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EXHIBIT 10.24
RETENTION AGREEMENT
FOR
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
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RETENTION AGREEMENT
This Agreement between Gregory A. Thornton (you) and ReSourcePhoenix.com
Inc. (Company) have been entered into as of August 30, 2000. This Agreement
promises you severance benefits if, following a Change of Control or a Potential
Change in Control (referred to collectively hereafter as the "Change") you are
terminated without Cause or resign for Good Reason during the Term of this
Agreement. Capitalized terms are defined in the last section of this Agreement.
1. PURPOSE
The Company considers a sound and vital management team to be essential.
Management personnel who become concerned about the possibility that the Company
may undergo a Change in Control may terminate employment or become distracted.
Accordingly, the Board has determined that appropriate steps should be taken to
minimize the distraction executives may suffer from the possibility of a Change
in Control. One step is to enter into this Agreement with you.
2. YOUR PROMISE
If one or more of the events set forth in section 3 below occur during
the Term of this Agreement, you promise not to resign for at least 24 full
calendar months after the change except as follows: (a) you may resign if you
are given Good Reason to do so; and (b) you may terminate employment on account
of retirement on or after attaining age 65 or because you become unable to work
due to serious illness or injury.
3. EVENTS THAT TRIGGER SEVERANCE BENEFITS
(a) Termination After a Change in Control
You will receive Severance Benefits under this Agreement if, during the
Term of this Agreement and within twelve months after a Change in Control has
occurred, your employment is terminated by the Company without Cause (other than
on account of your Disability) or you resign for Good Reason.
(b) Termination After a Potential Change in Control
You also will receive Severance Benefits under this Agreement if, during
the Term of this Agreement and within twelve months after a Potential Change in
Control has occurred but before a Change in Control actually occurs, your
employment is terminated by the Company without Cause or you resign for Good
Reason, but only if either: (i) you are terminated at the direction of a Person
who has entered into an agreement with the Company that will result in a Change
in Control; or (ii) the event constituting Good Reason occurs at the direction
of such Person.
(c) Successor Fails To Assume This Agreement
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You also will receive Severance Benefits under this Agreement if, during
the Term of this Agreement, a successor to the Company fails to assume this
Agreement, as provided in Section 11(a).
4. EVENTS THAT DO NOT TRIGGER SEVERANCE BENEFITS
You will not be entitled to Severance Benefits if your employment ends
because you are terminated for Cause or on account of Disability or because you
resign without Good Reason, retire, or die. Except as provided in Section 3(b),
you will not be entitled to Severance Benefits while you remain protected by
this Agreement and remain employed by the Company, its affiliates, or their
successors.
5. TERMINATION PROCEDURES
If you are terminated by the Company after the Change and during the
Term of this Agreement, you will receive written notice of your termination if
you are being terminated for Cause. Your termination notice will specify the
basis for that opinion in detail.
6. SEVERANCE BENEFITS
(a) In General
If you become entitled to Severance Benefits under this Agreement, you
may receive all of the Severance Benefits described in this Section. Severance
benefits will be payable to you following your termination of employment only if
you deliver to the Company (on the form and by the deadline it prescribes) your
executed general release of all claims you may have against the Company and its
affiliates relating to your termination of employment, other than claims under
this Agreement, indemnification rights for your acts in the course and scope of
your employment, or under ERISA-regulated employee benefit plans of the Company.
(b) Lump-Sum Payment in Lieu of Future Compensation
In lieu of any further cash compensation for periods after your
employment ends, you will be paid a cash lump sum equal to 1.0 times your annual
base salary in effect when your employment ends or, if higher, in effect
immediately before the Change, or Good Reason event for which you terminate
employment.
(c) Group Insurance Benefit Continuation
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During the period that begins when you become entitled to Severance
Benefits under this Agreement and ends on the last day of the 12th calendar
month beginning thereafter, the Company shall provide, at no cost to you or your
spouse or dependents, the life, disability, accident, and health insurance
benefits (or substantially similar benefits) it was providing to you and your
spouse and dependents immediately before you became entitled to Severance
Benefits under this Agreement (or immediately before a benefit reduction that
constitutes Good Reason, if you terminate employment for that Good Reason).
These benefits shall be treated as satisfying the Company's COBRA obligations.
After benefit continuation under this subsection ends, you and your spouse and
dependents will be entitled to any remaining COBRA rights.
(d) Acceleration of Vesting under Stock Option Plans
To the extent permitted by the terms of the plans or under applicable
law, your rights to options granted under any of the Company's stock option
plans shall be immediately vested with respect to shares that would have vested
during the period beginning with date the of termination and ending on the next
occurring anniversary of the applicable option grant date had your termination
not occurred.
(e) Allowance for Professional Services
You will receive an allowance of $10,000 for your use for outplacement,
legal services, tax advice, or other professional services in connection with
the termination of your employment with the Company. Upon presentation of
invoices, the Company will pay the service providers directly until the
allowance has been exhausted. If any balance remains in the allowance fund at
the end of six months following termination, that balance will be paid to you in
a lump sum; the unused balance shall be determined on the basis of invoices
received by the Company on or before the end of the allowance period. The
Company shall have no other responsibility for expenses incurred by you except
as otherwise set forth in this Agreement.
(f) Payment of Accrued Personal Time Off ("PTO")
The Company will pay you all PTO that has accrued through the date your
employment terminates. No additional PTO shall accrue thereafter.
(g) Deferred Compensation Plans
Your vested rights under the Company's 401(k) Salary Deferral Plan and
any similar Salary Deferral Plan shall continue to be governed by the terms and
conditions of the Plan documents and applicable law.
7. TIME FOR PAYMENT
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You will be paid your cash Severance Benefits within 30 days after you
become entitled to Severance Benefits under this Agreement (e.g., within 30 days
following your termination of employment.
8. RELATION TO OTHER SEVERANCE PROGRAMS
Your Severance Benefits under this Agreement are in lieu of any
severance or similar benefits that may be payable to you under any other
employment agreement or other arrangement; to the extent any such benefits are
paid to you, they shall be applied to reduce the amount due under this
Agreement. This Agreement constitutes the entire agreement between you and the
Company and its affiliates with respect to such benefits. Notwithstanding any
other provision of this Agreement, if you are terminated for any reason not
addressed by this Agreement, other than termination for Cause, you will receive
separation benefits consistent with the Company's written severance policy or
twelve months salary, whichever is greater.
9. DISABILITY
Following a Change in Control, while you are absent from work as a
result of physical or mental illness, the Company will continue to pay you your
full salary and provide you all other compensation and benefits payable to you
under the Company's compensation or benefit plans, programs, or arrangements.
These payments will stop if and when your employment is terminated by the
Company for Disability or at the end of the Term of this Agreement, whichever is
earlier. Severance Benefits under this Agreement are not payable if you are
terminated on account of your Disability.
10. EFFECT OF REEMPLOYMENT
Your Severance Benefits will not be reduced by any other compensation
you earn or could have earned.
11. SUCCESSORS
(a) Assumption Required
In addition to obligations imposed by law on a successor to the Company,
during the Term of this Agreement the Company will require any successor to all
or substantially all of the business or assets of the Company expressly to
assume and to agree to perform this Agreement in the same manner and to the same
extent that the Company was required to perform. If the Company fails to obtain
such an assumption and agreement before the effective date of a succession, you
will be entitled to Severance Benefits as if you were terminated by the Company
without Cause on the effective date of that succession. Notwithstanding the
foregoing, you and the Company or its successor may in writing agree to replace
or modify the terms of this Agreement.
(b) Heirs and Assigns
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This Agreement will inure to the benefit of, and be enforceable by, your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If you die while any amount is still
payable to you under this Agreement, that amount will be paid to the executor,
personal representative, or administrator of your estate.
12. AMENDMENTS
This Agreement may be modified only by a written agreement executed by
you and the Chief Executive Officer of the Company.
13. GOVERNING LAW
To the extent that state law is applicable, the statutes and common law
of the State of California (excluding its choice of law statutes or common law)
shall apply.
14. DISPUTE RESOLUTION
(a) Sole Remedy
Both you and the Company agree that the sole and exclusive remedy for
any alleged breach of this Agreement by the other, or for any other dispute
arising out of any act or omission of you or the Company affecting, involving or
relating to this Agreement, shall be final and binding arbitration conducted by
and pursuant to the Employment Dispute Resolution Rules of the American
Arbitration Association in the County of San Francisco, California. The Parties
expressly waive venue in any other county or state in which they live or might
live.
(b) Time
Before demanding arbitration, the Party making the demand shall serve
written notice upon the other Party of the alleged breach or claim. Such written
notice must be served by hand delivery or by being placed in the U.S. Mail,
postage pre-paid, return receipt requested, or with an overnight mail delivery
service, not more than ninety (90) days after the breach or after the claim
arises. Failure timely to serve such notice shall constitute a waiver of the
claim. The party upon whom the notice is served shall have thirty (30) days from
the date of receipt of the notice to respond. If the party upon whom the notice
is served fails to respond within that time, of if the claim is not resolved
within that time, the party seeking arbitration must serve a demand for
arbitration upon the American Arbitration Association within fourteen (14) days.
Failure timely to serve the demand shall constitute a waiver of the claim.
(c) Expenses and Attorneys' Fees
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The prevailing party in any such proceeding, as determined by the
arbitrator, shall be entitled to an award of its reasonable attorneys' fees and
costs, including the full cost of the arbitration.
15. LIMITATION ON EMPLOYEE RIGHTS
This Agreement does not give you the right to be retained in the service
of the Company.
16. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
17. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
will be deemed an original, but all of which will constitute one and the same
instrument.
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18. GIVING NOTICE
(a) To the Company
All communications from you to the Company relating to this Agreement
must be sent to the Company in writing, addressed as follows (or in any other
manner the Company notifies you to use):
If Mailed ReSourcePhoenix.com
Attention: General Counsel
2401 Kerner Boulevard
San Rafael, California 94901
If Faxed ReSourcePhoenix.com
Attention: General Counsel
Fax: (415) 451-7551
Tel.: (415) 485-4600
(b) To You
All communications from the Company to you relating to this Agreement
must be sent to you in writing, addressed as indicated at the end of this
Agreement.
19. DEFINITIONS
(a) Agreement
"Agreement" means this contract, as amended.
(b) Beneficial Owner
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
(c) Board
"Board" means the Board of Directors of the Company.
(d) Cause
"Cause" means any of the following:
(1) Failure to Perform Duties. You continue to fail to perform your
duties for the Company after a written demand for performance
has been delivered to you by the Company that specifically
identifies how you have failed to perform. You may not be
terminated for Cause under this paragraph after
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you have properly notified the Company that you are resigning
for Good Reason.
(2) Adverse Conduct. You engage in conduct that is demonstrably and
materially injurious to the Company or its affiliates,
monetarily or otherwise.
(e) Change in Control
"Change in Control," means the first of the following to occur after the
date of this Agreement:
(1) Acquisition of Controlling Interest. Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 50 percent or more of the combined voting
power of the Company's then outstanding securities. In applying
the preceding sentence, securities acquired directly from the
Company or its affiliates by or for the Person shall not be
taken into account.
(2) Merger Approved. The shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company
outstanding immediately before the merger or consolidation would
continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 50 percent of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; and (b) no
Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 50 percent or more of the
combined voting power of the Company's then outstanding
securities.
(3) Sale of Assets. The shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets or a plan of complete
liquidation of the Company.
(f) Code
"Code" means the Internal Revenue Code of 1986, as amended.
(g) Company
"Company" means ReSourcePhoenix.com Inc. and any successor to its
business or assets that (by operation of law, or otherwise) assumes and agrees
to perform this Agreement. However, for purposes of determining whether a Change
in Control has occurred in connection with such a succession, the successor
shall not be considered to be the Company.
(h) Disability
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"Disability" means that, due to physical or mental illness: (i) you have
been absent from the full-time performance of your duties with the Company for
substantially all of a period of 6 consecutive months; (ii) the Company has
notified you that it intends to terminate you on account of Disability; and
(iii) you do not resume the full-time performance of your duties within 30 days
after receiving notice of your intended termination on account of Disability.
(i) Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) Good Reason
"Good Reason" means the occurrence of any of the following without your
express written consent after the Change:.
(1) Pay Cut. Your annual base salary is reduced other than as part
of across-the-board salary reductions affecting all employees of
similar status employed by the Company and any Person in control
of the Company.
(2) Relocation. If your principal office is transferred to another
location, which increases your one-way commute to work by more
than 30 miles, based on your residence when the transfer was
announced and the Company fails to pay (or reimburse you) for
all reasonable moving expenses you incur in changing your
principal residence in connection with the relocation and to
indemnify you against any loss you may realize when you sell
your principal residence in connection with the relocation in an
arm's-length sale for adequate consideration. For purposes of
the preceding sentence, your "loss" will be the difference
between the actual sales price of your residence and your
aggregate investment in the residence.
(3) Discontinuance of Compensation Plan Participation. Other than as
part of an across-the-board reduction affecting all employees of
similar status employed by the Company and any Person in control
of the Company, the Company fails to continue, or continue your
participation in, any compensation plan in which you
participated immediately before the Change that is material to
your total compensation, unless an equitable substitute
arrangement has been adopted or made available on a basis not
materially less favorable to you than the plan in effect
immediately before the Change, both as to the benefits you
receive and your level of participation relative to other
participants. The plans referred to in the preceding sentence
include such programs as Incentive Compensation Plan and
Incentive Stock Option Plan (if still in effect immediately
before the Change), similar programs, and any substitute plans
adopted before the Change.
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(4) Discontinuance of Benefits. Other than as part of an
across-the-board change affecting all employees of similar
status employed by the Company, the Company stops providing you
with benefits that, in the aggregate, are substantially as
valuable to you as those you enjoyed immediately before the
Change under the Company's pension, savings, deferred
compensation, life insurance, medical, health, disability,
accident, vacation, and any other fringe benefit plans,
programs, and arrangements.
(5) Notice of Prospective Action. During the Term of this Agreement,
you are officially notified or it is officially announced that
the Company will take any of the actions listed above.
However, an event that is or would constitute Good Reason shall cease to be Good
Reason if: (a) you do not terminate employment within 90 days after the event
occurs; (b) the Company reverses the action or cures the default that
constitutes Good Reason before you terminate employment; or (c) you were a
primary instigator of the Good Reason event and the circumstances make it
inappropriate for you to receive benefits under this Agreement (e.g., you agree
temporarily to relinquish your position on the occurrence of a merger
transaction you negotiate). If you have Good Reason to terminate employment, you
may do so even if you are on a leave of absence due to physical or mental
illness or any other reason.
(k) Person
"Person" has the meaning given in Section 3(a)(9) of the Exchange Act,
as modified and used in Section 13(d) of that Act, and shall include a "group,"
as defined in Rule 13d-5 promulgated thereunder. However, a Person shall not
include: (i) the Company or any of its subsidiaries; (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
(l) Potential Change in Control
"Potential Change in Control" means that any of the following has
occurred during the term of this Agreement:
(1) Agreement Signed. The Company enters into an agreement that will
result in a Change in Control.
(2) Board Declaration. With respect to this Agreement, the Board
adopts a resolution declaring that a Potential Change in Control
has occurred.
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(m) Severance Benefits
"Severance Benefits" means your benefits under Section 6 of this
Agreement.
(n) Term of this Agreement
"Term of this Agreement" means the period that commences on the date of
this Agreement and ends on the last day of the 12th month from the Change.
Date: 8/30/00 /s/ GUS CONSTANTIN
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Gus Constantin
Title: CEO
Date: 8/30/00 /s/ GREGORY A. THORNTON
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Gregory A. Thornton
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