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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
as of the 15th day of November, 1996, by and between American Homestar
Corporation, a Texas corporation ("Employer"), and Xxxxx X. Xxxxxx
("Employee"), but shall be effective for all purposes as of October 1, 1996.
This Agreement supersedes and replaces all prior employment agreements by and
between Employer and Employee.
W I T N E S S E T H:
WHEREAS, Employee is the Chairman of the Board and Co-Chief Executive
Officer of Employer and is Chief Executive Officer of Employer's retail
division ("the Retail Division"); and
WHEREAS, Employee and Employer have determined that it is in their
mutual best interests to enter into this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Employer hereby employs Employee and Employee
hereby accepts employment with Employer upon the terms and conditions
hereinafter set forth.
2. Duties. Employee shall perform (i) such management and other
duties as the Chairman of the Board and Co-Chief Executive Officer of a company
that is similar in type and size to Employer and as the Board of Directors of
Employer shall from time to time reasonably request and (ii) such management
and other duties as the Chief Executive Officer of a company that is similar in
type and size to the Retail Division and as the Board of Directors of Employer
shall from time to time reasonably request.
3. Term. The employment of Employee under this Agreement shall
commence on October 1, 1996, and shall continue, unless earlier terminated
pursuant to Section 6 below, until May 31, 2000; provided, however, that this
Agreement shall automatically extend for a one year period on each May 31,
commencing on May 31, 2000, unless either Employer or Employee provides the
other written notice at least 180 days prior to the end of the then existing
term of its intent to terminate this Agreement at the end of the then
applicable term. The initial term of this Agreement and any renewal terms as
provided above are collectively referred to herein as the "Term".
4. Compensation. As compensation for his services rendered under
this Agreement, during the Term Employee shall be entitled to receive the
following:
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(a) Salary. Employee shall be paid a yearly salary of
$235,000, payable bi-weekly in equal installments, subject to increase
from time to time as may be determined by the Board of Directors of
Employer.
(b) Bonus. Employee shall be paid an annual cash bonus
equal to 2.25% of Bonus Profit, subject to increase from time to time
as may be determined by the Board of Directors of Employer. "Bonus
Profit" shall mean the net consolidated operating profit of Employer
after income tax accruals and employee bonuses (other than bonuses of
other senior officers of Employer or its subsidiaries who are parties
to comparable bonus arrangements with Employer), with the tax rate
being deemed to be the effective combined tax rate for Employer and
its subsidiaries. Each annual bonus shall be paid within five days
after final audited financial statements of Employer have been
completed and delivered to Employer.
(c) Benefits. Employee shall be entitled to receive such
group benefits as Employer may provide to its other employees at
comparable salaries and responsibilities to those of Employee. In
addition, Employee shall be entitled to receive a car allowance of
$750.00 per month, plus all expenses (including gas, oil, maintenance
and insurance).
(d) Stock Options.
(i) As of the date hereof, Employee
shall receive a grant from Employer of 50,000 shares
of common stock of Employer ("Common Stock") pursuant
to the terms of Employer's 1994 Stock Compensation
Plan (the "Plan"), with such options being considered
incentive stock options to the greatest extent
possible.
(ii) As soon as possible after the date
hereof, Employee shall receive a grant from Employer
of additional stock options as agreed to by Employee
and Employer.
(iii) From time to time during the Term,
Employee shall be entitled to receive additional
options to purchase Common Stock, either inside or
outside the Plan, as may be approved by the Board of
Directors of Employer or any committee thereof.
(e) Expenses. Employer shall pay directly for Employee's
car phone expenses, long distance calling card and ordinary and
necessary business travel and entertainment. In addition, Employer
shall reimburse Employee for all other ordinary and reasonable
expenses incurred by Employee in rendering services required under
this Agreement on a monthly basis upon submission of a detailed
monthly statement and reasonable documentation.
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(f) Insurance. Employer will maintain the existing
Salary Continuation Agreement and Disability Compensation Agreement
for Employee. Employer will fund the following insurance policies
currently in place for Employee: (a) term life policy with General
American ($1 million), with Xxxxxxxxx X. Xxxxxx as owner and
beneficiary; and (b) a disability income policy with Xxxx Xxxxxx.
Employer agrees that, to the extent that Employee's benefits (on a
dollar-equivalent basis) under this Section 4(f) are less than those
provided to Xxxxxxxx X. Xxxxxx, Xx. ("Xxxxxx") under Section 4(f) of
his Employment Agreement with Employer, then Employer shall provide
Employee other benefits comparable to those provided to Xxxxxx (or
equivalent compensation).
5. Confidentiality.
(a) Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer and its affiliates in
any Trade Secrets (as hereinafter defined) of Employer and its
affiliates. Employee acknowledges and agrees that any and all Trade
Secrets learned by Employee during the course of his engagement by
Employer shall be and is the property of Employer and its affiliates.
Employee further acknowledges and understands that his disclosure of
any Trade Secrets and/or proprietary information may result in
irreparable injury and damage to Employer and its affiliates. As used
herein, "Trade Secrets" means all confidential and proprietary
information of Employer and its affiliates, including, without
limitation, information derived from reports, investigations,
experiments, research, work in progress, drawings, designs, plans,
proposals, codes, marketing and sales programs, client lists, client
mailing lists, financial projections, cost summaries, pricing formula,
and all other concepts, ideas, materials, or information prepared or
performed for or by Employer or its affiliates.
(b) Covenant Not-to-Divulge Trade Secrets. Employee
acknowledges and agrees that Employer and its affiliates are entitled
to prevent the disclosure of Trade Secrets. Employee agrees at all
times during the Term to hold in strict confidence and not to disclose
or allow to be disclosed to any person, firm or corporation, other
than to persons engaged by Employer and its affiliates to further the
business of Employer and its affiliates.
(c) Return of Materials at Termination. In the event of
any termination or cessation of his employment with Employer for any
reason whatsoever, Employee shall, upon the written request of
Employer, promptly deliver to Employer all documents, data and other
information pertaining to Trade Secrets. Employee shall not take any
documents or other information, or any reproduction or excerpt
thereof, containing or pertaining to any Trade Secrets.
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(d) 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 5(d) 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.
(e) 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 5 upon
written notice to Employer,
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in which event Employer's obligation to pay any remaining post-termination
compensation payable to Employee under the last paragraph of Section 6 below
shall thereafter terminate.
6. Termination. This Agreement and the employment relationship
created hereby shall terminate upon the occurrence of any of the following
events:
(a) The expiration of the Term as set forth in Section 3
above;
(b) The death of Employee;
(c) The "disability" (as hereinafter defined) of
Employee;
(d) Resignation by Employee;
(e) Written notice to Employee from Employer of
termination for "just cause" (as hereinafter defined); or
(f) Written notice to Employee from Employer of
termination for any reason other than as set forth in this Section 6.
For purposes of Section 6(c) above, the "disability" of Employee shall
mean his inability, because of mental or physical illness or incapacity, to
perform his duties under this Agreement for a continuous period of 120 days or
for 120 days out of a 150-day period. For purposes of Section 6(e) above,
"just cause" shall mean: (a) adjudication by a court of competent jurisdiction
that Employee (i) breached his fiduciary duty for personal profit or (ii) is
liable for gross negligence or intentional misconduct in the performance of his
duties to Employer, and, in either case, such adjudication is no longer subject
to direct appeal; (b) conviction of Employee of a felony involving fraud or
moral turpitude by a court of competent jurisdiction; or (c) Employee's
material breach of any material term of this Agreement, and such breach
continues for more than thirty (30) days after written notice of such breach is
delivered to Employee by Employer.
In the event of the termination of Employee's employment pursuant to
Sections 6(b), (c) or (e) above, Employee shall be entitled only to the
compensation earned by him, or accrued for his benefit (with any bonuses
accruing on a daily basis) as of the date of termination. If Employee's
employment is terminated pursuant to Section 6(f) above, Employee shall be
entitled to receive the compensation payable pursuant to Section 4 above as if
no termination had occurred, and after the end of such payments, Employee shall
be paid over the next one-year period an amount equal to his salary and bonus
for such period as if Employee had been employed for such period. If this
Agreement is terminated pursuant to Section 6(a) above or resigns pursuant to
Section 6(d) above, then Employee shall be paid over a one-year period
immediately following such termination, an amount
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equal to his salary and bonus for such period as if Employee had been employed
for such period.
7. Remedies. Employee recognizes and acknowledges that in the
event of any default in, or breach of any of, the terms, conditions or
provisions of this Agreement by Employee, Employer's remedies at law shall be
inadequate. Accordingly, Employee agrees that in such event, Employer shall
have the right of specific performance and/or injunctive relief in addition to
any and all other remedies and rights at law or in equity, and such rights and
remedies shall be cumulative.
8. Acknowledgments. Employee acknowledges and recognizes that
the enforcement of any of the provisions set forth in Section 5 above by
Employer will not interfere with Employee's ability to pursue a proper
livelihood. Employee recognizes and agrees that the enforcement of this
Agreement is necessary to ensure the preservation and continuity of the
business and goodwill of Employer.
9. Notices. Any notices, consents, demands, requests, approvals
and other communications to be given under this Agreement by either party to
the other shall be deemed to have been duly given if given in writing and
personally delivered or sent by mail, registered or certified, postage prepaid
with return receipt requested, as follows:
If to Employer: American Homestar Corporation
0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxx 00000
Attention: President
If to Employee: Xxxxx X. Xxxxxx
000 Xxxx Xxxxx Xxxxx
Xxxxxx Xxxx Xxxxxxx, Xxxxx 00000
Notices delivered personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of three days after mailing.
10. Entire Agreement. This Agreement contains the entire
agreement of the parties hereto and supersedes all prior agreements and
understandings, oral or written between the parties hereto, including, without
limitation, that certain Employment Agreement, dated as of May 3, 1994, by and
between Employer and Employee. No modification or amendment of any of the
terms, conditions or provisions herein may be made otherwise than by written
agreement signed by the parties hereto.
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11. 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.
12. Parties Bound. This Agreement and the rights and obligations
hereunder shall be binding upon and inure to the benefit of Employer and
Employee, and their respective heirs, personal representatives, successors and
assigns. Employer shall have the right to assign this Agreement to any
affiliate or to its successors or assigns. The terms "successors" and
"assigns" shall include any person, corporation, partnership or other entity
that buys all or substantially all of Employer's assets or all of its stock, or
with which Employer merges or consolidates. The rights, duties or benefits to
Employee hereunder are personal to him, and no such right or benefit may be
assigned by him. The parties hereto acknowledge and agree that Employer's
affiliates are third-party beneficiaries of the covenants and agreements of
Employee set forth in Sections 5 and 6 above.
13. Estate. If Employee dies prior to the payment of all sums
owed, or to be owed, to Employee pursuant to Section 4 above, then such sums,
as they become due, shall be paid to Employee's estate.
14. Enforceability. If, for any reason, any provision contained
in this agreement should be held invalid in part by a court of competent
jurisdiction, then it is the intent of each of the parties hereto that the
balance of this Agreement be enforced to the fullest extent permitted by
applicable law. Accordingly, should a court of competent jurisdiction
determine that the scope of any covenant is too broad to be enforced as
written, it is the intent of each of the parties that the court should reform
such covenant to such narrower scope as it determines enforceable.
15. Waiver of Breach. The waiver by any party hereto of a breach
of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party.
16. Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
17. 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.
18. Affiliate. An "affiliate" of any party hereto shall mean any
person controlling, controlled by or under common control with such party.
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19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EMPLOYER:
AMERICAN HOMESTAR CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx, Xx.
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Xxxxxxxx X. Xxxxxx, Xx.,
Co-Chief Executive Officer and
President
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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