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EXHIBIT 10.5
AMENDED AND RESTATED
COMPENSATION AGREEMENT
This Amended and Restated Compensation Agreement ("Agreement") is made
and entered into by and between Palm Harbor Homes, Inc., a Florida corporation
("Palm Harbor"), and Lee Posey ("Employee"), dated to be effective as of March
27, 1999.
WITNESSETH:
WHEREAS, effective April 1, 1995, Palm Harbor and Employee entered into
that certain Compensation Agreement (the "Original Agreement"); and
WHEREAS, the parties desire to amend and restate the Original Agreement
to reflect the current agreement between the parties;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the employment and payment of compensation to Employee upon the terms
and conditions set forth herein and each act done pursuant hereto, the parties
hereto agree as follows:
EMPLOYMENT
1. Nature of Employment. For the term of employment as below stated,
and subject to general supervision by the Board of Directors of Palm Harbor
(the "Board"), to whom Employee shall exclusively report, Palm Harbor hereby
employs Employee as its Chairman of the Board to supervise and manage the
operations of Palm Harbor, and to perform such other duties as are customarily
provided by persons in similar officer positions with companies of the same
general size and engaged in comparable businesses as the Company and as the
Board shall from time to time reasonably prescribe. Employee shall have the
authority to bind Palm Harbor to contracts to the same extent as the Chief
Executive Officer and/or President of Palm Harbor, without the necessity of
having the Board adopt a specific resolution in each such instance in which the
Chief Executive Officer and/or President has or is given authority to execute
contracts.
2. Initial Term. Subject to earlier termination as hereinafter
provided, the initial term of employment of Employee hereunder shall commence
on the date hereof, and continue for a period of eight years, which eight-year
term shall be renewable at the end of such eight-year period upon mutual
written agreement of Palm Harbor and Employee. As used herein, the phrase "term
of employment" shall mean said initial eight-year term of employment as well as
any renewal terms thereof.
3. Termination. This Agreement shall be terminated prior to the
expiration of the term of employment only as follows:
(a) by mutual consent of the parties;
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(b) upon the death or permanent disability (as determined in
accordance with the then existing policy of Palm Harbor) of
Employee;
(c) by Palm Harbor, upon conviction of a felony by Employee;
(d) by Palm Harbor, upon commission of any intentional misconduct
relating to the business of Palm Harbor which causes material
damage to Palm Harbor; or
(e) at Employee's option.
4. Relationship. In performing the services described under this
Agreement, it is mutually understood and agreed that Employee will at all times
be acting and performing as an employee. This Agreement creates the relationship
of principal and agent between Palm Harbor and Employee during the employment
period. Subject to the limitations in Section 1, Employee shall have the
authority to create obligations and make any contracts, agreements,
representations and warranties on behalf of and in the name of Palm Harbor
during the employment period.
5. Services. During the term of employment, Employee shall furnish the
services of Chairman of the Board to Palm Harbor for 100 days per year during
the three fiscal years following the date of this Agreement, and 50 days per
year during the five fiscal years thereafter, and shall perform such other
services reasonably related thereto as the Board may from time to time
reasonably request.
6. Compensation. As compensation for his services to Palm Harbor and
other duties and responsibilities herein contemplated during the term of
employment, Employee shall receive from Palm Harbor $400,000 per annum during
the term of employment that he provides 100 days of service to Palm Harbor, and
$300,000 per annum during the term of employment that he provides 75 days of
service to Palm Harbor, such amounts to be paid evenly during Palm Harbor's 24
pay periods.
7. Sick Leave, etc. During the term of employment, Employee shall be
entitled to sick leave of such duration as he is currently entitled, and dental,
medical and other insurance and other fringe benefits, as are consistent with
Palm Harbor's policy for its executive level employees. All reasonable travel
expenses and other business expenses incurred by Employee in connection with the
performance of his services for Palm Harbor shall be reimbursed to Employee by
Palm Harbor. Such reimbursement shall be made upon presentation to Palm Harbor
of vouchers, receipts, business purpose summaries and other statements itemizing
such expenses in detail complying with all tax reporting requirements therefor
and reimbursement policies of Palm Harbor.
8. Compensation in the Event of Termination. If this Agreement is
terminated for any reason, Employee or his estate, as applicable, shall be
entitled to receive the lesser of (i) $1,000,000 or (ii) $16,667 multiplied by
the remainder of 96 minus the number of months Employee provided services as an
employee under this Agreement after March 27, 1999. Any amounts due and owing to
Employee or his estate under this Section 8 shall be payable in cash, at
Employee's or his
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executor's, as applicable, sole option (i) in equal monthly installments over a
number of months selected by Employee or the executor of his estate, as
applicable; or (ii) in one lump sum payment within 30 days of the date of
termination.
9. ARBITRATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES BETWEEN
THEM RELATED HERETO AND ANY RELATED CLAIM BY ANY PARTY THAT CANNOT AMICABLY BE
SETTLED SHALL BE DETERMINED SOLELY AND EXCLUSIVELY BY ARBITRATION IN ACCORDANCE
WITH THE RULES THEN PROMULGATED BY THE AMERICAN ARBITRATION ASSOCIATION ("AAA")
OR ANY SUCCESSOR AT ITS OFFICES NEAREST DALLAS, TEXAS, UNLESS THE PARTIES
OTHERWISE AGREE IN WRITING. A DISPUTE SUBJECT TO THE PROVISIONS OF THIS SECTION
9 WILL EXIST IF EITHER PARTY NOTIFIES THE OTHER IN WRITING THAT A DISPUTE
SUBJECT TO ARBITRATION EXISTS AND STATES WITH REASONABLE SPECIFICITY THE ISSUES
SUBJECT TO DISPUTE (THE "ARBITRATION NOTICE"). THE PARTIES AGREE THAT AFTER THE
ISSUANCE OF AN ARBITRATION NOTICE, THE PARTIES WILL TRY IN GOOD FAITH TO RESOLVE
THE DISPUTE BY MEDIATION IN ACCORDANCE WITH THE COMMERCIAL MEDIATION RULES OF
THE AAA BETWEEN THE DATE OF ISSUANCE OF THE ARBITRATION NOTICE AND THE DATE SET
FOR ARBITRATION. THE PARTIES ALSO AGREE THAT THE AAA OPTIONAL RULES FOR
EMERGENCY MEASURES OF PROTECTION SHALL APPLY TO THE PROCEEDING. IF THE DISPUTE
IS NOT SETTLED BY THE DATE SET FOR ARBITRATION, THEN ANY REMAINING UNRESOLVED
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH
THEREOF WILL BE RESOLVED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE AAA, AND JUDGMENT UPON THE AWARD RENDERED BY
THE ARBITRATOR(S) MAY BE ENTERED AND ENFORCED IN ANY COURT OF COMPETENT
JURISDICTION. ANY MEDIATOR OR ARBITRATOR SELECTED TO RESOLVE SUCH A DISPUTE MUST
HAVE AT LEAST 10 YEARS EXPERIENCE IN THE FINANCE FIELD AND MUST HAVE ACTED AS
MEDIATOR OR ARBITRATOR IN AT LEAST FIVE PRIOR DISPUTES WHERE THE AMOUNT IN
CONTROVERSY EQUALS OR EXCEEDS THE AMOUNT IN CONTROVERSY IN THE SUBJECT DISPUTE.
ANY SUCH MEDIATOR OR ARBITRATOR MUST BE ACCEPTABLE TO EMPLOYEE AND PALM HARBOR
AND MUST BE KNOWLEDGEABLE ABOUT MANUFACTURED HOUSING AND RELATED FINANCIAL
ISSUES; PROVIDED, HOWEVER, THAT SUCH MEDIATOR OR ARBITRATOR SHALL NOT BE
EMPLOYED BY OR ACTING AS A CONSULTANT TO A COMPETITOR OF PALM HARBOR. IF THE
PARTIES ARE UNABLE TO REACH AGREEMENT ON A MEDIATOR OR ARBITRATOR WITHIN SEVEN
DAYS AFTER RECEIPT OF THE ARBITRATION NOTICE, THEN A MEDIATOR OR ARBITRATOR
MEETING THE REQUIREMENTS OF THIS SECTION 9 WILL BE SELECTED BY THE AAA.
10. Confidentiality. During the term of this Agreement, and thereafter,
Employee shall not use for his personal benefit, or disclose, communicate or
divulge to, or use for the direct or indirect benefit of any person, firm,
association or company other than Palm Harbor or its affiliates,
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any Confidential Information. "Confidential Information" means information
relating to the operations of Palm Harbor or any subsidiaries or affiliates
thereof that is not generally known, is proprietary to Palm Harbor, its
subsidiaries or affiliates or is made known to Employee or learned or acquired
by Employee while in the employ of Palm Harbor, including, without limitation,
information relating to advertising, marketing, accounting, purchasing, selling,
finance and business methods and techniques.
11. Notice. Whenever, in connection with this Agreement, any notice is
required to be given or any other act or event is to be done or occur on or by a
particular number of days, and the date thus particularized should be a
Saturday, Sunday, or bank holiday in the City of Dallas, Texas, such date shall
be postponed to the next day which shall not be a Saturday, Sunday, or bank
holiday in the City of Dallas, Texas. In the event a notice or other document is
required to be given hereunder to Palm Harbor or Employee, such notice or other
document shall either be personally delivered or be mailed to the party entitled
to receive the same by registered or certified mail, return receipt requested,
at the appropriate address set forth below or at such other address as such
party shall designate in a written notice given in accordance with this Section:
CORPORATION: EMPLOYEE:
Palm Harbor Homes, Inc. Lee Posey
15303 Dallas Parkway, Suite 800 17427 Club Hill Drive
Addison, Texas 75001 Dallas, Texas 75248
Notice shall be deemed given on the date of actual delivery, if delivered in
person, or, if mailed, then on the date noted on the return receipt.
12. Severability and Reformation. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of Employee or Palm Harbor under this Agreement
would not be materially and adversely affected thereby, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom, and in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible, and Palm Harbor and
Employee hereby request the court or any arbitrator to whom disputes relating to
this Agreement are submitted to reform the otherwise unenforceable covenant in
accordance with this Section 12.
13. Waiver, Modification, and Integration. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This instrument
contains the entire agreement of the parties and supersedes all prior and
contemporaneous representations, understandings and agreements, either oral or
in writing, between the parties and all such prior or contemporaneous
representations, understandings and agreements (including, but not limited to,
the Original Agreement) are hereby terminated. This
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Agreement may not be modified, altered or amended except by written agreement
executed by all the parties hereto.
14. Binding Effect and Assignability. Employee and Palm Harbor
understand and acknowledge that Employee's duties and responsibilities under
this Agreement are personal in nature and shall not be assigned by Employee or
Palm Harbor to any other person or entity without the prior written consent of
the other party hereto, which consent may be withheld in such party's sole
discretion.
15. Law Applicable; Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas; this
Agreement is performable in, and venue for any litigation shall lie in, Dallas
County, Texas.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original instrument, and
all of which together shall constitute one and the same Agreement.
17. Attorney's Fees. The prevailing party in any arbitration brought by
or against the other party to enforce any provision of this Agreement shall be
entitled to recover against the non-prevailing party the reasonable attorney's
fees, court or arbitration costs and other expenses incurred by the prevailing
party.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
set above.
PALM HARBOR HOMES, INC., EMPLOYEE
a Florida corporation
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LARRY KEENER, CHIEF EXECUTIVE LEE POSEY
OFFICER AND PRESIDENT
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