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Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of October 5, 2000, between RATEXCHANGE CORPORATION, a Delaware corporation
(the "Company"), and D. Xxxxxxxx Xxxxxxxx (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 President
and Chief Executive Officer of the Company for a period commencing on the date
hereof and ending three years after the date hereof. As Chief Executive Officer
and President 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 salary
equal to $300,000, with such increases as may be determined by the Company in
its discretion ("Base Salary"). 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.
4. Bonuses. The Executive shall receive a bonus of
$200,000 in connection with the signing of this Agreement. This bonus
shall be payable on the first business day in January, 2001. The Board
of Directors may, in its sole discretion, award additional bonuses to
the Executive based upon achievement of Company objectives.
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.
(a) 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 2,000,000 shares of the Company's common stock, par value
$.000l 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 the date such options are granted, 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. These options
shall be granted as soon as possible after the date of this Agreement.
The vesting of such options shall be as follows:
(A) options to purchase 500,000 shares
shall vest as of the date of this
Agreement.
(B) options to purchase 500,000 shares
shall vest on January 1, 2005, subject
to acceleration to vest immediately
upon the completion of a financing for
$15 million and further subject, in
either case, to continued employment as
of such date.
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(C) options to purchase 250,000 shares
shall vest on the first anniversary of
this Agreement, subject to continued
employment as of such date.
(D) options to purchase 250,000 shares
shall vest on the second anniversary of
this Agreement, subject to continued
employment as of such date.
(E) options to purchase 250,000 shares
shall vest on January 1, 2007, subject
to acceleration to vest immediately
following the first quarter of positive
earnings before interest, taxes,
depreciation and amortization (as
determined in accordance with generally
accepted accounting principles) after
January 2001 and further subject, in
either case, to continued employment as
of such date.
(F) options to purchase 250,000 shares
shall vest on January 1, 2006, subject
to acceleration to vest immediately
after the Common Stock has traded on
The American Stock Exchange LLC at a
price of $7.00 per share or more for
thirty (30) consecutive trading days
and further subject, in either case, to
continued employment as of such date.
(b) Each of the options will have a term of ten
years from the date of grant. To the extent eligible, the options will be
issued as incentive stock options within the meaning and subject to the
limitations of Section 422 of the Internal Revenue Code.
7. Sale of the Company.
(a) During the term of this Agreement or the
Severance Period (as defined below), upon (i) a sale of all or
substantially all of the assets of the Company, (ii) 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, or (iii) 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
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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 shall receive $1,000,000 from the
Company and all of the Executive's options that have been granted
pursuant to the terms set forth in this Agreement shall vest immediately.
(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 Board of Directors of the Company. The reasonableness of
such standards shall be measured against
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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 three weeks
(fifteen 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 Executive shall
continue to receive for twelve 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 immediately upon such
termination.
(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
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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 Board that Executive report to
someone other than the Board or the Chairman of the Board; (iii) any
involuntary reduction of Executive's Base Compensation; or (iv) the
issuance of a directive requiring Executive to relocate to a new office
located more than 25 miles from his current office.
(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 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.
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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 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:
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(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 therefor, 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 one year 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.
(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
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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
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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: RateXchange Corporation
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Chairman
To Employee: D. Xxxxxxxx Xxxxxxxx
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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.
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).
(signature page follows)
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RATEXCHANGE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: CHAIRMAN
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/s/ D. Xxxxxxxx Xxxxxxxx
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