FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2000
----------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------- -----------
For Quarter Ended Commission file number 0-19633
--------- -------
ENGLE HOMES, INC.
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2214791
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
123 N.W. 13th Street
Boca Raton, Florida 33432
- ------------------------------- --------------------------------
(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code) (561) 391-4012
----------------------
NONE
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to filing requirements
for the past 90 days.
YES x NO
------ ------
Number of shares of common stock outstanding as of April 30, 2000: 11,042,114
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
ENGLE HOMES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollars in thousands)
<CAPTION>
April 30, October 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CASH
Unrestricted $ 38,327 $ 60,944
Restricted 3,430 2,092
INVENTORIES 418,942 386,804
PROPERTY AND EQUIPMENT, net 5,927 6,221
OTHER ASSETS 27,428 26,354
GOODWILL 4,981 5,155
MORTGAGE LOANS HELD FOR SALE 18,924 27,323
--------- ----------
TOTAL ASSETS $ 517,959 $ 514,893
========= ==========
LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 28,118 $ 31,771
CUSTOMER DEPOSITS 19,905 16,279
BORROWINGS 3,390 5,457
SENIOR NOTES PAYABLE 248,288 248,178
FINANCIAL SERVICES BORROWINGS 18,542 26,776
--------- ---------
TOTAL LIABILITIES $ 318,243 $ 328,461
--------- ---------
SHAREHOLDERS' EQUITY
PREFERRED STOCK, $.01 par, share authorized
1,000,000, none issued
COMMON STOCK, $.01 par, shares authorized
25,000,000; issued and outstanding 11,042,114
and 11,047,977, respectively 110 110
ADDITIONAL PAID-IN CAPITAL 101,942 102,060
RETAINED EARNINGS 97,664 84,262
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 199,716 186,432
--------- ---------
$ 517,959 $ 514,893
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
2
<TABLE>
ENGLE HOMES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
APRIL 30, APRIL 30,
------------------- --------------------
2000 1999 2000 1999
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Sales of homes $ 202,368 $ 175,186 $ 357,048 $ 318,220
Sales of land 3,344 635 10,128 2,034
Rent and other 908 815 2,078 1,867
Financial services 5,492 5,861 10,032 11,095
--------- --------- --------- ---------
212,112 182,497 379,286 333,216
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of sales - homes 169,194 148,214 299,049 269,469
Cost of sales - land 3,285 609 9,423 1,932
Selling, marketing, general
and administrative 19,734 17,171 36,882 32,654
Depreciation and amortization 1,522 1,305 3,098 2,470
Financial services 3,805 4,146 7,602 7,976
--------- --------- --------- ---------
197,540 171,445 356,054 314,501
--------- --------- --------- ---------
INCOME BEFORE INCOME TAX 14,572 11,052 23,232 18,715
Provision for income taxes 5,333 4,266 8,503 7,224
--------- --------- --------- ---------
NET INCOME $ 9,239 $ 6,786 $ 14,729 $ 11,491
========= ========= ========= =========
Net income per share
Basic $ 0.84 $ 0.61 $ 1.33 $ 1.03
Diluted $ 0.84 $ 0.60 $ 1.33 $ 1.02
Shares used in earnings per
share calculations
Basic 11,040 11,197 11,043 11,190
Diluted 11,055 11,239 11,066 11,281
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
<TABLE>
ENGLE HOMES, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders' Equity
For the Six Months Ended April 30, 2000
(Unaudited)
(in thousands)
<CAPTION>
COMMON STOCK ADDITIONAL
-------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Amounts at
October 31, 1999 11,048 $ 110 $ 102,060 $ 84,262 $186,432
Net Income for the
Six Months Ended
April 30, 2000 14,729 14,729
Dividends to
Shareholders (1,327) (1,327)
Common stock issued
in connection with
employee stock bonus
plan 45 437 437
Common stock acquired
in connection with
stock repurchase
plan (51) (555) (555)
------- ------ --------- -------- --------
Amounts at
April 30, 2000 11,042 $ 110 $ 101,942 $ 97,664 $199,716
======= ====== ========= ======== ========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
<TABLE>
ENGLE HOMES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
---------------------
2000 1999
--------- ---------
<S> <C> <C>
NET CASH REQUIRED BY OPERATING ACTIVITIES $ (16,625) $ (943)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net acquisitions of property and equipment (2,043) (3,779)
--------- ---------
Net cash required by investing activities (2,043) (3,779)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings 22,000
Repayment of borrowings (2,067) (68,079)
Proceeds from issuance of senior notes 96,587
Distribution to shareholders (1,327) (894)
Repurchase of common stock (555)
Stock options exercised 96
--------- ---------
Net cash (required) provided by
financing activities (3,949) 49,710
--------- ---------
NET INCREASE (DECREASE) IN CASH (22,617) 44,988
CASH AT BEGINNING OF PERIOD 60,944 20,041
--------- ---------
CASH AT END OF PERIOD $ 38,327 $ 65,029
========= =========
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
5
ENGLE HOMES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
NOTE 1 BASIS OF PRESENTATION AND BUSINESS
These statements do not contain all information required by generally
accepted accounting principles that are included in a full set of financial
statements. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to present
fairly the financial position of Engle Homes, Inc. and subsidiaries ("the
Company") at April 30, 2000 and results of its operations and its cash flows
for the period then ended and period ended April 30, 1999. These unaudited
condensed consolidated financial statements should be read in conjunction with
the audited financial statements and notes contained in the Company's Form 10-K
for the year ended October 31, 1999. Results of operations for this period are
not necessarily indicative of results to be expected for the full year.
Engle Homes, Inc. and subsidiaries are engaged principally in construction
and sale of residential homes and land development in Florida; Dallas, Texas;
Denver, Colorado; Raleigh, North Carolina; Atlanta, Georgia; Phoenix, Arizona
and Virginia. Ancillary products and services to its residential homebuilding
include land sales to other builders, origination and sale of mortgage loans,
and title transfer services. The consolidated financial statements include the
accounts of the Company and all subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
<TABLE>
NOTE 2 INVENTORIES (dollars in thousands)
<CAPTION>
April 30, October 31,
2000 1999
--------- -----------
<S> <C> <C>
Land and improvements for residential homes
under development $ 291,554 $ 275,373
Residential homes under construction 127,388 111,431
--------- ---------
$ 418,942 $ 386,804
========= =========
</TABLE>
<TABLE>
NOTE 3 CAPITALIZATION OF INTEREST (dollars in thousands)
Included in inventory is the following:
<CAPTION>
For the Three Months For the Six Months
Ended April 30 Ended April 30,
-------------------- --------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest capitalized,
beginning of period $ 21,282 $ 16,804 $ 19,205 $ 16,326
Interest incurred and
capitalized 6,430 4,563 12,128 9,258
Amortized to cost of sales-homes (4,668) (4,837) (8,274) (8,984)
Amortized to cost of sales-land (553) (15) (568) (85)
--------- --------- --------- ---------
Interest capitalized, end of
period $ 22,491 $ 16,515 $ 22,491 $ 16,515
========= ========= ========= =========
6
</TABLE>
NOTE 4 SHAREHOLDERS' EQUITY AND DEBT
On February 17, 2000, the Company declared a cash dividend of $.06 per
share to shareholders of record on March 19, 2000, which was paid on
March 28, 2000.
On April 23, 1999, the Company sold in a private placement pursuant to Rule
144A, $100,000,000 of 9.25% Series B Senior Notes due 2008 (Series B Notes).
The Company used the net proceeds of approximately $96.6 million from the Series
B Notes primarily to repay bank indebtedness and general corporate purposes
including land acquisition.
7
NOTE 5 - EARNINGS PER SHARE (dollars in thousands except share data)
<TABLE>
Basic and diluted earnings per share are calculated as follows:
<CAPTION>
For the Three Months For the Six Months
Ended April 30, Ended April 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic:
Net Income $ 9,239 $ 6,786 $ 14,729 $ 11,491
Weighted average number of shares
outstanding 11,040 11,197 11,043 11,190
-------- -------- -------- --------
Basic earnings per share $ 0.84 $ 0.61 $ 1.33 $ 1.03
======== ======== ======== ========
Diluted:
Net Income $ 9,239 $ 6,786 $ 14,729 $ 11,491
Weighted average number of common
shares outstanding 11,040 11,197 11,043 11,190
Options to acquire common stock 15 42 23 91
-------- -------- -------- --------
Diluted weighted average common
shares outstanding 11,055 11,239 11,066 11,281
-------- -------- -------- --------
Diluted earnings per share $ 0.84 $ 0.60 $ 1.33 $ 1.02
======== ======== ======== ========
</TABLE>
8
Part 1 - Item II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
<TABLE>
The following table sets forth for the periods indicated certain items of
the Company's financial statements expressed as a percentage of the Company's
total revenues:
<CAPTION>
For the Three For the Six
Months Ended Months Ended
April 30, April 30,
----------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Total Revenues 100.0% 100.0% 100.0% 100.0%
Costs of home construction and
land sales 81.3 81.5 81.3 81.4
Selling, marketing, general and
administrative expense 9.3 9.4 9.7 9.8
Income before taxes 6.8 6.1 6.1 5.6
</TABLE>
<TABLE>
Backlog
Sales of the Company's homes are generally made pursuant to a standard
contract which requires a down payment of up to 10% of the sales price. The
contract includes a financing contingency which permits the customer to cancel
in the event mortgage financing at prevailing interest rates (including
financing arranged by the Company) is unobtainable within a specified period,
typically four to six weeks. The Company includes an undelivered home sale in
its backlog upon execution of the sales contracts and receipt of the down
payment. Revenue is recognized only upon the closing and delivery of a home.
The Company estimates that the average period between the execution of a
purchase agreement for a home and delivery is approximately six months. The
following table sets forth the Company's backlog for the periods indicated:
<CAPTION>
April 30,
(dollars in thousands)
2000 1999
---------------- ----------------
Units Dollars Units Dollars
----- --------- ----- ---------
<S> <C> <C> <C> <C>
South Florida 569 136,100 398 $ 91,400
Orlando 435 95,600 476 93,800
West Coast Florida 239 48,700 208 35,300
Texas 178 34,100 157 28,000
Denver 186 48,700 247 53,200
Virginia/Maryland 185 57,600 167 41,300
North Carolina 10 2,600 34 7,900
Atlanta, Georgia 64 12,700 58 10,600
Arizona 234 54,800 283 60,100
----- --------- ------ ---------
TOTAL 2,100 $ 490,900 2,028 $ 421,600
===== ========= ====== =========
</TABLE>
9
The Company is currently marketing in 105 subdivisions at April 30, 2000.
At April 30, 2000, the Company was marketing 18 subdivisions in South Florida;
23 in Central Florida; 9 in West Coast Florida; 12 in Denver, CO; 14 in Dallas,
TX; 5 in Virginia; 2 in Raleigh, North Carolina; 16 in Phoenix, Arizona and 6
in Atlanta, Georgia.
Result of Operations:
Three Months Ended April 30, 2000 compared to April 30, 1999.
The Company's revenues from home sales for the quarter ended April 30, 2000
increased $27.2 million (or 15.5%) compared to the same period in fiscal 1999.
The number of homes delivered increased 6.9% (to 935 from 875) and the average
selling price of homes delivered increased 8.0% (to $216,000 from $200,000).
The increase of revenues and homes delivered is primarily attributable to an
increased level of backlog at the beginning of the current quarter compared with
the prior year period. Management believes that changes in the average selling
price of homes delivered from period to period are attributable to discrete
factors at each of its subdivisions, including product mix and premium lot
availability, and cannot be predicted for future periods with any degree of
certainty.
The Company's revenues from land sales increased approximately $2.7 million
during the three months ended April 30, 2000, as compared to the same period
in fiscal 1999, primarily as a result of a sale of a residential land parcel on
the west coast of Florida in the amount of $2.1 million.
Cost of home sales increased $21.0 million (or 14.1%) compared to the
quarter ended April 30, 1999 primarily due to the related increase in home sale
revenues. Cost of home sales as a percentage of home sales revenue decreased
to 83.6% from 84.6% as a result of the product mix of homes delivered.
The Company's selling, marketing, general and administrative ("S,G&A")
expenses increased approximately $2.6 million (or 14.9%) during the three months
ended April 30, 2000, as compared to the corresponding fiscal 1999 period.
Selling and marketing expenses increased during the period as a result of the
increased number of homes delivered and an increase in selling expenditures
related to an increase in the number of residential subdivisions. S,G&A
expenses as a percentage of total revenues for the three months ended
April 30, 2000 decreased to 9.3% compared to 9.4%, primarily due to an increase
in home sales revenues for the period as compared to the prior year.
Primarily as a result of an increase in revenues and a decrease of cost of
home sales as a percentage of home sales revenue, net income increased by $2.5
million in the three months ended April 30, 2000 from the comparable period in
fiscal 1999.
Six months Ended April 30, 2000 compared to April 30, 1999.
The Company's revenues from home sales for the six months ended April 30,
2000 increased $38.8 million (or 12.2%) compared to the same period in fiscal
1999. The number of homes delivered increased 4.1% (to 1670 from 1604) and the
average selling price of homes delivered increased 8.1% (to $214,000 from
$198,000). The increase of revenues and homes delivered is primarily
attributable to the increase in the average selling price of homes delivered
during the quarter compared with the prior year period. Management believes
that changes in the average selling price of homes delivered from period to
period are attributable to discrete factors at each of its subdivisions,
including product mix and premium lot availability, and cannot be predicted for
future period with any degree of certainty.
10
Cost of home sales increased $29.6 million (or 10.9%) compared to the same
period in fiscal 1999 primarily due to the related increase in home sale
revenues. Cost of homes sales as a percentage of home sales revenue decreased
to 83.8% from 84.7% as a result of the product mix of homes delivered.
The Company's selling, marketing, general and administrative ("S,G&A")
expenses increased approximately $4.2 million (or 12.9%) during the six months
ended April 30, 2000, as compared to the corresponding fiscal 1999 period,
primarily due to selling and marketing expenses associated with the increased
number of homes delivered during the period and an increase in selling
expenditures related to an increase in the number of residential subdivisions.
S,G&A expenses as a percentage of total revenues for the six months ended April
30, 2000 decreased to 9.7% compared to 9.8% primarily due to the increase
in home sales revenue for the period as compared to the prior year.
Primarily as a result of the increase in revenues and a decrease of cost
of home sales as a percentage of home sales revenue, net income increased by
$3.2 million in the six months ended April 30, 2000 from the comparable period
in fiscal 1999.
Liquidity and Capital Resources
The Company's financing needs are provided by cash flows from operations,
unsecured bank borrowings and from time to time the public debt and equity
markets.
Cash flow from operations, before inventory additions, has improved as a
result of increased revenue. The Company anticipates that cash flow from
operations before inventory additions will continue to increase in fiscal year
2000 as a result of increased revenues from new home deliveries.
On April 30, 2000, the Company's $100 million unsecured revolving credit
facility, which expires in May 2002, had outstanding borrowings of $100,000.
In addition, $11.1 million of letters of credit are outstanding at April 30,
2000. The Company believes that funds generated from operations and expected
borrowing availability under the Credit Facility will be sufficient to fund the
Company's working capital requirements during fiscal 2000, with the exception
of major land acquisitions, if any.
In addition, Preferred Home Mortgage Company (PHMC) has a warehouse line
of credit in the amount of $40.0 million which is guaranteed by the Company.
At April 30, 2000, the outstanding balance was $18.5 million to service
origination of mortgage loans. The Company believes that this line is
sufficient for its mortgage banking operation for the remainder of fiscal 2000.
Management does not anticipate that PHMC'S expansion of its operation will
significantly impact liquidity because the mortgages are generally sold within
a short period of time after their origination to the Federal National Mortgage
Association (FNMA) or other qualified investors. PHMC has established the
capability to retain the servicing of loans, however, during fiscal 2000, the
Company has not retained servicing rights relating to loans sold.
LAND ACQUISITION. The Company is continually exploring opportunities to
purchase parcels of land for its homebuilding operations and is, at any given
time, in various stages of proposing, making offers for, and negotiating the
acquisition of various parcels, whether outright or through options. The
Company has continued to increase its land development and construction
activities in response to current and anticipated demand and expects to pursue
additional land acquisition and development opportunities in the future.
11
Risk Relating to the "Year 2000 Issue"
The Company has done an assessment of the homebuilding and corporate
operations that utilize the significant information technology ("IT") system
and non-IT systems ("Systems") (embedded technology such as microprocessors
in office equipment). The Company believes that the IT system is Year 2000
compliant in all material aspects and has not experienced any business
disruptions related to the Year 2000 problem.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Report and other such Company filings (collectively, "SEC filings") under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended (as well as information communicated orally or in writing between the
dates of such SEC filings) contains or may contain information that is forward
looking, related to subject matter such as national and local economic
conditions, the effect of governmental regulation on the Company, the
competitive environment in which the Company operates, changes in interest
rates, home prices, availability and cost of land for future growth,
availability of working capital and the availability and cost of labor and
materials. Such forward looking information involves important risks and
uncertainties that could significantly affect expected results. These risks
and uncertainties are addressed in this and other SEC filings.
12
Part II - Other Information
Item 1-3 Not applicable.
Item 4. Submission of Matters to a vote of Security Holders.
The 2000 Annual Meeting of Shareholders of Engle Homes, Inc. was held
on February 17, 2000. Matters voted upon at the meeting:
1. Election of Board of Directors. Persons being elected:
Votes Votes Votes Broker
Nominees For Against Withheld Non-Votes
---------------- ---------- --------- -------- ---------
Alec Englestein 9,982,089 - 44,322 -
Harry Englestein 9,982,089 - 44,322 -
John A. Kraynick 9,982,089 - 44,322 -
David Shapiro 9,982,089 - 44,322 -
Ron Korn 9,982,089 - 44,322 -
Henry Fishkind 9.982.089 - 44,322 -
Alan Shulman 9,982,089 - 44,322 -
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits.
Exhibit Description
No.
10.7 Form of Change of Control Severance Agreement entered into with
Harry Engelstein, John A. Kraynick, David Shapiro, Larry Shawe,
and Paul Leikert on May 14, 1999.
13
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the
registrant has duly caused this report
to be signed on its behalf by the
undersigned thereunto duly authorized.
ENGLE HOMES, INC.
-----------------
(Registrant)
Date: MAY 25, 2000 \s\ ALEC ENGELSTEIN
- ------------------------ ------------------------
Alec Engelstein
Chief Executive Officer
Date: MAY 25, 2000 \s\ DAVID SHAPIRO
- ------------------------ ------------------------
David Shapiro
Chief Financial Officer
14
Exhibit 10.7
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of the 14th day of May 1999 by and between ENGLE HOMES, INC., a
Florida corporation (the "Company"), and [ ] (the "Executive").
RECITALS:
The Board of Directors of the Company (the "Board"), has determined that it is
in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat, or occurrence of a Change of Control (as defined
below) of the Company.
The Board believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control, to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation arrangements upon a Change of Control which provide the Executive
with individual financial security and which are competitive with those of other
corporations and, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date
The "Effective Date" shall be the date on which a Change of Control occurs.
Anything in this Agreement to the contrary notwithstanding, if the Executive's
employment with the Company is terminated prior to the date on which a Change
of Control occurs, and it is reasonably demonstrated that such termination (i)
was at the request of a third party who has taken steps reasonably calculated
to effect a Change of Control, or (ii) otherwise arose in connection with or
anticipation of a Change of Control, then for all purposes of this Agreement the
"Effective Date" shall mean the date immediately prior to the date of such
termination.
2. Change of Control
For the purpose of this Agreement, a "Change of Control" shall mean:
(i) Approval by the shareholders of the Company of (x) a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities in substantially the same proportions as their ownership
immediately prior to such reorganization, or (y) a liquidation or dissolution
of the Company or (z) the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently abandoned);
(ii) Individuals who, as of the date of the Agreement, constitute the Board (the
15
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to the date of
this Agreement whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act of 1934(the "Securities Exchange Act") shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board or;
(iii) the acquisition (other than from the Company) by any person, entity
or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 50% of either the then outstanding shares of the
Company's Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a "Controlling Interest")
excluding, for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, (2) any person, entity or "group" that as of the date of this
Agreement owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest or (3)
any employee benefit plan of the Company or its Subsidiaries.
3. Employment Period
The Company hereby agrees to continue the Executive in its employ, and the
Executive hereby agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the second anniversary of such
date, after which time the Agreement is no longer in effect.
4. Terms of Employment
(a) Position and Duties.
(i) During the Employment Period, (1) the Executive's position (including
status, offices, titles and reporting requirements), authority, duties,
responsibilities and performance shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 180-day period immediately preceding the Effective Date, and (2)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office or location
less than sixty (60) miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
full attention and time during normal business hours to the business and affairs
of the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (1) serve on corporate, civic or charitable boards or committees,
(2) deliver lectures, fulfill speaking engagements or teach at educational
institutions, and (3) manage personal investments, so long as such activities
do not interfere with the performance of the Executive's responsibilities as
an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
16
Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive a
base salary ("Base Salary") at a monthly rate at least equal to the highest
monthly base salary paid or payable to the Executive by the Company during the
twelve-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded in the
ordinary course of business to the Executive in the three years prior to the
Effective Date. Any increase in Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Base Salary shall
not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Executive shall be awarded,
for each fiscal year during the Employment Period, an annual bonus (an "Annual
Bonus") (either pursuant to any then-established incentive compensation plan(s)
of the Company or otherwise) in cash. The Annual Bonus shall be increased
substantially consistent with and at least equal to the highest bonus payable
to the Executive from the Company and its subsidiaries in respect of any of the
three fiscal years immediately preceding the fiscal year in which the Effective
Date occurs.
(iii) Incentive, Savings and Retirement Plans. In addition to Base Salary
and Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate during the Employment Period in all incentive, savings
and retirement plans, practices, policies and programs applicable to other
executives of the Company and its affiliates, in each case comparable to those
in effect on the Effective Date or as subsequently amended. Such plans,
practices, policies and programs, in the aggregate, shall provide the Executive
with compensation, benefits and reward opportunities at least as favorable as
the most favorable of such compensation, benefits and reward opportunities
provided by the Company for the Executive under such plans, practices, policies
and programs as in effect at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as provided
at any time thereafter with respect to other key executives.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or
the Executive's family, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its subsidiaries (including,
without limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans and programs), at least as favorable as the most favorable of
such plans, practices, policies and programs in effect at any time during the
180-day period immediately preceding the Effective Date or, if more favorable
to the Executive and/or the Executive's family, as in effect at any time
thereafter with respect to other executives.
(v) Expenses. During the Employment Period, the Executive shall be entitled
to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in accordance with the most favorable policies, practices and
procedures of the Company and its subsidiaries in effect at any time during the
180-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect at any time thereafter with respect to other
executives.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be
entitled to fringe benefits, including use of an automobile and payment of
17
related expenses, in accordance with the most favorable plans, practices,
programs and policies of the Company and its subsidiaries in effect at any time
during the 180-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter with respect to
other executives.
(vii) Office and Support Staff. During the Employment Period, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Executive by the Company and
its subsidiaries at any time during the 180-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided at any time
thereafter with respect to other executives of the Company and its
subsidiaries.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its subsidiaries as in effect at any
time during the 180-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect at any time thereafter with
respect to other executives of the Company and its subsidiaries.
5. Termination
(a) Death or Disability. This Agreement shall terminate automatically upon the
Executive's death. If the Company determines in good faith that the Disability
of the Executive has occurred (pursuant to the definition of "Disability" set
forth below), it may give to the Executive written notice of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" means a mental or physical incapacity, illness or
disability which renders the Executive unable to perform his duties and
responsibilities for the Company and which, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment for "Cause."
For purposes of this Agreement, "Cause" means (i) an act or acts of personal
dishonesty taken by the Executive and intended to result in personal enrichment
of the Executive at the expense of the Company, (ii) repeated violations by the
Executive of the Executive's obligations under Section 4(a) of this Agreement
which are demonstrably willful and deliberate on the Executive's part and which
are not remedied within five (5) days upon receipt of written notice from the
Company setting forth the specific violation, or (iii) the conviction of the
Executive of a felony.
(c) Good Reason. The Executive's employment may be terminated by the Executive
for "Good Reason". For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in any respect
with the Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly after receipt of
18
notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of Section
4(b) of this Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office or
location other than that described in Section 4(a)(i)(2) hereof, except for
travel reasonably required in the performance of the Executive's
responsibilities;
(iv) any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 9(c) of this
Agreement.
(d) Notice of Termination. Any termination by the Company for Cause or by the
Executive for Good Reason shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 10(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such
notice). The failure by the Executive to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason shall not
waive any right of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing his rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be; provided, however, that (i) if the Executive's employment is terminated by
the Company other than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such termination, and
(ii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination
(a) Death. If the Executive's employment is terminated by reason of the
Executive's death, this Agreement shall terminate without further obligations
to the Executive's legal representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by the Executive as of
the Date of Termination, including, for this purpose (i) the Executive's full
Base Salary through the Date of Termination at the rate in effect on the Date
of Termination or, if higher, at the highest rate in effect at any time from the
180-day period preceding the Effective Date through the Date of Termination (the
"Highest Base Salary"), (ii) the product of the Annual Bonus paid to the
Executive for the last full fiscal year and a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and (iii) any compensation
previously deferred by the Executive (together with any accrued interest
thereon) and not yet paid by the Company and any accrued vacation pay not yet
paid by the Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as applicable, in a lump
19
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Executive's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company and any of its subsidiaries to surviving families of
executives of the Company and such subsidiaries under such plans, programs,
practices and policies relating to family death benefits, if any, in accordance
with the most favorable plans, programs, practices and policies of the Company
and its subsidiaries in effect at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the Executive and/or the
Executive's family, as in effect on the date of the Executive's death with
respect to other executives of the Company and its subsidiaries and their
families.
(b) Disability. If the Executive's employment is terminated by reason of the
Executive's Disability, this Agreement shall terminate without further
obligations to the Executive, other than those obligations accrued or earned and
vested (if applicable) by the Executive as of the Date of Termination, including
for this purpose, all Accrued Obligations. All such Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its subsidiaries to disabled employees and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in accordance with the most favorable plans,
programs, practices and policies of the Company and its subsidiaries in effect
at any time during the 180-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other executives and their
families.
(c) Cause; Other than for Good Reason. If the Executive's employment shall be
terminated for Cause, this Agreement shall terminate without further obligations
to the Executive other than the obligation to pay to the Executive the Highest
Base Salary through the Date of Termination plus the amount of any compensation
previously deferred by the Executive (together with accrued interest thereon).
If the Executive terminates employment other than for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other
than those obligations accrued or earned and vested (if applicable) by the
Executive through the Date of Termination, including for this purpose, all
Accrued Obligations. All such Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during the Employment
Period, the Company shall terminate the Executive's employment other than for
Cause, Disability or death, or if the Executive shall terminate his employment
for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following amounts:
1. to the extent not theretofore paid, the Executive's Highest Base Salary
through the Date of Termination; and
2. the product of (x) the Annual Bonus paid to the Executive for the last full
fiscal year (if any) ending during the Employment Period or, if higher, the
Annual Bonus paid to the Executive for the last full fiscal year prior to the
Effective Date (as applicable, the "Recent Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination and the denominator of which is 365; and
20
3. the product of (x) two multiplied times (y) the sum of (i) the Highest Base
Salary and (ii) the Recent Bonus; and
4. in the case of compensation previously deferred by the Executive, all
amounts previously deferred (together with any accrued interest thereon) and not
yet paid by the Company, and any accrued vacation pay not yet paid by the
Company; and
5. all other amounts accrued or earned by the Executive through the Date of
Termination and amounts otherwise owing under the then existing plans and
policies at the Company; and
(ii) for the remainder of the Employment Period, or such longer period as any
plan, program, practice or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated, including health, dental,
disability insurance and life insurance, in accordance with the most favorable
plans, practices, programs or policies of the Company and its subsidiaries
during the 180-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter with respect to
other key executives and their families and, for purposes of eligibility for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period.
(e) Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or any of its subsidiaries and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such rights as the Executive
may have under any stock option or other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or program of the
Company or any of its subsidiaries at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program.
(f) Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement. The Company and the
Exeutive agree that the prevailing party in any litigation over the
enforceability, interpretation or breach of this Agreement, including but not
limited to a dispute over any payment pursuant to Section 7 of this Agreement,
shall be entitled to an award of reasonable attorney fees and costs incurred in
such litigation through trial or appeal, plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
7. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment, distribution or other action by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, including any additional payments required under this Section 7) (a
"Payment") would be subject to any excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by the Executive with respect
21
to any such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), the
Company shall make a payment to the Executive (a "Gross-Up Payment") in an
amount such that after payments by the Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, the Executive retains (or has had
paid to the Internal Revenue Service on his be half) an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made. For purposes determining the amount
of the Gross-Up Payment, the Executive shall be deemed to (i) pay federal income
taxes at the highest marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, and (ii) pay applicable state
and local income taxes at the highest marginal rat e of taxation for the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.
(b) Subject to the provisions of paragraph (c) of this Section 7, all
determinations required to be made under this Section 7, including whether and
when a Gross-Up-Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by BDO Seidman, LLP (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 7, shall be paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 7 and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but not later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
22
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information requested by the Company relating to such
claim,
(ii) Take such action in connection with contesting such claim of the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company.
(iii) cooperate with the Company in good faith in order effectively contest
such claim; and
(iv) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 7(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 7(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 7(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5.7(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
23
8. Confidential Information
The Executive shall hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data relating to the
Company or any of its subsidiaries, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its subsidiaries and which shall not be or become public
knowledge (other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
9. Successors
(a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, or otherwise.
10. Miscellaneous
(a) This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
<EMPLOYEE NAME>
<EMPLOYEE ADDRESS LINE 1>
<EMPLOYEE CITY>, <EMPLOYEE STATE>
<EMPLOYEE ZIP CODE>
If to the Company:
Engle Homes, Inc.
123 N.W. 13th Street, Suite 300
Boca Raton, Florida
33432
Attn: President
24
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state or local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any provision
hereof shall not be deemed to be a waiver of such provision or any other
provision thereof.
(f) This Agreement contains the entire understanding of the Company and the
Executive with respect to the subject matter hereof.
(g) The Executive and the Company acknowledge that, except as set forth in any
written employment agreement between the Executive and the Company and effective
from and after the date hereof, the employment of the Executive by the Company
is "at will," and, prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Upon a termination of the Executive's
employment prior to the Effective Date, there shall be no further rights under
this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant
to the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
_____________________________
[Employee Name]
Engle Homes, Inc.
By:__________________________
25
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<PERIOD-END> APR-30-2000
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0
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<COMMON> 110
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