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Exhibit 10.01
Termination Agreement
EXECUTIVE TERMINATION AND
SEVERANCE AGREEMENT
THIS EXECUTIVE
TERMINATION AND SEVERANCE AGREEMENT is made and entered
effective as of the 16th day of March, 2005, by and between WCI
Communities, Inc., a Delaware corporation, (the
“Company”) and Jerry L. Starkey (hereinafter referred
to as the “Executive”) and supersedes and replaces any
prior severance or change in control agreements between the
Parties.
WHEREAS ,
the Board of Directors of the Company has approved the Company
entering into a termination and severance agreement with the
Executive;
WHEREAS ,
the Executive is now the Chief Executive Officer of the Company and
thus the key senior executive of the Company;
WHEREAS ,
the Executive is not now a party to any employment agreement with
the Company;
WHEREAS ,
the Company would like to provide some assurance to Executive that
if Executive’s employment is terminated by the Company
without cause, Executive will receive certain severance payments
and other benefits;
WHEREAS ,
the Executive would like to provide some assurance to the Company
that the Executive will not solicit any employees, customers,
suppliers, or vendors of the Company and will not work for any
entity which has any activities which compete with the
Company;
NOW
THEREFORE , in consideration of the recitals and the mutual
agreements herein set forth, the Company and the Executive agree as
follows:
Whenever used in
this Agreement, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
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(1)
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“Agreement” means this
Executive Termination and Severance Agreement.
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(2)
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“Accrued Benefits” means
any unpaid Base Salary and accrued vacation due to Executive
through the Date of Termination, plus all other amounts the
Executive is entitled to pursuant to the terms of any employee
benefit or compensation plans of the Company at the time such
payments are due.
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(3)
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Annual Salary means the annual base
salary paid to the Executive by the Company during the fiscal year
plus the total amount of annual bonuses paid to the Executive by
the Company during the fiscal year, including amounts received
under any incentive plans, whether or not deferred.
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(4)
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“Average Salary” means
the average of the Annual Salaries paid to the Executive during the
two most recent fiscal years ending prior to the Date of
Termination; provided, however, that Average Salary shall never
exceed three million dollars ($3,000,000.00).
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(5)
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“Board” means the Board
of Directors of the Company.
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(6)
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“Bonus Plan Opportunity”
means the Management Incentive Compensation Plan, or any successor
management incentive plan, in effect at the time of a Change in
Control.
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(7)
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“Cause” shall be
determined by the Board, in exercise of good faith and reasonable
judgment, and shall mean the occurrence of any one or more of the
following:
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(a)
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The
willful failure by the Executive to substantially perform his
duties after a written demand for substantial performance is
delivered by the Board to the Executive that specifically
identifies the manner in which the Board believes that the
Executive has not performed his duties, and the Executive has
failed to remedy the situation within fifteen (15) calendar
days of receiving such notice; or
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(b)
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Misconduct by the Executive
involving dishonesty or breach of trust in connection with
Executive’s employment; or
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(c)
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Misconduct by the Executive which
would be a reasonable basis for an indictment of Executive for a
felony or misdemeanor involving moral turpitude or
Executive’s conviction for committing any act which
constitutes a felony; or
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(d)
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Any
act of misconduct or dishonesty that is injurious to the Company,
as determined by the Board; or
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(e)
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Habitually engaging in the use of
alcohol, or illegal use of drugs; or
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(f)
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Committing any act, or failing to
act, concerning any matter tending to bring the Company or a
subsidiary of the Company into substantial public disgrace or
disrepute; or
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(g)
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Engaging in any act or omission
which constitutes a conflict of interest, theft or misappropriation
of any thing of value; or
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(h)
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Gross negligence or willful
misconduct with respect to the Company or a subsidiary of the
Company.
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(8)
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“Change in Control”
means:
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(a)
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When any “person” as
defined in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and as used in
Section 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) of the Exchange Act, (excluding any person
(or “group” as defined in Section 13(d) of the Exchange
Act) holding securities representing 50% or more of the combined
voting power of the Company’s outstanding securities as of
the Effective Date, excluding the Company, any Subsidiary and any
employee benefit plan sponsored or maintained by the Company or any
Subsidiary (including any trustee of such plan acting as trustee)),
who directly or indirectly, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange
Act), of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding
securities (unless the event causing the 50% threshold to be
crossed is an acquisition of securities directly from the Company);
or
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(b)
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the
shareholders of the Company shall approve any merger or other
business combination of the Company, sale of 50% or more of the
Company’s assets, liquidation or dissolution of the Company
or combination of the foregoing transactions and a closing of the
transaction shall have occurred (the “Transactions”)
other than a Transaction immediately following which the
shareholders of the Company and any trustee or fiduciary of any
Company employee benefit plan immediately prior to the Transaction
who collectively owned at least 50% of the voting power, directly
or indirectly, of the Company immediately prior to the Transaction
own, immediately after the Transaction, at least 50% of the voting
power, directly or indirectly, of (A) the surviving entity in
any such merger or other business combination; (B) the
purchaser of or successor to the Company’s assets;
(C) both the surviving entity and the purchaser in the event
of any combination of Transactions; or (D) the parent company
owning 100% of such surviving entity, purchaser or both the
surviving entity and the purchaser, as the case may be;
or
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(c)
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within any twelve month period, the
persons who were directors immediately before the beginning of such
period (the “Incumbent
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Directors”) shall cease (for
any reason other than death) to constitute at least a majority of
the Board or the board of directors of a successor to the Company.
For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent
Director if such director was elected to the board of directors by,
or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent
Directors (so long as such director was not nominated by a person
who has entered into an agreement to effect a Change in Control or
expressed an intention to cause such a Change in
Control).
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(9)
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“Code” means the
Internal Revenue Code of 1986, as amended.
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(10)
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“Committee” means the
Compensation Committee of the Board, or any other committee
appointed by the Board to perform the functions of the Compensation
Committee.
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(11)
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“Company” means WCI
Communities. Inc. and each of its Subsidiaries, or any successor
thereto.
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(12)
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“Date of Termination”
means the date that Executive’s employment terminates with
the Company.
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(13)
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“Disability” means
permanent and total disability, within the meaning of Code
Section 22(e)(3), as determined by the Board in the exercise
of good faith and reasonable judgment, upon receipt of and in
reliance on sufficient competent medical advice from one or more
individuals, selected by the Board, who are qualified to give
professional medical advice.
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(14)
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“Good Reason” means,
without the Executive’s express written consent, the
occurrence after a Change in Control of the Company of any one or
more of the following:
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(a)
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The
assignment of the Executive to duties materially inconsistent with
the Executive’s authorities, duties, responsibilities, and
status (including titles and reporting requirements) as an officer
of the Company;
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(b)
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A
material reduction by the Company of the Executive’s annual
base salary or Bonus Plan Opportunity.
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Good Reason shall not be deemed to
have occurred unless Executive gives the Company thirty
(30) days written notice, and within such thirty (30) day
period, the Company does not restore Executive’s Base Salary
or restore Executive’s authorities, duties, responsibilities
and status as an
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officer, in
which event Good Reason shall be deemed to have occurred at the
time of the giving of such written notice. The Executive’s
continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good
Reason herein.
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(15)
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“Prohibited Activity”
means any activity or plan to engage in any activity, including,
without limitation, acting as a developer or builder, which is
competitive with the Company anywhere in Florida or within a two
hundred (200) mile radius of any area outside of Florida where
the Company engages in activity or business at the time of
Termination, or which involves preparing to engage in any activity,
including, without limitation, acting as a developer or builder,
which is competitive with the Company anywhere in Florida or within
a two hundred (200) mile radius of any area outside of Florida
where the Company engages in activity or business at the time of
Termination. For purposes of this definition, the Company will be
considered to be engaged in an activity if: (i) the Company
is, in fact, engaged in such activity or business; or (ii) the
Company is a party to any agreement which provides for the
performance of obligations or the creation of rights which,
i
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