EXHIBIT 10(h)
EMPLOYMENT AGREEMENT
Interstate General Company L.P. is a publicly traded limited
partnership. Its units are listed on the AMEX and the PSE. It is commonly
referred to as IGC. Its business consists of real estate development and
the ownership of properties, principally in Maryland. It also has a
corporate affiliate, American Family Homes, LLC., commonly referred to as
AFH.
AFH builds single family homes on homeowner-owned land.
Interstate General Management Corporation, a Delaware corporation, is
the managing general partner of IGC. It is commonly referred to as IGMC.
Interstate Business Corporation, a Delaware corporation, is a general
partner of IGC. It is controlled by the Wilson Family Partnership, a
Delaware limited partnership owned by James J. Wilson and his family. Mr.
Wilson is the chairman and chief executive officer of IGC. Interstate
Business Corporation is commonly referred to as IBC.
Benjamin L. Poole is a business executive and CPA who has had
extensive banking and real estate experience.
This agreement provides the terms under which Mr. Poole will be
employed by IGC as its chief financial officer and serve as chief executive
officer and on the Board of AFH for a term of three years.
The obligations of IGC and AFH under this agreement are guaranteed by
IBC.
Mr. Poole's compensation will consist of salary and other benefits,
all as more fully set forth below.
AGREEMENT
In consideration of the background statement and the mutual
undertakings of the parties hereinafter set forth, IGC and AFH (severally
and jointly), IBC and Mr. Poole agree as follows:
I. POSITION AND AUTHORITY
For the term of this agreement, Mr. Poole will serve as (i) chief
financial officer of IGC, reporting to the President of IGC and the board
of directors of IGMC, and (ii) a director and chief executive officer of
AFH, reporting to the board of directors of AFH.
II. TERM
The term of employment of Mr. Poole shall begin on December 7, 1998
(the "Effective Date") and shall continue through the third anniversary of
the Effective Date. The term shall be extended upon the third anniversary
and each anniversary, thereafter for one year succession periods.
Notwithstanding the foregoing, Mr. Poole's employment under this agreement
may be terminated if one or more of the following occurs:
A. If Mr. Poole dies or becomes disabled (as defined below), Mr.
Poole's employment shall terminate automatically upon his date of death or
disability. For purposes of this agreement, Mr. Poole shall become
disabled on such date as medical opinion and the board of directors of IGMC
or its successor, or, in lieu thereof, the board of directors of each
entity which then employs Mr. Poole under this agreement, determines that
Mr. Poole's employment shall terminate due to a physical or psychological
disability or impairment which materially interferes with his ability to
discharge his duties under this agreement and which it determines is likely
to continue for a continuous period of not less than 90 days, provided also
that Mr. Poole's termination is not in violation of the Americans with
Disabilities Act or other applicable law.
B. Mr. Poole's employment under this agreement may be terminated
for cause, which is hereby defined as (1) willful, reckless or grossly
negligent inattention to his duties under this agreement, (2) material
unethical conduct, (3) repeated disregard of rules, policies and/or
regulations applicable to employees of IGC or one or more of its affiliates
identified in this agreement, (4) conviction of a felony or other crime
involving theft, fraud or moral turpitude, (5) failure or refusal by Mr.
Poole to perform his material obligations under this agreement, and/or (6)
any act that is in violation of Mr. Poole's material fiduciary duties under
this agreement. The termination of Mr. Poole's employment for cause shall
require a decision by the board of directors of IGMC or its successor, or,
in lieu thereof, by the board of directors of each entity which then
employs Mr. Poole under this agreement.
C. Mr. Poole may elect to terminate his employment under this
agreement prior to the end of the term of this agreement by notice of
termination given to each of his employers under this agreement at least
sixty (60) days prior to the effective date of termination. In addition,
the board of directors of IGMC or its successor, or, in lieu thereof, the
board of directors of each entity which then employs Mr. Poole under this
agreement may elect to terminate Mr. Poole's employment in all respects
under this agreement prior to the end of the term of employment without
cause, in which event Mr. Poole will continue to receive his compensation
and additional benefits as provided in this agreement, payable ratably over
the greater of one year or the remaining original three year term. In case
of termination without cause, Mr. Poole's compensation and additional
benefits shall cease in any event if and when Mr. Poole assumes other
employment.
D. Except as provided in Paragraph C of this Section II in the case
of the termination of Mr. Poole's employment by his employer(s) without
cause, upon termination of Mr. Poole's employment hereunder, regardless of
the ground or basis therefor, all payment and benefit obligations of such
employer(s) hereunder shall cease, provided, however, that Mr. Poole shall
receive any accrued benefits to which he is entitled according to the
policies and procedures of IGC.
E. If AFH shall cease operation during the term of this Agreement,
Mr. Poole agrees to reassignment within the Interstate group of companies
in a position of comparable responsibility and compensation.
III. COMPANY RULES AND REGULATIONS
Mr. Poole shall comply with all directives of each entity by which he
is employed under this agreement and shall carry out to the best of his
ability such directives, policies and regulations. In the event of a
conflict between the terms of this agreement and such written rules,
policies and regulations, the terms of this agreement shall govern.
IV. LOCATION OF EMPLOYMENT
Mr. Poole shall have an executive office at the offices of IGC and
its affiliated companies located in the Dulles, Virginia area.
V. MR. POOLE TO DEVOTE FULL TIME TO DUTIES AND
RESTRICTIONS ON FUTURE SERVICES
A. Mr. Poole shall devote his full time and attention to the
performance of his duties under this agreement and for the term of this
agreement shall have no other employment and shall not render services to
any other person or firm, except as noted below in paragraph E of this
Section V.
B. During the term of this agreement, and for a period of three
years thereafter, without the written consent of the board of directors of
IGMC, or its successor, or, in lieu thereof, by the board of directors of
each entity by which Mr. Poole is then employed under this agreement, Mr.
Poole shall not disclose to any person any confidential information
obtained by him under this agreement; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosures). Mr. Poole shall be
allowed to disclose confidential information to his attorney solely for the
purpose of ascertaining whether such information is confidential within the
intent of this agreement; provided, however, that Mr. Poole (i) discloses
to his attorney the provisions of this subsection and (ii) agrees not to
waive the attorney-client privilege with respect thereto. Mr. Poole shall
be permitted to disclose confidential information acquired hereunder if
such disclosure is required by a court order or if such disclosure is to an
authorized employee of any employer under this agreement or any affiliate
of such employer, provided, however, that such disclosure is necessary or
appropriate in connection with the performance by Mr. Poole of his duties
under this agreement.
C. While Mr. Poole is employed hereunder, he shall use his best
efforts to make available to his employers and their affiliates any
business opportunities that come to his attention or to the attention of
persons (other than natural persons) under his control.
D. While Mr. Poole is employed under this agreement and for a
period of one year thereafter (the "Non-Compete Period"), Mr. Poole agrees
that he shall not compete with any employer under this agreement or any
affiliate of any employer without the prior written consent of the board of
directors or IGMC, or its successor, or, in lieu thereof, by the board of
directors of each entity of which Mr. Poole is then or was employed, as the
case may be, under this agreement. For purposes of this agreement, the
term "compete" shall mean participating as a more than five (5%) percent
stockholder, or as an officer, director, employee, partner, agent,
consultant, or in any other individual or representative capacity
(excluding as a CPA) in or with respect to any homebuilding entity which
competes with AFH in the same geographic areas and housing product in the
business of building homes. In the event the restrictions against engaging
in a competitive activity contained in this subsection D shall be
determined by any court of competent jurisdiction to be unenforceable by
reason of their extending for too great a period or over too large a
geographical area or by reason of their being too extensive in any other
respect, this subsection D shall be interpreted to extend only for the
maximum period for which it may be enforceable, the maximum geographical
area to which it may be enforceable and to the maximum extent in other
respects as may be enforceable, all as determined by such court. Mr. Poole
acknowledges that a breach of the restrictions contained in this subsection
D may cause irreparable injury to one or more employers under this
agreement, the amount of which may be difficult to ascertain, and that
remedies at law for such breach may be inadequate. Accordingly, Mr. Poole
and the employers under this agreement agree that if Mr. Poole is found to
have breached the restriction contained in this subsection D, any employer
under this agreement, or its affiliates shall be entitled to equitable
relief, including but not limited to injunctive relief, without posting
bond or other security.
VI. COMPENSATION
A. Mr. Poole shall receive an annual base salary of $200,000 to be
paid by one or more of the employers under this agreement.
B. All payments required to be made by any employer under this
agreement to Mr. Poole or his estate or beneficiaries shall be subject to
the withholding of such amounts relating to taxes as each respective
employer may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in
whole or in part, each respective employer may, in its sole discretion,
accept other provisions for payment of taxes and withholdings as required
by law, provided it is satisfied that all requirements for law affecting
its responsibilities to withhold compensation have been satisfied.
VII. ADDITIONAL BENEFITS
In addition to the compensation as defined above, Mr. Poole shall be
entitled to the following additional benefits:
A. Mr. Poole shall be eligible to participate in the health plans
and life and disability insurance programs available from time to time to
senior executive employees of each employer under this agreement in
accordance with the terms and provisions of such plans and programs.
B. Mr. Poole shall be eligible to participate in all other employee
benefits available from time to time to senior executive employees of each
employer under this agreement including provisions for a company-paid
vehicle, vacations, retirement plans, bonus plans and equity-based
incentive compensation plans in accordance with the terms and provisions of
such employee benefits.
C. IGC shall pay Mr. Poole $20,000 upon the Effective Date as a
transition payment.
D. On January 1, 1999 ("Grant Date"), IGC shall grant Mr. Poole
100,000 unit appreciation rights with respect to Class A Units ("Rights"),
pursuant to the Company's Employee Unit Incentive Plan (the "Plan"). The
Rights shall be evidenced by a separate agreement which shall provide for
the following terms: (A.) Base Price - $1; (B.) Vesting - 25,000 Rights
shall vest on each January 1, commencing on January 1, 2000, provided that
Mr. Poole is then an employee of IGC; (C.) Expiration Date - the Rights
will cease to be exercisable upon the sooner of (i) ninety (90) days
following termination of Mr. Poole's employment with IGC, or (ii) on the
10th Anniversary of the Grant Date.
E. AFH shall grant options in AFH common stock to Mr. Poole in such
amounts, at such times and on such terms as the Board of Directors of AFH
shall decide.
VIII. EQUITY OWNERSHIP
A. AFH hereby transfers to Mr. Poole 5% of the outstanding common
stock of AFH ("Founders' Shares"), provided, however, that Mr. Poole shall
forfeit (i) 100% of such Founders' Shares if Mr. Poole terminates his
employment or is terminated for any reason on or before the First
Anniversary of the Effective Date; and (ii) 75% of such Founders' Shares if
Mr. Poole terminates his employment or is terminated for any reason after
the First Anniversary of the Effective Date but on or prior to the Second
Anniversary of the Effective Date; (iii) 50% of such Founders' Shares if
Mr. Poole terminates his employment or is terminated for any reason after
the Second Anniversary of the Effective Date but on or prior to the Third
Anniversary of the Effective Date, and (iv) 25% of such Founders' Shares if
Mr. Poole terminates his employment or is terminated for any reason after
the Third Anniversary of the Effective Date but prior to the Fourth
Anniversary of the Effective Date; provided, further, that if Mr. Poole is
terminated due to death or Disability, AFH shall transfer to Mr. Poole or
to his beneficiaries, in addition to such Founders' Shares that Mr. Poole
would otherwise retain upon termination of his employment, 1% of the
outstanding common stock or common stock equivalent of AFH. Beginning on
the Effective Date, Mr. Poole shall be entitled to all dividends paid and
any voting rights in respect of the Founders' Shares. Mr. Poole also shall
be entitled to liquidation proceeds, if any, with respect to such Founders'
Shares as are not subject to forfeiture pursuant to this Section VIII.A.
Any Founders' Shares transferred hereunder shall not be transferable if
such Founders' Shares are subject to forfeiture pursuant to this Section
VIII.A. The foregoing sentence shall not apply to a transfer that is part
of a transaction whereby substantially all of the assets or stock of AFH,
as the case may be, is sold or otherwise transferred to an unrelated third
party, unrelated meaning an entity not controlled by a party to this
Agreement or by James J. Wilson and/or his family.
B. Mr. Poole hereby represents and warrants that he is acquiring
the Founders' Shares for investment for his own account and not with a view
to, or for resale in connection with, the distribution or other disposition
thereof. Mr. Poole agrees and acknowledges that he will not, directly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of
any of the Founders' Shares unless such transfer, sale, assignment, pledge,
hypothecation or other disposition (i) is pursuant to an effective
registration statement under the Securities Act of 1933 and the rules and
regulations in effect thereunder (the "Act") and under all applicable state
securities laws, or (ii) Mr. Poole shall have furnished the issuer with an
option of counsel, which opinion and counsel shall be satisfatory to the
issuer, to the effect that no such registration is required because of the
availability of an exemption from registration under the Act and under all
applicable state securities laws.
C. Mr. Poole acknowledges that he has been advised by AFH that (i)
the Founders' Shares have not been registered under the Act; (ii) the
Founders' Shares must be held indefinitely and Mr. Poole must continue to
bear the economic risk of the investment in the Founders' Shares unless the
offer and sale of such shares is subsequently registered under the Act and
all applicable state securities laws or an exemption from registration is
available; (iii) it is not anticipated that there will be any public market
for the Founders' Shares in the foreseeable future; (iv) Rule 144
promulgated under the Act is not presently available with respect to the
sales of any securities of AFH, and AFH has made a covenant to make such
rule available; (v) when and if the Founders' Shares may be disposed of
without registration under the Act in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule; (vi) if the Rule 144 exemption is not
available, public offer or sale without registration will require the
availability of an exemption under the Act; (vii) a restrictive legend
substantially in the form set forth in Paragraph D of this Section VIII
shall be placed on the certificates representing the Founders' Shares; and
(viii) a notation shall be made in the appropriate records of AFH
indicating that the Founders' Shares are subject to restriction on transfer
and, if the issuer shall at some time in the future engage the services of
a stock transfer agent, appropriate stop transfer restrictions will be
issued to such transfer agent with respect to the Founders' Shares.
D. If any of the Founders' Shares are to be disposed of in
accordance with Rule 144 under the Act or otherwise, Mr. Poole shall
promptly notify the issuer of such Founders' Shares of the intended
disposition and shall deliver to the issuer at or prior to the time of such
disposition such documentation as the issuer may reasonably request in
connection with such disposition and, in the case of a disposition pursuant
to Rule 144, shall deliver to the issuer an executed copy of any notice on
Form 144 required to be filed with the Securities and Exchange Commission.
Mr. Poole agrees that, if any securities of AFH are offered to the public
pursuant to an effective registration statement under the Act, Mr. Poole
will not without the consent of the issuer effect any public sale or
distribution of the Founders' Shares not covered by such registration
statement within seven (7) days prior to, or within ninety (90) days after,
the effective date of such registration statement. Mr. Poole is aware that
the Founders' Shares shall bear a legend in substantially the following
form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS (THE
"LAWS") AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT IT MAY BE TRANSFERRED IN COMPLAIANCE
WITH THE ACT AND THE LAWS.
E. On each occasion, if any, following the Effective Date, that AFH
contemplates filing with the SEC a registration statement under the Act
relating in whole or in part to the primary offer and sale of shares of its
common stock or common stock equivalent, other than a registration
statement which relates exclusively to the registration of securities under
an employee stock option, bonus, retirement or other compensation plan or
solely to the issuance of securities in connection with a business
acquisition or combination, AFH shall notify Mr. Poole in writing of its
intention to do so at least thirty (30) days prior to the filing of each
such registration statement. If Mr. Poole gives written notice to AFH
within fifteen (15) days of receipt of such notice from AFH of Mr. Poole's
desire to have any of his Founders' Shares included in such registration
statement, then Mr. Poole may, subject to the provisions of this Section
VIII.E, have his Founders' Shares so included. AFH shall file any required
amendments of or supplements to any registration statement filed pursuant
to this Section VIII.E. AFH shall bear all expenses in connection with the
registration statement. Notwithstanding the foregoing, if the underwriter
of any such offering determines that the number of shares proposed to be
sold by AFH and/or by Mr. Poole is greater than the number of shares which
the underwriter believes feasible to sell at the time, at the price and
upon the terms approved by AFH, then the number of shares which the
underwriter believes may be sold shall be allocated in the following order:
(i) primary shares being offered by AFH, and (ii) pro rata, between the
Founders' Shares owned by Mr. Poole and the shares of any other shareholder
of AFH with rights generally similar to the rights provided to Mr. Poole
under this Section VIII.E.
IX. INDEMNIFICATION
IGC agrees to indemnify Mr. Poole, with respect to his performance of
his duties described herein, to the maximum extent permitted by law,
subject to the terms of the Third Amended and Restated Limited Partnership
Agreement of the Company. Each employer under this agreement other than
IGC agrees to indemnify Mr. Poole, with respect to his respective duties
for such employer, to the maximum extent permitted by law.
X. ARBITRATION
A. Any dispute or controversy arising between Mr. Poole and any
employer(s) under this agreement relating to this agreement shall be
submitted to private, binding arbitration, upon the written request of Mr.
Poole or any employer(s), before one arbitrator, under the administration
of and in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). In the event of such dispute or
controversy, the employer(s) and Mr. Poole shall mutually select and
identify an arbitrator. In the further event that the employer(s) and Mr.
Poole have not selected an arbitrator within 60 days of initiation of the
arbitration, the AAA shall select an arbitrator. The arbitrator shall have
no power or authority to add to, subtract from, or otherwise modify the
terms of this agreement. A judgement based upon an arbitration award may
be entered in any court having jurisdiction thereof. Any arbitration
proceeding pursuant to this Section X shall be held in the Washington, D.C.
metropolitan area.
B. Notwithstanding the foregoing, any action brought by any
employer under this agreement seeking a temporary restraining order,
temporary and/or permanent injunction and/or a decree of specific
performance of the terms of this agreement may be brought in a court of
competent jurisdiction without the obligation to proceed first to
arbitration.
XI. ASSIGNABILITY AND BINDING EFFECT
Mr. Poole may not assign this agreement, or any obligation or rights
hereunder, to any other person or entity without the express written
consent of the board of directors of IGMC, or its successor, or, in lieu
thereof, by the board of directors of each entity which then employs Mr.
Poole under this agreement. This agreement shall be binding upon Mr. Poole
and his heirs, executors, administrators and successors.
XII. GOVERNING LAW
This agreement shall be governed by the laws of the State of Delaware
(excluding the choice-of-law rules thereof).
XIII. CAPTIONS
All captions contained in this agreement are for convenience only and
in no way defined or describe the intent of the parties or specific terms
hereof.
XIV. SEVERABILITY
If any provision of this agreement shall to any extent be held
invalid or unenforceable, the remaining terms and provisions shall not be
affected thereby.
XV. ENTIRE AGREEMENT
This agreement contains the entire agreement among the parties
relating to the subject matter hereof. All prior negotiations or
stipulations concerning any matter, which preceded or accompanied the
execution hereof are conclusively deemed to be superseded hereby.
No provision of this agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by Mr. Poole and such officers or directors as may be specifically
designated by the board of directors of IGMC, or, in lieu thereof, by the
board of directors of each entity which then employs Mr. Poole under this
agreement.
XVI. NOTICES
For purposes of this agreement, notices and all other communications
provided for in this agreement shall be in writing, addressed as follows,
and shall be duly given when delivered, if given by hand or facsimile
transmission, or upon receipt, if given by United States mail:
If to any employer:
c/o Interstate General Company L.P.
Suite 110
5160 Parkstone Drive
Chantilly, Virginia 20151
If to Mr. Poole:
Benjamin L. Poole
15007 Scottswood Court
Woodbine, MD 21797
Or to such other address and/or persons as any party may furnish to the
other(s) in writing in accordance herewith.
IN WITNESS WHEREOF, each party has executed this agreement on the day
and year first set forth below, and each party represents that it has the
capacity and authorization to execute this agreement.
INTERSTATE GENERAL COMPANY L.P.
BY: INTERSTATE GENERAL MANAGEMENT
CORPORATION, its managing
general partner
Date: November 16, 1998 /s/ James J. Wilson
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By: James J. Wilson
President
AMERICAN FAMILY HOMES, INC.
Date: November 16, 1998 /s/ Mark Augenblick
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By: Mark Augenblick
Title: Chairman
Date: November 24, 1998 /s/ Benjamin L. Poole
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Benjamin L. Poole
In order to induce Benjamin L. Poole to enter into this Employment
Agreement, Interstate Business Corporation, Inc., a Delaware corporation
("IBC") hereby unconditionally guarantees the performance of the
obligations of each of IGC and AFH under this Employment Agreement.
INTERSTATE BUSINESS CORPORATION
Date: November 17, 1998 /s/ J. Michael Wilson
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By: J. Michael Wilson
Title: President