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EXHIBIT 10.17
SEPARATION AGREEMENT
This Separation Agreement (this "Agreement") is made and entered into as
of the 18th day of August, 2000, by and between Xxxxxxxx X. Xxxxxx, Xx.
("Xxxxxx") and American Homestar Corporation, a Texas corporation (the
"Company").
W I T N E S E T H :
WHEREAS, the parties hereto desire to restructure their business
relationship and to effect the releases set forth herein;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Separation Obligations. The parties hereto hereby agree as follows:
(a) Xxxxxx hereby resigns as the Chief Executive Officer, President
and as a Director of the Company, effective as of the date hereof.
(b) Notwithstanding the above resignation, the parties hereto agree
to treat such resignation as a termination under Section 6, subpart (f) of
the Employment Agreement, dated as of November 15, 1996, as amended as of
April 1, 2000, by and between the Company and Xxxxxx (the "Employment
Agreement"), except that Xxxxxx shall be entitled to receive from the
Company the following compensation, and in lieu of any other compensation
which Xxxxxx is or may be entitled to receive under the Employment
Agreement:
(i) Fixed Payments. The Company shall pay Xxxxxx semi-monthly
payments of $15,000 (an annual rate of $360,000) until June 30, 2004
(prorated through June 30, 2004 for partial months).
(ii) Payments Based Upon Bonus Profit. Xxxxxx shall, on an
annual basis through the fiscal year 2004 ended June 30, 2004, be
paid an additional payment equal to 2.25% of Bonus Profit. "Bonus
Profit" shall mean the net consolidated operating profit of the
Company after income tax accruals and employee bonuses (other than
bonuses of senior officers of the Company or its subsidiaries who
are parties to comparable bonus arrangements with the Company), with
the tax rate being deemed to be the effective combined tax rate for
the Company and its subsidiaries. Each payment to Xxxxxx under this
subsection (ii) shall be paid to Xxxxxx within five days after final
audited financial statements of the Company for each fiscal year
have been completed and delivered to the Company. Xxxxxx and the
Company agree that no bonuses are due or payable for the Company's
fiscal year 2000, ended June 30, 2000.
(iii) Benefits. Xxxxxx shall receive, until June 30, 2003,
such group benefits as the Company may provide to its employees
whose salaries and responsibilities are comparable to what Xxxxxx
had during the final year of his
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employment with the Company. In addition, until June 30, 2003,
Xxxxxx shall receive a car allowance of $750 per month.
(iv) Insurance. The Company shall maintain the existing Salary
Continuation Agreement and Disability Compensation Agreement for
Xxxxxx from now until June 30, 2003. The Company will, through June
30, 2003, fund the following insurance policies currently in place
for Xxxxxx: (A) disability insurance policy; and (B) whole life
split dollar insurance policy in which the Company retains ownership
of the cash value and/or proceeds up to the total dollar amount of
premium payments funded by the Company, of which Xxxxxx'x life
insurance trust is the beneficiary.
(v) Expenses. Xxxxxx shall be entitled to be reimbursed for
any reasonable out-of-pocket expenses incurred in performing
services for the Company at the request of the Chief Executive
Officer of the Company. The Company acknowledges and agrees that
Xxxxxx is under no obligation to perform any services on behalf of
the Company.
(vi) Stock Options. The Company and Xxxxxx agree that they are
parties to the following stock option agreements of the Company (the
"Option Agreements"):
Total Exercise
Option Shares Price Vested Unvested
------ ------ -------- ------ --------
1994/NQ 76,688 $9.07 76,688 0
1994/ISO 17,063 9.97 17,063 0
1997/NQ* 140,625 9.07 93,742 46,883
1994/NQ 25,000 15.38 8,334 16,666
1999/NQ 200,000 15.38 0 200,000
------- ------- -------
Total 459,376 195,827 263,549
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*This option was issued under a special Co-CEO Plan. This option
continues to vest despite termination of employment, with mandatory
full-vesting on November 15, 2005 (i.e., the last tranche vests on
November 15, 2000 if the Company has a market capitalization prior
to such time of $500 million or more, but it automatically vests in
full on November 15, 2005).
The Company and Xxxxxx further agree that: (A) all unvested portions
of the Option Agreements shall be cancelled as of the date hereof
(except for the 1997/NQ Option which shall continue to vest pursuant
to its terms); and (B) the vested portions of the Option Agreements
may be exercised as follows:
(1) The 1994/NQ (76,688 vested shares), 1994/ISO (17,063
vested shares) and 1994/NQ (8,334 vested shares) may be
exercised in whole or in part at any time on or prior to
November 18, 2000.
(2) The 1997/NQ may be exercised in whole or in part on or
prior to November 15, 2006.
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(3) The 1999/NQ is not vested and is not exercisable.
(c) The Employment Agreement is hereby terminated and of no further
force or effect, except (i) as provided above in subsection (b) above;
(ii) that Section 5(a) and 5(c) shall be in full force and effect until
June 30, 2004; (iii) Section 5(e) shall be in full force and effect until
August 18, 2001; and (iv) Sections 0, 0, 00 xxx 00-00 xxxxx xx in full
force and effect until June 30, 2004.
(d) Simultaneously with the execution and delivery of this Agreement
by Xxxxxx, Xxxxxx shall deliver to the Company all Company credit cards,
travel vouchers and all other property of the Company in his possession,
excluding the computers installed at Xxxxxx'x homes in Texas and Colorado
(including the installed software, but Xxxxxx agrees to immediately delete
all information regarding the Company and its subsidiaries).
(e) Except as provided in this Agreement, Xxxxxx shall not be
entitled to receive any other compensation or benefits from the Company,
and Xxxxxx acknowledges and agrees that the Company does not owe him any
money and is not obligated in any way to him.
2. Releases.
(a) Release by the Company. The Company, on its own behalf and on
behalf of its directors, officers, agents, employees, successors, heirs,
legal representatives and the respective successors, heirs, legal
representatives and assigns of each of the foregoing (collectively, the
"Company Releasors") agrees to release and does hereby release, acquit and
forever discharge Xxxxxx, his agents, attorneys, heirs, legal
representatives and assigns of each of the foregoing (collectively, the
"Xxxxxx Releasees") from, and extinguishes, any and all claims, demands,
debts, damages, costs, losses, expenses, commissions, actions, causes of
action, rights, liabilities, obligations and choses in action of whatever
nature or type which any of the Company Releasors have, or may have, or
which have been, or could have been, or in the future otherwise might have
been asserted in connection with any acts or inactions of the Xxxxxx
Releasees or any of them occurring on or prior to the date hereof (the
"Company Claims"), except that in no event shall this paragraph operate to
release any of the Xxxxxx Releasees from any claims or liability resulting
from a breach of the representations, warranties, covenants and agreements
of Xxxxxx contained in this Agreement.
(b) Release by Xxxxxx. Xxxxxx, on his own behalf and on behalf of
his attorneys, agents, successors, heirs, legal representatives and
assigns (collectively, the "Xxxxxx Releasors") agrees to release and does
hereby release, acquit and forever discharge the Company and its
directors, officers, agents, employees and attorneys and the respective
successors, heirs, legal representatives and assigns of each of the
foregoing (collectively, the "Company Releasees") from, and extinguishes,
any and all claims, demands, debts, damages, costs, losses, expenses,
commissions, actions, causes of action, rights, liabilities, obligations
and choses in action of whatever nature or type which any of the Xxxxxx
Releasors have, or may have, or which have been, or could have been, or in
the future otherwise might have been asserted in connection with any acts
or inactions of the Company Releasees, or any of them, occurring on or
prior to the date hereof (the "Xxxxxx Claims"), including, but not limited
to: (i) all claims under the Age Discrimination in Employment Act of 1967;
(ii) all claims under the Americans With
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Disabilities Act; (iii) all claims under the Family Leave Act; (iv) all
claims under the Employee Retirement Income Security Act of 1974 and the
Texas Commission on Human Rights Act; (v) all claims related to Xxxxxx'x
employment with the Company; (vi) all claims of unlawful discrimination
based on age, sex, race, religion, national origin, handicap, disability,
equal pay or otherwise; (vii) all claims of wrongful discharge, breach of
any implied or express employment contract, negligent or intentional
infliction of emotional distress, libel, defamation, breach of privacy,
fraud and breach of any implied covenant of good faith and fair dealing;
and (viii) all claims related to unpaid wages, salary, overtime
compensation, bonuses, severance pay, vacation pay or other compensation
or benefits arising out of Xxxxxx'x employment with the Company through
the date of this Agreement (including, without limitation, any deferred
wages, salary or bonuses), except that in no event shall this paragraph
operate to release the Company from any claims or liability resulting from
a breach of the representations, warranties, covenants and agreements of
the Company contained in this Agreement. Xxxxxx hereby agrees that he will
not file any claims with the Texas Unemployment Commission with respect to
his leaving the Company.
3. Representations and Warranties of Xxxxxx. Xxxxxx hereby represents and
warrants that the following are true and correct as of the date hereof: (a)
Xxxxxx has the power and authority to execute, deliver and perform his
obligations under this Agreement, and this Agreement constitutes the valid and
binding obligation of Xxxxxx enforceable against him in accordance with the
terms hereof; (b) none of the Xxxxxx Releasors have assigned, sold, conveyed or
otherwise transferred all or any portion of the Xxxxxx Claims; and (c) Xxxxxx
has consulted or has had sufficient opportunity to discuss with any person,
including an attorney of his choice, all provisions of this Agreement, that he
has carefully read and fully understands all the provisions of this Agreement,
that he is competent to execute this Agreement, and that he is voluntarily
entering into this Agreement of his own free will and accord, without reliance
upon any statement or representation of any person or parties released, or their
representatives, concerning the nature and extent of the damages and/or legal
liability therefor.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants that the following are true and correct as of the date
hereof: (a) the Company is a corporation validly existing and in good standing
under the laws of the State of Texas; (b) the Company has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement, and the execution, delivery and performance by it of this Agreement
has been duly authorized by all necessary action, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against it in
accordance with the terms hereof; and (c) none of the Company Releasors have
assigned, sold, conveyed or otherwise transferred all or any portion of the
Company Claims.
5. Amendment and Assignment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by each of the parties
hereto. This Agreement shall extend to and be binding upon each of the parties
and their respective heirs, successors, assigns, legal representatives and any
corporation or other entity into or with which any party hereto may merge or
consolidate. Notwithstanding the above, neither this Agreement nor any right
created hereby shall be assignable to any party hereto.
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6. Notice. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile. Any such notice
or communication shall be deemed received, if not earlier received, on the third
business day following the date on which it is mailed, or on the day on which it
is hand delivered or delivered by facsimile, as the case may be. For purposes of
notice, the addresses of the parties shall be as set forth opposite their names
on the signature page hereto. Any party may change its address for notice by
written notice similarly given to the other parties.
7. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
8. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable by a court of competent jurisdiction, such provisions
shall be deemed severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provisions did not comprise a part
hereof unless the loss of such provision causes this Agreement to fail of its
essential purpose; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom except as aforesaid.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, the
parties agree to meet to determine in good faith, or will ask the court to
determine, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable
and such provision so determined shall then be added as part of this Agreement.
9. Governing Law. This Agreement and the rights and obligations of the
parties hereto, shall be governed, construed and enforced in accordance with the
laws of the State of Texas.
10. Revocation. It is expressly agreed that for seven (7) days following
execution of this Agreement by Xxxxxx, Xxxxxx may revoke this Agreement; it is
further expressly agreed by the parties that this Agreement shall not become
effective or enforceable until the seven (7) day revocation period described
above has expired, after which there this Agreement shall be deemed effective
and enforceable as of the date first above written.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
/s/ XXXXXXXX X. XXXXXX XX.
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Xxxxxxxx X. Xxxxxx, Xx.
Address: 00000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
and
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
AMERICAN HOMESTAR CORPORATION
/s/ XXXX X. XXXXXX
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Title: Interim President and Chief
Executive Officer
Address: 0000 Xxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, Xxxxx 00000
Attn: Chief Executive Officer
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