EXHIBIT 10.16
EMPLOYMENT AND COMPENSATION AGREEMENT
This Employment and Compensation Agreement (the "Agreement") is entered
into in Contra Costa County, California, as of the 20th day of August, 1998, by
and between, Finet Holdings Corporation, a Delaware corporation ("Finet" or
"Employer") and Xxxxxx X. Xxxxxx ("Employee"), who agree as follows:
This Agreement is made with reference to the following facts:
A. Employee desires to perform services for Employer and Employer
desires to engage Employee to perform services in accordance with the terms and
conditions set forth in this Agreement.
Now therefore, in consideration of the foregoing and of the covenants,
representations and promises set forth in this Agreement, the parties hereto,
agree as follows:
1. EMPLOYMENT.
a. Employer hereby offers Employee employment with Employer, and
Employee hereby accepts employment, commencing on August 20, 1998 on the terms
and conditions contained in this Agreement.
b. Employee shall serve as Executive Vice President of Administration,
of Finet, reporting directly to Finet's Chief Executive Officer or his designee.
In that capacity, Employee shall faithfully and diligently carry out such duties
and have such responsibilities as are customary among persons employed in
substantially similar capacities for similar companies, provided that Employee
shall at all times be subject to the direction of the Chief Executive Officer of
Finet. Employee agrees to the best of his ability and experience to perform
loyally and conscientiously all of the duties and responsibilities required of
him, either expressly or implicitly, by the terms of this Agreement.
c. Location of Employee's employment shall be as determined by
Employer, within the San Francisco Bay Area.
2. TERM OF EMPLOYMENT. Employee's Term of Employment in accordance with the
terms of this Agreement, shall commence as of August 20, 1998 and shall
terminate upon the earlier of August 20, 1999, or as is otherwise specified in
this Agreement (the "Term of Employment").
3. COMMITMENT. Except as is otherwise provided herein, during the Term of
Employment Employee shall devote one hundred (100%) percent of his entire
productive time, ability, and attention to the business of the Employer. Except
as is otherwise provided herein, Employee
shall not render any services of a commercial or professional nature to any
other person or organization, whether for compensation or otherwise, without the
prior written consent of the Chief Executive Officer of Finet. However, the
expenditure of reasonable amounts of time for educational, charitable, or
professional activities shall not be deemed a breach of this Agreement if those
activities do not materially interfere with the services required under this
Agreement and shall not require the prior written consent of the Chief Executive
Officer of Finet. Notwithstanding the foregoing, this Agreement shall not be
interpreted to prohibit Employee from making passive personal investments or
conducting private business affairs if those activities do not materially
interfere with the services required under this Agreement.
4. COMPETITIVE ACTIVITIES.
a. During the Term of Employment, Employee shall not, directly or
indirectly, own an interest in, operate, join, control, or participate in, or be
connected as an officer, employee, agent, independent contractor, partner,
shareholder or principal of any corporation, partnership, proprietorship, firm,
association, person, or other entity producing, designing, providing, soliciting
orders for, selling, distributing, or marketing products, goods, equipment, or
services that compete directly or indirectly with Employer's products and
services or Employer's business, without first obtaining the written approval of
Employer. Such approval may be rescinded by Employer if and when, in the
opinion of Employer, such activities materially inhibit Employee's performance
under this Agreement or place Employer at risk.
b. For one year following his termination as an Employee of, or
consultant to, Employer, whichever occurs later ("Posttermination Period"),
Employee shall not be prohibited from employment in the mortgage industry
involving activities similar to those engaged in prior to becoming an Employee
of or consultant to Employer, except, however, Employee shall not undertake any
employment or activity competitive with Employer's business in which the loyal
and complete fulfillment of the duties of the competitive employment or activity
would call on Employee to reveal or otherwise to use any confidential business
information or trade secrets of Employer's business to which Employee had access
by reason of his prior engagement by Employer.
c. During the Term of Employment and the Posttermination Period,
Employee shall not, directly or indirectly, either for himself or for any other
person, firm, or corporation, divert or take away or attempt to divert or take
away (and during the Posttermination Period, call on or solicit or attempt to
call on or solicit) any of Employer's customers or patrons, including but not
limited to those on whom he called or whom he solicited or to whom he catered or
with whom he became acquainted during his prior engagement by Employer. Nothing
herein shall limit Employee's right during the Posttermination Period, to call
on or solicit or attempt to call on or solicit any of Employee's customers or
patrons on whom he called or whom he solicited or to whom he catered or with
whom he became acquainted during the period prior to his engagement by Employer.
d. During the Term of Employment, Employee shall not undertake
planning for or organization of any business activity competitive with
Employer's business or combine or join
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with other employees or representatives of Employer's business for the purpose
of organizing any such competitive business activity.
e. During the Term of Employment and the Posttermination Period,
Employee shall not, directly or indirectly or by action in concert with others,
induce or influence (or seek to induce or influence) any person who is engaged
(as an employee, agent, independent contractor, or otherwise) by Employer to
terminate his employment or engagement.
5. COMPENSATION.
a. As compensation for the services to be rendered by Employee
hereunder during the Term of Employment, Employer shall pay Employee an annual
base salary in the sum of one hundred fifty thousand ($150,000.00) dollars
("Base Salary") prorated during the Term of Employment, and payable monthly in
accordance with Employer's customary payroll practices.
b. See Addendum A to this Agreement ("Stock and Stock Options").
6. BENEFITS. In addition to the compensation described herein above, during
the Term of Employment, Employee shall be eligible to receive the following
benefits:
a. Such health insurance and other benefits that Employer may, from time
to time, make available to Employer's employees.
b. Vacation time, sick leave, holidays and personal time in accordance
with Employer's vacation and absence policies, which Employer may, from time to
time, maintain for employees at Employee's level of employment.
c. Reimbursement of allowed business expenses, upon submission of
documentation in accordance with Employer's regular expense reimbursement
policies, for reasonable business expenses incurred on behalf of Employer by
Employee.
d. Participation in any savings plan, 401(k) plan, profit sharing plan
or pension plan, which Employer may, from time to time, maintain for employees
at Employee's level of employment, subject to plan eligibility.
7. CONFIDENTIAL INFORMATION.
a. Employee recognizes that, during the course of his employment with
Employer, he will be exposed to certain nonpublic, confidential information, the
disclosure of which to third parties would cause competitive injury to Employer.
Such confidential information includes but is not limited to Employer's
investment plans or strategies, trade secrets, sources of supply, customer
lists, lists of potential customers, customer or consultant contracts and the
details thereof, pricing policies, operational methods, marketing and
merchandising plans or strategies, business acquisition plans, personnel
acquisition plans, unannounced products and services,
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research and development activities, processes, formulas, methods, techniques,
technical data, know-how, inventions, designs, financial or accounting data,
inventory reports, production
schedules, cost and sales data, strategies, forecasts, and all other information
that is not publicly available pertaining to the business of Employer or any of
its affiliates. Such confidential information is hereinafter referred to as
"Confidential Information".
b. Confidential Information shall not include (i) any information
which is or becomes publicly available other than through breach of this
Agreement, or (ii) any information which is or becomes known or available to
Employee on a non-confidential basis and not in contravention of applicable law
from a source which is entitled to disclose such information to Employee.
c. Employee agrees that he will not, while he is employed by Employer,
divulge Confidential Information to any person, directly or indirectly, except
to Employer or its officers and agents, or as reasonably required in connection
with his duties on behalf of the Employer, except as is required by law or court
order. Employee further agrees not to use, except on behalf of the Employer, any
Confidential Information acquired by Employee during the Term of Employment.
Employee agrees that he will not at any time after his employment with Employer
has ended, divulge to any person, directly or indirectly, any Confidential
Information, except as is required by law or court order. Employee further
agrees that, if his relationship with the Employer is terminated for any reason,
he shall not take with him but will leave with Employer all records, papers, and
computer software and data, and any copies thereof relating to the Confidential
Information (or if such papers, records, computer software and data, or copies
are not on the premises of Employer, Employee agrees to return such papers,
records, and computer software and data immediately upon his termination).
Employee acknowledges that all such papers, records, computer software and data,
or copies thereof are and remain the property of Employer.
8. VOICE MAIL AND ELECTRONIC MAIL. All voice mail and electronic mail on
Employer's telephone or computer systems are the property of Employer and shall
be non-personal, non-private and non-privileged to Employee, and Employee shall
disclose to Employer all codes or passwords necessary for Employer to access
such voice mail or electronic mail.
9. COOPERATION. As a condition of his employment with Employer, Employee
agrees that he will not disrupt, damage, impair, or interfere with the business
of the Employer, such as by interfering with the duties of the Employer's
employees, disrupting relationships with Employer's customers, agents,
representatives, or vendors, or otherwise.
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10. TERMINATION.
a. Employee may terminate this Agreement for any reason or for no
reason upon providing Employer with sixty (60) days prior written notice of his
intention to terminate.
b. Employer may terminate this Agreement upon written notice to
Employee prior to its expiration date for just cause or due to the Employee's
death or substantial physical impairment which prevents Employee from performing
his duties and responsibilities as set forth herein. For purposes of this
Section, "just cause" is defined as the failure of Employee to perform his
duties and responsibilities as set forth herein to the satisfaction of Employer
or a violation of Section(s)
3., 4., 7., 8., or 9. of this Agreement; fraud, misappropriation of funds,
embezzlement, theft, physical assault on another person, drunkenness on the job,
possession or use of narcotics on Employer's property, willful and material
damage to Employer's property, conviction of a felony, repeated or material
violations of Employer's policies.
c. In the event Employee's employment is terminated, whether by
Employer for "just cause" or due to the Employee's death or substantial physical
impairment, as is defined herein, or by Employee as provided herein, Employer
shall have no further obligation to pay any compensation to or benefits on
behalf of Employee, however all compensation accrued as of the date of
termination shall be paid to Employee within forty five (45) days of
termination.
d. See Addendum D to this Agreement ("Early Termination").
e. Upon termination of his employment, Employee agrees to deliver
promptly to Employer all records, files, drawings, documents, specifications,
blueprints, letters, notes, reports and computer software, and all copies
thereof, and any and all materials relating to Employer's Confidential
Information that is in his possession or control. At the time of termination,
Employee will have an exit interview with Employer wherein Employee will certify
that Employee has returned to Employer all tangible Confidential Information
disclosed to him, and disclose Inventions conceived or developed by him during
the Term of Employment.
f. Sections 4., 7., 10., 11., 12., 13., 14., 15., and 16., hereof,
shall survive termination of this Agreement.
11. ASSIGNMENT. The rights and liabilities of the parties hereto shall bind
and inure to the benefit of their respective successors, executors and
administrators, as the case may be; provided that, as Employer has specifically
contracted for Employee's services, Employee may not assign or delegate his
duties and responsibilities under this Agreement either in whole or part without
the prior written consent of Employer. Employer may assign its rights and
obligations to a successor in interest to Employer, provided such successor
assumes all obligations and liabilities thereunder.
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12. SEVERABILITY OF PROVISIONS. In the event any provision of this Agreement
is held to be illegal, invalid, or unenforceable under any present or future
law, (a) such provision will be fully severable, (b) this Agreement will be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid, or unenforceable provision or by its severance herefrom, and
(d) in lieu of such illegal, invalid, or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid, and enforceable
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible.
13. MEDIATION AND ARBITRATION. Initially all claims and controversies of any
kind relating to this Agreement shall be submitted to mediation pursuant to the
services of an established mediation service with the venue of the mediation
being San Francisco, CA. In the event the matter cannot be disposed of by
mediation, all claims and controversies of any kind relating to this Agreement
shall be finally settled by binding arbitration before a single arbitrator in
San Francisco, CA, in accordance with the rules of the American Arbitration
Association. The parties to this Agreement shall be bound by the decisions in
an any such arbitration, and judgment upon such arbitration may be entered by
any court of proper jurisdiction. Notwithstanding the applicable rules of the
American Arbitration Association, in accordance with California Code of Civil
Procedure Section 1283.1 (b), the parties agree that depositions may be taken
and discovery obtained in any arbitration proceeding relating to this Agreement
in accordance with California Code of Civil Procedure Section 1283.05.
Attorney's fees and costs shall be allocated by agreement in mediation or by the
arbitrator in arbitration.
14. NOTICES. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, or mailed by certified mail (postage
prepaid and return receipt requested), or sent by reputable overnight courier
service, to the recipient at the address below indicated:
To Employee: Xxxxxx X. Xxxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
To Employer: Finet Holdings Corporation
Attn: Chief Executive Officer
0000 Xxxxxx Xxxxxx, #000
Xxxxxx Xxxxx, XX 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or if mailed, five (5) days after deposit in a U.S. Postal facility.
15. ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS. This Agreement contains the
sole, complete, final, exclusive and entire agreement between the parties
pertaining to the employment
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of Employee by Employer and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties. No
amendment, supplement, modification, rescission or waiver of this Agreement
shall be binding unless executed in writing by the parties. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a
continuing waiver unless otherwise expressly provided. The parties expressly
acknowledge that they have not relied upon any prior agreements, understandings,
negotiations or discussions, whether oral or written.
16. CHOICE OF LAW. The rights and duties of the parties will be governed by
the law of the State of California, excluding any choice-of-law rules that would
require the application of laws of any other jurisdiction.
17. INSURANCE. Employee shall cooperate at no cost to him with Employer,
should Employer wish to purchase key-man insurance on Employee's life.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPLOYER EMPLOYEE
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------- ------------------------
Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx
Chairman & CEO
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ADDENDUM "A"
STOCK OPTION
In addition to the Base Salary, Employee shall be granted:
(a) A signing bonus of 40,000 shares of Finet common stock; valued at a
basis of $1.063 per share (1/15/99 effective date) with piggy back rights if not
registered.
(b) Stock options to purchase up to Two Hundred Thousand (200,000) shares
of Finet common stock ("Shares"), at a price of $ 0.75 per Share ("Options"),
vesting 50,000 September 17, 1998 and 25,000 thereafter, each six months, fully
vested after 36 months, conditioned upon Employee's continued employment by
Employer ("Vested Options").
(c) Additional stock options to purchase up to One Hundred Thousand
(100,000) shares of Finet common stock ("Shares"), at a price of $ 0.656 per
Share ("Options"), vesting 25,000 October 15, 1998 and 18,750 thereafter, each
year, fully vested after four years, conditioned upon Employee's continued
employment by Employer ("Vested Options").
(d) For the purpose of this provision, Employee may only exercise Granted
Options that are Vested. The terms and conditions of the Options shall remain
subject to and interpreted in conformity with the Finet Holdings Corporation
Stock Option Plan, as may be amended from time to time.
ADDENDUM "D"
EARLY TERMINATION
1. In the event Employee's employment is terminated by Employer prior to
August 20, 1999 without "just cause", as is defined herein, Employee shall
receive his current Base Salary for one year from the effective date of
termination.
