EXHIBIT 10.18
EMPLOYMENT AND COMPENSATION AGREEMENT
This Employment and Compensation Agreement (the "Agreement") is entered
into in Contra Costa County, California, as of the 13th day of October, 1998, by
and between Finet Holdings Corporation, a Delaware corporation ("Finet") and
collectively herein ("Employer") and Xxxx X. Xxxxxx ("Employee"), who agree as
follows:
1. EMPLOYMENT.
a. Employer hereby offers Employee employment with Employer, and
Employee hereby accepts employment, commencing on October 13, 1998 on the terms
and conditions contained in this Agreement.
b. Employee shall serve as the sole Chairman and CEO of Finet Holdings
Corporation. 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 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. Location of Employee's employment shall be in the San Francisco Bay
area.
d. Addendums A and B are hereby incorporated into this Agreement.
2. TERM OF EMPLOYMENT. Specified in Addendum A.
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 not
withstanding the foregoing employee may serve on Boards of Directors of other
entities. 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. 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 prior written consent. 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. 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, not including those
on whom he called or whom he solicited or to whom he catered or with whom he
became acquainted prior to his 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.
c. 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 with other employees or representatives
of Employer's business for the purpose of organizing any such competitive
business activity.
d. 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.
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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").
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 reasonable 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, 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".
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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.
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.
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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 a violation of Section(s) 3., 4., 7., 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, whether by
Employer for "just cause", as is defined herein, or 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. In the event Employee's employment is terminated by Employer
without "just cause", or if a person or entity gains ownership of over 35% of
the outstanding shares of Finet, or if responsibilities of employee are
materially modified without Employee's consent, provisions and obligations in
Addendum A shall be applicable. The company shall continue to pay base salary
compensation for the remaining term. All share grants and options or warrants
shall fully vest upon the date of employment termination or acquisition of 35%
of outstanding shares. Employee shall have up to 90 days from termination date
to exercise such options or warrants.
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.
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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 Employee: Xxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
To Employer: President
Finet Holdings Corporation
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
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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/ Xxxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxx
------------------ ------------------
Xxxxxx Xxxxxxx, Xxxx X. Xxxxxx
Chief Executive Officer Finet
By: /s/ S. Xxxxx Xxxxx
------------------
S. Xxxxx Xxxxx,
Co-Chairman
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ADDENDUM A
EMPLOYMENT TERM SHEET
XXXX X. XXXXXX
This agreement between Xxxx Xxxxxx (Xxxxxx), and Xxxxx Holdings
Corporation (Finet) shall define prospective terms of employment.
TERM - The term of this agreement shall be four years. Xxxxxx shall be
provided an "Evergreen" clause in said agreement which will automatically renew
agreement for an additional year at the end of each twelve month term.
Agreement shall also provide a 3rd party guarantee of salary for the first
eighteen months; guarantee shall be provided in a mutually acceptable form as
contained in Addendum B attached.
POSITION - Xxxxxx shall be named Finet's Chairman and Chief Executive
Officer.
COMPENSATION - for fiscal year 1999 of contract Xxxxxx shall receive a
base salary of $350,000; for fiscal year 2000, which begins may 1, 1999 base
shall increase to $375,000. Subsequent years Xxxxxx shall receive $25,000 per
year increases.
Xxxxxx shall also receive bonus income of 2% of Finet pre-tax GAAP
profits. Said Bonus shall be calculated and paid on an annual basis.
EQUITY INCENTIVES - Xxxxxx shall receive 500,000 shares of stock and
1,300,000 employee qualified incentive stock options, or warrants. Options
shall be priced based on market price of stock at execution of this agreement.
Both options and stock shall be vested equally over the first four years of
agreement, the first grant upon execution. EI: Upon execution Xxxxxx receives
125,000 shares and 325,000 options or warrants. At the end of each twelve
months for a total of forty-eight months Xxxxxx will receive 93,750 shares and
243,750 options or warrants. Such option price is $0.56 per share. Company
agrees to pay all of Xxxxxx'x income taxes incurred as a result of the grant of
stock options, and/or warrants.
Xxxxxx shall be further granted an anti-dilution provision to this
agreement providing for continual ownership opportunity of Finet in the amount
of 4.0%. Based on full vesting of stock, options or warrant awards, said
provision shall remain in effect for the first four years of this agreement.
BENEFITS - Xxxxxx shall receive standard benefits as provided to other
Finet Holdings Senior Executives; including, medical, dental, life and four
weeks of paid vacation. In addition to standard benefits Xxxxxx shall also be
entitled to an auto allowance of up to $750.00 per month, and short and long
term disability.
INDUSTRY COMMITMENTS - Finet acknowledges Xxxxxx has a commitment to
habitat for Humanity and in fact currently serves as an International Director.
Said commitment
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occupies up to two weeks annually of Xxxxxx'x time. Xxxxxx also serves as a
Director of Headlands Mortgage and may continue at his sole discretion.
ADDITIONAL CAPITAL - Finet acknowledges the importance of infusing
additional capital into company and commits it's best efforts to cause further
investment of up to Ten Million dollars. Finet will raise said money at the
earliest possible date. Xxxxxx agrees to aid Finet in all reasonable ways to
raise said capital; including, Road shows both in the United States and abroad.
Overseas business travel shall be business class.
BOARD MEMBERSHIP - Xxxxxx shall serve as a member and Chairman of the
Board. With Board consent he shall also be entitled the appointment of one
additional Board member.
CHANGE OF CONTROL - This agreement shall provide for change of control
provisions regarding acceleration of salary and vesting.
Agreed by:
/s/ Xxxx Xxxxxx /s/ L. Xxxxxx Xxxxxxx
----------------------------------------
Finet Holdings Corporation
Chief Executive Officer
Dated: October 10, 1998 Dated: October 10, 1998
/s/ S. Xxxxx Xxxxx
----------------------------------------
Finet Holdings Corporation
Co-Chairman of the Board
Dated: October 10, 1998
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FINET HOLDINGS CORPORATION
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
February 3, 1999
Xx. Xxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Dear Xxxx:
This will confirm the following amendments to your employment agreement
with the Finet Holdings Corporation (the "Company") authorized by the
Compensation Committee and agreed to by you today:
11. YOU PRESENTLY HOLD A GRANT (THE "GRANT") OF 375,000 SHARES OF THE
COMPANY'S COMMON STOCK WHICH ARE SUBJECT TO VESTING OVER THE NEXT THREE YEARS.
EFFECTIVE AS OF TODAY, IT IS AGREED THAT THE GRANT IS CANCELED AND YOUR RIGHT TO
RECEIVE THE 375,000 SHARES SURRENDERED. IN CONSIDERATION THEREFOR YOU ARE ISSUED
A NON-QUALIFIED STOCK OPTION TO PURCHASE 375,000 SHARES OF THE COMPANY'S COMMON
STOCK (100% OF PRIOR STOCK GRANT) AT A XXXXX XXXXX OF $1.03) PER SHARE
REPRESENTING THE FAIR MARKET VALUE OF A SHARE OF THE COMPANY'S COMMON STOCK ON
THE DATE HEREOF. THE RIGHT TO EXERCISE THE OPTION WILL VEST AS FOLLOWS:
Date Total Shares Vested
------------------- -------------------------
October 13, 1999 93,750
October 13, 2000 187,500
October 13, 2001 281,250
October 13, 2002 375,000
12. PURSUANT TO THE EMPLOYMENT AND COMPENSATION AGREEMENT DATED OCTOBER 13,
1998 BETWEEN YOU AND THE COMPANY, YOU ARE PROVIDED A "CONTINUAL OWNERSHIP
OPPORTUNITY" IN THE COMPANY OF 4% (THE "ANTI-DILUTION CLAUSE"). AS A RESULT OF
THE ISSUANCE AND SALE OF A SUBSTANTIAL NUMBER OF THE COMPANY'S SHARES OF COMMON
STOCK SINCE THE COMMENCEMENT OF YOUR EMPLOYMENT, WE HAVE AGREED TO "TRUE UP"
YOUR RIGHTS AS OF THE DATE HEREOF. IT IS AGREED THAT IN FULL SATISFACTION OF
YOUR RIGHTS TO DATE UNDER THE ANTIDILUTION CLAUSE, YOU WILL BE ISSUED A NON
QUALIFIED STOCK OPTION TO PURCHASE 2,001,291 SHARES OF THE COMPANY'S COMMON
STOCK AT A XXXXX XXXXX OF $1.03 PER SHARE. THE RIGHT TO EXERCISE THE OPTION WILL
VEST AS FOLLOWS:
Date Total Shares Vested
------------------- -------------------------
February 3, 1999 400,258
October 13, 1999 800,516
October 13, 2000 1,200,774
October 13, 2001 1,601,032
October 13, 2002 2,001,291
13. THE FOREGOING AGREEMENTS WILL BE REFLECTED IN DEFINITIVE AGREEMENTS TO BE
PREPARED BY THE COMPANY'S COUNSEL AND SUBJECT TO REVIEW AND APPROVAL BY YOU AND
YOUR COUNSEL, THE EXPENSE OF WHICH WILL BE BORNE BY THE COMPANY.
Please acknowledge your agreement to and acceptance of 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:
/s/ Xxxx X. Xxxxxx
---------------------------
Xxxx X. Xxxxxx
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