EMPLOYMENT AGREEMENT
AGREEMENT, made as of this 1st day of December, 1997, by and between
CONTINENTAL HOMES HOLDING CORP., a Delaware corporation (the "Company"), and
XXXXX X. XXXXXXX (the "Employee").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has approved the employment
of the Employee on the terms and conditions set forth in this Agreement; and
WHEREAS, the Employee is willing, for the consideration provided, to
continue in the employment of the Company on the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Employment. The Company hereby agrees to continue to employ the
Employee, and the Employee hereby accepts such continued employment, upon the
terms and conditions set forth in this Agreement.
2. Term. The term (the "Term") of the Employee's employment under this
Agreement shall be the period commencing on December 1, 1997 and shall continue
until November 30, 1999,
-2-
unless sooner terminated by termination of the Employee's employment pursuant to
Section 5, 6 or 7.
3. Position and Duties. During the Term, the Employee shall serve as Chief
Financial Officer of the Company, and shall have such responsibilities and
authority as commensurate with such office and as may from time to time be
prescribed by or pursuant to the Company's By-laws. The Employee shall devote
substantially all of her working time and efforts to the business and affairs of
the Company.
4. Compensation. During the Term, the Company shall provide the Employee
with the following compensation and other benefits:
(a) Base Salary. The Company shall pay to the Employee base salary at the
initial rate of $150,000 per annum, which shall be payable in accordance with
the standard payroll practices of the Company. Such base salary rate shall be
reviewed annually in accordance with the Company's normal policies beginning in
calendar year 1998; provided, however, that at no time during the Term shall the
Employee's base salary be decreased from the rate then in effect except with the
written consent of the Employee.
-3-
(b) Bonus. The Employee shall participate in a bonus program maintained by
the Company.
(c) Other Benefits. In addition to the compensation and benefits otherwise
specified in this Agreement, the Employee (and, if provided for under the
applicable plan or program, her spouse) shall be entitled to participate in, and
to receive benefits under, the Company's employee benefit plans and programs
that are or may be available to senior executives generally and on terms and
conditions that are no less favorable than those generally applicable to other
senior executives of the Company. At no time during the Term shall the
Employee's participation in or benefits received under such plans and programs
be decreased except (i) in connection with across-the-board reductions similarly
affecting substantially all senior executives of the Company or (ii) with the
written consent of the Employee.
(d) Expenses. The Employee shall be entitled to prompt reimbursement of all
reasonable expenses incurred by her in performing services hereunder, provided
she properly accounts therefor in accordance with the Company's policies.
(e) Office and Services Furnished. The Company shall furnish the Employee
with office space, secretarial assistance and such other facilities and services
as shall
-4-
be suitable to the Employee's position and adequate for the performance of her
duties hereunder.
5. Termination of Employment by the Company.
(a) Cause. The Company may terminate the Employee's employment for Cause if
(i) the Employee willfully engages in conduct which is or would reasonably be
expected to be materially and demonstrably injurious to the Company, (ii) the
Employee willfully engages in an act or acts of dishonesty resulting in material
personal gain to the Employee at the expense of the Company, (iii) the Employee
is convicted of a felony, (iv) the Employee engages in an act or acts of gross
malfeasance in connection with her employment hereunder, (v) the Employee
commits a material breach of the confidentiality provision set forth in Section
10, or (vi) the Employee exhibits demonstrable evidence of alcohol or drug abuse
having a substantial adverse effect on her job performance hereunder. The
Company shall exercise its right to terminate the Employee's employment for
Cause by (i) giving her written notice of termination at least 45 days before
the date of such termination specifying in reasonable detail the circumstances
constituting such Cause; and (ii) delivering to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than a ma-
-5-
jority of the entire membership of the Board of Directors (except the Employee),
after reasonable notice to the Employee and an opportunity for the Employee and
her counsel to be heard before the Board of Directors, finding that the Employee
has engaged in the conduct set forth in this subsection (a). In the event of
such termination of the Employee's employment for Cause, the Employee shall be
entitled to receive (i) her base salary pursuant to Section 4(a) and any other
compensation and benefits to the extent actually earned pursuant to this
Agreement or any benefit plan or program of the Company as of the date of such
termination at the normal time for payment of such salary, compensation or
benefits and (ii) any amounts owing under Section 4(d). Except as provided in
Section 9, the Employee shall receive no other compensation or benefits from the
Company.
(b) Disability. If the Employee incurs a Permanent and Total Disability, as
defined below, the Company may terminate the Employee's employment by giving her
written notice of termination at least 45 days before the date of such
termination. In the event of such termination of the Employee's employment
because of Permanent and Total Disability, (i) the Employee shall be entitled to
receive her base salary pursuant to Section 4(a) and any other compensation and
benefits to the extent actually earned by the Em-
-6-
ployee pursuant to this Agreement or any benefit plan or program of the Company
as of the date of such termination of employment at the normal time for payment
of such salary, compensation or benefits, and (ii) any amounts owing under
Section 4(d). For purposes of this Agreement, the Employee shall be considered
to have incurred a Permanent and Total Disability if she is unable to engage in
any substantial gainful employment by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months. The existence of such Permanent and Total Disability shall be
evidenced by such medical certification as the Secretary of the Company shall
require and shall be subject to the approval of the Compensation Committee of
the Board of Directors of the Company.
(c) Without Cause. The Company may terminate the Employee's employment at
any time and for any reason, other than for Cause or because of Permanent and
Total Disability, by giving her a written notice of termination to that effect
at least 45 days before the date of termination. In the event of such
termination of the Employee's employment without Cause, the Employee shall be
entitled to the benefits described in Section 8.
-7-
6. Termination of Employment by the Employee.
(a) Good Reason. The Employee may terminate her employment for Good Reason
by giving the Company a written notice of termination at least 45 days before
the date of such termination specifying in reasonable detail the circumstances
constituting such Good Reason. In the event of the Employee's termination of her
employment for Good Reason, the Employee shall be entitled to the benefits
described in Section 8. For purposes of this Agreement, Good Reason shall mean
(i) a significant reduction in the scope of the Employee's authority, functions,
duties or responsibilities from that which is contemplated by this Agreement,
(ii) the relocation of the Employee's office location to a location more than 50
miles away from the Employee's principal place of employment on December 1,
1997, (iii) any reduction in the Employee's base salary, (iv) a significant
change in the Company's annual bonus program adversely affecting the Employee,
or (v) a significant reduction in the other employee benefits provided to the
Employee (unless the Employee is fully compensated for the value of such
reduction through an increase in cash compensation); provided that, in the event
of a change of control of the Company involving X.X. Xxxxxx, Inc., a substantial
reduction in such employee benefits shall not be deemed to have occurred for the
purpose of
-8-
clause (v) above after the expiration of the 6-month period beginning on the
date of such change of control if the Employee shall be entitled to participate
in and receive benefits under the Company's or its successor's employee benefit
plans and programs that are or may be available to senior executives generally
and on terms and conditions that are no less favorable than those generally
applicable to other senior executives of the Company or its successor. A
significant reduction within the meaning of clause (i) of the preceding sentence
shall not be deemed to have occurred merely because the Company ceases to be a
public company and the Employee ceases to perform investor relations functions
(such as discussing the Company's financial reports with analysts) or because
the Employee's title is changed, provided that the Employee's authority,
functions, duties and responsibilities otherwise remain substantially the same
as the authority, functions, duties and responsibilities of a person with the
Employee's position (as specified in Section 3 herein and as of the date hereof)
within a comparably sized division of a national homebuilding company. A
significant reduction within the meaning of clause (v) of the second preceding
sentence shall not be deemed to have occurred merely by reason of the
termination of the Company's Equity Split Dollar Plan, provided that the Company
assigns
-9-
to the Employee all rights which the Company may have under any life insurance
policy issued on the Employee's life under said plan, including, without
limitation, the right to reimbursement for any premiums and administrative
service fees paid by the Company (in which event, subsection (f) of Section 8 of
this Agreement shall have no further applicability). If an event constituting a
ground for termination of employment for Good Reason occurs, and the Employee
fails to give notice of termination within 3 months after the occurrence of such
event, the Employee shall be deemed to have waived her right to terminate
employment for Good Reason in connection with such event (but not for any other
event for which the 3-month period has not expired).
(b) Other. The Employee may terminate her employment at any time and for
any reason, other than pursuant to subsection (a) above, by giving the Company a
written notice of termination to that effect at least 45 days before the date of
termination. In the event of the Employee's termination of her employment
pursuant to this subsection (b), the Employee shall be entitled to receive (i)
her base salary pursuant to Section 4(a) and any other compensation and benefits
to the extent actually earned by the Employee pursuant to this Agreement or any
benefit plan or program of the Company as of the date of such termination at
-10-
the normal time for payment of such salary, compensation or benefits, and (ii)
any amounts owing under Section 4(d). Except as provided in Section 9, the
Employee shall receive no other compensation or benefits from the Company.
7. Termination of Employment By Death. In the event of the death of the
Employee during the course of her employment hereunder, the Employee's estate
shall be entitled to receive her base salary pursuant to Section 4(a) and any
other compensation and benefits to the extent actually earned by the Employee
pursuant to this Agreement or any other benefit plan or program of the Company
as of the date of such termination at the normal time for payment of such
salary, compensation or benefits, and any amounts owing under Section 4(d).
8. Benefits Upon Termination Without Cause or For Good Reason. If the
Employee's employment with the Company shall terminate (i) because of
termination by the Company pursuant to Section 5(c) other than for Cause or
because of Permanent and Total Disability, or (ii) because of termination by the
Employee for Good Reason pursuant to Section 6(a), the Employee shall be
entitled to the following:
(a) The Company shall pay to the Employee her base salary pursuant to
Section 4(a) and any other compensation and benefits to the extent actually
earned by the Em-
-11-
ployee under this Agreement or any benefit plan or program of the Company as of
the date of such termination at the normal time for payment of such salary,
compensation or benefits.
(b) The Company shall pay the Employee any amounts owing under Section
4(d).
(c) The Company shall pay to the Employee as a severance benefit an amount
equal to twice the sum of (i) her annual rate of base salary immediately
preceding her termination of employment, and (ii) the average of her three
highest annual bonuses awarded under the Company's regular annual bonus program
for any of the five calendar years preceding her termination of employment (or,
if she was not eligible for a bonus for at least three calendar years in such
five-year period, then the average of such bonuses for all of the calendar years
in such five-year period for which she was eligible), with any deferred bonuses
counting for the year earned rather than the year paid. Such severance benefit
shall be paid in a lump sum within 45 days after the date of such termination of
employment.
(d) The Company shall pay to the Employee as a bonus for the year of
termination of her employment an amount equal to a portion (determined as
provided in the
-12-
next sentence) of the bonus awarded to her under the Company's regular annual
bonus program for the calendar year immediately preceding the calendar year of
the termination of her employment, with deferred bonuses counting for the year
earned rather than the year paid. Such portion shall be determined by dividing
the number of days of the Employee's employment during such calendar year up to
her termination of employment by 365 (366 if a leap year). Such payment shall be
made in a lump sum within 45 days after the date of such termination of
employment, and the Employee shall have no right to any further bonuses under
said program.
(e) During the period of 24 months beginning on the date of the Employee's
termination of employment, the Employee shall remain covered by the medical,
dental, vision, life insurance, and, if reasonably commercially available
through nationally reputable insurance carriers, long-term disability plans of
the Company that covered her immediately prior to her termination of employment
as if she had remained in employment for such period. In the event that the
Employee's participation in any such plan is barred, the Company shall arrange
to provide the Employee with substantially similar benefits (but, in the case of
long-term disability benefits, only if reasonably commercially avail-
-13-
able). Any medical insurance coverage for such 24-month period pursuant to this
subsection (e) shall become secondary upon the earlier of (i) the date on which
the Employee begins to be covered by comparable medical coverage provided by a
new employer, or (ii) the earliest date upon which the Employee becomes eligible
for Medicare or a comparable Government insurance program.
(f) At the end of the 24-month period described in subsection (e) above,
the Company shall assign to the Employee all rights which the Company may have
under any life insurance policy issued on the Employee's life under the
Company's Equity Split Dollar Plan (including, without limitation, the right to
reimbursement for any premiums and administrative service fees paid by the
Company).
(g) The Company shall arrange for an outplacement assistance firm to
provide outplacement assistance services to the Employee at the Company's
expense for a period of twelve months beginning on the date of termination of
the Employee's employment.
(h) Notwithstanding the other provisions of this Agreement, in the event
that the amount of payments or other benefits payable to the Employee under this
Agreement, together with any payments or benefits payable under any other
-14-
plan, program, arrangement or agreement maintained by the Company or one of its
affiliates, would constitute an "excess parachute payment" (within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended), the payments
under this Agreement shall be reduced (by the minimum possible amounts) until no
amount payable to the Employee under this Agreement constitutes an "excess
parachute payment" (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended); provided, however, that no such reduction shall be
made if the net after-tax payment (after taking into account Federal, state,
local or other income and excise taxes) to which the Employee would otherwise be
entitled without such reduction would be greater than the net after-tax payment
(after taking into account Federal, state, local or other income and excise
taxes) to the Employee resulting from the receipt of such payments with such
reduction. If, as a result of subsequent events or conditions (including a
subsequent payment or absence of a subsequent payment under this Agreement or
other plans, programs, arrangements or agreements maintained by the Company or
one of its affiliates), it is determined that payments under this Agreement have
been reduced by more than the minimum amount required to prevent any payments
from constituting an "excess parachute payment," then an addi-
-15-
tional payment shall be promptly made to the Employee in an amount equal to the
additional amount that can be paid without causing any payment to constitute an
"excess parachute payment." All determinations required to be made under this
subsection (h), including whether a payment would result in an "excess parachute
payment" and the assumptions to be utilized in arriving at such determination,
shall be made by a Big Six accounting firm selected by the Company which shall
provide detailed supporting calculations both to the Company and the Employee as
requested by the Company or the Employee. All fees and expenses of the
accounting firm shall be borne solely by the Company and shall be paid by the
Company. All determinations made by the accounting firm under this subsection
(h) shall be final and binding upon the Company and the Employee.
(i) Anything in this Agreement to the contrary notwithstanding, if the
Company approves any transaction with another business entity which it wishes to
qualify for "pooling of interests" accounting treatment and, prior to the
consummation of such transaction, the Company's accountants advise that any
benefits payable under this Agreement might adversely affect the availability of
such accounting treatment, such benefits shall not be payable, and the Company
and the Employee shall negotiate in good faith to pro-
-16-
vide, if possible, an alternative way of giving substantially equivalent
economic benefits to the Employee that would not adversely affect "pooling of
interests" accounting treatment.
9. Entitlement To Other Benefits. Except as provided in this Agreement,
this Agreement shall not be construed as limiting in any way any rights or
benefits that the Employee or her spouse, dependents or beneficiaries may have
pursuant to any other plan or program of the Company.
10. Confidential Information. The Employee shall retain in confidence any
confidential information known to her concerning the Company, its subsidiaries,
and their respective businesses until such information is publicly disclosed.
This provision shall survive the termination of the Employee's employment for
any reason under this Agreement.
11. No Duty to Seek Employment. The Employee shall not be under any duty or
obligation to seek or accept other employment following termination of
employment, and no amount, payment or benefits due to the Employee hereunder
shall be reduced or suspended if the Employee accepts subsequent employment.
-17-
12. Non-Solicitation. The Employee agrees that, for a period of eighteen
months following the date of termination of her employment hereunder, she will
not solicit, directly or indirectly, any officer or employee of the Company or
any of its subsidiaries or affiliates to leave and work for any other employer
and, further, that she will not suggest to others that they approach or solicit
any officer or employee of the Company or any of its subsidiaries or affiliates
with respect to potential employment elsewhere. This provision shall survive the
termination of the Employee's employment for any reason under this Agreement. If
the Employee breaches this provision in any significant respect, she shall
forfeit her right to receive the payments and benefits described in subsections
(c) through (h) of Section 8 (including, without limitation, payments and
benefits already received). To the extent any payments and benefits already
received are so forfeited, the Employee shall promptly return such payments and
benefits to the Company. In addition, the Company may seek other legal and
equitable relief in the event of any breach by the Employee of this Section 12.
13. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled by arbitration, conducted before a panel of
three arbitrators in Phoenix, Arizona in accordance with the applicable rules
and procedures of the American Arbitration Association then in ef-
-18-
fect. Arbitration shall be the exclusive remedy for any such dispute or
controversy except only as to the failure to abide by an arbitration award
rendered hereunder. Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction. Such arbitration shall be final and
binding on the parties. If the Employee is awarded more than an insignificant
amount compared with what the Company asserted was due her or otherwise
substantially prevails in the arbitration, the Company shall reimburse the
Employee for the costs incurred by the Employee in connection with such
arbitration, including without limitation reasonable attorneys' fees, and hereby
agrees to pay interest on any money award obtained by the Employee from the date
payment should have been made until the date payment is made, calculated at the
rate of 2% in excess of the LIBOR rate in effect from time to time from the date
that payment(s) to her should have been made under the Agreement. If the
Employee enforces the arbitration award in court, the Company shall reimburse
the Employee for the costs incurred in such enforcement, including without
limitation reasonable attorneys' fees.
14. Successors. This Agreement shall be binding upon and inure to the
benefit of the Employee and her estate and the Company and any successor of the
Company, but neither
-19-
this Agreement nor any rights arising hereunder may be assigned or pledged by
the Employee.
15. Severability. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
or affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
16. Notices. All notices required or permitted to be given under this
Agreement shall be given in writing and shall be deemed sufficiently given if
delivered by hand or mailed by registered mail, return receipt requested, to her
residence in the case of the Employee and to its principal executive offices in
the case of the Company. Either party may by giving written notice to the other
party in accordance with this Section 16 change the address at which it is to
receive notices hereunder.
17. Controlling Law. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Delaware (without
giving effect to principles of conflict of laws).
-20-
18. Changes to Agreement. This Agreement may not be changed orally but only
in a writing, signed by the party against whom enforcement is sought.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
of which together shall constitute one and the same instrument.
20. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to its subject matter and supersedes all prior
agreements, drafts, and written or oral representations of either party.
-21-
IN WITNESS WHEREOF, the parties have executed this Agreement on the 1st
day of December, 1997.
EMPLOYEE: CONTINENTAL HOMES HOLDING CORP.
/s/ Xxxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxxxx
-------------------------- ------------------------------
Xxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
ATTEST:
By:/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
