EXHIBIT 10.11
EMPLOYMENT AND COMPENSATION AGREEMENT
This Employment and Compensation Agreement (the "Agreement") is entered
into in Contra Costa County, California, as of the second day of October, 1998
by and between Finet Holdings Corporation, a Delaware corporation ("Finet") and
collectively herein ("Employer") and L. Xxxxxx Xxxxxxx ("Employee"), who agree
as follows:
This Agreement is made with reference to the following facts:
A. Employee has served as Finet's Chief Executive officer since May,
1995 without an employment agreement.
B. Employer and Employee now wish to formalize Employee's current and
future employment terms of Employee in anticipation of changes at Finet's senior
management level.
C. Employer and Employee (the "parties") have agreed to enter into
this Agreement which shall. supersede and replace any and all prior
understandings or agreements.
D. 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 continued employment with Employer,
and Employee hereby accepts continued employment, commencing on the date first
above written, 1998 on the terms and conditions contained in this Agreement.
b. Employee shall serve as Chief Executive Officer ("CEO") of Finet.
In this 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 Employer's Board of Directors.
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. Should the potential changes in Finet's senior management include
the appointment of a new CEO, as anticipated, Employee shall be employed in the
position of President of Finet or such other position as shall be mutually
agreed upon by the parties. 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 CEO of Finet.
d. Location of Employee's employment shall be in the San Francisco Bay
Area as determined by Employer.
2. TERM OF EMPLOYMENT.
Employee's Term of Employment in accordance with the terms of this
Agreement, shall commence as of the date first above written and shall terminate
upon the earlier of March 30, 2000, 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 CEO 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 CEO 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
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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 Employees
business or combine or join 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 a Base
Salary and additional compensation based upon the performance of Employee, as is
more specifically set forth in Addendum A to this Agreement ("Adjusted Base
Salary").
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b. Employee's Adjusted Base Salary, will be payable in accordance with
Employer's customary payroll practices.
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, 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 Employees
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, 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
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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.
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
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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 material violation of
Section(s) 3., 4., or 9. hereof, 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 by Employer for
"just cause", as is defined 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. In the event Employee's employment is terminated by Employer for
any reason other than "just cause", as is defined herein, or by Employee for any
reason or for no reason, Employer shall continue to pay compensation to Employee
at his then current total compensation rate to the later of expiration of this
Agreement or twelve months after the date of 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., 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 then in effect from the American Arbitration
Association. All 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. 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 Employer: Chief Executive Officer
Finet Holdings Corporation
000 Xxxxxxx Xxxxxx, #00000
Xxx Xxxxxxxxx, 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.
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15. ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS.
This Agreement contains the sole, complete, final, exclusive and entire
agreement between the parties pertaining to the employment 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.
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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/ S. Xxxxx Xxxxx By: /s/ L. Xxxxxx Xxxxxxx
-------------------------------- -------------------------------------
S. Xxxxx Xxxxx, L. Xxxxxx Xxxxxxx
Co-Chairman
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ADDENDUM A
EMPLOYMENT AGREEMENT
L. XXXXXX XXXXXXX
Base Salary: $150,000 per year, payable in
accordance with Employer's normal
payroll practices, plus annual cost
of living adjustments.
Employee shall also receive bonus
income of two percent (2%) of Finet's
pre-tax GAAP net income, payable
quarterly.
Deferred Compensation: At the time of this Agreement,
Employee was owed approximately
$71,000 as deferred compensation from
Employer's 1997 and earlier fiscal
years. Employer agrees to pay the
amount owed to Employee in full prior
to the termination of this Agreement,
at a rate of not less than $3,000
month, and to continue to pay $3,000
per month thereafter as compensation,
for the duration of this Agreement.
Benefits: Employee shall receive standard
benefits provided to Finet senior
executives, including medical, dental,
life and four weeks paid vacation.
Directorship: Employee shall serve as a member of
Employer's Board of Directors as an
employee for the term of this
Agreement and as a non-employee
Director thereafter.
FINET HOLDINGS CORPORATION
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
February 3, 1999
Mr. L. Xxxxxx Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Dear Xxx:
This will confirm the following agreements arrived at today by and
between you and Finet Holdings Corporation (the "Company"), as authorized by the
Compensation Committee. This letter agreement ("Agreement") is deemed to amend
and supersede any and all employment agreements and understandings between you
and the Company, except as otherwise specifically provided herein.
1. You will be issued a common stock purchase warrant (the "Warrant")
entitling you to purchase 600, 000 shares of the Company's common stock at $ 1.
03 per share. The purchase price for the warrant will be $15,000. The warrant
will be for a five year period and the shares issuable pursuant to the warrant
("Shares") will be included in the Company's next registration of common stock
following the effective date of this Agreement. The foregoing notwithstanding,
in the event of the termination of your employment for any reason other than
without cause, the Company will have the right to repurchase the Warrant or the
Shares issued upon exercise of the Warrant, which repurchase right will lapse at
the rate of 25% per year over 4 years, as of January Ist of each year following
the date of this Agreement. The repurchase price for the Warrant will be $0.25
per share and the repurchase price for Shares issued upon exercise of the
Warrant will be $1.25 per share. The Warrant and the Company's repurchase rights
will be evidence by separate agreements consistent with the terms of this
Agreement.
2. Section 10d. of the Employment and Compensation Agreement dated
October 2, 1998 between you and the Company is hereby amended in its entirety to
read as follows:
"In the event Employee's employment is terminated by Employer for any
reason other than "just cause" as is defined herein, Employer shall
continue to pay compensation to Employee at his then current total
compensation rate to the later of the expiration of this Agreement or 12
months after the date of termination."
Mr. L. Xxxxxx Xxxxxxx
February 3, 1999
Page 2
3. In consideration for the issuance of the Warrant and for other
valuable consideration, receipt of which is hereby acknowledged, you and the
Company agree that you shall have no further anti-dilution rights pursuant to
the agreement between you and the Company as reflected in that certain Unanimous
Written Consent of the Company's Board of Directors dated January 30, 1996, that
all anti-dilution rights you may have or claim under such understanding will be
satisfied in full by the execution, delivery and performance of this Agreement
by the Company, and further, that such understanding is hereby terminated. You
represent and warrant that you hold no other anti-dilution rights regarding any
Company securities, either directly or indirectly, other than those possessed
generally by employees of the Company pursuant to the Company's standard stock
option agreements.
4. You and the Company agree that the Employment and Compensation
Agreement, as amended in this Agreement, represents and contains all employment
agreements and understandings between you and the Company as of this date.
Please acknowledge your agreement with the foregoing by signing and
return the enclosed copy of this letter.
FINET HOLDINGS CORPORATION
By: /s/ S. Xxxxx Xxxxx
-----------------------------------------
S. Xxxxx Xxxxx
Chairman of the Compensation
Committee of the Board of Directors
Accepted and agreed to this 12th
day of March, 1999: ------
------
/s/ L. Xxxxxx Xxxxxxx
----------------------------------
L. Xxxxxx Xxxxxxx
