EXHIBIT 10.2
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 XXXXX X. XXXXX, an
individual resident of the State of Georgia ("Executive").
W I T N E S S E T H :
WHEREAS, the Company wishes to employ Executive as the Chief Operating
Officer and Chief Financial Officer of the Company; and
WHEREAS, the Company wishes to appoint Executive as a member of the
Board of Directors to serve as such for a three-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 COO, CFO and Director 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 Operating Officer and Chief financial
Officer, and as such she 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 Executive
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 her best efforts and substantially all of her
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 $20,000 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 her 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 her Base Salary (annualized)
bonus and automobile allowance includible in her
gross income in respect to her 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 related to the
subject matter hereof in any way. Any employment, benefit or bonus
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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/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
"EXECUTIVE"
/s/ Xxxxx 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.
