Amended and Restated
EMPLOYMENT AGREEMENT
This Amended and Restated EMPLOYMENT AGREEMENT (this "Agreement") is
made this 28th day of May, 1999, between xxxxxxxx.xxx, inc. (f/k/a First
Mortgage Network, Inc.), a Florida corporation (the "Company"), and Xxxxx Xxxxxx
(the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
the Executive's potential contribution to the growth and success of the Company
and desires to assure the Company of the Executive's continued employment in an
executive capacity and to compensate him therefor; and
WHEREAS, the Company and the Executive wish to amend and restate in its
entirety the Employment Agreement dated July 18, 1997 (the "Former Employment
Agreement") which is attached hereto as Exhibit "A" and which, except for
certain provisions specifically incorporated by reference, shall be of no
further force or effect; and
WHEREAS, the Executive desires to commit himself to serve the Company
on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
words and phrases shall have the following meanings:
"Affiliate" has the same meaning as "affiliate" in Rule 144(a)
promulgated under the Securities Act of 1933, as amended.
"Beneficial Owner" has the same meaning as "beneficial owner" in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended.
"Cause" for termination shall mean (i) Executive's conviction of a
felony, (ii) acts of Executive which, in the judgment of the Board, constitute
fraud on the part of Executive, including but not limited to misappropriation or
embezzlement in the performance of duties as an employee of the Company, or
willfully engaging in conduct materially injurious to the Company and in
violation of the covenants contained in this Agreement, or (iii) gross
misconduct, including but not limited to the willful failure of Executive either
to (a) continue to obey lawful written instruction of the Board after 30 days
notice in writing of Executive's failure to do so and the Board's intention to
terminate Executive if such failure is not corrected, or (b) correct any conduct
of Executive which constitutes a breach of this Agreement after 30 days notice
in writing of Executive's failure to do so and the Board's intention to
terminate Executive if such failure is not corrected.
"Change of Control" shall be deemed to have occurred if, after the
effective date of this Agreement, any one Person (or group of Affiliated
Persons) other than an Excluded Person or an underwriter temporarily holding
securities pursuant to an offer of such securities, becomes a Beneficial Owner,
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directly or indirectly, of securities representing 40% or more of the total
number of votes that may be cast for the election of directors of the Company.
"Date of Termination" shall mean (i) if the term of this Agreement
expires, the expiration date as specified in Section 2 hereof, (ii) if the
Executive's employment is terminated by his death, the date of his death or if
the Executive's employment is terminated by his Retirement, the date of his
Retirement, (iii) if the Executive's employment is terminated as a result of a
disability described in Section 9, the date on which the Executive is terminated
in accordance with the provision of Section 9 and (iv) if the Executive's
employment is terminated for any other reason, the date specified in the Notice
of Termination.
"Excluded Person" means Xxxx X. Xxxxxx, Canaan Equity L.P., Dominion
Fund III or Affiliates of any of the foregoing.
"Net Profits of OPENCLOSE" shall mean the annual (or quarterly, if
payments under Section 6d. are made quarterly) net income of OPENCLOSE before
the deduction or allowance for federal or state income taxes. In computing Net
Profits of OPENCLOSE, the Company shall allocate general overhead and
administrative expenses pursuant to the budget attached as Exhibit "H" and all
intercompany technology fees shall be waived by the Company. The determination
of Net Profits of OPENCLOSE shall otherwise be made in accordance with generally
accepted accounting principles consistent with the Company's past accounting
practices.
"Notice of Termination" has the meaning set forth in Section 8(f).
"Person" means any individual, firm, partnership, corporation or other
entity, including any successor (by merger or otherwise) of such entity, or a
group of any of the foregoing acting in concert.
"Retirement" shall be deemed to have occurred if the Executive's
employment terminates at age 62 or older, and if the Executive has accrued 15
years of continuous service with the Company or any Affiliate company.
2. Employment. Unless earlier terminated pursuant to the provisions of
Section 8 hereof, the employment of the Executive by the Company shall be for
the term of five (5) years commencing on March 1, 1997 and shall thereafter
automatically renew annually for successive terms of one (1) year unless either
the Company or the Executive shall give written notice to the other at least
ninety (90) days prior to the end of the initial term hereof or any subsequent
one (1) year renewal term, as the case may be, of the Company's or the
Executive's election not to extend this Agreement, in which event the expiration
of the then current term of this Agreement shall constitute the Date of
Termination.
3. Position and Duties. The Executive shall serve as the President and
Chief Operating Officer of the Broker Services Group of the Company (the
"B.S.G.") and in such additional management positions as the Board and the
Executive may mutually agree. As President and Chief Operating Officer of the
B.S.G., Executive's sole duties shall consist of the following duties described
in the rest of this paragraph. The Executive shall be accountable only to the
Chief Executive Officer (the "CEO") of the Company and the Board, and, subject
to the authority of the CEO and the Board, shall be the most senior executive
having supervision and control over and responsibility for the general
management and operation of OPENCLOSE and shall have such other powers and
duties as may from time to time be prescribed by the CEO or the Board, provided
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that such duties are consistent with the Executive's position as the senior
executive officer in charge of the general management of OPENCLOSE. The current
operations of OPENCLOSE are more particularly described in Exhibit "B" attached
hereto. The Executive shall devote his entire working time and efforts to the
business and affairs of the Company and shall diligently and faithfully perform
the duties of his office pursuant to this Agreement.
4. Place of Performance. In connection with his employment by the
Company, the Executive shall be based at the Company's principal executive
offices or such other place as may be mutually agreed to by the Company and the
Executive.
5. Director's Seat. Prior to the time of an initial public offering,
the Company shall elect the Executive, and after an initial public offering, the
Company shall nominate the Executive to serve as a Board member at each annual
meeting of the Company's shareholders occurring during the term of this
Agreement.
6. Compensation.
a. Base Salary. The Executive shall receive during the term of his
employment hereunder an annual base salary ("Base Salary") at the rate of at
least Two Hundred Thousand Dollars ($200,000.00). There shall be an annual
review for merit by the Board at which time the Executive's annual salary may be
increased. Once increased, the Executive's Base Salary hereunder shall not
thereafter be reduced. The Executive's Base Salary shall be payable in periodic
installments in accordance with the Company's usual practice for senior
executives of the Company.
b. Incentive Compensation Based on Performance of "xxx.XXXXXXXXX.xxx"
The Company is in the process of developing an Internet website
service (to be located at and hereinafter referred to as "xxx.XXXXXXXXX.xxx")
that provides participating mortgage brokers and lenders with access to Xxxxxx
Xxx desktop underwriting ("DU") information, product and rate information, and
mortgage insurance information, and which is more particularly described in
Exhibit "B" attached hereto. (The OPENCLOSE Division of the B.S.G. is
hereinafter referred to as "OPENCLOSE"). In addition to Base Salary, during the
term of his employment hereunder, the Executive shall be entitled to earn a
performance bonus of up to One Hundred Thousand Dollars ($100,000) annually as
follows:
(i) Fifty Thousand Dollars ($50,000) on June 1, 1999 (the "Start
Date") if by that date there are (1) a minimum of eight (8) contracts, signed by
lenders participating in the OPENCLOSE web site, ("Lender Contracts") or a
minimum of eight (8) fully executed letters of intent to enter into a Lender
Contract or any combination of Lender Contracts and letters of intent; and (2) a
minimum of 30 contracts signed by brokers participating in the OPENCLOSE web
site ("Broker Contracts") or thirty (30) letters of intent to enter into a
Broker Contract or any combination thereof; and (3) a minimum of twenty-three
(23) submissions to the OPENCLOSE web site. The Start Date shall be extended one
(1) day for each day beyond March 1st, 1999 that the OPENCLOSE web site is not
released by the Company for Beta Testing.
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(ii) Fifty Thousand Dollars ($50,000) on January 1, 2000 if by
that date there are (1) a minimum of twelve (12) Lender Contracts or letters of
intent to enter into a Lender Contract, or any combination thereof; and (2) a
minimum of five hundred seventy-five (575) Broker Contracts or letters of intent
to enter into a Broker Contract, or any combination thereof; and (3) a minimum
of one thousand five hundred eighty (1,580) submissions to the OPENCLOSE web
site.
(iii) The performance criteria in subsequent years shall be as
mutually agreed between the parties hereto.
The amount Executive is entitled to earn under this Section shall
not be adjusted proportionally if the minimum number of Lender Contracts, Broker
Contracts, letters of intent and submissions is not achieved by the Start Date
or January 1, 2000, as the case may be.
c. Incentive Compensation Based on Stock Options in the Company.
(i) In addition to Base Salary and pursuant to the Former
Employment Agreement, the Executive has previously received options with a term
of ten (10) years to purchase 150,000 shares of the Company's Common Stock at a
price of $7.50 per share (the "Options"), pursuant to the Company's Stock Option
Plan, which options shall be incentive stock options to the extent permitted by
law. (A copy of the Stock Option Agreement between the Executive and the Company
for the foregoing 150,000 options is attached hereto as Exhibit "C" and is
hereafter referred to as the "150,000 Stock Option Agreement"). In connection
with all of the vesting schedules for the Options set forth below, Options which
may not be eligible for incentive stock option treatment as a result of yearly
or other limits on the number of shares eligible for such treatment shall be
deemed to be non-qualified stock options. The Options shall contain a "cashless"
exercise feature to the extent that such feature will not result in an Option
which would otherwise be a tax-qualified incentive stock option being deemed to
be a non-qualified stock option.
(ii) So long as this Agreement is in effect, the Options shall
vest on the earlier of (i) such date or on such conditions as are provided in
the 150,000 Stock Option Agreement or (ii) twenty percent (20%) on each one year
anniversary from March 1, 1997; provided, however, that, during Executive's
employment hereunder, in the event of an initial public offering of the
Company's Common Stock which results in the Company's Common Stock being listed
on a national securities exchange, on NASDAQ, or on a comparable system (the
"IPO"), or a transaction or series of transactions not involving a public
offering pursuant to which any person other than Xxxx Xxxxxx, Canaan Capital
Limited Partnership, Canaan Capital Offshore Limited Partnership C.V., Canaan
Equity L.P., Canaan Ventures II Limited Partnership, Canaan Ventures II Offshore
C.V., or Dominion Partners III, or affiliates of any of the foregoing, acquire
an aggregate amount of Common Stock representing thirty-three and one-third
percent (33-1/3%) or more of the outstanding shares of Common Stock (the
"Private Placement"), on or prior to March 1, 1999, or a Change of Control on or
prior to March 1, 1999, (x) forty percent (40%) of the Options shall vest on the
closing date of the IPO, Private Placement or transaction giving rise to the
Change of Control and (y) twenty percent (20%) of the Options shall vest each 6
months thereafter. During Executive's employment hereunder, in the event of an
IPO, Private Placement or Change of Control after March 1, 1999, twenty percent
(20%) of the Options shall vest each 6 months following the closing date of the
IPO, Private Placement or the transaction giving rise to the Change of Control;
except that if any Options were scheduled to vest prior to the six month
anniversary of the closing date of the IPO, Private Placement or transaction
giving rise to a Change of Control (the "Scheduled Options"), the Scheduled
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Options shall vest as scheduled (the "Scheduled Option Date") and thereafter
twenty percent (20%) of the Options shall vest each six (6) months following
Scheduled Option Date.
Notwithstanding anything herein or in the 150,000 Stock
Option Agreement to the contrary, if the Executive's employment shall be
terminated on or after March 1, 1998 for reasons other than (i) for Cause, (ii)
as a result of his retirement pursuant to the retirement policies of the
Company, or (iii) upon termination by the Executive pursuant to Section 8(e)
hereof, the Options (and any other stock options subsequently granted to
Executive by Company's Board of Directors) shall become one hundred percent
(100%) vested on the Date of Termination.
If any change(s) in the federal income tax laws materially
affect(s) the tax treatment of the Executive with respect to the Options or the
Common Stock purchasable pursuant to the Options, the Company and the Executive
agree to negotiate in good faith to reach an agreement which will take advantage
of, or minimize the disadvantage to the employee of, such change(s).
d. Incentive Compensation Based on Net Profits of the OPENCLOSE
Division of B.S.G. In order to increase Executive's incentive to develop the
OPENCLOSE business, the Company grants to the Executive the right to share in
the Net Profits of OPENCLOSE, or in the Net Proceeds of any External Financing
of OPENCLOSE (described below) or in the proceeds of a sale of the OPENCLOSE
Division, as follows:
(i) In consideration of the services to be performed under this
Agreement, and of the agreement by the Executive to forbear from exercising (the
"Forbearance" ) any portion of the 50,000 Incentive Stock Options granted to
Executive in the 1998 Incentive Stock Option Agreement (the "1998 SOA", a copy
of which is attached as Exhibit "D") until the earlier of the Initial Vesting
Date, as defined herein, or the date the Company exercises its Discontinuance
Right, as defined herein, Executive shall have the right to earn as additional
incentive compensation a percentage of the Net Profits of OPENCLOSE and the Net
Proceeds of any External Financing of OPENCLOSE, if any (the "vested interest"
or "VI"), which percentage shall be determined and shall vest as set forth
below.. (Notwithstanding the foregoing, in the event the lead managing
underwriter for the Company's initial public offering determines that it is in
the best interest of the Company for all of Executive's rights in the 1998 SOA
to be released prior to the completion of the IPO (the "Underwriter's Option")
then, in lieu of the Forbearance, Executive agrees to release all of his right,
title and interest to the 1998 SOA pursuant to the Transfer, Assignment and
Release, a copy of which is attached as Exhibit "E").
o 5% on January 1, 2001 (the "Initial Vesting Date")
o 1% on January 1, 2002
o 2% on January 1, 2003
o 2% on January 1, 2004
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o If at any time prior to January 1, 2004 Executive's
employment is terminated for any reason other than
pursuant to Section 8e hereof, or for Cause, the
remaining unvested portion of the VI shall vest
immediately such that the VI shall equal ten (10%)
percent.
Any compensation to which Executive may be entitled under
this Section shall be paid to him annually thirty (30) days after the end of the
Company's fiscal year, commencing with the first full fiscal year which includes
January 1, 2001. Commencing with the second full fiscal year after the Company
has achieved Net Profits of OPENCLOSE , the compensation to which Executive is
entitled under this Section shall be paid to him quarterly within thirty (30)
days after the end of the quarter.
(ii) Executive's Right of Rescission of the VI. Commencing on the
Initial Vesting Date or the date the Executive's employment is terminated for
any reason other than termination by the Executive pursuant to Section 8e,
whichever is earlier, and continuing for ninety (90) days thereafter (the
"Executive's Rescission Period") the Executive shall have the right to deliver
written notice to the Company (the "Executive's Rescission Notice") notifying
the Company that he is releasing his rights in the VI back to the Company
("Executive's Right of Rescission") (such that he shall have no further right to
any portion of the Net Profits of OPENCLOSE or Net Proceeds of any External
Financing of OPENCLOSE), and rescinding the Forbearance ; provided, however,
that if the Underwriter's Option was exercised, the Executive may elect in the
Executive's Rescission Notice to receive a payment (the "Rescission Payment")
computed pursuant to either of the following methods at the election of the
Executive:
Method 1 (applicable only if Company Common Stock is
publicly traded): An amount payable in cash or Common Stock of the Company, at
the election of the Executive, equal to the difference between [the average
trading price of the Company's Common Stock for the seven (7) trading days
immediately preceding the date of the Executive's Rescission Notice] and [the
Exercise Price under the 1998 SOA,] multiplied by [the number of shares (the
"Share Amount") that Executive would have been vested in under the 1998 SOA on
the date of the Rescission Notice had the Executive not released his rights
therein pursuant to this Section.] The Exercise Price and the Share Amount shall
be adjusted for stock splits and other adjustments pursuant to Section 4.3 of
the Company's Restated Stock Option Plan last amended on October 18, 1998. The
value of any unvested options computed pursuant to the above method shall be
granted to the Executive at such times as the Executive would have become vested
in the corresponding number of shares under the 1998 SOA.
Method 2: Cash or, if the Company's stock is publicly
traded, Common Stock (valued at the average trading price seven (7) trading days
immediately preceding the date of Executive's Rescission Notice) of the Company
in an amount equal to the fair market value of the VI on the date of Executive's
Rescission Notice as determined by the appraisal method set forth on Exhibit
"F".
In addition, at any time after the expiration of the
Executive's Rescission Period, the Executive shall have the right to exercise
the Executive's Right of Rescission and release the VI to the Company, in which
event the Company shall provide the Executive the Rescission Payment computed in
the manner set forth for Method 2.
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Provisions Regarding Common Stock: In the event the
Executive elects to receive Common Stock of the Company in payment of any of the
amounts set forth above, the Provisions Regarding Company Common Stock set forth
in Exhibit "G shall apply.
(iii) Company's Right to Redeem the VI. Commencing on the Initial
Vesting Date, in the event that the Executive's employment is terminated by
either party for any reason, and continuing for one (1) year thereafter (the
"Company Rescission Period") or, in the event the Company sells the assets of
OPENCLOSE, the Company may deliver written notice to the Executive (the "Company
Rescission Notice"), notifying him of the Company's intent to redeem Executive's
rights in the VI (the "Company Right of Redemption") for a redemption price
equal to the fair market value of the VI on the date of the Company Rescission
Notice as determined by the appraisal method set forth on Exhibit "F". Upon
completion of the appraisal, and payment of the redemption price, the Executive
shall have no further interest in the Net Profits of OPENCLOSE or the Net
Proceeds of any External Financing of OPENCLOSE.
(iv) Net Losses. If OPENCLOSE shall suffer a net loss in any year
during the term of this Agreement, including any extension thereof, such loss
shall be applied against future Net Profits of OPENCLOSE plus the proceeds of
External Financing so that the balance of compensation which Executive shall be
entitled to receive over his Base Salary under this provision shall be the Net
Profits of OPENCLOSE for the then-current year reduced by net losses, if any, in
prior years which have not been previously applied against Net Profits of
OPENCLOSE or the proceeds of External Financing. Net losses sustained by
OPENCLOSE in years prior to the effective date of this Agreement shall not enter
into the computation of Net Profits of OPENCLOSE and shall not be applied
against future Net Profits of OPENCLOSE or the proceeds of External Financing.
The Company shall furnish Executive with detailed annual statements of profit
and loss for OPENCLOSE contemporaneously with the completion of the yearly audit
of the Company's financial statements by its independent auditors.
Notwithstanding anything herein to the contrary, , Executive
shall be entitled to receive his share of Net Profits of OPENCLOSE only to the
extent the cumulative net losses of the OPENCLOSE Division' do not exceed One
Million Five Hundred Thousand Dollars ($1,500,000) plus the proceeds of External
Financing. In the event the cumulative net losses of the OPENCLOSE Division
exceed the sum of One Million Five Hundred Thousand Dollars, ($1,500,000) plus
the proceeds of External Financing, one hundred percent (100%) of the net income
of the OPENCLOSE Division shall be applied against cumulative net losses, and no
amount of Net Profit or External Financing shall be paid to the Executive, until
such time as the cumulative net losses do not exceed One Million Five Hundred
Thousand Dollars($1,500,000) plus the proceeds of External Financing.
(v) Definition of Net Proceeds of any External Financing. The
provisions of this paragraph 6d(v) apply only if the assets of the OPENCLOSE
Division are distributed to a separate entity controlled by the Company (the
"OPENCLOSE Newco"), and the operations consist solely of XXXXXXXXX.xxx. The term
Net Proceeds of any "External Financing" shall mean the proceeds of any debt or
equity financing obtained by the Company from third parties (other than
Affiliates), less expenses incurred in obtaining such debt or equity financing
but only to the extent such Net Proceeds are obtained based solely upon the
assets of OPENCLOSE through the sale of debt or equity in the OPENCLOSE
Division. However, the Net Proceeds of any External Financing of OPENCLOSE shall
be paid first to the Company in return of its capital investment in OPENCLOSE up
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to $1,500,000. Thereafter, a percentage of the Net Proceeds of any External
Financing of OPENCLOSE shall be paid to the Executive equal to the VI. [As an
example: suppose the Company has invested Two Million Dollars ($2,000,000) in
OPENCLOSE and the net proceeds of any External Financing of OPENCLOSE is Three
Million Dollars ($3,000,000) and the VI is ten percent (10%). The first Five
Hundred Thousand Dollars ($500,000) will be used to repay the Company's
investment and the remainder shall be split ten percent (10%) to Executive and
ninety percent (90%) to the Company. The same shall apply upon the independent
sale of the OPENCLOSE Division should it occur, provided, however, that after
the sale of the OPENCLOSE Newco to an entity not controlled by the Company, the
Executive shall have no further VI in the Net Profits or External Financing of
the OPENCLOSE Newco.]
Contemporaneously with any payments made hereunder, the
Company shall provide Executive with a schedule showing the calculations made in
connection herewith, in reasonable detail, and shall allow Executive and his
representatives access to the underlying detail to verify the calculations,
provided such representatives agree to be bound by a customary nondisclosure
agreement as provided by the Company.
e. Company's Right to Discontinue OPENCLOSE and Executive's Option to
Purchase OPENCLOSE.
(i) The Company reserves the right to discontinue or substantially
reduce the level of commitment to operation of OPENCLOSE at any time, in its
sole discretion (the "Discontinuance Right"). Without in any respect limiting
the right of the Company to sell or otherwise transfer OPENCLOSE, it is agreed
that the Company's sale or other transfer (directly or indirectly) of OPENCLOSE
for value to a third party, including as a result of a business combination or
sale of the Company's stock, shall not be deemed to be an exercise of the
Discontinuance Right.
(ii) In the event the Company exercises its Discontinuance Right
prior to the Initial Vesting Date, the Forbearance shall be rescinded, and
Executive shall receive as severance compensation at the rate set forth in
Section 10c and, in addition, the Executive shall have the right to obtain
ownership of and continue the business of the OPENCLOSE Division. If the
Executive elects to exercise that right, the Company shall assign to Executive
or his affiliated entity (the "Transferee") each OPENCLOSE Lender Contract and
Broker Contract subject to (i) the prior written consent to such assignment of
each Lender, Broker and FannieMae required in connection therewith; and (ii) the
assumption by the Transferee, in a form reasonably acceptable to the Company, of
all of the Company's obligations under each such Lender, Broker or third party
Contract required in connection therewith and shall transfer to the Transferee
all other assets primarily used in the conduct of the business of OPENCLOSE (the
"Assignment").
(iii) In the event the Company exercises its Discontinuance Right
after the Initial Vesting Date, the Forbearance shall not be rescinded and
Executive shall, at the election of the Executive, be entitled to receive the
Assignment.
In the event the Company exercises its Discontinuance Right,
it agrees to give Executive ninety (90) days written notice in order that
Executive may exercise the election to receive the Assignment.
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f. Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him in performing services hereunder (according to the policies and
procedures from time to time established by the Board for its senior executive
officers) provided that the Executive properly accounts therefor in accordance
with Company policy.
g. Fringe Benefits. During the term of his employment, the Executive
shall be entitled to participate in or receive benefits under all the Company's
employee benefits plans and arrangements, including any retirement plan, stock
option plan, profit-sharing plan, savings plan, health-and-accident plan,
disability plan, insurance or other arrangement made available by the Company to
its senior executives, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.
h. Vacations. The Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Company from time to time
for its senior executive officers, but not less than four (4) weeks in any
calendar year (prorated in any calendar year during which the Executive is
employed for less than the entire year in accordance with the number of days in
such calendar year during which he is so employed). The Executive shall also be
entitled to all paid holidays provided by the Company to its senior executive
officers.
i. Car Allowance. During the term of this Employment Agreement, the
Executive shall, at the Executive's expense, maintain an automobile available
for use in connection with the performance of his duties hereunder and shall be
entitled to a car allowance of $1,500 per month.
j. Insurance. The Company shall obtain and pay for and keep in force at
all times while Executive is employed by Company and thereafter as provided
herein, an insurance policy on the life of the Executive with a death benefit
not less than the greater of (i) four (4) times the Base Salary or (ii) Seven
Hundred Fifty Thousand Dollars ($750,000); provided, that if the Executive is
not insurable at the insurer's lowest rates for healthy, non-smoking males of
the Executive's age (the "Non-Rated Premiums"), then the Company shall obtain
and pay for an insurance policy on the life of the Executive in the face amount
obtainable for such Non-Rated Premiums. The Executive shall have the exclusive
right to designate the beneficiaries of any life insurance policy provided by
the Company hereunder and to change the beneficiaries from time to time. Such
policy and the proceeds and cash value thereof, if any, shall be the sole
property of the Executive, and the Company shall not retain any benefit therein.
Upon termination of the Executive's employment by the Company for Cause, upon a
disability described in Section 8, as a result of his Retirement , by the
Executive pursuant to Section 7(e), or by the Company or the Executive pursuant
to notice as set forth in Section 2 hereof, the Company's obligation to pay the
premiums on such insurance shall cease; in all other events the premiums shall
be paid for eighteen (18) months following the Date of Termination. In addition,
the Company shall, at such time as the Company's Board of Directors shall
determine that such purchase is in the Company best interests, purchase and
maintain directors' and officers' insurance coverage in such amounts and on such
terms as the Board of Directors shall deem customary for companies within the
Company's industry, and the Company shall agree to indemnify Executive to the
same extent as Company shall agree to indemnify other senior executives.
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k. Market Rate Home Financing. The Company shall supply to the
Executive market rate mortgage loan financing to enable the Executive to
purchase a residence in Florida. Unless otherwise agreed upon by the Company and
Executive, any such financing shall have a term of no less than 30 years and
shall not be greater than 95% of the price of the new residence; provided,
however, that in no event shall the amount of any such loan exceed $570,000. The
Executive shall be responsible for all principal and interest on the mortgage
loan. The Company will offer wholesale rates and will not add origination fees,
discount points, processing fees, underwriting and closing fees, or any xxxx-up
whatsoever.
7. Unauthorized Disclosure.
During the period of his employment hereunder and following termination
thereof, the Executive shall not, without the written consent of the Board or a
person authorized thereby, disclose to any person, other than an employee of the
Company or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Company, any material confidential information obtained by him while in
the employ of the Company with respect to any of the Company's products,
improvements, formulas, designs or styles, processes, customers, computer
software and systems, computer programming or methods of marketing, the
disclosure of which would be materially damaging to the Company; provided,
however, that confidential information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by
the Executive) or any information of a type not otherwise considered
confidential by persons engaged in the same business or a business similar to
that conducted by the Company. Executive shall have no obligation hereunder to
keep confidential any confidential information if and to the extent disclosure
of any thereof is specifically required by law; provided, however, that in the
event disclosure is required by applicable law, the employee shall provide the
Company with prompt notice of such requirement, prior to making any disclosure,
so that the Company may seek an appropriate protective order. Executive will not
use or disclose to other employees of the Company, during the term of this
Agreement, confidential information belonging to his former employers.
8. Termination.
a. Death and Retirement. The Executive's employment hereunder shall
terminate upon his death. The Executive's employment hereunder shall terminate
upon his Retirement.
b. Termination by the Company for Cause. The Company may terminate the
Executive's employment hereunder at any time for Cause by delivering a Notice of
Termination to the Executive.
c. Termination by the Company without Cause. The Company may terminate
the Executive's employment hereunder for any reason by delivering a Notice of
Termination to the Executive at least (90) days prior to the Date of
Termination.
d. Constructive Discharge. If the Company (i) breaches its obligations
described in Sections 2-6 or engages in any other material breach of the terms
of this Agreement, or (ii) exercises its rights under Section 6e(i), or (iv)
there is a material adverse change by the Board or the CEO of Executive's
functions, duties, or responsibilities without Executive's written consent, and,
10
as a result of such change, Executive's position with the Company shall be or
becomes one of less dignity, responsibility, importance or scope, the Executive
shall have the option to terminate this Agreement and such termination shall be
treated for all purposes as a termination by the Company pursuant to subsection
(c) of this Section.
e. Termination by the Executive. The Executive may terminate his
employment hereunder upon delivering a Notice of Termination to the Company not
less than thirty (30) days prior to the Date of Termination.
f. Notice of Termination. Any termination by the Company pursuant to
subsections (b) or (c) of this Section, and any termination by the Executive
pursuant to subsections (d) or (e) of this Section, shall be communicated by a
written notice delivered by certified mail, return receipt requested, within the
appropriate time periods, if any, specified in such subsections, and such Notice
of Termination shall indicate the specific termination provision in this
Agreement relied upon. If the termination is pursuant to subsections (b) or (d)
of this Section, the Notice of Termination also shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
9. Disability. If as a result of the Executive's incapacity due to
physical or mental illness, as determined in writing by a physician reasonably
acceptable to Executive, the Executive shall have been absent from his duties
hereunder on a full-time basis for the Disability Period (as defined below), and
the Executive is incapable of performing such duties, and within thirty (30)
days after the Company notifies the Executive in writing that it intends to
replace him, the Executive shall not have returned to the performance of his
duties hereunder on substantially a full-time basis, the Company may terminate
the Executive and replace him without breaching this Agreement. As used herein,
the Disability Period shall mean the period of disability required by the
Company's disability insurance policies as a condition to providing disability
benefits to the Executive under such policies.
10. Compensation Upon Termination or During Disability.
a. If the Executive's employment shall be terminated by reason of his
disability or death, the Executive or Executive's estate shall be entitled to
all compensation and fringe benefits accrued and vested through the end of the
month of his death, all accrued and vested retirement benefits and, if no
beneficiary is designated, the proceeds of the insurance policy provided for in
Section 6(J) hereof; provided, however, that if the Executive's employment is
terminated as a result of disability within the meaning of Section 9, the
Company shall provide such disability benefits to the Executive as are made
available to other senior executive officers of the Company.
b. If the Executive's employment shall be terminated (i) for Cause, or
(ii) as a result of his retirement pursuant to the retirement policies of the
Company, the Executive shall be entitled to receive (i) his full Base Salary
accrued through the Date of Termination at the rate in effect at the time the
notice of termination is given, (ii) only such Options as have vested prior to
the Date of Termination, and the Company shall have no further obligations to
the Executive under this Agreement, and (iii) incentive compensation accrued or
vested prior to the Date of Termination.
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c. If the Company shall terminate the Executive's employment prior to
March 1, 2002 for a reason other than Cause, disability or retirement pursuant
to the retirement policies of the Company, then the Company shall pay to the
Executive his full Base Salary accrued through the Date of Termination at the
rate in effect at the time the notice of termination is given. In addition, in
lieu of any further salary payments to the Executive for periods subsequent to
such Date of Termination, the Company shall pay as severance pay to the
Executive an amount equal to (a) one hundred fifty percent (150%) of Executive's
annual Base Salary in effect as of the Date of Termination payable in eighteen
(18) equal monthly installments, plus (b) the amount of Executive's car
allowance for eighteen (18) months payable in eighteen (18) equal monthly
installments (the "Severance Payment"). In addition, the Company shall maintain
in full force and effect for the continued benefit of the Executive for eighteen
(18) months following the Date of Termination, all employee benefit plans and
programs in which the Executive was entitled to participate immediately prior to
the Date of Termination; provided that the Executive's continued participation
is possible under the general terms and provisions of such plans and programs.
To the extent that the Executive's benefits from any pension, profit sharing or
other retirement plan or program (whether tax qualified or otherwise) are not
vested on the Date of Termination, except for the VI, the Company shall pay to
the Executive in eighteen (18) equal monthly installments following the Date of
Termination, the present value of the difference between the amounts which would
have been paid to the Executive had he been fully vested on the Date of
Termination and the amounts actually paid or payable to the Executive pursuant
to such plans or programs (the "Retirement Payment" and together with the
Severance Payment, the "Termination Payments").
d. If the Company shall terminate the Executive's employment after
March 1, 2002, other than pursuant to notice as set forth in Section 2 hereof,
or for a reason other than Cause, disability or retirement pursuant to the
retirement policies of the Company, then the Company shall continue to pay to
the Executive his full Base Salary plus car allowance from the Date of
Termination at the rate in effect at the time the notice of termination is given
through the end of the then current one year (1) renewal term, and Executive
shall not be entitled to the Termination Payments described in subsection c.
above.
11. Non-Competition. In recognition of the Company's substantial
relationships with business clients or prospects and its trade secrets and other
valuable, confidential business or professional information, the Executive
agrees that, in the event of any termination, except termination under Sections
8(c) or 8(d) the Executive shall not, for a period expiring one (1) year after
the Date of Termination, without the prior written approval of the Board,
participate in the management of, be employed by or own any business enterprise
at a location within the United States that engages in substantial competition
with the online mortgage origination business of the Company or its affiliates,
where such enterprise's revenues from any competitive activities amount to 10%
or more of such enterprise's net revenues or sales for its most recently
completed fiscal year. Nothing in this Section 11 shall prohibit the Executive
from owning stock or other securities of a competitor amounting to less than
five percent of the outstanding capital stock of such competitor. In addition
and notwithstanding anything herein to the contrary, this section shall not
apply if the Date of Termination as defined in Section 1 is the date the term of
this Agreement expires as specified in Section 2.
12. Non-Solicitation. In recognition of the Company's substantial
relationships with customers, members, business clients or prospects and its
trade secrets and other valuable, confidential business or professional
12
information, the Executive agrees that during the term of his employment with
the Company, and for a period of one (1) year following the termination of his
employment by Company for Cause or by Executive voluntarily, he will not,
directly or indirectly, for himself or for any other commercial enterprise,
directly or indirectly (i) solicit any of the Company's customers, members or
joint venture partners, which relationships are in existence during the term of
his employment or at the time of termination of such employment, as the case may
be, or (ii) solicit or discuss with any employee of the Company the employment
of such Company employee by any commercial enterprise other than the Company,
nor recruit, attempt to recruit, hire or attempt to hire any such Company
employee on behalf of any commercial enterprise other than the Company. In
addition and notwithstanding anything herein to the contrary, this section shall
not apply if the Date of Termination as defined in Section 1 is the date the
term of this Agreement expires as specified in Section 2.
The Executive acknowledges that the enforcement of the provisions
in this Section shall not result in unreasonable deprivation of his right to
earn a living and that if the provisions of this Section shall be determined by
any court to be invalid or unenforceable to any extent, then this Section shall
be deemed to be amended so as to be valid and enforceable to the fullest extent
permitted by law.
13. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx Xxxxxx
00000 Xx. Xxxxxxx Xxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
If to the Company:
xxxxxxxx.xxx, inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxx, CEO
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Successors; Binding Agreement. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. This Agreement shall be
binding on the successors and assigns of the parties hereto. If the Executive
should die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there be no such designee, to the Executive's
estate.
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15. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is approved
by the Board of Directors and agreed to in writing signed by the Executive and
such officer as may be specifically authorized by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida, exclusive of conflicts of laws principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida (without regard to the
choice of law or conflict of laws provisions thereof).
18. Attorneys' Fees. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees
and expenses from the losing party, whether incurred before suit is brought,
before or at trial, on appeal, or in insolvency proceedings.
19. Jurisdiction. Each party to this Agreement hereby irrevocably
submits to the jurisdiction of any Florida state court or federal court sitting
in Broward County, Florida in any action or proceeding arising out of or
relating to this Agreement, or any other related document, and each hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Florida state or federal court. The Company and
Executive agree that such jurisdiction and venue shall be exclusive and each
party to this Agreement hereby irrevocably waives, to the fullest extent it may
effectively do so, the defense of any inconvenient forum to the maintenance of
such action or proceeding.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Entire Agreement; Modification. This Agreement supercedes all
previous agreements including the Former Employment Agreement and represents the
entire agreement between the parties hereto with respect to the subject matter
hereof. It may not be amended or modified except by a written instrument
executed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
xxxxxxxx.xxx, inc. ("Company")
By: /s/ Xxxx Xxxxxx
--- ---------------
Xxxx Xxxxxx, Chief Executive Officer
/s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx ("Executive")
15
EXHIBITS
Exhibit F Appraisal Method for Right of Recision
EXHIBIT F
Appraisal Method for Right of Recision
In order to exercise the Right of Recision, the Executive shall provide
to the Company written notice that Executive elects to exercise the Right of
Recision and such notice shall be given by registered or certified mail. Such
notice shall designate an Independent Appraiser.
Upon receipt of such notice, the Company shall also select an
Independent Appraiser. Each of the Independent Appraisers selected by Executive
and the Company shall be at the cost and expense of the Company and shall be
instructed to complete the required appraisal of the Division within fifteen
(15) days of his appointment. The Company and the Executive shall supply all
information necessary to allow the appraisers to perform the appraisals.
Following submission of the independent appraisers' reports to the
Company and the Executive, the Company and the Executive shall have five (5)
business days (an "Agreement Period") to agree on a valuation. If the Company
and the Executive agree on a valuation, then the fair market value of the VI
shall be set at such agreed upon figure, and the Executive's election to convert
shall become irrevocable. If the Company and the Executive cannot so agree, the
Executive shall have the option to rescind his Recision Notice by written notice
of such recision (by facsimile to the Chief Executive Officer of the Company,
with receipt confirmed by telephone) no later than the first business day
following the end of the Agreement Period. No partial recision shall be
permitted. If no Recision Notice is timely delivered, the Executive's election
to convert shall become irrevocable. The two independent appraisers submitting
reports shall be instructed by the Executive and the Company, respectively, to
immediately appoint a third independent appraiser to perform the valuation. The
third independent Appraiser shall be instructed to complete the required
appraisal within fifteen (15) days of his appointment. The value of the VI, as
determined by the third appraiser, shall be final and binding upon the Company
and the Executive, free of challenge or review in any court.
