98
EXHIBIT-10.4
Employment Agreement
dated as of August 1, 1996
between Lexford and
Annette Hoover,
Vice President of Lexford
August 1, 1996
Annette Hoover
8615 Freeport Parkway
Suite 200
Irving, Texas 75063
Dear Annette:
The following sets forth our mutual understanding respecting your
employment with the undersigned, Lexford Properties, Inc., a Texas corporation
(herein referred to as "Employer"), and when this letter is signed by you the
same shall constitute an Employment Agreement between Employer and you. For
purposes of this Agreement, you are herein referred to in the third person as
"Employee". The terms of said Employment Agreement are as follows:
1. Employment.
(a) During the term of this Employment Agreement, or any
extension or renewal hereof (for purposes hereof, all references herein
to the term of this Employment Agreement shall be deemed to include
references to the period of extension or renewal hereof, if any),
Employee will devote her full time and best efforts to her employment
and perform diligently such duties as are or may be from time to time
required by the Board of Directors of Employer (the "Board"), which
duties shall be consistent with her position as set forth in paragraph
2 hereof.
(b) Employee shall not, without the prior written consent of
Employer, directly or indirectly, during the term of this Employment
Agreement, other than in the performance of duties naturally inherent
in the business of Employer, Employer's parent corporation, Cardinal
Realty Services, Inc., an Ohio corporation ("Parent") or any direct or
indirect subsidiary of Parent or Employer and in furtherance thereof,
render services of a business, professional or commercial nature to any
other person or firm, whether for compensation or otherwise. For
purposes of this Employment Agreement, all references herein to
subsidiaries of Parent shall be deemed to include references to
subsidiaries of either Parent or Employer now or hereafter existing
whether owned directly or indirectly through one or more
intermediaries.
99
Annette Hoover
August 1, 1996
Page 2
2. Term and Positions.
(a) Subject to the provisions for termination as hereinafter
provided, the term of this Employment Agreement shall be deemed to
begin on August 1, 1996, and shall continue for a term of four (4)
years from such date to and including July 31, 2000.
(b) Employee shall serve as Vice President of Employer and in
such substitute or further offices or positions with Employer, Parent
or any direct or indirect subsidiary of Parent or Employer (consistent
with such named office or position) as shall, from time to time, be
assigned by the Board without, however, any change in Employee's
compensation hereunder.
3. Compensation.
(a) In consideration of Employee's execution of this
Employment Agreement, Employer has paid Employee Ten Thousand Dollars
($10,000), the receipt of which Employee hereby acknowledges.
(b) For all services she may render to Employer and any direct
or indirect subsidiary of Parent or Employer during the term of this
Employment Agreement, Employee shall receive an aggregate salary while
she is employed hereunder at the rate of One Hundred Twenty-Five
Thousand Dollars ($125,000) per year, payable in equal installments in
accordance with Employer's customary payroll procedures ("Base
Salary").
(c) In addition to the Base Salary, Employee shall be entitled
to receive, if earned, a performance cash bonus (the "Incentive
Compensation") as a Grade 11 Property Management Executive under
Parent's 1996 Incentive Compensation Plan as adopted by Parent's Board
of Directors on March 21, 1996 and as outlined on the attached Exhibit
A to this Employment Agreement up to a maximum of sixty percent (60%)
of Employee's Base Salary earned during fiscal year 1996 while this
Employment Agreement is in effect. For purposes of determining the
amount, if any, of Incentive Compensation that Employee is entitled to
in accordance with the calculations contained on Exhibit A, the target
net income-property management shall be Six Million Nine Hundred Two
Thousand Six Hundred and Seven Dollars ($6,902,607) (it being
acknowledged that such target is different than the target for other
employees of Parent under the Plan) and the actual net income-property
management for fiscal year 1996 shall include the actual net profits of
Lexford Properties, a Texas joint venture, and its successors in
interest for fiscal year 1996 earned prior to the date hereof. After
December 31, 1996 and during the remaining term of this Employment
Agreement, Employee shall be entitled to receive the same incentive
compensation as other similarly situated property management executives
under Parent's then existing incentive compensation plan(s).
100
Annette Hoover
August 1, 1996
Page 3
(d) During the term of this Employment Agreement, Employee
shall be entitled to monthly advances ("Advances") not to exceed Two
Thousand Dollars ($2,000) per month regardless of the amount of any
Advances made in prior months. All unpaid Advances received by Employee
shall bear interest ("Interest") at the rate of the "prime" or "base"
rate of interest per annum, as announced from time to time by The
Provident Bank or Parent's successor senior lender, plus one percent
(1%) until repaid. Any request for an Advance shall be made by Employee
by the fifth (5th) day of each month upon the receipt of which Employer
will fund such Advances by the fifteenth (15th) day of each month. The
Incentive Compensation earned by Employee, if any, for any period shall
be applied by Parent first to any accrued and unpaid Interest with
respect to Advances made, second to the principal amount of any
outstanding Advances and the balance, if any, shall be paid to
Employee. If the Incentive Compensation earned by Employee for any
period is less than the sum of the outstanding Advances and the accrued
and unpaid Interest thereon, if any, Employee shall pay such deficit
(plus Interest accrued thereon to the date of payment) to Parent within
ninety (90) days of Parent's demand therefor.
4. Additional Compensation. In addition to the compensation as
above stated, Employee shall be entitled to receive such additional
compensation, if any, as may be awarded from time to time by the Board.
5. Termination and Further Compensation.
(a) The employment of Employee under this Employment
Agreement, and the term hereof, may be terminated by Employer for cause
at any time. For purposes hereof the term "cause" includes but is not
limited to:
(i) Employee's fraud, dishonesty, willful misconduct,
or gross negligence in the performance of her duties
hereunder; or
(ii) Employee's material breach of any provision of
this Employment Agreement.
Any termination by reason of the foregoing shall not be in limitation
of any other right or remedy Employer may have under this Employment
Agreement or otherwise.
(b) In the event of termination of this Employment Agreement
by Employer pursuant to this paragraph 5, Employee shall be entitled to
no further salary, additional compensation or other benefits under this
Employment Agreement.
6. Renewal. The term of this Employment Agreement may be extended
or renewed by mutual agreement of Employer, acting through the Board, and
Employee.
101
Annette Hoover
August 1, 1996
Page 4
7. Reimbursement. Employer shall reimburse Employee (or provide
her with an expense allowance) for travel, entertainment and other expenses
reasonably and necessarily incurred by Employee in the promotion of Employer's
business.
8. Covenants and Confidential Information.
(a) Employee agrees that during the term of this Employment
Agreement and for a period of one (1) year thereafter (and, as to
clauses (iii) and (iv) of this subparagraph (a), at any time after the
term of this Employment Agreement) she will not, directly or
indirectly, do or suffer any of the following:
(i) Own, manage, control or participate in the
ownership, management or control of, or be employed or engaged
by or otherwise affiliated or associated as a consultant,
independent contractor or otherwise with, any other
corporation, partnership, proprietorship, firm, association,
or other business entity, or otherwise engage in any business,
which is engaged in any manner in, or otherwise competes with,
the business of Employer, Parent or any of Parent's
subsidiaries (as conducted on the date Employee ceases to be
employed by Employer, Parent or any of Parent's subsidiaries
in any capacity, including as a consultant) in the continental
United States (it being acknowledged by Employee that Employer
and Parent each conduct businesses of national scope);
provided, however, that the ownership of not more than one
percent (1%) of the stock of any publicly traded corporation
shall not be a violation of this covenant;
(ii) Employ, assist in employing, or otherwise associate
in business with any present, former or future employee,
officer or agent of Employer, Parent or any of Parent's
subsidiaries;
(iii) Induce any person who is an employee, officer
or agent of Employer, Parent or any of Parent's subsidiaries
to terminate said relationship; or
(iv) Disclose, divulge, discuss, copy or otherwise use
or suffer to be used in any manner, in competition with, or
contrary to the interests of, Employer, Parent or any of
Parent's or Employer's direct or indirect subsidiaries, the
customer lists, appraisals, engineering and environmental
reports, market research, investment banking analyses or
financial and engineering data or other trade secrets of
Employer, Parent or any of Parent's subsidiaries, it being
acknowledged by Employee that all such information regarding
the business of Employer, Parent and Parent's subsidiaries
compiled or obtained by, or furnished to, Employee while
Employee shall have been employed by or associated with
Employer is confidential information and Employer's exclusive
property.
102
Annette Hoover
August 1, 1996
Page 5
(b) Employee expressly agrees and understands that the remedy
at law for any breach by her of this paragraph 8 will be inadequate and
that the damages flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this paragraph 8, Employer shall be entitled
to immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this paragraph
8 shall be deemed to limit Employer's remedies at law or in equity for
any breach by Employee of any of the provisions of this paragraph 8
which may be pursued or availed of by Employer.
(c) In the event Employee shall violate any legally
enforceable provision of this paragraph 8 as to which there is a
specific time period during which she is prohibited from taking certain
actions or from engaging in certain activities, as set forth in such
provision, then, in such event, such violation shall toll the running
of such time period from the date of such violation until such
violation shall cease.
(D) EMPLOYEE HAS CAREFULLY CONSIDERED THE NATURE AND EXTENT OF
THE RESTRICTIONS UPON HER AND THE RIGHTS AND REMEDIES CONFERRED UPON
EMPLOYER UNDER THIS PARAGRAPH 8, AND HEREBY ACKNOWLEDGES AND AGREES
THAT THE SAME ARE REASONABLE IN TIME AND TERRITORY, ARE DESIGNED TO
ELIMINATE COMPETITION WHICH OTHERWISE WOULD BE UNFAIR TO EMPLOYER, DO
NOT STIFLE THE INHERENT SKILL AND EXPERIENCE OF EMPLOYEE, WOULD NOT
OPERATE AS A BAR TO EMPLOYEE'S SOLE MEANS OF SUPPORT, ARE FULLY
REQUIRED TO PROTECT THE LEGITIMATE INTERESTS OF EMPLOYER AND DO NOT
CONFER A BENEFIT UPON EMPLOYER DISPROPORTIONATE TO THE DETRIMENT TO
EMPLOYEE.
9. Severable Provisions. The provisions of this Employment
Agreement are severable and if any one or more provisions are determined to be
illegal or otherwise unenforceable, in whole or in part, the remaining
provisions and any partially unenforceable provision to the extent enforceable
in any jurisdiction shall, nevertheless, be binding and enforceable.
10. Death or Permanent Disability. In the event of Employee's death or
permanent disability (as hereinafter defined) occurring during the term of this
Employment Agreement, this Employment Agreement shall be deemed terminated and
she or her estate, as the case may be, shall be entitled to no further salary,
other compensation or other privileges or benefits hereunder, except as to (i)
that portion of any unpaid salary or other benefits accrued and earned by
Employee hereunder up to and including the day of death or disability, as the
case may be and (ii) in the case of permanent disability, continuation of salary
payments for nine (9) months. The phrase "permanent disability" shall be deemed
to occur after one hundred twenty (120) days in the aggregate during any
consecutive twelve (12) month period, or after ninety (90) consecutive days,
during which one hundred twenty (120) or ninety (90) days, as the case may be,
Employee, by reason of her physical or mental disability or illness, shall have
been unable to discharge fully her duties under this Employment Agreement.
103
Annette Hoover
August 1, 1996
Page 6
11. Binding Agreement. The rights and obligations of Employer under
this Employment Agreement shall inure to the benefit of, and shall be binding
upon, Employer and its successors and assigns, and the rights and obligations of
Employee under this Employment Agreement shall inure to the benefit of, and
shall be binding upon, Employee and her heirs, personal representatives and
estate.
12. Arbitration. Any controversy or claim arising out of or relating to
this Employment Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Rules of the American Arbitration Association
then pertaining in the City of Columbus, Ohio, and judgment upon the award
rendered by the Arbitrator or Arbitrators may be entered in any Court having
jurisdiction thereof. The Arbitrator or Arbitrators shall be deemed to possess
the power to issue mandatory orders and restraining orders in connection with
such arbitration; provided, however, that nothing in this paragraph 12 shall be
construed so as to deny Employer the right and power to seek and obtain
injunctive relief in a court of equity for any breach or threatened breach by
Employee of any of her covenants contained in subparagraph (a) of paragraph 8
hereof.
13. Notices. Any notice to be given under this Employment Agreement
shall be personally delivered in writing or shall have been deemed duly given
after it is posted in the United States Mails, postage prepaid, registered or
certified, return receipt requested, and if mailed to Employer, shall be
addressed to Employer c/o Parent at Parent's principal place of business,
Attention: John B. Bartling, Jr., President and Chief Executive Officer, and if
mailed to Employee, shall be addressed to her at her home address last shown on
the records of Employer, or at such other address or addresses as either
Employer or Employee may hereafter designate in writing to the other.
14. Waiver. The failure of either party to enforce any provision or
provisions of this Employment Agreement shall not in any way be construed as a
waiver of any such provision or provisions as to any future violations thereof,
nor prevent that party thereafter from enforcing each and every other provision
of this Employment Agreement. The rights granted the parties herein are
cumulative and the waiver of any single remedy shall not constitute a waiver of
such party's right to assert all other legal remedies available to it under the
circumstances.
15. Miscellaneous. This Employment Agreement supersedes all prior
employment agreements and understandings between the parties and may not be
modified or terminated orally. No modification, termination or attempted waiver
of this Employment Agreement shall be valid unless in writing and signed by the
party against whom the same is sought to be enforced. This Employment Agreement
shall be governed by and construed according to the laws of the State of Ohio.
104
Annette Hoover
August 1, 1996
Page 7
If the foregoing understanding respecting the Employment Agreement
between you and the undersigned is acceptable to you, please indicate your
approval thereof by signing a copy of this letter in the space provided below
and return it to the undersigned. Thereupon, the Employment Agreement shall be
in full force and effect in accordance with its terms above set forth.
Sincerely,
LEXFORD PROPERTIES, INC.
By: Mark D. Thompson
Vice President
The terms and provisions of the Employment Agreement are hereby
approved and accepted this 1st day of August, 1996.
/s/ Annette Hoover
-------------------------------------
Annette Hoover
The provisions of Paragraph 3(c) are hereby approved and accepted this
1st day of August, 1996.
CARDINAL REALTY SERVICES, INC.
By: Mark D. Thompson
Executive Vice President
of Corporate Acquisitions
105
STOCK BONUS MAX CASH BONUS
---------------------- -------------------------
GROSS SALARY RESTRICTED OPTIONS 60% 45% 30% 4.5%
------------ ---------- ------- --- --- --- ----
GRADE 12 - 1 EMPLOYEE $285,000
- ---------------------
President x
GRADE 11 - 5 EMPLOYEES 643,819
- ----------------------
Chief Financial Officer x x
Corporate Acquisitions x x
Manager Advisory Services x x
Property Management - FO x x
Property Management - PO x x
GRADE 10 - 11 EMPLOYEES 714,301
- -----------------------
Corporate Treasurer x x
Audit / Strategic Planning x x
General Counsel x x
Co-General Counsel x x
Ancillary Services x x
Regional Manager - PM/NE x x
Regional Manager - PM/NW x x
Regional Manager - PM/S x x
Portfolio Manager - WO x x
Portfolio Manager - S Synd. x x
Portfolio Manager - N Synd. x x
---------------------------
GRADE 9 - 49 EMPLOYEES 2,511,267
- ----------------------
Asset Managers - WO x x
Asset Managers - S Synd. x x
Asset Managers - N Synd. x x
Asset Manager - Portf. x x
Assoc. General Counsel x x
Assoc. General Counsel x x
Ancillary Services x x
Ancillary Services x x
Property Management - Portf x x
Administrative Services - HR x x
Management Information x x
Accounting Managers - 8 emps. x x
District Managers - 30 emps. x x
----------------------------
DISCRETIONARY POOL 2,861,828 x x
- ------------------
* NOTE: NOTWITHSTANDING THE ABOVE CHART,
EMPLOYEE SHALL NOT BE ENTITLED TO RECEIVE STOCK OPTIONS.
106
BONUS CALCULATION = FACTOR %INCREASE X MULTIPLIER (CUMULATIVELY)
------------------------------------------------------------------------------ MAX-CASH
FACTOR 3% - 5% 6% - 10% 11% - 15% 16% - 20% 21% - 25% 26% - 30% BONUS
------ ------- -------- --------- --------- --------- --------- ---------
GRADE 12 - 1 EMPLOYEE 171,000
- ---------------------
President EBITDA 2.00 2.00 2.00 2.00 2.00 2.00
--------- ------ ---- ---- ---- ---- ---- ----
GRADE 11 - 5 EMPLOYEES 386,291
- ----------------------
Chief Financial Officer EBITDA 1.50 1.50 2.00 2.00 2.50 2.50
Corporate Acquisitions EBITDA 1.50 1.50 2.00 2.00 2.50 2.50
Manager Advisory Services Return/Equity 1.50 1.50 2.00 2.00 2.50 2.50
Property Management - FO Net Income - PM 1.50 1.50 2.00 2.00 2.50 2.50
Property Management - PO Net Income - PM 1.50 1.50 2.00 2.00 2.50 2.50
------------------------ --------------- ---- ---- ---- ---- ---- ----
GRADE 10 - 11 EMPLOYEES 321,435
- -----------------------
Corporate Treasurer EBITDA 1.13 1.13 1.50 1.50 1.88 1.88
Audit / Strategic Planning EBITDA 1.13 1.13 1.50 1.50 1.88 1.88
General Counsel EBITDA 1.13 1.13 1.50 1.50 1.88 1.88
Co-General Counsel EBITDA 1.13 1.13 1.50 1.50 1.88 1.88
Ancillary Services Net Income - AS 1.13 1.13 1.50 1.50 1.88 1.88
Regional Manager - PM/NE NOI 2.00 3.00 4.00
Regional Manager - PM/NW NOI 2.00 3.00 4.00
Regional Manager - PM/S NOI 2.00 3.00 4.00
Portfolio Manager - WO Return/Equity 1.13 1.13 1.50 1.50 1.88 1.88
Portfolio Manager - S Synd. Return/Equity 1.13 1.13 1.50 1.50 1.88 1.88
Portfolio Manager - N Synd. Return/Equity 1.13 1.13 1.50 1.50 1.88 1.88
--------------------------- ------------- ---- ---- ---- ---- ---- ----
GRADE 9 - 49 EMPLOYEES 753,380
- ----------------------
Asset Managers - WO Return/Equity 0.75 0.75 1.00 1.00 1.25 1.25
Asset Managers - S Synd. Return/Equity 0.75 0.75 1.00 1.00 1.25 1.25
Asset Managers - N Synd. Return/Equity 0.75 0.75 1.00 1.00 1.25 1.25
Asset Manager - Portf. Return/Equity 0.75 0.75 1.00 1.00 1.25 1.25
Assoc. General Counsel EBITDA 0.75 0.75 1.00 1.00 1.25 1.25
Assoc. General Counsel EBITDA 0.75 0.75 1.00 1.00 1.25 1.25
Ancillary Services Net Income - AS 0.75 0.75 1.00 1.00 1.25 1.25
Ancillary Services Net Income - AS 0.75 0.75 1.00 1.00 1.25 1.25
Property Management - Portf Net Income - PM 0.75 0.75 1.00 1.00 1.25 1.25
Administrative Services - HR Net Income - PM 0.75 0.75 1.00 1.00 1.25 1.25
Management Information Net Income - PM 0.75 0.75 1.00 1.00 1.25 1.25
Accounting Managers - 8 emps. Net Income - PM 0.75 0.75 1.00 1.00 1.25 1.25
District Managers - 30 emps. NOI 1.50 2.00 2.50 WE THANK THEM
---------------------------- --- ---- ---- ----- ----- ----- -----
DISCRETIONARY POOL EBITDA 0.125 0.125 0.150 0.150 0.175 0.175 128,782
- ------------------
* NOTE: NOTWITHSTANDING THE ABOVE CHART,
EMPLOYEE SHALL NOT BE ENTITLED TO RECEIVE STOCK OPTIONS.