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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the
23rd day of August, 1997 (the "Effective Date"), by and between American
Homestar Corporation, a Texas corporation ("Employer") and Xxxxxx XxXxxxxx
("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as provided herein, and
Employee desires to accept such employment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I. RESPONSIBILITIES
Employee shall initially have the title, and perform the duties, of
Executive Vice-President of Employer and the President and Chief Operating
Officer of Oak Creek Housing Corporation (the manufacturing division of
Employer) and such other duties as reasonably requested from time to time by
the President/Co-Chief Executive Officer or Board of Directors of Employer.
Employee will faithfully devote his best efforts and all his working time to
and for the benefit of Employer; provided, however, that Employee may, at his
option, devote reasonable time and attention to civic, charitable, business or
social organizations or speaking engagements as he deems appropriate. It is
anticipated that Employee will devote a reasonable amount of time to serving on
the board of directors of one or more public or private corporations, provided
that the business activities of any such corporation are not competitive with
those of Employer.
ARTICLE II. COMPENSATION
SECTION 2.1 GENERAL TERMS. As compensation for his services rendered
under this Agreement, during the term of this Agreement, Employee shall be
entitled to receive the compensation as provided in EXHIBIT A attached hereto.
SECTION 2.2 REIMBURSEMENT. It is acknowledged by the parties that
Employee, in connection with the services to be performed by him pursuant to
the terms of this Agreement, will be required to make payments for travel,
communications, entertainment of business associates and similar expenses.
Employer will reimburse Employee for all reasonable expenses of types
authorized by Employer and incurred by Employee in the performance of his
duties hereunder. Employee will comply with such budget limitations and
approval and reporting requirements with respect to expenses as Employer may
establish from time to time.
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ARTICLE III.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 3.1 DEFINITIONS. For purposes of this Agreement,
"Confidential Information" is any data or information that is unique to
Employer, proprietary, competitively sensitive, and not generally known by the
public, including, but not limited to, Employer's initial business plan,
prospective customers ("prospective customers" is understood to mean those
potential customers with whom or with which Employer is engaged in active
discussion about a business relationship) training manuals, product development
plans, bidding and pricing procedures, internal performance statistics,
financial data, confidential personnel information concerning employees of
Employer, operational or administrative plans, policy manuals, and terms and
conditions of contracts and agreements. The term "Confidential Information"
shall not apply to information which is (i) already in Employee's possession
(unless such information was obtained by Employee from Employer in the course
of Employee's employment by Employer); (ii) received by Employee from a third
party with no restriction on disclosure or (iii) required to be disclosed by
any applicable law or by an order of a court of competent jurisdiction.
SECTION 3.2 USE AND DISCLOSURE. Employee recognizes and acknowledges
that the Confidential Information constitutes valuable, special and unique
assets of Employer and its affiliates. Except as required to perform
Employee's duties as an employee of Employer, until such time as they cease to
be Confidential Information through no act of Employee in violation of this
Agreement, Employee will not use or disclose any Confidential Information of
Employer.
SECTION 3.3 SURRENDER. Upon the request of Employer and, in any
event, upon the termination of this Agreement for any reason, Employee will
surrender to Employer (i) all memoranda, notes, records, drawings, manuals or
other documents pertaining to Employer's Business (as defined below) including
all copies and/or reproductions thereof and (ii) all materials involving any
Confidential Information of Employer.
ARTICLE IV. NONCOMPETITION
SECTION 4.1 RESTRICTION. In consideration of the severance
provisions contained herein and the access to the Confidential Information
granted to Employee, Employee hereby agrees that, until one year after the
termination of Employee's employment hereunder (the "Restricted Period"), for
any reason, Employee will not solicit or encourage any officer, employee, or
consultant of Employer to leave its employ for employment by or with any
competitor of Employer in the business of producing manufactured homes.
SECTION 4.2 REFORMATION AND SEVERANCE. If a judicial determination is
made that any of the provisions of the above restriction constitutes an
unreasonable or otherwise unenforceable restriction against Employee, it shall
be rendered void only to the extent that such judicial determination finds
such provisions to be unreasonable or otherwise unenforceable. In this regard,
the parties hereby agree that any judicial authority construing this Agreement
shall be empowered to sever any portion
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of the prohibited business activity from the coverage of this restriction and
to apply the restriction to the remaining portion of the business activities
not so severed by such judicial authority. Moreover, notwithstanding the fact
that any provisions of this restriction are determined by a court not be
specifically enforceable through injunctive relief, Employer shall nevertheless
be entitled to seek to recover monetary damages as a result of the breach of
such provision by Employee. The time period during which the restrictions
shall apply shall be tolled and suspended as to Employee for a period equal to
the aggregate quantity of time during which Employee violates such prohibitions
in any respect.
ARTICLE V. TERM
Subject to Article VI below, this Agreement shall continue in full
force and effect for a term of three (3) years commencing on the Effective Date
and shall thereafter automatically renew for successive additional one year
terms unless either party provides the other with written notice of its intent
not to renew this Agreement at least ninety (90) days prior to the end of the
term.
ARTICLE VI. TERMINATION
Employee's employment hereunder will terminate prior to the time set
forth in Article V hereof upon the occurrence of the following events:
(a) BY COMPANY WITHOUT CAUSE. Employer may terminate
this Agreement at any time, for any reason or without cause. In the
event of the termination of this Agreement pursuant to this
Subsection, Employee shall be entitled to receive the salary and
bonuses provided for in Exhibit A until the later of (i) the date that
this Agreement would have expired had it not been terminated pursuant
to this Subsection or (ii) one year after termination pursuant to this
Subsection.
(b) BY EMPLOYEE WITHOUT CAUSE. Employee may terminate
this Agreement at any time, for any reason or without cause. In the
event of the termination of this Agreement pursuant to this
Subsection, Employee shall be entitled to receive only the
compensation earned by him as of, and payable for the period prior to,
the date of termination.
(c) BY COMPANY WITH CAUSE. This Agreement may be
terminated by Company at any time upon written notice for any of the
following reasons:
I. a substantial breach by the Employee of a material
provision of this Agreement, which breach remains
uncorrected for more than thirty (30) days following
written notice detailing the specific provision for
which a breach is alleged, and setting forth the
actions, which, when taken, will correct the breach;
II. conviction of the Employee for a felony which
materially affects Employee's ability to perform his
duties pursuant to this Agreement; or
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III. commission by Employee of an act of fraud,
embezzlement, or material dishonesty against Employer
or its affiliates.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive only the compensation earned by him as
of, and payable for the period prior to, the date of termination.
(d) BY EMPLOYEE FOR CAUSE. This Agreement may be
terminated by Employee at any time upon written notice to Employer
after the occurrence of a Constructive Termination. As used in this
Agreement, the term "Constructive Termination" means any of the
following:
I. a material reduction in Employee's duties and
responsibilities without Employee's consent; or
II. conviction of Employer for a felony related to
activities in which Employee has not participated.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive the salary and bonuses provided for in
Exhibit A until the later of (i) the date that this Agreement would have
expired had it not been terminated pursuant to this Subsection and (ii) one
year after termination pursuant to this Subsection.
(e) TERMINATION ON DEATH. In the event of Employee's
death, this Agreement will be deemed to have terminated on the date of
his death. In the event of his death, Employer will pay to the
testamentary trusts created by Employee's Will or, if there are no
such trusts, to his estate, all salary due and owing through the date
of his death together with a lump sum payment in the amount of one
hundred percent (100%) of the Employee's annual base salary as
provided in Exhibit A.
(f) TERMINATION ON DISABILITY. This Agreement will
terminate immediately in the event Employee becomes physically or
mentally disabled. Employee will be deemed disabled if, as a result
of Employee's incapacity due to physical or mental illness, Employee
shall have been absent from his duties with Employer on a full-time
basis for 120 consecutive business days. In the event of the
termination of this Agreement pursuant to this Subsection, Employee
shall be entitled to receive only the compensation earned by him as
of, and payable for the period prior to the date of termination.
ARTICLE VII. CHANGE IN CONTROL TERMINATION PAYMENT
SECTION 7.1 TERMINATION PAYMENT. Notwithstanding anything to the
contrary contained in Article VI hereof, if, Employee's employment with
Employer terminates within the twelve month
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period following a Change In Control (as defined in Section 7.2 hereof), the
Employee shall be entitled to receive the following:
I. The salary and bonuses provided for in EXHIBIT A until the
later of (i) the date that this Agreement would have expired
had a Change In Control not occurred; and (ii) one-year after
the date of termination of Employee's employment with
Employer.
II. All options to purchase common stock of Employer shall fully
vest.
III. The deemed repayment of the principal amount of the promissory
note described in Item 13 of Exhibit A shall be accelerated
such that Employee is given credit for one-year of deemed
repayment (i.e., 20% of the principal amount) in addition to
any deemed repayments previously received.
SECTION 7.2 CHANGE IN CONTROL. A Change In Control will be deemed to
have occurred for purposes hereof (i) when a change of stock ownership of
Employer of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any successor Item of a similar nature has
occurred; or (ii) upon the acquisition of beneficial ownership, directly or
indirectly, by any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) of securities of Employer representing 50% or more of the
combined voting power of Employer's then outstanding securities; or (iii)
during any period of two consecutive years, a majority of the Board of
Directors ceases, for any reason, to consist of Continuing Directors; provided
that a Change In Control will not be deemed to have occurred for purposes
hereof with respect to any person meeting the requirements of clauses (i) and
(ii) of Rule 13d-1(b)(1) promulgated under the Securities Exchange Act of 1934,
as amended. As used herein, "Continuing Director" shall mean a member of the
Board of Directors of Employer who either (i) was a member of the Board of
Directors as of the beginning of the relevant two year period or (ii) was
nominated or appointed (before initial election as a director) to serve as a
director by a majority of the then Continuing Directors.
SECTION 7.3 NO RIGHT TO CONTINUED EMPLOYMENT. This Article VII will
not give Employee any right of continued employment or any right to
compensation or benefits from Employer except the rights specifically stated
herein.
ARTICLE VIII. GENERAL TERMS
SECTION 8.1 NOTICES. All notices and other communications hereunder
will be in writing or by written telecommunication, and will be deemed to have
been duly given if delivered personally or if sent by overnight courier or by
written telecommunication, to the relevant address set forth
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below, or to such other address as the recipient of such notice or
communication will have specified to the other party hereto in accordance with
this Section:
If to Employer, to: with a copy to:
American Homestar Corporation Xxxxxxx Xxxxxx, L.L.P.
0000 X. Xxxxx Xxxxxxxxx, Xxxxx 000 000 Xxxx Xxxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxx 76006-7422 Xxxxxx, Xxxxx 00000
Attention: President Attention: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
If to Employee, to:
Xxxxxx XxXxxxxx
0000 Xxxx Xxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxx 00000
Phone No.: (000) 000-0000
Fax No.:
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SECTION 8.2 WITHHOLDING. All payments required to be made by Employer
under this Agreement to Employee will be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.
SECTION 8.3 ENTIRE AGREEMENT; MODIFICATION. This Agreement and
Exhibit A attached hereto constitute the complete and entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties. The parties have executed this Agreement based
upon the express terms and provisions set forth herein and have not relied on
any communications or representations, oral or written, which are not set
forth in this Agreement.
SECTION 8.4 AMENDMENT. The covenants and/or provisions of this
Agreement may not be modified by any subsequent agreement unless the modifying
agreement: (i) is in writing; (ii) contains an express provision referencing
this Agreement; (iii) is signed and executed on behalf of Employer by an
officer of Employer other than Employee; (iv) is approved by resolution of the
Board; and (v) is signed by Employee.
SECTION 8.5 LEGAL CONSULTATION. Both parties have been accorded a
reasonable opportunity to review this Agreement with legal counsel prior to
executing this Agreement.
SECTION 8.6 CHOICE OF LAW. This Agreement and the performance hereof
will be construed and governed in accordance with the laws of the State of
Texas, without regard to its choice of law principles.
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SECTION 8.7 COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which he or it may be entitled.
SECTION 8.8 SUCCESSORS AND ASSIGNS. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not be
assignable. In the event of Employee's death or disability, this Agreement
shall be enforceable by Employee's estate, executors and/or legal
representatives.
SECTION 8.9 WAIVER OF PROVISIONS. Any waiver of any terms and
conditions hereof must be in writing and signed by the parties hereto. The
waiver of any of the terms and conditions of this Agreement shall not be
construed as a waiver of any subsequent breach of the same or any other terms
and conditions hereof.
SECTION 8.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any portion shall be held invalid, illegal or
enforceable for any reason, the remainder of this Agreement shall be effective
and binding upon the parties provided that the substance of the economic
relationship created by this Agreement remains materially unchanged.
SECTION 8.11 REMEDIES. The parties hereto acknowledge and agree that
upon any breach by Employee of his obligations under either of Articles III and
IV hereof, Employer will have no adequate remedy at law, and accordingly will
be entitled to specific performance and other appropriate injunctive and
equitable relief. No remedy set forth in this Agreement or otherwise conferred
upon or reserved to any party shall be considered exclusive of any other remedy
available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, Employer and Employee have caused this Agreement
as of the day and year first above written.
/s/ XXXXXX XxXXXXXX
----------------------------------------------
Xxxxxx XxXxxxxx
AMERICAN HOMESTAR CORPORATION
By: /s/ XXXXXXXX X. XXXXXX, XX.
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Its: President & Co. CEO
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EXHIBIT A
COMPENSATION PLAN
(1) POSITION: Executive Vice President of American Homestar Corporation
("Employer") and President and Chief Operating Officer of Oak Creek
Housing Corporation ("OCHC"), the manufacturing division of Employer.
This position reports to the President/Co-Chief Executive Officer of
Employer.
(2) SUPERVISORY ASSIGNMENTS AND DIRECT REPORTS:
o Regional Vice Presidents/General Managers (when hired)
o Plant General Managers
o Corporate and/or Regional Vice Presidents of Sales and
Marketing
o Manufacturing Division, staff directors and vice presidents
o Vice President Finance and Financial Accounting/MIS function
will report to President/Co-Chief Executive Officer of
Employer initially
(3) BASE SALARY: $135,000 annually, payable semi-monthly in arrears on
the 15th and 30th of each month.
(4) AUTO ALLOWANCE: $650 per month, plus all gas and maintenance expenses
for one automobile.
(5) GROUP MEDICAL AND LONG-TERM DISABILITY BENEFITS: Per the standard
Group Medical Plan and Long Term Disability Plan for all employees of
OCHC, as amended from time to time.
(6) VACATION BENEFITS: Per the standard salaried employee benefits
schedule for employees of OCHC with 5 or more years of continuous
service.
(7) GROUP LIFE INSURANCE: Per the standard plan, which currently provides
for death benefits equal to two times employee's annual W-2 income,
with a maximum of $500,000.
(8) 401(K) PLAN: Per the standard Plan of Employer.
(9) OTHER BENEFITS: It is understood that if the Board of Directors of
Employer approves new or additional benefits or deferred compensation
plans for any group of senior management which would include
Employee's position, that Employee will participate appropriately in
such new or additional benefits or compensation.
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(10) BONUS COMPENSATION:
A. Annual Bonus: 1/2% of the consolidated net income of
Employer, net of taxes and management bonus accruals.
B. Quarterly Bonus Plans:
1. Employer's Target Bonus Plan: $120,000 annual rate.
a. This bonus is earned based on the
achievement of Employer's Wall Street
Forecast earnings commitment ("WSF"), as
follows:
o 80% is earned for 80% achievement of
WSF
o 90% is earned for 90% achievement of
WSF
o 100% is earned for 100% achievement
of WSF
o 110% is earned for 110% achievement
of WSF
o 120% is earned for 120% achievement
of WSF
b. The maximum of this bonus will be 120% of
the Target Bonus amount (i.e., $144,000).
c. This bonus is paid quarterly based on
year-to-date performance versus the WSF,
up to 100%. The balance (if any) is paid
at year-end.
2. Manufacturing Division Profit Bonus: 0.5% of OCHC
Pre-Tax Profit.
a. This bonus is based on the
consolidated profits of OCHC (the
manufacturing division of Employer)
after interest and amortization
expense and all bonuses except this
one, and before state and federal
taxes (the "OCHC Pre-Tax Profits").
b. This bonus is paid quarterly at the
rate of 0.5% of year-to-date OCHC
Pre-Tax Profits, less prior
quarterly payments hereunder.
3. Annual Profit Improvement Bonus: For any year of the
term of the Agreement, Employee will be paid a bonus
equal to 1.0% of the fiscal year OCHC Pre-tax Profit
increase over the OCHC Pre-tax Profit earned in the
prior fiscal year. This bonus is paid after the end
of the fiscal year.
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C. Notes:
1. Bonuses for quarterly or annual periods will be paid
within ten (10) days after the quarterly or annual
operating results for the relevant period are
publicly announced.
2. A bonus is earned for the relevant quarterly or
annual period only if Employee continues to be
employed by Employer through the completion of such
relevant period.
3. The quarterly and annual bonuses hereunder for the
first fiscal year will be pro-rated based upon the
date Employee commences his employment with Employer.
(11) RELOCATION ALLOWANCE: Employee will be reimbursed the greater of: (i)
$25,000; or (ii) the amount of the following expenses, for Employee's
relocation from Austin to the Dallas/Fort Worth area:
A. Real estate commissions on the sale of Employee's Austin
residence
B. Out-of-pocket, direct moving costs
C. Temporary living expenses for a furnished apartment in
Arlington (for up to 10 months)
D. Costs of commuting between Austin and Dallas/Fort Worth (for
up to 10 months)
(12) COMPENSATION GUARANTY: As long as Employee continues to be employed by
Employer under this Agreement, the total of salary and bonuses earned
and payable under the terms of this Agreement will be not less than
$400,000 for the first full twelve-month period of this Agreement, and
not less than a cumulative $1,000,000 for the full 36- month term of
the Agreement (pro-rated for partial terms).
(13) SIGNING BONUS: Employer will loan to Employee (the "Loan") an amount
equal to the greater of (i) $1.0 million; or (ii) the amount paid by
Employee to purchase 50,000 shares of Employer's common stock (the
"Common Stock").The Loan will be evidenced by a promissory note (the
"Note"), and will be secured by the shares of Common Stock purchased.
The Note will include the following terms:
A. Interest on the Note will accrue at the rate of _____% per
annum.
B. Principal of and interest on the Note will be payable upon the
earlier of: (i) one (1) year after the date of termination of
the Agreement; or (ii) the seventh anniversary of the date of
the Note. In addition, principal of and interest on the Note
must be paid-down from the proceeds of a sale of any shares of
Common Stock.
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C. If Employee remains employed by Employer for the full three-
year term of the Agreement, 20% of the principal of the Note
will be deemed paid (i.e., "forgiven"). At the end of each
annual period thereafter that Employee continues to be
employed by Employer under the Agreement, an additional 20% of
the principal of the Note will be deemed paid (i.e,
"forgiven").
(14) STOCK OPTIONS: Employee will be granted the following options to
purchase Common Stock under Employer's 1994 Amended and Restated Stock
Compensation Plan (the "Plan"):
A. 22,000 shares: Incentive Stock Options, which will vest 20%
per year at the end of years 2 - 6 of employment.
B. 28,000 shares: Non-Qualified Options, which will vest 40% at
the end of year 2 and 20% at the end of years 3 - 5 of
employment.
C. Exercise Price: The exercise price for the above options shall
be the market price of the Common Stock on the date of grant;
provided, however, that the exercise price for the 28,000
option shares described in (B) above shall be reduced by $1.00
per share, unless Employer pays to Employee a bonus of $28,000
on or before August 23, 1998.
(15) FUTURE STOCK OPTIONS: Future stock options may be granted from time to
time, although there is no specific procedure or timetable for such
reviews. In the future, Employee will be eligible for consideration
of stock options by the Compensation Committee of the Board of
Directors of Employer when options are considered for any group of
senior management which includes Employee. However, the Compensation
Committee will have no obligation for such consideration for Employee
within two years of Employee's date of hire. Notwithstanding the
above, Employer agrees to grant to Employee Non-Qualified Options to
purchase at least 50,000 shares of Common Stock under the Plan at a
cumulative grant rate of 10,000 shares per year on the third through
seventh anniversaries of the date of the Agreement (subject to
Employee continuing to be employed by Employer); with such options
being issued at the market price of the Common Stock on the date of
grant and subject to an equal five-year vesting schedule commencing
one-year after the date of grant.
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