Exhibit 10.7
EMPLOYMENT CONTRACT
THIS CONTRACT entered into this 1st day of May, 2005, by and between Xxxxx
X. Xxxxxxxxxxx, hereinafter referred to as The Employee and Advisors REIT I,
Inc., a Maryland corporation, hereinafter referred to as The Corporation.
W I T N E S S E T H:
WHEREAS, The Employee desires to accept employment as a corporate employee;
and
WHEREAS, the Board of Directors of the Corporation has determined what a
reasonable compensation will be for The Employee and has offered The Employee
employment for such compensation and other benefits hereinafter set forth and
The Employee is willing to accept employment on such terms:
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained, it is agreed:
1. EMPLOYMENT. The Corporation hereby employs The Employee and The
Employee hereby accepts employment from The Corporation upon the terms and
conditions herein set forth.
2. TERM. The term of this Agreement shall begin on the date of this
agreement and shall continue until terminated as hereinafter provided.
3. SALARY. For all services rendered by the Employee under this
Agreement, The Corporation shall pay the Employee a salary of Five Thousand
Dollars ($5,000) per month during the term of this agreement payable on the
dates determined by the Board of Directors. This monthly salary will
automatically increase to $5,500 for any month in which deposits from
subscriptions exceed $20,000,000. Such salary shall be reviewed by the Board of
Directors annually based on financial results for the previous fiscal year
beginning with fiscal year 2005.
4. BONUS. See Bonus Plan Attached. The salary has been fixed by the Board
of Directors. The Corporation may, in addition to his salary, pay the Employee a
bonus in such amount as the Board of Directors shall determine is proper in
relation to the income generated by the Employee.
5. DUTIES. The Employee is employed to act as President on behalf of this
Corporation. The Corporation shall have the power to determine what specific
duties shall be performed. The Corporation shall have the power to determine the
assignment of duties to The Employee and The Employee must perform the duties
assigned to him by the Corporation. The Corporation shall have the power to
dictate to the Employee what duties shall be performed, how they shall be
performed, and when they shall be performed. The power to direct, control, and
supervise the duties to be performed, the manner of performing said duties and
the time for performing said duties shall be exercised by the Board of Directors
of The Corporation.
6. WORKING FACILITIES. The Corporation shall furnish The Employee with or
make arrangements for office space, professional staff, supplies, equipment and
such other facilities and services as are suitable to his position and adequate
for the performance of his duties.
7. PROFESSIONAL RELATIONSHIPS. The Employee recognizes that acting as an
employee of The Corporation shall not affect any law, duty, right or privilege
arising out of or applicable to services rendered by The Employee.
8. INDEMNITY. The Corporation shall indemnify The Employee against any
damages, costs and expenses, including reasonable attorney's fees, incurred in
defending or compromising any action arising out of the rendition of services by
The Employee. This indemnity shall survive the termination of this Agreement.
Such indemnification shall cover only acts performed in good faith on behalf to
the Corporation. The Corporation agrees to provide Directors and Officers
insurance with coverage in an amount as determined by the Board of Directors.
9. EXPENSES. All expenses incurred by The Employee in the normal course
of corporate business, including, but not limited to, entertainment, promotion,
education, and transportation, may be paid directly by The Corporation, or at
the Employee's option, shall be reimbursed to the Employee by The Corporation
upon presentation by The Employee of an itemized account of such expenditures.
Such reimbursement of expenses to be covered by company policy as may be adopted
by the Board of Director.
10. FRINGE BENEFITS. The Corporation shall consider the adoption of a
retirement program consisting of a pension and/or profit sharing plan for The
Employee within three (3) years of the date of this Agreement. The Corporation
shall provide an employee welfare plan as defined in Employee Welfare Plan
Attachment.
11. VACATION. The amount of vacation leave given to The Employee shall be
mutually agreed upon between The Employee and The Corporation.
12. DEATH DURING EMPLOYMENT. If The Employee dies during the term of his
employment, The Corporation shall pay to the estate of The Employee the salary
payable to said employee up to the end of the month in which his death occurs
plus any declared and unpaid bonus. The Corporation shall consider paying the
widow(er), or, if none, to the estate, a sum up to five thousand dollars cash as
an additional death benefit in such event.
13. DISABILITY. If The Employee becomes disabled, The Corporation hereby
agrees to indemnify The Employee's full salary for a period not exceed sixty
(60) days. The above disability income will not include any benefits payable
under Social Security.
14. TERMINATION. Notwithstanding anything herein contained to the
contrary, this contract may be terminated by any party hereto upon thirty (30)
days written notice with or without cause.
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15. RIGHT TO DISCHARGE EMPLOYEE. The Corporation shall have at all times
the right to discharge The Employee for cause.
16. RELATIONSHIP BETWEEN THE PARTIES. The parties recognize that the Board
of Directors of The Corporation shall manage the business affairs of The
Corporation. The Employee shall be considered under the provisions of this
Agreement as having employee status and shall be entitled to participate in any
plans, arrangements or distributions by The Corporation pertaining to or in
connection with any pension, profit sharing, bonus or other incentive plan
established by The Corporation for its employees. Nothing herein contained shall
be construed to give The Employee any interest in the physical assets or the
accounts receivable of The Corporation.
17. WAIVER OF BREACH. The waiver of any party hereto of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach by any party.
18. BINDING UPON HEIRS. The contract shall inure to the benefit of and be
binding upon the parties hereto, their successors, heirs, personal
representatives and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ADVISORS REIT I, INC.
A T T E S T:
/s/ Xxx Xxxxx BY /s/Xxxxx X. Xxxxxxxxxxx
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Xxx Xxxxx, Secretary Xxxxx X. Xxxxxxxxxxx, President
/s/Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx, Employee
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ADVISORS REIT I
EMPLOYEE WELFARE PLAN
Advisors REIT I adopts the following Employee Welfare Plan: Advisors REIT I will
provide the following employee welfare benefits:
- Medical and dental insurance premium reimbursement for Employee's
existing medical and dental insurance policy, including some group
term insurance.
- A Sec 105 Plan in conjunction with $3,300 reimbursement for out of
pocket medical, dental and drug expenses.
- A Simple XXX plan which, currently requires Advisors REIT I to match
employee contributions up to 3% of salary every year.
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ADVISORS REIT I
PRESIDENT - CEO
BONUS PLAN
The President - CEO will be eligible for bonus calculated annually calculated in
conjunction with the filing of our Federal income tax return. The calculation of
the bonus is: 10% of base FFO (defined below) over 120% of the amount calculated
as the invested funds of our stockholders multiplied times the weighted average
cost of capital (WACC).
Base FFO equals:
- Federal taxable income, excluding gains or losses from sales of property
- Without the deduction for the dividend distribution deduction
- Without the deduction for the President - CEO bonus
Invested funds equal the total dollar amount that our stockholders invested in
Advisors REIT I The weighted average cost of capital equals 7.0%
Example:
Base FFO:
Federal taxable income without CEO bonus or dividend deduction 1,800,000
Minus profit from real estate sales (100,000)
Plus depreciation and amortization 500,000
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Base FFO 2,250,000
Invested Funds 25,000,000
WACC 7.0%
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$ required to distribute 1,750,000
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Bonus Hurdle:
$ required to distribute 1,750,000
Times 120%
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Bonus Hurdle 2,100,000
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Bonus FFO 2,250,000
Bonus Hurdle 2,100,000
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Gross Bonus 150,000
Bonus Rate 10%
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Earned Bonus 15,000
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