EXHIBIT 10.13
January 15, 2004
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: EMPLOYMENT LETTER AGREEMENT
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Dear ▇▇▇▇▇:
In keeping with our discussions, this letter agreement memorializes the
terms of your continued employment with optionsXpress, Inc. (the "Company").
1. TITLES AND DUTIES. Your titles will be President and Chief
Technology Officer, and you will report directly to the Board of Directors of
the Company (the "Board"). As such, you will be responsible for performing such
duties and responsibilities as are customarily assigned to such positions, and
to perform such other services as assigned from time to time by the Board, not
inconsistent with your positions. You will be expected to devote your full
business time and attention to the business of the Company and the performance
of your duties.
2. COMPENSATION; TERM. You will receive an annual base salary of
$188,000 (the "Base Salary") paid in accordance with the payroll procedures of
the Company, with annual increases (but not decreases) as may be determined by
the Compensation Committee of the Board in its discretion. The Base Salary
payable hereunder, as may be increased from time to time, and any other amounts
payable to you under this Agreement (including, without limitation, pursuant to
Section 3 and Section 4 below), shall be subject to applicable withholding and
payroll taxes, and such other deductions as may be required under the Company's
employee benefit plans. The term of your employment under this letter agreement
shall begin on the date hereof and shall continue until terminated in
accordance with Section 5 below.
3. BONUSES. Unless the Board or the Compensation Committee thereof
determines in good faith that you and/or the Company had significant performance
issues, during the term of your employment you will be eligible to receive
annual bonuses under, and historically consistent with, the Company's bonus
plans for senior level executives, and the grant and payment terms and the
amount of any such bonuses shall be determined by the Compensation Committee of
the Board. Your bonus opportunity shall be at least equal to the opportunities
provided to you under the Company's current and historical bonus plans for
senior level executives.
4. EMPLOYEE BENEFITS. During the term of your employment, you will be
entitled to participate in all employee welfare benefit plans of the Company
applicable to senior level executives. In addition, during the term of your
employment, you will be entitled to three (3) weeks paid vacation per year.
Further, you shall be entitled to reimbursement for expenses incurred by you in
the ordinary course of the Company's business (subject to the Company's policies
with respect to reporting and documentation of such expenses).
5. TERMINATION AND SEVERANCE.
(a) During the term of employment hereunder, your employment may
be terminated as follows:
(i) At any time upon prior written notice by the Company
for any reason other than Cause (as defined below) or
no reason ("Termination Without Cause").
(ii) At any time upon three (3) months prior written
notice by you for any reason other than Good Reason
(as defined below) or no reason.
(iii) Automatically in the event of (A) your death or (B)
your inability to perform the essential duties,
responsibilities and functions of your position with
the Company as a result of any mental or physical
incapacity, even with reasonable accommodations for
such disability or incapacity provided by the
Company, which inability lasts (or is likely to last,
based on competent medical evidence presented to the
Board) for a continuous period of six (6) months or
longer. The reasoned and good faith judgment of the
Board as to your mental or physical inability to
perform shall be final so long as such judgment is
based on competent medical evidence presented to the
Board by you and by any physician or group of
physicians engaged by you or the Board to advise the
Board on such matters.
(iv) Immediately upon written notice by the Company if
such termination is for Cause ("Termination for
Cause").
(v) Immediately upon written notice by you if such
termination is for Good Reason.
(vi) At any time by mutual written agreement between you
and the Company.
(b) Upon termination of your employment hereunder for any reason,
all obligations of the Company shall cease upon such termination, except
the Company's obligations to (i) pay the compensation set forth in Section
2 hereof through the date of such termination, (ii) provide the benefits
set forth in Section 4 hereof through the date of such termination and to
comply with all state and federal laws and regulations applying to such
benefits and (iii) pay the severance benefits, if applicable, to you
pursuant to the terms and conditions set forth in Section 5(c) below. In
the event that your employment is terminated by you without Good Reason or
as a result of a Termination for Cause by the Company, you shall not be
entitled to any bonus compensation in respect of the calendar year of your
termination.
(c) In the event that your employment is terminated for Good
Reason or as a result of a Termination Without Cause, you shall be entitled
to receive an amount equal
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to twelve (12) months severance pay at the monthly rate of your
then-current base salary, payable in twelve (12) equal monthly installments
following such termination, unless increased pursuant to the terms of
Section 5(f) below, if and only if (i) you have executed and delivered to
the Company a mutual general release of all claims against you, on the one
hand, and the Company and its directors, officers and affiliates, on the
other hand, which general release shall be in the form of EXHIBIT A
attached hereto, and (ii) subsequent to such termination, you shall not
have (A) revoked or breached the provisions of such general release or
breached or otherwise failed to comply with the provisions of Sections 6, 7
or 8 of this letter agreement, or (B) applied for unemployment compensation
chargeable to the Company during such severance period.
(d) For purposes hereof, the term "Cause" means the following:
(i) the commission of fraud, theft or embezzlement by you in connection
with your duties to the Company or any of its customers or other material
business relations; (ii) your conviction of (or entry of a plea of guilty
or NOLO CONTENDERE to) a felony (other than minor traffic violations) (A)
in connection with your duties to the Company or any of its customers or
other material business relations, or (B) that materially and adversely
effects your ability to continue in your position and fulfill your duties
to the Company under applicable laws and regulations; (iii) your gross
mismanagement demonstrably and materially injurious to the Company, which
is not cured within thirty (30) days after a written demand is delivered to
you by the Board which identifies the grounds therefor; (iv) any material
breach by you of the provisions of this letter agreement (including any
breach by you of the provisions set forth in Sections 6, 7 or 8 hereof) or
any other material breach of any other agreement between or among you and
the Company, in either event which breach has not been cured within thirty
(30) days after a written demand is delivered to you by the Board which
identifies the grounds therefor. Any disagreement concerning whether there
has been "Cause" for termination will be resolved by the Board in its sole
discretion acting in good faith after providing you an opportunity to
address the Board at a full meeting thereof regarding whether or not there
has been "Cause" for termination.
(e) For purposes hereof, the term "Good Reason" means your
termination of employment with the Company as a result of the following:
(i) a material adverse alteration in the nature or status of your position,
duties or responsibilities with the Company without your prior written
consent; or (ii) the failure of the Company to comply in any material
respect with any of its obligations hereunder or under any other agreements
with you which remains uncured for a period of thirty (30) days following
your written notice to the Company of such failure.
(f) In the event your employment with the Company is terminated
for any reason, the Company shall have the option to elect in writing
within sixty (60) days after the date of termination to pay you, in equal
monthly installments, an additional amount equal to your then-current base
salary for up to twenty-four (24) additional months following the
Noncompetition Period, with any such additional period being referred to
herein as the "Additional Restriction Period" (which amount shall be in
addition to any other amounts payable to you under Section 5(c) hereof). If
the Company makes such election then the restrictions contained in Sections
7(a) and (b) hereof shall commence on the date of such termination and
extend for the Additional Restriction Period. In the event the Company
fails to make such election in the manner and during the time period
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set forth above, then the Company shall be deemed to have waived its rights
to make an election under this Section 5(f).
6. CONFIDENTIALITY.
(a) You will not at any time during or after termination of your
employment with the Company disclose to anyone or make use of, directly or
indirectly, any Confidential Information (as defined below). All records of
every nature and description relating to the Company's business during your
employment, whether or not prepared by you, shall be and remain the
property of the Company. All records of every nature and description
relating to the Company's business during your employment shall be left
with or delivered to the Company upon termination of your employment.
(b) For purposes of this letter agreement, "Confidential
Information" means all information of a confidential or proprietary nature
(whether or not specifically labeled or identified as "confidential"), in
any form or medium, that relates to the Company or its subsidiaries or
their business relations and their respective business activities and
includes, without limitation, the following: (i) internal business
information (including historical and projected financial information and
budgets and information relating to strategic and staffing plans and
practices, business, training, marketing, promotional and sales plans and
practices, cost, rate and pricing structures and accounting and business
methods); (ii) identities and individual requirements of, and specific
contractual arrangements with, the Company's and its subsidiaries'
customers, employees, independent contractors, clearing agencies, joint
venture partners and other business relations and their confidential
information; (iii) trade secrets, know-how, compilations of data and
analyses, techniques, systems, formulae, research, records, reports,
manuals, documentation, models, data and data bases relating thereto; (iv)
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether
or not patentable); and (v) information related to any and all intellectual
and proprietary property and rights and rights in Confidential Information
of every kind and description anywhere in the world, including all (A)
patents, patent applications, patent disclosures and inventions, (B)
internet domain names, trademarks, service marks, trade dress, trade names,
logos and corporate names and registrations and applications for
registration thereof together with all of the goodwill associated
therewith, (C) copyrights (registered or unregistered) and copyrightable
works and registrations and applications for registration thereof, (D) mask
works and registrations and applications for registration thereof, (E)
computer software, data, data bases and documentation thereof, (F) trade
secrets and other Confidential Information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or
not reduced to practice), know-how, manufacturing and production processes
and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable
works, financial and marketing plans and customer and supplier lists and
information), (G) other intellectual property rights and (H) copies and
tangible embodiments thereof (in whatever form or medium).
(c) Notwithstanding the provisions of this Section 6, information
shall not be deemed "Confidential Information" for purposes hereof if such
information is (i) in the
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public domain (other than as a result of a breach of this Agreement by
you), (ii) approved for release by the Company or (iii) lawfully obtained
by you after termination of your employment with the Company from third
parties (other than the Company or any of its affiliates or any of their
respective employees, directors or representatives) on a nonconfidential
basis who, to your knowledge, are not prohibited from disclosing such
information to you by a legal, contractual or fiduciary obligation to the
Company or any of its affiliates.
7. NONCOMPETITION; NONSOLICITATION.
(a) You acknowledge that (i) you are one of the Company's
founders and that you are familiar with the Company's trade secrets and
with other confidential information concerning the Company, including the
Company's (A) inventions, technology and research and development, (B)
customers and vendors and customer and vendor lists, (C) products and
services (including those under development) and related costs and pricing
structures, (D) accounting and business methods and practices, and (E)
similar and related confidential information and trade secrets; (ii) your
services have been and shall continue to be of special, unique and
extraordinary value to the Company and that you have been substantially
responsible for the growth and development of the Company and the creation
and preservation of the Company's goodwill; and (iii) the Company would be
irreparably damaged (including a significant loss of goodwill) if you were
to provide similar services to any person or entity competing with the
Company or engaged in a similar business. You further acknowledge that the
execution and delivery of this Agreement was a material inducement to the
Purchasers (as defined therein) and the Company to enter into the Stock
Purchase and Recapitalization Agreement dated as of December 17, 2003 (the
"Recapitalization Agreement") and part of the consideration for the
Repurchase Price paid to you thereunder. Due to your access to the
confidential proprietary information, customer information and customer
relationships and uniqueness of your services to the Company and the
consideration you received under the Recapitalization Agreement as
described and acknowledged in the preceding sentences, and in consideration
of the Company's agreements herein, you agree that for the longer of (x)
three (3) years from the date of the closing under the Recapitalization
Agreement and (y) the term of your employment with the Company and a period
of one (1) year after termination of your employment as provided hereunder
(the "Noncompetition Period"), unless such one (1) year period is extended
pursuant to the provisions of Section 5(f) above, you shall not directly or
indirectly, either for yourself or for any other individual, corporation,
partnership, joint venture or other entity, own any interest in, manage,
control, participate in (whether as an officer, director, employee,
partner, agent, representative or otherwise), consult with or render
services for any entity that (in whole or in part) engages or proposes to
engage in, or in any other manner engage, anywhere in the world, in the
on-line securities industry for the retail, consumer customer base
(including, for the avoidance of doubt and without limitation, the service
of retail brokerage accounts through independent representatives) or any
other business conducted by the Company or any of its subsidiaries during
your employment term or proposed to be conducted by the Company or any of
its subsidiaries within the six (6) month period prior to the termination
of your employment; PROVIDED, HOWEVER, that nothing herein shall prohibit
you from being a passive owner of not more than ten percent (10%) of the
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outstanding stock of any class of a corporation which is publicly traded so
long as you do not have any active participation in the business of such
corporation.
(b) During the Noncompetition Period, you shall not directly or
indirectly (through any other individual, corporation, partnership, joint
venture or other entity or otherwise) (i) induce or attempt to induce any
employee of the Company or any of its subsidiaries to leave the employ of
the Company or any of its subsidiaries, or in any way interfere with the
relationship between the Company or any of its subsidiaries and any
employee thereof, (ii) hire any person who was an employee of the Company
or any of its subsidiaries at any time during the six (6) month period
immediately prior to the date on which such hiring would take place, or
(iii) call on, solicit or service any customer, supplier, licensee,
licensor or other business relation of the Company or any of its
subsidiaries in order to induce or attempt to induce such person to cease
doing business with the Company or any of its subsidiaries, or in any way
interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any of its subsidiaries.
Each of you and the Company (on behalf of itself and its subsidiaries)
mutually agree not to make any negative statements or communications about
the other and, in the case of the Company, about any of its subsidiaries.
(c) If, at the time of enforcement of the covenants contained in
this Section 7 (the "Restrictive Covenants"), a court shall hold that the
duration, scope or area restrictions stated herein are unreasonable under
circumstances then existing, you agree that the maximum duration, scope or
area reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed and
directed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. You acknowledge that you have
consulted with legal counsel regarding the Restrictive Covenants and, based
on such consultation, have determined and hereby acknowledge that the
Restrictive Covenants are reasonable in terms of duration, scope and area
restrictions and are necessary to protect the goodwill of the Company's
business and the on-line nature of the Company's business is such that it
is not conducted with respect to geographical boundaries.
(d) If you breach, or threaten to commit a breach of, any of the
Restrictive Covenants, the Company shall have the right and remedy to have
the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
(e) In the event of any breach or violation by you of any of the
Restrictive Covenants, the time period of such covenant shall be tolled
until such breach or violation is resolved.
8. THE COMPANY'S OWNERSHIP OF INTELLECTUAL PROPERTY.
(a) In the event that you, as part of your activities on behalf
of the Company or any of its subsidiaries generate, author or contribute to
(whether before or after the date of this letter agreement) any invention,
design, new product or service development,
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device, product, method or process (whether or not patentable or reduced to
practice or comprising Confidential Information), any copyrightable work
(whether or not comprising Confidential Information) or any other form of
Confidential Information relating directly or indirectly to the Company's
or any of its subsidiaries' business as now or hereinafter conducted (the
"Intellectual Property"), you acknowledge that such Intellectual Property
is the exclusive property of the Company and hereby assign all right, title
and interest in and to such Intellectual Property to the Company. Any
copyrightable work prepared in whole or in part by you will be deemed "a
work made for hire" under Section 201(b) of the 1976 Copyright Act, and the
Company shall own all of the rights comprised in the copyright therein. You
shall promptly and fully disclose to the Company all Intellectual Property
not generally known to the Company through the ordinary course of operation
of the business, and you shall cooperate with the Company to protect the
Company's interests in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in securing patent
protection and copyright registrations and executing all documents as
reasonably requested by the Company, whether such requests occur prior to
or after termination of your employment with the Company). The Company
agrees to pay you for any reasonable costs, fees and expenses incurred by
you for providing your assistance pursuant to this Section 8, including,
but not limited to, any of your costs, expenses and your hourly fees if
such assistance is provided after your termination for any reason.
(b) In accordance with Section 2872 of the Illinois Employee
Patent Act, Ill. Rev. Stat. Chap. 140, Section 301 et seq. (1983), you are
hereby advised that Section 8 of this Agreement regarding the Company's
ownership of Intellectual Property does not apply to any invention for
which no equipment, supplies, facilities or trade secret information of the
Company was used and which was developed entirely on your own time, unless
(i) the invention relates to the business of the Company or any of its
subsidiaries or to the Company's or any of its subsidiaries actual or
demonstrably anticipated research or development or (ii) the invention
results from any work performed by you for or on behalf of the Company or
any of its subsidiaries.
9. BINDING EFFECT. The terms hereof shall be binding upon and shall
inure to the benefit of you and the Company, the successors and assigns of the
Company, and the heirs, executors, administrators, legal representatives and
assigns of you; PROVIDED THAT your rights and obligations hereunder may not be
delegated or assigned.
10. ENTIRE AGREEMENT. This letter agreement shall supersede any former
oral agreement and any former written agreement heretofore executed relating
generally to your employment with the Company, and this letter agreement can
only be amended, altered or terminated and its provisions can only be waived by
an agreement in writing signed by you and the Company; PROVIDED, HOWEVER, that,
except for the definition of "Cause" in Section 5(d) hereof, this letter
agreement shall not be deemed to supersede any restricted stock, equity award or
other agreement between the Company and you.
11. REPRESENTATIONS. You hereby represent and warrant to the Company
that (a) the execution, delivery and performance of this Agreement by you does
not and shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which your are a
party or by which your are bound, (b) you are not a party
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to or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any person or entity other than the Company and/or its
subsidiaries and (c) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of you,
enforceable in accordance with its terms. You hereby acknowledge and represent
that you have consulted with independent legal counsel regarding your rights and
obligations under this Agreement and that you fully understand the terms and
conditions contained herein.
12. COOPERATION. During the term of your employment and for a period of
two (2) years after termination of your employment for any reason, you shall
reasonably cooperate with the Company in (a) any internal investigation or any
administrative, regulatory or judicial proceeding (so long as such investigation
or proceeding is not adversarial in nature between you and the Company) or (b)
any dispute with a third party, as reasonably requested by the Company
(including, without limitation, being available to the Company upon reasonable
advance notice for interviews and factual investigations, appearing at the
Company's request to give testimony without requiring service of a subpoena or
other legal process, volunteering to the Company all pertinent information and
turning over to the Company all relevant documents which are or may come into
your possession, all at times and on schedules that are reasonably consistent
with your other activities and commitments). In the event the Company requires
your cooperation in accordance with this Section, the Company shall reimburse
you for all reasonable travel and other out-of-pocket expenses (including
lodging and meals) incurred by you in connection therewith promptly upon
submission of receipts therefor.
13. REMEDIES. In the event that you violate any of the provisions
hereof, you hereby acknowledge that the Company will suffer irreparable damages
and will be entitled to full injunctive relief or such other relief against you
as may be provided by law or in equity.
14. ENFORCEABILITY. This letter agreement shall be construed and
enforced under the laws of the State of Illinois without giving effect to the
principles of conflicts of laws thereof. If any provision of this letter
agreement is held invalid or unenforceable by operation of law or otherwise,
such circumstances shall not have the effect of rendering any of the other
provisions of this letter agreement invalid or unenforceable.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO EMPLOYMENT LETTER AGREEMENT]
By signing below, the Company agrees to all of the terms and conditions of
this letter agreement. Please indicate your acceptance of these terms and
conditions by signing each enclosed copy of this letter agreement where
indicated below, and return an originally-executed copy of this letter agreement
to the undersigned.
Sincerely yours,
optionsXpress, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, Chairman of the Board
ACCEPTED AND AGREED as of
this 15th day of January, 2004.
/s/ ▇▇▇▇▇ ▇▇▇▇
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