EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into to be effective November 1, 2002
(the "Effective Date"), by and between LUMMI DEVELOPMENT, INC., a Delaware
corporation (the "Company") dba Signature Horizons, Inc. and XXXXXX X. XXXXX, an
individual resident of the State of Florida ("Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to employ Executive as the Chief Executive
Officer of the Company; and
WHEREAS, the Company wishes to appoint Executive as a member and Chairman
of the Board of Directors to serve as such for a five-year term; and
WHEREAS, Executive shall have and be entitled to all of the rights, powers
and authority, and be obligated to discharge all of the duties and
responsibilities, customary to the position of CEO and Chairman in a
publicly-traded company; and
WHEREAS, the Company and Executive desire to enter into certain agreements
providing for Executive's employment with the Company, and the Company and
Executive desire that Executive serve in a senior executive capacity with the
Company on the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. The Company agrees to employ Executive, and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon the earlier of (a) termination pursuant to Section 1(f) hereof or
(b) the date three (3) years from the date of this Agreement (the "Employment
Period").
(a) SERVICES. During the Employment Period, Executive will serve as
the Company's Chief Executive Officer, and as such he shall have such
rights, entitlements, authority, duties and responsibilities as would
normally attach to such position, subject to the authority of the Board of
Directors (the "Board"). Furthermore, Executive, together with the Chief
Operating Officer and an appointee of the Board, will form an Executive
Committee, which will have full right and authority to make changes and
other decisions pertaining to personnel, operations and finance. Executive
will devote his best efforts and substantially all of his business time and
attention (except for vacation periods and reasonable periods of illness or
other incapacity) to the business of the Company and its affiliates and
will faithfully and diligently carry out such duties and have such rights,
powers, authority and responsibilities as are customary among persons
employed in substantially similar capacities for similar companies.
Notwithstanding the foregoing, Executive may serve on civil and charitable
boards and committees and manage personal investments, provided, however,
that Executive shall use Executive's best efforts to pursue such activities
in such a manner so that such activities shall not prevent Executive from
fulfilling Executive's obligations to the Company hereunder. Executive will
report to the Board of Directors and shall faithfully and diligently comply
with all of its reasonable and lawful directives. For purposes of this
Agreement, the term "affiliates" means any corporation, limited
partnership, limited liability company or other entity engaged in the same
business as the Company or a related business, which is controlled by or
under common control with the Company.
(b) BASE SALARY AND BONUS. The Company will pay Executive a base
salary at the rate of not less than $22,000 per month or such higher amount
as determined from time to time by the Board of Directors of the Company
(the "Base Salary"). The Base Salary for each calendar year or portion
thereof during the Employment Period shall be paid to the Executive on the
regularly recurring pay periods established by the Company, but in no event
in less than equal semi-monthly installments. As additional compensation
for the performance of the services rendered by Executive, the Company will
pay to Executive an annual performance bonus, beginning with the 2002
calendar year, based upon the achievement of those goals and objectives,
which shall be determined by the Board of Directors. If Executive achieves
the goals and objectives determined by the Board of Directors with respect
to each year, beginning with 2002, Executive shall be entitled to receive
an annual bonus in an amount up to $100,000 (the "Performance Bonus"). The
Performance Bonus shall be paid within thirty (30) days after the last day
of the year for which the Performance Bonus was earned. Executive shall
have the option of receiving the Performance Bonus in cash and/or shares of
the Company's common stock ("Bonus Shares") with a fair market value (as
determined by the average closing sales price for the last month of the
applicable year) equal to the amount of the Performance Bonus taken in
Bonus Shares. Executive shall have the right to require Bonus Shares to be
registered by the Company with the Securities and Exchange Commission for
resale.
(c) STOCK OPTIONS. Executive shall also receive non-qualified stock
options (the "Options") to purchase 500,000 shares of common stock of the
Company (the "Option Shares"). The Options shall have an exercise price of
$1.00 per share and shall be exercisable for a period of five (5) years
from and after the date they first become exercisable. 20% of the Options
shall vest upon the date hereof and the remaining 80% of the Options shall
vest 20% each year of the term of this Agreement, provided, however, that
Executive is an employee of the Company at the time of vesting or as
otherwise provided herein or in the Option Agreement evidencing and
governing the grant of the Options, and provided further, however, that all
unvested Options shall vest and become immediately exercisable in the event
the sales price of the Company's common stock closes at $8.00 or higher for
any twenty (20) consecutive trading days for which there is a quoted
closing sales price or if the Company earns at least $5 million in any
calendar
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quarter or $15 million in any calendar year. It is also agreed that the
Company shall use its best efforts to register the Option shares on a
Form S-8.
(d) BENEFITS. In addition to the compensation described in Section
1(a), (b) and (c), Executive will be entitled, during the Employment
Period, to the benefits described in Exhibit A hereto.
(e) TERMINATION. Executive's employment with the Company will continue
until termination of Executive's employment pursuant to any of the
following provisions:
(i) Termination by the Company without Cause. The Company may at
any time by action of a majority of the entire membership of its Board
of Directors terminate Executive's employment without Cause (as
defined below) by giving Executive notice of the effective date of
termination (which effective date may be the date of such notice) (the
"Date of Termination"). A voluntary termination by Executive within
sixty (60) days after any of the following events will be deemed a
termination of Executive's employment by the Company without Cause:
(1) a reduction of Executive's status by the Company; (2) relocation
of the Executive outside the Atlanta, Georgia metropolitan area; (3)
failure by the Company to comply with any material provision of this
Agreement that has not been cured within ten (10) days after notice of
such non-compliance has been given to the Company; (4) a material
reduction of Executive's responsibilities or reduction of her salary
by more than five percent (5%); or (5) termination of Executive's
employment due to Executive's death or Disability (as defined below).
In the event of such termination, the Company shall have the
obligation to pay Executive the following:
(A) Through the Date of Termination, the Company shall pay
Executive his full Base Salary at her then current rate of pay,
and continue the benefits in effect at the time notice of
termination is given;
(B) In lieu of any further salary payments to Executive for
periods subsequent to the Date of Termination, the Company shall
pay, as severance to Executive, a payment (the "Severance
Payment") equal to 3.0 times the Annual Compensation (as defined
below) which was payable to Executive by the Company (or any
corporation affiliated with the Company ("Affiliate") within the
meaning of Section 1504 of the Internal Revenue Code of 1954, as
amended (the "Code") and includible by Executive in her gross
income for Federal income tax purposes for the twelve (12)
calendar months preceding the Date of Termination such Severance
Payment to be payable in equal bi-weekly payments for a period of
twelve (12) months following the effective date of such
termination; provided, however, that, if Executive's employment
shall be terminated within one year after a Change in Control (as
hereinafter defined), the Severance Payment shall be a lump sum
payment equal to 4.0 times such Annual Compensation. For purposes
of this Agreement, "Annual
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Compensation" shall mean his Base Salary (annualized) bonus and
automobile allowance includible in his gross income in respect to
his employment by the Company (or an Affiliate). For purposes of
this Agreement, a "Change in Control" shall be deemed to occur in
the event of a merger or consolidation of the Company with or
into any other corporation or other entity or a sale of all or
substantially all of the assets of the Company, unless the
stockholders of the Company immediately prior to such transaction
hold at least fifty percent (50%) of the outstanding equity
securities of the entity surviving such merger or consolidation
or the entity purchasing such assets, or in the event of a sale
or transfer of more than fifty percent (50%) of the Company's
Common Stock to a person or persons acting as a group, who is or
are not controlled directly or indirectly by the Company, in a
single transaction or series of related transactions;
(C) The Severance Payment shall be in lieu of any other
severance payment offered by the Company and applicable to
Executive;
(D) In the event that the Severance Payment (and any
payments payable under any other plan, program, or arrangement or
agreement maintained by the Company or an Affiliate) would
constitute an "excess parachute payment" (with the meaning of
Section 280G of the Code), the Severance Payment will be reduced
(by the minimum possible amount) until the total "parachute
payments" (within the meaning of Section 280G of the Code) do not
constitute an "excess parachute payment" (within the meaning of
Section 280G of the Code); provided, however, that no such
reduction shall be made if the net after-tax benefit (after
taking into account federal, state and local income and excise
taxes) to which Executive otherwise would be entitled without
such reduction would be greater than the net after-tax benefit
(after taking into account federal, state and local income and
excise taxes) to Executive resulting from the receipt of such
payments with such reduction. For purposes of this calculation,
it shall be assumed that Executive's tax rate is the maximum
marginal federal, state and local income tax rate on earned
income, with such maximum federal rate to be computed with regard
to Section 1(g) of the Code, if applicable. In the event that
Executive and the Company are unable to agree as to the amount of
the reduction described above, if any, Executive shall select a
law firm or accounting firm which is not regularly consulted by
(but is reasonably acceptable to) the Company ("Tax Counsel") and
such Tax Counsel shall, at the Company's expense, determine the
amount of such reduction and such determination shall be final
and binding upon Executive and the Company;
(E) The Company shall also pay to Executive all legal fees
and expenses reasonably incurred by her in successfully
contesting or disputing any such termination or in a successful
action to obtain or enforce any
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right or benefit provided by this Agreement or any other right or
benefit enjoyed by Executive during his employment with the
Company, such payments to be made with five (5) days after
submission by Executive to the Company of a request for payment
with such evidence as the Company may reasonably require;
(F) In the event of a Change in Control, the payments
provided for in subsection (B) above, shall be made not later
than the fifth (5th) day following the Date of Termination;
provided, however, that if the amount of such payments, and the
limitation on such payments set forth in subsection (C) above,
cannot be finally determined on or before such day, the Company
shall pay Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments
and shall pay the remainder of such payments (together with
interest at the applicable federal rate as defined in Section
1274 of the Code or such other minimum rate which will not cause
imputation of income for its purpose, hereafter referred to as
the "Applicable Rate") as soon as the amount thereof can be
determined but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company
to Executive, payable on the fifth day after demand by the
Company (together with interest at the Applicable Rate);
(G) If Executive's employment shall be terminated by the
Company other than for Cause, then all of the then unvested Stock
Options provided for in subsection (c) of this Section 1 shall
immediately vest and be exercisable and, for an eighteen (18)
month period after the Date of Termination, the Company shall, at
Executive's request made within sixty (60) days after the Date of
Termination, arrange to provide Executive with health and life
benefits substantially similar to those which Executive was
receiving immediately prior to the Notice of Termination unless
and until Executive receives such benefits from a subsequent
employer. The cost of the benefits provided for in the preceding
sentence shall be borne by the Company for the first twelve (12)
months after the Date of Termination. The determination of
whether any of such benefits would result in a reduction of the
Severance Payment and, if so, by how much shall be made at the
Company's expense, by Tax Counsel and transmitted to Executive
within ten days after the Date of Termination;
(H) Executive shall not be required to mitigate the amount
of any payment provided for in this Section 1(e)(i) by seeking
other employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 1(e)(i) be
reduced by any compensation earned by Executive as the result of
employment by another employer or by retirement benefits after
the Date of Termination, or otherwise.
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(I) For purposes of this Agreement, the term, "Disability,"
shall mean an incapacity due to physical or mental illness or
injury that is permanent in nature and prevents Employee from
performing the substantial and material duties of his employment
hereunder. Any such disability shall be deemed to be permanent in
nature if such disability is expected to last for a period of at
least twelve (12) consecutive months.
(ii) Termination by the Company for Cause. A majority of the
entire membership of the Board shall have the right to terminate
Executive's employment at any time for any of the following reasons
(each of which is referred to herein as "Cause") by giving Executive
written notice which specifically identifies in reasonable detail the
Cause and affords reasonable opportunity for a hearing before the
Board with the right to be accompanied by counsel, and Executive shall
have fifteen (15) days from the receipt of such notice (or, if later,
the date of such hearing) to cure such Cause, to the extent such Cause
is curable. If the Cause is not cured within said fifteen (15) days or
the Cause is not curable, the Company may give Executive written
notice of the effective date of termination (which effective date may
be the date of such notice):
(A) the willful breach of any provision of Section 1(a),
Section 2 and/or Section 4;
(B) any act of intentional fraud or dishonesty with respect
to any aspect of the Company's or any affiliate's business;
(C) continued use of illegal drugs;
(D) as a result of Executive's willful misconduct, Executive
shall commit any act that causes, or shall knowingly fail to take
reasonable and appropriate action to prevent, any material injury
to the financial condition or business reputation of the Company
or any affiliate; or
(E) conviction of, or entering a plea of guilty or nolo
contendere to, a misdemeanor involving fraud, embezzlement,
theft, dishonesty or other criminal conduct against the Company
or a felony.
If a majority of the Board terminates Executive's employment
for any of the reasons set forth above in this Section 1(e)(ii),
the Company shall have no further obligations hereunder accruing
from and after the effective date of termination and shall have
all other rights and remedies available under this or any other
agreement and at law or in equity.
(iii) Voluntary Termination by Executive. In the event that
Executive's employment with the Company is terminated by Executive
(except as set forth in Section 1(e)(i)), the Company shall have no
further obligations hereunder accruing from and after the date of such
termination.
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2. NONDISCLOSURE. Executive hereby acknowledges and agrees that, in
performing services under this Agreement, Executive will have access to
Proprietary Information (as defined below). Executive further agrees as follows:
(a) Executive shall (i) use the Proprietary Information exclusively
for the purpose of fulfilling the obligations of this Agreement; (ii)
return the Proprietary Information, and any copies thereof, in his
possession or under his control, to the Company upon request of the
Company, or expiration or termination of this Agreement for any reason; and
(iii) except for disclosures to employees of the Company in the ordinary
course of business, hold the Proprietary Information in confidence and not
copy, publish or disclose to others or allow any other party to copy,
publish or disclose to others in any form, any Proprietary Information
without the prior written approval of the Chairman of the Board of the
Company.
(b) The obligations and restrictions set forth in this Section 2 shall
survive expiration or termination of this Agreement, for any reason, and
shall remain in full force and effect as follows:
(i) as to Trade Secrets, for an indefinite period after
expiration or termination of this Agreement it being understood that
disclosure of Company Trade Secrets shall never be permissible; and
(ii) as to Confidential Information, for a period of two (2)
years after expiration or termination of this Agreement for any
reason.
(c) The confidentiality, property, and proprietary rights protections
available in this Agreement are in addition to, and not exclusive of, any
and all other corporate rights, including those provided under copyright,
corporate officer or director fiduciary duties, and trade secret and
confidential information laws. The obligations set forth in this Section 2
shall not apply or shall terminate with respect to any particular portion
of the Proprietary Information which (i) was in Executive's possession,
free of any obligation of confidence, prior to his receipt from the
Company, (ii) Executive establishes is already in the public domain at the
time the Company communicates it to Executive, or becomes available to the
public through no breach of this Agreement by Executive, or (iii) Executive
establishes is received by Executive independently and in good faith from a
third party lawfully in possession thereof and having no obligation to keep
such information confidential.
(d) For purposes of this Section 2, the following definitions shall
apply:
(i) "Confidential Information" shall mean any information which
does not rise to the level of a Trade Secret, but is valuable to the
Company and provided in confidence to Executive.
(ii) "Proprietary Information" shall mean collectively Trade
Secrets and Confidential Information.
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(iii) "Trade Secret" shall mean any information, which derives
economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use, and
is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
3. OTHER BUSINESS. During the Employment Period, Executive agrees that she
will not, directly or indirectly, except with the express written consent of the
Board of Directors, become engaged in, render services for, or permit her name
to be used with, any business other than the business of the Company and its
affiliates.
4. TERMINATION OF AGREEMENT. This Agreement shall terminate on the fifth
(5th) anniversary of the date hereof.
5. GENERAL PROVISIONS.
(a) NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, or mailed by first class
mail (postage prepaid and return receipt requested) or sent by reputable
overnight courier services, to the recipient at the address below
indicated:
To the Company: 0000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
XX 00000
To Executive: 0000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party. Any notice under this Agreement will be deemed to have been given
when so delivered or sent or if mailed, five days after so mailed.
(b) SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision in any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein except that any court having jurisdiction
shall have the power to reduce the duration, area or scope of such invalid,
illegal or unenforceable provision and, in its reduced form, it shall be
enforceable.
(c) COMPLETE AGREEMENT. This Agreement embodies the complete agreement
and understanding between the parties and supersedes and preempts any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have
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related to the subject matter hereof in any way. Any employment, benefit or
bonus arrangements or agreements between the Company and Executive that
existed at any time prior to the execution and delivery of this Agreement
are hereby terminated by Executive: provided, however, that Executive shall
remain liable for any beach of such arrangements or agreements occurring
during the term of such arrangement or agreement. From and after the date
of this Agreement, Executive shall not be entitled to any compensation from
the Company on account of any such arrangement or agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company,
except that Executive may not assign any of his rights or obligations under
this Agreement and the Company may not assign any of its rights or
obligations under this Agreement except as provided in the following
sentence. The Company may assign its rights under this Agreement, as
security, to any lender to the Company, and in the event of a sale of all
of the stock, or substantially all of the stock, of the Company, or
consolidation or merger of the Company into another corporation or entity,
or the sale of substantially all of the operating assets of the Company to
another corporation, entity or individual, the Company may assign its
rights and obligations under this Agreement to its successor-in-interest
provided that such successor-in-interest shall have assumed all obligations
of the Company hereunder by written agreement with Executive, and in the
event the Company does not so assign its rights and obligations hereunder,
such sale, consolidation or merger shall be deemed to be termination of
Executive's employment by the Company without Cause in accordance with
Section 1(e)(i) hereof.
(e) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia (without regard to any
conflicts of laws provisions of the laws of such state).
(f) REMEDIES. Each of the parties to this Agreement will be entitled
to enforce his or its rights under this Agreement specifically to recover
damages (including, without limitation, reasonable fees and expenses of
counsel) by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in his or its favor. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for
any breach or threatened breach of the provisions of this Agreement and
that any party may in his or its sole discretion apply or any court of law
or equity of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(g) AMENDMENTS AND WAIVERS. Any provisions of this Agreement my be
amended or waived only with the prior written consent of Executive and a
majority of the Board.
(h) ABSENCE OF CONFLICTING AGREEMENTS. Executive hereby warrants and
covenants that his employment by the Company does not result in a breach of
the terms, conditions or provisions of any agreement to which Executive is
subject.
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(i) SURVIVAL. No termination of Executive's employment in accordance
with Section 1(e) shall reduce or terminate Executive's covenants and
agreements in Section 2.
(j) ACKNOWLEDGEMENT. By signing this Agreement, Executive acknowledges
that the Company has advised Executive of his right to consult with an
attorney prior to executing this Agreement; that he has the right to retain
counsel of his own choosing concerning the agreement to arbitrate or any
waiver of rights or claims; that he has read and fully understands the
terms of this Agreement and/or has had the right to have it reviewed and
approved by counsel of choice, with adequate opportunity and time for such
review; and that he is fully aware of its contents and of its legal effect.
Accordingly, this Agreement shall not be construed against any party on the
grounds that the party drafted this Agreement. Instead, this Agreement
shall be interpreted as though drafted equally by all parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.
"COMPANY"
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------
Title: Chief Financial Officer
-----------------------------
"EXECUTIVE"
/s/ Xxxxxx X. Xxxxx
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EXHIBIT A
BENEFITS
1. VACATION. Executive shall be entitled to a total of four (4) weeks of
paid vacation for each year during the term of this Agreement. Notwithstanding
the foregoing, Executive hereby acknowledges that no more than two (2) weeks of
vacation may be taken consecutively. Any vacation not taken in any such year
shall be forfeited and shall not be carried forward to subsequent years.
2. INSURANCE. Executive shall receive the employee benefits such as health
insurance, life insurance and disability insurance as are provided, from time to
time, to senior executives of the Company. In addition, Company hereby agrees to
purchase a term life insurance policy for Executive payable to the beneficiary
designated by Executive in the amount of $500,000, provided, however, that
Executive is insurable.
3. BUSINESS EXPENSES. Upon submission of itemized expense statements in the
manner specified by the Company, Executive shall be entitled to reimbursement
for reasonable business and travel expenses duly incurred by Executive in the
performance of his duties under this Agreement.
4. AUTOMOBILE ALLOWANCE. The Company hereby agrees to pay Executive or an
automobile leasing or finance company, if so directed by Executive, an amount up
to $700.00 per month as an automobile allowance, plus related automobile
insurance premiums and ad valorem taxes in an amount not to exceed $1,000.00 per
year.
6. CELL PHONE ALLOWANCE. The Company hereby agrees to furnish Executive
with a cellular telephone and pay cellular phone charges or reimburse executive
for same.
7. LAPTOP COMPUTER. The Company hereby agrees to furnish Executive with a
laptop computer for Executive's use during the term of this Agreement.
