1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into
effective as of the 7th day of February, 2000 by and between TARRAGON REALTY
INVESTORS, INC., a Nevada corporation ("TRII") and XXXXXX X. XXXXXX, an
individual (herein called "Employee").
W I T N E S S E T H:
WHEREAS, TRII is engaged in the business of investing in equity
interests in real estate and financing real estate and real estate related
activities through mortgage loans including first, wrap-around and junior
mortgage loans and has elected to be treated as a real estate investment trust,
but has from time to time in the past and may again in the future engage in any
and all aspects of the real estate business including acquisition, development
and construction (all collectively the "Real Estate Business");
WHEREAS, TRII desires to employ Employee as a senior executive officer
and Employee is willing to accept such employment, all under the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Adoption of Recitals. The parties hereby adopt and confirm the foregoing
recitals in the same manner as if fully recopied herein for all purposes.
2. Employment. TRII agrees to employ Employee for the term of this Agreement as
set forth in Section 3 below, and Employee agrees to accept such employment and
to serve TRII in the capacity of President and Chief Executive Officer of
Tarragon Development Corporation, a wholly owned subsidiary of TRII, and to fill
such other positions of responsibility and description as the Board of Directors
of TRII may from time to time determine, all upon the terms and conditions
herein set forth.
3. Term. The term of Employee's employment shall commence on the Effective Date
of this Agreement and shall continue for three (3) full calendar years
thereafter, expiring on February 6, 2003 (the "Initial Period"). Thereafter,
this Agreement shall automatically renew and continue on a year-to-year basis
unless terminated by written notice of non-renewal from either party to this
Agreement to the other party, delivered at least thirty (30) calendar days prior
to the expiration of the Initial Period or thirty (30) calendar days prior to
the termination of any subsequent annual extension of such period of employment,
unless otherwise previously terminated as set forth herein.
1
2
4. Compensation. In consideration of services to be rendered by Employee during
the term of this Agreement, TRII shall compensate Employee as follows:
a. Base Compensation. While Employee is in the employ of TRII under the
provisions of this Agreement, TRII shall pay to Employee a base
compensation at the rate of $200,000 per annum during each year of the
Initial Period, payable no less frequently than 1/12th per month;
during each annual period after the Initial Period, TRII shall pay to
Employee a base compensation at the rate of $200,000 per annum,
payable no less frequently than 1/12th per month, or at such higher
rate of base compensation as may be set from time to time by the Board
of Directors.
b. Bonus. Employee may receive, in addition to his base compensation,
such bonuses as may be deemed appropriate by the Board of Directors of
the Company, in their sole discretion.
c. Other Benefits. During the term of this Agreement, TRII will provide
for Employee the following:
i. Health Insurance; Benefit Plans. TRII will allow Employee to
participate in any benefit plan of TRII or any of its subsidiaries
covering health/major medical insurance and any self-funded retirement
or "401-k" plan on the same basis as any other senior executive
officer of the Company.
ii. Other Insurance. TRII will provide life insurance and disability
insurance for Employee on the same basis or pursuant to the same
arrangements now or hereafter existing for the benefit of senior
executive officers of TRII and its subsidiaries and Employee generally
at any time during the term of this Agreement.
iii. Vacation and Other Benefits. Employee shall be entitled to participate
in benefits generally extended from time to time to senior executive
officers of TRII and its subsidiaries and reasonable vacations
consistent with TRII and its subsidiaries' policies.
5. Duties; Extent of Services. Employee shall devote substantially all of his
business time, attention and energy to TRII and its subsidiaries and shall not,
during the term of employment, be actively engaged in any competitive managerial
or employment capacity in any other business activity for gain, profit or other
pecuniary advantage; provided, however, that the foregoing does not prohibit
Employee from making investments that do not materially interfere with the
performance of his duties for TRII and its subsidiaries and, provided, further,
that TRII recognizes that Employee has certain other business interests in real
estate which may require some devotion of time by Employee. Within such
parameters, Employee shall serve TRII and its subsidiaries in such responsible
capacities as the Board of Directors or other senior executive officers of TRII
may, from time to time, determine and in such capacities shall serve TRII and
its subsidiaries faithfully and to the best of his ability discharge the duties
undertaken by him
2
3
hereunder under the direction of the Board of Directors and other senior
executive officers of TRII, subject at all times to the discretion and control
of the Board of Directors of TRII. Employee shall also serve as a member of the
Board of Directors, and shall perform the duties of a director and/or member of
any committee of directors of TRII to which Employee is elected or selected.
Employee agrees that he shall not, during the term of this Agreement, whether as
an employee, director, officer, shareholder, owner, partner or otherwise,
directly or indirectly, engage in any business or businesses competitive to that
conducted by TRII or any of its subsidiaries or affiliates. Nothing herein
contained shall prevent Employee from owning or dealing in stocks or interests
of any entity actively traded on a recognized exchange which may be so
competitive (without participating in the management or control of such entity),
provided that Employee's holdings shall not at any time exceed five percent (5%)
of the outstanding equity voting securities of such entity. Employee may from
time to time request permission of the Board of Directors of TRII to engage in
other business activities (which may include service as a director of other
entities) which do not interfere with or prevent his faithful performance of the
responsibilities assigned to him by the Board of Directors or other senior
executive officers of TRII. Any such permission granted must be in writing to
become effective and be pursuant to and approved at a duly constituted meeting
of the Board of Directors. Notwithstanding the foregoing or anything else to the
contrary contained herein, it is recognized that Employee is an equity owner of
and/or directly involved with businesses and entities listed and described on
Exhibit "1" annexed hereto (all of which are collectively sometimes referred to
herein as the "Rohdie Entities"). The continuation of Employee's ownership
and/or involvement with the Rohdie Entities, including Employee's active
participation in the respective operations of the Rohdie Entities, shall not be
deemed to be a conflict with, or breach or violation of this Agreement or to
create, by itself, any right of termination or cancellation of this Agreement.
6. Termination. Employee's employment hereunder may be terminated at any time
during the term of this Agreement, but only on the terms and conditions set
forth below, provided, however, that notwithstanding such termination or any
other provision of this Agreement, the provisions of Sections 8, 9, 10 and 11
shall survive the term and termination of this Agreement and Employee and TRII
shall continue to be bound thereby:
a. Mutual Agreement. Employee's employment hereunder may be terminated at
any time by mutual agreement on terms to be negotiated and reduced to
writing at the time of such termination.
b. Death. Employee's employment hereunder and this Agreement shall
terminate automatically upon the death of Employee.
c. Disability. Employee's employment hereunder shall terminate and this
Agreement shall terminate automatically upon the total disability of
Employee. For purposes of this Agreement "total disability" shall be
deemed to have occurred if in the sole judgment of TRII, acting in
good faith by a vote of at least 80% in number of the members of the
Board of Directors, Employee shall have been unable to perform the
duties of employment due to mental or physical incapacity for a period
of 90 consecutive calendar days.
3
4
d. Cause. TRII may terminate Employee for "Cause." For purposes of this
Agreement, the term "Cause" shall be deemed to be conduct by Employee
constituting "mismanagement" (defined below), willful misconduct or
fraud during the term of this Agreement directly involving TRII and
the determination made in good faith by a vote of at least 50% in
number of the members of the Board of Directors of TRII or the
occurrence of events which, in the determination made in good faith by
a vote of at least 50% in number of the members of the Board of
Directors of TRII render Employee unable to devote full time and
undivided attention to his duties under this Agreement (other than
death, disability or illness). The term "gross mismanagement" shall be
and mean (i) that Employee shall be convicted of, or shall admit in
writing or publicly, to a crime involving the business or property of
TRII or any of its subsidiaries, (ii) the absence other than by reason
of illness, injury or vacation from his duties without the consent of
TRII for more than thirty (30) consecutive days, (iii) the negligence
by Employee in the performance of his duties under this Agreement or
otherwise willfully failing to comply with the terms and conditions of
this Agreement, or (iv) the engagement by Employee in any activity
that would, in the reasonable opinion of at least 50% of the members
of the Board of Directors of TRII, constitute a direct conflict of
interest with TRII and/or its business, except for matters involving
the Rohdie Entities. In the event of any such termination for Cause of
Employee's employment hereunder, such termination shall not affect any
of TRII's or Employee's other rights and/or remedies and any such
termination for Cause may be made by TRII upon notification to the
Employee in writing of the occurrence of any of the events specified
in this paragraph within fifteen (15) calendar days prior to such
termination.
e. Requested Resignation. The employment of Employee may be terminated
without Cause by a vote of at least 80% in number of the members of
the Board of Directors of TRII.
f. Employee's Voluntary Resignation. The employment of Employee will be
terminated in the event of Employee's voluntary written resignation
from employment.
7. Effects of Termination. Upon severance or termination of employment of
Employee for any reason and without regard to any attribution of fault to any
person, Employee shall, upon such severance or termination:
a. return to TRII and its subsidiaries all items of property owned or
leased by TRII and its subsidiaries in Employee's possession
including, without limitation, all credit cards, cash advances, work
papers, computer programs or tapes, computers, customer lists, keys to
facilities, vehicles or other items of transportation; and
b. have such other rights to which Employee may be entitled under the
provisions of this Agreement.
Notwithstanding any subpart of this Section 7, upon severance or termination of
employment, Employee will make himself available, when reasonably requested, for
testimony in any lawsuit or administrative proceeding that may be brought
against TRII and/or its subsidiaries after
4
5
severance or termination of his employment. In the event Employee is called upon
to render such services, TRII agrees to reasonably compensate Employee for such
services.
8. Compensation upon Termination. If the employment of Employee under this
Agreement is terminated pursuant to the provisions of paragraph (a) under
Section 6 above, the terms of the negotiated mutual settlement shall encompass
and provide for the compensation, if any, to be paid to Employee and no further
compensation will be payable to Employee except as specifically provided
therein. In the event of the termination of this Agreement by reason of
paragraph (b) or (c) of Section 6 above, this Agreement shall terminate and no
further compensation shall be paid to Employee other than the base compensation
accrued through the date of termination, and such other benefits specifically
provided to Employee or his heirs under any benefit plan then in effect
involving the Employee. In the event of termination of this Agreement by reason
of paragraphs (d) or (f) under Section 6 above, this Agreement shall terminate
and no further compensation shall be paid to Employee other than the base
compensation accrued through the date of termination. In the event of
termination of this Agreement by reason of paragraph (e) under Section 6 above,
Employee shall receive on a monthly basis from TRII a payment of $16,666 per
month for the lesser of (x) the remaining number of months in the Initial Period
or, if such Initial Period has passed, then the then annual renewal term of this
Agreement, or (y) the equivalent number of months covered by Section 10 below
which are observed by Employee, not to exceed 12 calendar months.
9. Disclosure of Information. The Employee hereby acknowledges that he has had
and will continue to have access to certain trade secrets and confidential
information of TRII and its subsidiaries and affiliates (all collectively the
"Entities") and that such information constitutes the valuable, special and
unique property of the Entities. Employee will not, during or after the term of
employment hereunder, disclose any such trade secrets or confidential
information to any person or entity for any reason or purpose whatsoever, except
as may be required by law.
10. Restrictive Covenant; Agreement Not to Compete. Employee and TRII agree that
the covenants, agreements and restrictions contained herein are necessary to
protect the business good will, business interests and proprietary rights of
TRII and that the parties to this Agreement have independently discussed,
reviewed and had the opportunity to consult legal counsel about this Agreement
and have stipulated that the covenant contained in this Section 10 is an
integral part of an enforceable agreement, specifically the Agreement, and the
covenants contained herein were made at the same time that the Agreement was
consummated by the parties hereto, and that the covenants contained herein are
fair and reasonable in (i) geographical area, (ii) length of time, and (iii)
scope of activity being restrained. Employee expressly agrees that while this
Agreement is in effect, and following the termination of employment with TRII
pursuant to Section 6 above, for a period of one calendar year following the
date of termination, Employee shall not, except as provided below, "engage,"
directly or indirectly, in a "Competing Business." For purposes of the foregoing
sentence, the term "engage" shall mean and include activities that directly
further the business of any business enterprise (regardless of whether it is a
corporation, partnership, sole proprietorship, limited liability or other
business association entity) which
5
6
constitutes a "Competing Business" whether Employee serves as a principal,
owner, director, consultant, stockholder or employee of any such business
enterprise. "Competing Business" shall mean a business enterprise regardless of
how constituted as a sole proprietorship, corporation, limited liability
company, general or limited partnership or otherwise which is engaged in the
business of investing in equity interests in real estate and financing real
estate and real estate related activities through mortgage loans including
first, wrap-around and junior mortgage loans in the geographical areas or states
where TRII is actively engaged in such business during the period covered by
this Agreement or at the termination hereof, as applicable. For the purposes of
this Agreement, the term "Person" means any individual, corporation,
partnership, unincorporated association, firm, trust, joint stock company, joint
venture or other entity of whatever nature. For the purposes of this Agreement,
the term "affiliate" means, with respect to any Person, any Person that directly
or indirectly controls, or is controlled by or is under common control with,
such designated Person and, without limiting the generality of the foregoing,
shall include any Person who, directly or indirectly, is the legal or beneficial
owner of or controls 10% or more of any class of equity securities of the
designated Person. For the purpose of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise. Notwithstanding the foregoing, Employee shall not be
deemed to be engaged in a Competing Business solely by reason of:
a. ownership of an economic interest in a Competing Business on the
Effective Date of this Agreement or continuing to hold such interest
after the date of this Agreement or receipt of any payments in respect
of such economic interest; or
b. continuing or becoming, after termination of this Agreement, an
officer, director, consultant or employee of any of the Rohdie
Entities or performing services or duties after termination of this
Agreement requested by any of the Rohdie Entities (other than, in each
instance specified in this paragraph, those which require Employee to
render assistance to a Competing Business that furthers its
competitive position in the areas specified in the definition of
"Competing Business"); or
c. beneficial ownership as an investment, acquired after the date of this
Agreement, of not more than 5% of the equity securities of any entity
that constitutes a "Competing Business" if such entity is subject to
the reporting requirements imposed by Sections 13 or 15 of the
Securities Exchange Act of 1934, as amended.
It is intended that the restrictions set forth in this section shall not be held
invalid or unenforceable because of the scope of the territory or actions
subject thereto or restricted thereby for the period of time within which such
restriction is operative, but any judgment of any court of
6
7
competent jurisdiction may redefine or further limit the territory included in
the definition of "Competing Business," increase the exceptions set forth in the
immediately preceding paragraph and/or reduce the period of time during which
such restriction is enforceable.
11. Agreement Not to Solicit Employees. Following termination of employment with
TRII hereunder, Employee agrees that for a period of one (1) calendar year,
Employee will not, either alone or on behalf of any business engaged in a
"Competing Business" solicit or induce, or in any manner attempt to solicit or
induce, any person employed by, or an agent of, TRII or its affiliates to
terminate his or her contract of employment or agency (including those employees
at will), as the case may be, with TRII or one of its affiliates (other than
Employee's secretary or direct assistant).
12. Injunctive Relief; Independent Covenants. The covenants contained in
Sections 8, 9, 10 and 11 are independent and separate and, in the event any
provision contained in this Agreement is declared invalid or illegal, the other
provisions shall not be affected or impaired thereby and shall remain valid and
enforceable. In the event of a breach or threatened breach by Employee of any of
Sections 9, 10 or 11 of this Agreement, TRII shall be entitled to an injunction
to prevent irreparable injury to TRII or any of its affiliates. In the event of
a breach by TRII of Section 8 of this Agreement, the Employee shall be entitled
to an injunction to prevent irreparable injury to the Employee. Nothing herein
contained shall be construed as prohibiting any of TRII or any affiliate or the
Employee from pursuing any other remedies available to them for such breach or
threatened breach, including recovery of damages.
13. Right of First Refusal. While Employee is in the employ of TRII under the
provisions of this Agreement, regardless of whether any such duty or obligation
might exist absent this Agreement, Employee shall provide to TRII the right to
first acquire or engage in (and Employee shall refrain from acting with respect
to, until the expiration of ten calendar days following the date of written
notice to TRII by Employee of such opportunity) any opportunity relating to any
aspect of the real estate business received by Employee in any manner from any
source, in a manner which might directly or indirectly confer a benefit of any
kind upon Employee or the Rohdie Entities in all instances where such knowledge,
information or opportunity is received in the first instance by Employee from
his activities on behalf of TRII or its Subsidiaries, or while Employee is
directly and exclusively engaged in performing his duties as a director or
officer of TRII in TRII's business and is received as a direct result of such
activities, or in a written communication the express terms of which evidence
that it is intended to be received, and it was in fact intended to be received,
only by an officer or director of TRII in that capacity, unless otherwise
approved by a majority of the disinterested members of the Board of Directors of
TRII. The Employee also hereby agrees to apprise TRII in writing of such
opportunities in the real estate business and to impart to TRII such knowledge,
information, advice, and expertise relating to possible opportunities in the
real estate business as he may receive after the date of this Agreement. In the
event TRII fails to notify Employee of its election to exercise any such right
of first refusal within ten (10) calendar days following receipt of such notice,
TRII shall be deemed to have elected not to exercise such right of first
refusal. The right of first refusal
7
8
contained herein shall remain in full force and effect throughout the term of
this Agreement except with respect to those real estate opportunities for which
TRII has elected not to exercise such right of first refusal. In the event that
TRII ever elects not to exercise its right of first refusal and the real estate
opportunity is then available to Employee, Employee may take up such opportunity
on such basis as he deems appropriate without further obligation to TRII, so
long as such real estate opportunity does not interfere with the covenant of
Employee in Section 5 above to devote substantially all of his business time,
attention and energy to TRII and its subsidiaries.
14. Management of Real Estate Assets. During the term of this Agreement,
Employee will utilize his best lawful efforts to transfer to TRII and/or its
subsidiaries the right and opportunity to manage any real estate assets now or
hereafter controlled by Employee or his family which are of a type and in a
location where TRII is then managing one or more similar properties on terms
mutually acceptable to Employee and TRII.
15. Notices. Any notice or other communication required or permitted to be given
by this Agreement or any other document or instrument referred to herein or
executed in connection herewith must be given in writing (which may be by
telecopy, followed by mail or personal delivery) and must be personally
delivered or mailed by prepaid, certified or registered mail, to the party to
whom such notice or communication is directed, at the address of such party set
forth opposite his or its name on the signature page to this Agreement. Subject
to the other provisions of this Agreement, any party may change its address (or
re-designate the person to whom such notice shall be delivered) for purposes of
this Agreement by giving notice of such change to the other party pursuant to
this section. In all instances, any notice or other communication required or
permitted to be given by this Agreement shall only be effective upon actual
receipt thereof by the person intended to receive same.
16. Modification or Waiver. This Agreement may be amended, modified or
superseded and any of the terms, covenants, representations, warranties or
conditions herein may be waived, but only by a written instrument executed by
the parties hereto. No waiver of any nature, in any one or more instance, shall
be deemed to be or be construed as a further or continued waiver of any
condition or any breach of any other term, covenant, representation or warranty
in this Agreement. This Agreement and each provision hereof may not be waived,
altered, amended or modified, except in writing, duly executed by the parties
hereto. No failure to exercise and no delay in exercising, any right or power
hereunder shall operate as a waiver thereof.
17. Benefit. This Agreement shall inure to the benefit of and be binding upon
Employee, his heirs and personal representatives and TRII, its successors and
assigns. Neither this Agreement nor the rights and obligations created hereunder
may be assigned by either party without the prior written consent of the other
party.
18. Further Cooperation. To the extent that either TRII's or Employee's further
approval or other action is deemed necessary or desirable by the other party in
order to effectuate the terms and conditions of this Agreement and the matters
set forth herein, the parties hereby agree to
8
9
execute all reasonable documents and take all actions reasonably requested by
the other party to effectuate the terms and conditions of this Agreement.
19. Governing Law and Enforcement. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Texas, the
state in which it was negotiated, executed and delivered, without regard to any
principals of law involving conflicts of laws. Should any clause, sentence,
section or paragraph of this Agreement be judicially or administratively
declared to be invalid, unenforceable or void under the laws of the State of
Texas or the United States of America, or any agency or subdivision thereof,
such decision shall not have the effect of invalidating or voiding the remainder
of this Agreement and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable or void shall be deemed to have
been deleted here from and the remainder shall have the same force and effect as
if such part or parts had never been included herein. In the event any party
hereto shall fail to perform any of its obligations under this Agreement, such
party hereby agrees to pay all reasonable expenses, including reasonable
attorneys' fees, which may be incurred by any party hereto which is successful
in enforcing this Agreement.
20. Entire Agreement; Counterparts. This Agreement and the agreements referred
to herein constitute the entire agreement between the parties hereto concerning
the subject matter hereof, and supersedes all prior memoranda, correspondence,
conversations, and agreements. This Agreement may be executed in several
identical counterparts that together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
TARRAGON REALTY INVESTORS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
President
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx, individually
9
10
EXHIBIT "1"
List and Description of Rohdie Entities
10
