AMENDMENT TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amendment to
the Amended and Restated Employment Agreement (this
“Amendment”), made this 13 th day of January, 2006 is by and between Technical
Olympic USA, Inc., a Delaware corporation (the
“Company”), and Antonio B. Mon, an individual (the
“Executive”).
The Company and
the Executive previously entered into the Amended and Restated
Employment Agreement, including Attachment B thereto (together the
“Agreement”), effective July 26, 2003. The Company
and the Executive mutually desire to amend the Agreement as set
forth below.
Now, therefore, in
consideration of the facts, mutual promises, and covenants
contained herein and intending to be legally bound hereby, the
Company and the Executive agree as follows:
1.
Sections 5.2 and 5.3 of the Agreement shall each be modified
to replace all references of “twenty (20) Business
Days” with “sixty (60) Business
Days.”
2.
Section 5.5 of the Agreement is hereby amended as
follows:
(a) On
January 13, 2006, the Company shall grant to the Executive the
right to purchase up to 1,323,940 shares of the common stock, par
value $.01 per share, of the Company (the “Capital
Stock”), with an exercise price of $23.62 per share, in
accordance with the terms and conditions set forth in the Stock
Option Agreement attached as Exhibit A hereto and the
provisions of the Company’s Annual and Long-Term Incentive
Plan (as amended and restated effective as of October 5, 2004,
and as further amended from time to time (the “LTIP
Plan”)).
(b) For the
calendar year ending December 31, 2006, the Company shall pay
to the Executive a bonus in the amount of $8,711,525, if and only
if, the performance criteria established by the Compensation
Committee on or before March 31, 2006 pursuant to the terms of
the LTIP Plan for payment of such bonus are satisfied. In the event
that the performance criteria are satisfied, the Company shall pay
the bonus to the Executive on January 2, 2007, or on such
later date as the Compensation Committee shall determine and
certify in accordance with Section 162(m)(4)(C)(iii) that the
performance criteria have been satisfied.
(c) This
Amendment Section 2 shall replace Section 5.5 of the
Agreement and Attachment C referenced therein in its entirety;
provided, however, that if at the 2006 Annual Meeting of
Stockholders, the stockholders of the Company fail to properly
approve funding of the LTIP Plan with sufficient shares of Capital
Stock of the Company to implement this Section 2, then this
Section 2 shall have no further effect and Executive’s
rights to the equity grants described in Section 5.5 of the
Agreement and Attachment C referenced therein shall be restored in
full.
(d) For the
avoidance of doubt, this Amendment Section 2 is intended to
effectuate the equity grant in Section 5.5 of the Agreement
and is not intended to replace or otherwise modify any other
compensation or bonus provisions in the Agreement. For the calendar
year ending on December 31, 2006, the bonus described in
Section 2(b) above shall be in addition to such other incentive
compensation that may be payable to Executive pursuant to the
Agreement.
3. Attachment B
of the Agreement shall be modified as follows:
a. All references
to “Net Income” shall be changed to “Adjusted Net
Income.”
b. “Adjusted
Net Income,” as used therein, shall mean the Company’s
net income for the fiscal year as determined in accordance with
U.S. generally accepted accounting principles, adjusted for the
following:
(i) charges or
credits related to any stock-based compensation
expenses;
(ii) charges for
the cost of payments made under the Management Services Agreement;
and
(iii) the impact
of any changes in accounting principles and policies from those
that existed on December 31, 2001.
c. The net
income impact of (i) through (iii) is determined by
multiplying the sum of such items for each fiscal year by the
reciprocal of the Company’s effective tax rate as shown in
the Company’s audited financial statement for the pertinent
fiscal year.
4.
Section I. A. 3. of Attachment B of the Agreement shall be
modified to replace 3.25% with 4.0%.
5. Attachment B
of the Agreement shall be further modified to replace
Section I. C. (including heading) in its entirety with the
following language:
“
Compensation Deferral . All payments hereunder may be
deferred at your election pursuant to the Company’s
Non-Qualified Deferred Compensation Plan. All such compensation
deferrals must comply with the Plan’s requirements and
provisions and with then-applicable law. Upon termination of
employment, all withdrawals shall comply with the Plan’s
provisions and with then-applicable law and shall be duly reported
to the relevant taxing authorities, including the U.S. Internal
Revenue Service, as required by law.”
6. Attachment B
of the Agreement shall be further modified to replace
Section III in its entirety with the following
language:
“
Calculations and Payments . All calculations under this
Agreement shall be made by the Company, reviewed and approved by
you, and approved by the Company’s Human Resources Department
and the Human Resources, Compensation and Benefits Committee of the
Board of Directors. Committee approval and full payment shall be
made in cash no later than sixty (60) days after the end of
the applicable Bonus Year, except where the Executive has elected
to defer all or a portion of the payment as contemplated by
Section I.C. Compensation Deferral.”
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7. A new
Section 15.12 shall be added to the Agreement to read as
follows:
15.12
Section 409A Compliance.
(a) To
the extent the Executive would otherwise be entitled to any payment
(whether pursuant to this Agreement or otherwise) during the six
months beginning on termination of employment that would be subject
to the additional tax imposed under Section 409A of the Code
(“Section 409A”), the payment will be paid to the
Executive on the earlier of the six-month anniversary of the
Executive’s date of termination of employment or the
Executive’s death or disability (within the meaning of
Section 409A). Similarly, to the extent the Executive would
otherwise be entitled to any benefit (other than a payment) during
the six months beginning on termination of employment that would be
subject to the Section 409A additional tax, the benefit will
be delayed and will begin being provided (together, if applicable,
with an adjustment to compensate the Executive for the delay) on
the earlier of the six-month anniversary of the date of
termination, death or disability (within the meaning of
Section 409A).
(b) It
is the Company’s intention that the benefits and rights to
which the Executive could become entitled pursuant to the
provisions of this Agreement will comply with Section 409A. If
the Executive or the Company believes, at any time, that any of
such benefit or right does not comply, it shall promptly advise the
other and shall negotiate reasonably and in good faith to amend the
terms of such arrangement such that it complies (with the most
limited reasonable economic effect on the Executive and on the
Company).
(c) The
Company shall indemnify the Executive, on a fully grossed-up basis,
for any additional tax, interest, penalties or other liabilities
payable or incurred by the Executive by reason of the failure of
any provision of this Agreement to comply with Section 409A
and that cannot be reasonably cured by an amendment negotiated in
good faith pursuant to Section 15.12(b) hereof. The provisions
of Sections 8.1 through 8.4 of the Agreement, relating to
Gross-Up Payments as therein defined, shall apply with respect to
any payment required under this Section 15.12(c).
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