EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into on
this 18th day of August, 1998, by and between Home Real Estate Company of Omaha
(the "Company"), a subsidiary of MidAmerican Realty Services Company ("MRSC"),
which is a subsidiary of MidAmerican Energy Holdings Company ("MidAmerican") and
Xxxxxx X. Xxxxxxx (the "Employee").
WHEREAS, the Company believes that the Employee's contribution to the
growth and success of the Company as a member of its management team will be
substantial and desires to employ the Employee in that role; and
WHEREAS, the Employee is desirous of serving the Company in said capacity
on the terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Employment and Term. The Company hereby agrees to employ the Employee
as a member of its management team and the Employee hereby agrees to
serve the Company in such capacity, on the terms and conditions set
forth herein for the period commencing on the date of this Agreement
and continuing for a period of four (4) years from that date, unless
earlier terminated by the Employee or the Company in accordance with
paragraph 6 herein. Upon the expiration of the initial term of this
Agreement, it shall be automatically extended for one-year periods,
unless on or before the date which is one year prior to the
expiration of the initial term of the Agreement or any subsequent
one-year extension period, either party has delivered to the other
written notice of intent to terminate this Agreement upon its next
expiration date. The purpose of the automatic extension is to assure
that the parties have at least one year prior notice of termination
of the Agreement. Irrespective of whether the Agreement is in its
initial term or a subsequent one-year extension period, it is at all
times subject to the termination provisions of paragraph 6.
2. Waiver of Rights. The Employee specifically acknowledges and agrees
that upon the effective date of this Agreement, any prior
employment agreement or agreements with Home Realty Company of Omaha,
AmerUs Home Services, Inc., and their affiliates, successors and
assigns are canceled and no longer in effect. Further, the Employee
waives any and all rights, claims or other causes of action he may
have against Company, Home Realty Company of Omaha and AmerUs Home
Services, Inc., their affiliates, parents and its and their
predecessors and successors on account of any contract, liability or
other thing done or omitted, from all time in the past until the
effective date of this Agreement.
3. Duties. The Employee is engaged by the Company to be responsible for
oversight of Company's real estate operations in Omaha, Nebraska and
if acquired by Company or MRSC, the operations of other realty
companies in Omaha, and for such other duties related to the
Company's management as may from time to time be assigned by its
Board of Directors (the "Board") and shall report to the Board.
Duties assigned to Employee shall not be materially inconsistent
with the duties described in Exhibit "A." The Employee will, during
his term of employment hereunder:
a. Faithfully and diligently do and perform all such acts and
duties and furnish such services for the Company as the Board or
its designated representative shall direct from time to time;
b. Except as provided hereinafter, devote his full time, energy and
skill to the business of the Company and to the promotion of its
best interests, except for vacations, absences made necessary
because of illness, and service on other corporate, civic or
charitable boards or committees not significantly interfering
with his duties hereunder. Also, the parties agree that the
Employee may continue to spend time on other real estate and
personal ventures as described in Exhibit "B"; and any new
ventures of similar nature may be undertaken to the extent that
the new ventures when combined with the ventures listed on
Exhibit "B," do not interfere or conflict with Employee's duties
under this Agreement. Future listing policies with respect to
these personal ventures will be consistent with historical
listing policies under which Company continues to be the
predominant listing broker.
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4. Compensation. During the initial term of this Agreement, the Company
shall pay the Employee base, supplemental, and, when earned and
payable in accordance with the provisions of paragraph 4.(c),
incentive compensation for the performance of his duties under this
Agreement, as follows:
a. The Company shall pay Employee a base salary at the annual rate
of $175,000, and an annual supplement to base annual salary of
$75,000, such that employee is paid a minimum gross compensation
of $250,000 per year. Total annual gross minimum compensation
shall be payable at the Company's regular payroll intervals and
in accordance to Company's regular payroll procedures.
b. Short-term incentive compensation to be determined as provided
in Exhibit "C" attached hereto.
With respect to the calculation of short-term incentives under
this subparagraph, if it becomes apparent that the stated
income goals cannot be achieved for unforeseen reasons and in
spite of diligent management effort, the Employee may
nonetheless be awarded short-term incentive payments, if
approved by the Compensation Committee of the Board of Directors
of MidAmerican ("Committee"), as recommended by the Chief
Executive Officer of MidAmerican Energy Holdings Company, to
reward exemplary performance.
In the event the Company terminates the Employee's employment
for any reason other than Good Cause, as defined in subparagraph
6(c) other than due to Employee's death or disability, or the
Employee terminates his employment for Good Reason, as defined
in subparagraph 6(d), prior to the end of any calendar year, he
shall be entitled to a short-term incentive payment if the
income goals described in Exhibit B have been achieved as of the
last day of the calendar year in which his termination of
employment occurs, provided, however, that the amount of such
payment shall be calculated by multiplying the incentive amount
that would have been payable to the
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Employee pursuant to Exhibit B, had his employment not
terminated during the calendar year, by a fraction, the
numerator of which is the number of full weeks of employment
completed by the Employee during such calendar year and the
denominator of which is 52. If the Employee's employment is
terminated for Good Cause, as defined in subparagraph 6(c),
other than due to death or disability, or the Employee
terminates his employment for other than Good Reason, as
defined in subparagraph 6(d), prior to the end of any calendar
year, no short-term incentive shall be payable for such year.
c. The parties agree that Employee is to receive minimum gross
compensation of $250,000 per year. Therefore, if the total of
Employee's annual base salary ($175,000) and annual short-term
incentive payments do not exceed $250,000 for any year, Company
will not pay to Employee any incentive compensation for that
year. If the total of Employee's annual base salary and
incentive compensation for any year exceeds $250,000, then the
Company shall pay Employee the excess as incentive compensation.
d. If the Employee's employment continues subsequent to the fourth
anniversary of the date of this Agreement, the Employee and the
Chief Executive Officer of MidAmerican Energy Holdings Company
shall negotiate the amount of the Employee's future base salary
and the terms of any further short-term incentive arrangements
at that time, with all such compensation to be subject to
approval of the Committee.
5. Additional Benefits.
a. The Employee shall be eligible to participate in the ERISA
qualified retirement and welfare benefit plans of the Company in
accordance with the terms and conditions of such plans. The
Employee shall also be entitled to paid vacations and holidays
consistent with the Company's customary practice for executives
as provided in Exhibit "D."
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b. The Company shall promptly pay (or reimburse the Employee for)
all reasonable expenses incurred by him in the performance of
his duties hereunder in accordance with policies from time to
time adopted by the Board, including business travel and
entertainment expenses. The Employee shall furnish to the
Company such receipts and records as the Company may require to
verify the foregoing expenses.
6. Termination.
a. The Employee may resign his employment with the Company
effective upon two months' advance written notice to the Board.
If the Employee resigns under this paragraph, the Board (by the
vote of a majority of its members other than the resigning
Employee and other members who have given notice of resignation
as an employee) retains the right to terminate the Employee's
employment, effective upon written notice to the Employee, at
any time during the notice period for Good Cause, as defined in
subparagraph 6(c).
b. The employment of the Employee with the Company may be
terminated, for other than Good Cause, as defined in
subparagraph 6(c), by the Board directing such termination (by
the vote of a majority of its members other than the Employee
and other members who have given notice of resignation as an
employee) and upon two months' advance written notice to
Employee, provided, however, that Employee may be terminated,
effective upon written notice to Employee, for Good Cause
during the notice period. The Board may require Employee to
cease reporting to work during the notice period, even without
Good Cause.
c. The employment of the Employee may be terminated for Good Cause
by the Board directing such termination (by the vote of a
majority of its members other than the Employee and other
members who have given notice of resignation as an employee) and
effective upon written notice to the Employee. Good Cause shall
mean (1) the Employee's conviction of any gross misdemeanor
involving dishonesty, fraud or breach of
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trust or a felony; (2) the Employee's engagement in gross
misconduct that materially injures the Company, monetarily or
otherwise; (3) the Employee's gross neglect of his duties under
this Agreement;(4) the Employee's death or Disability; (5)
Employee's failure to physically appear for work; or (6) the
Employee's violation of paragraph 8 of this Agreement. The
Employee shall be considered to have come under a Disability if
he, by reason of physical or mental disability, becomes unable
to perform the services required of him hereunder for three (3)
consecutive months during any 12-month period. With respect to
"Good Cause" as described in (5) and (6) of this paragraph 6(c),
termination shall not occur unless Employee, within thirty days
of notice to desist, fails to do so.
A violation of paragraph 3(a) and 3(b) shall not constitute good
cause hereunder unless Employee, within thirty (30) days of
notice to desist, fails to do so. No notice shall be required if
material, irreparable damage has already resulted from the
Employee's conduct.
d. The Employee may terminate his employment with the Company at
any time for Good Reason, effective immediately upon written
notice to the Board. Good Reason shall exist if the Employee
terminates his employment because (1) the Company has materially
breached any of the terms of this Agreement and has failed to
cure within thirty (30) days following receipt of Employee's
written notice of breach; (2) the Employee is assigned duties
which are materially inconsistent with his position, duties,
responsibilities and status as a member of the Company's
management team; (3) the Company's principal office or the
Employee's own office location as assigned to him by the Company
is relocated to a location more than 50 miles from Omaha,
Nebraska; or (4) the majority of the common stock or
substantially all of the assets of the Company or MRSC are sold
or transferred, and the Employee is unable in good faith to
reach agreement with the purchaser on an employment arrangement
which, with respect to duties, responsibilities and
compensation, is substantially similar to this Agreement within
thirty (30) days of the sale. It
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is specifically understood and acknowledged by the parties
hereto that such sale or transfer shall not constitute "Good
Reason," if such sale or transfer is the result of taking
Company or MRSC public or a merger or acquisition involving
MidAmerican, provided that following the merger or acquisition,
MidAmerican or its successors continues, directly or indirectly,
to own Company.
7. Severance.
a. If the Employee's employment is terminated by the Company for
other than Good Cause or the Employee terminates his employment
with the Company for Good Reason, the Company shall continue to
pay the Employee his base salary as in effect as of his
termination date at the Company's normal payroll intervals
during the remaining term of the Agreement and the
Non-Competition Period, as defined in subparagraph 8(a). In
addition, during the Non-Competition Period, the Company shall
also pay to the Employee annually a short-term incentive payment
as described in Exhibit "C", equal to the average annual
short-term incentive payments made to the Employee under this
Agreement prior to the Employee's termination. During this
period, if the Employee is eligible for and elects continuation
coverage under one or more group health plans sponsored by the
Company or its subsidiaries, the Company shall pay the same
portion of the premium cost of such coverage, if any, as is paid
by the Company for members of its management team who are
actively employed. Upon the occurrence of an event which causes
the commencement of continuation pay and the non-compensation
period, Company will escrow 120% of the remaining balance owed
to the Employee in a separate account to be used solely for the
purpose of paying the benefits due under this paragraph 7(a).
b. If the Employee terminates his employment with the Company for
other than Good Reason, the Company shall pay the Employee his
base salary only through his termination date and the
Non-Competition Period shall continue for the full period
specified in sub-paragraph 8(a) without additional
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consideration other than payments made prior to the Employee's
termination date.
c. If the Employee is terminated by the Company for Good Cause, the
Company shall pay the Employee his base salary only through his
termination date and the Non-Competition Period shall continue
for the full period specified in subparagraph 8(a) without
additional consideration other than the payments made prior to
the Employee's termination date.
d. Except as provided in this paragraph 7 or in subparagraph 4(b),
or as otherwise required pursuant to the laws applicable to the
retirement and welfare plans sponsored by the Company or its
subsidiaries, the Employee shall receive no compensation or
additional benefits following his termination date.
8. Non-Competition and Non-Solicitation.
a. So long as Company continues in full performance of its
obligations hereunder, Employee covenants and agrees that,
during his employment and, at the election of the Company, from
the date of his termination of employment with the Company for
any reason for a period to be determined by Company not to
extend beyond the date which is the third anniversary of such
date (the "Non-Competition Period"), he will not, directly or
indirectly, own, manage, operate, control, invest in, be
employed by or under contract with, participate in, consult with
or render services to, or be connected in any manner with the
operation, ownership, management or control of any enterprise
which competes with any business engaged in by Company during
his employment and within the states of Nebraska and Iowa.
Employee agrees that he will promptly notify the Board of his
employment or other affiliation with any other business or
entity during the Non-Competition Period.
b. Employee also certifies that he is not currently subject to a
noncompetition agreement with a former employer or any
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other person or entity which prohibits him from working with the
Company in the capacity contemplated by this Agreement.
c. The Employee specifically acknowledges that he has obtained and
will, in the course of his employment, continue to obtain and
have access to confidential data pertaining to customers and
prospective customers of the Company, that such data is a
valuable and unique asset of Company's business and that the
success or failure of Company's specialized business is
dependent to a significant degree upon the ability of Company to
establish and maintain close and continuing personal contacts
and working relationships with its customers and prospective
customers and to develop proposals which are specifically
devised, refined and adjusted to meet, satisfy and coincide with
the interests and requirements of its customers and prospective
customers. Therefore, this paragraph is specifically intended to
prohibit, during the Non-Competition Period, solicitation,
either directly or indirectly, of any or all of Company's
customers and clients at the time of the Employee's termination
of employment and prospective customers and clients of Company
with whom Employee had contact, or was in a position to have
contact with, during the two years preceding his termination of
employment.
d. Employee further agrees that during his employment and during
the Non-Competition Period, Employee will not solicit on his own
behalf or on behalf of any other person, the services of any
person who is an employee or agent of Company or was an employee
or agent of Company during the two years preceding the
Non-Competition Period or solicit any of Company's employees or
agents to terminate their employment or agency with Company,
without advance, written approval of the Board of the Company.
e. Employee further acknowledges that he has obtained and will, in
the course of his employment, continue to obtain and have access
to confidential data relating to Company's special vendors and
procurers and their representatives and that this information is
a valuable and unique asset of Company, also
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developed over time. Employee agrees that, during the Non-
Competition Period, he will not solicit on his own behalf or on
behalf of any other person, any such vendor, procurer or
representative for the purposes of either providing products or
services or terminating their relationship or agency with
Company.
f. Employee further agrees that, during the Non-Competition Period,
he will do nothing to interfere with any of Company's business
relationships or its goodwill or reputation.
g. Employee hereby acknowledges and agrees that all non-public
information and data of Company, including without limitation
that related to products, customers, pricing, sales and
financial results (collectively "Trade Secrets") are of
substantial value to Company, provide it with a substantial
competitive advantage in its business, and are and have been
maintained in strictest confidence as trade secrets. Except as
otherwise approved in writing by the Board, the Employee shall
not divulge, furnish, or make accessible to anyone (other than
the Company, its directors and officers or to others during the
course of Employee's employment with the Company if, in good
faith, the Employee determines that such disclosure is in the
best interest of the Company) any Trade Secrets.
9. Remedies. Employee acknowledges that the restrictions set forth in
paragraph 8 are reasonably necessary to protect a legitimate business
interest of the Company. It is understood that if the Employee
violates his obligations under any of these paragraphs, Company would
suffer irreparable harm for which a recovery of money damages would
be an incomplete and inadequate remedy. It is therefore agreed that
in the case of any violation or threatened violation of paragraph 8
of this Agreement, Company may apply for and secure injunctive
relief, temporary or provisional, in court, without bond but upon due
notice, pending final resolution on the merits pursuant to
arbitration as set forth in paragraph 16 below. No waiver of any
violation of this Agreement shall be implied from any failure by
Company to take action under this paragraph.
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10. Severability. The parties intend that the covenants and agreements
contained herein shall be deemed to be a series of separate covenants
and agreements, one for each and every state of the United States and
political subdivision outside the United States where the business
described is conducted. If, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants deemed included in
such action, then such unenforceable covenants shall be deemed
eliminated from the provisions of this Agreement for the purpose of
such proceeding to the extent necessary to permit the remaining
covenants to be enforced in such proceeding. Further, in the event
that any provision is held to be over broad as written, such
provision shall be deemed amended to narrow its application to the
extent necessary to make the provision enforceable according to
applicable law and enforced as amended.
11. Binding Effect. The covenants and agreements of paragraph 8 shall
survive the termination of this Agreement for any reason and shall
not be terminated by the voluntary dissolution of the Company (or any
parent, subsidiary or successor of the Company) or merger whereby the
Company (or such parent, subsidiary or successor of the Company) is
not the surviving or resulting corporation, or any transfer of
substantially all the assets of the Company, unless no transferee or
successor continues to carry on the business activities of the
Company. In the event of any such merger or consolidation or transfer
of assets, the provisions of this Agreement shall inure to the
benefit of and shall be binding upon the surviving or resulting
corporation or the corporation to which such assets shall be
transferred.
12. Entire Agreement. From and after the date of this Agreement, the
terms and provisions of this Agreement constitute the entire
agreement between the parties. This Agreement supersedes any previous
oral or written communications, representations, or agreements with
respect to any subject, including the subject matter of compensation,
incentive, participation and profit sharing and termination
compensation.
13. Waiver. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of
this
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Agreement to be performed by the other party shall be deemed a waiver
of any other provisions or conditions at the same time or at any
prior or subsequent time.
14. Applicable Law. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be
construed and governed in accordance with the laws of the State of
Iowa. The parties consent to the personal jurisdiction of the State
of Iowa, waive any argument that such a forum is not convenient, and
agree that any litigation or arbitration relating to this Agreement
shall be venued in Polk County, Iowa.
15. Tax Withholding. The Company may withhold from any payment of
benefits under this Agreement (and forward to the appropriate taxing
authority) any taxes required to be withheld under applicable law.
16. Disputes. Any and all claims or disputes between Employee and Company
(including the validity, scope, and enforceability of this
paragraph), except as otherwise provided under paragraph 9 herein,
shall be submitted for arbitration and resolution to an arbitrator.
No demand for arbitration may be made after the date when the
institution of legal or equitable proceedings based on such claim or
dispute would be barred by the applicable statute of limitation. The
arbitrator shall be selected by mutual agreement of the parties.
Unless otherwise provided for in this Agreement, the Expedited Labor
Arbitration Rules of the American Arbitration Association shall
apply. If the parties are unable to agree upon an arbitrator, any
such dispute shall be solely and finally settled by arbitration in
accordance with the Expedited labor Arbitration Rules of the American
Arbitration Association ("AAA"), except (1) the arbitrator shall be
selected by the AAA as follows: (a) the AAA shall submit a list of
names of five arbitrators with significant experience in arbitrating
executive employment disputes; (b) each party shall have the right to
exercise unlimited challenges to said named arbitrators for cause,
the AAA to determine, if disputed, whether any such challenge for
cause is justifiable and to replace any such stricken arbitrator name
with another name so that the parties are presented with five names,
none of which can be stricken for cause; (c) each party hereto may
exercise up to two peremptory challenges to names on the submitted
list of five
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names; and (d) the AAA shall select the arbitrator from the remaining
names; and (2) the arbitrator shall render an Award in writing with
sufficient detail to determine the arbitrator's decision on each
issue submitted to arbitration. The parties agree that no punitive
damages shall be awarded hereunder. The parties also agree that all
awards, decisions and remedies in favor of a winning party hereunder
with respect to any issue shall be proportional to the violation
caused by the losing party with respect to that issue. All costs in
conducting the arbitration, including but not limited to the
arbitration filing fee, the arbitrator's fees and expenses, and the
reasonable attorney's fees and expenses of the prevailing party
(including the attorney's fees and costs incurred by the prevailing
party in seeking or resisting temporary or provisional court relief
as set out in paragraph 9 above), shall be the responsibility of the
losing party. In the event there is more than one issue in dispute
and there is no one prevailing party with respect to all issues in
dispute, costs and attorneys' fees shall be prorated by the
arbitrator according to the relative dollar value of each issue. The
arbitrator's Award shall be final and binding. In the event either
party must resort to the judicial process to enforce the provisions
of this Agreement, the award of an arbitrator or equitable relief
granted by an arbitrator, the party seeking enforcement shall be
entitled to recover from the other party all costs of litigation
including, but not limited to, reasonable attorney's fees and court
costs. The arbitration proceedings and Award shall be maintained by
both parties as strictly confidential, except as otherwise required
by court order and with respect to the parties' attorneys and tax
advisors, and, with respect to Company, members of its management,
and, with respect to Employee, his family and close confidants.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
effective as of the day and year first above written.
HOME REAL ESTATE COMPANY OF OMAHA
By:
-----------------------------
Title:
-----------------------------
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XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
-------------------------------------
THE UNDERSIGNED HEREBY guarantees Company's performance under this
Agreement.
MIDAMERICAN REALTY SERVICES COMPANY
By:
-----------------------------
Title:
-----------------------------
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EXHIBIT A
XXX XXXXXXX
JOB DESCRIPTION & RESPONSIBILITIES
President and Designated Broker for HOME Real Estate Company of Omaha,
Nebraska. Responsible for the operation of the brokerage company. Involves the
following:
1. Five residential office managers.
2. 270 sales associates in six offices.
3. HFS Mobility Services relationship.
4. PHM Mortgage relationship and four financial service representatives.
5. Recruiting program - Xxxx Xxxxxx
6. Administration and Accounting departments - involves three managers and
35-40 employees (including sales office employees).
7. Budget and Salary establishment and review.
8. Advertising and Marketing Coordinator with the advertising agency
involving all media and marketing efforts. Xxxxxxx Xxxxx, Marketing
Manager
9. Coordination of legal matters involving HOME Real Estate Company with
in-house attorney, managers and other attorneys. Xxxx Xxxx, In-house
Attorney
10. Education department - involves the training of new agents and the
development of on going education programs for our existing agents.
Xxxxxxx Xxxxx, Manager
11. Coordination and integration of our land development projects with the
brokerage to include both agent and builder relations.
12. Any other responsibilities, which involve the operation of a
residential brokerage company.
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EXHIBIT C
Short-Term Incentive Compensation Plan for Xxxxxx X. Xxxxxxx
Start Date: August 18, 1998
Term of Plan: 4 years
Award Opportunity: Target award of 70% of base salary, with a
maximum award equal to 100% of base salary
Definition of EBITDA: Operating profit before depreciation;
amortization of transaction costs and goodwill;
interest income or expense; income taxes and
unusual non-recurring gains or expenses (e.g.,
legal settlements, provisions for contingencies,
effect of accounting changes and severance
costs). The 1998 bonus will be based on the
time period from Closing through December
31, 1998.
Payment: Payment of the award will be made upon
achievement of the performance criteria and
after the Compensation Committee of the
Board of Directors of MidAmerican Energy
Holdings Company (the "Committee")
approves the incentive award computations,
based upon the recommendation of the Chief
Executive Officer ("CEO") of MidAmerican
Energy Holdings Company.
Purpose: The intent of the incentive award and its
underlying formula is to focus senior
executives on maximizing "enterprise value".
Award Determination: Award to be recommended to the Committee
will be determined by the CEO and based upon
objective performance criteria to be established
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at the beginning of each calendar
year. Such criteria will also be
recommended by the CEO to the
Committee for approval. For 1998,
the performance criteria in effect
will be based upon "EBITDA" level,
which will be established by the CEO
following acquisition of Home Real
Estate Company of Omaha by
MidAmerican Realty Services Company.
During a calendar year, performance
criteria may be adjusted at the sole
discretion of the CEO, with the
concurrence of the Committee, to
reflect modifications to MidAmerican
Realty Services Company's
operations, resulting from items
such as acquisitions or other items
such as acquisitions or other items
for which an adjustment is deemed
appropriate. The CEO and the
Committee will be under no
obligation to make any such
adjustments to the performance
criteria.
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EXHIBIT "D"
EXECUTIVE VACATION AND HOLIDAY SCHEDULE
VACATION
25 days a year accrued as of January 1st of each year
15 days maximum may be carried over per year
HOLIDAY SCHEDULE
New Year's Day Friday after Thanksgiving
Memorial Day Christmas Day
Independence Day (July 4) Day before or after Christmas*
Labor Day
Thanksgiving Day Floating Holidays
* The Human Resources Department will determine the beginning of each year
whether the day before or after Christmas is taken as a holiday. This is
dependent on which day of the week Christmas falls.
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