Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT, made as
of this 10th day of March, 2009, and effective as of
January 1, 2009 (the “Effective Date”), is between
Orleans Homebuilders, Inc., a Delaware corporation with
offices at 3333 Street Road, Bensalem, Pennsylvania 19020
(hereinafter the “ Company ”) and Michael T.
Vesey, an individual (hereinafter the “ Employee
”).
BACKGROUND
Employee has been employed by the
Company on an “at-will” basis as President and Chief
Operating Officer, and Employee and the Company desire that
Employee continue working for the Company in this
capacity.
Employee and the Company further
desire to enter into this written Employment Agreement (“
Agreement ”) and to be bound by the terms and
conditions herein.
NOW THEREFORE, in consideration of
the promises and the mutual covenants and agreements contained
herein, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION 1. CAPACITY AND
DUTIES
1.1
At-Will
Employment. The Company has employed and shall continue to
employ Employee pursuant to this Agreement on an
“at-will” basis.” Employee’s
employment hereunder with the Company is for an unspecified
duration and may be terminated at any time by either Employee or
the Company, for any or no reason, with or without prior notice,
except as described in Sections 3.4 and 3.6.
1.2
Capacity and
Duties.
Employee shall be employed by the Company as President and Chief
Operating Officer, and, subject to the supervision and control of
the Company’s Chairman of the Board and Chief Executive
Officer and the Board of Directors, agrees to perform such duties
and responsibilities normally associated with the position of
President and Chief Operating Officer and as may reasonably be
assigned to Employee from time to time by the Company’s
Chairman of the Board and Chief Executive Officer or by the
Company’s Board of Directors. Employee is required to
work those hours necessary to perform properly such duties and
responsibilities normally associated with the position of President
and Chief Operating Officer and as may reasonably be assigned to
Employee from time to time pursuant to this Agreement.
Notwithstanding the foregoing in this Section 1.2, after a
Closing Date, Employee shall have such title, duties and
responsibilities and be subject to the supervision and control of
such persons as may be, after taking into account the fact that a
Change of Control has occurred and other relevant facts and
circumstances, determined by the Company in its sole discretion
from time to time.
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SECTION 2. COMPENSATION AND FRINGE
BENEFITS
2.1
Compensation.
(a)
Base Salary.
As base compensation for
Employee’s services hereunder, the Company shall pay to
Employee an initial salary at an annual rate of $535,000 (the
“ Base Salary ”). Employee’s Base
Salary will be payable in accordance with the Company’s
regular payroll practices in effect from time to time during
Employee’s employment; but not less than monthly.
Employee’s Base Salary shall be reviewed by the Company no
less often than annually and shall be adjusted (upward, and with
the consent of Employee, downward) upon review as determined by the
Company.
(b)
Bonus.
(i)
Incentive Bonus
. Employee shall be eligible
to receive an annual incentive bonus pursuant to and in accordance
with the Orleans Homebuilders, Inc. Incentive Compensation
Plan (the “ Plan ”) and subject to the
Plan’s eligibility requirements and other terms, conditions
and restrictions (the “ Incentive Bonus ”);
provided, however, that the Plan and its terms are subject to
change and the Plan may be modified or eliminated in accordance
with the terms of the Plan.
(ii)
Additional Bonuses
. While Employee shall not be
entitled to receive any other bonuses from the Company; provided,
however, that the Company may award Employee additional bonuses as
it determines are appropriate in its sole discretion (the “
Additional Bonuses ”).
2.2
Fringe
Benefits.
(a)
Insurance and Retirement
Benefits .
Employee (and his eligible dependents, where applicable) shall be
eligible to participate in the Company’s insurance and health
benefit plans to the extent and upon the terms offered to the
Company’s other senior executive officers, including but not
limited to, any 401(k) plans, supplemental executive
retirement plans (SERP), savings plans, incentive plans, stock
purchase plans, stock incentive plans, retirement plans and/or
deferred compensation plans, subject to the plans’ respective
eligibility requirements and other terms, conditions, restrictions
and exclusions. To the extent applicable, Employee shall be
entitled to participate in such plans as a Tier 1 employee.
Nothing herein shall preclude or otherwise restrict the
Company’s right to modify or terminate any insurance or other
benefit plan, policy or program as it deems appropriate in its sole
discretion.
(b)
Vacation. Employee shall be entitled to four
(4) weeks of paid vacation during each full calendar year of
his employment in accordance with the terms and provisions of the
Company’s policies and practices in effect from time to
time.
(c)
Expense Reimbursement.
The Company shall reimburse
Employee for all reasonable expenses incurred by him in connection
with the performance of his duties hereunder
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in accordance with the Company’s regular
reimbursement policies as in effect from time to time and upon
receipt of itemized vouchers therefor and such other supporting
information as the Company may reasonably require. The
reimbursement of any such eligible expense shall be made on or
before the last day of the calendar year next following the
calendar year in which the expense was incurred.
(d)
Transportation
Allowance.
Employee shall receive a monthly transportation allowance in the
amount of Seven Hundred Thirty Dollars ($730.00) (the “
Transportation Allowance ”). The Transportation
Allowance shall be payable in accordance with the Company’s
regular payroll practices in effect from time to time.
(e)
Additional Benefits.
Employee shall be eligible to
participate in such other fringe benefits upon the terms offered to
the Company’s other senior executive officers and subject to
the terms, conditions, restrictions and exclusions of any such
fringe benefit plans or programs.
(f)
Indemnification
.
(i)
The Company shall
maintain a directors and officers liability insurance policy while
Employee is employed by the Company pursuant to this Agreement to
the extent such a policy is available at commercially reasonable
rates as determined by the Board of Directors. Employee shall
be entitled to coverage under such policy as an officer of the
Company, subject to the policy’s terms, conditions,
restrictions and exclusions.
(ii)
In addition to
the Company’s obligation to maintain said insurance, the
Company shall, to the fullest extent permitted by and in accordance
with applicable law as it may be amended from time to time,
indemnify Employee in connection with any claim, action, suit,
investigation or proceeding arising out of or relating to
performance by Employee of services for, or any action of Employee
as a director, officer, member, manager or employee of, the
Company, or of any other person or enterprise for whom Employee is
serving at the request of the Company as an a director, officer,
member, manager or employee. Expenses reasonably incurred by
Employee in defending such a claim, action, suit, investigation or
proceeding shall, to the extent permitted by applicable law, be
paid by the Company in advance of the final disposition thereof
upon receipt of a written undertaking by or on behalf of Employee
to repay such amounts if it shall ultimately be determined that
Employee is not entitled to indemnification by the Company as
provided in this Section 2.2(f). Notwithstanding
anything in the foregoing to the contrary, in no event will
Employee be entitled to any indemnification (including without
limitation any advancement of fees or expenses) pursuant to this
Section 2.2(f) with respect to any action, suit or
proceeding brought or made by Employee against the Company or any
of its affiliates or officers, directors, employees or
agents. The provisions of this Section 2.2(f) shall
be in addition to any indemnification rights Employee may have by
law, contract, charter, by-law, policy of insurance or
otherwise.
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2.3
Payments After Termination of
Employment.
(a)
Termination for Any
Reason. Regardless
of the reason for the termination of Employee’s employment,
whether by Employee or the Company, whether or not due to
Employee’s death or Disability (as that term is defined in
Section 3.2), and whether or not for Cause (as that term is
defined in Section 3.3) or for Good Reason (as that term is
defined in Section 3.5), Employee (or his estate) will receive
unpaid Base Salary for any days actually worked by Employee prior
to the termination of his employment, expense reimbursement for all
reasonable expenses incurred by him in connection with the
performance of his duties prior to the termination of his
employment and payment for accrued but unused vacation pay to the
extent Employee may be eligible for such payment under the
Company’s policies.
(b)
Termination by the Company
Without Cause or due to Employee’s Death, Disability or by
Employee for Good Reason. Subject to the terms and conditions set
forth in Section 2.3(d), (i) if Employee is terminated by
the Company without Cause (as that term is defined in
Section 3.3) or due to his Disability (as that term is defined
in Section 3.2), (ii) if Employee terminates his
employment with the Company for Good Reason (as that term is
defined in Section 3.5), or (iii) his employment with the
Company terminates due to his death, then in addition to the
payments described in Section 2.3(a) above:
(i)
The Company shall pay Employee any
accrued but unpaid Incentive Bonus with respect to any completed
Plan Year (as that term is defined in the Plan) ending prior to the
date on which Employee’s employment terminates, to be paid in
accordance with the terms of the Plan. Payment of any such
amount shall be made at the same time these amounts would have been
paid if Employee’s employment had not terminated.
(ii)
The Company shall pay Employee a
prorated bonus calculated by multiplying the higher of (x) the
sum of the Incentive Bonus and any Additional Bonuses Employee
received with respect to the last full Company fiscal year during
which Employee was employed by the Company (and for which bonus
determinations have been made), or (y) the average of the
Incentive Bonuses and any Additional Bonuses Employee received
during each of the last two full fiscal years during which Employee
was employed by the Company, by a fraction, the numerator of which
is the number of days in the current fiscal year through
Employee’s termination date, and the denominator of which is
365; provided, however, that the sum of any Incentive Bonuses and
any Additional Bonuses Employee received in respect of Fiscal 2007
shall be deemed to be $400,000 regardless of the actual amount of
such bonuses. This amount will be paid in a single lump sum
as soon as practicable following Employee’s termination of
employment; provided, however, that if any portion of such payment
constitutes a payment of nonqualified deferred compensation for
purposes of Section 409A of the Internal Revenue Code, and the
payment of any portion of such payments would be in violation of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code,
then, to the extent required to avoid a violation of
Section 409A(a)(2)(B)(i) of the Internal Revenue Code,
such payment shall be deferred until the six (6) month
anniversary date of Employee’s termination. Deferred
benefits will be paid with interest at the lesser of the prime rate
and five percent (5%).
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(iii)
The Company shall pay Employee a
severance equal to the sum of (A) the higher of (x) the
Employee’s annual Base Salary (at the rate in effect on the
date of termination), or (y) the average of the annual Base
Salary Employee received during each of the last two full fiscal
years during which Employee was employed by the Company, and
(B) the higher of (x) the sum of the Incentive Bonus and
any Additional Bonuses Employee received with respect to the last
full Company fiscal year during which Employee was employed by the
Company, or (y) the average of the Incentive Bonuses and any
Additional Bonuses Employee received during each of the last two
full fiscal years during which Employee was employed by the
Company; provided, however, that the sum of any Incentive Bonuses
and any Additional Bonuses Employee received in respect of Fiscal
2007 shall be deemed to be $400,000 regardless of the actual amount
of such bonuses and provided further that any amounts payable to
Employee or his estate, widow, eligible dependents or other
beneficiaries as a death or disability benefit under the
Company’s SERP (the “ SERP Payment ”)
shall be deducted from the amounts otherwise payable pursuant to
this Section 2.3(b)(iii). This amount will be paid in a
single lump sum as soon as practicable following Employee’s
termination of employment; provided, however, that if any portion
of such payment constitutes a payment of nonqualified deferred
compensation for purposes of Section 409A of the Internal
Revenue Code, and the payment of any portion of such payments would
be in violation of Section 409A(a)(2)(B)(i) of the
Internal Revenue Code, then, to the extent required to avoid a
violation of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code, such payment shall be deferred until the six
(6) month anniversary date of Employee’s
termination. Deferred benefits will be paid with interest at
the lesser of the prime rate and five percent (5%). In the
event that the full amount of the SERP Payment is not actually paid
to Employee or his estate, widow, eligible dependents or other
beneficiaries within 75 days after the termination of
Employee’s employment giving rise to the right to receive
payment under this Section 2.3(b)(iii), then within 10 days
thereafter, the Company shall pay to Employee or his estate, widow,
eligible dependents or other beneficiaries an amount equal to the
difference between the full amount of the SERP Payment and any
portion of the SERP Payment previously paid. In the event
that, subsequent to the payment of any such difference, Employee or
his estate, widow, eligible dependents receives any payment on
account of any unpaid portion of the SERP Payment, then within 10
days after receipt of any such payment, the recipient shall pay
such amount to the Company.
(iv)
The Company shall reimburse Employee
(or his widow or eligible dependents, in the event of
Employee’s death) for the full cost of continuation coverage
under the Company’s group health plan pursuant to the
Consolidated Omnibus Budget Reconciliation Act (“
COBRA ”) at the same level of coverage Employee (and
his eligible dependents where applicable) had as of
Employee’s termination date (collectively, “ COBRA
Payments ”) for up to eighteen (18) months, so long as
Employee (and/or Employee’s eligible dependents) remain
eligible for continuation coverage under COBRA and provided that
Employee is eligible for and timely elects continuation coverage
under COBRA and continues to make COBRA payments on a timely
basis. If Employee provides to the Company within 45 days
after his termination written notice that he elects to receive the
COBRA Payments in a lump sum, then as soon as practicable
thereafter the Company shall pay to Employee a lump sum equal to
the aggregate amount of COBRA Payments Employee would have received
as reimbursement of COBRA payments for the full initial 18 month
period of CORBA continuation coverage (less any COBRA payments made
by the Company for which Employee is required to reimburse
the
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Company). Employee acknowledges that this
benefit (whether paid in a lump sum or in installments) may be
taxable to Employee. Payment of reimbursements pursuant to
this Section 2.3(b)(iv) shall in all cases be made in a
time and manner consistent with the requirements of Treasury
Regulations regarding payment of reimbursements under Internal
Revenue Code Section 409A. In the event Employee (or his
widow or eligible dependents, in the event of Employee’s
death) is eligible for COBRA continuation coverage beyond the
initial 18-month period of COBRA continuation coverage (“
Extended COBRA Coverage ”), so long as Employee
(and/or Employee’s eligible dependents) timely elects
continuation of coverage under COBRA and makes the COBRA payments
on a timely basis, Employee and his eligible dependents where
applicable) may continue the Extended COBRA Coverage at
Employee’s sole cost and expense, which cost and expense will
not be reimbursed by the Company.
(v)
At such time as Employee and/or
Employee’s eligible dependents become ineligible for
continuation coverage under the Company’s group health plan
pursuant to COBRA, the Company shall take reasonable steps to
assist Employee and/or Employee’s eligible dependents in
securing alternative health coverage on a fully insured basis
(which may be in the form of conversion coverage, if such coverage
is available from any insurance carrier which is at that time
providing coverage or services in connection with a Company group
health plan) or, if a determination is made by the Company in its
sole discretion that coverage can be made available to Employee
and/or Employee’s eligible dependents after Employee and/or
Employee’s eligible dependents cease to be eligible for
continuation coverage under COBRA without resulting in the health
benefits becoming taxable to Employee, then the Company will permit
Employee and/or Employee’s eligible dependents to continue to
participate in the Company’s group health plan with payment
of premiums comparable to those required under either the
Company’s plan, or COBRA, at the option of the Company.
Payment of premiums under any such arrangement will be made by
Employee from Employee’s own funds and will not be subject to
reimbursement by the Company.
(vi)
Unless otherwise specifically
provided to the contrary in the applicable grant or award document
(as said grant or award document may be modified by the Company),
all of Employee’s unvested options to acquire Company stock
and unvested restricted Company stock shall immediately vest, with
such accelerated vesting to be otherwise in accordance with the
terms and conditions of the applicable grant or award document and
plan. (The provisions of this
Section 2.3(b)(vi) shall be considered to be an amendment
to any applicable grant or award document to the extent necessary
to implement the terms of this Section 2.3(b)(vi).)
(c)
Termination in Connection with a
Change of Control.
Subject to the terms and conditions set forth in
Section 2.3(d) and subject to the occurrence of the
Closing Date with respect to the subject Change of Control, if
(x) the Company terminates Employee’s employment for any
reason (including without limitation, Disability) or
Employee’s employment terminates due to Employee’s
death during the period beginning one hundred twenty (120) days
prior to a Change of Control (as defined in Section 3.7) and
ending on the applicable Closing Date, (y) the Company
terminates Employee’s employment with the Company for any
reason (including without limitation, Disability) or
Employee’s employment terminates due to Employee’s
death within one (1) year following the applicable Closing
Date, provided that Employee was
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employed by the Company on the applicable
Closing Date, or (z) Employee terminates Employee’s
employment with the Company for (1) Good Reason (provided,
however, that solely for purposes of this Section 2.3(c),
“Good Reason” shall not include the facts or
circumstances described in clause (ii) of the definition of
“Good Reason” set forth in Section 3.5) within one
(1) year following the Closing Date, provided that Employee
was employed by the Company on the applicable Closing Date, or
(2) for any reason within thirty (30) days immediately
preceding the one (1) year anniversary of the Closing Date,
provided that Employee was employed by the Company on the
applicable Closing Date, then in addition to the payments describe
in Section 2.3(b) above:
The Company shall pay Employee (or
his estate, widow, eligible dependents or other beneficiaries, in
the event of Employee’s death) severance in an amount that is
equal to three times Employee’s average total compensation
(including Base Salary, Incentive Bonus and Additional Bonuses),
calculated by determining the average (mean) total cash
compensation Employee earned for the most recent three full fiscal
years worked prior to Employee’s termination date, not to
exceed $1.2 million of total compensation for any one
(1) year, in order that such calculation is made on a basis
consistent with the definition of “recognized
compensation” under the Com
