CHIEF EXECUTIVE OFFICER
EMPLOYMENT CONTRACT
This agreement is made and effective as of the 15th day of November 2005 between
PRIVATE TRADING SYSTEMS, INC. and/or its affiliates and/or subsidiaries
(hereinafter "PVTD" or "the Company"), a Nevada corporation, and of C. XXXXXX
XXXXXXX (hereinafter "Xxxxxxx" or "the CEO").
WHEREAS, PVTD desires to secure the services of Xxxxxxx and of Xxxxxxx desires
to accept such employment.
NOW THEREFORE, in consideration of the material advantages accruing to the two
parties and the mutual covenants contained herein, and intending to be legally
and ethically bound hereby, PVTD and Xxxxxxx agree with each other as follows:
1. Position and Duties. Xxxxxxx will render professional services to PVTD in
the capacity of Chief Executive Officer of PVTD. He will at all times,
faithfully, industriously and to the best of his ability, perform all duties
that may be required of him by virtue of his position as Chief Executive Officer
and all duties set forth in the PVTD bylaws and in any policy statements of the
Board of Directors thereof. It is understood that these duties shall be
substantially the same as those of a chief executive officer of a publicly held
business corporation.
Xxxxxxx will be further appointed Chairman of the Board of Directors of the
Company upon the execution of this Agreement, such appointment to run
concurrently with the term of this agreement unless the parties hereto should
otherwise agree in writing. Xxxxxxx shall have all of the customary powers and
authority granted to a chairman of the board of a publicly held business
corporation. Xxxxxxx is hereby vested with authority to act on behalf of the
Board in keeping with policies adopted by the Board, as amended from time to
time. In addition, he shall perform in the same manner any special duties
assigned or delegated to him by the Board.
2. Term of Employment. The term of employment under this Agreement shall be
for 5 (five) years from the date of execution hereof. The term of employment
under this agreement may be extended by further written agreement between the
parties hereto in additional increments of two years or longer as the parties
may agree, such extension agreements to be negotiated, drafted, and signed by
the parties no later than 60 (sixty) days prior to the expiration of the
existing agreement. This contract and all its terms and conditions shall
continue in effect until terminated.
3. Sign-on Bonus. Pursuant to negotiations between the parties, Xxxxxxx will
receive a sign-on bonus in the amount of US $300,000.00 (Three Hundred Thousand
Dollars). The sign-on bonus will be paid to Xxxxxxx in a manner to be agreed
upon between the parties hereto, and is contingent only upon execution of this
agreement. Further, the sign-on bonus is in addition to and not a part of any
other compensation identified
herein.
4. Compensation. In consideration for his services as Chief Executive Officer,
PVTD agrees to pay Xxxxxxx a minimum annualized salary of US $600,000.00 (Six
Hundred Thousand Dollars) or such higher figure as shall be agreed upon at an
annual review of his compensation and performance by the Compensation Committee
of the Company. Such review shall be based upon the CEO's contributions to the
Company, the performance of PVTD, and such other bases as the parties may agree
in writing in advance to consider. The annual review shall occur a minimum of 90
(ninety) days prior to the end of each year of the contract for the express
purpose of considering incremental increases in compensation. The amount of US
$50,000.00 (Fifty Thousand Dollars) shall be payable to Xxxxxxx on a monthly
basis throughout the initial contract year; thereafter, a monthly payment will
be determined based upon that year's annualized salary as determined by the
Compensation Committee.
5. Annual Incentive Compensation. Xxxxxxx will be entitled to annual
incentive compensation based upon performance measures and goals established and
agreed in writing between Xxxxxxx and the Compensation Committee in advance of
the commencement of the year for which such performance measures and goals shall
be in place. For the first year of this Agreement, the performance measures and
goals will be established within 60 (sixty) days of the execution hereof. The
target amount of the incentive compensation shall be a minimum of 75%
(seventy-five percent) of Xxxxxxx'x base salary, with a maximum incentive in any
given year of 150% (one hundred fifty percent) of Xxxxxxx'x base salary, based
upon the performance measures and goals agreed upon between Xxxxxxx and the
Compensation Committee.
6. Option Grants. Xxxxxxx will have been granted as of December 2004 an
option entitling him to purchase 20,000,000 shares of the common stock of PVTD
at an exercise price of US $00.50 (Fifty Cents) per share, the fair market value
at the time Xxxxxxx was granted the option. The option is to be fully vested
upon issuance and shall have full registration rights, and shall have an
expiration period of seven years. As an additional incentive, PVTD will issue to
Xxxxxxx an additional option under the Company's Long-Term Equity Incentive Plan
once adopted entitling Xxxxxxx to purchase an additional 10,000,000 shares of
PVTD common stock pursuant to PVTD's standard form of option agreement. The
sequent option will vest in three equal installments on an annual basis over a
three year period, contingent only upon Xxxxxxx'x continued employment with the
Company.
7. (a) Vacation. Xxxxxxx shall be entitled to 5 (five) weeks of compensated
vacation time in each of the contract years, to be taken at times mutually
agreed upon between him and the Board.
(b) Long-Term Disability. In the event of a period of prolonged inability to
work due to the result of a sickness or an injury, Xxxxxxx will be compensated
at his full rate of pay for at least 1 (one) year from the date of the sickness
or injury. In the second year through fifth years of such disability, the
Company agrees to pay disability coverage of US
$500.00 (Five Hundred Dollars) per day, such payments to be sourced from a
disability policy purchased by the Company from an A- rated or better insurance
company as rated by A.M. Best and Company.
(c) Professional Absences. Xxxxxxx will be permitted to be absent from the
Company during working days to attend professional meetings and to attend to
such outside professional duties in the Company's field as have been mutually
agreed upon between him and the Board. Attendance at such approved meetings and
accomplishment of approved professional duties shall be fully compensated
service time and shall not be considered vacation time.
(d) Expenses. PVTD shall reimburse Xxxxxxx for all expenses including
first-class travel expenses incurred by him incident to attendance at approved
professional meetings and such other expenses incurred by him in furtherance of
the Company's interests, including spousal travel expenses, all in accordance
with the Company's policies and procedures for senior executives and provided
that such reimbursement is properly accounted for in accordance with Company
policy.
(d) Additional benefits. In addition, Xxxxxxx shall be entitled to all other
fringe benefits generally available to other senior executive employees of the
Company, as and when such benefits become available.
8. PVTD agrees to pay Xxxxxxx'x dues to professional associations and
societies and to such service organizations and clubs, including country club
dues limited to two memberships, of which the CEO is a member, approved by the
Board as being in the best interests of PVTD, during the term of this Agreement
and any extension hereof.
9. PVTD also agrees to:
(a) indemnify Xxxxxxx with respect to all matters relating to his service as an
officer and/or director of PVTD to the extent of his services as set forth in
this agreement and the Company's Bylaws as amended from time to time, and in
accordance with the terms of any other indemnification applicable to the
Company's officers and/or directors that the Company may provide. This
indemnification is contractual in nature and shall survive any adverse amendment
to or repeal of the Company's Bylaws, and shall survive the termination of
Xxxxxxx'x employment and/or the termination of this Agreement;
(b) insure Xxxxxxx under the Company's general liability insurance policy and a
separate directors' and officers' liability insurance policy for all acts done
by him in good faith as Chief Executive Officer and/or Chairman throughout the
term of this Agreement and any extension hereof. This requirement is contractual
in nature and shall survive the termination of Xxxxxxx'x employment and the
termination of this Agreement;
(c) provide, throughout the term of this Agreement and any extension hereof, a
group life insurance policy for the CEO in an amount equivalent to US
$5,000,000.00 (Five
Million Dollars) payable to the beneficiary of his choice;
(d) provide full health and major medical health insurance for the CEO and his
family in accordance with the coverage provided to all other employees
throughout the term of this Agreement and any extension hereof;
(e) purchase travel accident insurance covering the CEO in the sum of US
$5,000,000.00 (Five Million Dollars) payable to the beneficiary of his choice,
which coverage shall continue throughout the term of this Agreement and any
extension hereof;
(f) furnish an automobile for the use of Xxxxxxx suitable to his role as CEO
and Chairman of the Board of the Company, leased or purchased at the beginning
of every third fiscal year, and reimburse him for expenses of its operation,
maintenance, insurance and registration throughout the term of this Agreement
and any extension hereof; upon termination of this agreement, such automobile
then in Xxxxxxx'x possession shall become his personal property free and clear
of any lien or further obligation;
(g) purchase financial counseling services on behalf of Xxxxxxx in an amount
not to exceed US $10,000.00 on an annual basis during each year of this
Agreement and any extension hereof;
(h) to provide suitable office equipment including computers, copier, fax,
telephone and such other equipment as Xxxxxxx shall require for his personal
office and to upgrade or replace such equipment every three years throughout the
term of this Agreement and any extension hereof; upon termination of this
agreement, such equipment then in Xxxxxxx'x use shall become his personal
property free and clear of any lien or further obligation;
(i) contribute on behalf of the CEO to a defined contribution retirement plan
qualified under the Internal Revenue Code, at the rate of 20% (Twenty percent)
of Xxxxxxx'x then monthly income per month during the term of this Agreement and
any extension hereof; and
(j) contribute on behalf of the CEO to a non-qualified retirement plan in the
form of a Supplemental Executive Retirement Plan, at the rate of 10% (Ten
percent) of Xxxxxxx'x then monthly income per month during the term of this
Agreement and any extension hereof.
10. Termination.
(a) Termination Due to the Death or Disability of Xxxxxxx. The Board may
terminate the CEO for disability or death. Under these circumstances, PVTD
shall pay Xxxxxxx his then-accrued salary for the month in which his duties were
terminated and any pro-rated bonus for the year up until the date of
termination.
(b) By the Company for Cause. The Board may terminate Xxxxxxx'x duties as
Chief Executive Officer for Cause. For purposes of this Agreement, "Cause"
shall mean
(i) Xxxxxxx'x willful, intentional or grossly negligent failure to perform
his duties under this Agreement diligently and in accordance with the
directions of the Board of Directors;
(ii) an admission by or final conviction of Xxxxxxx of any felony;
(iii) the commission of an act of fraud against the Company by Xxxxxxx or
the material misappropriation by Xxxxxxx of property belonging to the
Company; or
(iv) any material breach of this Agreement not remedied by Xxxxxxx within
30 (thirty) days of written notice to him from the Company, which
notice must include a detailed and specific description of the alleged
material breach.
Such action shall require a supermajority (66%) vote of the entire Board and
become effective upon written notice to the CEO or at such later time as may be
specified in said notice. After such termination, all rights, duties and
obligations of both parties shall cease, except for the payment of any accrued
salary due and owing to Xxxxxxx at that time.
(c) By PVTD Other Than for Cause. In the event of a termination of Xxxxxxx by
the Company other than for Cause or as otherwise described in section 12
following, Xxxxxxx shall be entitled to the same severance package as if there
had been a Change in Control of the Company, as set forth in section 11 below.
11. Termination Due to Change in Control of PVTD.
(a) In the event a Change in Control of the Company as defined below:
(i) occurs during the term of this Agreement, and prior to the
earlier to occur of the first anniversary of the Change in
Control or the expiration of the then-current term of this
Agreement, and either (A) Xxxxxxx is terminated by the Company
pursuant to section 6(c), but not for Cause, or (B) Xxxxxxx
terminates, or gives notice of termination, for Good Reason (as
defined below); or
(ii) prior to the effectiveness of a firm commitment underwritten
public offering pursuant to a registration statement under the
Securities Act of 1933, as amended, covering the offer and sale
of PVTD's common stock for the account of the Company in which
the aggregate price to the public for shares sold by the Company
equals or exceeds US $1,000,000,000.00 (One Billion Dollars)
Xxxxxxx'x service as an officer and director of the Company
terminates for any reason other than for Cause or his death,
disability or resignation;
then Xxxxxxx shall be entitled to payment and benefits as set forth in section
11(b) below.
(b) If payment and benefits are required under section 11(a) above, PVTD shall:
(i) pay to Xxxxxxx as xxxxxxxxx pay, in one lump sum, in cash, no
later than the tenth day following his termination, an amount
equal to 2 (two) times his annualized salary and annual incentive
compensation then in effect; but in no case shall such payment
exceed 2.99 (two point nine-nine) times his annual salary then in
effect; and
(ii) PVTD shall maintain full senior executive medical, dental and
health coverage on Xxxxxxx and his dependents subject to the
limitations set forth in this section 11(b)(ii). The Company's
obligation to Xxxxxxx shall expire upon the earlier to occur of
(A) the date which is 36 months after the date Xxxxxxx'x
employment is terminated, or (B) the date that Xxxxxxx becomes an
employee of another company providing him with coverage
substantially similar to that provided to him by the Company
immediately prior to the termination of his employment.
Notwithstanding anything to the contrary in this section
11(b)(ii), the payment of premiums by the Company is not intended
to alter in any way the provisions of any group health plan of
the Company, and all time limits, effects of subsequent coverage
and all other relevant provisions of any such plan remain
unchanged and shall control Xxxxxxx'x entitlement to coverage or
benefits under such plan.
(c) As used herein, a "Change in Control" means the happening of any of the
following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended,
other than the Company or a wholly-owned subsidiary thereof, any
employee benefit plan of the Company or any of its subsidiaries,
becomes the beneficial owner of the Company's securities having
50% or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an issuance
of securities initiated by the Company in the ordinary course of
business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sales of
assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power
of the then outstanding securities of the Company or any
successor corporation or entity entitled to vote generally in the
election of the directors of the Company or such other
corporation or entity after such transaction are held in the
aggregate by the holders of the Company's securities entitled to
vote generally in the election of directors of the Company
immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board of
Directors of the Company cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination
for election by the Company's stockholders, of each director of
the Company first elected during such period was approved by a
vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
(d) For purposes of this Agreement, "Good Reason" shall mean the occurrence of
any of the following events without Xxxxxxx'x express written consent:
(i) the assignment to Xxxxxxx by PVTD of duties inconsistent with his
position, duties, responsibilities and status with the Company
immediately prior to a Change in Control, or a change in
Xxxxxxx'x titles or offices as in effect immediately prior to a
Change in Control, or any removal of Xxxxxxx from or any failure
to reelect him to any of such positions; provided, that any such
event that occurs in connection with the termination of
employment for disability, retirement, for Cause, as a result of
Xxxxxxx'x death, or by Xxxxxxx other than for Good Reason, shall
not fall within the purview of this section 11(d)(i);
(ii) a reduction by PVTD in Xxxxxxx'x annualized salary as in effect
on the date hereof or as the same may be increased from time to
time during the term of this Agreement;
(iii) any material breach by PVTD of any provision of this Agreement;
or
(iv) any failure by PVTD to obtain the assumption of this Agreement by
any successor or assign of the Company.
12. Voluntary Termination. Should Xxxxxxx at his discretion elect to terminate
this contract for any other reason than as stated in section 10, he shall give
the Board 90 days' written notice of his decision to terminate. At the end of
the 90 days, all rights, duties and obligations of both parties to the contract
shall cease and Xxxxxxx will not be entitled to severance benefits other than
his accrued salary.
13. Confidentiality. Xxxxxxx shall maintain confidentiality with respect to
information that he receives in the course of his employment and not disclose
any such information. Xxxxxxx shall not, either during the term of employment or
thereafter, use or permit the use of any information of or relating to the
Company in connection with any activity or business and shall not divulge such
information to any person, firm, or corporation whatsoever, except as may be
necessary in the performance of his duties hereunder or as may be required by
law or legal process.
14. Non- Competition. During the term of his employment and during the 12-month
period following termination of his employment, Xxxxxxx shall not directly own,
manage, operate, or control, as an officer or director, any other publicly
traded software company in the field of developing turnkey securities exchanges,
(hereinafter referred to as "entity") that is at the time engaged principally or
significantly in a business that is, directly or indirectly, at the time in
competition with the business of PVTD. Nothing herein shall prohibit Xxxxxxx
from acquiring or holding any issue of stock or securities of any entity that
has any securities listed on a national securities exchange or quoted in a daily
listing of over-the-counter market securities, provided that at any one time
Xxxxxxx and members of Xxxxxxx'x immediate family do not own more than 3% (three
percent) of any voting securities of any such entity.
15. Non-Solicitation. Xxxxxxx shall not directly or indirectly through his own
efforts or otherwise, during the term of this Agreement, and for a period of 12
months thereafter, employ, solicit to employ, or otherwise contract with, or in
any way retain the services of any employee or former employee of PVTD, if such
individual has provided professional or support services to the Company at any
time during this Agreement without the express written consent of the Company.
Xxxxxxx will not interfere with the relationship of the Company and any of its
employees and he will not attempt to divert from the company any business in
which the Company has been actively engaged during his employment.
16. This Agreement constitutes the entire agreement between the parties and
contains all the agreements between them with respect to the subject matter
hereof. It also supersedes any and all other agreements or contracts, either
oral or written, between the parties with respect to the subject matter hereof.
17. Except as otherwise specifically provided, the terms and conditions of this
Agreement may be amended at any time by mutual agreement of the parties,
provided that before any amendment shall be valid or effective it shall have
been reduced to writing and signed by Xxxxxxx and a majority of the members of
the Board.
18. The invalidity or unenforceability of any particular provision of this
Agreement shall not affect its other provisions, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions had
been omitted.
19. This agreement shall be binding upon PVTD, its successors and assigns,
including, without limitation, any corporation into which the Company may be
merged or by which it may be acquired, and shall inure to the benefit of the
CEO, his administrators, executors, legatees, heirs and assigns.
20. This Agreement shall be construed and enforced under and in accordance with
the laws of the State of Arizona.
The undersigned has executed this Chief Executive Officer Employment Agreement
Contract effective as of the date set forth above.
Private Trading Systems, Inc. C. Xxxxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxx /s/ C. Xxxxxx Xxxxxxx
---------------------------------- ----------------------------------
By: Xxxxxxx X. Xxxxx
Its: Chief Financial Officer
