EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made this first day of January 2002,
between NVR, INC., a Virginia corporation (the "Company") and WILLIAM J. INMAN,
a resident of Virginia (the "Executive").
WHEREAS, the parties wish to terminate all prior employment agreements and
amendments thereto; and
WHEREAS, the parties wish to establish the terms of the Executive's future
employment with the Company.
ACCORDINGLY, the parties agree as follows:
3. Employment, Duties and Acceptance.
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3.1 Employment by the Company. The Company hereby employs the Executive,
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for itself and its affiliates, to render exclusive and full-time
services to the Company. The Executive will serve in the capacity of
President of NVR Mortgage of the Company. The Executive will perform
such duties as are imposed on the holder of that office by the
By-laws of the Company and such other duties as are customarily
performed by one holding such position in the same or similar
businesses or enterprises as those of the Company. The Executive will
perform such other related duties as may be assigned to him from time
to time by the Company's Board of Directors. The Executive will
devote all his full working time and attention to the performance of
such duties and to the promotion of the business and interests of the
Company. This provision, however, will not
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prevent the Executive from investing his funds or assets in any
form or manner, or from acting as a member of the Board of
Directors of any companies, businesses, or charitable
organizations, so long as such investments or companies do not
compete with the Company, subject to the limitations set forth in
Section 7.1.
3.2 Acceptance of Employment by the Executive. The Executive accepts
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such employment and shall render the services described above.
3.3 Place of Employment. The Executive's principal place of
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employment shall be the Washington, D.C. metropolitan area,
subject to such reasonable travel as the rendering of services
associated with such position may require.
2. Duration of Employment.
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This Agreement and the employment relationship hereunder will continue in
effect for six (6) years from January 1, 2002 through January 1, 2008. It may be
extended beyond January 1, 2008 by mutual, written agreement at any time. In the
event of the Executive's termination of employment during the term of this
Agreement, the Company will be obligated to pay all base salary, bonus and other
benefits then accrued, as well as cash reimbursement for all accrued but unused
vacation, plus, if applicable, the additional payments provided for in Sections
6.1, 6.2, 6.4 and 6.6 of this Agreement.
3. Compensation.
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3.9 Base Salary. As compensation for all services rendered pursuant
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to this Agreement, the Company will pay to the Executive an
annual base salary of THREE HUNDRED FORTY FIVE THOUSAND DOLLARS
($345,000) payable in equal monthly installments of TWENTY EIGHT
THOUSAND SEVEN HUNDRED FIFTY DOLLARS ($28,750). The
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Company's Board of Directors in its sole discretion may increase,
but may not reduce, the Executive's annual base salary.
3.10 Bonuses. The Executive shall be eligible to be paid a bonus
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annually in cash or in the registered stock of NVR, Inc. as
determined by the Compensation Committee of the Board of
Directors or in a combination thereof in a maximum amount of 100%
of the Executive's annual base salary. This bonus shall be paid
at the same time (or times) and in the same manner as other
senior executives of the Company. Entitlement to the bonus is
dependent on the Executive meeting certain goals, which shall be
established annually by the Company.
3.11 Participation in Employee Benefit Plans. The Executive shall be
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permitted during the term of this Agreement, if and to the extent
eligible to participate in any group life, hospitalization or
disability insurance plan, health program, pension plan, Employee
Stock Ownership Plan or similar benefit plan of the Company,
which may be available to other comparable executives of the
Company generally, on the same terms as such other executives.
The Executive shall be entitled to paid vacation and all
customary holidays each year during the term of this Agreement in
accordance with the Company's policies.
3.12 Expenses. Subject to such policies as may from time to time be
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established by the Company's Board of Directors, the Company
shall pay or reimburse the Executive for all reasonable expenses
actually incurred or paid by the Executive in the performance of
the Executive's services under this Agreement upon presentation
of expense statements or vouchers or such other supporting
information as it may require.
12. Management Long-Term Stock Option Plans.
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The Executive is a participant in the 1993 NVR, Inc. Management Equity
Incentive Plan, 1994 NVR, Inc. Management Equity Incentive Plan, 1996 NVR, Inc.
Management Long-Term Stock Option Plan, the 1998 NVR, Inc. Management Long-Term
Stock Option Plan, and the 2000 Broadly Based Stock Option Plan. The Executive
has entered into separate agreements governing the terms of his participation in
the Plans.
13. High Performance Compensation Plan.
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The Executive is a participant in the NVR, Inc. High Performance
Compensation Plan. - Number 1, the NVR, Inc. High Performance Compensation Plan
- - Number 2 and the NVR, Inc. High Performance Compensation Plan - Number 3. The
Executive has entered into separate agreements governing the terms of his
participation in the Plans.
14. Termination or Disability.
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6.1 Termination Upon Death. If the Executive dies during the term
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hereof, this Agreement shall terminate, except that the
Executive's legal representatives shall be entitled to receive
the Executive's base salary and accrued Bonus for the period
ending on the last day of the second calendar month following the
month in which the Executive's death occurred. Accrued Bonus
shall be calculated as one hundred percent of Base Salary
multiplied by the fraction (x) the number of days in calendar
year up to last day of second calendar month following the month
in which Executive died divided by (y) 365 days.
6.5 Disability. If during the term hereof the Executive becomes
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physically or mentally disabled, whether totally or partially, so
that the Executive is, in the discretion of the Company's Board
of Directors, substantially unable to perform his services
hereunder, the Executive shall transfer from active to disability
status. Nothing in this Section 6.2 shall be deemed to in any way
affect the Executive's right to participate in any disability
plan maintained by the Company and for which the Executive is
otherwise
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eligible. If the Executive transfers to disability status he
would be entitled to receive the Executive's Base Salary and
accrued Bonus for the period ending on the last day of the second
calendar month following the month in which the Executive is
transferred to disability status. Accrued Bonus shall be
calculated as one hundred percent of Base Salary multiplied by
the fraction (x) the number of days in calendar year up to last
day of second calendar month following the month in which the
Executive was transferred to disability status divided by (y) 365
days.
6.3 Termination for Cause. If the Executive is convicted of any
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felony, other crime involving moral turpitude, or any crime or
offense which results in his incarceration for more than three
months, is guilty of gross misconduct in connection with the
performance of his duties as described in Section 1.1 hereunder,
or materially, breaches affirmative or negative covenants or
undertakings set forth in Section 7, the Company at any time by
written notice to the Executive, may terminate the Executive's
employment hereunder. Any such termination shall be for Cause.
6.4 Termination Without Cause. In the event the Company on sixty (60)
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days' notice terminates the Executive's employment without Cause
(as such term is defined in Section 6.3) during the term of this
Agreement, then as full satisfaction of the Company's obligations
to the Executive, the Executive shall be entitled to payment of
TWO HUNDRED PERCENT (200%) of his then annual base salary, paid
in twelve equal monthly installments beginning on the fifteenth
day of the first month following the date of termination. The
Executive shall also be provided with outplacement services with
a firm jointly selected by the Executive and the Company at a
cost not to exceed THIRTY THOUSAND DOLLARS ($30,000).
6.5 Voluntary Termination. The Executive may on sixty (60) days'
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notice
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terminate his employment hereunder. In such event, he shall
not be entitled to any severance pay except in the
circumstances described in Section 6.6 below.
6.6 Voluntary Termination-Change of Control. In the event the
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Executive voluntarily terminates his employment hereunder in
connection with or within one (1) year after a Change of
Control of the Company (as defined below), the Executive shall
receive a payment of TWO HUNDRED PERCENT (200%) of his then
annual base salary, as well as his accrued pro-rata bonus (on
the assumption that the maximum annual bonus would have been
paid pursuant to Section 3.2) through the date of termination.
Payment of such amount shall be in twelve equal monthly
installments beginning on the first day of the first month
following the date of termination. For purposes of this
Agreement, "Change of Control" means (i) any transaction or
series of transactions (including, without limitation, a
tender offer, merger or consolidation) the result of which is
that any "person" or "group" (within the meaning of Section 13
(d) and 14 (d) (2) of the Exchange Act), becomes the
"beneficial owner" (as defined in rule 13d-3 under the
Exchange Act) of more than 50 percent of the total aggregate
voting power of all classes of the voting stock of the Company
and/or warrants or options to acquire such voting stock,
calculated on a fully diluted basis, or (ii) if all or
substantially all of the assets of the Company are sold or
otherwise transferred to any individual, corporation,
partnership, trust, association, joint venture, pool,
syndicate or similar organization or group acting in concert
or (iii) the Company is liquidated or dissolved or adopts a
plan of liquidation or (iv) a merger consolidation or other
reorganization or business combinations with any party
including a leveraged buy-out or a going private transaction
and where there has been a significant reduction in
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Executive's responsibilities.
6.7 Voluntary Termination-Change in Senior Management Accompanied
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by
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Change in Business Philosophy. If the Company elects a new
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Chairman and/or Chief Executive Officer (the "New Officer") or
provided that the New Officer enacts major changes in the
Company's business philosophy, mission or business strategies,
the Executive may voluntarily terminate his employment. To
provide sufficient time for a transfer of the Executive's
responsibilities and duties, he shall be required to provide
sixty (60) days notice prior to such voluntary termination and
the Company shall have the option of extending the notice an
additional thirty (30) days. In the event the Executive
voluntarily terminates his employment in connection with or
within one year after the election of a New Officer
accompanied by any of the changes described in this Section
6.7, he shall not be entitled to any severance pay and shall
not be bound by the "Covenant Not to Compete" described in
Section 7.
6.8 Effectiveness. In the event any of the events described in
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this Section 6 should occur during the term of this Agreement,
and result in payments to the Executive which would in their
normal course continue beyond the term of this Agreement, such
payments shall be made at such times and in such amounts as if
the term of this Agreement had not expired.
15. Covenant Not to Compete.
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The covenant set forth in Section 7.1 shall be applicable for a period
of one (1) year after termination in the event the Executive is
terminated pursuant to Section 6.4 "Without Cause" or to Section 6.5
"Voluntary" or to Section 6.6 "Voluntary Termination -Change of
Control". It shall be applicable for a period of two (2) years after
termination in the event the Executive is terminated pursuant to
Section 6.3 for "Cause".
15.1 Scope. During the term of Executive's employment under this
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Agreement, and for the applicable period thereafter, Executive
hereby
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covenants and agrees that neither he nor any affiliate (as
defined hereinbelow), at any time, directly or indirectly,
will (i) engage, whether as an employee or otherwise, in the
Homebuilding and Mortgage Financing Business (as defined
hereinbelow) on behalf of himself or any other person or
entity, whether conducted individually or through an
affiliate; (ii) own, acquire an interest in, manage, operate,
join or control, or participate in the ownership, acquisition,
management, operation or control of, or be a director, agent,
representative, shareholder of more than 1% of the outstanding
stock, partner, employee, officer, or consultant of, any
enterprise of any kind that is engaged in the Homebuilding
Business or Mortgage Financing Business; (iii) induce or
attempt to induce any customer or potential customer of the
Company to discontinue, in whole or in part, business, or not
to do business, with the Company or (iv) hire or attempt to
hire any person now or hereafter employed by the Company.
15.2 Definitions. For purposes of this Agreement, (i) the term
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"affiliate" shall mean Executive, Executive's spouse, and any
minor children ("immediate family") and any entity that
Executive and/or any members of his immediate family control,
either directly or indirectly; (ii) "control" for purposes of
the immediately preceding clause shall mean possession,
directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership
of voting securities, by contract, or otherwise); and (iii)
the term "Homebuilding Business" and "Mortgage Financing
Business" shall mean the business of designing, constructing,
and/or the origination, underwriting, placement or sale of
residential home mortgages at any location within any Standard
Metropolitan Statistical Area (as determined by the Census
Bureau, Department of Commerce, United States Government) in
which is located any office of the Company which has been
assigned to the Executive's area of managerial responsibility
at any time within the last two years of the employment of the
Executive with the Company.
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15.3 Reasonableness. The Executive acknowledges that the
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restrictions contained in this Section 7 are reasonable and
necessary to protect the business and interests of the
Company, and that it would be impossible to measure in money
the damages that would accrue to the Company by reason of the
Executive's failure to perform his obligations under this
Section 7. Therefore, the Executive hereby agrees that in
addition to any other remedies that the Company may have at
law or at equity with respect to this Section 7, the Company
shall have the right to have all obligations, undertakings,
agreements, and covenants set forth herein specifically
performed, and that the Company shall have the right to obtain
an order of such specific performance (including preliminary
and permanent injunctive relief to prevent a breach or
contemplated breach of any provision of this Section 7) in any
court of the United States or any state or political
subdivision thereof, without the necessity of proving actual
damage; provided that the Company is not in breach of any of
its obligations hereunder.
15.4 No Waiver. No waiver by the Company of a breach
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of, or of a default under, any of the provisions
of this Agreement, nor their failure on one or
more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or
privilege hereunder shall thereafter be construed
as a waiver of any subsequent breach or default
of a similar nature, or as to the waiver of any
such provision, rights, or privileges hereunder.
15.5 Blue-Pencilling. If any part of any provision of this Section
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applicable law, such part shall be ineffective to the extent
of such invalidity or unenforceability only, without in any
way affecting the remaining terms of such provision or the
remaining provisions of this Section 7. The Executive hereby
covenants and agrees that to the extent any provision or
portion of this
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Agreement shall be held, found, or deemed to be unreasonable,
unlawful, or unenforceable, then any necessary modifications
shall be made (but only to such extent) so that such provision
or portion hereof shall be legally enforceable to the fullest
extent permitted by applicable law. The Executive further
agrees and authorizes any court of competent jurisdiction to
enforce any such provision or portion hereof in order that
such provision or portion hereof shall be enforced by such
court to the fullest extent permitted by applicable law.
15.6 Confidentiality. During the term of the Executive's employment
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with the Company, he will acquire information of a proprietary
or confidential nature and knowledge about the operations of
the Company. Accordingly, the Executive agrees not to use or
to disclose to any third party, or cause to be used, in any
manner, directly or indirectly, the information described
immediately above. The Executive further agrees to return to
the Company promptly upon the termination of the Executive's
employment with the Company, and all information of a
proprietary or confidential nature acquired by the Executive
at any time during the course of his employment with the
Company, to the extent such information has been reduced to
writing, together with any and all documents and materials of
any kind then in the possession or control of the Executive
which may be the property of the Company or any affiliate,
whether confidential or otherwise, including any copies which
may have been made by or for the Executive.
15.7 No Conflict. The Covenant Not to Compete set forth in this
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Section 7 shall supersede and override any and all limitations
on Executive's right to compete with the Company including,
without limitation, any similar covenants not to compete in
the Stock Option Agreements and the Performance Share
Agreements executed in conjunction with the 1993 and 1994 NVR,
Inc. Management Equity Incentive Plans, 1996 and 1998
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NVR, Inc. Management Long-Term Stock Option Plans, 2000 Broadly Based
Stock Option Plan and the NVR, Inc. High Performance Compensation
Plans - Number 1, 2, and 3 and shall be the sole standard by which
Executive shall be bound.
8. Other Provisions.
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8.5 Notices. Any notice or other communication required or which may be
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given hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or
sent by certified, registered or express mail, postage prepaid, and
shall be deemed given when so delivered personally, telegraphed,
telexed, or sent by facsimile transmission, or if mailed, four days
after the date of mailing as follows:
(v) if the Company, to:
NVR, Inc.
7601 Lewinsville Road, Suite 300
McLean, Virginia 22102
(vi) if the Executive, to:
William J. Inman
1314 Ballantrae Farm Drive
McLean, VA. 22101
8.6 Entire Agreement. This Agreement contains the entire agreement
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between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect
thereto.
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10.3. Waiver and Amendments. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended, and the terms and conditions
hereof may be waived, only by a written instrument signed by the parties
or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
8.4 Governing Law. This Agreement shall be governed and construed in
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accordance with the laws of the Commonwealth of Virginia.
8.13 Assignability. This Agreement, and the Executive's rights and
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obligations hereunder, may not be assigned by the Executive. The Company
shall assign this Agreement and its rights, together with its
obligations, to any entity which will substantially carry on the
business of the Company subject to the Executive's rights set forth in
this Agreement, but the Company shall even after such assignment be
fully liable to the Executive for all obligations set forth herein.
8.14 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
8.15 Headings. The headings in this Agreement are for reference purposes only
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and shall not in any way affect the meaning or interpretation of this
Agreement.
8.16 Indemnification. The Company shall indemnify the Executive
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and hold him harmless for any acts or decisions made by him in
good faith while performing services for the Company or its
affiliates and shall use its best efforts to obtain coverage for
him under an insurance policy (whether now in force or
hereinafter obtained) during the term of this Agreement covering
the officers and directors of the Company or its affiliates. The
Company will pay all expenses including attorney's fees,
actually and necessarily incurred by the Executive in connection
with any appeal thereon including the cost of court settlement
arising or alleged to arise from his employment by the Company.
11. Arbitration.
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Any controversy or claim arising out of or in connection with this Agreement
shall be settled by arbitration in accordance with the rules then pertaining of
the American Arbitration Association. Such controversies shall be submitted to
three arbitrators, one arbitrator being selected by the Company, one arbitrator
being selected by the Executive, and the third being selected by the two so
selected by the Company and the Executive or, if they cannot agree upon a third,
by the American Arbitration Association. In the event that either the Company or
the Executive, within one month after any notification of any demand for
arbitration hereunder, shall not have selected its arbitrator and given notice
thereof by registered or certified mail to the other, such arbitrator shall be
selected by the American Arbitration Association. Confirmation of any award in
any such arbitration may be held in any court having jurisdiction of the person
against whom such award is rendered. Regardless of the circumstances giving rise
to the need for arbitration, until such arbitration shall be finally determined
and ended, the base salary of the Executive pursuant to Section 3.1, subject to
the provisions of Section 6, shall be paid monthly until the expiration of the
term of this Agreement, and Bonus pursuant to Section 3.2, subject to the
provisions of Section 6, shall be earned and paid in accordance with Section 3.2
until the expiration of the term of this agreement. If the results of such
arbitration are more favorable to the position taken by the Executive than that
taken by the Company, in the opinion of the arbitrators, then all costs and
expenses incurred
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by the Executive in connection with such arbitration shall be paid by the
Company.
10. Effective Date.
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This Agreement shall be effective as of January 1, 2002.
IN WITNESS WHEREOF, The parties hereto, intending to be legally bound hereby,
have executed this Agreement as of the day and year first above mentioned.
NVR, INC.
By:__________________________ ______________________________
WILLIAM J. INMAN
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