EXHIBIT 10.2
EMPLOYMENT SEPARATION AGREEMENT
AND RELEASE OF ALL LIABILITY
This Employment Separation Agreement and Release of All Liability
("Agreement") is made on May 13, 2003 between Mark J. O'Brien ("Executive") and
Pulte Homes, Inc., a Michigan corporation ("Pulte"). As used in this Agreement,
"Employer" means Pulte, its successors, assigns, parents, subsidiaries,
divisions and/or affiliates (whether incorporated or unincorporated), and all of
its past and present directors, officers, trustees, employees and agents (in
their individual and representative capacities) of each and any and all persons
acting by, through, or in concert with any of them.
RECITALS
A. Executive has worked in the employ of Employer since 1982;
currently, he is the President and Chief Executive Officer and a Director of
Pulte.
B. Executive will resign from his employment on June 30, 2003
(the "Termination Date").
C. In consideration of payments to be made, and benefits to be
provided, by Employer to Executive, Executive and Employer have each agreed to
release the other from any liability to the other and to the other matters set
forth in this Agreement.
Therefore, Executive and Employer agree as follows:
1. Executive resigns from all of his positions with Employer
(including from the Board of Directors of Employer), effective on the
Termination Date.
2. The following will be Executive's sole and exclusive payments
and benefits with respect to Executive's continued employment through the
Termination Date, the termination of Executive's employment with Employer and
Executive's other obligations under this Agreement:
(a) As long as he remains employed by Employer, Executive
will receive a continuation of his current monthly salary of $70,833.33 and a
continuation of his current fringe benefits until the Termination Date.
Executive will also be entitled to receive a bonus with respect to the year
ending December 31, 2003 in an amount equal to $3,200,000. The salary and bonus
referred to in this paragraph 2(a) will be paid in accordance with Employer's
normal payroll procedures and policies, except that the bonus will be paid on
January 9, 2004. The usual withholdings and deductions for applicable taxes and
the like will be deducted from all payments to Executive under this paragraph
2(a).
(b) In return for the consulting services described in
Exhibit 1 to this Agreement, Executive will receive 18 monthly payments of
$70,833.33 each, payable on the first business day of each month beginning on
July 1, 2003 and ending on December 1, 2004.
(c) Executive will be entitled to:
(1) $1,925,000, which represents an amount equal to the
entire maximum award which would have been payable to him
under the Long-Term Incentive Plan for Key Executives which
commenced on January 1, 2001; such amount will be payable on
the date that awards are payable to Pulte executives under
such plan.
(2) $1,966,667, which represents an amount equal to the
sum of (A) 1/2 of Executive's maximum award which would have
been payable to him under the Long-Term Incentive Plan for Key
Executives which commenced on January 1, 2002 ($1,400,000),
plus (B) 1/6 of Executive's maximum award which would have
been payable to him under the Long Term Incentive Plan for Key
Executives which commenced on January 1, 2003 ($566,667); such
payment will be made on June 30, 2004.
Payments to Executive under this paragraph 2(c) will be made irrespective of
whether awards are payable to Pulte executives under such plans, and the amount
of such payments will not change even if a greater or lesser amount would have
ultimately been earned for Executive's account under the plans had he remained a
participant under such plans for the duration of the plans. Payments under this
paragraph 2(c) will be in lieu of any other awards or payments which may be owed
under the long-term compensation plans referred to in this paragraph. Payments
under this paragraph 2 will be made by direct deposit to such accounts as
Executive advises Pulte in writing from time to time.
(d) Employer will provide Executive and his spouse with
continued medical and dental insurance coverage and will use its best
commercially reasonable efforts to obtain for Executive continued disability and
life insurance coverage, in each case with benefits substantially equivalent to
Executive's current coverage, until Executive reaches age 65. Executive will
cooperate with Employer in its efforts to obtain disability and life insurance
coverage, including, if required by the prospective insurer, submitting to a
physical examination. If Employer is unable to obtain disability and/or life
insurance coverage for Executive at standard rates, it will not be required to
obtain such coverage. In such case, if Executive desires to purchase such
coverage, Employer will, upon Executive's request, contribute an amount equal to
the standard rate for such coverage to Executive's cost of purchasing such
coverage. If Executive dies or becomes disabled before reaching age 65 and is
survived by his wife, such medical and dental benefits will be provided to
Executive's widow until the date that would have been Executive's 65th birthday.
Executive (or his widow) will reimburse Pulte, on request (but not more often
than quarterly), for the same portion of the premium for such coverage as Pulte
senior executives reimburse Pulte for their own health, dental, disability, and
life insurance coverage (as applicable).
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(e) From July 1, 2003 until December 31, 2003, Executive
will be entitled to reasonable secretarial support, at no charge, from a Pulte
secretary (Karen O'Paterny).
(f) Pulte will use its best commercially reasonable
efforts to assign to Executive the lease of the 2003 Lexus SC430 convertible
currently used by Executive. Upon such assignment, Pulte will (at its cost) have
the automobile moved to Executive's Florida residence.
(g) Pulte (or a Pulte subsidiary) will assume Executive's
obligations under the lease of apartment premises at 444 Chester (the "Apartment
Lease"). If, for any reason, Pulte is not allowed by the landlord under the
Apartment Lease to assume the Apartment Lease, it will pay directly to the
landlord, on Executive's behalf, all remaining obligations under the Apartment
Lease. Executive will vacate the apartment premises by June 10, 2003. To induce
Pulte to assume the Apartment Lease, Executive represents and warrants to Pulte
as follows:
(1) Executive has delivered to Pulte a true and
correct copy of the Apartment Lease.
(2) Executive is not in default under the
Apartment Lease.
Executive will indemnify and hold Employer harmless against any costs or
liability incurred by Employer as a result of Executive's breach of his
representations and warranties under this paragraph 2(g).
(h) Executive will be allowed to retain (1) his laptop
computer after Pulte's Information Systems representatives have removed all
confidential and proprietary information from the computer; (2) his
company-provided palm pilot; (3) his company-provided cellular phone; and (4)
other miscellaneous personal items.
(i) Pulte will (at its cost) cause all of Executive's
personal furnishings to be packed and moved from his Michigan apartment and/or
office to his Florida residence.
(j) Pulte will reimburse Executive for the following
professional fees which may be incurred by him: (1) up to $15,000 in connection
with the preparation and negotiation of this Agreement (including tax planning);
and (2) up to $8,500 per year for tax and financial advisory services rendered
with respect to the calendar years ending December 31, 2003 and 2004,
respectively. Fees will be paid by Pulte under this paragraph 2(j) upon
Executive's presentation to Pulte of bona fide statements for services rendered.
(k) Pulte will make all remaining premium payments under
the split dollar insurance policy maintained by Pulte on Executive's behalf, and
Executive will have no further obligations with respect to such insurance. All
documents relating to such insurance will remain in full force and effect.
The amounts payable, and the benefits provided, under this paragraph 2
will continue to be payable and provided notwithstanding Executive's death or
disability.
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Executive will indemnify Employer for any taxes, interest and penalties
payable or claimed by appropriate authorities to be payable in respect of the
payments and benefits described in this paragraph 2 that result from Executive's
failure to pay or timely pay such taxes, interest and/or penalties.
3. For the consideration described in this Agreement, Employer
and Executive hereby fully and forever mutually release, acquit and discharge
each other from and for all manner of claims, counterclaims, causes of action,
bonds, bills, debts, sums of money, commissions, compensation for purported
personal services rendered, damages and rights whatsoever, in law or in equity,
now existing in its or his favor by reason of any facts, known or unknown,
including under Pulte's Long-Term Incentive Plans for Key Executives (except for
the payments described in paragraph 2(c) above in lieu of payments under such
plans). This release does not cover any breach of this Agreement (including
Pulte's and Executive's obligations under paragraph 2 above).
4. Except for actions or suits based upon breaches of this
Agreement, each of Executive and Employer will refrain from commencing any suit,
claim or action, or prosecuting any pending action, claim or suit, in law or in
equity, against the other on account of any employment related action or cause
of action based upon any facts, whether known or unknown, including all claims
for wrongful discharge, breach of contract, violation of the penal statutes,
negligence of any kind, intentional infliction of emotional distress, defamation
and/or discrimination on account of sex, age, race, handicap or nationality
which has or could have been alleged under the common law or any federal, state
or local statute or ordinance, including: Title VII of the Civil Rights Act of
1964; the Age Discrimination in Employment Act; the Rehabilitation Act of 1973;
the Older Workers Benefit Protection Act; the Americans With Disabilities Act;
the Family and Medical Leave Act of 1993; the Elliott-Larsen Civil Rights Act;
the Michigan Handicappers Civil Rights Act; the Michigan Whistle Blowers
Protection Act; the Michigan Wage and Benefit Act; and any and all amendments to
any of the foregoing.
5. Executive will forever maintain as confidential all
confidential information of Employer. For purposes of this Agreement,
confidential information means all confidential and proprietary information of
Employer, including confidential and proprietary data, know-how, schedules,
processes, designs, sketches, photographs, plans, drawings, specifications,
samples, reports, vendor information, pricing information, market definitions,
inventions, ideas and information obtained from Employer as well as strategic
information concerning Employer. Confidential information may be written or
oral. Confidential information will not include information which:
(1) is or becomes severally available to the
public other than as a result of Executive's disclosure; or
(2) becomes available to Executive on a
non-confidential basis from a source other than Employer
provided that such source is not bound by a confidentiality
agreement with or other obligation of secrecy to Employer
which is known to Executive.
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Executive will be allowed to disclose confidential information if required by
law to do so. However, if practicable, Executive will advise Employer of such
legal requirements prior to making such disclosure, so that Employer may attempt
(at no cost or penalty to Executive) to seek an appropriate protective order or
legal limitation on such disclosure.
(b) From the date of this Agreement until June 30, 2005,
Executive will not, directly or indirectly:
(1) Engage in, or have an interest in or be
associated with (whether as an officer, director, stockholder,
partner, member, associate, employee, consultant, owner or
otherwise), a "Competing Business", which is any corporation,
partnership, limited liability company, firm or enterprise
(including a sole proprietorship) which directly competes with
Employer anywhere in the United States, Puerto Rico or Latin
America. Notwithstanding the foregoing, Executive may invest
in any publicly-held corporation engaged in a Competing
Business if (A) such investment does not exceed 5% in value of
the issued and outstanding capital stock of such corporation
and (B) Executive is not otherwise affiliated with such
corporation.
(2) Employ any person known by Executive to be
an employee of Employer or induce or attempt to induce any
person known by Executive to be an employee of Employer or any
of its affiliates to leave the employment of the Employer or
such affiliate.
(3) Deliberately attempt to materially and
adversely affect the relationship between Employer and (i) any
of its vendors, contractors, subcontractors, shareholders, or
customers, (ii) the financial community, or (iii) the public.
The provisions of this paragraph 5(b) will automatically terminate if (i)
Employer breaches this Agreement by failing to pay Executive any payment or to
provide any benefit to Executive when and as due under this Agreement and (ii)
Employer fails to cure such breach within 10 days after written notice from
Executive to Employer of such breach by Employer. Before being deemed to be in
violation of clause (1) of this paragraph 5(b), Executive must be given written
notice from Pulte and a 10 day right to cure; such cure will include repaying to
Pulte all amounts paid or payable to Executive from or with respect to the
activity which violates clause (1).
(c) If Executive violates this paragraph 5 in any
material respect (and Pulte has not previously consented in writing to the
action which constitutes the violation), Employer will be entitled to all
remedies available to it under law or equity (including specific performance, a
claim for damages, including a refund of amounts previously paid or benefits
provided by Employer pursuant to paragraph 2(b) of this Agreement, and
termination of any or all of the remaining payments and benefits described under
paragraph 2(b) above). Such exercise of rights and remedies will not be
considered a breach of this Agreement by Employer.
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6. Except as may be required by law, (a) Executive will not
directly or indirectly assist or aid any other person, corporation, firm,
partnership or other entity, in or about any action, cause of action, suit,
claim, proceeding, litigation or other matter against Employer (collectively,
"Covered Matters") and (b) Executive will not communicate with, either orally or
in writing, in any manner whatsoever, any other person, corporation, firm,
partnership or other entity, in or about any Covered Matter other than
communications with members of Executive's family, friends and professional
advisors as long as such communications are conducted in a fashion which will
not and could not reasonably be expected to adversely affect Employer.
7. On the Termination Date:
(a) Except for the items retained by Executive under
paragraph 2 above, Executive will return to Employer all materials, files and
any other property which belong to Employer (including his security cards, keys,
and telephone credit card); and
(b) Executive and Employer will execute and deliver the
agreement attached as Exhibit 2 to this Agreement (the "Bring-down Release") in
order to re-affirm the release and covenant not to sue which are reflected in
paragraphs 3 and 4 above, effective as of the Termination Date. The parties'
failure or a party's refusal to execute and deliver the Bring-down Release will
not invalidate or diminish the effectiveness of the release and covenant not to
sue set forth in paragraphs 3 and 4 above.
8. Executive is completely able to perform the duties of his
position at Employer, and has no disability recognized under the Workers'
Compensation Act or otherwise. Executive will not claim or collect state
unemployment benefits in connection with the termination of his employment with
Employer. If Executive violates this covenant or if Executive claims or collects
any worker's compensation benefits with respect to his employment by Employer,
he will immediately forfeit or refund that portion of the consideration paid or
payable by Employer to Executive under this Agreement which is equal to the
unemployment or worker's compensation benefits, as applicable, received by
Executive.
9. Pulte will indemnify and hold Executive harmless from any
claims, demands and complaints made by any third party, which arise out of or
relate to Executive's good faith performance of his job duties during the term
of his employment by Employer and of his consulting duties under this Agreement,
in accordance with Employer's bylaws and applicable law. Executive will advise
Employer of any such claim immediately upon becoming aware of it. Employer's
agreement in this respect is based and reliant upon Executive's specific
representation that he is not presently aware, nor does he have any reason to
suspect, that any such claim, demand or complaint will be forthcoming, other
than with respect to any matter which has been disclosed in Item 3 of Pulte's
Annual Report on Form 10-K for the fiscal year ended December 31, 2002 or in
Pulte's Quarterly Report on Form 10-Q with respect to the fiscal quarter ended
March 31, 2003.
10. Executive will retain all of his Pulte stock options in
accordance with the stock option agreements which evidence such option grants
(the "Option Agreements"). Such options will not be subject to any restriction
or forfeiture under this agreement (including paragraphs 5 and 6 above) but will
continue to be subject to the Option Agreements.
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11. (a) This Agreement, which will be effective and
irrevocable immediately upon the time limits described in this Agreement,
reflects the entire agreement of Executive and Employer relative to its subject
matter, and supersedes all prior or contemporaneous oral or written
understandings, statements, representations or promises with respect to the
termination of Executive's employment, including the confidentiality,
non-competition and non-solicitation agreement delivered by Executive to
Employer in 2000.
(b) This Agreement may not be amended except by a written
instrument signed by Executive and Pulte, on behalf of Employer.
(c) This Agreement will be construed in accordance with
and governed by Michigan law. The sole forum for any dispute under this
Agreement will be the Oakland County (Michigan) Circuit Court; the parties
consent to the exclusive jurisdiction of such court.
12. Executive will use his best reasonable efforts to maintain,
and will instruct his attorneys, accountants and tax and financial advisors and
consultants to maintain, the confidentiality of the existence and terms of this
Agreement, and any underlying conversations, discussions, documents,
correspondence or agreements in furtherance thereof or in connection or leading
thereto. However, Executive will be entitled to disclose (a) information to the
extent required by law, (b) information which becomes a matter of public record
(other than as a result of Executive's disclosure thereof), (c) information to
his immediate family but only after instructing them to keep such information
confidential and (d) the existence of his non-disclosure obligation or other
obligations under this Agreement to any person who requests that Executive
disclose information in violation of this paragraph 12 or otherwise requests
that Executive take action in violation of this Agreement.
13. Upon request of Executive, as long as he is not in default of
this Agreement, Pulte will provide a favorable reference on behalf of Executive
to prospective employers and other persons doing business with Executive.
Neither Executive nor Employer will disparage the other in any way.
14. EXECUTIVE UNDERSTANDS THAT BY THIS AGREEMENT HE IS WAIVING ANY
RIGHTS HE MAY PRESENTLY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS
AMENDED. EXECUTIVE ENTERS INTO THIS AGREEMENT FREELY AND VOLUNTARILY WITHOUT ANY
DURESS OR COERCION, AND AFTER HE HAS CAREFULLY AND COMPLETELY READ ALL OF THE
TERMS AND PROVISIONS OF THIS AGREEMENT. HE HAS BEEN ADVISED TO CONSULT WITH
LEGAL COUNSEL AND UNDERSTANDS HE WILL BE ALLOWED TO CONSIDER THIS AGREEMENT FOR
21 DAYS PRIOR TO SIGNING IT. EXECUTIVE UNDERSTANDS THAT THIS AGREEMENT SHALL NOT
BECOME EFFECTIVE FOR SEVEN DAYS FOLLOWING THE DATE IT IS SIGNED, DURING WHICH
TIME HE MAY REVOKE THIS AGREEMENT BY WRITTEN NOTICE TO EMPLOYER, IN CARE OF JOHN
R. STOLLER, SENIOR VICE PRESIDENT AND GENERAL COUNSEL. EXECUTIVE UNDERSTANDS
THAT PAYMENTS TO BE MADE TO HIM AS PROVIDED IN THIS AGREEMENT WILL NOT COMMENCE
UNTIL THE EXPIRATION OF SUCH DAYS.
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Date: May 13, 2003 /s/ Mark J. O'Brien
--------------------------------
Mark J. O'Brien
Pulte Homes, Inc. (on behalf of itself and
all entities which constitute "Employer"
under this Agreement)
Date: May 13, 2003 By: /s/ Roger A. Cregg
-------------------------
Name: Roger Cregg
Title: Senior Vice President and Chief
Financial Officer
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EXHIBIT 1
CONSULTING SERVICES
Unless otherwise defined in this Schedule, all capitalized terms used
in this Schedule will have the meanings given to them in the employment
separation agreement and release of liability entered into today between Mark J.
O'Brien and Pulte Homes, Inc.
1. During the Consulting Term (which begins on July 1, 2003 and
will end on December 31, 2004), Executive will, upon reasonable notice from
Employer, provide consulting services ("Services") to Employer in connection
with Employer's business, including domestic and international homebuilding,
merger and acquisition opportunities, and other aspects of Employer's business.
Executive will not be required to perform more than 10 hours of Services in any
calendar month; unused portions of such 10 hour maximum will not be used in
subsequent months. Executive will not be required to travel away from his
Florida residence, except to assist Pulte in testimony or preparation for any
litigation or proceedings relating to matters or events which arose or took
place during his employment with Pulte and then only with reasonable advance
notice from Pulte.
2. The Services will be rendered on a part-time basis only, at
such times as Executive and Employer mutually agree in good faith. Every
reasonable attempt will be made by Employer to accommodate Executive's full time
occupation when scheduling the time and place for the delivery of the Services.
Executive will be free to engage in any other activities, subject to paragraph 5
of the Agreement.
3. Executive will at all times during the Consulting Term be an
independent contractor of Employer, and will not be considered as having
"employee status" with Employer for any purpose.
4. Executive will not have any authority to enter into any
contract or agreement on behalf of Employer or to bind or commit Employer orally
or in writing, except to the extent he has been so authorized by the chief
executive officer or chief operating officer of Pulte.
5. Executive will be reimbursed for all reasonable, necessary and
pre-approved business related travel and other out-of-pocket expenses incurred
by him in performing Services upon presentation of receipts or expense vouchers
for such expenses in accordance with Employer's usual accounting procedures.
Initials:
MJO
-----------------
RAC
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EXHIBIT 2
"BRING-DOWN RELEASE"
This "Bring-Down" Release ("Release") is entered into on June 30, 2003
between Mark J. O'Brien ("Executive") and Pulte Homes, Inc., a Michigan
corporation ("Pulte"). Except as otherwise defined in this Release, all
capitalized terms used in this Release have the meanings given to them in the
Agreement (as defined in Recital A. below).
RECITALS
A. Executive and Pulte are parties to an Employment Separation
Agreement and Release of all Liability dated May 13, 2003 (the "Agreement").
B. Pursuant to paragraph 7(b) of the Agreement, the parties
agreed to execute and deliver this Release on the Termination Date.
Therefore, the parties agree as follows:
1. The release provisions of paragraph 3 of the Agreement are
ratified and confirmed by Executive and Pulte, on behalf of Employer, and will
be deemed given on this date.
2. Neither Executive nor Employer will challenge or seek to avoid
this Release or the release made in the Agreement, and any attempt to do so will
be a violation of the Agreement. The invalidity of this Release will not in any
way affect the release provisions of the Agreement.
3. The remainder of the Agreement will continue in full force and
effect.
________________________________
Date: June 30, 2003 Mark J. O'Brien
Pulte Homes, Inc.
Date: June 30, 2003 By:_____________________________
Name:
Title:
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