EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of January 9,
2001 between RATEXCHANGE CORPORATION, a Delaware corporation (the "Company"),
and Xxxxxxx X. Xxxxxx (the "Executive"). WHEREAS, the parties desire to enter
into this Agreement setting forth the terms and conditions for the employment
relationship of the Executive with the Company.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Executive is hereby employed as Executive Vice President and
Chief Financial Officer of the Company for a period commencing on the date
hereof and ending three years after the date hereof. As Executive Vice President
and Chief Financial Officer of the Company, the Executive shall handle all
day-to-day activities of the Company as customarily performed by persons serving
in such capacities. He shall also perform such other duties as the Board of
Directors of the Company may from time to time direct. The Executive agrees to
serve the Company faithfully and to the best of his ability and to devote his
full time, attention and efforts to the business and affairs of the Company
during the term of his employment. The Executive hereby confirms that he is
under no contractua1 commitments inconsistent with his obligations set forth in
this Agreement. The Executive shall be entitled without prior written consent to
hold positions on the Board of Directors of entities that do not compete with
the Company. The Executive has, as of the date of this Agreement, disclosed to
the Board of Directors of the Company the positions the Executive currently
holds on other Boards of Directors, and the Company has consented to such
positions.
2. Location of Services. During the term of this Agreement, the Executive shall
be principally located at the offices of the Board of Directors of the Company
located in the San Francisco, California metropolitan area.
3. Salary. The Company shall pay the Executive an annual Base Salary equal to
$125,000. The Base Salary of the Executive shall not be decreased at any time
during the term of this Agreement from the amount then in effect unless the
Executive otherwise agrees in writing. Participation in deferred compensation,
discretionary bonus, retirement, and other employee benefit plans and in fringe
benefits shall not reduce the Base Salary. The Base Salary shall be payable to
the Executive not less frequently than monthly.
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4. Bonuses. Upon the signing of this Agreement, the Executive shall be entitled
to receive a bonus of $50,000 if certain events are achieved. A sum of $50,000/3
= $16,667.00 will be earned upon achievement of each of the following three
finance operations milestones.
1. Hiring and training of a qualified CPA controller
2. A renegotiated auditor relationship with goal of reducing annual costs
by 10% or more, and improving RateXchange's status as a valuable
client
3. A coordinated, integrated IR strategy and stock administration plan
The Company's Chairman and CEO may, in his sole discretion, award additional
bonuses to the Executive based upon achievement of Company objectives.
Additional cash and equity incentives to be determined by the CEO predicated on
CFO performance metrics, sourcing and hiring of additional brokers or analysts,
and profitability thereof, and revenue generating activities such as sourcing
and executing deals including private placements, public offerings, M&A
assignments, asset gathering, and the like. These payments will be substantially
in line with what other employees of RateXchange earn for the same activities.
5. Participation in the Executive Benefit Plans. In addition to the benefits
noted below, the Executive shall be entitled to participate, on the same basis
as other executive employees of the Company, in any stock option, stock
purchase, pension, thrift, profit-sharing, group life insurance, medical
coverage, education, or other retirement or employee pension or welfare plan or
benefits that the Company has adopted or may adopt for the benefit of its
employees. The Executive shall be entitled to participate in any fringe
benefits, which are now or may be or become applicable to the Company's
executive employees generally.
The Executive shall promptly be reimbursed for all reasonable expenses which he
may incur in connection with his services hereunder in accordance with the
Company's normal reimbursement policies as established from time to time.
6. Stock Options.
Subject to approval by the Company's Board of Directors, in consideration of the
Executive's acceptance of employment hereunder, the Executive shall be granted
options to purchase an aggregate of 1,000,000 shares of the Company's common
stock, par value $.0001 per share ("Common Stock"), at an exercise price to be
equal to the closing price of the Common Stock as listed on The American Stock
Exchange LLC on January 8, 2002, which was the closing price immediately prior
to the Executive's first day of work at the Company on January 9, 2002, and on
terms to be set forth in one of the Company's standard forms of stock option
agreement to be entered into between the Company and the Executive. (January
8th, 2002 close on AMEX was $0.53) The vesting and amounts of such options shall
be as follows:
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(a) A 450,000 share option grant upon commencement of employment, with one year
cliff vesting on 25% of the option shares, the remainder vesting 1/36th per
month over the following three years.
(b) A 550,000 share option grant upon commencement of employment that will vest
on January 1, 2007. The vesting of these shares will be accelerated with
550,000/3 = 183,333 shares vesting upon achievement of the milestone set
forth below:
(i) Top line annual revenue for RTX Corporation of at least $5million in
any year.
(ii) Two consecutive quarters of EBITDA profitability in any year.
(iii) A share price of at least $1.00 for 10 consecutive trading days in
any year.
7. Sale of the Company.
(a) During the term of this Agreement or the Severance Period (as defined
below), upon (1) a sale of all or substantially all of the assets of the
Company, (2) a merger of the Company with another entity where the Company
is not the surviving entity or where the stockholders of the Company
immediately prior to the merger own less than fifty percent (50%) of the
voting stock of the Company following the merger, (3) a change in the
membership of the Board of Directors such that individuals who, as of the
date hereof, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though the individual were a member of the Incumbent Board, but excluding,
for this purpose, any individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Company's
Board of Directors, the Executive's options that have been granted pursuant
to the terms set forth in this Agreement shall vest as follows:
(i) If an event of change in control as defined above occurs prior to
vesting of at least half of the Executive's Company options, then a
total of one half (1/2) of the Executive's options will accelerate and
vest fully.
(ii) If an event of change in control as defined above occurs after the
Executive has vested on one half (1/2) or more of the Executive's
options, then one half (1/2) of the Executive's then remaining options
will accelerate and vest fully.
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(b) Notwithstanding any other provision of this Agreement or of any other
agreement, contract, or understanding heretofore or hereafter entered into by
the Executive with the Company, except an agreement, contract, or understanding
hereafter entered into that expressly modifies or excludes application of this
paragraph (an "Other Agreement"), and notwithstanding any formal or informal
employment agreement or other arrangement for the direct or indirect provision
of compensation to the Executive (including groups or classes of participants or
beneficiaries of which the Executive is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Executive (a "Benefit Arrangement"), if the Executive is a "disqualified
individual," as defined in Section 280G(c) of the Internal Revenue Code (the
"Code"), any right to receive any payment or other benefit under this Agreement
shall not become exercisable or vested or shall be forfeited to the extent that
such right to exercise, vesting, payment, or benefit, taking into account all
other rights, payments, or benefits to or for the Executive under this
Agreement, all Other Agreements, and all Benefit Arrangements, would cause any
payment or benefit to the Executive under this Agreement to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then
in effect (a "Parachute Payment"). In the event that the receipt of any such
right to exercise, vesting, payment, or benefit under this Agreement, in
conjunction with all other rights, payments, or benefits to or for the Executive
under any Other Agreement or any Benefit Arrangement would cause the Executive
to be considered to have received a Parachute Payment under this Agreement, then
the Executive shall have the right, in the Executive's sole discretion, to
designate those rights, payments, or benefits under this Agreement, any Other
Agreements, and any Benefit Arrangements that should be reduced or eliminated so
as to avoid having the payment or benefit to the Executive under this Agreement
be deemed to be a Parachute Payment.
8. Standards. The Executive shall perform the Executive's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Chairman and CEO and
Board of Directors of the Company. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
Company's industry.
9. Voluntary Absences: Vacations. The Executive shall be entitled to annual paid
vacation of at least four weeks (twenty days) per year or such longer period as
the Board of Directors of the Company may approve. The timing of paid vacations
shall be scheduled in a reasonable manner by the Executive.
10. Termination of Employment.
(a) The Executive may terminate his employment at any time after the 60-day
notice period in Section 11 has elapsed. The Board of Directors of the Company
may terminate the Executive's employment at any time, subject to payment of the
compensation described below.
(b) In the case of (i) any termination other than "termination for cause" as
defined below, or (ii) any termination by the Executive for "Good Reason" as
defined below, the
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Executive shall continue to receive for six months, commencing on the date of
such termination (the "Severance Period"), his full Base Salary, any bonus that
has been earned but not paid before termination of employment, and all other
benefits and compensation that the Executive would have been entitled to under
this Agreement in the absence of termination of employment (collectively, the
"Severance Amount"); provided, further, that all of Executive's options that
have been granted pursuant to the terms set forth in this Agreement shall vest
according to the same definitions as set forth in the change of control
scenarios in points 7.(a)(i) and 7(a)(ii) of the this Agreement.
(c) The Executive shall have no right to receive compensation or other benefits
from the Company for any period after termination for cause by the Company or
termination by the Executive other than termination with good reason, except for
any vested retirement benefits to which the Executive may be entitled under any
qualified employee pension plan maintained by the Company and any deferred
compensation to which the Executive may be entitled. (d) The term "termination
for cause' shall mean termination by the Company because of the Executive's (i)
fraud or material misappropriation with respect to the business or assets of the
Company; (ii) persistent refusal or failure materially to perform his duties and
responsibilities to the Company for a period of at least ten (10) days, which
continues after the Executive receives notice of such refusal or failure; (iii)
conduct that constitutes disloyalty to the Company and which materially xxxxx
the Company or conduct that constitutes breach of fiduciary duty involving
personal profit; (iv) conviction, or the entry of a plea of guilty or nolo
contendere by the Executive, of a felony or crime, or willful violation of any
law, rule, or regulation, involving moral turpitude; (v) the use of drugs or
alcohol which interferes materially with the Executive's performance of his
duties; or (vi) material breach of any provision of this Agreement.
(e) The term resignation for "Good Reason" shall mean that Executive's
resignation occurs within three months of one of the following events: (i) an
involuntary reduction of Executive's job duties or responsibilities; (ii) the
Chairman and CEO or Board decides that Executive report to someone other than
the Chairman and CEO; or (iii) any involuntary reduction of Executive's Base
Compensation.
(f) The Executive's employment pursuant to this Agreement shall terminate
automatically prior to the expiration of the term of this Agreement in the event
of the Executive's death or disability. In the event the Executive's employment
terminates prior to the expiration of the term of this Agreement due to his
death or disability, the Executive shall not be entitled to any further
compensation under the provisions of this Agreement, except for his base salary
earned through the date of termination, and the portion of any bonus which
previously had been approved by the Company but was unpaid as of the Executive's
death or disability. The Executive (or, in the event of death, the Executive's
estate) shall be entitled to such unpaid portion of any approved bonus only if
the Executive (or the authorized representative of the Executive's estate) signs
a comprehensive general release of claims in a form acceptable to Company.
Payments of such approved but unpaid bonus shall not commence until after the
Executive (or the authorized representative of his estate) signs such a release,
and after any revocation period referenced in such release has expired. If the
Executive (or the
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authorized representative of his Estate) does not sign such a general release of
claims, the Executive (or his estate) shall not be entitled to receive any
compensation under the provisions of this Agreement except for the Executive's
base salary earned through the date of death or disability. In the case of
disability, if the Executive violates any of the provisions of Sections 13 or 14
of this Agreement, the Company's obligations to pay the unpaid portion of any
approved Bonus to the Executive shall cease on the date of such violation.
11. Termination by the Executive. The Executive may terminate his employment at
any time during the term of this Agreement by giving sixty (60) days' prior
written notice thereof to the Board of Directors of the Company. In the event of
termination by the Executive under this Section 11, the Company may at its
option elect to have the Executive cease to provide services immediately,
provided that during such 60-day notice period the Executive shall be entitled
to continue to receive his base salary.
12. Return of Proprietary Property. The Executive agrees that all property in
the Executive's possession that he obtains or is assigned in the course of his
employment with the Company, including, without limitation, all documents,
reports, manuals, memoranda, customer lists, credit cards, keys, access cards,
and all other property relating in any way to the business of the Company, is
the exclusive property of the Company, even if the Executive authored, created,
or assisted in authoring or creating such property. The Executive shall return
to the Company all such property immediately upon termination of employment or
at such earlier time as the Company may request. 13. Confidential Information.
Except as permitted or directed by the Board of Directors of the Company, during
the time the Executive is employed by the Company or at any time thereafter, the
Executive shall not divulge, furnish, or make accessible to anyone or use in any
way (other than in the ordinary course of the business of the Company) any
confidential or secret information or knowledge of the Company, whether
developed by himself or by others. Such confidential and/or secret information
encompassed by this Section 13 includes, but is not limited to, the Company's
customer and supplier lists, business plans, and financial, marketing, and
personnel information. The Executive agrees to refrain from any acts or
omissions that would reduce the value of any confidential or secret knowledge or
information to the Company, both during his employment hereunder and at any time
after the termination of his employment. The Executive's obligations of
confidentiality under this Section 13 shall not apply to any knowledge or
information that is now published publicly or that subsequently becomes
generally publicly known, other than as a direct or indirect result of a breach
of this Agreement by the Executive.
14. Patent and Related Matters.
(a) The Executive agrees to promptly disclose in writing to the Company complete
information concerning each and every invention, discovery, improvement, device,
design, process, or product made, developed, perfected, devised, conceived, or
first
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reduced to practice by the Executive, either solely or in collaboration with
others, during the Executive's term of employment by the Company, or within six
months thereafter, relating to the business, products, practices, or techniques
of the Company (hereinafter referred to as "Developments"). The Executive, to
the extent that the Executive has the legal right to do so, hereby acknowledges
that any and all of said Developments are the property of the Company and hereby
assigns and agrees to assign to the Company any and all of the Executive's
right, title, and interest in and to any and all of such Developments.
(b) The provisions of this Section 14 shall not apply to any Development meeting
the following conditions:
(i) such Development was developed entirely on the Executive's own time; and
(ii) such Development was made without the use of any Company equipment,
supplies, facilities, or trade secret information; and such Development does not
relate at the time of conception or reduction to practice to (i) to the business
of the Company, or (ii) to the Company's actual or demonstrably anticipated
research or development; and
(iii) such Development does not result from any work performed by the Executive
for the Company. (c) Upon request and without further compensation therefore,
but at no expense to the Executive, and whether during the term of the
Executive's employment by the Company or thereafter, the Executive will do all
lawful acts, including, but not limited to, the execution of papers and the
giving of testimony, that in the opinion of the Company, its successors, or
assigns, may be necessary or desirable in obtaining, sustaining, reissuing,
extending, or enforcing Letters Patent, and for perfecting, affirming, and
recording the Company's complete ownership and title thereto, and to cooperate
otherwise in all proceedings and matters relating thereto.
15. Restrictive Covenants.
(a) During the employment of the Executive under this Agreement and for a period
of six (6) months after termination of such employment, the Executive shall not
at any time (i) compete on his own behalf, or on behalf of any other person or
entity, with the Company or any of its affiliates within all territories in
which the Company does business with respect to the business of the Company or
any of its affiliates as such business shall be conducted on the date hereof or
during the employment of the Executive under this Agreement; (ii) solicit or
induce, on his own behalf or on behalf of any other person or entity, any
employee of the Company or any of its affiliates to leave the employ of the
Company or any of its affiliates; or (iii) solicit or induce, on his own behalf
or on behalf of any other person or entity, any customer of the Company or any
of its affiliates to reduce its business with the Company or any of its
affiliates.
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(b) The Executive shall not at any time during or subsequent to his employment
by the Company, on his own behalf or on behalf of any other person or entity,
disclose any proprietary information of the Company or any of its affiliates to
any other person or entity other than on behalf of the Company or in conducting
its business, and the Executive shall not use any such proprietary information
for his own personal advantage or make such proprietary information available to
others for use, unless such information shall have come into the public domain
other than through unauthorized disclosure.
(c) The ownership by the Executive of not more than 5% of a corporation,
partnership or other enterprise shall not constitute a violation hereof.
(d) If any portion of this Section 15 is found by a court of competent
jurisdiction to be invalid or unenforceable, but would be valid and enforceable
if modified, this Section 15 shall apply with such modifications necessary to
make this Section 15 valid and enforceable. Any portion of this Section 15 not
required to be so modified shall remain in full force and effect and not be
affected thereby. The Executive agrees that the Company shall have the right of
specific performance in the event of a breach by the Executive of this Section
15.
16. Assignment. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company. The Executive may not assign this Agreement or any
rights hereunder. Any purported or attempted assignment or transfer by the
Executive of this Agreement or any of the Executive's duties, responsibilities,
or obligations hereunder shall be void.
17. Company Remedies. The Executive acknowledges that the remedy at law for any
breach of any of the provisions of Sections 12, 13 or 15 will be inadequate, and
that the Company shall be entitled, in addition to any remedy at law or in
equity, to preliminary and permanent injunctive relief and specific performance.
18. Other Contracts. The Executive shall not, during the term of this Agreement,
have any other paid employment other than with a subsidiary of the Company,
except with the prior approval of the Board of Directors.
19. Notices. All notices, requests, demands, consents, or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered by overnight courier or express mail
service or by postage prepaid registered or certified mail, return receipt
requested (the return receipt constituting prima facie evidence the giving of
such notice request, demand or other communication), by personal delivery, or by
fax with confirmation of receipt and a copy mailed with postage prepaid, to the
following address or such other address of which a party may subsequently give
notice to the other party in accord with the provisions of this Section. Notice
is effective immediately if by personal delivery or by fax with confirmation
received and a copy mailed the same day. Notice sent by overnight courier or by
registered or certified mail is effective the earlier of actual receipt or the
fifth date after the date mailed as evidenced by the sender's certified or
registered receipt.
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To the Company: RateXchange Corporation
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Chairman
To Employee: Xxxxxxx X. Xxxxxx
0 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
20. Attorneys Fees. Should any party hereto retain counsel for the purpose of
enforcing, or preventing the breach of, any provision hereof including, but not
limited to, the institution of any action or proceeding, whether by arbitration,
judicial or quasi-judicial action, or otherwise, to enforce any provision
hereof, or for damages for any alleged breach of any provision hereof, or for a
declaration of such party's rights or obligations hereunder, then whether the
matter is settled by negotiation, or by arbitration or judicial determination,
the prevailing party shall be entitled to be reimbursed by the losing party for
all costs and expenses incurred thereby, including, but not limited to,
reasonable attorney's fees for the services rendered to such prevailing party.
22. Amendments or Additions. No amendments or additions to this Agreement shall
be binding unless in writing and signed by all parties hereto.
23. Section Headings. The section 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.
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24. 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.
25. Governing Law. This Agreement shall be governed by the laws of the State of
Delaware (other than the choice of law rules thereof).
RATEXCHANGE CORPORATION
By: D. Xxxxxxxx Xxxxxxxx
Chairman & CEO
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Signed:
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Title: Executive Vice President and Chief Financial Officer
By: Xxxxxxx X. Xxxxxx
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Signed:
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