EXECUTION COPY
EMPLOYMENT AGREEMENT
(Xxxxxx Xxxxxx)
This Employment Agreement ("Agreement") is entered into effective as of
September 15, 1999, by and between RateXchange, Inc., (the "Company"), a wholly
owned subsidiary of XxxXxxxxxx.xxx, Inc. ("XxxXxxxxxx.xxx"), and Xxxxxx Xxxxxx
("Employee"). The Company and Employee agree as follows:
1. Employment. The Company hereby employs Employee, and Employee
accepts such employment, upon the terms and conditions set forth in this
Agreement.
2. Position and Duties. During Employee's employment hereunder, he
shall serve as the Company's Chief Executive Officer, and shall perform such
employment duties as the Company shall assign to him from time to time. In
addition, Employee shall serve as the Chairman of the Board of Directors of the
Company, upon his nomination and election, or appointment, in accordance with
the Company's by laws. Employee also agrees to serve on the XxxXxxxxxx.xxx Board
of Directors immediately upon appointment by the Board of Directors of
XxxXxxxxxx.xxx ("NetAmerica Board") to serve the remaining term of a vacant
position on such Board. Thereafter, it is expected that the NetAmerica Board
will recommend to the shareholders Employee's election at the annual meeting to
serve a full term on the Board. Upon termination of Employee's employment, for
whatever reason, Employee agrees to resign immediately from the Boards of
Directors of the Company and XxxXxxxxxx.xxx.
Employee 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. Employee hereby
confirms that he is under no contractual commitments inconsistent with his
obligations set forth in this Agreement. Employee agrees that, during the term
of this Agreement, he will not render or perform any services for any
corporation, firm, entity or person, other than the Company and XxxXxxxxxx.xxx,
without the written consent of the Company, except that Employee shall be
entitled without prior written consent to hold positions on the Board of
Directors of entities that do not compete with the Company. Employee has, as of
the date of this Agreement, disclosed to the Board of Directors of the Company
the positions Employee currently holds on other Boards of Directors, and the
Company has consented to such positions.
3. Term. Unless terminated at an earlier date in accordance with
Section 5 of this Agreement, the term of this Agreement shall be from September
15, 1999, to September 14, 2002 (the "Term").
4. Compensation. As compensation for all services to be rendered by
Employee under this Agreement, the Company shall provide to Employee the
following:
4.01 Base Salary. The Company shall pay to Employee an annual
base salary of $300,000, less legally required deductions and
authorized withholdings, payable in periodic installments in accordance
with the standard payroll practices of the Company in effect from time
to time. Employee shall be eligible for annual salary increases which
shall be determined by the Company in its sole discretion.
4.02 Incentive Bonus. Employee shall be eligible for an annual
incentive bonus ("Bonus") of up to 50% of his annual base salary, less
legally required or legally authorized deductions and withholdings. The
amount of any Bonus paid to Employee shall be based upon criteria upon
which the Employee and the Company shall mutually agree, except that
Employee shall be guaranteed a Bonus of $150,000 for the first year of
the term of this Agreement, as follows: (a) 50% of such guaranteed
Bonus shall be due upon execution of this Agreement; and (b) the
remaining 50% of such guaranteed Bonus shall be paid to Employee on or
about September 14, 2000, provided Employee has remained employed
continuously for the first year of the Term, and has not been
terminated for Cause, as defined in this Agreement, during that first
year. The amount of any Bonus payable to Employee for the remaining
years of the Term shall be determined by the Company in its sole
discretion, based upon the eligibility criteria upon which the Company
and Employee have agreed.
4.03 Equity Position. The Company agrees to make available to
Employee stock equal to 10 % of the common shares of Company stock
outstanding as of the date of execution of this Agreement. The Company
and Employee agree to work cooperatively to design and implement a
stock plan and/or other executive compensation arrangement as soon as
administratively possible to provide Employee with such Company stock,
taking into account Employee's tax objectives. Employee shall be
entitled to receive such shares of Company stock pursuant to either:
(i) the grant of options to acquire such shares, such options to be fully
(100%) vested at the time of grant, or
(ii) the issuance and/or transfer by the Company of shares of Company stock to
Employee, or
(iii) such other arrangement which is mutually agreed upon by Employee and the
Company.
If the Company does not pursue independent financing, the
Company and Employee intend that Employee shall receive, or have the
option to acquire, stock in XxxXxxxxxx.xxx in an amount equal to 10% of
the outstanding common stock of XxxXxxxxxx.xxx as of the date of
execution of this Agreement. Such ownership interest in XxxXxxxxxx.xxx
would be in lieu of the ownership interest in the Company as described
above in this Section 4.03. To that end, the Company and Employee agree
to work cooperatively to structure a stock plan or other arrangement
which will permit, under certain circumstances, the conversion of
Employee's ownership rights or interests in the Company to comparable
interests in XxxXxxxxxx.xxx, as permitted under applicable tax,
corporate and securities laws, and taking into consideration Employee's
tax objectives.
4.04 Employee Benefits; Automobile Allowance. The Company
shall reimburse Employee for costs incurred by him for disability and
life insurance for himself, and for health insurance for himself and
his dependents, and shall provide an automobile allowance, the total of
such reimbursed costs and auto allowance not to exceed $2,000 per
month. In addition, Employee shall be entitled to participate in all
employee benefit plans or programs which are established by the Company
to the extent that his position, title, tenure, salary, health, and
other qualifications make him eligible to participate. Employee's
participation in any such plan or program shall be subject to the
provisions, rules, and regulations applicable thereto, as the same may
be amended from time to time. The Company does not guarantee the
adoption or continuance of any particular employee benefit plan or
program, and nothing in this Agreement is intended to, or shall in any
way restrict the right of the Company, to amend, modify or terminate
any of its benefits during the term of Employee's employment.
4.05 Entertainment Expenses. The Company shall pay or
reimburse Employee for job-related entertainment expenses in the nature
of tickets to sporting events or similar entertainment, in a minimum
amount of $5,000 annually, and for other expenses in keeping with the
Company's policies.
5. Termination.
5.01 Termination Due to Employee's Death or Disability.
Employee's employment pursuant to this Agreement shall terminate
automatically prior to the expiration of the Term in the event of
Employee's death or Disability, as defined herein. "Disability" shall
mean a physical or mental impairment of Employee which results in
Employee's inability to perform one or more of the essential functions
of Employee's position, with or without reasonable accommodation,
provided Employee has exhausted Employee's entitlement to any
applicable leave, if Employee desires to take such leave and satisfies
all eligibility requirements for such leave.
5.02 Termination by the Company for Cause. Employee's
employment pursuant to this Agreement shall terminate prior to the
expiration of the Term in the event that there is "Cause" to terminate
Employee's employment, which shall be defined as any of the following:
(i) Employee's material breach of any obligation to the
Company under the terms of this Agreement;
(ii) Employee's conviction, or the entry of a plea of
guilty or nolo contendere by Employee, of any crime
involving moral turpitude or any felony;
(iii) Any acts of Employee constituting gross negligence or
misconduct in connection with his employment with the
Company, or Employee's breach of any fiduciary duty
to the Company or to XxxXxxxxxx.xxx; or
(iv) Employee's failure to carry out any reasonable
directive of the Company or XxxXxxxxxx.xxx, any
conduct by Employee which is detrimental to the
Company or XxxXxxxxxx.xxx, or any failure by Employee
to comply with any of the policies or performance
standards of the Company or, as applicable,
XxxXxxxxxx.xxx.
The Company's determination that there is Cause to terminate
Employee's employment shall be subject to the dispute resolution
procedures pursuant to Section 16 of this Agreement.
5.03 Termination by the Company without Cause. The Company may
terminate Employee's employment at any time prior to the expiration of
the Term for any reason, including a sale, merger, or change of control
in the ownership of the Company, and without prior notice, provided the
Company pays to Employee the severance pay described in Section 5.05.4.
5.04 Termination by Employee. Employee may terminate his
employment at any time during the term of this Agreement by giving
sixty (60) days' prior written notice thereof to the Company's Board of
Directors. In the event of termination by Employee under this Section
5.04, the Company may at its option elect to have Employee cease to
provide services immediately, provided that during such 60-day notice
period Employee shall be entitled to continue to receive his base
salary.
5.05 Effect of Termination.
5.5.1 Survival of Provisions. Notwithstanding any
termination or expiration of this Agreement, or any
termination of Employee's employment with the Company
pursuant to this Section 5, Employee, in
consideration of Employee's employment hereunder to
the date of such termination or expiration, shall
remain bound by the provisions of this Agreement
which specifically relate to periods, activities or
obligations upon or subsequent to the termination of
Employee's employment, including, but not limited to,
the provisions of Sections 6, 7, and 8.
5.5.1 Termination due to Death or Disability. In the
event Employee's employment terminates prior to the
expiration of the Term due to his death or
Disability, Employee 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
annual Incentive Bonus under Section 4.02 of this
Agreement which previously had been approved by the
Company but was unpaid as of Employee's death or
Disability. Employee (or, in the event of death,
Employee's estate) shall be entitled to such unpaid
portion of any approved annual Incentive Bonus only
if Employee (or the authorized representative of
Employee's estate) signs a comprehensive general
release of claims in a form acceptable to the
Company. Payments of such approved but unpaid annual
Incentive Bonus shall not commence until after
Employee (or the authorized representative of his
estate) signs such a release, and after any
revocation period referenced in such release has
expired. If Employee (or the authorized
representative of his Estate) does not sign such a
general release of claims, Employee (or his estate)
shall not be entitled to receive any compensation
under the provisions of this Agreement except for
Employee's base salary earned through the date of
death or Disability. In the case of Disability, if
Employee violates any of the provisions of Sections 7
or 8 of this Agreement, the Company's obligations to
pay the unpaid portion of any approved annual
Incentive Bonus to Employee shall cease on the date
of such violation.
5.05.3 Termination for Cause. In the event of a termination
for Cause under Section 5.02, Employee shall not be
entitled to receive any further compensation under
the provisions of this Agreement, except for his base
salary earned through the date of termination.
5.05.4 Termination without Cause. In the event of
termination without Cause under Section 5.03,
Employee shall be entitled to severance pay
consisting of the following: (1) base salary
continuation for 12 months following the date of
termination, at the rate in effect at the time of
termination, which shall be paid on the Company's
regular paydays; and (2) a lump sum payment of
$150,000. Employee shall only be entitled to the
foregoing severance pay if Employee signs a
comprehensive general release of claims in a form
acceptable to the Company. Employee's severance pay
shall not commence until the first payday after
Employee signs such a release, and after any
revocation period referenced in such release has
expired. If Employee does not sign such a general
release of claims, Employee shall not be entitled to
receive any compensation under the provisions of this
Agreement except for his base salary earned through
the date of termination. If Employee violates any of
the provisions of Sections 7 or 8 of this Agreement,
the Company's obligations to pay severance pay to
Employee shall cease on the date of such violation.
5.05.5 Termination Occasioned by Employee. In the event
Employee terminates his employment under Section
5.04, Employee shall not be entitled to receive any
further compensation under the provisions of this
Agreement, except for his base salary earned through
the date of termination.
6. Return of Proprietary Property. Employee agrees that all property in
Employee'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 Employee authored, created, or
assisted in authoring or creating such property. Employee shall return to the
Company all such property immediately upon termination of employment or at such
earlier time as the Company may request.
7. Confidential Information. Except as permitted or directed by the
Company's Board of Directors, during the time Employee is employed by the
Company or at any time thereafter, Employee 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 7 includes, but is not limited
to, the Company's customer and supplier lists, business plans, and financial,
marketing, and personnel information. Employee 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. Employee's obligations of
confidentiality under this Section 7 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 Employee.
8. Patent and Related Matters.
8.01 Disclosure and Assignment. Employee 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
reduced to practice by Employee, either solely or in collaboration with
others, during Employee'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").
Employee, to the extent that Employee 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 Employee's right, title and interest in and to
any and all of such Developments.
8.02 Limitation The provisions of this Section 8 shall not
apply to any Development meeting the following conditions:
(i) such Development was developed entirely on Employee's own
time; and
(ii) such Development was made without the use of any Company
equipment, supplies, facilities or trade secret information;
and
(iii) such Development does not relate at the time of conception
or reduction to practice to (a) to the business of the
Company, or (b) to the Company's actual or demonstrably
anticipated research or development; and
(iv) such Development does not result from any work performed by
Employee for the Company.
8.03 Assistance of Employee. Upon request and without
further compensation therefor, but at no expense to Employee, and
whether during the term of Employee's employment by the Company or
thereafter, Employee 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 and 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.
9. Confidentiality of this Agreement. Employee agrees to keep the terms
of this Agreement confidential, and not to disclose such terms to any other
RateXchange, Inc. or XxxXxxxxxx.xxx employee, other than authorized members of
the respective Boards of Directors of the Company and RateXchange, Inc.
10. 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. Employee may not assign this Agreement or any rights
hereunder. Any purported or attempted assignment or transfer by Employee of this
Agreement or any of Employee's duties, responsibilities, or obligations
hereunder shall be void.
11. Governing Law, Construction and Severability. This Agreement is
made under and shall be governed by and construed in accordance with the laws of
the State of California. In the event any provision of this Agreement (or
portion thereof) shall be held illegal or invalid for any reason, said
illegality or invalidity will not in any way affect the legality or validity of
any other provision (or portion thereof) of this Agreement.
12. Company Remedies. Employee acknowledges that the remedy at law for
any breach of any of the provisions of Sections 6 or 7 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.
13. Entire Agreement. This Agreement contains the entire agreement
between the Company and Employee with respect to his employment by the Company
and there are no undertakings, covenants, or commitments other than as set forth
herein. This Agreement may not be altered or amended, except by a writing
executed by the party against whom such alteration or amendment is to be
enforced. This Agreement supersedes, terminates, replaces, and supplants any and
all prior understandings or agreements between the parties relating in any way
to the hiring or employment of Employee by the Company, including but not
limited to, the offer letter from the Company to Employee dated September 8,
1999.
14. Counterparts. This Agreement may be simultaneously executed in any
number of counterparts, and such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.
15. Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof, or the exercise of any
other right or remedy granted hereby or by any related document or by law. No
single or partial waiver of rights or remedies hereunder, nor any course of
conduct of the parties, shall be construed as a waiver of rights or remedies by
either party (other than as expressly and specifically waived).
16. Dispute Resolution. Any controversy, claim or dispute of whatever
nature arising out of or relating to this Agreement or Employee's employment,
including but not limited to discrimination claims, whether such controversy,
claim or dispute is based on statute, contract, tort, common law or otherwise,
and whether such controversy, claim or dispute existed prior to or arises after
the date of this Agreement (any such controversy, claim or dispute being a
"Dispute"), shall be resolved in accordance with the procedures set forth in
this Section 16, which procedures shall be the sole and exclusive procedures for
the resolution of any Disputes (except as otherwise provided in Section 12).
All Disputes shall be resolved by arbitration in San
Francisco, California, in accordance with the then current Non-Administered
International Arbitration Rules & Commentary of the CPR Institute by a sole
arbitrator who has had both training and experience as an arbitrator of general
corporate, commercial and employment matters and who is and for at least ten
years has been a partner, shareholder or member in a law firm. If the Company
and Employee cannot agree on an arbitrator, then the arbitrator shall be
selected by the President of the CPR Institute in accordance with the criteria
set forth in the preceding sentence. The arbitrator may decide any issue as to
whether, or as to the extent to which, any Dispute is subject to the arbitration
and other Dispute resolution provisions in this Agreement. The arbitrator must:
(i) base and render his or her award on the provisions of this Agreement or
applicable law and (ii) render his or her award in writing including an
explanation of the reasons for such award and the provisions of this Agreement
supporting such award. Judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The statute of limitations
applicable to the commencement of a lawsuit shall apply to the commencement of
an arbitration under this subsection. The Employee acknowledges and agrees that
the Employee has been given the opportunity to negotiate this provision. No
exercise of any rights under this Section 16 shall limit the right of the
Company or the Employee pursuant to this Agreement to commence any judicial
proceeding to obtain injunctive relief. Reasonable attorney's fees and expenses
of arbitration incurred in any Dispute relating to the interpretation or
enforcement of this Agreement shall be paid by the prevailing party in such
Dispute.
17. 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 parties. 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.
To the Company: Rate Xchange, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Mr. Xxxx Xxxxxxxx
To Employee: Xx. Xxxxxx Xxxxxx
==============================
18. 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.
IN WITNESS WHEREOF, the parties have signed this Agreement.
Rate Xchange, Inc.
Dated:_________________________________
By: Xxxx Xxxxxxxx
Its: President
Signed:_________________________________
Xxxxxx Xxxxxx
Dated:__________________________________
XxxXxxxxxx.xxx, Inc.
Dated:__________________________________
By: Xxxxxx Xxxxxx
Its:_____________________________________
