Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of this 1st day of
October, 2001 by and between MERITAGE CORORATION, a Maryland corporation (the
"Company") and Larry W. Seay, an individual ("Executive"). If Executive is
presently or subsequently becomes employed by a subsidiary of Company, the term
"Company" shall be deemed to refer collectively to Meritage Corporation and the
subsidiary or subsidiaries which employs Executive.
RECITALS
A. COMPANY BUSINESS. The Company's principal business is homebuilding.
B. EXECUTIVE EXPERIENCE. Since April 1, 1996, Executive has served as Vice
President - Finance, Chief Financial Officer ("CFO"), Treasurer and Secretary of
the Company.
C. AGREEMENT PURPOSE. The Company desires to employ Executive, and
Executive desires to be employed by Company, on the terms and condition set
forth herein.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. DEFINITIONS. As used herein:
(a) "CAUSE" shall include the following:
i) Employee's wrongful misappropriation of any money or other
assets or properties of the Company;
ii) Executive is convicted of committing a felony, or engages in
conduct involving fraud, moral turpitude, dishonesty, gross misconduct,
embezzlement, theft, or similar matters that are detrimental to Company;
iii) Employee's willful disregard of his primary duties to the
Company or policies of the Company.
(b) "CHANGE OF CONTROL". A Change of Control of the Company shall
mean: (a) the purchase or other acquisition by any person, entity, or group
of persons, within the meaning of section 13 (d) or 14 (d) of the
Securities Exchange Act of 1934 as amended (the "Act") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Act) of
more than 50% of either the outstanding share of common stock of the
Company or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally; (b) the approval by the
stockholders of the Company of a reorganization, merger, or consolidation,
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in each case with respect to which persons who were stockholders of the
Company immediately prior to such reorganization, merger, or consolidation
do not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged, or consolidated company's then outstanding securities;
or (c) a liquidation or dissolution of the Company or the sale of all or
substantially all of the Company's assets.
(c) "COMPANY CONFIDENTIAL INFORMATION" shall mean confidential,
proprietary information or trade secrets of Company and its subsidiaries,
including, without limitation, the following: (1) customer and vendor lists
and customer and vendor information as complied by Company and its
subsidiaries, including pricing, sale and contract terms and conditions,
contract expirations, and other compiled customer and vendor information;
Company's and its subsidiaries' internal practices and procedures; (3)
Company's and its subsidiaries' financial condition and financial results
of operation; (4) information relating to Company's and its subsidiaries'
real estate holding or commitments, lot positions, strategic planning,
sales, financing, insurance, purchasing, marketing, promotion,
distribution, and selling activities, whether now existing, or acquired,
developed, or made available anytime in the future to or by Company or its
subsidiaries; (5) all information which Executive has a reasonable basis to
consider confidential or which is treated by Company or its subsidiaries as
confidential; and (6) any and all information having independent economic
value to Company or its subsidiaries that is not generally known to, and
not readily ascertainable by proper means by, persons who can obtain
economic value from its disclosure or use. Executive acknowledges that such
information is Company Confidential Information whether disclosed to or
learned by Executive or originated by Executive during his employment by
Company or any of its subsidiaries. In the event that information is not
clearly and obviously publicly available, all information about Company or
its subsidiaries shall be presumed to be confidential. In the event of a
dispute or litigation, Executive will have the burden of proof by clear and
convincing evidence that such information is not confidential.
(d) "DEMOTION EVENT" shall include a demotion or relocation of
Executive, a material chance in Executive's duties without Executive's
consent, a reduction from the previous year in Executive's base salary
without Executive's consent, or any action taken by the Company
specifically to limit Executive's ability to earn a bonus comparable to his
prior year's bonus. Notwithstanding the foregoing, the assignment of
certain controller and treasury duties to a corporate controller who shall
report to Executive shall not be considered a Demotion Event.
(e) "TERMINATION" shall mean termination of Executive's employment
with Company pursuant to Sections 17 through 21 hereof.
2. TERM OF AGREEMENT. This Agreement will commence as of October 1, 2001,
and shall terminate on December 31, 2003, unless earlier terminated in
accordance with, and subject to, the other provision hereof (the "Term"). This
Agreement will automatically renew for successive one-year terms unless one of
the parties hereto gives notice of non-renewal at least ninety (90) days before
the scheduled renewal date.
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3. POSITION WITH COMPANY. During the Term, Executive shall serve as Vice
President - Finance, CFO, Treasurer and Secretary of Company, shall devote his
full time and efforts to the affairs of Company, and shall faithfully and
diligently perform all duties commensurate with such position, including,
without limitation, those duties reasonably requested by Company's Board of
Directors. Without limitation of the foregoing, Executive shall: (i) manage
financing and capital arrangements; (ii) supervise controller function; (iii)
supervise treasury function; (iv) supervise public reporting and stockholder
relations; (v) supervise information and data processing systems, and (vi)
support merger and acquisition efforts. Executive shall be subject to and comply
with all of Company's policies and procedures.
4. SALARY. Executive shall be entitled to receive a minimum base salary
from Company in the amount of $200,000 annually, payable in equal installments
in accordance with Company's general salary payment policies in effect during
the Term hereof (the "Minimum Base Salary"). The Minimum Base Salary may be
increased at such times and in such amounts as Company's Board of Directors
shall determine in its sole discretion.
5. BONUS AND STOCK OPTION. The Board of Directors may, from time to time,
at its discretion, pay performance bonuses to Executive, which shall based on a
target ranging from 75 percent to 100 percent of base salary. Any such
performance bonus may be paid in cash or Company stock, in the discretion of the
Board of Directors. In addition, the Board of Directors may, form time to time,
at its discretion, grant Executive options under the Company's stock option
plan.
6. VACATION AND SICK LEAVE. Executive shall be entitled to take reasonable
vacation, holiday and sick leave, subject to the Company's reasonable limits and
policies.
7. BENEFIT PLANS. Executive shall be eligible to participate in all benefit
plans made available to Company employees from time to time. Nothing herein
shall restrict Company's ability to terminate or modify any benefit plan or
arrangement.
8. EXPENSES. Company shall pay for or reimburse Executive for all ordinary
and necessary business expenses incurred or paid by Executive in furtherance of
Company's business, subject to and in accordance with Company's policies and
procedures of general application. The Company shall provide Executive a car
allowance of $500 per month.
9. STAFF MANUAL. All other terms of Executives employment shall be governed
by the Company employee manual (the "Employee Manual"). The Company reserves the
right to amend the Employee Manual, from time to time, and Executive shall be
subject to changes made so long as such changes are applied to all Company
employees.
10. COVENANTS OF EXECUTIVE. (a) Executive hereby covenants and agrees that,
during the term of this Agreement, Executive will not engage, directly or
indirectly, either as principal, partner, joint venturer, consultant or
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independent contractor, agent, or proprietor or in any other manner participate
in the ownership, management, operation, or control of any person, firm,
partnership, limited liability company, corporation, or other entity which
engages in the business or providing any products or services, including,
without limitation, home building products or services, which are competitive
with those products or services offered or sold by Company or its subsidiaries
within any jurisdiction in which Company or its subsidiaries does or proposes to
do business. The covenants set forth in this paragraph 10(a) shall expire upon
cessation of Executive's employment for any reason.
(b) Executive hereby covenants and agrees that, during the term of the
Agreement, and for a period of one year after the last date on which the
Executive is employed by the Company, Executive will not:
(i) Directly or indirectly solicit for employment (whether as an
employee, consultant, independent contractor, or otherwise) any person who
is any employee, independent contractor or the like of Company or any of
its subsidiaries, unless Company gives its written consent to such
employment or offer of employment.
(ii) Call on or directly or indirectly solicit or divert or take
away from Company or any of its subsidiaries (including, without
limitation, by divulging to any competitor or potential competitor or
company or its subsidiaries) any person, firm, corporation, or other entity
who was a customer of prospective customer of the Company during
Executive's term of Employment.
11. CONFIDENTIALITY AND NONDISCLOSURE. It is understood that in the course
of Executive's employment with Company, Executive will become acquainted with
Company Confidential Information. Executive recognizes that Company Confidential
Information has been developed or acquired at great expense, is proprietary to
Company or its subsidiaries, and is an shall remain the exclusive property of
Company. Accordingly, Executive hereby covenants and agrees that he will not,
without the express written consent of Company, during Executive's employment
with Company or its subsidiaries and thereafter or until such time as Company
Confidential Information becomes generally known, or readily ascertainable by
proper means, by persons unrelated to Company or its subsidiaries, disclose to
others, copy, make any use of, or remove from Company's or its subsidiaries'
premises any Company Confidential Information, except as Executive's duties for
Company or its subsidiaries may specifically require. In the event of dispute or
litigation, Executive shall have the burden of proof by clear and convincing
evidence that the Company Confidential Information has become generally known,
or readily ascertainable by proper means, by persons unrelated to Company or its
subsidiaries.
12. ACKNOWLEDGMENT; RELIEF FOR VIOLATION. Executive hereby agrees that the
period of time provided for in Sections 10 and 11 and the territorial
restrictions and other provisions and restrictions set forth therein are
reasonable and necessary to protect Company, its subsidiaries and its and their
successors and assigns in the use and employment of the good will of the
business conducted by Company and its subsidiaries. Executive further agrees
that damages cannot compensate Company in the event of a violation of Section 10
or 11, and than, if such violation should occur, injunctive relief shall be
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essential for the protection of Company, its subsidiaries, and its and their
successors and assigns. Accordingly, Executive hereby covenants and agrees that,
in the event any of the provisions of Sections 10 and 11 shall be violated or
breached, Company shall be entitled to obtain injunctive relief against
Executive, without bond but upon due notice, in addition to such further or
other relief as may appertain at equity or law. Obtainment of such an injunction
by Company shall not be considered an election of remedies or a waiver of any
right to assert any other remedies which Company has at law or in equity. No
waiver of any breach or violation hereof shall be implied from forbearance or
failure by Company to take action thereon. Executive hereby agrees that he has
such skills and abilities that the provisions of Sections 10 and 11 will not
prevent him from earning a living. Each party agrees to pay its own costs and
expenses in enforcing any provision of this Agreement.
13. EXTENSION DURING BREACH. Executive agrees that the time period
described in Sections 10 and 11 shall be extended for a period equal to the
duration of any breach of such provisions by Executive.
14. NO CONFLICTS OF INTEREST.
(a) During the period of Executive's employment with Company,
Executive will not independently engage in the same or a similar line of
business as Company or its subsidiaries, or, directly or indirectly, serve,
advise, or be employed by any individual, firm, partnership, association,
corporation, or other entity engaged in the same or similar line or lines of
business.
(b) Executive is not a promoter, director, employee, or officer of, or
consultant or independent contractor to, a business organized for profit, nor
will Executive become a promoter, director, employee, or officer of, or
consultant to, such a business while employed by Company or its subsidiaries
without first obtaining the prior written approval of Company. Executive
disclaims any such relationship or position with any such business. Should
Executive become a promoter, director, employee, or officer of, or a consultant
to, a business organized for profit upon obtaining such prior written approval,
Executive understands that Executive has a continuing obligation to advise
Company at such time of any activity of Company, or such other business that
presents Executive with a conflict of interest as an employee of Company.
(c) Should any matter of dealing in which Executive is involved, or
hereafter becomes involved, on his own behalf or as an employee of Company,
appear to present a possible conflict of interest under any Company policy then
in effect, Executive will promptly disclose the facts to Company's Board of
Directors so that a determination can be made as to whether a conflict of
interest does exist. Executive will take whatever action is requested of
Executive by Company or its Board of Directors to resolve any conflict which it
finds to exist, including severing the relationship which creates the conflict.
(d) Notwithstanding anything herein to the contrary, Executive may
make investments in commercial properties or land development ventures provided
they are not competitive with the business of the Company, and may own less than
1% of stock in publicly traded homebuilders.
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15. RETURN OF COMPANY MATERIAL AND COMPANY CONFIDENTIAL INFORMATION. Upon
Termination, Executive shall promptly deliver to Company the originals and all
copies of any and all materials, documents, notes, manuals, or lists containing
or embodying Company Confidential Information or relating directly or indirectly
to the business of Company in the possession or control of Executive.
16. NO AGREEMENT WITH OTHERS. Executive represents, warrants, and agrees
that Executive is not a party to any agreement with any other person or business
entity, including former employers, that in any way affects Executive's
employment by Company or relates to the same subject matter of this Agreement or
conflicts with his obligations under this Agreement, or restricts Executive's
services to Company.
17. TERMINATION FOR CAUSE. The Company may terminate this Agreement for
Cause by giving written notice of Termination and, with respect to a purported
violation of Section 1 (a)(i), (ii) or (iii) of this Agreement that is curable
in such time period, shall afford Executive an opportunity to cure or disprove
the purported violation for the thirty-day period following such notice. Upon
Termination of Executive for Cause, Executive shall be entitled to receive only
the Minimum Base Salary, the amount of any unpaid performance bonus earned in
any complete fiscal year of the Company preceding the date of termination, and
any benefits as are due Executive through the effective date of such
Termination. No prorated bonus shall be paid to Executive upon a Termination for
Cause.
18. TERMINATION BY COMPANY WITHOUT CAUSE. If Executive is terminated
without Cause, Executive shall be entitled to receive an amount equal to 75% of
Executive's base salary and 75% of Executive's average bonus for the previous
three fiscal years and the vesting of Executive's stock options shall be
accelerated, as if Executive had held them through the end of the following
fiscal year. Executive may terminate his employment upon the occurrence of a
Demotion Event and such termination shall be deemed a Termination without Cause.
Any amounts due to Executive under this paragraph shall be paid to Executive in
six (6) equal monthly payments or in a lump sum (to be paid within twenty (20)
days after Termination), at the Executive's discretion, following Termination.
If the Executive elects to take the payments due under this paragraph over a six
month period, he shall be entitled, to the extent permitted by law and the
plans, to continued participation in the Company's benefit plans for such
period. If the Executive elects to take a lump sum payment, his participation in
the Company's benefit plans shall terminate upon receipt of the lump sum
payment.
19. TERMINATION UPON CHANGE OF CONTROL. If, within twelve (12) months
following a Change of Control of the Company, Executive voluntarily terminates
his employment as a result of a Demotion Event, Executive shall be entitled to
receive an amount equal to 100% of Executive's base salary and 100% of
Executive's average bonus for the previous three fiscal years and all of
Executive's stock options shall vest in full and be immediately exercisable. Any
amount due to Executive under this paragraph shall be paid to Executive in
twelve (12) equal monthly payments or in a lump sum (to be paid within twenty
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(20) days after Termination), at the Executive's discretion, following
Termination. If the Executive elects to take the payments due under this
paragraph over a twelve month period, he shall be entitled, to the extent
permitted by law and the plans, to continued participation in the Company's
benefit plans for such period. If the Executive elects to take a lump sum
payment, his participation in the Company's benefit plans shall terminate upon
receipt of the lump sum payment.
20. TERMINATION UPON DEATH OF EXECUTIVE. If during the term of this
Agreement Executive dies, then this Agreement shall terminate and Company shall
pay to the estate of Executive only the Minimum Base Salary, the amount of any
unpaid bonus earned in any complete fiscal year of the Company preceding the
date of Termination, the prorated portion of any objectively determined current
year bonus, and any benefits (including any life insurance benefits provided to
Executive's estate under Company's standard policies as in effect) as are due
through the date of his death. In addition, the vesting of Executive's stock
options shall be accelerated, as if the executive has served through the end of
the fiscal year of his Termination.
21. TERMINATION UPON DISABILITY OF EXECUTIVE. If during the term of the
Agreement Executive is unable to perform the services required of Executive
pursuant to this Agreement for a continuous period of ninety (90) days due to
disability or incapacity by reason of any physical or mental illness (as
reasonable determined by Company by its Board of Directors), then Company shall
have the right to terminate this Agreement at the end of such ninety-day period
by giving written notice to Executive. Executive shall be entitled to receive
only such Minimum Base Salary, the amount of any unpaid bonus earned in any
complete fiscal year of the Company preceding the date of termination, the
prorated portion of any objectively determined current year bonus, and any
benefits as are due Executive through the effective date of such Termination. In
addition, the vesting of Executive's stock options shall be accelerated, as if
the Executive had served through the end of the fiscal year of his Termination.
22. INDEMNITY. The Company shall indemnify Executive to the fullest extent
permitted by the Company's Bylaws. Such indemnification shall survive the
termination of this Agreement.
23. ARBITRATION. Any dispute, controversy, or claim, whether contractual or
non-contractual, between the parties hereto arising directly or indirectly out
of or connected with this Agreement, relating to the breach or alleged breach of
any representation, warranty, agreement, or covenant under this Agreement,
unless mutually settled by the parties hereto, shall be resolved by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA"). Any arbitration shall be conducted by
arbitrators approved by the AAA and mutually acceptable to Company and
Executive. All such disputes, controversies, or claims shall be conducted by a
single arbitrator, unless the dispute involves more than $50,000 in the
aggregate in which case the arbitration shall be conducted by a panel of three
arbitrators. If the parties hereto are unable to agree on the arbitrator(s),
then the AAA shall select the arbitrator(s). The resolution of the dispute by
the arbitrator(s) shall be final, binding, nonappealable, and fully enforceable
by a court of competent jurisdiction under the Federal Arbitration Act. The
arbitrator(s) shall award compensatory damages to the prevailing party. The
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arbitrator(s) shall have no authority to award consequential or punitive or
statutory damages, and the parties hereby waive any claim to those damages to
the fullest extent allowed by law. The arbitration award shall be in writing and
shall include a statement of the reasons for the award. The arbitration shall be
held in Phoenix, Arizona. The arbitrator(s) shall award reasonable attorney's
fees and costs to the prevailing party.
24. SEVERABILITY; REFORMATION. In the event any court or arbiter determines
that any of the restrictive covenants in this Agreement, or any part thereof, is
or are invalid or unenforceable, the reminder of the restrictive covenants shall
not thereby be affected and shall be given full effect, without regard to
invalid portions. If any of the provisions of this Agreement should ever be
deemed to exceed the temporal, geographic, or occupational limitations permitted
by applicable laws, those provisions shall be and are hereby reformed to the
maximum temporal, geographic, or occupational limitations permitted by law. In
the event any court or arbiter refuses to reform this Agreement as provided
above, the parties hereto agree to modify the provisions held to be
unenforceable to preserve each party's anticipated benefits thereunder.
25. NOTICES. All notices and other communication hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier,
or by registered or certified mail (postage prepaid and return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by it by like notice):
If to Company: Meritage Corporation
6613 N. Scottsdale Road
Suite 200
Scottsdale, Arizona 85250
Phone: (602) 998-8700
Fax: (602) 998-9162
Attn: Co-Chairman and Co-CEO
With a copy to: Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
Phone: (602) 382-6252
Fax: (602) 382-6070
Attn: Steven D. Pidgeon, Esq.
If to Executive: Larry W. Seay
802 W. El Caminito Drive
Phoenix, Arizona 85021
All such notices and other communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; three business days
after being deposited in the mail, postage prepaid, if delivered by mail: and
when receipt is acknowledged, if telecopied.
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26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute one and the same Agreement.
27. GOVERNING LAW. The validity, construction, and enforceability of this
Agreement shall be governed in all respects by the laws of the State of Arizona,
without regard to its conflict of laws rules.
28. ASSIGNMENT. This Agreement shall not be assigned by operation of law or
otherwise, except that Company may assign all or any portion of its rights under
this Agreement to any Company entity, but no such assignment shall relieve
Company of its obligations hereunder, and except that this Agreement may be
assigned to any corporation or entity with or into which Company may be merged
or consolidated or to which Company transfers all or substantially all of its
assets, and such corporation or entity assumes this Agreement and all
obligations and undertakings of Company hereunder.
29. FURTHER ASSURANCES. At any time on or after the date hereof, the
parties hereto shall each perform such acts, execute and deliver such
instruments, assignments, endorsements and other documents and do all such other
things consistent with the terms of this Agreement as may be reasonably
necessary to accomplish the transaction contemplated in this Agreement or
otherwise carryout the purpose of this Agreement.
30. GENDER, NUMBER AND HEADINGS. The masculine, feminine, or neuter
pronouns used herein shall be interpreted without regard to gender, and the use
of the singular or plural shall be deemed to include the other whenever the
context so requires.
31. WAIVER OF PROVISION. The terms, covenants, representations, warranties,
and conditions of this Agreement may be waived only by a written instrument
executed by the party waiving compliance. The failure of any party at any time
to require performance of any provisions hereof shall, in no manner, affect the
right at a later date to enforce the same. No waiver by any party of any
condition, or breach of any provision, term, covenant, representation, or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
32. ATTORNEYS' FEES AND COSTS. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover reasonable attorneys' fees, accounting
fees, and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
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33. SECTION AND PARAGRAPH HEADINGS. The Article and Section headings in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
34. AMENDMENT. This Agreement may be amended only by an instrument in
writing executed by all parties hereto.
35. EXPENSES. Except as otherwise provided herein, each party shall bear
its own expenses incident to this Agreement and the transactions contemplated
hereby, including without limitation, all fees of counsel, consultants, and
accountants.
36. ENTIRE AGREEMENT. This Agreement constitutes and embodies the full and
complete understanding and agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior understandings or agreements,
whether oral or in writing.
37. WITHHOLDING. Executive acknowledges and agrees that payments made to
Executive by Company pursuant to the terms of this Agreement may be subject to
tax withholding and that Company may withhold against payments due Executive any
such amounts as well as any other amounts payable by Executive to Company.
38. RELEASE. Receipt by Executive of any of the severance benefits noted in
paragraphs 18, 19, 20 and 21 hereof following termination of Executive's
employment hereunder shall be subject to Executive's compliance with any
reasonable and lawful policies or procedures of Company relating to employee
severance including the execution and delivery by Executive of a release
reasonably satisfactory to Company and Executive of any and all claims that
Executive may have against Company or any related person, except for the
continuing obligations provided herein, and an agreement that Executive shall
not disparage Company or any of its directors, officers, employees or agents.
Concurrent with the termination of Executive's employment hereunder pursuant to
paragraphs 18, 19, 20 or 21 hereof, and receipt of a release reasonably
satisfactory to the Company and Executive, the Company shall execute and deliver
to Executive a release, reasonably satisfactory to Company and Executive, of any
and all claims that Company may have against Executive, except for any claims
arising out of Executive's fraudulent or criminal conduct, and an agreement the
Company shall not disparage Executive.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement or
caused this Agreement to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
MERITAGE CORPORATION, a
Maryland corporation
By: By:
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Name: Steven J. Hilton Name: John R. Landon
Its: Co-Chairman and Co-CEO Its: Co-Chairman and Co-CEO
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Larry W. Seay
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