Exhibit
10.2


 


EMPLOYMENT
AGREEMENT


 


This Employment
Agreement (“Agreement”) is entered into this 26th day of February,
2004, by and between Don Klabunde (“Executive”) and INVESTools Inc. (the
“Company”).


 


RECITALS


 


WHEREAS,
contemporaneous with the execution of this Agreement, INVESTools Inc., SES
Acquisition Corp., Service Enhancement Systems, Inc., d/b/a 360 Group (“360
Group”), Ted B. Shuel and Jamie Lynn Speas Shuel, as trustee of The Shuel
Family Trust, Scott K. Waltz, individually, Ted B. Shuel, individually, and
Jamie Lynn Speas Shuel, individually, are entering into a certain Agreement and
Plan of Merger (the “Merger Agreement”);


 


WHEREAS, this
Agreement is contemplated by Section 3.10 of the Merger Agreement;


 


WHEREAS, in
conjunction with the merger transaction, the Company will be paying to the
shareholders of 360 Group approximately $5.5 million for all of its stock and
substantially all of its assets, including the 360 Group’s business and its
customer goodwill;


 


WHEREAS, as an
executive of 360 Group, Executive has had access to, and gained significant
knowledge about, the Confidential Information, as herein defined, relating to
360 Group’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 and assets
of 360 Group, including 360 Group’s business and customer goodwill, and the
Company would not have paid as much consideration for the acquisition of 360
Group’s stock and assets, including 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 360 Group’s stock and assets,
including 360 Group’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.             Term
of 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 Agreement for
the period beginning on the date hereof and continuing for a period of three
years (unless otherwise terminated earlier in accordance with Section 5
hereof (the “Employment Period”).


 


2.             Nature of Duties.  Executive
shall be employed as the Company’s Vice President and Chief Information
Officer.  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.  While the Executive will initially perform
his duties in the San Francisco, California vicinity, he will be expected to
travel extensively on Company business and may be required to relocate within
the San Francisco Bay Area during the Employment Period.


 


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, adjust Executive’s base salary
from time to time during the Employment Period, but in no event shall
Executive’s base salary be adjusted below an annual rate of $180,000.00.


 


(b)           Bonuses. 
During the Employment Period, Executive shall be eligible for a bonus,
on an annual basis.  The amount of
bonus, if any, shall be determined within the sole discretion of the Company.


 


(c)           Stock Options.   Subject to the Closing, as defined in Section 3.9 of the Merger
Agreement, the Company shall grant Executive options to purchase 100,000 shares
of the Company’s common stock at an exercise price per share equal to the price
per share as of the Closing Date (as defined in Section 3.9 of the Merger
Agreement), subject to the terms and conditions of the applicable stock option
agreement and stock plan.


 


(d)           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.


 


(e)           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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5.             Termination.  Executive’s
employment with the Company will continue throughout the Employment Period,
unless earlier terminated pursuant to any of the following provisions:


 


(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)            willful and material breach by Executive of any
provision of this Agreement;


 


(ii)           any act by Executive of fraud or material dishonesty,
including but not limited to stealing or falsification of Company records with
respect to any aspect of the Company’s business;


 


(iii)          violation of material state or federal laws;


 


(iv)          drug or alcohol use of Executive in material violation
of Company policy or that impedes Executive’s job performance or brings
Executive into disrepute in the community;


 


(v)           failure by Executive to perform hereunder after 14
days notice of such failure and an opportunity to explain and cure such failure
of performance;


 


(vi)          misappropriation of funds or of any corporate opportunity;


 


(vii)         conviction of Executive of a felony, or of a crime
that the Company, in its reasonable discretion, determines involves a subject
matter which may reflect negatively on the Company’s reputation or business (or
a plea of nolo contendere thereto);


 


(viii)        acts by Executive attempting to secure or securing any
personal profit not fully disclosed to and approved by the Chief Executive
Officer and/or Board of Directors of the Company in connection with any
transaction entered into on behalf of the Company;


 


(ix)           gross negligence, material misconduct, or conduct
which constitutes a breach of any fiduciary duty owed to the Company by
Executive;


 


(x)            the failure of Executive to follow the lawful
instructions or directions from the Chief Executive Officer of the Company;


 


(xi)           material violation of any lawful Company policy, rule,
regulation or directive;


 


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(xii)          conduct on the part of Executive, even if not in
connection with the performance of his
duties contemplated under this Agreement, that could result in serious
prejudice to the interests of the Company, and Executive fails to cease such
conduct immediately upon receipt of notice to cease such conduct; or


 


(xiii)         acceptance by Executive of employment with any other
employer.


 


If the Company
terminates Executive’s employment for Cause as defined above, the Company shall
have no further obligations hereunder from and after the effective date of
termination and the Company 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. 
Subject to the severance pay provision set forth in subsection (f)
below, the Company shall have the right to terminate Executive without Cause
for any reason at any time.


 


(c)           Voluntary Termination by Executive. 
In the event that Executive’s employment with the Company is terminated
by Executive for any reason prior to the end of the Employment Period, 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 hereunder, the Company
shall pay to Executive’s estate any compensation due that would otherwise have
been payable through the date of his 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).  Such severance payments shall be paid 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 his employment by the Company.


 


(f)            Severance Pay.  If the Company terminates Executive
other than for Cause, death or disability, the Company shall provide Executive
with severance payments equal to the lesser of (i) six month’s base salary
(based on Executive’s monthly salary on the date of termination) or (ii) the
balance of Executive’s base salary remaining in the Employment Period under
this Agreement (the “Severance Period”). 
Such severance payments shall be paid in accordance with the Company’s
normal payroll practices and schedule, subject to the limitations set forth
below.  In the event Executive obtains
gainful employment, or is in breach of his post-employment covenants contained
in Sections 6, 7, 8, and 9, at any time during the Severance Period, the
Company shall be entitled to immediately cease any severance payments, the
Company’s severance obligation shall terminate and expire, and the Company
shall have no 


 


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further
obligations to Executive hereunder from and after the date of such other
employment or breach and shall have all other rights and remedies available
under this Agreement or any other agreement, and at law or in equity.


 


6.             Nondisclosure.  Executive acknowledges that during his
employment by 360 Group, he acquired substantial knowledge with respect to the
operations of 360 Group’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, 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.  As used in this Agreement, “Confidential
Information” shall mean any information relating to the business or affairs of
the Company and its affiliates and predecessors (including 360 Group),
including, but not limited to, trade secrets, information relating to financial
statements, operations manuals, systems manuals, customer identities, customer
profiles, customer preferences, partner or investor identities, employees,
suppliers, project designs, project methods, advertising programs, advertising
techniques, target markets, servicing methods, equipment, programs, strategies
and information, market analyses, profit margins, pricing information, cost
structure, past, current or future marketing strategies, or any other
proprietary information used by the Company or its affiliates; provided however,
that Confidential Information shall not include any information which is in the
public domain or becomes known in the industry through no wrongful act on the
part of Executive.  Executive
acknowledges that the Confidential Information is vital, sensitive,
confidential and proprietary to the Company and that he is under a contractual
and common law duty to not disclose the Confidential Information to any third
party at any time.  Executive
acknowledges and agrees that his non-disclosure obligation applies to all
Confidential Information of 360 Group and the Company, no matter when he
obtained knowledge of or access to such Confidential Information.


 


7.             Non-Interference
or Solicitation of Employees. 
Executive agrees that during his employment with the Company and for a
period of two years after the termination of Executive’s employment (for
whatever reason), that neither he nor any individual, partner(s), limited
partnership, corporation or other entity or business with which he is in any
way affiliated, including without limitation, any partner, limited partner,
director, officer, shareholder or employee of any such entity or business, will
request, induce or attempt to influence, directly or indirectly, any employee
of the Company to terminate their employment with the Company.


 


8.             Non-Interference or
Solicitation of Men’s Warehouse. 
Executive further agrees that during his employment with the Company and
for a period of two years after the termination of Executive’s employment (for
whatever reason), he shall not, directly or indirectly, as an individual,
employee, agent, consultant, owner, director, partner, or in any other
individual or representative capacity of any person, entity or business,
solicit or accept business from, or 


 


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perform services
on behalf of, the Men’s Warehouse or in any way encourage it to terminate or
otherwise alter its relationship with the Company.


 


9.             Non-Interference or Solicitation of Other Clients.  Executive agrees that during his employment
with the Company and for a period of two years after the termination of
Executive’s employment (for whatever reason), he shall not, directly or
indirectly, as an individual, employee, agent, consultant, owner, director,
partner, or in any other individual or representative capacity of any person,
entity or business, solicit or accept business from, or perform services on
behalf of, any current or future client of the Company or in any way encourage
them to terminate or otherwise alter their relationship with the Company.


 


10.          Notification of Future Employment.  Executive agrees that during his
employment with the Company and for a period of two years after the termination
of Executive’s employment (for whatever reason), he will, within ten days after
accepting any employment, advise the Company in writing of the identity of his
employer.  The Company shall be entitled
to serve notice upon each such employer that Executive is bound by this
Agreement and the Merger Agreement and furnish each such employer with a copy
of this Agreement and/or the Merger Agreement or the relevant portions thereof.


 


11.          Extension
of Covenant.  In the event of a
breach by Executive of any covenant set forth in Sections 7, 8 and 9 of
this Agreement, the term of such covenant will be extended by the period of the
duration of such breach.


 


12.          Work
Product.  For purposes of this Section 12, “Work
Product” shall mean all intellectual property rights, including all trade
secrets, U.S. and international copyrights, trademarks, trade names, patentable
inventions, discoveries and other intellectual property rights in any work
product that is created in connection with Executive’s work or using the
Company’s materials.  In addition, all
rights in any preexisting Work Product provided to the Company during
Executive’s employment shall automatically become part of the Work Product
hereunder, whether or not it arises specifically out of Executive’s
“Work.”  For purposes of this Agreement,
“Work” shall mean (1) any direct assignments and required performance by
or for the Company, and (2) any other productive output that relates to the
business of the Company and is produced during Executive’s employment by the
Company.  For this purpose, Work may be
considered present even after normal working hours, away from the Company’s
premises, on an unsupervised basis, alone or with others.  Unless otherwise approved in writing by the
Chief Executive Officer or the Board of Directors of the Company, this
Agreement shall apply to all Work Product created in connection with all Work
conducted before or after the date of this Agreement.


 


The Company shall
own all rights in the Work Product.  To
this end, all Work Product shall be considered work made for hire for the
Company.  If any of the Work Product may
not, by operation of law or agreement, be considered Work made by Executive for
hire for the Company (or if ownership of all rights therein do not otherwise
vest exclusively in the Company immediately), Executive agrees to assign, and
upon creation thereof does hereby automatically assign, without further
consideration, the ownership thereof to the Company.  Executive hereby irrevocably relinquishes for the benefit of the
Company and its assigns any moral rights in the Work Product recognized by
applicable law.  The Company shall have
the right to obtain and 


 


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hold, in whatever
name or capacity it selects, copyrights, registrations, and any other
protection available in the Work Product.


 


Executive agrees
to perform upon the request of the Company, during or after Executive’s Work or
employment with the Company, such further acts as may be necessary or desirable
to transfer, perfect, and defend the Company’s ownership of the Work Product,
including by (1) executing, acknowledging, and delivering any requested
affidavits and documents of assignment and conveyance, (2) obtaining and/or
aiding in the enforcement of copyrights, trade secrets, and (if applicable)
patents with respect to the Work Product in any countries, and (3) providing
testimony in connection with any proceeding affecting the rights of the Company
in any Work Product.


 


13.          No
Exclusions.  Executive hereby represents that Executive
has not heretofore created any Work Product or prepared any work which is the
subject of any Work Product that Executive wishes to exclude from the
provisions of Section 12 above.


 


14.          Return of
Documents.  Executive agrees that if Executive’s
relationship with the Company is terminated (for whatever reason), Executive
shall not take with Executive, but will leave with the Company, all work
product, Confidential Information, records, files, memoranda, reports,
financial information, price lists, customer lists, supplier lists, documents
and other information, in whatever form (including on computer disk), and any
copies thereof, or if such items are not on the premises of the Company,
Executive agrees to return such items immediately upon Executive’s termination
or at the request of the Company. 
Executive acknowledges that all such items are and remain the property
of the Company.


 


15.          Severability
and Reformation.  If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of Executive or the Company under this Agreement
would not be materially and adversely affected thereby, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom, and in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the Company
and Executive hereby request the court or arbitrator to whom disputes relating
to this Agreement are submitted to reform the otherwise unenforceable provision
in accordance with this Section 15.


 


16.          Injunctive Relief.  Executive
acknowledges that the breach of any of the covenants contained herein,
including, without limitation, the confidentiality covenants contained in Section
6 and the non-solicitation covenants in Sections 7, 8 and 9, will
give rise to injury to the Company and will deprive the Company of the benefit
of its purchase of 360 Group’s stock and assets, including 360 Group’s business
and its customer goodwill.  Accordingly,
the Company shall be entitled to injunctive relief to prevent or cure breaches
or threatened breaches of the provisions of this Agreement and to enforce
specific performance of the terms and provisions hereof in any court of
competent jurisdiction, in addition to any other legal or equitable remedies
which may be available.  Executive
further acknowledges and agrees 


 


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that the
enforcement of a remedy hereunder by way of injunction shall not prevent
Executive from earning a reasonable livelihood.  Executive further acknowledges and agrees that the covenants
contained herein are necessary for the protection of the Company’s legitimate
business interests and are reasonable in scope and content.  Nothing herein shall prevent the Company
from pursuing a legal and/or equitable action against Executive for any damages
caused by his breach of this Agreement. 
Furthermore, nothing herein shall limit the remedies available to the
Company for any breach of the Merger Agreement.


 


17.          Headings,
Gender, etc.  The headings used in this Agreement have
been inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement. 
Unless the context of this Agreement otherwise requires, (i) words of
any gender shall be deemed to include each other gender; (ii) words using the
singular or plural number shall also include the plural or singular number,
respectively; and (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and
derivative or similar words shall refer to this entire Agreement.


 


18.          Governing
Law.  THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY PRINCIPLE OF CONFLICT OF LAWS THAT WOULD REQUIRE THE APPLICATION
OF THE LAW OF ANY OTHER JURISDICTION.


 


19.          Survival. 
Executive’s termination from employment and/or the termination of this
Agreement, for whatever reason, shall not reduce or terminate Executive’s
covenants and agreements set forth herein.


 


20.          Notices. 
Any notice necessary under this Agreement shall be in writing and shall
be considered delivered three days after mailing if sent certified mail, return
receipt requested, or when received, if sent by telecopy, prepaid courier,
express mail or personal delivery to the following addresses:


 


	
  If to the Company:

  	
  INVESTools Inc.

  
	
   

  	
  Attn:  Lee Barba

  
	
   

  	
  5959 Corporate Drive,
  Suite LL250

  
	
   

  	
  Houston, Texas 77036

  
	
   

  	
   

  
	
  cc to:

  	
  Paul G. Nason, Esq.

  
	
   

  	
  Locke Liddell &
  Sapp LLP

  
	
   

  	
  2200 Ross Avenue, Suite
  2200

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  (214) 740-8000
  (telephone)

  
	
   

  	
  (214) 740-8800
  (facsimile)

  
	
   

  	
   

  
	
  If to the Executive:

  	
  Don Klabunde

  
	
   

  	
  999 Fifth Avenue, Suite
  400

  
	
   

  	
  San Rafael, California
  94901

  
	
   

  	
  (415) 258-2900
  (telephone)

  
	
   

  	
  (415) 258-2715
  (facsimile)

  



 


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21.          Entire
Agreement.  Except as provided herein, this Agreement,
including the Recitals and introductions, embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and supersedes all prior conflicting or inconsistent agreements,
consents and understandings relating to such subject matter.  Nothing herein shall be construed as
superceding or otherwise affecting Executive’s obligations and covenants under
Section 8 of his prior Employment Agreement with 360 Group, dated April 25,
2001 (“Prior Employment Agreement”). 
Executive acknowledges and agrees that there is no oral or other
agreement between the Company and Executive which has not been incorporated in
this Agreement.  This Agreement may only
be modified pursuant to Section 25 and nothing herein shall affect the
parties’ obligations under the Merger Agreement.


 


22.          No Waiver. 
The forbearance or failure of one of the parties hereto to insist upon
strict compliance by the other with any provisions of this Agreement, whether
continuing or not, shall not be construed as a waiver of any rights or
privileges hereunder.  No waiver of any
right or privilege of a party arising from any default or failure hereunder of
performance by the other shall affect such party’s rights or privileges in the
event of a further default or failure of performance.


 


23.          Assignment. 
No approval shall be required for the Company to assign this Agreement
to any affiliate or successor in interest to the Company’s business.  Executive shall not assign his obligations
under this Agreement.  Any assignment
made by either party in contravention of this Section 23 shall be null
and void for all purposes.


 


24.          Binding
Effect.  This Agreement shall be binding on and inure
to the benefit of the parties and their respective permitted successors and
assigns.


 


25.          Modification. 
This Agreement may be modified only by a written agreement signed by
both parties.  Any such written
modification may only be signed by Chief Executive Officer of the Company.


 


26.          Knowledge.  Executive acknowledges that he has had the
opportunity to read and review this Agreement and that he understands all of
the terms of this Agreement and its importance.  Executive further acknowledges that the Company would not enter
into the Merger Agreement or pay the substantial consideration for 360 Group’s stock
and assets without this Agreement. 
Executive recognizes and agrees that the enforcement of this Agreement
is necessary and essential to ensure the preservation, continuity and value of
the Company’s business, including its assets and customer goodwill, and the 360
Group’s and the Company’s Confidential Information.  Executive also recognizes and agrees that the enforcement of this
Agreement is necessary to allow the Company to realize and derive all of the
benefits, rights, and expectations of conducting such business and owning and
protecting the Company’s business, including its stock, assets and customer
goodwill, as well as its Confidential Information.  Executive acknowledges that the Company encourages Executive to
consider consulting with an attorney prior to execution of this Agreement by
Executive.


 


27.          Waiver of Rights Under
Prior Employment Agreement.  In
exchange for the mutual promises and consideration contained herein, Executive
waives all rights to 


 


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compensation,
including severance pay, under the Prior Employment Agreement and any offer
letter presented to Executive by 360 Group.


 


28.          Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original instrument, and all of which together
shall constitute one and the same Agreement.


 


29.          Taxes.  The
Company may withhold from any amounts payable to Executive hereunder all
federal, state, local or other taxes that the Company may reasonably determine
are required to be withheld pursuant to any applicable law or regulation.


 


IN WITNESS
WHEREOF, the parties hereto have executed this Employment Agreement as of the
day and year first above written.


 


	
   

  	
  DON KLABUNDE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Donald K. Klabunde

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INVESTOOLS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Lee K. Barba

  
	
   

  	
   

  	
  Lee K. Barba, Chief
  Executive Officer

  



 


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