Re: Amended and Restated Retention Letter Agreement
Exhibit 10.6
January 3, 2007
Mr. Xxxxx Xxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
| Re: | Amended and Restated Retention Letter Agreement |
Dear Xxx:
In keeping with our discussions, this letter agreement memorializes the terms of your
continued retention by optionsXpress Holdings, Inc. (the “Company”). This letter amends and
restates that certain Retention Letter Agreement, dated as of January 5, 2005, which shall continue
is full force and effect from the date hereof as amended hereby.
1. Titles and Duties. Your title will be Chairman of the Board, 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 position, and
to perform such other services as assigned from time to time by the Board, not inconsistent with
your position. You will be expected to devote such business time and attention to the business of
the Company as you deem appropriate for your position as Chairman of the Board and acting as such
in a non-executive capacity.
2. Compensation; Term. You will receive an annual retainer of $300,000 (the “Base
Remuneration”) 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 Remuneration 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, if
any, and such other deductions as may be required under the Company’s employee benefit plans. The
term of your retention under this letter agreement shall begin on the date hereof and shall
continue until terminated in accordance with Section 5 below.
3. Benefits. None.
4. Termination and Severance.
(a) During the term of retention hereunder, your retention 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”). |
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Mr. Xxxxx Xxxx
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| (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 retention 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) 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 retention 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 retention is terminated for Good Reason or as a result of a
Termination Without Cause, you shall be entitled to receive an amount equal to twelve (12)
months severance pay at the monthly rate of your then-current Base Remuneration, 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 other 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.
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Mr. Xxxxx Xxxx
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(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 retention by
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 retention 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 retainer 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 set forth above, then the
Company shall be deemed to have waived its rights to make an election under this Section
5(f).
5. Confidentiality.
(a) You will not at any time during or after termination of your retention 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
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Mr. Xxxxx Xxxx
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Mr. Xxxxx Xxxx
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Company’s business during your retention, 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 retention shall be left with or delivered to the Company
upon termination of your retention.
(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 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 retention
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
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Mr. Xxxxx Xxxx
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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.
6. 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. The term of your
retention with the Company and a period of one (1) year after termination of your retention
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 retention
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 retention; provided,
however, that nothing herein shall prohibit you from being a passive owner of not
more than ten percent (10%) of the 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; and, provided further, that you shall not be deemed to have violated
the provisions of this Section 7(a) as a result of any ordinary course trading, investment
or other business activities taken by or on behalf of G-Bar Limited Partnership and its
affiliates in connection with their respective businesses so long as no significant portion
of such ordinary course trading, investment or other business activities are in direct
competition with the business of the Company or any of its subsidiaries relating to the
service of retail consumer customers or the service of retail brokerage accounts through
independent representatives.
January 3, 2007
Mr. Xxxxx Xxxx
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Mr. Xxxxx Xxxx
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(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.
7. 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,
January 3, 2007
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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 retention 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, § 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.
8. 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.
9. Entire Agreement. This letter agreement shall supersede any former oral agreement
and any former written agreement heretofore executed relating generally to your retention with or
employment by 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.
January 3, 2007
Mr. Xxxxx Xxxx
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Mr. Xxxxx Xxxx
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10. 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 you are a party or by which you are bound, (b) you are not a party to or bound by
any retention agreement, 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.
11. Cooperation. During the term of your retention and for a period of two (2) years
after termination of your retention 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.
12. 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.
13. 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.
14. Nature of Services. Notwithstanding anything herein to the contrary, your services
hereby shall be performed in an autonomous and independent manner, consistent with the obligations
of a director under applicable law. Subject to the provisions of such law, the Company shall have
no power to control the means and methods utilized by you in discharging your duties hereunder.
[Signature Page Follows]
Signature Page to Retention 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 Holdings, Inc. |
||||
| By: | /s/ Xxxxx Xxxx | |||
| Xxxxx Xxxx, Chief Executive Officer | ||||
ACCEPTED AND AGREED as of
this 3rd day of January, 2007
this 3rd day of January, 2007
/s/ Xxxxx Xxxx |
||
Xxxxx Xxxx |
