Exhibit 10.14
Term Sheet
RateXchange/Ultimate Markets
This agreement outlined below, dated July 23rd, 1999, is by and between
RateXchange, Inc., A Colorado corporation with offices located at 450 Sansome
Ave, #1550, San Francisco, CA 94111 ("RateXchange"): and Ultimate Markets, Inc.,
a Delaware corporation with offices located at 68 E. Wacker Pl., Suite 750
Chicago, IL 60601 ("Ultimate Markets"): collectively the parties' ("Parties").
RateXchange is in the business of, among other things, facilitating the trade of
telecommunications carrier network capacity as a service ("RateXchange
Services"), and
Ultimate Markets is in the business of, among other things, providing web-based
trading software and market design services ("Ultimate Markets Services").
RateXchange has agreed to engage Ultimate Markets for the creation of a fully
integrated exchange infrastructure and market development expertise, as applied
to the telecommunications market, based on the following terms:
1. RateXchange will pay Ultimate Markets $500,000 in cash plus
applicable expense.
o $150,000 upon signing this agreement.
o $100,000 at deliverable point 1 (see below).
o $250,000 at deliverable point 2 (see below).
2. Upon signing of this contract, RateXchange will also pay Ultimate
Markets 5% of RateXchange stock and an additional 5% of RateXchange
stock in the form of a stock grant, neither of which will be diluted
by the next $2,000,000 in future additional financing.
o The stock grant will vest monthly over a 24-month
period beginning on the date of this agreement,
o All stock will vest immediately upon the transfer of
a controlling interest of RateXchange.
o All equity will include a piggyback right to sell
into any future financing.
o All equity and equity equivalents will include an
anti-dilution clause that will prevent dilution if
future equity or equity equivalents are issued below
the price of the $2 million financing referred to
above.
3. RateXchange also agrees to pay Ultimate Markets a quarterly
management fee for:
o Continued Technology support and software upgrades.
o The development of pricing and risk management tools.
o Assistance in developing market liquidity.
o Quarterly fees will be based on RateXchange's transaction volume
according to the following schedule:
o $50,000 for volume between 0-150 trades per quarter
o $75,000 for volume between 150-300 trades per quarter
o $100,000 for volume greater than 300 trades per
quarter
4. In the event that RateXchange pursues an independent financing as
discussed above, it is understood that Art Bushonville will hold a
seat on RateXchange's Board.
5. This contract will be cancelable by either party with six month's
notice.
6. The Parties agree to complete a formal contract, based on the terms
outlined in this agreement, within 2 weeks from the date of this
agreement of such date as mutually agreed to by the parties.
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7. Ultimate Markets agrees to provide these design and implementation
services exclusively to RateXchange and agrees not to compete against
RatteXchange (with regard to the telecommunications market).
Definition of Deliverable point 1:
o All possible matching attributes will be identified and agreed to. o
Credit policies and procedures will be defined.
o A prototype web site will be completed which supports matching and
transaction processing based on the matching attributes.
o The prototype will not incorporate credit processing or automated
fulfillment.
It is estimated that Deliverable point 1 will be reached within 6 week.
Definition of Deliverable point 2:
o A functioning exchange web site available on the public internet
which will include:
o Integrated credit processing.
o A simple interface to the fulfillment system, which
may be, e-mail or similarly based initially.
o A plan for integrating automated fulfillment.
o Management reporting facilities available in
real-time.
This agreement replaces all previous written and verbal commitments and
understandings between the Parties.
AGREED TO AND ACCEPTED AS OF THIS 23RD DAY OF JULY, 1999
RateXchange, Inc. Ultimate Markets, Inc.
By: /s/ Ross Mayfield By: /s/ Arthur Bushonville
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Title: VP, Marketing Title: President
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