Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive
Employment Agreement (“ Agreement ”) is entered
into this 26th day of January, 2005, by and between Timothy Knight
(“ Executive ”) and INVESTools Inc. (the “
Company ”).
RECITALS
WHEREAS,
contemporaneous with the execution of this Agreement, the Company,
Prophet Financial Systems, Inc. (“ Prophet ”)
and Timothy Knight and certain other named parties are entering
into a certain Stock Purchase Agreement (the “ SPA
”);
WHEREAS, this
Agreement is contemplated by Section 3.6(a)(iv) of the
SPA;
WHEREAS, in conjunction with the transaction,
the Company will be paying to the shareholders of Prophet
approximately $8,000,000 for all their Prophet stock consisting of
100% of the outstanding stock of Prophet, therefore acquiring
Prophet’s business and its customer goodwill;
WHEREAS, as an executive and principal
shareholder of Prophet, Executive has had access to, and gained
significant knowledge about, the Confidential Information, as
herein defined, relating to Prophet’s business, including
trade secrets, proprietary methods, processes, marketing
information, pricing and customer information;
WHEREAS, in the
course of Executive’s employment with the Company, Executive
will have access to the Confidential Information, as herein
defined, relating to the business of the Company;
WHEREAS, the
Company would not employ Executive but for Executive’s
covenants and promises contained in this Agreement; and
WHEREAS,
Executive’s covenants and promises contained in this
Agreement played a major role in the Company’s valuation of
the purchase price for the stock of Prophet, Prophet’s
business and customer goodwill, and the Company would not have paid
as much consideration for Prophet’s stock, its business and
customer goodwill, in the absence of Executive’s covenants
and promises contained in this Agreement.
NOW, THEREFORE, in
consideration of the Company’s acquisition of Prophet’s
stock, Prophet’s business and its customer goodwill, as well
as the other mutual promises hereinafter contained, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1.
Employment. The Company agrees to employ Executive and
Executive hereby accepts such employment from the Company upon the
terms and conditions set forth in this
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Agreement for the
period beginning upon Closing, as such term is defined in the SPA,
and continuing for a period of two years (unless otherwise
terminated earlier in accordance with Section 5 hereof)
(“ Initial Employment Period ”). Upon the
expiration of the Initial Employment Period, this Agreement shall
be automatically renewed for consecutive one-year periods unless
either party provides a notice of non-renewal for any reason at
least 30 days prior to the end of the Initial Employment Period or
any additional one-year period (the “ Renewal Employment
Period ”) (the Initial Employment Period and any Renewal
Employment Periods shall be referred to collectively herein as the
“ Employment Period ”).
2.
Nature of Duties.
Executive shall be employed as the Vice President of
Technology. As such, Executive shall work exclusively for the
Company and its wholly owned subsidiaries and shall have all of the
customary powers and duties associated with that position.
Executive shall report to the Chief Executive Officer of the
Company or his designee. Executive shall also be subject to
the Company’s supervisory procedures and approval practices,
as are generally in effect from time-to-time.
3.
Place of Performance.
Executive shall perform his duties at or within a reasonable
vicinity of Palo Alto, California, except for required travel on
the Company’s business.
4 .
Compensation and Related
Matters.
(a)
Base Salary.
During the first year of the Employment Period, the Company shall
pay Executive a base salary at an annual rate of $180,000.00.
The Company shall pay Executive his base salary in conformity with
the Company’s salary payment practices generally applicable
to other similarly situated Company executives. After the
first year of the Employment Period, the Company may, in its sole
discretion, increase Executive’s base salary from time to
time during the remainder of the Employment Period.
(b)
Bonuses.
During the Employment Period, Executive shall be eligible for a
bonus, on an annual basis. The amount of bonus shall be
targeted at up to 35% of Executive’s base salary, but the
exact amount of such bonus, if any, shall be determined within the
sole discretion of the Company.
(c)
Standard Benefits.
During the Employment Period, Executive shall be entitled to
participate in all employee benefit plans and programs, including
paid vacations, generally available to other similarly situated
Company executives, subject to the terms and conditions of the
applicable plans.
(d)
Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable and customary travel and business
expenses he incurs in connection with his employment
hereunder. Executive must account for those expenses in
accordance with the policies and procedures established by the
Company.
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(e)
Stock Options.
The Company shall grant Executive options to purchase 50,000
shares of the Company’s common stock at an exercise price per
share equal to the price per share as of the date of Closing, as
that term is defined in the SPA, subject to the terms and
conditions of the applicable stock option agreement and stock
plan.
5.
Termination. The Company or Executive may terminate this
Agreement and Executive’s employment as provided below:
a.
Termination by the Company for Cause. The Company shall
have the right to immediately terminate Executive’s
employment at any time for any of the following reasons (each of
which is referred to herein as “ Cause ”) by
giving Executive written notice of the effective date of
termination (which effective date may be the date of such
notice):
(i)
Any intentional act by Executive of fraud or dishonesty including,
but not limited to, stealing or falsification of Company records,
with respect to any aspect of the Company’s business;
(ii)
Any intentional failure by Executive to follow the lawful
instructions or directions from the Chief Executive Officer of the
Company or his designee;
(iii)
failure by Executive to perform in any manner under this Agreement
after being given notice of such failure by the Company, along with
an explanation of such failure of performance;
(iv)
misappropriation of Company funds or of any corporate
opportunity;
(v)
conviction of Executive of a felony, or of a crime that the
Company, in its sole discretion, determines involves a subject
matter which may reflect negatively on the Company’s
reputation or business (or a plea of nolo contendere thereto);
(vi)
gross, willful or wanton negligence, misconduct, or conduct which
constitutes a breach of any fiduciary duty or duty of loyalty owed
to the Company by Executive;
(vii)
Any intentional and material violation of any lawful Company
policy, rule, regulation or directive;
(viii)
conduct on the part of Executive, even if not in connection with
the performance of his duties contemplated under this Agreement,
that
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is
reasonably likely to result in serious prejudice to the interests
of the Company, as determined by the Company in its reasonable
discretion, and Executive fails to cease such conduct immediately
upon receipt of notice to cease such conduct;
(ix)
acceptance by Executive of employment with another employer;
or
(x)
violation of federal or state securities laws as determined in the
reasonable discretion of the Company.
If
the Company terminates Executive’s employment for any of the
reasons set forth above, the Company shall have no further
obligations to Executive hereunder from and after the effective
date of termination and shall have all other rights and remedies
available under this or any other agreement and at law or in equity
and Executive gets nothing else.
b.
Termination by the Company Without Cause. The Company
shall have the right to terminate Executive without Cause for any
reason by providing 30 days’ written notice to
Executive. If the Company terminates Executive without Cause
by providing 30 days’ notice, the Company shall pay Executive
through the date of termination and, subject to the limitations set
forth below, the Company shall provide Executive with severance
payments equal to six months’ base salary (based on
Executive’s annual salary on the date of termination), less
applicable taxes. Such severance payments shall be paid in
bi-weekly installments (“ Installment Severance
Payments ”) over the six-month period following the date
of termination (referred to herein as the “ Severance
Period ”) in accordance with the Company’s normal
payroll practices and schedule. In the event Executive is in
violation of Sections 6 , 7 , 8 , 9 or
11 , the Company shall be entitled to immediately cease the
payment of the Installment Severance Payments, the Company’s
severance obligation shall terminate and expire, and the Company
shall have no further obligations hereunder from and after the date
of such violation and shall have all other rights and
remedies available under this Agreement or any other agreement and
at law or in equity.
Additionally, for purposes of this
Section 5(b) , Executive’s Effective Termination
at any time shall be treated as a termination by the Company
without Cause and the Executive shall be entitled to the Severance
Payments described within this Section 5(b) . For
purposes of this Agreement, the term “ Effective
Termination ” shall mean that any of the following
are undertaken without Executive’s express written consent:
(i) the assignment to Executive of any duties or
responsibilities that results in a material diminution of
Executive’s position, authority, or scope of
responsibilities; or (ii) a reduction in Executive’s
annual base salary, except to the extent the salary of all other
similarly situated executives of the Company, or successor thereof,
are similarly reduced.
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c.
Voluntary Termination by Executive. In the event that
Executive’s employment with the Company is voluntarily
terminated by Executive for any reason other than an Effective
Termination as described in Section 5(b) , the Company
shall have no further obligations hereunder from and after the date
of such termination and shall have all other rights and remedies
available under this Agreement or any other agreement and at law or
in equity.
d.
Termination Upon
Death. In the event that Executive shall die
during his employment by the Company, the Company shall pay to
Executive’s estate any compensation due that would otherwise
have been payable through the date of death.
e.
Termination Upon Disability. In the event that Executive
shall become disabled during his employment by the Company,
Executive’s employment hereunder shall terminate and the
Company shall provide Executive with severance payments equal to
three months’ salary (based on Executive’s monthly
salary on the date of termination), less applicable taxes.
Such severance payments shall be paid bi-weekly over a period of
three months in accordance with the Company’s normal payroll
practices and schedule. For purposes of this Agreement,
Executive shall become “disabled” if he shall become,
because of illness or incapacity, unable to perform the essential
functions of his job under this Agreement with or without
reasonable accommodation for a continuous period of 90 days during
the Employment Period.
6.
Nondisclosure. Executive acknowledges that during his
employment with Prophet and as a shareholder of Prophet, he
acquired substantial knowledge with respect to the operations of
Prophet’s business, including Confidential Information, as
defined below. In addition, Executive acknowledges that
during his employment with the Company, the Company will provide to
Executive, and Executive will acquire, Confidential Information, as
defined below. During the term of this Agreement, Executive
shall keep secret and retain in strictest confidence, and shall
not, without the prior written consent of the Chief Executive
Officer of the Company, furnish, make available or disclose to any
third party or use for the benefit of himself or any third party,
except in the furtherance of his job duties with the Company except
as may be required by law, regulation or legal process, any
Confidential Information. Executive shall not, at any time
after his employment with the Company has ended (for whatever
reason), use or divulge to any person or entity, directly or
indirectly, any Confidential Information, or use any Confidential
Information in subsequent employment of any nature except as may be
required by law, regulation or legal process. As used in this
Agreement, “ Confidential Information ” shall
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