EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of November 13,
1998, by and between Diamond Key Homes, Inc., an Arizona corporation (the
"Company"), and Xxxxxxx Xxxxx ("Executive").
RECITALS:
WHEREAS Executive has been the sole stockholder and president and chief
executive officer of the Company, all of the stock of which has been acquired
by Xxxxxx Incorporated ("Xxxxxx"); and
WHEREAS Xxxxxx and the Company desire to retain the services of Executive
as President, Chief Operating Officer and Qualified Person of the Company
subsequent to the effective date of the above-described acquisition;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Executive and the Company agree as follows:
1. TERM. The Company hereby agrees to employ Executive, and Executive
hereby agrees to serve the Company, on the terms and conditions of this
Agreement for a five year period commencing as of November 13, 1998 (such
period, subject to earlier termination or extension as provided herein, being
referred to as the "Period of Employment"). Commencing on November 13, 2003,
and on each annual anniversary of such date (each such date being referred to
as a "Renewal Date"), the Period of Employment shall be automatically
extended so as to terminate one year from such Renewal Date, unless at least
60 days prior to the Renewal Date the Company shall give written notice to
Executive or Executive shall give written notice to the Company that the
Period of Employment shall not be so extended.
2. DUTIES AND SERVICES: During the Period of Employment, Executive
agrees to serve the Company as President, Chief Operating Officer and
Qualified Person, and in such other offices and directorships of the Company
and its subsidiaries and related companies (collectively, "Affiliates")
to which he may be elected or to perform such other reasonable and
appropriate duties as may be requested of him by the board of directors of
the Company (the "Board of Directors"), in accordance with the terms herein
set forth; PROVIDED, HOWEVER, that Executive shall not be required to perform
duties or accept positions in addition to those heretofore performed or to
undertake responsibilities in addition to those heretofore undertaken without
his consent, which consent shall not be unreasonably withheld. In performance
of his duties, Executive shall be subject to the direction of the Board of
Directors. Excluding periods of vacation and sick leave to which Executive is
entitled, Executive shall devote his full time, energy and skill during
regular business hours to the business and affairs of the Company and its
Affiliates that employ him and to the promotion of their interests. The
principal place of performance by Executive of his duties hereunder shall be
greater Phoenix, Arizona, or such other location as may be mutually agreed
upon by the Company and the Executive, although Executive may be reasonably
required to travel outside those areas.
3. COMPENSATION.
(a) DRAWS AND BONUSES. As compensation for his services hereunder,
the Company shall pay Executive, during the Period of Employment, the annual
sum of Two Hundred Forty Thousand Dollars ($240,000.00), payable in 24 equal
installments on the first and sixteenth of each month, or at such other times
as may mutually be agreed upon by the Company and Executive, subject to
annual adjustment to reflect any changes in the U.S. Consumer Price Index for
the Phoenix metropolitan area. Executive shall be entitled to such bonuses
and other benefits as the Board of Directors may periodically award in its
discretion. Nothing contained herein shall preclude Executive from
participating in the present or future employee benefit plans of the Company
or of any Affiliate, including without limitation any employee stock
ownership plan, pension plan, profit-sharing plan, savings plan, deferred
compensation plan and health-and-accident plan or arrangement, if he meets
the eligibility requirements therefor.
(b) STOCK OPTIONS. Xxxxxx shall xxxxx Executive stock options under
Xxxxxx'x management stock option plan at the commencement of Executive's
employment, for 25,000 shares. Said options shall vest equally over five
years so long as Executive is employed by the Company, with an exercise price
equal to the market price of the Common Stock of Xxxxxx as of close of
trading on the last trading day preceding the date of grant and shall
otherwise be granted on the same terms and conditions as currently provided
under Xxxxxx'x existing management stock option plan. All shares to be issued
under said option will be registered under the U.S. Securities Act of 1933,
as amended.
(c) FRINGE BENEFITS. Executive shall receive employment fringe
benefits not less favorable than those made available to Xxxxxx'x most
senior executives.
(d) EXPENSES. All travel and other expenses incident to the
rendering of services by Executive hereunder shall be paid by the Company.
Executive shall be provided a corporate credit card with a minimum limit of
$5,000 to cover such expenses. If any such expenses are paid in the first
instance by Executive, the Company shall reimburse him therefor on
presentation of the appropriate documentation required by the Internal Revenue
Code of 1986, as amended, and Treasury Regulations or otherwise required
under the Company policy in connection with such expenses. Executive shall
also be entitled to be reimbursed for 55% of the lease payments on his car,
such reimbursement not to exceed $550 per month.
(e) VACATION. Executive shall be entitled to paid vacation, to be
taken at time or times mutually satisfactory to Executive and the Company, in
accordance with the Company's vacation policy in effect from time to time for
most senior executives, with Executive's service prior to the date hereof
credited to him for this purpose.
4. EARLY TERMINATION.
(a) Notwithstanding the provisions of Section 1 hereof, Executive
may be discharged by the Company for Cause (as defined in Section 4(c)
hereof), in which event the Period of Employment hereunder shall cease and
terminate and the Company shall have no further obligation or duties under
this Agreement, except for obligations accrued under Section 3 at the date of
termination. In addition, the Period of Employment hereunder shall cease and
terminate upon the earliest to occur of the following events: (i) the death
of Executive; or (ii) at the election of the Board of Directors (subject to
the Americans With Disabilities Act), the
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inability of Executive by reason of physical or mental disability to continue
the proper performance of his duties hereunder for a period of 180
consecutive days.
(b) In the event that (i) Executive is discharged by the Company
other than for Cause or other than pursuant to Section 4(a) hereof by reason
of physical or mental disability, or (ii) Executive terminates employment
with the Company for good reason (as defined in Section 4(d) hereof),
Executive shall have no further obligations or duties under this Agreement;
PROVIDED, HOWEVER, that Executive shall continue to be bound by the
provisions of Section 5 hereof if the Company performs its obligations under
this Section 4(b). In the event of termination of the Period of Employment
pursuant to the preceding sentence, the Company shall, in addition to paying
the obligations accrued under Section 3 at the date of termination, pay
Executive, with no duty by Executive to mitigate, an amount equal to the
entire compensation otherwise payable to him under Sections 3(a) and (c)
hereof for the lesser of two years or the remaining Period of Employment
(without giving effect to any future available renewals of the term hereof).
At the Company's option, said payment may be (x) in the form of a cash
severance payment, in which event the amount of said payment shall be
discounted to net present value and payable within 30 days of termination, or
(y) in the form of equal installments payable on the first and sixteenth of
each month as provided under Sections 3(a) and (c) hereof.
(c) For purposes of this Agreement, cause ("Cause") shall be
deemed to exist only (i) upon Executive's consistent, unexcused refusal or
inability to substantially perform, or willful misconduct in the substantial
performance of, his duties and obligations hereunder after notice thereof and
a reasonable opportunity to cure; provided such duties and obligations are
consistent with the duties and obligations imposed on Executive by this
Agreement and are clearly communicated to Executive or (ii) Executive's
conviction of a felony.
(d) For purposes of this Agreement, the term "for good reason"
shall mean (i) the Company's requiring relocation of Executive, without his
prior written consent, to a place of employment other than Phoenix, Arizona,
except for travel reasonably required in the performance of Executive's
responsibilities; or (ii) the Company's failure to substantially comply with
the provisions of Sections 2 and 3 of this Agreement or other material breach
by the Company of this Agreement or by Xxxxxx of any other agreement to which
Executive is a party or any demotion or substantial reduction in duties or
responsibilities; PROVIDED, HOWEVER, that prior to termination of this
Agreement pursuant to this subsection 4(d), Executive shall have given the
Company not less than 20 days prior written notice of the condition upon
which such termination is purportedly based, and the Company shall not have
cured such condition within said 20 days.
5. CONFIDENTIALITY, NON-COMPETITION AND NEPOTISM.
(a) The Company and Executive acknowledge that the services to be
performed by Executive under this Agreement are unique and extraordinary and,
as a result of such employment, Executive will be in possession of
confidential information, proprietary information and trade secrets
(collectively, "Confidential Material") relating to the business practices of
the Company and its Affiliates. Executive agrees that he will not, directly
or indirectly, (i) disclose to any other person or entity either during or
after his employment by the Company or (ii) use, except during his employment
by the Company in the business and for the benefit of the Company or any of
its Affiliates, any Confidential Material acquired by Executive during his
employment by the Company, without the prior written consent of the Company.
Upon termination of his employment with the Company for any reason, Executive
agrees to
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return to the Company all tangible manifestations of Confidential Materials
and all copies thereof. All programs, ideas, strategies, approaches,
practices or inventions created, developed, obtained or conceived of by
Executive prior to or during the term thereof, and all business opportunities
presented to Executive during the term hereof by reason of his engagement by
the Company, shall be owned by and belong exclusively to the Company,
provided that they are related in any manner to its business or that of any
of its Affiliates. Executive shall (i) promptly disclose all such programs,
ideas, strategies, approaches, practices, inventions or business
opportunities to the Company and (ii) execute and deliver to the Company,
without additional compensation, such instruments as the Company may require
from time to time to evidence its ownership of any such items.
(b) Executive agrees that during the Period of Employment, and for
two years following the end of such Period of Employment if the termination
of employment results from (i) Executive's discharge by the Company for
Cause; (ii) Executive's written notice to the Company of his decision not to
extend the Period of Employment on any Renewal Date as provided in Section 1
hereof, or (iii) Executive's decision to terminate this Agreement other than
"for good reason" within the meaning of Section 4(d) hereof, he will not
become a stockholder, director, officer, employee or agent of or consultant
to any corporation (other than an Affiliate), or member of or consultant to
any partnership or other entity, or engage in any business as a sole
proprietor or act as a consultant to any such entity, or otherwise engage,
directly or indirectly, in any enterprise, in each case which is in the
business of production homebuilding within ninety (90) miles of any location
in which the Company, Xxxxxx or any Affiliate does business or in which
Executive has knowledge that the Company, Xxxxxx or any Affiliate contemplates
doing business, including but not limited to the greater Phoenix and Tucson,
Arizona areas; provided, however, that competition shall not include the
ownership (solely as an investor and without any other participation in or
contact with the management of the business) of less than two percent (2%)
of the outstanding shares of stock of any corporation engaged in any such
business, which shares are regularly traded on a national securities exchange
or in an over-the-counter market. Executive agrees that during the noncompete
period referred to in this Section 5, neither Executive nor any person or
enterprise controlled by the Executive will SOLICIT for employment any person
employed the Company, Xxxxxx or any Affiliate at, or at any time within three
months prior to, the time of the solicitation. If Executive breaches the
foregoing covenant not to compete, the Company shall be entitled to
liquidated damages of $1,000,000. Executive and the Company agree that actual
damages for breach of this provision would be substantial but difficult to
calculate and that such amount represents a reasonable estimate thereof.
(c) Executive agrees that, during the Period of Employment,
Executive shall not own or hold any real estate related interest as a
partner, member of a limited liability company, shareholder, beneficiary of a
trust, or any other form of ownership or economic interest, in or to any real
estate related entity, except for Executive's personal residence and those
assets acquired by Executive more than one year prior to the date hereof and
disclosed to the Company in writing prior to the date hereof.
(d) Executive agrees that during the Period of Employment
Executive shall not enter into any transaction on behalf of the Company or
any Affiliate with any member of Executive's family, without prior approval
of the Board of Directors of the Company.
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(e) Executive agrees that the remedy at law for any breach by him
of this Section 5 may be inadequate and that the Company shall be entitled to
injunctive relief, in addition to any and all other rights and remedies
available to the Company.
6. MISCELLANEOUS.
(a) NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be made in writing and shall be
delivered in person, by facsimile transmission or mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
parties as follows:
If to the Company:
c/x Xxxxxx Incorporated
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: General Counsel
Facsimile No: (000) 000-0000
If to Executive:
Mr. Xxxxx Xxxxx
Diamond Key Homes, Inc.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
or to such other address as the party shall have furnished in writing in
accordance with this Section. Such notices or communications shall be
effective upon delivery if delivered in person or by facsimile and either
upon actual receipt or three days after mailing, whichever is earlier, if
delivered by mail.
(b) PARTIES IN INTEREST. This Agreement shall be binding upon and
inure to the benefit of Executive, and it shall be binding upon and inure to
the benefit of the Company and any corporation succeeding to all or
substantially all of the business and assets of the Company by merger,
consolidation, purchase of assets or otherwise.
(c) ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Executive by the Company and contains all of the
covenants and agreements between the parties with respect to such employment
in any manner whatsoever. Any modification of this Agreement will be
effective only if it is in writing signed by the party to be charged.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without giving
effect to the choice of law or conflicts of laws rules and laws of such
jurisdiction.
(e) SEVERABILITY. In the event that any term or condition
contained in this Agreement shall for any reason be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in
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any respect, such invalidity, illegality or unenforceability shall not affect
any other term or condition of this Agreement, but this Agreement shall be
construed as if such invalid or illegal or unenforceable term or condition
had never been contained herein. If a court of competent jurisdiction
determines by final judgement that the scope, time period or geographical
limitations set forth in Section 5 are too broad to be capable of enforcement,
it may modify such covenants and enforce such provisions as to scope, time and
geographical area as it deems equitable.
IN WITNESS WHEREOF the undersigned have executed this Agreement as of the
date first set forth above.
COMPANY: EXECUTIVE:
DIAMOND KEY HOMES, INC.,
an Arizona corporation
By: /s/ Xxxxxxx Xxxxx /s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx, President XXXXXXX XXXXX
ACKNOWLEDGED AND AGREED TO:
XXXXXX INCORPORATED, a Nevada corporation
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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