EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of December 31,
1996 by and between Homeplex Mortgage Investments Corporation, a Maryland
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx ("Employee").
WHEREAS, the Company desires to obtain the services of Employee, and
Employee desires to provide services to the Company, in accordance with the
terms, conditions and provisions of this Agreement;
NOW, THEREFORE, the Company and Employee agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement,
the Company agrees to employ Employee as Chairman and Co-Chief Executive Officer
of the Company, and Employee agrees to perform the duties associated with such
positions diligently and to the reasonable satisfaction of the Company's Board
of Directors. Employee will devote substantially all of his business time,
attention and energies to the business of the Company and will comply with the
policies and guidelines established by the Company from time to time.
2. Term. Employee will be employed under this Agreement for a term
beginning on December 31, 1996 (the "Effective Date") and ending on December_31,
2001, unless Employee's employment is terminated earlier pursuant to Section 8.
3. Base Salary. The Company will pay Employee the Base Salary (as
defined below). For purposes of this Agreement, the term "Base Salary" shall
mean until December_31, 1997 an
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amount equal to $200,000 per year. For each year thereafter during the term
hereof, the Base Salary shall be equal to 105% of the previous Base Salary.
Salary will be payable biweekly in accordance with the payroll practices of the
Company in effect from time to time. All of Employee's compensation under this
Agreement will be subject to deduction and withholding authorized or required by
applicable law.
4. Initial Stock Options. On the Effective Date, the Company will grant
Employee options to purchase 500,000 shares of the Company's common stock (the
"Common Stock"). The terms of such options are set forth in a Stock Option
Agreement, dated as of the Effective Date, between the Company and Employee,
which is attached hereto as Exhibit_A.
5. Incentive Compensation. Employee will be entitled to incentive
compensation based on the achievement of certain budgeted income projections
specified in Exhibit_B hereto.
6. Employee Benefits. During the term of this Agreement, the Company
will provide to Employee such fringe benefits and other employee benefit plans
as are regularly maintained by the Company for its senior executives, in
accordance with the policies of the Company in effect from time to time.
7. Reimbursement of Expenses. The Company will reimburse Employee for
reasonable out-of-pocket business, entertainment and travel expenses incurred
and documented in accordance with the policies of the Company in effect from
time to time.
8. Termination.
(a) If Employee voluntarily terminates his employment with the
Company or if
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the Company discharges Employee for Cause (as defined below), then the Company's
obligations to pay the Base Salary and incentive compensation under this
Agreement will terminate immediately, except for the payment of the Base Salary
through the Date of Termination. For purposes of this Agreement, "Cause" is
defined to mean only an act or acts of dishonesty by Employee constituting a
felony and resulting or intended to result directly or indirectly in substantial
personal gain or enrichment at the expense of the Company. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated for Cause unless
and until there shall have been delivered to Employee a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Company's Board of Directors (excluding Employee if he
is then a director) at a meeting of the Board called and held for the purpose
(after reasonable notice to Employee and an opportunity for Employee, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board Employee was guilty of conduct meeting the criteria set
forth above and specifying the particulars thereof.
(b) If Employee's employment with the Company is terminated by
the Company without Cause or as a result of Employee's death or Permanent
Disability (as defined below), then (i) the Company will be obligated to pay
Employee's then current Base Salary pursuant to Section 3 (A) through the end of
the stated term of employment hereunder in the event of termination by the
Company without Cause or (B) for six months after the Date of Termination in the
event of death or Permanent Disability and (ii) within 90 days after the Date of
Termination, the Company will pay Employee pro rated incentive compensation
pursuant to Section 5 through the date of termination.
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For purposes hereof, "Permanent Disability" means a disability that results or,
in the judgment of a physician mutually agreeable to the Company and Employee,
is likely to result in Employee being unable to fulfill his duties under this
Agreement for 180 consecutive days.
(c) Any termination by the Company for Cause or Permanent
Disability pursuant to Section 8(a) or 8(b), respectively, shall be communicated
by written Notice of Termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated. For purposes of this
Agreement, no such purported termination shall be effective without such Notice
of Termination.
(d) For purposes of this Agreement, "Date of Termination"
shall mean (i) if the Agreement is terminated as a result of Employee's death,
the date of Employee's death, (ii) if the Agreement is terminated by Employee,
the date on which he delivers a Notice of Termination to the Company, (iii) if
this Agreement is terminated by the Company for Permanent Disability, 30 days
after a Notice of Termination is given (provided that Employee shall not have
returned to the performance of Employee's duties on a full-time basis during
such 30-day period), or (iv) if Employee's employment is terminated by the
Company for any other reason, the date on which a Notice of Termination is given
; provided that if within 30 days after any Notice of Termination is given by
the Company, Employee notifies the Company that a dispute exists concerning the
termination, the Date of Termination shall be the earlier of the fifth
anniversary date of this
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Agreement or the date on which the dispute is finally determined, either by
mutual written agreement of the parties, or by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
(e) Employee shall have no duty to mitigate the Company's
obligations with respect to the payments set forth in this Section 8 by seeking
other employment following his termination of employment, nor shall such
obligations be subject to offset or reduction by reason of any compensation
received by Employee from such other employment.
9. Restrictive Covenant. In consideration of the Company's agreement to
employ Employee, until December_31, 2001, Employee hereby agrees that Employee
will not, except in connection with the performance of his duties hereunder,
directly or indirectly, either as an employee, partner, owner, director, adviser
or consultant or in any other capacity:
(a) engage in the homebuilding business (a "Competing
Business");
(b) recruit, hire or discuss employment with any person who
is, or within the six month period preceding the date of such activity was, an
employee of the Company (other than as a result of a general solicitation for
employment);
(c) subject to the proviso below, solicit any customer or
supplier of the Company for a Competing Business or otherwise attempt to induce
any such customer or supplier to discontinue its relationship with the Company;
or
(d) except solely as a limited partner or other form of
passive investment with no
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management or operating responsibilities, engage in the land banking or lot
development business; provided, however, that the foregoing shall not restrict
(i) the ownership of less than 5% of a publicly-traded company or, (ii) in the
event Employee's employment is terminated hereunder, engaging in the custom
homebuilding business, including soliciting customers through a general
solicitation and soliciting suppliers who serve the Company, but not to induce
them to discontinue their relationship with the Company, or engaging in the
production homebuilding business outside a 100 mile radius of any project of the
Company or outside Northern California (which shall be deemed to mean the
metropolitan area of San Xxxx and all of the State of California north of such
area) or engaging in the land banking or lot development business.
Employee represents to the Company that he is willing and able to
engage in businesses that are not Competing Businesses hereunder and that
enforcement of the restrictions set forth in this Section 9 would not be unduly
burdensome to Employee. The Company and Employee acknowledge and agree that the
restrictions set forth in this Section 9 are reasonable as to time, area and
scope of activity and do not impose a greater restraint than is necessary to
protect the goodwill and other business interests of the Company, and Employee
agrees that the Company is justified in believing the foregoing. If the
provisions of this Section 9 are found by a court of competent jurisdiction to
contain limitations as to time, area or scope of activity that are not
reasonable or not necessary to protect the goodwill or other business interests
of the Company, then such court is hereby directed to reform such provisions to
the minimum extent necessary to cause the limitations contained herein as to
time, area and scope of activity to be reasonable and to impose a restraint that
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is not greater than necessary to protect the goodwill and other business
interests of the Company. The provisions of this Section 9 will survive any
termination of this Agreement, except that this Section 9 will not apply
following termination of Employee by the Company without Cause.
10. Confidential Information. During the term of Employee's employment
and for one year thereafter, without the Company's prior written consent,
Employee will not use competitively or disclose to any third party (other than
in accordance with the proper performance of his duties hereunder or as may be
required by statute or court order) the proprietary information, trade secrets,
business, marketing, advertising, strategic or business information, customer or
prospect lists, work product, know-how or other confidential information of the
Company ("Confidential Information"), all of which Employee acknowledges and
agrees is the sole and exclusive property of the Company. Upon termination of
his employment for any reason, Employee will immediately return to the Company
all copies, in whatever form, of any Confidential Information that may be in his
possession or control.
11. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any applicable law, then such provision
will be deemed to be modified to the minimum extent necessary to render it
legal, valid and enforceable, and if no such modification will render it legal,
valid and enforceable, then this Agreement will be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties will be construed and enforced accordingly.
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12. Injunctive Relief. Employee acknowledges and agrees that the
Company would be irreparably harmed by any violation of Employee's obligations
under Sections 9 and 10 hereof and that, in addition to all other rights or
remedies available at law or in equity, the Company will be entitled to
injunctive and other equitable relief to prevent or enjoin any such violation.
13. Entire Agreement. This Agreement embodies the complete agreement of
the parties hereto with respect to the subject matter hereof and supersedes any
prior written, or prior or contemporaneous oral, understandings or agreements
between the parties that may have related in any way to the subject matter
hereof. This Agreement may be amended only in writing executed by the Company
and Employee.
14. Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement, shall be governed by and
construed in accordance with the internal laws, and not the law of conflicts, of
the State of Arizona.
15. Notice. Any notice required or permitted under this Agreement must
be in writing and will be deemed to have been given when delivered personally or
by overnight courier service or three days after being sent by mail, postage
prepaid, at the address indicated below or to such changed address as such
person may subsequently give such notice of:
if to the Company: Homeplex Mortgage Investments Corporation
0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Corporate Secretary
if to Employee: Xxxxxxx X. Xxxxxxxx
0000 X. Xxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
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16. Arbitration. All disputes, claims and other matters in controversy
arising directly or indirectly out of or related to this Agreement, or the
breach thereof, whether contractual or non-contractual, shall be determined by
arbitration and shall be settled by three arbitrators, one of whom shall be
appointed by the Company, one by the Employee and the third of whom shall be
appointed by the first two arbitrators. Persons eligible to be selected as
arbitrators shall be limited to attorneys who have been in practice at least 15
years specializing in employment law matters and who have had both training and
experience as arbitrators ("Experienced Arbitrators"). If either such person
fails to appoint an arbitrator within ten (10) days of a request in writing by
the other such person to do so or if the first two arbitrators cannot agree on
the appointment of a third arbitrator within thirty days, then such arbitrator
shall be appointed by the American Arbitration Association (which appointment
shall not be limited to Experienced Arbitrators if not made within the
applicable time period). Except as to the selection of arbitrators which shall
be as set forth above, the arbitration shall be conducted promptly and
expeditiously at such place in Phoenix, Arizona agreed to between the Company
and the Employee in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association then in effect so as to enable the arbitrators
to resolve the disputes, claims and other matters in controversy within
forty-five (45) days of the commencement of the arbitration proceedings. The
arbitrators shall base their award on applicable law and judicial
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precedent and, unless both parties agree otherwise, shall include in such award
the findings of fact and conclusions of law upon which the award is based and
may award temporary or permanent equitable relief. Judgement on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The arbitrators' resolution of the dispute shall be final,
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binding and non-appealable. The nonprevailing party shall bear the expenses of
the arbitrators and the arbitration, including reasonable attorneys' fees and
costs.
IN WITNESS WHEREOF, the Company and Employee have executed and
delivered this Agreement as of the date first above written.
HOMEPLEX MORTGAGE INVESTMENTS
CORPORATION
By: /s/ Xxx X. Xxxxxxx
.........................................
Name: Xxx X. Xxxxxxx
Title: President
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxxx
............................................
Xxxxxxx X. Xxxxxxxx
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