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EXHIBIT 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the 1st
day of April 2000 (the "Effective Date"), by and between American Homestar
Corporation, a Texas corporation ("Employer") and Xxxxxx XxXxxxxx ("Employee").
This Agreement supersedes and replaces all prior employment agreements by and
between Employer and Employee, including the Employment Agreement dated August
23, 1997.
W I T N E S S E T H:
WHEREAS, Employee is the Executive Vice President of Employer and the
Chief Operating Officer of the manufacturing division of Employer (the
"Manufacturing Division"); and
WHEREAS, Employee and Employer have determined that it is in their mutual
best interests to enter into this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I. RESPONSIBILITIES
Employee shall have the title, and perform the duties, of Executive Vice
President of Employer and the Chief Operating Officer of the Manufacturing
Division and such other duties as reasonably requested from time to time by the
President and Chief Executive Officer or Board of Directors of Employer.
Employee will faithfully devote his best efforts and all his working time to and
for the benefit of Employer; provided, however, that Employee may, at his
option, devote reasonable time and attention to civic, charitable, business or
social organizations or speaking engagements as he deems appropriate. It is
anticipated that Employee will devote a reasonable amount of time to serving on
the board of directors of one or more public or private corporations, provided
that the business activities of any such corporation are not competitive with
those of Employer.
ARTICLE II. COMPENSATION
SECTION 2.1 GENERAL TERMS. As compensation for his services rendered under
this Agreement, during the term of this Agreement, Employee shall be entitled to
receive the compensation as provided in EXHIBIT A attached hereto.
SECTION 2.2 REIMBURSEMENT. It is acknowledged by the parties that
Employee, in connection with the services to be performed by him pursuant to the
terms of this Agreement, will be required to make payments for travel,
communications, entertainment of business associates and similar expenses.
Employer will reimburse Employee for all reasonable expenses of types authorized
by Employer and incurred by Employee in the performance of his duties
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hereunder. Employee will comply with such budget limitations and approval and
reporting requirements with respect to expenses as Employer may establish from
time to time.
ARTICLE III.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 3.1 DEFINITIONS. For purposes of this Agreement, "Confidential
Information" is any data or information that is unique to Employer, proprietary,
competitively sensitive, and not generally known by the public, including, but
not limited to, Employer's initial business plan, prospective customers
("prospective customers" is understood to mean those potential customers with
whom or with which Employer is engaged in active discussion about a business
relationship) training manuals, product development plans, bidding and pricing
procedures, internal performance statistics, financial data, confidential
personnel information concerning employees of Employer, operational or
administrative plans, policy manuals, and terms and conditions of contracts and
agreements. The term "Confidential Information" shall not apply to information
which is (i) already in Employee's possession (unless such information was
obtained by Employee from Employer in the course of Employee's employment by
Employer); (ii) received by Employee from a third party with no restriction on
disclosure or (iii) required to be disclosed by any applicable law or by an
order of a court of competent jurisdiction.
SECTION 3.2 USE AND DISCLOSURE. Employee recognizes and acknowledges that
the Confidential Information constitutes valuable, special and unique assets of
Employer and its affiliates. Except as required to perform Employee's duties as
an employee of Employer, until such time as they cease to be Confidential
Information through no act of Employee in violation of this Agreement, Employee
will not use or disclose any Confidential Information of Employer.
SECTION 3.3 SURRENDER. Upon the request of Employer and, in any event,
upon the termination of this Agreement for any reason, Employee will surrender
to Employer (i) all memoranda, notes, records, drawings, manuals or other
documents pertaining to Employer's Business (as defined below) including all
copies and/or reproductions thereof and (ii) all materials involving any
Confidential Information of Employer.
ARTICLE IV. NONCOMPETITION
SECTION 4.1 RESTRICTION. In consideration of the severance provisions
contained herein and the access to the Confidential Information granted to
Employee, Employee hereby agrees that, until one year after the termination of
Employee's employment hereunder (the "Restricted Period"), for any reason,
Employee will not solicit or encourage any officer, employee, or consultant of
Employer to leave its employ for employment by or with any competitor of
Employer in the business of producing manufactured homes.
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SECTION 4.2 COMPETITION DURING EMPLOYMENT. Employee agrees that during the
Term, neither he, nor any of his affiliates, will directly or indirectly compete
with Employer or its affiliates in any way, and that he will not act as an
officer, director, employee, consultant, shareholder, lender, or agent of any
entity which is engaged in any business of the same nature as, or in competition
with, the businesses in which Employer and its affiliates are now engaged or in
which Employer or its affiliates become engaged during the Term; provided,
however, that this Section 4.2 shall not prohibit Employee or any of his
affiliates from (i) serving as a director (or similar capacity) of any entity
which is not in direct competition with Employer or its affiliates or (ii)
purchasing or holding an aggregate equity interest of up to 5%, so long as
Employee and his affiliates combined do not purchase or hold an aggregate equity
interest of more than 5%, in any business in competition with Employer and its
affiliates.
SECTION 4.3 COMPETITION FOLLOWING EMPLOYMENT. If this Agreement is
terminated for any reason, then Employee agrees that for a period of one (1)
year after such termination or cessation of his employment with Employer,
neither Employee, nor any of his affiliates, shall, directly or indirectly, for
itself or himself or on behalf of any other corporation, person, firm,
partnership, association, or any other entity (whether as an individual, agent,
servant, employee, employer, officer, director, shareholder, investor,
principal, consultant or in any other capacity):
(i) engage or participate in any business which engages in
competition with such businesses being conducted by Employer or
any of its affiliates during the Term anywhere in the United
States; provided, however, that this Section 5(e) shall not
prohibit Employee or any of his affiliates from (i) serving as a
director (or similar capacity) of any entity which is not in
direct competition with Employer or its affiliates or (ii)
purchasing or holding an aggregate equity interest of up to 5%,
so long as Employee and his affiliates combined do not purchase
or hold an aggregate equity interest of more than 5%, in any
business in competition with Employer;
(ii) induce or attempt to influence any employee of Employer or its
affiliates to terminate his/her employment; or
(iii) assist or finance any person or entity in any manner or in any way
inconsistent with the intents and purposes of this Agreement.
Notwithstanding the above, in the event this Agreement is terminated for any
reason other than "just cause," Employee may terminate this Section 4.3 upon
written notice to Employer, in which event Employer's obligation to pay any
remaining post-termination compensation payable to Employee under the last
paragraph of Section 6(d) below shall thereafter terminate.
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SECTION 4.2 REFORMATION AND SEVERANCE. If a judicial determination is made
that any of the provisions of the above restriction constitutes an unreasonable
or otherwise unenforceable restriction against Employee, it shall be rendered
void only to the extent that such judicial determination finds such provisions
to be unreasonable or otherwise unenforceable. In this regard, the parties
hereby agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the prohibited business activity from the
coverage of this restriction and to apply the restriction to the remaining
portion of the business activities not so severed by such judicial authority.
Moreover, notwithstanding the fact that any provisions of this restriction are
determined by a court not be specifically enforceable through injunctive relief,
Employer shall nevertheless be entitled to seek to recover monetary damages as a
result of the breach of such provision by Employee. The time period during which
the restrictions shall apply shall be tolled and suspended as to Employee for a
period equal to the aggregate quantity of time during which Employee violates
such prohibitions in any respect.
ARTICLE V. TERM
Subject to Article VI below, this Agreement shall continue in full force
and effect from the Effective Date until August 30, 2002. Thereafter, this
Agreement shall automatically renew for successive additional one year terms
unless either party provides the other with written notice of its intent not to
renew this Agreement at least ninety (90) days prior to the end of the term.
ARTICLE VI. TERMINATION
Employee's employment hereunder will terminate prior to the time set forth
in Article V hereof upon the occurrence of the following events:
(a) BY COMPANY WITHOUT CAUSE. Employer may terminate this Agreement
at any time, for any reason or without cause. In the event of the
termination of this Agreement pursuant to this Subsection, Employee shall
be entitled to receive the salary and bonuses, as if Employee continued to
be employed by Employer, and stock options shall continue to vest as
provided in Exhibit A until the later of (i) the date that this Agreement
would have expired had it not been terminated pursuant to this Subsection
or (ii) one year after termination pursuant to this Subsection.
(b) BY EMPLOYEE WITHOUT CAUSE. Employee may terminate this Agreement
at any time, for any reason or without cause. In the event of the
termination of this Agreement pursuant to this Subsection, Employee shall
be entitled to receive only the compensation earned by him as of, and
payable for the period prior to, the date of termination.
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(c) BY COMPANY WITH CAUSE. This Agreement may be terminated by
Company at any time upon written notice for any of the following reasons:
I. a substantial breach by the Employee of a material provision
of this Agreement, which breach remains uncorrected for more
than thirty (30) days following written notice detailing the
specific provision for which a breach is alleged, and setting
forth the actions, which, when taken, will correct the breach;
II. conviction of the Employee for a felony which materially
affects Employee's ability to perform his duties pursuant to
this Agreement; or
III. commission by Employee of an act of fraud, embezzlement, or
material dishonesty against Employer or its affiliates.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive only the compensation earned by him as of,
and payable for the period prior to, the date of termination.
(d) BY EMPLOYEE FOR CAUSE. This Agreement may be terminated by
Employee at any time upon written notice to Employer after the occurrence
of a Constructive Termination. As used in this Agreement, the term
"Constructive Termination" means any of the following:
I. a material reduction in Employee's duties and
responsibilities without Employee's consent; or
II. conviction of Employer for a felony related to activities in
which Employee has not participated.
In the event of the termination of this Agreement pursuant to this Subsection,
Employee shall be entitled to receive the salary and bonuses, as if Employee
continued to be employed by Employer, and stock options shall continue to vest,
as provided in Exhibit A until the later of (i) the date that this Agreement
would have expired had it not been terminated pursuant to this Subsection and
(ii) one year after termination pursuant to this Subsection.
(e) TERMINATION ON DEATH. In the event of Employee's death, this
Agreement will be deemed to have terminated on the date of his death. In
the event of his death, Employer will pay to the testamentary trusts
created by Employee's Will or, if there are no such trusts, to his estate,
all salary due, plus all bonuses due and all bonuses that would have been
earned by Employee, prorated to the date of death, together with a lump
sum
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payment in the amount of one hundred percent (100%) of the Employee's
annual base salary as provided in Exhibit A.
(f) TERMINATION ON DISABILITY. This Agreement will terminate
immediately in the event Employee becomes physically or mentally disabled.
Employee will be deemed disabled if, as a result of Employee's incapacity
due to physical or mental illness, Employee shall have been absent from
his duties with Employer on a full-time basis for 120 consecutive business
days. In the event of the termination of this Agreement pursuant to this
Subsection, Employee shall be entitled to receive all salary and bonuses
due and owing through the date of disability, plus all bonuses that would
have been earned by Employee through the date of disability (prorated to
the date of disability).
ARTICLE VII. CHANGE IN CONTROL TERMINATION PAYMENT
SECTION 7.1 TERMINATION PAYMENT. Notwithstanding anything to the contrary
contained in Article VI hereof, if, Employee's employment with Employer
terminates within the twelve-month period following a Change In Control (as
defined in Section 7.2 hereof), the Employee shall be entitled to receive the
following:
I. The salary and bonuses provided for in Exhibit A, as if Employee
continued to be employed by Employer until the later of (i) the date
that this Agreement would have expired had a Change In Control not
occurred; and (ii) one-year after the date of termination of
Employee's employment with Employer.
II. All options to purchase common stock of Employer shall fully vest.
III. The deemed repayment of the principal amount of the promissory note
described in Item 13 of Exhibit A shall be accelerated such that
Employee is given credit for one-year of deemed repayment (i.e.,
1/6th of the principal amount) in addition to any deemed repayments
previously received.
SECTION 7.2 CHANGE IN CONTROL. A Change In Control will be deemed to have
occurred for purposes hereof (i) when a change of stock ownership of Employer of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and any successor Item of a similar nature has occurred;
or (ii) upon the acquisition of beneficial ownership, directly or indirectly, by
any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) of securities of Employer representing 50% or more of the combined voting
power of Employer's then outstanding securities; or (iii) during any period of
two consecutive years, a majority of the Board of Directors ceases, for any
reason, to consist of Continuing Directors; provided that a Change In Control
will not be deemed to have occurred for purposes hereof with
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respect to any person meeting the requirements of clauses (i) and (ii) of Rule
13d-1(b)(1) promulgated under the Securities Exchange Act of 1934, as amended.
As used herein, "Continuing Director" shall mean a member of the Board of
Directors of Employer who either (i) was a member of the Board of Directors as
of the beginning of the relevant two year period or (ii) was nominated or
appointed (before initial election as a director) to serve as a director by a
majority of the then Continuing Directors.
SECTION 7.3 NO RIGHT TO CONTINUED EMPLOYMENT. This Article VII will not
give Employee any right of continued employment or any right to compensation or
benefits from Employer except the rights specifically stated herein.
ARTICLE VIII. GENERAL TERMS
SECTION 8.1 NOTICES. All notices and other communications hereunder will
be in writing or by written telecommunication, and will be deemed to have been
duly given if delivered personally or if sent by overnight courier or by written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section:
If to Employer, to: with a copy to:
American Homestar Corporation Xxxxxxx Xxxxxx, L.L.P.
0000 X. Xxxxx Xxxxxxxxx, Xxxxx 000 000 Xxxx Xxxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxx 76006-7422 Xxxxxx, Xxxxx 00000
Attention: President Attention: Xxxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000 Fax No.: (000) 000-0000
If to Employee, to:
Xxxxxx XxXxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
SECTION 8.2 WITHHOLDING. All payments required to be made by Employer
under this Agreement to Employee will be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.
SECTION 8.3 ENTIRE AGREEMENT; MODIFICATION. This Agreement and Exhibit A
attached hereto constitute the complete and entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
between the parties. The parties have
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executed this Agreement based upon the express terms and provisions set forth
herein and have not relied on any communications or representations, oral or
written, which are not set forth in this Agreement.
SECTION 8.4 AMENDMENT. The covenants and/or provisions of this Agreement
may not be modified by any subsequent agreement unless the modifying agreement:
(i) is in writing; (ii) contains an express provision referencing this
Agreement; (iii) is signed and executed on behalf of Employer by an officer of
Employer other than Employee; (iv) is approved by resolution of the Board; and
(v) is signed by Employee.
SECTION 8.5 LEGAL CONSULTATION. Both parties have been accorded a
reasonable opportunity to review this Agreement with legal counsel prior to
executing this Agreement.
SECTION 8.6 CHOICE OF LAW. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
SECTION 8.7 COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which he or it may be entitled.
SECTION 8.8 SUCCESSORS AND ASSIGNS. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not be
assignable. In the event of Employee's death or disability, this Agreement shall
be enforceable by Employee's estate, executors and/or legal representatives.
SECTION 8.9 WAIVER OF PROVISIONS. Any waiver of any terms and conditions
hereof must be in writing and signed by the parties hereto. The waiver of any of
the terms and conditions of this Agreement shall not be construed as a waiver of
any subsequent breach of the same or any other terms and conditions hereof.
SECTION 8.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any portion shall be held invalid, illegal or
enforceable for any reason, the remainder of this Agreement shall be effective
and binding upon the parties provided that the substance of the economic
relationship created by this Agreement remains materially unchanged.
SECTION 8.11 REMEDIES. The parties hereto acknowledge and agree that upon
any breach by Employee of his obligations under either of Articles III and IV
hereof, Employer will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief. No remedy set forth in this Agreement or otherwise conferred upon or
reserved to any party shall be considered exclusive of any other remedy
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available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, Employer and Employee have caused this Agreement as of
the day and year first above written.
/s/ XXXXXX XxXXXXXX
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Xxxxxx XxXxxxxx
AMERICAN HOMESTAR CORPORATION
By: /s/ XXXXXXXX X. XXXXXX XX.
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Its: President
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