EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 22nd day of
October, 2001 by XXXXX X. XXXXXXX, an individual residing at 0000 Xxxxxxx Xxxx
Xx., Xxxxxxxx, Xxxxxx 00000 (the "Employee"), and X.X. XXXXXX, INC., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the Company and Xxxxxxx Homes, Inc. ("Xxxxxxx") have entered
into an Agreement and Plan of Merger, dated as of October 22, 2001 (the "Merger
Agreement");
WHEREAS, the Merger Agreement provides that, as a condition to the
consummation of the transactions contemplated thereby, the Company shall have
entered into an employment agreement with the Employee, with employment
thereunder to be effective as of the Closing Date as defined in the Merger
Agreement (such date being the "Effective Date" herein).
WHEREAS, pursuant to the provisions of the Merger Agreement, the
Company desires to hire the Employee, and the Employee desires to accept
employment with the Company, upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment of Employee. Subject to the terms and conditions hereof,
the Company hereby employs the Employee in the capacity of Senior Vice President
of Company and President of the Company's Xxxxxxx Homes Region, and the Employee
hereby accepts such employment.
2. Duties. The Employee shall be responsible for operations of the
Company's Xxxxxxx Homes Region. The Company agrees to assign to the Employee,
and the Employee agrees to perform, such duties and responsibilities as are
consistent with the responsibilities assigned to the regional presidents of
other regions of the Company as well as such other duties and responsibilities
as the Chairman or Chief Executive Officer of the Company may from time to time
assign. During the term of his employment with the Company, the Employee shall
devote his full time to the business and affairs of the Company (other than with
respect to those activities and investments in which the Employee is engaged as
of the date hereof as more fully set forth on Schedule B to the Confidentiality
and Noncompetition Agreement, dated as of the date hereof (the "Noncompetition
Agreement"), delivered by the Employee in favor of the Company), shall use his
reasonable best efforts to discharge the responsibilities of his office and
position as set forth herein, and shall not engage in any other employment or
business activities for any direct or indirect remuneration that would be
harmful or detrimental to, or that may compete with, the business and affairs of
the Company, or that would interfere with his duties hereunder. In addition,
during the term of this Agreement and thereafter the Employee may be nominated
to, and if nominated agrees to serve on, the Company's Board of Directors;
provided, however, that
during any period of such service the Employee will continue to hold
(individually or through a foundation or trust of his designation) at least 25%
of the Company's common stock that he and his affiliates receive in connection
with Merger Agreement.
3. Termination of Prior Employment Agreement. On and after the
Effective Date, this Agreement will supersede the April 3, 2001 Employment
Agreement between the Employee and Xxxxxxx and any amendments thereto (the
"Xxxxxxx Agreement"), and such agreement shall thereupon be terminated and no
longer in effect. Except as expressly provided herein, the parties mutually
release each other from all debts, duties, and obligations under the Xxxxxxx
Agreement including, without limitation, the severance and other obligations of
Section 5 thereof. The release of such obligations and termination of the
Xxxxxxx Agreement shall not constitute a Termination of Service or a
Constructive Termination thereunder entitling the Employee to severance or any
other benefit under the Xxxxxxx Agreement.
4. Base Compensation. During the Term (as defined below), the Company
shall pay to the Employee semi-monthly, as base compensation for the services to
be rendered hereunder, the sum of $12,500.00 less appropriate deductions and
withholdings, with such payments made consistent with the normal payroll
procedures of the Company (the "Base Compensation"). The Base Compensation shall
be prorated for any month during which the Employee is employed for less than
the entire month.
5. Bonus. For Xxxxxxx'x fiscal year ending on March 31, 2002, the
Employee shall be eligible to receive a bonus of one percent (1%) of the
earnings before taxes attributable to the operations of Xxxxxxx as historically
conducted consistent with past practices immediately prior to the Effective
Date. Such bonus shall be offset against any portion of the annual bonus
received by the Employee pursuant to Section 4(b) of the Xxxxxxx Agreement for
such fiscal year. For the periods commencing on April 1, 2002 and ending on
March 31, 2003 and for each twelve month period thereafter, provided the
Employee remains employed during such periods, the Employee shall be eligible to
receive a bonus of 0.75% of the pre-tax income during each such period
attributable to the Xxxxxxx Homes Region (calculated in the manner the Company
calculates regional pre-tax income for internal financial statements
presentation). Any such bonus payments may be made, at the Company's discretion,
under the Xxxxxxx'x 2000 Incentive Bonus Plan or the Company's 2000 Incentive
Bonus Plan, as the case may be.
6. Employee Benefits. During his employment, the Employee shall be
entitled to participate, subject to their terms, in those benefit plans and
programs (other than incentive compensation plans) generally available to
similarly situated officers of the Company. Such plans may include, but not
necessarily be limited to, the X.X. Xxxxxx, Inc. 1991 Stock Incentive Plan, the
X.X. Xxxxxx, Inc. Profit Sharing Plus Plan, the X.X. Xxxxxx, Inc. Flexible
Benefits Plan, the X.X. Xxxxxx, Inc. Major Medical Health Care Plan, the X.X.
Xxxxxx, Inc. Pre-Tax Premium Contribution Plan and such other employee benefit
plans generally available to employees of the Company as may be in effect from
time to time. In addition, during his employment, the Employee shall be eligible
to participate in the X.X. Xxxxxx, Inc. Supplemental Executive Retirement Plan
No. 1 and the X.X. Xxxxxx, Inc. Supplemental Executive Retirement Plan No. 2.
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The Company reserves the right to amend, modify, or terminate such benefit plans
or programs, as well as any benefit arrangement or policy reflected in its
Employee Manual, at any time without notice to the Employee. Additionally, the
Company agrees to reimburse the Employee in accordance with generally applicable
policies of the Company for business expenses reasonably incurred by the
Employee on behalf of the Company.
7. Term. The term of the Employee's employment hereunder shall commence
as of the Effective Date and, unless sooner terminated as provided in Section 8
hereof, shall continue through March 31, 2005. Upon termination of such
employment, the provisions of Sections 9 through 17 hereof shall remain in force
pursuant to their respective terms.
8. Termination. The Employee's employment under this Agreement shall
terminate upon the following circumstances:
(a) the death of the Employee;
(b) the Employee becomes Permanently Disabled. For purposes of this
provision, the Employee shall be "Permanently Disabled" if: (i) to the
extent that the Employee is covered by a policy of disability
insurance, the Company reasonably determines that the Employee's
condition satisfies the definition of "disability" therein; or (ii) in
the event that Employee is not covered by a policy of disability
insurance, it is determined that, as the result of physical or mental
incapacity, he has been or will be unable to perform the essential
duties of his position, even with reasonable accommodation, for a
period of 90 days or more. The determination of Permanent Disability
for purposes of subpart (ii) of the preceding sentence shall be made by
mutual agreement of the Employee and the Company, or if no such
agreement is reached, shall be determined by a mutually selected person
who is an expert in the type of disability claimed whose determination
shall be final and binding. If the parties cannot agree on the
selection of an expert as provided in the preceding sentence, the
determination shall be made by an arbitrator selected pursuant to the
commercial arbitration rules of the American Arbitration Association.
Nothing in this Agreement shall constitute a promise that the Company
will provide any form of disability insurance coverage or a guarantee
that the Employee will receive any benefits under such coverage;
(c) the delivery by the Employee to the Chairman or Chief Executive
Officer of the Company of 30 days prior written notice of termination
as of a date not earlier than the first anniversary of the Effective
Date;
(d) the engagement by the Employee in any activity that constitutes
Cause. For purposes of this Agreement, the term "Cause" shall mean that
the Employee shall have committed any act of fraud, embezzlement or
theft in connection with his duties hereunder;
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(e) the delivery by the Company to the Employee of notice of
termination as of a date not earlier than the first anniversary of the
Effective Date; or
(f) the delivery by the Employee to the Company of notice of
termination by reason of a Material Breach by the Company. A "Material
Breach by the Company" shall mean a breach by the Company in any
material respect of any material provision of this Agreement, if such
breach is not discontinued within 10 days of written notice from the
Employee or occurs again after the expiration of such 10-day notice
period.
In the event that the Employee's employment is terminated under
subsections (a) through (d) above at any time, or under subsections (e) or (f)
at any time after March 31, 2003, his right to additional compensation and
benefits shall cease and the Employee shall be entitled only to earned Base
Compensation, accrued bonus amounts, and accrued but unused vacation time as of
the date of termination. Under such circumstances, the accrued bonus amount
shall be a pro rata portion of any bonus that would otherwise have been paid
under Section 5 of this Agreement, calculated by dividing the number of days
employed during the relevant bonus period by the total number of days in such
period. Any Base Compensation and Bonus amounts due following termination under
this Section shall be paid consistent with the Company's normal payroll and
bonus determination schedules.
9. Non-Disclosure of Confidential Information.
(a) In the course of his employment under this Agreement, the
Employee will be given access to and receive certain Confidential Information
that the Company has acquired and developed, and will continue to acquire and
develop, through the expenditure of valuable resources and that provide the
Company with advantages over competitors who do not know and use such
information. For purposes of this Agreement, "Confidential Information" includes
any trade secret, process, computer information systems, plans, checklists,
documents, pricing information, cost and expense data, customer lists or
information pertaining to customers, financial information, or marketing data,
whether such information is embodied in writing or other physical form or in the
memory of the Employee. The Employee acknowledges and agrees that the Company
has taken reasonable precautions against the disclosure to and use by others of
such Confidential Information. The Employee further acknowledges and agrees
that, although some of the Confidential Information existing on the date hereof
may be known to the Employee by reason of his prior association with the
business acquired by the Company pursuant to the Merger Agreement, additional
valuable Confidential Information of the Company will be disclosed to the
Employee in connection with his employment under this Agreement. Accordingly,
the Employee agrees that he will not, directly or indirectly, disclose or use
any such Confidential Information during the term of this Agreement or at any
time thereafter, except as required in the course of his employment for the
Company's benefit.
(b) The Employee further agrees that all files, records, documents,
computer-recorded information, marketing surveys, operating manuals, price
lists, memoranda, and similar
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items relating to the business of the Company, whether prepared by the Employee
or otherwise coming into his possession, are and shall remain the exclusive
property of the Company and shall be immediately returned (along with any copies
or derivatives thereof) upon the termination of the Employee's employment with
the Company.
(c) Notwithstanding the foregoing, this Section 9 shall not preclude
the Employee from disclosing information and material covered by this provision
to the extent that it (i) is or becomes generally available to the public other
than by the Employee's breach of this Section 9, (ii) is required to be
disclosed by law or court order, and the Employee has promptly notified the
Company of the requirement to disclose such information or material and allowed
the Company a reasonable period to obtain a protective order to prevent such
disclosure, or (iii) is disclosed to the Employee's accountant, lawyer, or other
advisor for the sole purpose of receiving professional advice with respect
thereto, provided that such professional advisor does not disclose the covered
information or material to any other person except as permitted under this
subsection.
(d) The existence of any claim or cause of action by the Employee
against the Company whether predicated upon the terms of the Employee's
employment hereunder or otherwise, shall not constitute a defense to the
enforcement by the Company, or its successors and assigns, of the foregoing
restrictive covenants but shall be litigated separately.
10. Non-Solicitation and Non-Interference.
(a) The Employee acknowledges and agrees that the nature of the
Confidential Information to which he will have access by virtue of his
employment under this Agreement will render it impossible, even with the
exercise of complete good faith, to engage in certain conduct without using or
disclosing such Confidential Information. Accordingly, in exchange for access to
such information and in order to protect its value to the Company, the Employee
agrees that during his employment under this Agreement and for a period of one
(1) year thereafter (the "Restricted Period"), he shall not engage in any of the
following activities (hereinafter, the "Prohibited Activities"):
(i) Solicit Employees. Solicit to employ any employee of the
Company or any affiliate thereof while such person is employed by
any of them;
(ii) Interfere with Contracts. Either on his own account or for
any other person, solicit, induce, attempt to induce, interfere with
or endeavor to cause any person (including without limitation any
broker, customer, governmental authority, subcontractor, or
supplier) to modify, amend, terminate, or otherwise alter any
contract or arrangement that such person has with the Company;
(iii) Send Home Buyers to Competitors. Make any statement or
perform any act intended to cause any existing or potential home
buyer of whom the Employee was aware during his employment under
this Agreement to purchase
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a home from or enter into a commercial construction contract with
any existing or prospective competitor of the Company.
(b) If, for any period, the Employee is in breach or violation of the
provisions of this Section 10, the Restricted Period shall be extended by a
period equal to the period of such breach or violation.
11. Enforcement. The Employee acknowledges and agrees that any breach
or threatened breach of the provisions of Sections 9 or 10 of this Agreement
would result in damage to the Company that would be immediate and irreparable,
would be difficult and perhaps impossible to adequately ascertain, and would not
be subject to adequate remedy by virtue of money damages. Accordingly, the
Employee agrees that in the event of any such threatened or actual breach or
violation, the Company shall be entitled to an injunction restraining any future
or continued breach or violation without need for any bond or other security.
Such right to an injunction shall be in addition to and cumulative of (and not
in lieu of) any other remedies to which the Company is entitled because of such
breach or violation. If a court of competent jurisdiction determines that the
provisions of Sections 9 or 10 are partially or wholly inoperative, invalid, or
unenforceable in a particular case because of their duration, scope, restricted
activity, or any other parameter, the court shall reform such duration, scope,
restricted activity, or other parameter with respect to such case to permit
enforcement of the reformed provisions to the greatest extent allowable.
12. Company Property. The Employee agrees that any and all home
designs, development techniques or other concepts, products, or processes
relating to the Company's business which the Employee may create, make,
discover, introduce or invent while retained by the Company hereunder, shall
belong to and be the sole property of the Company. The Employee agrees promptly
and fully to disclose the same to the Company and to assign all rights thereto
to the Company immediately.
13. Survival. The parties hereby agree that the provisions of Sections
9 through 17 hereof shall survive the termination of this Agreement.
14. Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Texas.
15. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the Company, its successors and assigns, and any
corporation with which the Company may merge or consolidate or to which the
Company may sell all or substantially all of its assets, and the Employee and
his executors, administrators, heirs and legal representatives. Since the
Employee's duties and services hereunder are special, personal and unique in
nature, the Employee may not transfer, sell or otherwise assign his rights,
obligations or benefits under this Agreement.
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16. Entire Agreement. This Agreement and the Noncompetition Agreement,
contain the entire agreement between the parties relating to the subject matter
hereof and supersede all previous agreements between the parties whether written
or oral with respect to the subject matter hereof. This Agreement cannot be
modified, altered or amended except by a writing signed by all the parties.
17. Invalidity. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
or impair the validity or enforceability of the remaining provisions of this
Agreement, which shall remain in full force and effect, and the parties hereto
shall continue to be bound thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ XXXXX X. XXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxx
X.X. XXXXXX, INC.
By: /s/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx
Attorney-in-Fact
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