EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered and effective into as of
this 1st day of June, 2001, by and between Xxxxxxx Xxxxxxxx (the "Employee"),
and e-Net Xxxxxxxxx.xxx, Inc., a Nevada corporation, and all of their
subsidiaries (the "Company").
W I T N E S S E T H:
The parties agree as follows:
1. The Company hereby agrees to employ the Employee to render services
to the Company during the Employment Period, as that term is hereinafter
defined, as President and CEO of the Company (Chairman, CEO and President of
ENet; and Chairman and CEO of American Residential Funding, Inc.,
XxxxxXxxxxx.xxx, Xxxxx Real Estate & Xxxxxxx.xxx). The Employee agrees to be
employed by the Company in such capacity and agrees that throughout the
Employment Period he will perform all such duties as shall be necessary for him
to perform consistent with his positions or as shall be assigned to him. The
Employee further agrees to devote his best efforts to the performance and
discharge of his duties and responsibilities. Notwithstanding the foregoing,
the Company confirms that Employee shall be involved at the rate of
approximately 8 hours per week in the operations of Xxxxx Real Estate, Lavington
Financial, and Firstline Companies.
2. The Company agrees to pay Employee, as full compensation for the
services to be rendered by the Employee hereunder, and the Employee agrees to
accept as full compensation therefore (except as noted in 2(a)), a salary during
the Employment Period at an annualized rate of $275,000.00, subject to an annual
increase of 10% commencing Jan. 1, 2002, which compensation shall be payable in
arrears in equal monthly installments in accordance with the normal payroll
policies of the Company from time to time in effect, subject to withholding for
Federal, state and local income taxes, FICA, FUTA and other legally required
withholding taxes and contributions. It is agreed that the various subsidiaries
are additionally bound by all provisions of this agreement, and shall be fully
liable to pay any and all amounts due as noted in this agreement, even in the
event any subsidiaries are sold. The company shall also pay employee an auto
allowance of $1,200.00 per month plus insurance and gas, as well as other
compensation noted below.
(a) Employee has incurred significant liability as an officer of
X-XxxXxxxxxxxx.xxx and American Residential Funding, Inc., having
provided services since April 14, 2000 and April 1, 1997
respectively. These liabilities include personally guarantying
$2,000,000 in a Bank Line of credit, personally guarantying
$75,000 in a Bank Line of credit, personally guarantying numerous
equipment leases, signing as responsible party in over 40 state
licensing matters, securing a large loan to Enet with Employees
personally owned 1,000,000 shares of Enet, liability to
shareholders (and other creditor) actions with significantly
inadequate D&O insurance, and the like. In lieu of receiving
compensation in cash for this liability, the Board has authorized
the payment of stock options as fully described in the attached
addendum.
3. Employment Period.
(a) The "Employment Period" hereunder shall commence on the date
hereof and shall terminate five (5) years from the date hereof,
which is June 1, 2006.
(b) Notwithstanding paragraph 3(a), the Employment Period, and the
Employee's employment hereunder, shall terminate on such earlier
date on which any of the following events occurs:
(ii) the death of the Employee,
(iii) the resignation of the Employee,
(iv) the termination by the Board of the Employee's employment
with the Company for disability (as hereinafter defined in (c)),
or
(v) the termination by the Board of the Employee's employment
with the Company, upon fifteen (15) days' prior written notice to
the Employee hereunder, for cause (as hereafter defined in (d).
(vi) the termination of Employee's employment with the Company by
the Board of an acquiring company that acquired a minimum of 51%
the Company, to which Employee shall receive compensation as
noted in (e).
(c) The term "disability," as used herein with respect to the
termination of the Employee's employment with the Company, shall
mean the Employee's inability to perform effectively the
substantial portion of his duties hereunder because of physical
or mental disability for a cumulative period of 180 days in any
consecutive twelve month period during the Employment Period.
(d) The term "cause," as used herein with respect to the termination
of the Employee's employment with the Company, shall mean any of
the following: (i) willful and persistent failure or refusal to
perform material, significant and appropriate obligations under
this Agreement, with proper written notice having been given and
time to make corrections; (ii) the conviction of the Employee for
any felony; any other action of the Employee that is reported in
the general or trade press or otherwise achieves a general
notoriety, involving conduct that is illegal, immoral or
scandalous, and that materially reduces the value of the
Employee's services and significantly discredits the Employee and
the Company's business.
(e) If the Company (or acquiring company) elects to terminate the
Employee, due to merger, acquisition or other business
considerations, or for any cause, then the Company shall
immediately pay to Employee $500,000 as severance pay, and all
stock and options shall be accelerated and immediately vested
prior to such acquisition or merger. All assets of the Company
and the acquiring company, including cash, clients, customers and
all physical assets, shall secure this claim. Employee has full
rights under California law to lien and seize any assets of the
Company until such obligation is paid in full. Upon full receipt
of severance pay and vested securities, the Company shall have no
further obligation to Employee.
4. The compensation provided for hereunder shall be exclusive of and in
addition to any benefits which may become available to the Employee, and which
shall become available to the Employee, when and as the same becomes available
to other employees of the Company according to him and their respective
positions under, and pursuant to the terms of, any stock option, pension plan,
group life insurance plan, hospitalization plan, medical services plan,
disability plan or any other employee benefit plan, program or policy provided
by the Company during the Employment Period. In this regard, the Company shall
furnish Employee and his family full Blue Cross of California coverage,
disability insurance the premium for which shall be payable per quarter and
shall also provide term life insurance in the amount of $1,000,000 for benefit
of Employee.
5. The Company agrees to reimburse the Employee for all reasonable
travel, entertainment and other expenses which are incurred by the Employee
during the Employment Period in connection with the performance of the
Employee's duties hereunder, provided that the general scope of such expenses
are approved by the Board in advance and such expenses are itemized and
presented to the Company in writing in a form then prescribed by the Company in
its general policies relating to reimbursement of employee business expenses.
6. In addition, the Company shall establish various bonus, stock
option, stock grant, and profit sharing plans, under which the Company shall be
fully liable to Employee in providing and paying the additional compensation as
noted.
7. All notices and other communications hereunder shall be given in
writing by hand delivery or by registered or certified mail, return receipt
requested, postage prepaid, addressed to the party to receive the same at its
respective address set forth below, or at such other address as may from time to
time be designated by either party to the other hereunder in accordance with
this Section:
If to the Employee: 00000 Xxxxxxxxx Xx., Xxxxxxxxxx Xxxxx, Xx. 00000
If to the Company: 0000 Xxxxxxx Xx., Xxx. 000, Xxxxx Xxxx, Xx 00000
All such notices and communications hereunder shall be effective and deemed
given, if mailed, when delivered, as evidenced by the acknowledgment of receipt
issued with respect thereto by the applicable postal authorities, and, if
delivered by hand, when received, as evidenced by the signed acknowledgment of
receipt of the person to whom such notice or communication shall have been
addressed.
8. This Agreement constitutes the entire agreement of the parties
hereto with respect to the Employee's employment by the Company and supersedes
and terminates all prior agreements, arrangements and policies between the
Employee and the Company, as well as all of it's majority owned subsidiaries,
with respect to the subject matter hereof.
9. No failure by either party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder by either party preclude any
other or future exercise of that right or any other right hereunder by that
party.
10. In case any one or more of the provisions of this Agreement should
be found to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
11. This Agreement, and the respective rights, duties and obligations
of the parties hereunder, shall be governed by and construed in accordance with
the laws of the State of California.
12. The rights and benefits of this Agreement shall inure to the
benefit of, and be enforceable by, the Company's successors and assigns. The
rights and obligations of the Employee under this Agreement may only be assigned
with the prior written consent of the Company.
13. This Agreement may not be amended, terminated or superseded except
by an agreement in writing, executed by the Company and the Employee.
14. The Employee hereby acknowledges that, in connection with his
review of the terms and conditions of this Agreement, including, without
limitation, the undertakings, restrictions and waivers set forth herein, he has
had the opportunity to consult with and be represented by his own counsel, who
may advise him concerning the execution and delivery of this Agreement by him.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
E-Net Xxxxxxxxx.xxx, Inc.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Director
/s/ Xxxxxxx Xxxxxxxx
By: Xxxxxxx Xxxxxxxx
OPTION NO. 01
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made and entered into on June 1 2001, by
and between E-net Xxxxxxxxx.xxx, Inc. ("Company"), and Xxxxxxx Xxxxxxxx, an
individual, and officer of the Company (referred to herein as the "Optionee"),
with reference to the following recitals of facts:
WHEREAS, the Company desires to grant the Optionee a stock option
("Option") to purchase shares of common stock of the Company (the "Shares") upon
the terms and conditions hereinafter stated; and
NOW, THEREFORE, in consideration of the covenants herein set forth, the parties
hereto agree as follows:
1. Shares; Price. The Company hereby grants to Optionee the right to
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purchase, upon and subject to the terms and conditions herein stated, 2.5
million (2,500,000) Shares for cash (or other consideration acceptable to the
Board of Directors of the Company, which shall include a loan to Optionee from
the Company) at the closing price of the Shares as of the date of this
Agreement, such price being not less than the fair market value per share of the
Shares covered by these Options as of the date hereofThese shall vest over the
one year period of time during which the Employment Agreement to which this
Agreement is an Exhibit is in full force and effect.
2. Term of Option. This Option shall expire, and all rights hereunder
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to purchase the Shares shall terminate five years from the date hereof. This
Option shall earlier terminate subject to Paragraphs 5 and 6 hereof .
3. Exercise. This Option shall be exercised by delivery to the Company
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of (a) a written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the
amount of the purchase price of the Shares covered by the notice (in which the
Company shall be obligated to loan Optionee such funds to cover the purchase).
4. Termination of Employment or Engagement. If Optionee shall cease to
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serve as an employee of the Company for any reason, whether voluntarily or
involuntarily, other than by the conclusion of the term of Optionee's written
employment agreement, then Optionee shall retain all rights set forth herein for
vested Options and all non-vested options shall terminate and be of no further
force or effect.
5. Recapitalization. The number of Shares covered by this Option, shall
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not be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a subdivision or consolidation of shares or the
payment of a stock dividend, or any other increase or decrease in the number of
such shares affected without receipt of consideration by the Company; provided
however that the conversion of any convertible securities of the Company shall
not be deemed having been "effected without receipt of consideration by the
Company." The exercise price of this Option shall not be adjusted upon such a
subdivision or consolidation of the shares. The number of such Shares shall be
increased/decreased on a pro rata basis in accordance with any stock split,
provided, however, the amount of options shall not be reduced by more than 20%
of the amount issued under this option and under no circumstances shall the
exercise price of this option be adjusted.
6. In the event of a proposed dissolution or liquidation of the
Company, a merger or consolidation in which the Company is not the surviving
entity, or a sale of all or substantially all of the assets of the Company, all
options granted herein shall immediately vest and be exercisable. Subject to any
required action by the stockholders of the Company, if the Company shall be the
surviving entity in any merger or consolidation, this Option thereafter shall
pertain to and apply to the securities to which a holder of Shares equal to the
Shares subject to this Option would have been entitled by reason of such merger
or consolidation, and the vesting provisions of Section 3 shall continue to
apply.
7. Registration Rights. The Optionee shall have the right to register
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Shares covered by vested options on Form S-8 pursuant to Optionee's Employment
Agreement to which this Option is an Exhibit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
E-Net Xxxxxxxxx.xxx, Inc.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Director
/s/ Xxxxxxx Xxxxxxxx
By: Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx Employment Contract
Dated June 1, 2001
Amendment to Stock Option Agreement No. 1
Dated July 2, 2001
Xxxxxxxx and E-Net Financial agree to amend the Stock Option agreement to limit
the maximum compensation that may earned by Xxxxxxxx upon execution of this
agreement.
Therefore, the paragraph below shall become a part of and supercede the Stock
Option Agreement relating to these issues; all other terms of the Agreement
shall remain the same:
"Upon the options being converted into common stock, the total compensation
received by Xxxxxxxx shall not exceed either $1,900,000 or 20% of the
outstanding number of common shares, fully diluted, whichever is greater.
Options shall be vested at the rate of 33 1/3% each year, becoming fully vested
on June 1, 2004."
e-Net Xxxxxxxxx.xxx Corp.
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Xxxxx Xxxxxx, Director Xxxxxxx Xxxxxxxx
