non-renewal (each such additional one-year period being referred to as an
"Extended Service Period" and all of the Extended Service Periods and Initial
Service Period being referred to as the "Service Period"). During the Extended
Service Periods, Broad River agrees to provide these services, and to cause
Ackerman to devote, two full working days a week for the performance of Broad
River's obligations.
3. During the Service Period, Atlantic Gulf will compensate Broad River at
the rate of $207,625 per annum ($511,975 per annum for the first twelve months
of the Initial Service Period) (which, along with his compensation during the
Initial Service Period, is collectively referred to herein as Broad River's
"Compensation"). In addition, Atlantic Gulf will reimburse Broad River for
Ackerman's reasonable out of pocket expenses.
4. During the Service Period, Atlantic Gulf will permit Broad River to
become a participating employer in Atlantic Gulf's employee insurance and other
benefit plans.
5. If Broad River provides services to Atlantic Gulf through the first
12-month anniversary of the commencement of the Service Agreement, Broad River
will be entitled to a bonus equal to 25% of the cumulative overhead savings, as
defined in the Service Agreement (the "Bonus"), realized by the Company during
such 12-month period.
6. While retained by Atlantic Gulf, Broad River will be entitled to receive
an additional bonus equal to 5% of the total dollars available for shareholder
distribution after payment of all institutional and project indebtedness of the
Company (the "Profit Participation"). Broad River's Profit Participation is not
secured by any assets of Atlantic Gulf, will only be paid after repayment of
Atlantic Gulf's indebtedness (as defined in the Service Agreement) and will be
paid pari passu with distributions to Atlantic Gulf's stockholders.
<PAGE>
7. Broad River's Profit Participation vests after Broad River fully
completes the Initial Service Period; however, the maximum amount of the Profit
Participation during the Initial Service Period is capped at $2,500,000 (the
"Dollar Cap"). For each full Extended Service Period that Broad River completes,
the Dollar Cap will increase by $1,000,000.
8. In the case of a termination of the Service Agreement:
(a) due to non-renewal, Broad River will be entitled to receive (a)
all accrued but unpaid Compensation, (b) the cash value of Ackerman's accrued
but unused vacation time, (c) Broad River's and Ackerman's unreimbursed
expenses, (d) all of the accrued but unpaid Cash Bonus (but only to the extent
earned as of November 30, 2000 and not yet paid as of that date) (the "Accrued
Obligations") and to retain 100% of the vested Profit Participation.
(b) by the Company for "cause" (as defined in the Service Agreement),
Broad River will be entitled to receive the Accrued Obligations plus 25% of its
vested Profit Participation;
(c) by Broad River without "good reason" (as defined in the Service
Agreement), Broad River will be entitled to receive the Accrued Obligations plus
100% of its vested Profit Participation;
(d) by the Company for reasons other than cause, by Broad River for
good reason or because of Ackerman's death or disability, Broad River will be
entitled to receive the Accrued Obligations plus 100% of the Profit
Participation, whether or not vested, and the Dollar Cap will be determined as
if Broad River had been terminated immediately following the close of business
on the next succeeding November 30th (provided that the Dollar Cap shall never
be less than $2.5 million), plus a lump sum payment equal to the Compensation
that Broad River would have received if it had continued to provide services
through the end of the then current Service Period.
9. Broad River and Ackerman have certain confidentiality, nonsolicitation
of employees and limited non-compete obligations.
10. While Broad River renders services to Atlantic Gulf, Atlantic Gulf has
agreed to maintain director and officer insurance for Ackerman and otherwise
indemnify Broad River and Ackerman (except for Broad River's or Ackerman's gross
negligence and/or willful misconduct) to the fullest extent permitted by law for
losses incurred by them as a result of any suits relating to Ackerman's
performance of services under the Services Agreement.
THE FOREGOING IS INTENDED AS A SUMMARY ONLY, AND IS NOT (AND SHOULD NOT BE
CONSIDERED TO BE) A DEFINITIVE DESCRIPTION OF ALL, OF THE TERMS OF THE SERVICE
AGREEMENT. FOR A COMPLETE DESCRIPTION OF THE TERMS OF THE SERVICE AGREEMENT, SEE
THE COPY OF THE SERVICE AGREEMENT ATTACHED AS EXHIBIT 10.1 HERETO.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
<PAGE>
10.1 Service Agreement, dated March 1, 2000, between Broad River LLC and
Atlantic Gulf Communities Corporation.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLANTIC GULF COMMUNITIES CORPORATION
(Registrant)
// RICHARD ACKERMAN //
-------------------------------
Date: March 12, 2000 By: Richard Ackerman
Title: President and Chief Executive Officer
<PAGE>
EXHIBIT 10.1
SERVICE AGREEMENT
See attached.
<PAGE>
ATLANTIC GULF COMMUNITIES CORPORATION
4800 N. FEDERAL HIGHWAY, SUITE 105E
BOCA RATON, FLORIDA 33431
(561) 620-0029
March 1, 2000
Broad River LLC
334 Palm Trail
Delray Beach, FL 33434
Attention: Mr. Richard Ackerman, Manager
Re: SERVICE AGREEMENT (THIS "AGREEMENT")
Dear Richard:
This Agreement, effective as of December 1, 1999 (the "EFFECTIVE DATE"),
sets forth the terms and conditions under which Atlantic Gulf Communities
Corporation, a Delaware corporation ("AGCC"), and certain of its subsidiaries
(the "SUBSIDIARIES"), as designated from time to time by the Board of Directors
of AGCC (the "BOARD"), agree to hire Broad River LLC ("BROAD RIVER") to provide
the services specified hereunder. AGCC and the Subsidiaries are sometimes
collectively referred to herein as the "COMPANY."
Each of Broad River and the Company is sometimes referred to herein as a
"PARTY," and Broad River and the Company are sometimes collectively referred to
herein as the "PARTIES."
1. BROAD RIVER. You have advised us that Broad River is a Florida limited
liability company and that Richard Ackerman ("RA") is the sole member, and sole
manager, of Broad River.
2. SERVICE PERIOD. Broad River agrees to provide the services of RA to
perform the duties of the Company's President and Chief Executive Officer
("CEO"), and Broad River agrees to cause RA to individually assume such titles,
for the period beginning on the Effective Date and ending on November 30, 2001,
or earlier termination pursuant to Section 8. below (the "INITIAL SERVICE
PERIOD"); provided, however, that, in the absence of termination, the Service
Period shall be extended for successive 12-month terms (subject to earlier
termination pursuant to Section 8. below) so long as neither Broad River nor
AGCC gives written notice of non-renewal to the other Party not less than 90
days prior to the then-current scheduled expiration date of the Service Period
(each an "EXTENSION PERIOD," and together with any and all other Extension
Periods, the "EXTENDED SERVICE PERIOD"). The Initial Service Period and the
Extended Service Period, if any, are collectively referred to herein as the
"SERVICE PERIOD." If such notice of non-renewal is given, this Agreement shall
expire at the end of the Initial Service Period or then-current Extension
Period, as the case may be. The last day of the Service Period is referred to as
the "TERMINATION DATE."
<PAGE>
3. SERVICES.
a. DURING THE INITIAL SERVICE PERIOD. During the Initial Service
Period, Broad River (utilizing RA) shall render services to the Company
consistent with the positions of President and CEO of the Company and/or as the
Board shall designate from time to time, and Broad River shall cause RA to
devote substantially his full business time and attention to performing Broad
River's obligations hereunder with regard to the business of the Company during
the Service Period.
b. DURING THE EXTENDED SERVICE PERIOD. During the Extended Service
Period, Broad River (utilizing RA) shall render services to the Company
consistent with the positions of President and CEO and/or as the Board shall
designate from time to time, and Broad River shall cause RA to devote such
business time as is necessary in performing Broad River's obligations hereunder
with regard to the business of the Company through the Extended Service Period,
with due recognition that RA will be performing other services during the
Extended Service Period unrelated to the Company and its business and that it is
contemplated that the time devoted to the business of the Company will be, on
average, two (2) full working days per week.
c. OTHER INVESTMENT ACTIVITIES. Notwithstanding Sections 3.a. and 3.b.
above, the Company hereby acknowledges and agrees that RA will be permitted to
manage his investments, both active and inactive (including real estate
transactions), during the Service Period to the extent that they do not
materially interfere with RA rendering services to the Company as described
hereunder.
4. BASIC SERVICE FEES. During the Service Period, the Company shall, in
consideration for Broad River's services hereunder, pay Broad River an annual
rate equal to (x) plus (y), where (x) equals $207,625 ($511,975 during the first
twelve (12) months of the Initial Service Period (the "FIRST 12-MONTH PERIOD"))
and where (y) equals Broad River's annual cost of providing RA with benefits
under the Benefit Plans (as defined below) pursuant to Section 7. hereof. The
amounts payable to Broad River pursuant to this Section 4. shall be paid monthly
in advance. The intent of this Section 4. is to place the Company in the same
net economic position it would have been in if RA were an employee of the
Company.
5. CASH BONUS. Subject to Section 8. below, provided that Broad River has
rendered services to the Company through the Initial Service Period under this
Agreement, Broad River shall be entitled to receive a one-time cash bonus (the
"CASH BONUS") in an amount equal to 25% of the Cumulative Overhead Savings (as
defined below) realized by the Company during the First 12- Month Period.
"CUMULATIVE OVERHEAD SAVINGS" shall be equal to Projected Overhead (as defined
below) less Actual Overhead (as defined below). "PROJECTED OVERHEAD" shall be
equal to $3.4 million. "ACTUAL OVERHEAD" shall be equal to the Company's actual
overhead during the First 12-Month Period, calculated on the accrual basis in
accordance with generally accepted accounting principles, consistently applied
and maintained throughout the First 12-Month Period. Projected Overhead has been
calculated, and Actual Overhead shall be calculated, by excluding (a) the amount
payable to Broad River under Section 4. hereof during the First 12-Month Period
and (b) all of the
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<PAGE>
Company's pension and pension-related costs incurred during such First 12-Month
Period. The Company's independent auditors (the "AUDITORS") shall calculate the
amount of the Cash Bonus, if any, within 25 days after the end of such First
Twelve Month Period, and distribute written copies of the calculation (the
"AUDITORS' CALCULATION") to Broad River and AGCC within 30 days after the end of
such First 12-Month Period. The amount of the Cash Bonus, as set forth in the
Auditors' Calculation, shall be final, binding and non-appealable. The Company
shall pay the Cash Bonus (in the amount set forth in the Auditors' Calculation)
to Broad River within 10 business days after the date on which it receives the
Auditors' Calculation.
6. PROFIT PARTICIPATION.
a. AMOUNT. Subject to Sections 6.b., 6.c. and 8. below, Broad River
shall be entitled to receive a 5% profit participation (a "PROFIT
PARTICIPATION") in all Net Cash Available for Distribution to Stockholders (as
defined below). "NET CASH AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS" means all
dollars available for distribution to the stockholders of the Company (as
determined by the Board, acting reasonably and in good faith), AFTER REPAYMENT
of (a) all Institutional Indebtedness of the Company (as defined below) and (b)
all Project Indebtedness of the Company (as defined below).
"INSTITUTIONAL INDEBTEDNESS" of the Company means all present and future
indebtedness of the Company to institutional lenders, other than Project
Indebtedness, including any and all refinancings of, modifications of,
amendments to and/or substitutions for such indebtedness incurred by the Company
at any time and from time to time and, as of the Execution Date, shall
specifically include the indebtedness evidenced by (i) that certain Third
Amended and Restated Revolving Loan Agreement, dated as of December 31, 1998, by
and among AGCC, the Financial Institutions Listed on the Signature Pages Thereof
and MH Davidson & Co., LLC, as Agent and Collateral Agent, as amended (in the
principal amount of $19.0 million as of December 1, 1999), (ii) that certain
Term Loan Agreement, dated as of December 31, 1998, by and among AGCC, the
Financial Institutions Listed on the Signature Pages Thereof, Anglo-American
Financial, as Agent, and MH Davidson & Co., LLC, as Collateral Agent, as amended
(in the principal amount of $26.5 million as of December 1, 1999), and (iii)
that certain Future Advance Note in the principal amount of $850,000, dated as
of December 31, 1998, payable to AP-AGC, LLC, as amended, and that certain
Future Advance Note in the principal amount of $1,000,000, dated as of December
31, 1998, payable to AP-AGC, LLC, as amended.
"PROJECT INDEBTEDNESS" means all present and future indebtedness of the
Company specifically related to, and secured by, any and all of its real estate
projects now owned or hereafter acquired, including any and all refinancings of,
modifications of, amendments to and/or substitutions for such indebtedness
incurred by the Company at any time and from time to time. Project Indebtedness
specifically excludes Institutional Indebtedness.
b. TWO-YEAR VESTING. Subject to Section 8. hereof, Broad River's Profit
Participation shall vest in full on the close of business on November 30, 2001,
provided, that the
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Service Period shall not have been terminated as of that date (the "VESTING
DATE"). Subject to Section 8. below, from and after the Vesting Date, Broad
River shall be fully vested in its Profit Participation.
c. DOLLAR CAP. Notwithstanding anything herein to the contrary except
Section 8.d. hereof, the dollar amount of Broad River's Profit Participation
shall not exceed $2.5 million, such cap to be increased by $1.0 million for each
additional full twelve-month period following November 30, 2001, that Broad
River continues to render services to the Company under this Agreement (the
"DOLLAR CAP").
For example, if Broad River renders services to the Company through
July 31, 2005, the Dollar Cap will be $5.5 million (i.e., $2.5 million, plus
$3.0 million for the three additional full twelve month periods following
November 30, 2001). If, instead, Broad River renders services to the Company
through the close of business on November 30, 2005, the Dollar Cap will be $6.5
million (i.e., $2.5 million plus $4.0 million for the four additional full
twelve month periods following November 30, 2001).
d. PAYMENT. Broad River's Profit Participation will be paid in cash to
Broad River pari passu with the distribution of Net Cash Available for
Distribution to Stockholders. Broad River's Profit Participation will be an
unsecured claim against the general assets of the Company. Broad River
acknowledges and agrees that the Company shall have no obligation to segregate
or otherwise set aside funds from its general assets to secure the payment of
Broad River's Profit Participation.
7. BENEFITS.
a. INSURANCE AND OTHER BENEFIT PLANS. Subject to applicable law, during
the term of this Agreement, the Company shall permit Broad River to become a
participating employer in Broad River's employee medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, savings, pension, profit sharing and deferred compensation
plans and any and all other employee welfare or benefit plans as are presently
and hereinafter offered by the Company to its executives during the Service
Period (the "BENEFIT PLANS"). The Company shall amend the Benefit Plans to
permit Broad River's participation therein, subject to applicable law.
b. VACATION. During the Service Period, Broad River shall be relieved
from its obligation to make RA available to perform the duties described
hereunder for up to eight days (four weeks during the First 12-Month Period) per
calendar year (prorated for any periods consisting of less than 52 full weeks)
to permit RA to take vacation. Any unused days for any period shall expire at
the close of business on the November 30 of the immediately following calendar
year if not used before then. If Broad River ceases to provide services to the
Company under this Agreement for any reason, other than a termination of Broad
River's services by the Company for Cause (as defined below) or by Broad River
without Good Reason (as defined below), Broad River will be entitled to
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<PAGE>
receive payment for such accrued but unused days (which have not previously
expired) through the date of termination based upon the fee structure described
in Section 4. hereof.
c. REIMBURSEMENT OF EXPENSES. The Company will reimburse Broad River for
RA's reasonable out-of-pocket expenses incurred on behalf of Broad River in
connection with the performance of services hereunder by Broad River, in each
case subject to and consistent with Company policy.
8. TERMINATION.
a. TERMINATION IN GENERAL. The Service Period shall terminate on the
first to occur of (i) the scheduled expiration date of the then-current Service
Period, assuming notice of non-renewal by one of the Parties was provided in
accordance with Section 2. above, (ii) RA's death or Disability (as defined
below), (iii) termination of the Service Period by Broad River with or without
Good Reason (as defined below) or (iv) termination of the Service Period by the
Board with or without Cause (as defined below). Notwithstanding anything herein
to the contrary, in the event the Service Period terminates in accordance with
clause (i) of the immediately preceding sentence (regardless of which Party
delivers the notice of non-renewal), Broad River will be entitled to receive the
Accrued Obligations (as defined below) and to retain 100% of the vested Profit
Participation (in which case the Dollar Cap shall be determined pursuant to
Section 6.c. above).
b. TERMINATION BY THE COMPANY FOR CAUSE. If the Company terminates the
Service Period for Cause, Broad River will be entitled (i) to receive (A) all of
the accrued but unpaid amounts specified in Section 4. hereof, (B) the cash
value of all of the accrued but unused vacation specified in Section 7.b.
hereof, (C) all of RA's and Broad River's unreimbursed expenses and (D) all of
the accrued but unpaid Cash Bonus (but only to the extent earned as of November
30, 2000, and not yet paid as of the date of termination) (the amounts specified
in clause (A) through (D) are collectively referred to herein as the "ACCRUED
OBLIGATIONS") and (ii) to retain 25% of the vested Profit Participation (in
which case the Dollar Cap shall be determined pursuant to Section 6.c. above).
c. TERMINATION BY BROAD RIVER WITHOUT GOOD REASON. If Broad River
terminates the Service Period for reasons other than Good Reason, Broad River
will be entitled (i) to receive the Accrued Obligations and (ii) to retain 100%
of the vested Profit Participation (in which case the Dollar Cap shall be
determined pursuant to Section 6.c. above).
d. TERMINATION BY THE COMPANY FOR REASONS OTHER THAN CAUSE; TERMINATION
BY BROAD RIVER FOR GOOD REASON; DISABILITY; DEATH. If the Service Period is
terminated by the Company for reasons other than for Cause, by Broad River for
Good Reason or as a consequence of RA's death or Disability (as defined below),
Broad River will be entitled to (i) to receive the Accrued Obligations (ii) to
retain 100% of the Profit Participation, whether or not vested as of date of
termination, and the Dollar Cap shall be determined as if RA had ben terminated
immediately following the close of business on the next succeeding November 30th
(provided that
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the Dollar Cap shall never be less than $2.5 million) and (iii) a lump sum
payment equal to the sum of the payments that would have been made to Broad
River under Section 4. hereof had RA continued rendering services to the Company
through the end of the then current Service Period.
e. DEFINITIONS. For purposes of this Agreement:
(i) "CAUSE" shall mean:
(A) Broad River's or RA's willful and repeated failure to
comply with the lawful written directives of the Board;
(B) any knowing, willful or intentional act of disloyalty or
misconduct by Broad River or RA that is materially injurious to the property,
operations, business or reputation of the Company; or
(C) Broad River's or RA's material breach of this Agreement
(which shall include any breach of Section 9. or 10. hereof), provided that the
Company has provided Broad River with written notice of such material breach and
Broad River shall have failed to cure, or cause RA to cure, such material
breach, to the reasonable satisfaction of the Company, within 15 business days
after receipt by Broad River of such written notice.
A determination that "Cause" exists shall be made by the Board, acting
reasonably and in good faith; provided, however, that Broad River has not waived
its right to contest any such determination by the Company in accordance with
the provisions of Section 18. below. Notwithstanding anything herein to
contrary, the Company shall be required to notify Broad River in writing of the
occurrence of an event constituting "Cause" within 90 days of the occurrence
thereof, or, failing timely delivery of such written notice, the Company shall
be deemed to have irrevocably waived its right to terminate this Agreement for
such "Cause" event.
(ii) "GOOD REASON" shall mean:
(A) any reduction in (without Broad River's prior written
consent), or failure by the Company to timely pay the amounts specified in
Sections 4., 5. or 6. hereof (to the extent earned and fully vested);
(B) any material change in RA's position and/or title (without
Broad River's prior written consent) or material diminution in RA's duties,
responsibilities and/or authority (without Broad River's prior written consent);
(C) the occurrence of any of the following: (i) a merger or
consolidation of AGCC into or with any other entity, but only if AGCC or an
entity, 50% or more of the total voting power of which is owned by AGCC or its
affiliates, is not the surviving entity in such merger or consolidation, (ii) a
transfer to a third party which vests in such third party 50% or more of the
total voting power of all classes of stock of AGCC, (iii) any third party (other
than AP-
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<PAGE>
AGC, LLC, Elliott Associates, L.P., Westgate International, L.P., Morgan Stanley
Dean Witter & Co., and/or any of their affiliates) acquires more than 50% of the
total number of shares of Series A Preferred Stock of the Company that are
issued and outstanding on the Effective Date, (iv) sale, transfer or other
disposition of all or substantially all of the assets of AGCC (each a
"RESTRUCTURING EVENT"), unless the entity which survives the Restructuring Event
shall assume and agree to perform the obligations of AGCC hereunder pursuant to
a written instrument reasonably acceptable to Broad River or (v) during any
period of 12 consecutive months, individuals who at the beginning of such period
constituted the Board, together with any new directors whose election by the
Board or whose nomination for election by the shareholders of the Company was
approved by a majority vote of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved (collectively, the "DIRECTORS"), cease
for any reason to constitute a majority of the Board then in office; provided,
however, that (i), (ii), (iii) (iv) and (v) above shall not include a
restructuring or recapitalization of the Company's preferred and common stock;
and provided further that, for purposes of (v) above, the term "Directors" shall
include any person appointed by the holders of the Company's Series A Preferred
Stock and/or the Company's Series B Preferred Stock to fill a vacancy on the
Board of Directors at any time and from time to time;
(4) any material breach by the Company of this Agreement,
provided that Broad River has provided the Company with written notice of such
material breach and the Company has failed to cure such material breach, to
Broad River's reasonable satisfaction, within 15 business days after receipt by
the Company of such written notice; or
(5) any requirement by the Board that RA relocate his principal
residence (without Broad River's prior written consent) or if the Company
relocates its headquarters more than 50 miles from its location on the date
hereof.
(iii) "DISABILITY" shall mean RA's mental or physical disability for
such period of time and under such circumstances as entitle RA to receive
disability benefits under the terms of the Company's long-term disability
insurance policy then maintained by the Company.
Notwithstanding anything herein to contrary, Broad River shall be required
to notify the Company in writing of the occurrence of a "Good Reason" event
within 90 days of the first occurrence thereof, or, failing timely delivery of
such written notice, Broad River shall be deemed to have irrevocably waived its
right to terminate this Agreement for such "Good Reason" event.
9. CONFIDENTIAL INFORMATION. Broad River acknowledges that information
obtained by Broad River and RA during the Service Period (or the period of RA's
employment with the Company under the Employment Agreement between RA and the
Company, dated August 17, 1999) concerning the business or affairs of the
Company ("CONFIDENTIAL INFORMATION") is the property of the Company. Broad River
shall be prohibited, and Broad River shall prohibit RA, at any time during or
after the Service Period, without the prior written consent of the Board, from
disclosing to any unauthorized person or use for Broad River or RA's own account
or for the account of any
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<PAGE>
person other than the Company any Confidential Information, except (a) to the
extent necessary to comply with applicable laws, (b) to the extent necessary for
Broad River and/or RA to render services hereunder or (c) to the extent that
such information becomes generally known to and available for use by the public
other than as a result of your acts or failure to act. Upon termination of the
Service Period or at the request of the Board at any time, Broad River agrees,
and agrees to cause RA, to deliver to the Company all documents containing
Confidential Information or relating to the business or affairs of the Company
that RA or Broad River may then possess or have under its/his control.
10. NON-COMPETITION; NON-SOLICITATION.
a. NON-COMPETITION. Broad River acknowledges that RA and Broad River
are and will be in possession of Confidential Information and that Broad River's
services are of unique and great value to the Company. Accordingly, during the
Service Period and for an additional period of twelve months thereafter (the
"NON-COMPETE PERIOD"), Broad River shall be prohibited, and shall prohibit RA,
from directly or indirectly owning, managing, controlling, participating in,
consulting with, rendering services to, or in any manner engaging in, any
enterprise competing directly with any of the Projects (as defined below),
within (i) a 25 mile radius of the Company's West Bay Club Project, located in
Naples, Florida, (ii) a 50 mile radius of the Company's Chenoa Project, located
in Glenwood Springs, Colorado, or (iii) a 25 mile radius of any other real
estate project now owned or hereafter acquire by the Company (the "PROJECTS").
Nothing herein shall prohibit RA or Broad River from being a passive owner of
not more than 5% of any publicly-traded class of capital stock of any entity
engaged in such competitive activities.
b. NON-SOLICITATION. During the Non-Compete Period, Broad River shall be
prohibited, and shall prohibit RA, from, directly or indirectly, for themselves
or any other person or entity employing or attempting to employ, or solicit the
employment of, or entering into any contractual arrangement with, any employee
or former employee of the Company, unless such employee or former employee has
not been employed by the Company for a period in excess of six months.
c. SCOPE OF RESTRICTION. If, at the time of enforcement of this
Section 10. or Section 9. above, a court shall hold that the duration, scope or
area restrictions stated herein or therein are unreasonable under circumstances
then existing, the Parties agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the stated
duration, scope or area.
d. INJUNCTIVE RELIEF. Broad River acknowledges that the Company would be
irreparably harmed by Broad River's breach of the provisions of this Section 10.
or of Section 9. above, and hereby consent to the Company's request for
injunctive relief in connection with any such breach or threatened breach.
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11. D&O INSURANCE. The Company will maintain at all times during the
Service Period officer and director liability insurance coverage for RA, in the
same aggregate amount and under the same terms as are maintained for the
Company's senior officers and directors, and will otherwise indemnify Broad
River and RA and hold both of them harmless (except for Broad River's and/or
RA's gross negligence and/or willful misconduct) to the fullest extent permitted
by Delaware law for all losses and expenses incurred by them as a result of any
suits or proceedings relating to RA's rendering services to the Company
hereunder.
12. PRIOR AGREEMENTS. This Agreement embodies the complete agreement and
understanding between the Parties and supersedes any and all prior agreements,
arrangements or understandings, written or oral, between the Parties. This
Agreement may be amended or modified, and the terms hereof may be waived, only
in a writing duly executed and delivered by Broad River and AGCC.
13. SURVIVAL. The provisions of Sections 6., 8., 9., 10. and 11. above and
Sections 18. and 19. below will survive any termination of this Agreement.
14. GOVERNING LAW. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal law, and not
the law of conflicts, of the State of Florida.
15. NOTICES. Any notices, consents or other communications required
hereunder shall be in writing and shall be sufficiently given only if sent by
overnight courier (such as Federal Express) or by registered or certified mail
(return receipt requested), postage prepaid, addressed as follows (or to such
other address or addresses as may hereafter be furnished in writing by notices
similarly given by one Party to the other):
To BROAD RIVER:
Broad River LLC
334 Palm Trail
Delray Beach, FL 33434
Attention: Mr. Richard Ackerman, Manager
Fax No.: (561) 394-7712
with a copy to:
Michael Sirkin, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Fax No.: (212) 969-2900
To AGCC and/or the COMPANY:
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<PAGE>
Atlantic Gulf Communities Corporation
Board of Directors
4800 N. Federal Highway, Suite 105E
Boca Raton, Florida 33431
Attention: The Board of Directors of Atlantic Gulf
Communities Corporation
Fax No.: (561) 620-1062
with a copy to:
John L. Ruppert, Esq.
Brownstein Hyatt & Farber, P.C.
410 17th Street, Suite 2200
Denver, Colorado 80202
Fax No.: (303) 623-1956
16. COUNTERPARTS. This Agreement may be executed in two or more original
counterparts, each of which shall constitute an original and both or all of
which together shall constitute one and the same instrument. Only one such
counterpart signed by the Party against whom enforceability is sought needs to
be produced to evidence the existence of this Agreement. Signatures may be
exchanged by telecopy, with original signatures to follow. Each Party to this
Agreement agrees to be bound by its/his own telecopied signature and to accept
the telecopied signature of the other Party to this Agreement.
17. SEVERABILITY. The various provision of this Agreement are severable
from each other and from the rest of this Agreement, and, in the event any part
of this Agreement is held to be invalid or unenforceable by a court or
otherwise, the remainder of this Agreement shall be fully effective, operative
and enforceable.
18. DISPUTES; ATTORNEYS' FEES. Except as otherwise provided in the last
sentence hereof, the Parties agree that any claim, controversy or dispute
arising out of, in connection with, related to or regarding the subject matter
hereof ("DISPUTE(S)") shall be resolved by arbitration ("ARBITRATION") conducted
by a single arbitrator engaged in the practice of law (the "ARBITRATOR") under
the Commercial Arbitration Rules (the "CRA") of the American Arbitration
Association ("AAA"). The Federal Arbitration Act, 9. U.S.C., Sections 1-16, not
state law, shall govern all Arbitration proceedings instituted hereunder. All
Disputes shall be submitted to the Arbitrator for resolution under Expedited
Procedures, regardless of the amount in controversy, as provided under Rule 9 of
the CRA or any successor thereto. The Arbitrator's award or ruling with respect
to any Dispute shall be final, binding and nonappealable and may be entered in
any court having jurisdiction thereof. Each Party shall bear its own costs and
attorneys' fees of the Arbitration proceeding; provided, however, that, in
addition to any damages awarded by the Arbitrator, the substantially prevailing
Party in the Dispute (as determined by the Arbitrator) shall be entitled to
receive from the other Party its/his reasonable attorneys' fees and
out-of-pocket costs. The laws of the State of Florida shall govern the
construction and interpretation of this Agreement, and any
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<PAGE>
Arbitration hereunder shall be conducted in Boca Raton, Florida. It is expressly
agreed that a Party may seek injunctive relief in the case of any Dispute in an
Arbitration or in an appropriate court of law or equity, at the sole discretion
of such Party.
19. REIMBURSEMENT OF LEGAL FEES. The Company will pay all of RA's and Broad
River's reasonable legal fees (at their attorney's standard rates) and
out-of-pocket costs incurred in connection with the negotiation, execution and
delivery of this Agreement, as soon as practicable following presentation to the
Company of reasonable documentation therefor.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.]
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Please execute the additional copy of this Agreement in the space below and
return it to the undersigned at the address set forth above to confirm your
understanding and acceptance of the agreements contained herein.
Very truly yours,
ATLANTIC GULF COMMUNITIES
CORPORATION
By:
-------------------------------------
Name (Print):
---------------------------
Title: Director
ACCEPTED AND AGREED TO:
BROAD RIVER LLC
By:
------------------------------
Name (Print): Richard Ackerman
Title: Manager
cc: Michael Sirkin, Proskauer Rose LLP
John L. Ruppert, Brownstein Hyatt & Farber, P.C.
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