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Exhibit 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (the " Agreement ") is entered
into on August 4, 2006, by and between Steven Murray, an individual
(" Executive ") and MxEnergy Inc., a Delaware corporation
(the " Company "). Terms within this Agreement that begin
with initial capital letters shall have the meaning specially set
forth herein, unless the context clearly demonstrates a different
meaning (see Section 7 of this Agreement for the definition of
several terms).
1.
Employment .
(a)
Officer . Executive will serve as Chief
Operating Officer of the Company for the Employment Term specified
in Section 2 below. Executive will report to the Chief Executive
Officer (the " CEO "), and will render such services consistent
with the foregoing role. The parties anticipate that such services
will include (but not be limited to) participating in the
Company’s efforts to consummate an initial public offering of
its Common Stock. Executive’s office shall be located at the
executive offices of the Company in Houston, Texas.
(b)
Director . As soon as practical after the
execution of this Agreement, the Company shall increase the size of
its Board of Directors (the Board) by one director, and shall
appoint the Executive to fill such vacancy. During the remainder of
the Employment Term (as defined below), the Company shall use its
best efforts to ensure that Executive continues to serve as a
member of the Board.
2.
Term . Company’s employment of
Executive pursuant to this Agreement shall be for an initial term
of three (3) years (the " Employment Term "), beginning on the
expiration or waiver of any requisite notice period in connection
with the termination of his current employment arrangement with
Shell Energy Services Company, L.L.C. (the " Commencement
Date ") and ending on the third annual anniversary of the
Commencement Date (the " Expiration Date ") or such earlier
date on which Executive’s employment terminates in accordance
with Section 6 of this Agreement. On the Expiration Date and each
anniversary thereof, this Agreement shall automatically renew for a
one-year term unless (a) the Agreement has been earlier terminated
under Section 6 or (b) either party gives written notice not less
than 180 days prior to the expiration of any such term that the
Agreement will not be extended. Upon termination of the Employment
Term for any reason, Executive shall promptly resign from all
positions held with the Company.
3.
Salary . The Company shall pay Executive
base salary (" Base Salary ") at an annual rate of $450,000.
Executive’s Base Salary shall be paid in conformity with the
Company’s salary payment practices generally applicable to
similarly situated Company executives.
4.
Bonus .
(a)
Annual Bonus . Executive shall be entitled
to participate in the Company’s executive bonus program.
Executive’s annual target bonus (the " Target Bonus ")
shall be 100% of Base Salary, of which (a) 75% shall be payable
based on achievement of Company and/or individual objectives
specified by the Compensation Committee (the "Compensation
Committee") of the Board of Directors of the Company (the "
Board "), and (b) 25% may be awarded solely at the
discretion of
the Compensation Committee. In addition, the Compensation
Committee may, in its sole discretion, award the Executive an
additional bonus of up to 20% of Base Salary for extraordinary
performance by the Executive in connection with a significant
business event affecting the Company, such as an initial public
offering or a Change in Control; provided, however, that absent
special circumstances the maximum actual bonus will not exceed 120%
of Base Salary.
(b)
Signing Bonus . The Company shall be
obligated to pay Executive a signing bonus in the amount of
$150,000 (the "Signing Bonus"), which shall be payable upon the
Commencement Date. The parties agree that the Signing Bonus shall
be reduced by any bonus Executive receives on account of (i) the
proposed transaction pursuant to the Asset Purchase Agreement
between the Company and Shell Energy Services Company, L.L.C.
("SESCO") and (ii) his performance during SESCO’s fiscal year
2006 through the termination of his employment with the
SESCO.
5.
Executive Benefits .
(a)
Stock Options . The Company shall grant
Executive a nonqualified stock option to purchase an aggregate of
150,000 shares of Common Stock of the Company in accordance with
the Company’s 2006 Equity Incentive Compensation Plan (the
" Plan "). The stock options shall have an exercise price equal
to the fair market value of the underlying shares on the grant date
(as determined by the Board), and shall vest in equal annual
installments on the first three annual anniversaries of the date of
grant, subject to Executive’s continued employment with the
Company on each vesting date; provided that the third and final
installment shall vest on the Expiration Date even in the event
this Agreement is not extended. Except as otherwise provided herein
and in the next paragraph, the stock options shall be on terms and
conditions consistent with the Company’s standard form of
notice of grant and the Plan.
(b)
Repurchase of Common Stock . In the event
that Executive’s employment terminates for any reason, the
Company shall have the right (or obligation) to purchase all of the
shares of Common Stock that the Executive owns subject to the terms
and conditions set forth herein.
(i)
If Executive’s employment is terminated for
any reason during the Employment Term, the Company shall have the
initial right to purchase all (but not less than all) of the Common
Stock owned by the Executive ("Call Option"). The Company shall
have the right to exercise the Call Option by giving written notice
to Executive within sixty (60) days after the date of termination,
which shall set forth the fair market value of the shares being
purchased as determined in the good faith of the Board ("Call
Notice"). In the event that the Company fails to exercise the Call
Option on a timely basis, its rights under this Section 5(b)(i)
shall automatically terminate. If the Call Notice is delivered on a
timely basis and the Executive agrees with the valuation set forth
in the Call Notice, he shall provide a written acceptance to the
Company within fifteen (15) days from the date of the Call Notice,
and the repurchase of the shares shall occur within fifteen (15)
days from the date of acceptance. If, however, the Call Notice is
delivered on a timely basis and the Executive disagrees with the
valuation set forth therein, the repurchase price for the shares
shall be determined in accordance with Section 5(b)(iii)
below.
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(ii)
If Executive’s employment is terminated for
any reason during the Employment Term, but the Company does not
exercise the Call Option on a timely basis, the Executive shall
have the right to cause the Company to repurchase all (but not less
than all) of the Common Stock owned by the Executive ("Put
Option"). The Put Option shall become exercisable upon the
expiration of the Call Option. The Executive shall have the right
to exercise the Put Option by giving written notice to the Company
within sixty (60) days after the expiration of the Call Option,
which shall set forth the fair market value of the shares being
sold to the Company as determined in good faith by the Executive
("Put Notice"). If the Executive fails to exercise the Put Option
on a timely basis, his rights under this Section 5(b)(ii) shall
automatically terminate. If the Put Notice is delivered on a timely
basis and the Company agrees with the valuation set forth in the
Put Notice, it shall provide a written acceptance to the Executive
within fifteen (15) days from the date of the Put Notice, and the
repurchase of the shares shall occur within fifteen (15) days from
the date of acceptance. If, however, the Put Notice is delivered on
a timely basis and the Company disagrees with the valuation set
forth therein, the repurchase price for the shares shall be
determined in accordance with Section 5(b)(iii) below.
(iii)
In the event that Executive’s employment
terminates for any reason, the Company shall have the right to
repurchase, or the Executive shall have the right to cause the
Company to repurchase, all or part of the shares of Common Stock
that the Executive owns. The repurchase price shall equal the fair
market value of the shares, as established by the Board in its
discretion, being repurchased. If the Executive does not agree with
the Board’s determination of the fair market value of those
shares, then the Executive and the Company shall mutually select a
neutral independent valuation firm that will establish the fair
market value of the shares being repurchased, and that firm’s
determination of fair market value will be binding on all parties.
If the Executive and the Company do not agree on a neutral
independent valuation firm, each of the Executive and the Company
shall appoint their own independent representative; and such
independent representatives shall select the neutral independent
valuation firm. The Company shall pay all fees related to the
expense associated with such valuation.
(iv)
If (A) the Company repurchases the Common Stock held
by the Executive pursuant to Section 5(b)(i) or 5(b)(ii) above, (B)
the Company enters into an agreement to effect a Change in Control
within six (6) months following the date of such repurchase, and
(C) the per share consideration to be received by the holders of
Common Stock in connection with the Change of Control is greater
than the per share consideration received by the Executive for his
Common Stock hereunder, then the Company shall be obligated to pay
additional consideration to Executive in an amount equal to the
difference ("Additional Consideration"). Any Additional
Consideration payable hereunder shall be paid by the Company in
cash within five (5) business days following the consummation of
the Change of Control transaction. To the extent the consideration
received by holders of Common Stock in connection with the Change
of Control is in the form of securities, the value of such
consideration will be based on the market value upon the closing of
the Change of Control, or if no market exists, it will be based on
the good faith determination of the Board.
(v)
Notwithstanding the foregoing, the rights under this
Section 5(b) shall automatically terminate upon an initial public
offering of the Common Stock of the Company, or to the extent the
Company becomes a reporting company under the Securities Exchange
Act of 1934.
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(c)
Other Employee and Executive Benefits .
During the Employment Term, the Company shall pay for
Executive’s membership in the Plaza Club or its successors or
assigns (with such membership to be used for Company purposes), and
the Young President’s Organization or its successors or
assigns ("YPO"). The Company will also reimburse the Executive for
certain expenses related to YPO activities in an amount up to
$25,000 per annum. In addition, Executive shall be entitled to
receive all benefits provided to senior executives, executives and
employees of the Company generally from time to time, including
health, life insurance and disability, and all other benefits
provided to the Company’s senior executives generally, in
each case so long as and to the extent the same exist; provided,
that in respect to each such plan Executive is otherwise eligible
and insurable in accordance with the terms of such plans.
Notwithstanding the preceding sentence, Executive’s right to
receive severance payments and benefits shall be only as provided
in Section 6 hereof.
(d)
Vacation, Sick Leave, Holidays and
Sabbatical . Executive shall be entitled to paid time off
(" PTO "), sick leave, and holidays in accordance with the
policies of the Company, as they exist from time to time, for
senior executives. PTO not used during any calendar year will not
roll over to the following year.
6.
Severance Benefits .
(a)
At Will Employment . Executive’s
employment shall be "at will." Either the Company or
Executive may terminate this agreement and Executive’s
employment at any time, with or without Business Reasons, in its or
his sole discretion, upon sixty (60) days’ prior written
notice of termination.
(b)
Involuntary Termination Without Business
Reasons . If at any time during the Employment Term (other
than following a Change in Control to which Section 6(c) applies)
the Company terminates the employment of Executive involuntarily
and without Business Reasons or a Constructive Termination occurs,
then subject to Executive’s signing and not revoking a
general release of claims against the Company and its successors,
Executive shall be entitled to receive the following:
(i)
Base Salary, PTO, and any earned and unpaid Annual
Bonus accrued through the Termination Date, and any expense
reimbursements and other benefits due to the Executive under any
Company-provided plans, policies and arrangements;
(ii)
a lump sum equal to the greater of (A)
Executive’s Base Salary for a period of twelve months
following the Termination Date, or (B) Executive’s Base
Salary for the remainder of the then-current Employment
Term;
(iii)
a lump sum equal to (A) seventy-five percent (75%)
of the Target Bonus for the fiscal year in which the termination
occurs, (B) seventy-five percent (75%) of the Target Bonus for any
full fiscal year remaining during the Employment Term, and (C) a
pro rata portion of seventy-five percent (75%) of the Target Bonus
being paid for the final fiscal year that begins during the
Employment Term (such pro rata amount will be based on the ratio of
the number of full months of the Employment Term that fall within
such final fiscal year, to 12); and
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(iv)
subject to Section 5(b) which shall remain
applicable to any shares purchased through Executive’s
exercise of stock options, all of the Executive’s unvested
stock options and other equity awards shall become fully vested,
and all stock options that are vested and outstanding (but
unexercised) on the Termination Date shall be cancelled in
consideration of the Company’s payment to the Executive, as
soon as practicable after the Termination Date, of an amount equal
to the product of the following:
-
-
-
-
-
-
-
-
(A)
the excess, if any, of (1) the per share fair market
value, as determined pursuant to Section 5(b) above, of the shares
underlying the cancelled stock options, over (2) the weighted
average exercise price per share of the Company Common Stock
subject to such option, multiplied by
(B)
the number of shares of Company Common Stock that
are subject to the stock options being cancelled).
Notwithstanding the foregoing, if Executive violates the
provisions set forth in Section 11, Executive no longer shall be
entitled to receive any consideration otherwise paid pursuant to
this section, and any unexercised stock options, whether vested or
unvested, will be cancelled.
(c)
Change in Control . If there is a Change
in Control during the Employment Term, and either a Constructive
Termination occurs or the Company terminates the Executive’s
employment without Business Reasons prior to the Expiration Date,
the Executive shall receive the benefits set forth in Section 6(b),
subject to its terms and conditions.
(d)
Termination for Disability . If at any
time during the Employment Term Executive becomes unable to perform
his duties as an employee as a result a Disability, which gives
rise to termination of employment for Disability, then (i)
Executive shall be entitled to receive payments and benefits in
accordance with the Disability policies of the Company, as they
exist from time to time, for senior executives and (ii)
Executive’s outstanding stock options and other equity
arrangements shall expire in accordance with the terms of the
applicable award agreement(s). The payments and benefits
contemplated under clause (i) above shall include, without
limitation, the following: (v) any accrued and unpaid salary,
(w) any accrued and unpaid Annual Bonus for a prior fiscal year,
(x) a pro-rata portion of any Annual Bonus that Executive would
have otherwise earned during the fiscal year in which his
Disability occurs, (y) any accrued and unpaid PTO, and (z) any
expense reimbursements.
(e)
Voluntary Termination or Involuntary Termination
for Business Reasons . If (i) Executive voluntarily
terminates his employment (other than in the case of a Constructive
Termination), or (ii) Executive is terminated involuntarily for
Business Reasons, then in any such event (A) all further vesting of
Executive’s stock options and other equity arrangements will
cease immediately and such awards will expire in accordance with
the terms of the applicable award
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