EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (" Agreement"), effective as of March -, 2000
(the "Effective Date"), is entered into by and between Referral Finance.com
Corporation (the "Company") and Glenn A. LaPointe (the "Employee").
RECITALS
WHEREAS, the Board of Directors of the Company ("Board of Directors")
recognizes that the possibility of a change in control of the Company may exist
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of key management
personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of the
Company to enter into this Agreement with the Employee in order to assure
continuity of management of the Company and to reinforce and encourage the
continued attention and dedication of the Employee to the Employee's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company, although no
such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution
of this Agreement with the Employee to take effect as stated in Section 2
hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is agreed as follows:
1. Definitions.
1.1 Change In Control. The term "Change in Control" means (a) an event
of a nature that would be required to be reported in response to Item 1 of
the current report on Form 8- K, as in effect on the date hereof, pursuant
to Section 13 or 15( d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); (b) any person (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly of securities
of the Company representing twenty percent (20%) or more of the Company's
outstanding securities; (c) individuals who are members of the Board of
Directors on the date hereof (the "Incumbent Board") cease for any reason
to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-fourths (3/4ths) of the directors
comprising the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the nominating committee serving
under an Incumbent Board, shall be considered a member of the Incumbent
Board; or (d) a reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Company or a similar transaction in
which the Company is not the resulting entity. The term "Change in Control"
shall not include an acquisition of securities by an employee benefit plan
of the Company.
1.2 Date of Termination. The term "Date of Termination" means the date
upon which the Employee ceases to serve as an employee of the Company.
1.3 Effective Date. The term "Effective Date" means March 1,2000.
1.4 Involuntary Termination. The term "Involuntary Termination" means
termination of the employment of Employee without the Employee's express
written consent, and shall include a material diminution of or interference
with the Employee's duties, responsibilities and benefits as President and
Chief Executive Officer of the Company, including, without limitation, any
of the following actions unless consented to in writing by the Employee:
(a) a change in the principal
-1-
workplace of the Employee to a location outside of a thirty (30) mile
radius from the Company's headquarters office as of the date hereof; (b) a
material demotion of the Employee;(c) a material reduction in the number or
seniority of other personnel reporting to the Employee or a material
reduction in the frequency with which, or in the nature of the matters with
respect to which, such personnel are to report to the Employee, other than
as part of a Company-wide reduction in staff; (d) a material adverse change
in the Employee's salary, perquisites, benefits, contingent benefits or
vacation, other than as part of an overall program applied uniformly and
with equitable effect to all members of the senior management of the
Company; and (e) a material permanent increase in the required hours of
work or the workload of the Employee. The term "Involuntary Termination"
does not include Termination for Cause or termination of employment due to
retirement, death, disability or suspension or temporary or permanent
prohibition from participation in the conduct of the Company's affairs
under applicable law.
1.5 Termination for Cause. The terms "Termination for Cause" and
"Terminated for Cause" mean termination of the employment of the Employee
because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of a fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. The Employee shall not be deemed to have been Terminated for
Cause unless and until there shall have been delivered to the Employee a
copy of a resolution, duly adopted by the affirmative vote of not less than
a majority of the entire membership of the Board of Directors at a meeting
of the Board called and held for such purpose (after reasonable notice to
the Employee. and an opportunity for the Employee, together with- the
Employee's counsel, to be heard before the Board), stating that in the good
faith opinion of the Board the Employee has engaged in conduct described in
the preceding sentence and specifying the particulars thereof in detail.
2. Term. The term of this Agreement shall b~ the period of three years
commencing on the Effective Date unless extended as provided herein and subject
to earlier termination as provided herein. Beginning on the first anniversary of
the Commencement Date and on each anniversary thereafter, the term of this
Agreement shall be extended for a period of one year in addition to the
then-remaining term; provided that (a) the Company has not given notice to the
Employee in writing at least sixty (60) days prior to such date that the term of
this Agreement shall not be extended further; and (b ) prior to such date, the
Board of Directors explicitly reviews and approves the extension. Reference
herein to the term of this Agreement shall refer to both such initial term and
such extended terms. Notwithstanding the foregoing, in the event that there is
no net increase in operating profits of the Company for two consecutive years,
the Board of Directors may terminate this Agreement with no obligation to the
Employee on the part of the Company.
3. Employment. The Employee is employed as President and Chief Executive
Officer of the Company. As such, the Employee shall render administrative and
management services for the Company and its subsidiaries as are customarily
performed by persons situated in similar executive capacities, and shall have
such other powers and duties the Board of Directors may prescribe from time to
time.
4. Compensation.
4.1 Salary. The Company agrees to pay the Employee during the term of
this Agreement an annual salary of $120,000.00. The amount of the
Employee's salary shall be reviewed annually by the Board of Directors.
Adjustments in salary or other compensation shall not limit or reduce any
other obligation of the Company under this Agreement. The Employee's salary
in effect from time to time during the term of this Agreement shall not
thereafter be reduced.
4.2 Bonuses. The Employee shall be entitled to an annual bonus for
fiscal years 2000, 2000 and 2001, payable within thirty (30) days after the
completion of the Company's annual audit (the" Audit"), equal to twelve
percent (12%) of the excess of (a) the Company's net income for any such
year as reported in the Audit over (b) $50,000.00, as calculated
-2-
without regard to (i) any change in accounting principals after March
1,2000, (ii) any extraordinary items, (iii) any gain or loss from the sale
of securities, physical assets or deposits, or (iv) any other item which,
in the reasonable judgment of the Board of Directors, did not arise in the
ordinary course of business.
4.3 Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in
performing services under this Agreement in accordance with the policies
and procedures applicable to the executive officers, provided that the
Employee accounts for such expenses as required under such policies and
procedures.
5. Benefits. .
5.1 Participation in Retirement and Employee Benefit Plans. The
Employee shall be entitled to participate in all plans relating to pension,
thrift, profit-sharing, group life insurance, medical and dental coverage,
education, and other retirement or employee benefits or combinations
thereof, in which all executive officers participate.
5.2 Fringe Benefits. The Employee shall be eligible to participate in,
and receive benefits under, any fringe benefit plans which are or may
become applicable to all executive officers. Employee shall also receive an
automobile allowance of no more than $750.00 per month.
6. Vacations: Leave. The Employee shall be entitled to four non-consecutive
weeks of paid vacation, no more than two of which shall be consecutive.
7. Termination of Employment.
7.1 Involuntary Termination. The Board of Directors may terminate the
Employee's employment at any time but, except in the case of Termination
for Cause, termination of employment shall not prejudice the Employee's
right to compensation or other benefits under this Agreement. Except as
provided in Section 2 of this Agreement, in the event of Involuntary
Termination other than in connection with or within twelve (12) months
after a Change in Control, the Company shall, during the twelve "(12)
months following the Date of Termination, (a) pay to the Employee the
Employee's salary at the rate in effect immediately prior to the Date of
TenI1ination, in such manner and at such times as such salary would have
been payable if the Employee had continued to be employed under this
Agreement, and (b ) provide to the Employee health benefits as maintained
for the benefit of executive officers from time to time during such
periods; provided, that the Company's obligations under this Section 7.1
shall be reduced to the extent that the Employee earns salary and receives
substantially similar health benefits from another employer during such
period.
7.2 Termination for Cause. In the event of TenI1ination for Cause, the
Company shall pay the Employee the Employee's salary through the Date of
Termination, and the Company shall have no further obligation to the
Employee under this Agreement.
7.3 Voluntary TenI1ination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon sixty (60) days'
written notice or such shorter period as may be agreed upon between the
Employee and the Board of Directors. In the event of such voluntary
termination, the Company shall be obligated to continue to pay to the
Employee the Employee's salary and benefits only through the Date of
TenI1ination, at the time such payments are due, and the Company shall have
no further obligation to the Employee under this Agreement.
7.4 Change in Control. Except as provided in Section 2 of this
Agreement, in the event of Involuntary Termination in connection with or
within twelve (12) months after a Change in Control which occurs at any
time while the Employee is employed under this Agreement, the Company
shall, subject to Section 8 of this Agreement, (a) pay to the Employee in a
lump sum in cash within twenty-five (25) business days after the Date of
Termination an amount equal to two
-3-
hundred ninety-nine percent (299%) of the, Employee's "base amount" as
defined in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"); and (b) provide to the Employee during the remaining term of
this Agreement such health benefits as are maintained for executive
officers from time to time during the remaining Term of this Agreement or
substantially the same health benefits as were maintained for its executive
officers immediately prior to the Date of Termination.
7.5 Death: Disability. In the event of the death of the Employee while
employed under this Agreement and prior to any termination of employment,
the Employee's estate, or such person as the Employee may have previously
designated in writing, shall be entitled to receive the salary of the
Employee through the day on which the Employee died. If the Employee
becomes disabled, as such Term is defined in the Company's then current
disability plan, if any, or if the Employee is otherwise unable to serve as
President and Chief Executive Officer of the Company, the Employee shall be
entitled to receive group and other disability income benefits of the type,
if any, then provided for executive officers.
7.6 Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the
Company's affairs by a notice served under law applicable to the Employee's
conduct, the Company's obligations under this Agreement shall be suspended
as of the date of service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Company may in its discretion (a)
pay the Employee all or part of the compensation withheld while its
obligations under this Agreement were suspended and (b ) reinstate in whole
or in part any of its obligations which were suspended.
7.7 Permanent Suspension or Prohibition. If the Employee is removed
and/or permanently prohibited from participating in the conduct of the
Company's affairs by an order issued under law applicable to the Employee's
conduct, all obligations of the Company under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
8. Confidential Information. The Employee acknowledges that in the course
of his employment, he will have access to and become informed of confidential
and secret information which is a competitive asset of the Company and its
subsidiaries ("Confidential Information"), including, without limitation, (a)
the terms of any agreement between the Company or any subsidiary thereof and any
employee, customer or supplier, (b) pricing strategy, (c) merchandising and
marketing methods, (d) product development ideas and strategies, (e) financial
results, (1) strategic plans and demographic analyses, and (g) any non- public
information concerning the Company or any of its subsidiaries, or their
respective employees, suppliers or customers. The Employee agrees that he will
keep all Confidential Information in strict confidence and will not make known,
divulge, reveal, furnish, make available, or use any Confidential Information
that could. materially affect the operations, profitability or reputation of the
Company or any of its subsidiaries ( except in the course of his regular
authorized duties). The Employee may disclose information as required by law
(after giving the Company notice and opportunity to contest such requirement).
The Employee's obligations under this Section 8 are in addition to, and not in
limitation of or preemption of, all other obligations of confidentiality which
the Employee may have to the Company and its subsidiaries under general legal or
equitable principles-
9. No Assignment.
9.1 Consent Required. This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of its rights
or obligations hereunder without first obtaining the written consent of the
other party; provided, however, that the Company shall require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by an assumption agreement in form and
substance satisfactory to. the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or
-4-
assignment had taken place. Failure of the Company to obtain such an
assumption agreement prior to the effectiveness of any such succession or
assignment shall be a breach of this Agreement and shall entitle the
Employee to compensation in the same amount and on the same terms as the
compensation pursuant to Section 7.4 hereof. For purposes of implementing
the provisions of this Section 9.1, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
9.2 Benefits. This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal
and legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the
Employee's devisee, legatee or other designee or if there is no such
designee, to the Employee's estate.
10. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, via facsimile
transmission or mailed first-class, postage prepaid, registered or certified
mail as follows:
(a) If to the Company:
Referral Finance.com Corporation
6200 LaCalma, Suite 201
Austin, Texas 78752
Phone: 512/
----------------------------------
Fax: 512/
----------------------------------
-5-
(b) If to the Employee:
Glenn A. LaPointe
9002 Jolly Hollow Dr.
Austin, Texas 78750
Phone: 512/
------------------------------------
Fax: 512/
-------------------------------------
11. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
12. Headings. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
13. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
14. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Texas.
15. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the transaction described herein and contains all the covenants and
agreements between the parties with respect to the transaction described herein.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
REFERRAL FINANCE.COM CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
--------------------------------
--------------------------------
Glenn A. LaPointe
-6-
