EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of the Effective Date
of the Acquisition described in the registration statement on Form S-4 of
American Family Holdings, Inc., filed with the Securities and Exchange
Commission (File No. 333-37161) on October 3, 1997, by and between American
Family Holdings, Inc. (hereinafter referred to as "AFH" or the "Company") at
0000 Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, and Xxxx
Xxxxxxxx, at 17 Carlina, Xxxxxx, Xxxxxxxxxx 00000 (the "Employee").
The parties agree as follows:
1. EMPLOYMENT/TERM. AFH will employ Employee as Vice President of
Finance. AFH will also cause Employee to be employed as Vice President of
Finance for American Family Communities, Inc. ("AFC") when it is formed.
Employee will be based in Newport Beach, California, at AFH's offices and
will report directly to Xxx Xxxxxxxxx, Executive Vice President of American
Family Holdings, Inc. As Vice President, Employee will be responsible for
all finance, accounting and reporting issues and internal controls. It is
understood and accepted that job functions and responsibilities may be
modified by the Board of Directors as the business objectives of AFH and AFC
evolve over the next year. The term of this Agreement is from the Effective
Date of the Acquisition through December 31, 1998 and renewable yearly
thereafter.
2. BASE COMPENSATION. The annual base salary for the year will be
$100,000. This salary is payable bi-monthly in accordance with AFH's
standard payroll procedures. Within 60 days, prior to the expiration of this
contract, the Company and Employee agree to discuss contract renewal.
3. INCENTIVE BONUS COMPENSATION. Employee will be eligible to receive
incentive bonus compensation in an amount up to 20% of base salary which will
be based upon specific performance criteria. Ten percent of this bonus shall
be discretionary by the Company, ten percent of this bonus shall be
non-discretionary. This will be due and payable within 90 calendar days of
the term of this agreement and after the completion of the Company=s audited
financial statements for the prior year. The performance criteria are set
forth on Schedule A attached hereto.
4. FOUNDERS STOCK. Employee shall purchase 1,000 shares of stock at
$0.01 per share.
5. STOCK OPTIONS. Employee is hereby granted options to purchase
5,000 shares of Company common stock which will be exercisable for a period
of ten years for $10 per share. The options shall vest at the rate of 25%
every three months commencing on the first day of the first full month after
the Effective Date of the Acquisition. Any unexercised options shall lapse
should Employee resign or be terminated for "Cause" (as hereinafter defined).
6. BUSINESS EXPENSES. All corporate travel, hotels, meals and
entertainment and other business expenses including reasonable cellular
telephone charges will be paid for by the Company. Itemization and business
expense forms with original receipts will be turned in monthly for
reimbursement. AFH will cover any reasonable costs for any professional
seminars and conferences attended, as well as professional organizational
memberships and dues.
7. BENEFITS. As an employee of the Company, Employee will receive, at
the Company's cost, medical benefits that the Company offers to its employees.
8. VACATION. Employee will receive two weeks of paid vacation for the
term of this Agreement. He will also be eligible to receive paid sick leave
and all legal holidays in accordance with AFH's policies and procedures.
9. EXCLUSIVE EMPLOYMENT/INDEMNIFICATION. Employee will devote all
working time to the Company and will not have interests which conflict with
duties or a full-time employment commitment to the Company. He will be
covered under AFH's Directors and Officers liability insurance policy and
will be indemnified to the maximum extent permitted by applicable law.
10. CONFIDENTIALITY. Employee agrees not to reveal the Company's trade
secrets or confidential information, or any part thereof, to any person or
firm before, during or after the term of employment. The Company will be
entitled to an injunction restraining Employee from disclosing same, or from
rendering any service to any entity to whom said information has been or
threatened to be disclosed. The right to secure an injunction is not
exclusive, and the Company may pursue any other remedies it has against
Employee for a breach or threatened breach of this condition, including
recovery of damages.
11. TERMINATION. In the event the Company terminates Employee for any
reason other than for "Cause" (as defined below) or his inability to perform
his functions and duties outlined herein for a period of 90 consecutive days
during the term hereof (exclusive of vacation time), Employee will receive a
severance payment equal to six months salary and any amounts owing under
incentive bonus, and the stock option arrangement then in effect, providing
Company has the working capital for such payment. In the event the Company
does not have sufficient working capital to make such payment, then the
Company and the Employee shall work out a monthly payment plan whereby the
severance amount will be paid in its entirety within a six-month period of
termination. This severance payment will represent a complete satisfaction of
all amounts due from the Company upon termination other than for "Cause" or
inability to perform his duties.
The Company may terminate Employee's services at any time for "Cause."
In such event, except for accrued but unpaid amounts of compensation due to
Employee, the obligation of the Company to pay Employee the compensation due
under this Agreement will terminate upon the date of his termination of
services. "Cause" shall mean and be limited to the following events: (i) an
act of fraud, embezzlement or similar conduct by Employee involving the
Company; (ii) any action by Employee involving the arrest of Employee for
violation of any criminal statute
constituting a felony or misdemeanor involving moral turpitude if the Board
reasonably determines that the continuation of Employee's employment after
such event would have an adverse impact on the operations of the Company or
its reputation in the financial community; (iii) gross misconduct or habitual
negligence in the performance of Employee's duties; (iv) an act constituting
employment discrimination, sexual harassment or a breach of Employee's
fiduciary duty to the Company under the Delaware General Corporation Law; (v)
a continuing, repeated willful failure or refusal by Employee to perform his
duties; provided, however, that termination shall not be deemed to be for
Cause under this subclause (v) unless Employee shall have first received
written notice from the Board advising Employee of the specific acts or
omissions alleged to constitute a failure or refusal to perform and such
failure or refusal to perform continues after Employee shall have had a
reasonable opportunity to correct the acts or omissions cited in such notice;
or (vi) competition by Employee with the Company or its subsidiaries in
violation of Section 4 thereof.
The Company may terminate Employee's services if Employee has been unable
to perform his duties for a period of 90 consecutive days (exclusive of vacation
time). In such event, Employee will be entitled to one month's severance plus
three months of medical benefits, after which the Company will have no further
obligation to Employee.
12. MISCELLANEOUS.
(a) The failure to enforce any provision of this Agreement will not
be construed as a waiver for any such provisions nor prevent a party thereafter
from enforcing the provision or any other provisions of this Agreement. The
rights granted the parties are cumulative, and the election of one will not
constitute a waiver of such party=s right to assert all other legal and
equitable remedies available under the circumstances.
(b) All notices, requests, demands and other communications hereunder
will be in writing, and will be deemed to have been duly given if delivered or
mailed, certified mail, first class, postage prepaid, as follows:
To the Company: Messrs. Xxx Xxxxxxxxx, Xxxxx Xxxxxx & Xxx Xxxx
American Family Holdings, Inc.
0000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
To Employee: Xx. Xxxx Xxxxxxxx
17 Carlina
Xxxxxx, Xxxxxxxxxx 00000
(c) This Agreement will not be assignable by either party.
(d) The provisions of this Agreement are severable. If any
provisions of this Agreement will be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions or
enforceable parts thereof will not be affected thereby and will be enforced in
the fullest extent permitted by law.
(e) This Agreement supersedes all prior agreements and understandings
between the parties, oral or written. No modification, termination or attempted
waiver will be valid unless in writing and signed by the party against whom such
modification, termination or waiver is sought to be enforced.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
(g) All parties hereto each covenant to cooperate and use their best
efforts to effect the provisions and intent of this Agreement, and each party,
in whatever capacity is appropriate, hereby agrees to promptly execute, deliver
or receive, as the case may be, all documents, amendments, and other
instruments, and to take all actions required by such other party, as are
necessary or desirable to carry out the provisions or intent of this Agreement.
(h) This Agreement and all questions as to its interpretation,
performance and enforcement and the rights and remedies of the parties hereunder
will be determined in accordance with the laws of the State of California.
Should any provision contained in this Agreement violate the laws of any state
in which this Agreement is to be performed, that provision will be deemed void
to the extent such law is so violated without invalidating any other provision
contained herein. The parties hereto mutually and knowingly agree that any suit
arising out of or relating to this Agreement will be filed and adjudicated
exclusively by a court in Orange County, State of California. In the event of
any dispute or controversy or legal action of any kind concerning the terms of
this Agreement, the prevailing party will be entitled to all reasonable
attorneys' fees and costs relating thereto.
The foregoing is understood, agreed to and accepted:
AMERICAN FAMILY HOLDINGS, INC.
By
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Xxx Xxxxxxxxx, Executive Vice President
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Xxxx Xxxxxxxx, Employee
SCHEDULE A
INCENTIVE BONUS PERFORMANCE CRITERIA
[to come]
