EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into this
29th day of June, 1995 (the "Execution Date"), to be effective July 1, 1995 (the
"Effective Date"), by and between AMERICAN FINANCIAL HOLDING, INC., a Delaware
corporation (the "Employer"), and XXX X. XXXXX (the "Executive").
For and in consideration of the mutual covenants contained herein and of
the mutual benefits to be derived hereunder, the parties agree as follows:
1. Employment. Employer hereby employs Executive to perform those duties
generally described in this Agreement, and Executive hereby accepts and agrees
to such employment on the terms and conditions hereinafter set forth.
2. Term. The term of this Agreement shall be for a period of three (3)
years commencing on the Effective Date of this Agreement and shall, on each
anniversary of the Effective Date hereof, automatically be renewed and extended
for a new three (3) year term unless previously terminated pursuant to the terms
hereof. Notwithstanding the foregoing, Executive may terminate this Agreement
at any time upon at least ninety (90) days prior written notice to Employer, and
the board of directors of Employer may resolve at any time not to extend this
Agreement for an additional year upon the next succeeding anniversary of the
Effective Date, whereupon the term of this Agreement shall expire upon the
termination of the then current three (3) year period.
3. Duties. During the term of this Agreement, Executive shall be
employed by Employer, shall be appointed as a director, and shall initially be
elected vice-president of marketing. Executive agrees to serve in such offices
or positions with Income Builders, Inc. ("Income Builders"), a wholly-owned
subsidiary of Employer, as its board of directors may determine, and such
substitute or further offices or positions of substantially consistent rank and
authority as shall, from time to time, be determined by Employer's board of
directors. Executive agrees to continue to serve as a member of the board of
directors of Employer and to serve as a director and officer of Income Builders
for no additional compensation. Executive shall devote substantially all of his
working time and efforts to the business of Employer and its subsidiaries and
shall not during the term of this Agreement be engaged in any other substantial
business activities which will significantly interfere or conflict with the
reasonable performance of his duties hereunder.
4. Compensation.
(a) For all services rendered by Executive on behalf of the Employer,
Executive shall be paid through December 31, 1995, an annual draw of
$200,000, payable in weekly installments, plus such bonuses as the board of
directors of Income Builders shall from time to time determine; provided,
however, that in no event shall the accrual or payment of Executive's
annual compensation, when combined with all other annual compensation for
executives of Income Builders, result in Income Builders reporting a net
loss, prior to income taxes and without deducting charge-backs for unearned
commissions previously paid, for any fiscal year for operations, as
determined in accordance with generally accepted accounting principles, as
determined by Employer's regular outside certified public accountants.
Executive shall also be paid such additional incentive compensation as the
board of directors of Employer may, in its sole discretion, from time to
time determine. Within the first 90 days of each fiscal year commencing in
1996, the parties shall determine the amount of any increase in the fixed
draw and formula for annual bonuses for such fiscal year, which shall be
applicable during such year.
(b) All payments shall be subject to withholding and other applicable
taxes. The compensation may be increased at any time as Employer's board
of directors may determine, based on earnings, increased activities of the
Employer, or such other factors as the board of directors may deem
appropriate.
5. Employment Benefits. Employer shall provide, either directly or
indirectly through Income Builders, health and medical insurance for Executive
in a form and program to be chosen by Employer for its full-time employees.
Executive shall be entitled to participate in any retirement, pension, profit-
sharing, stock option, or other plan as in effect from time to time on the same
basis as other employees.
6. Vacations. Executive shall be entitled each year to a paid vacation
of a least two (2) weeks. Vacation shall be taken by Executive at a time and
with starting and ending dates mutually convenient to Employer and Executive.
Vacation or portions of vacations not used in one employment year shall carry
over to the succeeding employment year, but shall thereafter expire if not used
within such succeeding year.
7. Expenses. Income Builders will reimburse Executive for expenses
incurred in connection with Income Builders' business, including expenses for
travel, lodging, meals, beverages, entertainment, and other items on Executive's
periodic presentation of an account of such expenses.
8. Stock Registration Provisions. During the term of this Agreement,
Executive shall have the following rights and obligations with respect to
registration under the Securities Act of 1933, as amended, and applicable blue
sky laws of shares of common stock ("Shares") of Employer owned of record by
Executive or to be acquired on exercise of any options issued in Executive's
name to purchase Shares, including any Shares that may be subject to redemption:
(a) Participatory Registration. Employer shall notify Executive, at
least thirty (30) days prior to the filing of any registration statement of
forms X-0, X-0, X-0, XX-0, or any successor forms under the Securities Act
of 1933, as amended, covering common stock of the Employer and will, upon
the written request of Executive delivered at least twenty (20) days prior
to such filing, include in any such registration statement such information
as may be required to register such number of Executive's Shares as
Executive may request. In connection with such offering, Executive and
Employer shall each include customary representations, warranties,
indemnification, and contribution provisions in any underwriting agreement
entered into in connection with such registration. If the managing
underwriters for such registration advise Employer in writing that, in
their opinion, the total amount of securities to be included in such
registration statement exceeds the amount which should reasonably be
included in that offering to achieve the Employer's financing goals,
Employer may limit the amount of stock to be included as follows: (i)
first, all securities Employer proposes to sell may be included, (ii)
second, the Shares of common stock requested to be included in such
registration by all executives pursuant to registration rights may be
reduced and adjusted among participating executives and employees on the
basis of the amount of shares owned of record by each executive, and (iii)
third, if applicable, other stock requested to be included in such
registration may be similarly and ratably adjusted with all executives'
stock pro rata according to the amount
of stock owned of record by any proposed seller. All incremental expenses
of such registration will be allocated pro rata according to the number of
Shares included for Executive. There shall be no limit on the number of
registrations so requested, but each such request shall cover an amount of
Shares having a proposed offering price of not less than Fifty Thousand
Dollars ($50,000.00).
(b) General. In connection with each of the foregoing registrations
and subject to the provisions concerning expenses, Employer shall also (i)
use its best efforts to qualify the Shares for public sale under the blue
sky laws of such jurisdictions as Executive may reasonably request, (ii)
provide such number of preliminary and final prospectuses as Executive may
reasonably request, and (iii) keep the final prospectus in any such
registration current for a reasonable period not to exceed one hundred
twenty (120) days. In connection with the indemnification and contribution
to be provided by Executive to any underwriter or Employer pursuant to this
paragraph 8, the aggregate liability of Executive shall not exceed the
aggregate net proceeds received by Executive from the sale of the
registered Shares, and, in connection with contribution, shall also take
into consideration the relative fault of each contributing person.
The above stock registration provisions shall not have the effect of
modifying or adding to any stock redemption rights the Employer may have with
respect to any Shares owned of record by the Executive.
9. Nondisclosure of Information. In further consideration of employment
and the continuation of employment by Employer, Executive will not, directly or
indirectly, during or after the term of employment, disclose to any person not
authorized by Employer to receive or use such information, except for the sole
benefit of Employer, any of Employer's confidential or proprietary data,
information, or techniques, or give to any person not authorized by Employer to
receive it any information that is not generally known to anyone other than
Employer or that is designated by Employer as "Limited," "Private," or
"Confidential," or similarly designated or for which there is any reasonable
basis to be believed is, or which appears to be, treated by Employer as
confidential.
10. Termination for Cause. Employer may terminate this Agreement during
its term for cause ("Cause") by showing that Executive has materially breached
the terms hereof; that Executive, in the determination of the board, has been
grossly negligent in the performance of his duties; that Executive has
substantially failed to meet written standards established by Employer for the
performance of his duties; that Executive has engaged in material willful or
gross misconduct in the performance of his duties hereunder; or that a final
non-appealable conviction of or a plea of guilty or nolo contendere by Executive
to a felony or misdemeanor involving fraud, embezzlement, theft, or dishonesty
or other criminal conduct against Employer.
11. Termination Upon Change of Control. Notwithstanding any provision of
this Agreement to the contrary, Executive may terminate this Agreement, but not
the covenant not to disclose information set forth in paragraph 9, upon the
happening of any of the following events:
(a) The sale by Employer of substantially all of its assets to a
single purchaser or to a group of associated purchasers;
(b) The sale, exchange, or other disposition to a single person or
group of persons under common control in one transaction or series of
related transactions resulting in such person or persons owning, directly
or indirectly, greater than fifty percent (50%) of the combined voting
power of the outstanding shares of Employer's common stock;
(c) More than fifty percent (50%) of the members of the board of
directors of Employer shall be persons who are neither nominated for
election by the board or an authorized committee of the board nor elected
by the board;
(d) The decision by Employer to terminate its business and liquidate
its assets; or
(e) The merger or consolidation of Employer in a transaction in which
the shareholders of Employer immediately prior to such merger or
consolidation receive less than fifty percent (50%) of the outstanding
voting shares of the new or continuing corporation.
In the event Executive does not elect to terminate this Agreement upon the
happening of any of the events noted above, and as a result of such event,
Employer is not the surviving entity, then the provisions of this Agreement
shall inure to the benefit of and be binding upon the surviving or resulting
entity. If as a result of the merger, consolidation, transfer of assets, or
other event listed above, the duties of Executive are increased, then the
compensation of Executive provided for in paragraph 4 of this Agreement shall be
reasonably adjusted upward to compensate for the additional duties and
responsibilities assumed.
12. Payments on Death or Disability. This Agreement and Executive's
employment hereunder shall terminate on the death of Executive or if its
determined, based upon the written opinion of the physician regularly attending
Executive, that Executive is unable, because of a medically determinable
disease, injury, or other physical or mental disability, to perform
substantially all of his regular duties to Employer and that such disability is
determined or reasonably expected to continue for at least 180 days. In the
event of termination of this Agreement on such death or disability, then
Executive or Executive's estate, as the case may be, shall be paid all amounts
payable to him pursuant to paragraph 4 hereof and shall receive all benefits
provided pursuant to paragraph 5 hereof during the balance of the term of this
Agreement.
13. Termination Payments. In the event that the Executive's employment is
terminated by Employer during the term hereof for reasons other than Cause as
defined in paragraph 10, Employer shall compensate Executive with the monthly
compensation as provided in paragraph 4, and shall continue to provide Executive
with employment benefits as provided in paragraph 5, through the term hereof.
14. Nontransferability. Neither Executive, Executive's spouse,
Executive's designated contingent beneficiary, nor their estates shall have any
right to anticipate, encumber, or dispose of any payment due under this
Agreement. Such payments and other rights are expressly declared nonassignable
and nontransferable, except as specifically provided herein.
15. Indemnification. Employer shall indemnify Executive and hold
Executive harmless from liability for acts or decisions made by Executive while
performing services for Employer to the greatest extent permitted by applicable
law. Employer shall use its best efforts to obtain coverage for Executive under
any insurance policy now in force or hereafter obtained during the term of this
Agreement insuring officers and directors of Employer against such liability.
16. Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party.
17. Entire Agreement. This Agreement is and shall be considered to be the
only agreement or understanding between the parties hereto with respect to the
employment of Executive by Employer. All negotiations, commitments, and
understandings acceptable to both parties have been incorporated herein. No
letter, telegram, or communication passing between the parties hereto covering
any matter during this contract period, or any plans or periods thereafter,
shall be deemed as part of this Agreement; and shall not have the effect of
modifying or adding to this Agreement unless it is distinctly stated in such
letter, telegram, or communication that it is to constitute a part of this
Agreement and is to be attached as an amendment to this Agreement and is signed
by the parties to this Agreement.
18. Enforcement. Executive acknowledges that any remedy at law for breach
of paragraph 9 would be inadequate, acknowledges that Employer would be
irreparably damaged by an actual or threatened breach thereof, and agrees that
Employer shall be entitled to an injunction restraining Executive from any
actual or threatened breach of paragraph 9 as well as any further appropriate
equitable relief without any bond or other security being required. In addition
to the foregoing, each of the parties hereto shall be entitled to any remedies
available in equity or by statute with respect to the breach of the terms of
this Agreement by the other party.
19. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the state of Utah.
20. Severability. If and to the extent that any court of competent
jurisdiction holds any provision or any part thereof of this Agreement to be
invalid or unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
21. Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement, or condition of this Agreement or to exercise
any right or remedy consequent upon a breach hereof shall constitute a waiver of
any such breach or of any covenant, agreement, term, or condition.
AGREED AND ENTERED INTO as of the date first above written.
Employer:
AMERICAN FINANCIAL HOLDING, INC.
/s/ Xxxxxx X. Xxxxxxx
Executive:
/s/ Xxx X. Xxxxx
