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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of the 15th day of
September, 1998, by and between American Homestar Corporation, a Texas
corporation ("Employer") and Xxxxx X. Xxxxxxxx ("Employee").
WITNESSETH:
WHEREAS, Employer desires to employ Employee as provided herein, and
Employee desires to accept such employment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I. RESPONSIBILITIES
Employee shall have the title, and perform the duties, of Executive Vice
President and Chief Financial Officer of Employer and/or such other positions
or duties as reasonably requested from time to time by the Executive Committee,
Chief Executive Officer(s) or Board of Directors of Employer. Employee will
faithfully devote his best efforts and all his working time to and for the
benefit of Employer; provided, however, that Employee may, at his option,
devote reasonable time and attention to civic, charitable, business or social
organizations or speaking engagements as he deems appropriate. It is
anticipated that Employee may devote a reasonable amount of time to serving on
the board of directors of one or more public or private corporations, provided
that the business activities of any such corporation are not competitive with
those of Employer.
ARTICLE II. COMPENSATION
SECTION 2.1 GENERAL TERMS. As compensation for his services rendered
under this Agreement, during the term of this Agreement, Employee shall be
entitled to receive the compensation as provided in EXHIBIT A attached hereto.
SECTION 2.2 REIMBURSEMENT. It is acknowledged by the parties that
Employee, in connection with the services to be performed by him pursuant to
the terms of this Agreement, will be required to make payments for travel,
communications, entertainment of business associates and similar expenses.
Employer will reimburse Employee for all reasonable expenses of types
authorized by Employer and incurred by Employee in the performance of his
duties hereunder. Employee will comply with such budget limitations and
approval and reporting requirements with respect to expenses as Employer may
establish from time to time.
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ARTICLE III.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 3.1 DEFINITIONS. For purposes of this Agreement, "Confidential
Information" is any data or information that is unique to Employer,
proprietary, competitively sensitive, and not generally known by the public,
including, but not limited to, Employer's initial business plan, prospective
customers ("prospective customers" is understood to mean those potential
customers with whom or with which Employer is engaged in active discussion
about a business relationship) training manuals, product development plans,
bidding and pricing procedures, internal performance statistics, financial
data, confidential personnel information concerning employees of Employer,
operational or administrative plans, policy manuals, and terms and conditions
of contracts and agreements. The term "Confidential Information" shall not
apply to information which is (i) already in Employee's possession (unless such
information was obtained by Employee from Employer in the course of Employee's
employment by Employer); (ii) received by Employee from a third party with no
restriction on disclosure or (iii) required to be disclosed by any applicable
law or by an order of a court of competent jurisdiction.
SECTION 3.2 USE AND DISCLOSURE. Employee recognizes and acknowledges that
the Confidential Information constitutes valuable, special and unique assets of
Employer and its affiliates. Except as required to perform Employee's duties as
an employee of Employer, until such time as they cease to be Confidential
Information through no act of Employee in violation of this Agreement, Employee
will not use or disclose any Confidential Information of Employer.
SECTION 3.3 SURRENDER. Upon the request of Employer and, in any event,
upon the termination of this Agreement for any reason, Employee will surrender
to Employer (i) all memoranda, notes, records, drawings, manuals or other
documents pertaining to Employer's Business (as defined below) including all
copies and/or reproductions thereof and (ii) all materials involving any
Confidential Information of Employer.
ARTICLE IV. NONCOMPETITION
SECTION 4.1 RESTRICTION. In consideration of the severance provisions
contained herein and the access to the Confidential Information granted to
Employee, Employee hereby agrees that, until one year after the termination of
Employee's employment hereunder (the "Restricted Period"), for any reason,
Employee will not, directly or indirectly, induce or attempt to influence any
officer, employee, or consultant of Employer to leave its employ for employment
by or with any competitor of Employer in the business of manufacturing,
retailing, or financing manufactured homes or to hire any such officer,
employee or consultant, whether or not so induced or influenced.
SECTION 4.2 REFORMATION AND SEVERANCE. If a judicial determination is made
that any of the provisions of the above restriction constitutes an unreasonable
or otherwise unenforceable restriction against Employee, it shall be rendered
void only to the extent that such judicial determination finds such provisions
to be unreasonable or otherwise unenforceable. In this regard, the parties
hereby agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the prohibited business activity from the
coverage of this restriction and to apply the restriction
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to the remaining portion of the business activities not so severed by such
judicial authority. Moreover, notwithstanding the fact that any provisions of
this restriction are determined by a court not be specifically enforceable
through injunctive relief, Employer shall nevertheless be entitled to seek to
recover monetary damages as a result of the breach of such provision by
Employee. The time period during which the restrictions shall apply shall be
tolled and suspended as to Employee for a period equal to the aggregate quantity
of time during which Employee violates such prohibitions in any respect.
ARTICLE V. TERM
Subject to Article VI below, this Agreement shall continue in full force
and effect for a term of three (3) years commencing on the Effective Date and
shall thereafter automatically renew for successive additional one year terms
unless either party provides the other with written notice of its intent not to
renew this Agreement at least ninety (90) days prior to the end of the term.
ARTICLE VI. TERMINATION
Employee's employment hereunder will terminate prior to the time set forth
in Article V hereof upon the occurrence of the following events:
(a) BY EMPLOYER WITHOUT CAUSE. Employer may terminate this Agreement
at any time, for any reason or without cause. In the event of the
termination of this Agreement pursuant to this Subsection, Employee shall
be entitled to receive the salary and bonuses, as if Employee continued to
be employed by the Company, and stock options shall continue to vest, as
provided for in Exhibit A until the later of (i) the date that this
Agreement would have expired had it not been terminated pursuant to this
Subsection or (ii) one year after termination pursuant to this Subsection.
(b) BY EMPLOYEE WITHOUT CAUSE. Employee may terminate this Agreement
at any time, for any reason or without cause. In the event of the
termination of this Agreement pursuant to this Subsection, Employee shall
be entitled to receive only the compensation earned by him as of, and
payable for the period prior to, the date of termination.
(c) BY EMPLOYER WITH CAUSE. This Agreement may be terminated by
Employer at any time upon written notice for any of the following reasons:
I. a substantial breach by the Employee of a material provision of
this Agreement, which breach remains uncorrected for more than
thirty (30) days following written notice detailing the specific
provision for which a breach is alleged, and setting forth the
actions, which, when taken, will correct the breach;
II. conviction of the Employee for a felony which materially affects
Employee's ability to perform his duties pursuant to this
Agreement; or
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III. commission by Employee of an act of fraud, embezzlement, or
material dishonesty against Employer or its affiliates.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive only the compensation earned by him as
of, and payable for the period prior to, the date of termination.
(d) BY EMPLOYEE FOR CAUSE. This Agreement may be terminated by
Employee at any time upon written notice to Employer after the occurrence
of a Constructive Termination. As used in this Agreement, the term
"Constructive Termination" means any of the following:
I. a substantial breach by Employer of a material provision of
this Agreement, which breach remains uncorrected for more
than thirty (30) days following written notice detailing
the specific provision for which a breach is alleged, and
setting forth the actions, which, when taken, will correct
the breach;
II. a material reduction in Employee's compensation, duties and
responsibilities without Employee's consent; or
III. conviction of Employer for a felony related to activities
in which Employee has not participated.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive the salary and bonuses, as if Employee
continued to be employed by the Company, and stock options shall continue to
vest, as provided for in Exhibit A until the later of (i) the date that this
Agreement would have expired had it not been terminated pursuant to this
Subsection or (ii) one year after termination pursuant to this Subsection.
(e) TERMINATION ON DEATH. In the event of Employee's death, this
Agreement will be deemed to have terminated on the date of his death. In
the event of his death, Employer will pay to the testamentary trusts
created by Employee's Will or, if there are no such trusts, to his estate,
all salary and bonuses due and owing through the date of his death plus
all bonuses that would have been earned by Employee up through his date of
death (prorated to the date of death) together with a lump sum payment in
the amount of one hundred percent (100%) of the Employee's annual base
salary as provided in Exhibit A.
(f) TERMINATION ON DISABILITY. This Agreement will terminate
immediately in the event Employee becomes physically or mentally disabled.
Employee will be deemed disabled if, as a result of Employee's incapacity
due to physical or mental illness, Employee shall have been absent from
his duties with Employer on a full-time basis for 120 consecutive business
days. In the event of the termination of this Agreement pursuant to this
Subsection, Employee shall be entitled to receive all salary and bonuses
due and owing through the date of his disability plus all bonuses that
would have been earned by Employee up through his date of disability
(prorated to date of disability).
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(g) PAYMENTS. Any payments to be made under this Article VI shall be
made, unless otherwise specifically provided for in this Article VI, at the
time it would have been due and payable if this Agreement had not been
terminated pursuant to this Article VI.
ARTICLE VII. CHANGE IN CONTROL TERMINATION PAYMENT
SECTION 7.1 TERMINATION PAYMENT.
(a) Notwithstanding anything to the contrary contained in Article VI
hereof, if, Employee's employment with Employer terminates pursuant to Article
VI (a) or (d) hereof within the twelve month period following a Change In
Control (as defined in Section 7.2 hereof), the Employee shall be entitled to
receive the following:
I. The salary and bonuses, as if Employee continued to be employed by the
Company, provided for in Exhibit A until the later of (i) the date that this
Agreement would have expired had a Change in Control not occurred; or (ii)
one-year after the date of termination of Employee's employment with Employer.
II. All options to purchase common stock of Employer shall fully vest.
(b) Notwithstanding anything to the contrary contained in Article VI
hereof, if, Employee's employment with Employer terminates pursuant to Article
VI (b) hereof within the twelve month period following a Change In Control (as
defined in Section 7.2 hereof), the Employee shall be entitled to receive the
following:
I. The salary and bonuses, as if Employee continued to be employed by the
Company, provided for in Exhibit A until the earlier of (i) the date that this
Agreement would have expired had a Change In Control not occurred; or (ii)
one-year after the date of termination of Employee's employment with Employer.
II. All options to purchase common stock of Employer shall fully vest.
SECTION 7.2 CHANGE IN CONTROL. A Change In Control will be deemed to have
occurred for purposes hereof (i) when a change of stock ownership of Employer of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and any successor Item of a similar nature has occurred;
or (ii) upon the acquisition of beneficial ownership, directly or indirectly, by
any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange
Act) of securities of Employer representing 50% or more of the combined voting
power of Employer's then outstanding securities; or (iii) during any period of
two consecutive years, a majority of the Board of Directors ceases, for any
reason, to consist of Continuing Directors; provided that a Change In Control
will not be deemed to have occurred for purposes hereof with respect to any
person meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1)
promulgated under the Exchange Act. As used herein, "Continuing Director" shall
mean a member of the Board of Directors of Employer who either (i) was a member
of the Board of Directors as of the beginning of the relevant two year period
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or (ii) was nominated or appointed (before initial election as a director) to
serve as a director by a majority of the Continuing Directors.
SECTION 7.3 NO RIGHT TO CONTINUED EMPLOYMENT. This Article VII will not
give Employee any right of continued employment or any right to compensation or
benefits from Employer except the rights specifically stated herein.
ARTICLE VIII. GENERAL TERMS
SECTION 8.1 NOTICES. All notices and other communications hereunder will be
in writing or by written telecommunication, and will be deemed to have been duly
given if delivered personally or if sent by overnight courier or by written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section:
If to Employer, to: with a copy to:
American Homestar Corporation Xxxxxxx Xxxxxx L.L.P.
0000 X. Xxxxx Xxxxxxxxx, Xxxxx 000 000 Xxxx Xxxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxx 76006-7422 Xxxxxx, Xxxxx 00000
Attention: President Attention: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
If to Employee, to:
Xxxxx X. Xxxxxxxx
0000 Xxxxxx Xxx
Xxxxxxx, Xxxxx 00000
SECTION 8.2 WITHHOLDING. All payments required to be made by Employer
under this Agreement to Employee will be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.
SECTION 8.3 ENTIRE AGREEMENT; MODIFICATION. This Agreement and Exhibit A
attached hereto constitute the complete and entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
between the parties. The parties have executed this Agreement based upon the
express terms and provisions set forth herein and have not relied on any
communications or representations, oral or written, which are set forth in this
Agreement.
SECTION 8.4 AMENDMENT. The covenants and/or provisions of this Agreement
may not be modified by any subsequent agreement unless the modifying agreement:
(i) is in writing; (ii) contains an express provision referencing this
Agreement; (iii) is signed and executed on behalf of Employer by an officer of
Employer other than Employee; (iv) is approved by resolution of the Board; and
(v) is signed by Employee.
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SECTION 8.5 LEGAL CONSULTATION. Both parties have been accorded a
reasonable opportunity to review this Agreement with legal counsel prior to
executing this Agreement.
SECTION 8.6 CHOICE OF LAW. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
SECTION 8.7 COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which he or it may be entitled.
SECTION 8.8 SUCCESSORS AND ASSIGNS. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not be
assignable. In the event of Employee's death or disability, this Agreement
shall be enforceable by Employee's estate, executors and/or legal
representatives.
SECTION 8.9 WAIVER OF PROVISIONS. Any waiver of any terms and conditions
hereof must be in writing and signed by the parties hereto. The waiver of any
of the terms and conditions of this Agreement shall not be construed as a
waiver of any subsequent breach of the same or any other terms and conditions
hereof.
SECTION 8.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any portion shall be held invalid, illegal or
enforceable for any reason, the remainder of this Agreement shall be effective
and binding upon the parties provided that the substance of the economic
relationship created by this Agreement remains materially unchanged.
SECTION 8.11 REMEDIES. The parties hereto acknowledge and agree that upon
any breach by Employee of his obligations under either of Articles III and IV
hereof, Employer will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief. No remedy set forth in this Agreement or otherwise conferred upon or
reserved to any party shall be considered exclusive of any other remedy
available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, Employer and Employee have caused this Agreement as of
the day and year first above written.
/s/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
AMERICAN HOMESTAR CORPORATION
By: /s/ XXXXX X. XXXXXX
--------------------------------------------------
Xxxxx X. Xxxxxx, Co-Chief Executive Officer
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EXHIBIT A
COMPENSATION PLAN
A. Position: Executive Vice President and Chief Financial Officer of
American Homestar Corporation ("AHC"). This position
reports to the Executive Committee.
B. Base Salary: $180,000 annual rate, payable bi-weekly in arrears,
effective as of September 1, 1998.
C. Bonus Compensation Effective as of June 1, 1998:
1. Target Bonus: $100,000 per year, per the Company's Target Bonus Plan.
The Target Bonus is earned 100% for 100% achievement of the annual
Wall Street Forecast ("WSF") profit performance. Bonus is adjusted 2%
for each 1% above or below actual results as compared to the WSF. For
example, for 90% achievement of WSF, the bonus is 80% x Target, or
$80,000. For 110% achievement, the bonus is 120% x Target or
$120,000. The maximum bonus is 150%. The bonus is funded quarterly up
to 100% performance. Employee must be employed as of the end of the
fiscal quarter in order to earn and receive the Quarterly Bonus.
2. Annual AHC Profit Bonus: 0.50% of the net profit of American Homestar
Corporation, net of taxes, before Senior Management Annual AHC Profit
Bonus accrual. Paid at the end of the fiscal year. Employee must be
employed as of the end of the fiscal year in order to earn and
receive the annual bonus.
D. Auto Allowance: $600 per month, plus gas and oil expenses.
E. Insurance: Reimbursement for Actual Premiums for existing AICPA life
and disability insurance.
