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Exhibit 10 (j) - Incentive Compensation Agreement, Charles McNairy
AVATAR HOLDINGS INC.
255 Alhambra Circle
Coral Gables, Florida 33134
As of September 9, 1993
Mr. Charles L. McNairy
c/o Avatar Holdings Inc.
255 Alhambra Circle
Coral Gables, FL 33134
Dear Charles:
We are writing with respect to the following incentive
compensation hereby granted to you as an employee of Avatar
Holdings Inc. (the "Company"):
1. Incentive Compensation.
(a) Within 10 days following the fifth anniversary
hereof or, if earlier, the Date of Termination (as hereinafter
defined), the Company shall pay you, as incentive compensation
("Incentive Compensation"), a cash amount equal to the product of
(x) the number of shares of the Company's common stock, par value
$1.00 per share ("Common Stock"), in which you are vested (as the
same may be adjusted pursuant to paragraph 3(x) below), times (y)
the excess, if any, of the Final Value per share of Common Stock
over $36.00 (the "Strike Price") (as the same may be adjusted
pursuant to paragraph 3(y) below), payable on the fifth
anniversary of the date hereof or, if earlier, on the Date of
Termination (in either case, the "Determination Date"). "Final
Value" shall mean, as of any Determination Date, the average
Market Value (as defined in paragraph 2 below) per share of
Common Stock during the twenty (20) business days immediately
preceding such Determination Date.
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(b) For the purposes of this paragraph 1, you will
vest in 3,000 shares of Common Stock on each of the first through
fifth anniversaries hereof provided that you are still employed
by the Company on such anniversary. In the event that there is a
Date of Termination prior to the fifth anniversary hereof as a
result of
(i) your death,
(ii) your "permanent disability",
(iii) the Company's termination of your
employment without "cause", or
(iv) your termination of your employment with the
Company for "good reason" (each as defined
in paragraph 2 below),
you shall immediately vest on the Date of Termination in 50% of
the remaining unvested shares and you shall forfeit any unvested
shares. In the event that there is a Date of Termination prior
to the fifth anniversary hereof as a result of the Company's
termination of your employment for "cause", you shall forfeit the
remaining unvested shares.
2. Certain Definitions.
(a) For the purposes hereof, "permanent disability"
shall be defined as any physical or mental disability or
incapacity which renders you incapable of fully performing the
services required of you in your employment with the Company for
a period of 120 consecutive days or for shorter periods
aggregating 120 days during any period of twelve (12) consecutive
months.
(b) For the purposes hereof, termination for "cause"
shall mean termination after:
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(i) your commission of a material act of fraud
against the Company or its affiliates;
(ii) your conviction of (or pleading by you of
nolo contendere to) any crime which
constitutes a felony in the jurisdiction
involved; or
(iii) the willful, repeated and demonstrable
failure by you substantially to perform your
duties over a period of not less than 30
days, other than any such failure resulting
from your incapacity due to physical or
mental illness, or material breach of any of
your obligations under this Agreement, and
your failure to cure such failure or breach
within 30 days after receipt of written
notice from the Chairman of the Executive
Committee of the Board of Directors of the
Company.
(c) For the purposes hereof, "Date of Termination"
shall mean
(i) if your employment is terminated by your
death, the date of your death, and
(ii) if your employment is terminated for any
other reason, the date on which a notice
thereof is given.
(d) For the purposes hereof, "good reason" shall mean
the substantial reduction by the Company of any material duties
currently performed by you as Executive Vice President, Treasurer
and Chief Financial Officer of the Company without cause,
provided that you first deliver written notice thereof to the
Chairman of the Executive Committee of the Board
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of Directors of the Company and the Company shall have failed to
restore such duties within thirty (30) days after receipt of such
written notice.
(e) For the purpose hereof, "Market Value" as of any
date shall mean the closing price (or, if there is no closing
price on such date, then the mean between the closing bid and
asked prices) per share of Common Stock on such date as reported
in the trading reports of the principal securities exchange in
the United States on which such stock is listed, or, if such
stock is not listed on a securities exchange in the United
States, as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or NASDAQ's
successor, or if not reported on NASDAQ, the fair market value
per share of such stock as determined by the Board of Directors
in good faith.
3. Adjustments. In the event the Company shall at any
time after the date hereof (A) declare or pay any dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide or
split the outstanding shares of Common Stock into a greater
number of shares or (C) combine or consolidate the outstanding
shares of Common Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Common Stock, then
and in each such event (x) the number of shares of Common Stock
on the basis of which the Incentive Compensation is to be
calculated shall be adjusted by multiplying (a) such number of
shares as determined immediately prior to such event by (b) a
fraction (the "Adjustment Fraction"), the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock outstanding immediately prior to such
event and (y) the Strike Price shall be adjusted by multiplying
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(a) the Strike Price as determined immediately prior to such
event by (b) the reciprocal of the Adjustment Fraction.
In addition, in the event the Company shall at any time
after the date hereof make any distribution on the shares of
Common Stock, whether by way of a dividend or a reclassification
of stock, a recapitalization, a spin-off of interests in an
affiliated entity, a reorganization of the Company or otherwise,
in cash or any debt security, debt instrument, real or personal
property or any other property (other than any shares of Common
Stock or other capital stock of the Company), then for the
purpose of calculating the Incentive Compensation to be paid to
you, the Final Value of the Common Stock of the Company on the
Determination Date shall be increased in accordance with the
remaining provisions of this paragraph 3. In the case of a cash
dividend, the Final Value per share of the Common Stock on the
Determination Date shall be increased by an amount equal to the
per share cash amount of such dividend. In all other cases, the
Final Value per share of the Common Stock on the Determination
Date shall be increased by an amount equal to the excess of (A)
the average Market Value per share of the Common Stock for the
five (5) business days immediately preceding the ex-dividend date
for a dividend or distribution on such stock or the five (5)
business days immediately preceding the effective date of a
reclassification, recapitalization or other transaction involving
such stock over (B) the average Market Value per share of the
Common Stock of the Company for the five (5) business days next
succeeding such ex-dividend date or effective date, as the case
may be; provided, however, that if the Company's Board of
Directors, in good faith, believes that the adjustment, as
determined by the preceding formula, is insufficient to reflect
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the per share reduction in value of the Company as a result of
such transaction, in addition to the adjustment determined by
such formula the Board of Directors may increase the Final Value
per share of the Common Stock on the Determination Date by such
amount as the Board of Directors determines, in good faith, to be
appropriate to reflect such per share reduction in value of the
Company. In addition to the adjustments specifically provided
for in this paragraph 3, the manner of determining the Incentive
Compensation due to you shall be further modified or amended as
mutually determined by you and the Board of Directors of the
Company (acting in its good faith judgment) to equitably account
for any extraordinary transaction or occurrence not specifically
described in this paragraph 3 and which would by itself adversely
affect the value of the Common Stock or the computation of the
Incentive Compensation due and owing to you.
4. No Obligation as to Employment. Nothing contained
herein shall be deemed to obligate the Company to continue your
employment or to obligate you to remain within the Company's
employment for any period of time hereafter.
5. Deductions and Withholdings. The Company shall be
entitled to withhold any amounts payable under this Agreement on
account of payroll taxes and similar matters as are required by
applicable law, rule or regulation of appropriate governmental
authorities.
6. Successors; Binding Agreement. (a) 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, by agreement in
form and substance reasonably satisfactory to you, to expressly
assume and agree to perform this Agreement in the same manner and
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to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company
to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
you to Incentive Compensation from the Company in the same amount
and on the same terms as you would be entitled to hereunder if
your employment was terminated other than for cause or as the
result of a permanent disability, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall include any successor to
the Company's business and/or assets as aforesaid which executes
and delivers the agreement provided for in this paragraph 6 or
which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement and all your rights hereunder shall
inure to the benefit of and be enforceable by your personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. Your obligations
hereunder may not be delegated and except as otherwise provided
herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber,
hypothecate or otherwise dispose of this Agreement or any of your
rights hereunder, and any such attempted delegation or
disposition shall be null and void and without effect.
7. Notice. For the purposes of this Agreement, notices
and all other communications provided for shall be in writing and
shall be deemed to have been duly given when delivered or mailed
by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If to you:
Mr. Charles L. McNairy
c/o Avatar Holdings Inc.
255 Alhambra Circle
Coral Gables, Florida 33134
If to the Company:
Avatar Holdings Inc.
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Chairman of the Executive Committee
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by you and by the
Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time. This Agreement constitutes the complete
understanding between the parties with respect to your employment
and no agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Florida.
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9. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
If the foregoing is satisfactory, would you please so
indicate by signing and returning to the Company the enclosed
copy of this letter whereupon this will constitute our agreement
on the subject.
AVATAR HOLDINGS INC.
By: /s/ Edwin Jacobson
Edwin Jacobson
Chairman of the Executive
Committee
ACCEPTED AND AGREED TO:
/s/ Charles L. McNairy
Charles L. McNairy
Sept. 24, 1993
Date
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