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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