Document:

Exhibit 10.8

 

CONFIDENTIAL
SEPARATION AGREEMENT

 

This Confidential
Separation Agreement (“Agreement”) is entered into as of the Separation Date
indicated below between KIMBALL HILL, INC. (“Company”)
and KIRK T. BREITENWISCHER (“Employee” or
“you”).

 

Whereas, Employee and
Company have concluded that it is in their mutual best interests that
Employee’s employment relationship with Company should be terminated; and

 

Whereas, Company and
Employee wish to provide for the termination of their employment relationship
and all agreements that may have existed between them, and fully and finally to
settle any and all actual or potential disputes arising out of Employee’s
employment by Company or the termination of Employee’s employment with Company,
on terms and conditions that are fair and mutually beneficial.

 

Therefore, in
consideration of the mutual promises and agreements set forth in this
Agreement, Company and Employee agree as follows:

 

I.                                         Employment Separation.

 

A.                                    Separation
Date. Effective April 30, 2006 (“Separation Date”), Employee resigns from
all active employment by and all offices and positions with Company and
Company’s subsidiaries and affiliates, including but not limited to the
position of Senior Vice President and National Land President of Kimball Hill,
Inc. Upon Company’s request, Employee shall execute and deliver to Company
written resignations as a director and officer of all of Company’s subsidiaries
and affiliates.

 

B.                                    

Separation. Effective on the Separation
Date, Employee’s employment shall end and Employee shall have no duties and no
authority to make any representations or commitments on behalf of Company and
Company’s subsidiaries and affiliates, as a director, officer, employee or in
any other capacity whatsoever. Thereafter, Employee shall have no further
rights deriving from Employee’s employment by Company or Company’s subsidiaries
and affiliates and shall not be entitled to any further compensation or
non-vested benefits, except as provided in this Agreement.

 

II.                                     Consideration.

 

A.                                    Separation
Payment. In exchange for Employee’s Covenants in Section IV, Employee’s
Waiver and Release of Claims in Section V, and the other acknowledgements and
agreements in this Agreement, and subject to the terms and conditions of this
Agreement, Company will pay Employee a separation payment in the gross amount
of $400,000.00 payable in a single payment (the “Separation Payment”) at the
time specified in Section V of this Agreement. Employee acknowledges and agrees
that the Separation Payment is in lieu of, and not in addition to, any and all
payments otherwise provided for in the Company Severance Pay

 

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Policy. If Employee has cancelled this Agreement pursuant to Section V
of the Agreement, then Company will have no obligation to pay Employee any
portion of the Separation Payment.

 

B.                                    Stock
Purchase. Employee acknowledges and agrees that under the terms of the
“Kimball Hill Homes Stock Option Agreements” dated respectively October 31,
1995, October 31, 1996, December 31, 1997, December 31, 1998, December 31,
1999, December 31, 2000 and December 31, 2001, and the “Agreement and
Amendment” dated September 30, 2005, Company has no obligation to purchase from
Employee any Company Stock owned by Employee upon Employee’s resignation from
Company. Nonetheless, at Employee’s request and in exchange for Employee’s
Covenants in Section IV, Employee’s Waiver and Release of Claims in Section V,
and the other acknowledgements and agreements in this Agreement, and subject to
the terms and conditions of this Agreement, Company hereby agrees to purchase
from Employee all Company Stock owned by Employee, in accordance with the
following provisions:

 

1.                                       Employee
currently owns 77,000 shares of common stock of Company, represented by
Certificate No. 31 dated 10/31/1999, Certificate No. 36 dated 12/31/2001,
Certificate No. 84 dated 12/29/2004, Certificate No. 88 dated 2/19/2005, and
Certificate No. 95 dated 9/30/2005 (the “Company Stock”). Employee represents
and warrants that he is the lawful owner of, and has the complete right, title,
and interest in and to the Company Stock, free and clear of any and all liens,
encumbrances, or rights of third parties, that he has not sold, transferred,
pledged, or assigned the Company Stock, and that he has full power to sell,
transfer, and assign the Company Stock to Company in accordance with the terms
of this Agreement.

 

2.                                       Employee
agrees to sell, and Company agrees to buy, effective as of the Separation Date,
the Company Stock at a price of $115.50 per share, for a total purchase price
of $8,893,500.00 (“Purchase Price”). Employee and Company agree that this
Purchase Price represents the fair market value of the Company Stock as of the
Separation Date.

 

3.                                       Employee
agrees that he will deliver to Company the following documents:

 

a.                                       Certificate
No. 31 dated 10/31/1999, Certificate No. 36 dated 12/31/2001, Certificate No.
84 dated 12/29/2004, Certificate No. 88 dated 2/19/2005, and Certificate No. 95
dated 9/30/2005 (collectively, the “Certificates”); and

 

b.                                      Executed
Stock Powers for all the aforesaid stock certificates in substantially the form
of Exhibit A to this Agreement.

 

Employee will deliver the
Certificates and the executed Stock Powers to Company not later than July 31,
2006, provided that Employee has not cancelled this Agreement pursuant to
Section V of the Agreement. Title to the Company Stock will vest in Company
immediately upon Employee’s delivery of the Certificates and the executed Stock
Powers to Company. If Employee has cancelled this Agreement pursuant to Section
V of this Agreement, then Employee will have no obligation under this Section
II to deliver the Certificates and the Stock Powers to Company.

 

2

 

4.                                       Provided
that Employee has delivered the Certificates and the executed Stock Powers to
Company in accordance with this Section II, and subject to the provisions of
Section II.C. below, Company will pay Employee the Purchase Price in two
installments, as follows:

 

a.                                       Installment
One of the Purchase Price, in the amount of $5,082,000.00, will be paid on the
date on which Employee delivers the Certificates and executed Stock Powers to
Company, but in any event no earlier than July 15, 2006.

 

b.                                      Installment
Two of the Purchase Price, in the amount of $3,811,500.00, will be paid to
Employee on January 31, 2007; provided, however, that if Company issues equity
securities to a non-affiliated third party prior to January 31, 2007, then
Company shall pay Installment Two within thirty (30) days after the issuance of
equity securities to that non-affiliated third party is completed. Installment
Two of the Purchase Price shall be evidenced by the Company’s Non-Negotiable
Promissory Note in substantially the form attached as Exhibit B, which shall be
delivered to Employee on the date on which Employee delivers the Certificates
and executed Stock Powers to Company as aforesaid.

 

C.                                    Notwithstanding
anything in this Agreement to the contrary, under no circumstances will Company
be obligated to make any payment of the Separation Payment or the Purchase
Price if, in the reasonable opinion of Company, the payment is prohibited (a)
by any restrictions created prior to the Separation Date which are contained in
any existing loan agreement, any existing debt instrument, any existing equity
financing agreement, or any similar agreement or commitment (including without
limitation the provisions of the Company’s 101⁄2% Senior Subordinated Notes Due
2012), except to the extent that such payment is prohibited by reason of the
Company's purchase or redemption of, or agreement to purchase or redeem, its
common stock from any other shareholder that occurs after the Separation Date;
or (b) by any federal, state, or other securities law, or any other requirement
of law or of any regulatory body with jurisdiction over the Company. If, in the
Company’s reasonable opinion, a payment is prohibited by any such restrictions
or laws (subject to the aforesaid exception), then the time periods provided
for in this Agreement for making that payment shall be suspended at the
election of the Company, and the Company shall make such payment as soon as, in
Company’s reasonable opinion, it is permitted to do so under any such
restrictions or laws. In addition, if Employee has cancelled this Agreement
pursuant to Section V of the Agreement, then Company will have no obligation to
pay Employee any portion of the Purchase Price for the Company Stock.

 

D.                                    The Separation
Payment and all payments of the Purchase Price shall be made either by wire
transfer or by check payable to Kirk T. Breitenwischer at the following
address:

 

3707 Wroxton

Houston, TX 77005

 

The check shall be mailed
first class mail, postage prepaid, and each payment shall be considered made as
of the date of mailing.

 

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E.                                      Employee
Acknowledgments.

 

1.                                       Employee
acknowledges and agrees that Company has made no representations to Employee
regarding any tax consequences to Employee resulting from or relating to this
Agreement, and Employee agrees that any tax consequences to Employee resulting
from or relating to this Agreement shall be borne solely by Employee.

 

2.                                       Employee
acknowledges and agrees that the Separation Payment and the Company’s offer to
purchase his Company Stock upon the termination of his employment is good and
valuable consideration. If Employee does not sign this Agreement or, after
signing, cancels this Agreement, then he shall not receive any portion of the
Separation Payment or the Purchase Price and shall receive only those benefits
and payments required by law.

 

F.                                      Withholding.
Company will withhold from the Separation Payment all appropriate
deductions for employee benefits, if applicable, and all amounts necessary for
Company to satisfy its withholding obligations under applicable tax laws. 

 

III.                                 Other Benefits and Compensation Payable.

 

A.                                    Vacation
Pay. In addition to the Separation Payment and the Purchase Price, Company
will pay Employee for any accrued and unused vacation days and floating holidays
earned by Employee as of the Separation Date, except that if Employee has taken
unearned vacation days, Employee’s final regular paycheck will be reduced to
reflect the cost of such vacation days.

 

B.                                    Matching
Contributions. Under Company’s Matching Contributions Program, Company will
match only charitable contributions made prior to Employee’s Separation Date.

 

C.                                    Withholding.
Company will withhold from the compensation and benefits payable to
Employee under this Section III all appropriate deductions for employee
benefits, if applicable, and all amounts necessary for Company to satisfy its
withholding obligations under applicable tax laws.

 

IV.                                 Employee’s Covenants. Employee and
Company desire to provide for the protection of the business, good will, confidential
information, relationships, and other proprietary rights of Company.
Accordingly, Employee agrees to the following:

 

A.                                    Property
of Company. By the Separation Date, Employee will return to Company all
Company property, including but not limited to: 
identification cards; files; computer hardware, software, equipment, and
disks; cell phones and ancillary cell phone equipment; keys and keycards;
credit cards; and all Confidential Information (as defined in Section IV.D.) or
other company business records, except that Employee may retain his laptop
computer, provided that Employee delivers the laptop to the Company IT
representative in Houston prior to April 30, 2006 so that the Company can
remove all Company proprietary programs and all Company information from this
computer. Employee shall be entitled to utilize

 

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the office space he is currently occupying (at no cost) from the
Separation Date through June 30, 2006.

 

B.                                    Future
Conduct.

 

1.                                       Company
and Employee each agree that they hold the other in esteem and each agrees not
to make disparaging comments about the other. Company and Employee further
agree that each will not engage in any other conduct that would otherwise harm
the reputation or good will of Company or its management or Employee.

 

2.                                       Employee
agrees to cooperate fully with Company, including its attorneys or accountants,
in connection with any potential or actual litigation, or other real or
potential disputes, which directly or indirectly involves Company. Employee
agrees to be reasonably available to appear as a witness and be reasonably
available to attend depositions, consultations, or meetings regarding
litigation or potential litigation as requested by Company. Company
acknowledges that these efforts, if necessary, will impose on Employee’s time
and would likely interfere with other commitments Employee may have in the
future. Consequently, Company shall attempt to schedule such depositions,
consultations, or meetings in coordination with Employee’s schedule, but
Employee recognizes that scheduling of certain court proceedings, including
depositions, may be beyond Company’s control. Company agrees to compensate
Employee for Employee’s time hereunder at a rate equal to $100.00 per hour for
actual time spent traveling to and from and attending such depositions,
consultations, or meetings, not to include ancillary time spent at hotels and
related locations during evenings between proceedings. Company also agrees to
reimburse Employee for the out-of-pocket expenditures actually and reasonably
incurred by Employee in connection with the performance of the services
contemplated by this Section IV, including hotel accommodations, air fare
transportation, and meals, consistent with Company’s generally-applicable
expense reimbursement policies. It is expressly understood by the parties that
any compensation paid by Company to Employee under this Section IV shall be in
exchange for Employee’s time only and is not agreed, intended, or
understood to be dependent upon the character or content of any information
Employee discloses in good faith in any such proceedings, consultations, or
meetings.

 

C.                                    Confidentiality
of this Agreement. Employee shall not reveal or disclose the terms or
substance of this Agreement to any other person (including former, current, or
future employees of Company), except as required by subpoena, court order, or
other legal process. If disclosure is compelled by any legal process, Employee
shall notify Company as soon as notice of such process is received and before
disclosure takes place. Notwithstanding these provisions, Employee may disclose
the terms of this Agreement to members of Employee’s immediate family,
Employee’s accountant or financial advisor, and Employee’s attorney, upon their
agreement to maintain this Agreement in strict confidence.

 

D.                                    Nondisclosure
of Confidential Information. Employee acknowledges that he performed
services for the Company that required the Company to disclose to him
confidential business information and trade secrets (“Confidential
Information”). Employee agrees that he will not, without the Company’s prior
express written authorization, use or disclose to any person

 

5

 

outside the Company, any Confidential Information of
Company, or any Confidential Information received from or about third parties
by Company. Employee will use reasonable and prudent care to safeguard and
prevent the unauthorized use or disclosure of Confidential Information. Employee
acknowledges and agrees that Confidential Information is any information
relating to the Company and its employees, customers, vendors, and development
partners that is not generally available to the public, and includes
information relating to the Company’s actual or anticipated business
operations, including, but not limited to, information about the Company’s
products, homebuilding designs and specifications, financial data, assets,
liabilities, pricing, margins, business systems, business plans, marketing
plans, customer strategy, land acquisition strategy, land acquisition terms,
land development strategy, the identity of Company’s subcontractors, vendors,
suppliers, and partners, resources, technical analyses, and recruiting and
compensation practices.

 

E.                                      Protection
of Company Proprietary Opportunities. Employee acknowledges and agrees that
“Company Proprietary Opportunities” means any land acquisition or land
development opportunity in which Company is participating or has expressed
written interest (to a third party) prior to the Separation Date. Employee
agrees that, for a period of 12 months following the Separation Date: (1)
Employee will not become involved as a seller, buyer, or consultant, in any
Company Proprietary Opportunity; and (2) Employee will not, directly or
indirectly, own (other than a 5% ownership in a publicly traded company),
manage, operate, or control any entity involved in a Company Proprietary
Opportunity; and (3) Employee will not be employed by, perform services for, or
consult with any entity involved in a Company Proprietary Opportunity;
provided, however, that Employee may be employed by, perform services for, or
consult with that entity in a capacity unrelated to the Company Proprietary
Opportunity, so long as Employee does not assist in, participate in, or become
involved in, the Company Proprietary Opportunity in any way.

 

F.                                      Nonsolicitation
of Employees. Employee shall not, at any time prior to the Separation Date
or during the twelve (12) month period following the Separation Date,
solicit any person who was employed by Company on the Separation Date to leave
the employ of Company.

 

G.                                    Company’s
Right to Injunctive Relief. Employee acknowledges and agrees that the terms
of this Section IV are material to this Agreement, and that if Employee
breaches the obligations of this Agreement, then Employee shall be responsible
for all damages caused to the Company, without prejudice to any other rights
and remedies that Company may have. Employee acknowledges and agrees that the
Confidential Information, Company Proprietary Opportunities, and employee
knowledge acquired by Employee during his employment with Company is a valuable
asset and that breach by Employee of his obligations will cause Company
irreparable injury and damage that cannot be reasonably or adequately
compensated by money damages. Employee, therefore, expressly agrees that
Company shall be entitled to injunctive or other equitable relief in order to
prevent or remedy a breach of this Agreement, in addition to monetary damages
and such other remedies legally available to Company. Employee expressly waives
the claim that Company has an adequate remedy at law.

 

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V.                                     General Waiver and Release.

 

A.                                    General
Waiver and Release by EMPLOYEE.

 

1.                                       As
a material inducement to Company to enter into this Agreement, and in
consideration of the Separation Payment and Company’s promise to purchase from
Employee the Company Stock owned by Employee at the time of the termination of
Employee’s employment, Employee knowingly and voluntarily releases and forever
discharges Company, and all of its affiliates, parents, subsidiaries and
related entities, and all of their past, present, and future partners,
directors, officers, shareholders, employees, agents, insurers, attorneys, and
assigns, from any federal, state, or local charges, claims, demands, actions,
liabilities, suits, or causes of action, at law or equity or otherwise, and any
and all rights to or claims for continued employment after the Separation Date,
attorneys’ fees or damages (including contract, compensatory, punitive or
liquidated damages) or equitable relief, which he may ever have had, has now,
or may ever have or which Employee’s heirs, executors, or assigns can or shall
have, against any or all of them, whether known or unknown, on account of or
arising out of Employee’s employment with Company or any of its affiliates or
the termination of Employee’s employment with Company or any of its affiliates.

 

2.                                       This
release includes, but is not limited to, rights and claims arising under the
Age Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefit Protection Act of 1990 (“ADEA”), Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act, the Employee Retirement
Income Security Act, 29 U.S.C. §1001 et seq. (“ERISA”), the Sarbanes-Oxley Act
of 2002 (including the “whistleblower” provisions, 18 U.S.C. § 1514A et seq.),
the Fair Labor Standards Act, any state equal pay act, the Illinois Human
Rights Act, the Texas Commission on Human Rights Act, any state or local human
rights statute or ordinance, any claim for payment under the Company’s
Severance Pay Policy, any claims for any bonus payments, any claims or rights of
action relating to wage payment and collection, breach of contract, breach of
an employment agreement, violation of personnel policies or handbooks, public
policy, personal or emotional injury, defamation, libel, slander, additional
compensation, stock options, or fringe benefits; provided, however, the
Employee does not release any claims he may have now or in the future for (1)
indemnification by Company under its by-laws; or (2) any insurance coverage,
including, without limitation, directors and officers liability insurance which
might cover Employee for any acts or omissions he committed while an officer or
employee of Company. Employee specifically waives the benefit of any statute or
rule of law which, if applied to this Agreement, would otherwise exclude from
its binding effect any claims not now known by Employee to exist. This release
is not intended to waive or release any claim for failure to provide vested
benefits under an employee benefit plan sponsored by the Company to which
Employee is legally entitled, if any. This release also does not purport to
waive claims arising after the date of this Agreement or claims that cannot be
released by law.

 

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YOU UNDERSTAND THAT THIS
SEPARATION AND RELEASE AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS YOU MAY HAVE AGAINST COMPANY AS OF THE DATE OF THIS AGREEMENT.

 

3.                                       As
a material inducement to Employee to enter into this Agreement, Company
knowingly and voluntarily releases and forever discharges Employee, and all of
his affiliates, parents, subsidiaries and related entities, and all of their
past, present, and future partners, directors, officers, shareholders,
employees, agents, insurers, attorneys, and assigns, from any federal, state,
or local charges, claims, demands, actions, liabilities, suits, or causes of
action, at law or equity or otherwise, attorneys’ fees or damages (including
contract, compensatory, punitive or liquidated damages) or equitable relief,
which Company may ever have had, has now, or may ever have or which Company’s
assigns can or shall have, against any or all of them, whether known or
unknown, on account of or arising out of Employee’s employment with Company or
any of its affiliates.

 

4.                                       This
Agreement is presented to Employee on or before May 2, 2006. Employee
acknowledges that he has been granted at least twenty-one days within which to
consider this Agreement. Employee further acknowledges that by virtue of being
presented with this Agreement, he has been advised in writing to consult with
legal counsel and a tax advisor prior to executing this Agreement. Employee
acknowledges that if he executes this Agreement prior to the expiration of
twenty-one days, or chooses to forgo the advice of legal counsel or a tax advisor,
he does so freely and knowingly, and waives any and all future claims that such
action or actions would affect the validity of this Agreement. Employee further
acknowledges that any changes to this Agreement, whether material or
immaterial, do not restart the twenty-one day period.

 

5.                                       Employee
understands that he may cancel this Agreement at any time on or before the
seventh day following the date on which he signs the Agreement. To be
effective, the decision to cancel must be in writing and delivered to Company,
personally or by certified mail, on or before the seventh day after Employee
signs this Agreement, to the attention of:

 

JoAnn M. Peterson

Vice President, Human
Resources

Kimball Hill Homes

5999 New Wilke Road

Rolling Meadows, IL  60008

 

No portion of the Separation Payment will be paid to
Employee prior to April 30, 2006 and until at least seven days have elapsed
after the date on which Employee has signed this Agreement and Company has
received this Agreement signed by Employee. No portion of the Separation
Payment will be due and owing to Employee at all under this Agreement if
Employee cancels this Agreement as provided in this Section V.

 

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VI.                                 Miscellaneous Provisions.

 

1.                                       Employee
Acknowledgments. Employee acknowledges and agrees that Employee has not
suffered any on-the-job injury for which he has not already filed a claim; and
that this Agreement states fully all agreements, commitments, promises, and
understandings between Employee and Company relating to the termination of
Employee’s employment and that in deciding to sign this Agreement, Employee has
not relied on any agreements, promises, representations, or statements that are
not expressly set forth in this Agreement.

 

2.                                       Non-Assignment of Claims. Employee
represents and warrants that Employee has not sold, assigned, transferred,
conveyed, or otherwise disposed of to any third party, by operation of law or
otherwise, any action, cause of action, suit, debt, obligation, account,
contract, agreement, covenant, right, guarantee, controversy, judgment, damage,
claim, counterclaim, liability, or demand of any nature whatsoever relating to
any matter covered by this Agreement. This Agreement is personal to Employee,
and Employee may not assign, transfer, pledge, or hypothecate this Agreement or
any obligations, rights or payments arising under this Agreement. Company may
assign its rights under this Agreement.

 

3.                                       Waiver. No claim or right arising
out of a breach or default under this Agreement can be discharged by a waiver
of that claim or right unless the waiver is in writing signed by the party to
be bound by such waiver. A waiver by any party of a breach or default by the
other party of any provision of this Agreement shall not be deemed a waiver of
future compliance with such provision, and such provision shall remain in full
force and effect.

 

4.                                       Amendment. Any amendment to this
Agreement, including this provision, shall only be made in writing and signed
by both Employee and an officer of Company.

 

5.                                       Severability. This Agreement shall
be construed to be valid and enforceable to the maximum extent permitted by
law. If any provision of this Agreement is found by a tribunal of competent
jurisdiction to be invalid or unenforceable, in whole or in part, however, then
the parties agree that the tribunal shall have the ability to modify, amend, or
restrict that provision to the extent necessary so that it becomes valid and
enforceable, and the parties specifically request that the tribunal do so in
order to give effect, to the maximum extent possible, to the parties’
agreement. If any provision of this Agreement is, for any reason, held to be
invalid or unenforceable in any respect, then that provision shall be
ineffective to the extent, but only to the extent, of that invalidity or
unenforceability, and the remainder of that provision and all other provisions
of the Agreement shall remain in effect and valid and enforceable.

 

6.                                       Governing Law. The substantive laws
of the State of Illinois only shall govern the interpretation and enforcement
of this Agreement, and the conflict of laws rules of Illinois (or any other
jurisdiction) shall not be used to apply the substantive law of any other state
to the interpretation and enforcement this Agreement.

 

7.                                       Arbitration. Any dispute regarding
Employee’s employment with Company, including but not limited to any dispute
under this Agreement, which cannot be resolved by negotiations between Employee
and Company shall be submitted to, and solely and exclusively determined by,
final and binding arbitration conducted by the American Arbitration Association

 

9

 

in accordance with its National Rules For The Resolution Of Employment
Disputes, and the parties agree to be bound by the final award of the
arbitrator in any such proceeding. Employee waives his right to have any such
dispute resolved by judicial proceedings, including any right to trial by jury.
All questions regarding whether or not a dispute is subject to arbitration will
be resolved by the arbitrator. Arbitration shall be held in Chicago, Illinois
or such other place as the parties may mutually agree. Judgment upon the award
by the arbitrator may be entered in any court having jurisdiction thereof.
Notwithstanding this provision, however, any action by Company to obtain
injunctive relief for breach of Employee’s obligations under this Agreement may
be maintained in a court of competent jurisdiction.

 

8.                                       Entire Agreement. This Agreement is
a complete agreement and states fully all agreements, commitments, promises,
and understandings as between Employee and Company as to the separation of
Employee from employment by Company. This Agreement supersedes any and all
prior agreements, whether oral or written, between Employee and Company. Except
as expressly provided in this Agreement, Employee is not entitled to any other
or further compensation or remuneration from Company.

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement on the day and year set forth
below:

 

	
  Employee

  	
  Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kirk T.
  Breitenwischer

  	
   

  	
  By:

  	
  /s/ Hal H. Barber

  	
   

  
	
  KIRK T. BREITENWISCHER

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Senior Vice-President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  May 2, 2006

  	
  Date:

  	
  May 3, 2006

  	
   

  
							

 

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EXHIBIT A

 

STOCK
POWER 

 

FOR VALUE RECEIVED, Kirk T. Breitenwischer does hereby sell, assign, and
transfer to Kimball Hill, Inc. 7500 shares of
Common Stock of Kimball Hill, Inc. (the “Company”), represented by Certificate
No. 31, registered in the name of Kirk T. Breitenwischer on the books of the
Company.

 

Kirk T. Breitenwischer
represents and warrants that he is the lawful owner of, and has the complete
right, title and interest in and to, the aforesaid shares of Common Stock of
the Company represented by Certificate No. 31, free and clear of any liens,
claims, encumbrances, or rights of third parties, and that he has full power
and authority to sell, assign and transfer to Kimball Hill, Inc. the aforesaid
shares of Common Stock of the Company represented by Certificate No. 31.

 

Kirk T. Breitenwischer
does hereby irrevocably constitute and appoint the Secretary or any Assistant
Secretary of the Company as attorney, with full power of substitution, to
transfer the foregoing shares of Common Stock of the Company on the books of
the Company, hereby ratifying and confirming all actions that said attorney
shall lawfully do by virtue hereof.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kirk T. Breitenwischer

  	
   

  

 

11

 

STOCK
POWER 

 

FOR VALUE RECEIVED, Kirk T. Breitenwischer does hereby sell, assign, and
transfer to Kimball Hill, Inc. 16,500 shares
of Common Stock of Kimball Hill, Inc. (the “Company”), represented by
Certificate No. 36, registered in the name of Kirk T. Breitenwischer on the
books of the Company.

 

Kirk T. Breitenwischer
represents and warrants that he is the lawful owner of, and has the complete
right, title and interest in and to, the aforesaid shares of Common Stock of
the Company represented by Certificate No. 36, free and clear of any liens,
claims, encumbrances, or rights of third parties, and that he has full power
and authority to sell, assign and transfer to Kimball Hill, Inc. the aforesaid
shares of Common Stock of the Company represented by Certificate No. 36.

 

Kirk T. Breitenwischer
does hereby irrevocably constitute and appoint the Secretary or any Assistant
Secretary of the Company as attorney, with full power of substitution, to
transfer the foregoing shares of Common Stock of the Company on the books of
the Company, hereby ratifying and confirming all actions that said attorney
shall lawfully do by virtue hereof.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kirk T. Breitenwischer

  	
   

  

 

12

 

STOCK
POWER 

 

FOR VALUE RECEIVED, Kirk T. Breitenwischer does hereby sell, assign, and
transfer to Kimball Hill, Inc. 32,000 shares
of Common Stock of Kimball Hill, Inc. (the “Company”), represented by
Certificate No. 84, registered in the name of Kirk T. Breitenwischer on the
books of the Company.

 

Kirk T. Breitenwischer
represents and warrants that he is the lawful owner of, and has the complete
right, title and interest in and to, the aforesaid shares of Common Stock of
the Company represented by Certificate No. 84, free and clear of any liens,
claims, encumbrances, or rights of third parties, and that he has full power
and authority to sell, assign and transfer to Kimball Hill, Inc. the aforesaid
shares of Common Stock of the Company represented by Certificate No. 84.

 

Kirk T. Breitenwischer
does hereby irrevocably constitute and appoint the Secretary or any Assistant
Secretary of the Company as attorney, with full power of substitution, to
transfer the foregoing shares of Common Stock of the Company on the books of
the Company, hereby ratifying and confirming all actions that said attorney
shall lawfully do by virtue hereof.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kirk T. Breitenwischer

  	
   

  

 

13

 

STOCK
POWER 

 

FOR VALUE RECEIVED, Kirk T. Breitenwischer does hereby sell, assign, and
transfer to Kimball Hill, Inc. 14,000 shares
of Common Stock of Kimball Hill, Inc. (the “Company”), represented by
Certificate No. 88, registered in the name of Kirk T. Breitenwischer on the
books of the Company.

 

Kirk T. Breitenwischer
represents and warrants that he is the lawful owner of, and has the complete
right, title and interest in and to, the aforesaid shares of Common Stock of
the Company represented by Certificate No. 88, free and clear of any liens,
claims, encumbrances, or rights of third parties, and that he has full power
and authority to sell, assign and transfer to Kimball Hill, Inc. the aforesaid
shares of Common Stock of the Company represented by Certificate No. 88.

 

Kirk T. Breitenwischer
does hereby irrevocably constitute and appoint the Secretary or any Assistant
Secretary of the Company as attorney, with full power of substitution, to
transfer the foregoing shares of Common Stock of the Company on the books of
the Company, hereby ratifying and confirming all actions that said attorney
shall lawfully do by virtue hereof.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kirk T. Breitenwischer

  	
   

  

 

14

 

STOCK
POWER 

 

FOR VALUE RECEIVED, Kirk T. Breitenwischer does hereby sell, assign, and
transfer to Kimball Hill, Inc. 7,000 shares
of Common Stock of Kimball Hill, Inc. (the “Company”), represented by
Certificate No. 95, registered in the name of Kirk T. Breitenwischer on the
books of the Company.

 

Kirk T. Breitenwischer
represents and warrants that he is the lawful owner of, and has the complete
right, title and interest in and to, the aforesaid shares of Common Stock of
the Company represented by Certificate No. 95, free and clear of any liens,
claims, encumbrances, or rights of third parties, and that he has full power
and authority to sell, assign and transfer to Kimball Hill, Inc. the aforesaid
shares of Common Stock of the Company represented by Certificate No. 95.

 

Kirk T. Breitenwischer
does hereby irrevocably constitute and appoint the Secretary or any Assistant
Secretary of the Company as attorney, with full power of substitution, to
transfer the foregoing shares of Common Stock of the Company on the books of
the Company, hereby ratifying and confirming all actions that said attorney
shall lawfully do by virtue hereof.

 

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Kirk T. Breitenwischer

  	
   

  

 

15

 

EXHBIT B

 

NON-NEGOTIABLE PROMISSORY NOTE

 

	
  $3,811,500.00

  	
   

  	
  Rolling Meadows, Illinois

  
	
   

  	
   

  	
  July      , 2006

  

 

FOR VALUE RECEIVED, on or before January 31, 2007, the
undersigned, KIMBALL HILL, INC., an Illinois corporation (the “Company”),
promises to pay to KIRK T. BREITENWISCHER the principal sum of $3,811,500.00
and simple interest from the date hereof on the balance of principal remaining
from time to time unpaid at the rate of six percent (6.00%) per annum. 

 

This Note is made in
accordance with and is subject to the provisions of the Confidential Separation
Agreement as of April 30, 2006 between the Company and Kirk T. Breitenwischer.
Without limiting the generality of the foregoing, the Company’s payment of
principal and interest on the Note is subject to any and all limitations and
prohibitions contained in the Trust Indenture with respect to the Company’s 10
1⁄2% Senior Subordinated Notes Due 2012 as described in the certain Offering
Memorandum of the Company dated December 14, 2005.

 

This Note is subordinated
to the Notes and the Note Guarantees (together with any replacement or
substitute Notes and Note Guarantees) issued by the Company pursuant to the
provisions of the Company’s 10 1⁄2% Senior Subordinated Notes Due 2012, as such
terms are defined in the certain Offering Memorandum of the Company dated
December 14, 2005. See Certain Covenants—Limitations on Additional
Indebtedness.

 

All payments on account
of the indebtedness evidenced by this Note shall be first applied to interest
on the unpaid principal balance and the remainder to principal.

 

All payments of principal
and interest shall be made to Kirk T. Breitenwischer at 3707 Wroxton, Houston,
Texas 77005.

 

The Company shall have
the right to prepay this Note in whole or in part and from time to time without
penalty, including without limitation prepayment in the event the Company
issues equity securities to a non-affiliated third party as provided in the
aforesaid Confidential Separation Agreement between the Company and Kirk T.
Breitenwischer.

 

	
   

  	
  KIMBALL
  HILL, INC.,

  
	
   

  	
    an Illinois
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

16Exhibit 10.7

 

BROOKLINE BANK

 

AMENDMENT TO

EMPLOYMENT AGREEMENT

 

WHEREAS,
Brookline Bank (the “Bank”), a Massachusetts chartered stock savings bank, with
its principal administrative office at 160 Washington Street, Brookline,
Massachusetts 02447-0469 and Richard P. Chapman, Jr. (the “Executive”) are
parties to an employment agreement dated February 25, 1998 and amended on
February 25, 2003  (the “Employment
Agreement”); and

 

WHEREAS,
under recently enacted Section 409A of the Internal Revenue Code (“Code”),
employment agreements may be considered deferred compensation arrangement
subject to the provisions of Section 409A; and

 

WHEREAS,
the Bank and Executive desire at this time to update and amend the Employment
Agreement to, among other things, address compliance and other issues with
respect to recently enacted Code Section 409A.

 

NOW,
THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

 

1.             Section 4 of the
Employment Agreement “PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION” is
hereby amended in its entirety to read as follows:

 

The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 7 and 14.

 

(a)   The
provisions of this Section shall apply upon the occurrence of an Event of
Termination (as herein defined) during the Executive’s term of employment under
this Agreement. As used in this Agreement, an “Event of Termination” shall mean
and include any one or more of the following:

 

(i)    the
termination by the Bank or the Company of Executive’s full time employment
hereunder for any reason other than (A) Disability or Retirement, as defined in
Section 5 below, or (B) Termination for Cause as defined in Section 6
hereof;  or

 

(ii)   Executive’s
resignation from the Bank’s employ, upon any

 

(A) failure to elect or reelect or to appoint or reappoint Executive as
President and Chief Executive of the Company and Chief Executive Officer of the
Bank,

 

(B) material change in Executive’s function, duties, or
responsibilities, which change would cause Executive’s position to become one
of lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above,

 

(C) a relocation of Executive’s principal place of employment by more
than 30 miles from its location at the effective date of this Agreement, or a
material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement,

 

(D) liquidation or dissolution of the Bank or
Company other than liquidations or dissolutions that are caused by
reorganizations that do not affect the status of Executive, or

 

(E) breach of this Agreement by the Bank.

 

(iii)  Upon
the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E), above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon sixty (60) days prior written notice
given within a reasonable period of time not to exceed four calendar months
after the initial event giving rise to said right to elect. Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by
the Bank, the Executive, after giving due notice within the prescribed time
frame of an initial event specified above, shall not waive any of his rights
solely under this Agreement and this Section 4 by virtue of the fact that

 

 

Executive has submitted his resignation but
has remained in the employment of the Bank and is engaged in good faith
discussions to resolve any occurrence of an event described in clauses (A),
(B), (C), (D) and (E) above.

 

(b)   The
provisions of this Section 4(b) and 4(d) shall apply upon the occurrence of a
Change in Control during the term of this Agreement,
including extensions hereof. In the event of a Change in Control of the Company
or the Bank, Executive shall be entitled to the payments set forth in Section
4(d) hereof. For purposes of this Agreement, a Change in Control of the Company
or the Bank shall mean (i) a change in ownership of
the Company or the Bank under paragraph (1) below, or (ii) a change in
effective control of the Company or the Bank under paragraph (2) below, or
(iii) a change in the ownership of a substantial portion of the assets of the
Company or the Bank under paragraph (3) below:

 

(1)   Change
in the ownership of the Company or the Bank. A change in the ownership of the
Company or the Bank shall occur on the date that any one person, or more than
one person acting as a group (as defined in Proposed Treasury Regulation
Section 1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires ownership of
stock of the corporation that, together with stock held by such person or
group, constitutes more than 50 percent of the total fair market value or total
voting power of the stock of such corporation.

 

(2)   Change
in the effective control of the Company or the Bank. A change in the effective
control of the Company or the Bank shall occur on the date that either (i) any one person, or more than one person acting as a
group (as defined in Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B)
or subsequent guidance), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the corporation possessing 35 percent or more of the
total voting power of the stock of such corporation; or (ii) a majority of
members of the corporation’s board of Directors is replaced during any 12-month
period by Directors whose appointment or election is not endorsed by a majority
of the members of the corporation’s board of Directors prior to the date of the
appointment or election, provided that this sub-section (ii) is inapplicable
where a majority shareholder of the Company or the Bank is another corporation.

 

(3)   Change
in the ownership of a substantial portion of the Company’s or the Bank’s assets.
A change in the ownership of a substantial portion of the Company or the Bank’s
assets shall occur on the date that any one person, or more than one person
acting as a group (as defined in Proposed Treasury Regulation Section
1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such
person or persons) assets from the corporation that have a total gross fair
market value equal to or more than 40 percent of the total gross fair market
value of (i) all of the assets of the Company or the
Bank, or (ii) the value of the assets being disposed of, either of which is
determined without regard to any liabilities associated with such assets.

 

(4)   For
all purposes hereunder, the definition of Change in Control shall be construed
to be consistent with the requirements of Proposed Treasury Regulation Section
1.409A-3(g) or subsequent guidance.

 

(c)   Upon
the occurrence of an Event of Termination, on the Date of Termination, as
defined in Section 7, the Bank shall pay Executive, or, in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, as severance pay or liquidated damages, or both, a sum equal to three
(3) times the sum of (i) Base Salary and (ii) the
highest rate of bonus awarded to the Executive during the prior three years. Payments
of the amounts set forth in this paragraph shall be made no earlier than the
first day of the seventh month following Executive’s Separation from Service if
Executive is a Specified Employee and such delay is required by Code Section 409A.
For these purposes, the terms “Specified Employee” and “Separation from Service”
shall have the meaning required by Code Section 409A. At the election of the
Executive, which election is to be made on an annual basis by December 31 of
the year immediately preceding the year in which an Event of Termination
occurs, and which election is irrevocable for the year in which made and upon
the occurrence of an Event of Termination, any payments shall be made in a lump
sum or paid monthly during the remaining term of this Agreement following the
Executive’s termination. In the event that no election is made, payment to the
Executive will be made in a lump sum on the Date of Termination or on the first
day of the seventh month following Executive’s Separation of Service, if, as
provided above, required by Code Section 409A. Such payments shall not be
reduced in the event the Executive obtains other employment following
termination of employment.

 

(d)   Upon
the occurrence of a Change in Control, as defined in Section 4(b), the Bank
shall pay to Executive, or, in the event of his death during the term of this
Agreement but subsequent to a Change in Control, to his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to three (3) times the sum of (i) Base Salary and (ii) the highest annual bonus awarded to
Executive during the prior three years. Payment of the amount required
hereunder shall be made in a lump sum on the effective date of the Change in
Control.

 

 

(e)   Upon
the occurrence of an Event of Termination, or a Change in Control as defined in
Section 4(b), the Bank will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for Executive prior to his termination. Such coverage shall continue for
36 months from the Date of Termination or the Change in Control.

 

(f)    Notwithstanding
the preceding paragraphs of this Section 4, in the event that:

 

(i)    the
aggregate payments or benefits to be made or afforded to Executive under said
paragraphs (the “Termination Benefits”) would be deemed to include an “excess
parachute payment” under Section 280G of the Code or any successor thereto, and

 

(ii)   if
such Termination Benefits were reduced to an amount (the “Non Triggering Amount”),
the value of which is one dollar ($1.00) less than an amount equal to the total
amount of payments permissible under Section 280G of the Code or any successor
thereto,

 

then the
Termination Benefits to be paid to Executive shall be so reduced so as to be a
Non Triggering Amount.

 

2.             Terms not defined
herein shall have the meaning ascribed to them in the Employment Agreement.

 

3.             Except as set forth
above, all other terms and provisions of the Employment Agreement shall remain
in full force and effect.

 

IN WITNESS WHEREOF,
the Bank and the Company have caused this Amendment to be executed by their
duly authorized officers, and Executives have signed this Agreement, as of
December 15, 2005.

 

 

	
   

  	
   

  	
  BROOKLINE
  BANK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Franklyn Wyman, Jr.

  	
   

  
	
   

  	
   

  	
  Franklyn Wyman, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BROOKLINE
  BANCORP, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Franklyn Wyman, Jr.

  	
   

  
	
   

  	
   

  	
  Franklyn Wyman, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Richard P. Chapman, Jr.

  	
   

  
	
   

  	
   

  	
  Richard
  P. Chapman, Jr.

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