EMPLOYMENT AGREEMENT
Golf Ventures Inc., a Utah Corporation (the "Company") agrees to employ
Xxxxxx Xxxxxxxxx (Employee) and Employee agrees to accept such employment under
the following terms and conditions:
1. Term of Employment
(a) Except for earlier termination as is provided in Section 12 below,
employment under this Agreement and the term of this Agreement shall commence on
the closing date of the Golf Ventures, Inc./U.S. Golf Communities, Inc.
Reorganization Transaction and shall continue for an initial term of three (3)
years from said closing date (the "Initial Term"); provided, however, that if a
"Change of Control" (as hereinafter defined) of the Company occurs at any time
during the Initial Term (including more than one change of control) or during
the "Renewal Term" provided for in subsection (b) below, Employee shall have the
right, by giving written notice to the Company within 90 days after that Change
of Control, to terminate employment hereunder, effective the date of that
notice, whereupon the Initial Term shall be deemed to have ended. As used
herein, the term "Change of Control" shall mean (i) any transaction or set of
circumstances that would be required to be reported as a change of control under
item 6(e) of Schedule 14A (Rule 14A-101) promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), unless Employee is individually, or
is an executive officer or more than 5% equity holder of an entity that is,
directly or indirectly one of the new controlling parties, or (ii) the
completion by the Company of a merger or consolidation with, or a sale of all or
substantially of its assets to, another company, unless either (A) the Company
Is the surviving corporation and has not become a wholly owned subsidiary of
another person or entity or (B) Employee is an executive officer or more than 5%
equity holder of the other party to the transaction or of any entity controlling
that party to the transaction or of any entity controlling that party (any
transaction of the type described in this clause (ii) hereinafter being
described as a "Business Combination").
(b) After the Initial Term, this Agreement and employment hereunder
shall I be renewed automatically for successive terms of one (1) year each (a
"Renewal Term"), unless prior to the end of the Initial Term or any Renewal Term
either party shall have given to the other party at least three months' prior
written notice (a "Termination Notice") of termination of this Agreement or
Employee shall have exercised his right of termination upon a Change in Control
(to the extent applicable) provided for in subsection (a) above. If a
Termination Notice is given by either party, (I) the Company shall, without any
liability to Employee except as set forth herein, have the right, exercisable at
any time after the Termination Notice is given, to elect any other person to the
office or off ices in which Employee is then serving and to remove Employee from
such office or offices, but (ii) all other obligations Employee and the Company
have to the other, including the Company's obligation to pay compensation and
make available the fringe benefits to which Employee is entitled hereunder,
shall continue until the end of the Initial Term or any Renewal Term, as the
case may be, plus an amount equal one hundred percent (100%) of Employee's
prior year's base compensation.
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2. Compensation
(a) Employee shall I be compensated for performance of obligations
under this Agreement at the rate of Two Hundred Fifty Thousand Dollars,
($250.000.00) per annum (such salary, as adjusted as set forth below, and from
time to time pursuant to the discretion of the Board of Directors of the
Company, hereinafter is referred to as the "Base Salary"), payable in such
manner as is consistent with the Company's payroll practices for executive
employees. On the first day of each year of this Agreement, the Base Salary
shall be adjusted, at a minimum, by multiplying the Base Salary by a fraction
(I) the numerator of which shall be the Consumer Price Index (for urban wage
earners and clerical workers, all items) as reported by the Bureau of Labor
Statistics of the United States Department of Labor for the New York,
Northeastern New Jersey (or such other successor government agency as then shall
perform that reporting function) (the "Index") for the month immediately
preceding the month in which the Renewal Term shall commence and (ii) the
denominator of which shall be the Index for the month immediately preceding the
month in which the Immediately preceding term commenced; provided, however, that
in no event shall any such adjustment result In a decrease in Base Salary.
(b) Employee shall be granted performance-based options pursuant to the Equity
Incentive Plan. The initial grant shall be for Three Hundred Sixty Thousand
(360,000) options to purchase the Company's Common Stock, $0._ par value. The
option grant (I) shall become effective upon the closing date of the
Reorganization Transaction (U.S. Golf Communities, Inc. and Golf Ventures,
Inc.). (ii) The exercise (purchase) price of these options shall b ' e the
average of the closing bids for the ten (10) consecutive trading days prior to
the closing date plus 10%. (111) The options shall vest one-third (33 1/3%) on
the date of the grant and the remaining two-thirds (66 2/3%) equally over two
years, commencing one year from the date of grant. (iv) The vested options shall
be exercisable from time-to-time in whole or in part, within ten years from the
date of grant.
Options granted under the Equity Incentive Plan may be either Incentive
Stock Options (as defined in the internal Revenue Code of 1986, as amended) or
options which do not qualify as Incentive Stock Options. The exercise price of
all Incentive Stock Options granted under the Equity Plan may not be less than
the fair market value of the underlying Common Stock at the date of grant. In
the event that an optionee owns more than ten percent (10%) of the voting power
or value of all classes of stock of the Company, the minimum price of the
Incentive Stock Option may not be less than one hundred ten percent (110%) of
the market value of the underlying Common Stock at the date of grant.
(c) Employee shall not be entitled to receive director fees for
attending meetings of the Board of Directors or of any committee thereof.
Employee shall be entitled to reimbursement for reasonable expenses incurred in
connection with such attendance.
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3. Duties.
(a) During the term of employment hereunder, including any Renewal
Term hereof, Employee shall I serve and the Company shall I employ Employee as
the President and Chief Executive Officer, with such duties, title and
responsibilities of a similar or greater nature and stature as those initially
undertaken by Employee as the Board of Directors from time to time may
determine. Employee also shall perform such other services and duties consistent
with the office or offices in which Employee is serving and Its responsibilities
as from time to time shall be prescribed by the Board of Directors, and Employee
also shall serve, if elected, as an officer and/or director of any of the
Company's subsidiaries, in all cases in conformity to the bylaws and the
policies of the Board of Directors of each such corporation.
(b) Employee shall be required to devote substantially all his
business time and energies during normal business hours to the business and
affairs of the company and its subsidiaries.
(c) Employee shall cooperate with the Company, including taking such
medical examination as the Company reasonably shall deem necessary, if the
Company shall desire or be required (such as pursuant to the terms of any bank
loan or any agreement for merger, sale or purchase or any Company medical,
disability or life insurance plan) to certify in writing the current state of
Employee's physical health, Where reasonably possible, the Company shall
cooperate with Employee's request to have such examinations performed by his
personal physician or another physician reasonably acceptable to Employee.
(d) Employee shall be subject to the Company's rules, practices and
policies applicable to the Company's senior executive employees, except to the
extent the same are inconsistent with any of the express provisions of this
Agreement.
(e) Employee shall not be required to relocate outside the Orlando,
Florida area in order to perform his duties under this Agreement but shall
undertake such reasonable business travel as may be necessary to perform said
duties (for which Employee shall be reimbursed pursuant to Section 7 below).
4. Benefits.
(a) During the term of this Agreement and any subsequent renewal
periods, Company shall provide and pay for Employee's full family coverage of
medical and dental Insurance, with substantially the same benefits as Employee
is now covered by. Employee shall have the benefit of and be entitled to
participate In such employee benefit plans and programs, including life and
disability insurance, pension, saving and other similar plans, as the company
now has or hereafter may establish from time to time, and in which Employee
would be entitled to participate pursuant to the terms thereof. The foregoing,
however, shall I not be construed to require the Company to establish any such
plans or to prevent the
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Company from modifying or terminating any such plans, except health insurance,
and no such action or failure thereof shall affect this agreement.
(b) Employee shall be entitled to participate in the Company's
Incentive Compensation Plan, a copy of which will be made available to Employee.
Employee shall be entitled to be granted options under the Company's stock
option stock grant and stock appreciation plans as may be in effect from time to
time and applicable to the Company's senior executive management.
(c) Employee shall be entitled to four weeks of paid vacation each
year.
(d) The Company shall provide Employee with, or reimburse Employee
for, a leased luxury automobile of Employee's choice, at a rate of up to $750
per month.
(f) The Company shall indemnify Employee in the performance of his
duties pursuant to the By-Laws of the Company and to the full extent allowed by
applicable law, including, without limitation, legal fees.
5. Change of Control; Severance P.
(a) If Employee elects to terminate his employment hereunder during
the Initial Term or any Renewal Term, as a result of a Change of Control of the
Company, then within ten business days after the date of such termination date
(the "Termination Date") the Company shall pay to Employee an amount in cash
(the "Termination Payment") equal to two (2) times the average total
compensation for the prior two fiscal years, including base salary and all
benefits, perquisites and incentive or bonus payments, less an amount, if
necessary, sufficient to exclude such payment from falling within the provisions
of SEC28OG of the Internal Revenue Code relating to "excess parachute payments".
(b) The Employee shall continue to be covered by all of the company's
life, medical, health and dental plans for 24 months after such Change of
Control termination date.
(c) The Employee shall receive an additional retirement benefit over
and above that which the Employee would normally be entitled to under the
Company's retirement plans, equal to the actuarial equivalent of the additional
amount that the Employee would have earned under such retirement plans or
programs had he accumulated four additional continuous years of service. Such
amount shall be paid to the Employee in a cash lump sum payment at his normal
retirement age. The Employee may also elect to receive such payment at his early
retirement age, as provided for in the retirement plans, with a corresponding
actuarial reduction in the amount of such payment based upon the earlier date of
such payment.
(d) The amounts paid to the Employee hereunder shall be considered
severance pay in consideration of the past services he has rendered to the
Company and in
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consideration of his continued service from the date hereof to his entitlement
to those payments. The Employee shall have no duty to mitigate his damages by
seeking other employment. Should the Employee actually receive other payments
from any such other employment, the payments called for hereunder shall not be
reduced or offset by any such future earnings.
(e) The arrangements called for by this Agreement are not intended to
have any effect on the participation in any other benefits available to
executive personnel or to preclude other compensation or additional benefits as
may be authorized by the Company's Board of Directors from time to time.
6. Working and Other Facilities.
During the Initial Term and any Renewal Term, Employee shall be
provided with such working facilities and other support services as are
suitable to his position and necessary and appropriate for the performance of
his duties.
7. Expenses.
The Company shall reimburse Employee for all legal and accounting fees
and expenses incurred by Employee in connection with the structuring,
negotiation and preparation of this agreement hereof, up to an aggregate maximum
of $5,000, upon the presentation by Employee of appropriate substantiation
thereof. The Company also shall reimburse Employee for all reasonable expenses
incurred in connection with the performance of Employee's obligations hereunder,
upon the presentation of appropriate substantiation of such expenses and
approval thereof by the Compensation Committee in accordance with normal Company
expense reimbursement policies.
8. Restrictive Covenants.
During such time as the Employee shall be employed by the Company, and
for a period of two (2) years thereafter (except no waiting period shall I be
required in the case of change of control or non-renewal), Employee shall not,
without the prior written consent of the Board of Directors, directly or
indirectly, become associated with, render services to, invest in, represent,
advise or otherwise participate as an officer, employee, director, stockholder,
partner, agent of or a consultant for, any business that is "in Competition"
with the Company at the time employment with the Company ceases; provided,
however, that nothing herein shall prevent Employee from (i) investing (A)
without limit in the securities of any company that has a class of securities
listed on a national securities exchange or quoted on the NASDAQ quotation
system, or (B) to the extent of no more than 30% of the equity In any other
company, that (with reference to clauses (A) and (B) above) his involvement
(directly or through any affiliated person or entity) with any such company is
solely that of a passive stockholder, or (ii) retaining (or exercising his right
to acquire and thereafter retain) any investment that Employee owned (or had the
contractual right to acquire) as of the date of commencement of employment with
the Company. As used herein, the term "In Competition", when used with reference
to any business, means that (1) not less than 20% of the consolidated revenues
of that business are provided by one or more classes of services provided and/or
products manufactured and sold by such business (the "Common Classes")
Page 5
that, in the aggregate, provide not less than 20% of the Company's consolidated
revenues and (2) at least one of the Common Classes individually provides not
less than 10% of the consolidated revenues of that business and of the Company.
9. Confidentiality, Noninterference and Proprietary Information.
(a) In the course of employment by the Company hereunder, Employee
will have access to confidential or proprietary data or information of the
Company. Employee shall not at any time divulge or communicate to any person,
nor direct any Company employee to divulge or communicate to any person (other
than to a person bound by confidentiality obligations similar to those contained
herein and other than as necessary in performing duties hereunder) or use to the
detriment of the Company or for the benefit of any other person, any of such
confidential or proprietary data or information, except to the extent the same
becomes publicly known other than through a breach of this Agreement by
Employee. The provisions of this Section 9(a) shall survive employment
hereunder, whether by the normal expiration thereof, or otherwise, for as long
as such data or information remains confidential. The term "confidential or
proprietary data or information" as used in this agreement shall mean data or
information not generally available to the public, including personnel
information, financial information, customer lists, supplier lists, product and
trading specifications, trade secrets, information concerning product and
service composition, specifications and formulas, tools and dies, drawing and
schematics, manufacturing processes, information regarding operations, systems
and services, know how, computer and any other processed or collated data,
computer programs, pricing, marketing, sales and advertising data and regulatory
compliance information.
(b) Employee shall not, during the term of this Agreement and for a
period of one year after the termination of employment by the Company, for
Employee's own account or for the account of any other person, interfere with
the Company's, or its subsidiaries relationship with any of Its suppliers or
customers or interfere with or hire any of the Company's or its subsidiaries'
employees; provided. however that Employee's employment by a competitor of the
Company, if not in violation of his non-competition agreement contained in
Section 8 hereof, and Employee's contacting of suppliers and customers in
connection therewith, if not in violation of this Section 9, shall not
constitute "interference" hereunder.
(c) All written materials, records and documents made by Employee or
coming into his possession during his employment concerning any products or
services, processes or equipment, manufactured, used, developed, investigated or
considered by the Company or otherwise concerning the business or affairs of the
Company, shall be the sole property of the Company, and upon termination of
employment, or upon the reasonable request of the Company during employment,
Employee shall promptly deliver the same lo the Company. In addition, upon
termination of employment, or upon the reasonable request of the Company during
employment, Employee shall deliver to the Company all other Company property in
his possession or under his control, including confidential or proprietary data
or
Page 6
information and all Company credit cards and all equipment and automobiles owned
or leased by the Company.
10. Equitable Relief. With respect to the covenants contained in
Sections 8 and 9 of this Agreement, Employee acknowledges that any remedy at law
for any breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive or other
equitable relief to enforce its rights thereunder.
11. Earlier Termination: Continued Compensation. Employment hereunder
shall terminate prior to the stated expiration date of the Initial Term or, if
applicable, the current Renewal Term (the "Stated Expiration Date") on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of Employee's
death. Notwithstanding the foregoing, the Company shall: (i) continue to make
payments to Employee's estate of the Base Salary as then in effect pursuant to
this Agreement until I one year after death; provided, however, that to the
extent those Base Salary payments continue beyond the original expiration date
of the term of this Agreement during which Employee shall have died, the amount
of each of the payments to be made after that original expiration date shall be
adjusted by multiplying the same by a fraction (A) the numerator of which shall
be the Index for the last month of the term in which Employee died (as
originally provided for herein) and (B) the denominator of which shall be the
Index for the month immediately preceding the month in which that term
commenced; (ii) pay Employee's estate any reimbursable expenses that had been
incurred by Employee and which had not yet been reimbursed as provided herein as
of the date of death; and (iii) continue the Employee's family health benefit
for one (1) year after death.
(b) This Agreement shall be terminated, at the option of the Company,
if Employee is unable to perform his duties hereunder for go days (whether or
not continuous) during any period of 365 consecutive days by reason of physical
or mental disability. The disability shall be deemed to have occurred on the
90th day of inability to perform duties due to disability, and notice of
termination on account of such disability shall be given (if at all) by the
Company within 30 days after that date. Notwithstanding the foregoing, the
Company shall: (i) continue to pay Employee's Base Salary as then in effect
pursuant to this Agreement (less any amounts paid to Employee pursuant to any
disability policy provided by the Company), until one year after such
disability: provided however, that to the extent those Base Salary payments
continue beyond the original expiration date of the term of this Agreement
during which Employee shall have been determined to be disabled, the amount of
each of the payments to be made after that original expiration date shall be
adjusted by multiplying the same by a fraction (A) the numerator of which shall
be the Index for the last month of the term during which Employee was determined
to be disabled (as originally provided for herein) and (B) the denominator of
which shall be the Index for the month immediately preceding the month in which
that term commenced; and (11) pay Employee any reimbursable expenses that had
been incurred by him and had not been reimbursed as provided herein as of the
date of termination due to such disability. Disability as used in this
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paragraph shall mean any single or series of related physical or mental
conditions, illnesses or diseases which, in the opinion of a competent and
mutually selected medical specialist in the locale of Employee's residence,
independent of Employee and the Company, prevents Employee (as the date of that
specialist's examination, which shall not take place until the condition,
illness or disease in question shall have continued for at least 90 days) from
substantially fulfilling Employee's duties for the Company. No termination for
disability shall be effective unless (i) Employee has first received notice in
writing of the Company's determination to have him medically examined and such
examination has taken place or (ii) Employee has unreasonably delayed, or
interfered or refused to cooperate with, the examination process,
The Company covenants and agrees that during the initial Term of this
Agreement, or any Renewal Term, it shall maintain disability insurance which
shall pay 60% of Employee's base salary at the time of disability and Employee
and his family will continue to be covered by the Company's health, dental and
life insurance benefits during the term of such disability.
(c) This Agreement shall terminate immediately upon the Company's sending
Employee written notice terminating employment hereunder for cause. "Cause"
shall mean: (a) conviction of Employee of a felony; (ii) Employee's material
breach of any obligations under this Agreement (including voluntary termination
by Employee of this Agreement other than at the end of the Initial Term or any
Renewal Term or by exercise of Employee's right of termination provided for in
Section 1(a) hereof) without a material breach by the Company of its obligations
hereunder); or (iii) Employee's refusal to perform duties, obligations and
responsibilities under this Agreement, or (iv) Employee's gross negligence or
willful misconduct with respect to duties or gross misfeasance or gross
malfeasance of office.
(d) This Agreement may not be terminated by the Company except as set
in paragraphs 11 (a), (b) and (c) hereof.
(e) Upon termination of this Agreement, the Company's obligations
hereunder shall cease except as provided in subsections (a) and (b) above and
Section 5 hereof.
12. Entire Agreement: Modification: Construction. The Agreement
constitutes the full and complete understanding of the parties, and supersedes
all prior agreements and understandings, oral or written, between the parties,
with respect to the subject matter hereof. Employee acknowledges that he has (a)
carefully read this Agreement, (b) had an opportunity to consult with
independent counsel with respect to this Agreement and (c) entered into this
Agreement of his own free will. Employee represents and warrants that he is not
a party to, or otherwise bound by, any employment contracts, restrictive
covenants or any other contracts preventing the proper performance of duties
hereunder. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been made by either
party, or anyone acting on behalf of either party, which
Page 8
are not embodied or referred to herein and that no other agreement, statement or
promise pertaining to the terms of employment by the Company and not contained
specifically or referred to in this Agreement shall be valid or binding. This
Agreement may not be modified or amended except by an instrument in writing
signed by the party against which enforcement thereof may be sought.
13. Severability. Any term or provision of this Agreement that is held
to be invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of that invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
14. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement, which waiver must be in writing to be effective,
shall not operate as or be construed as a waiver of any subsequent breach.
15. Notices. All notices hereunder shall be in writing and shall be
sent by messenger or by certified or registered mail, postage prepaid, return
receipt request, if to Employee, to his residence at 000 Xxxxxxxxx Xxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx 00000 and if to the Company, to 000 Xxxxx Xxxxxx Xxxxxx. Xxxxx
0000. Xxxxxxx, Xxxxxxx 00000.
16. Assignability; Binding Effect. This Agreement shall not be
assignable by Employee without the written consent of the Board of Directors of
the Company. This Agreement shall be binding upon and inure to the benefit of
Employee, his legal representatives, heirs and distributees, and shall be
binding upon and inure to the benefit of the Company, its successors and
assigns.
17. Governing Law. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the State of Florida without giving
effect to the conflicts or choice of law provisions thereof.
18. Arbitration. Any disputes which arise under this Agreement shall be
settled by arbitration at Orlando, Florida or a mutually acceptable location
pursuant to the rules of the American Arbitration Association.
19. Headings. The headings in this agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this agreement.
20. Counterparts. This agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
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Executed by the Parties hereto effective as of 26 day of November 1997
COMPANY: GOLF VENTURES, INC.
EIN: ______________________
By: /s/ Xxxx Xx Xxxxxx By: /s/ Xxxxxxxx Xxxxx
------------------------ ------------------------
Xxxx Xx Xxxxxx Xxxxxxxx Xxxxx, Director
Exec. Vice President
As of As of
Date: 11/26/97 Date: 11/26/97
------------------ ---------------------
Employee: XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Signature
As of
Date: 11/26/97
--------------------
SSN: ###-##-####
---------------------
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