EXHIBIT 10.19


 


AMENDED
AND RESTATED


EMPLOYMENT
AGREEMENT


 


THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (“Agreement”) made and entered into as of this 22nd day of
December 2008, by and between the CHICAGO BOARD OPTIONS EXCHANGE (“Employer”)
and EDWARD TILLY (“Employee”), to become effective December 31, 2008 (the “Effective
Date”), is an amendment and restatement of the employment agreement previously
entered into between Employer and Employee effective as of August 21, 2006
(the “Prior Agreement”).


 


WITNESSETH:


 


WHEREAS, Employer and
Employee desire to amend, revise and restate the Prior Agreement;


 


WHEREAS, Employer
desires that Employee continue to provide services for the benefit of the
Employer and its affiliates and Employee desires to continue such employment
with the Employer;


 


WHEREAS, Employer and
Employee acknowledge that Employee will continue to be a member of the senior
management team of the Employer and, as such, will continue to participate in
implementing the Employer’s business plan;


 


WHEREAS, in the course
of employment with the Employer, Employee has had and will continue to have
access to certain confidential information that relates to or will relate to
the business of the Employer and its affiliates; and


 


WHEREAS, the Employer
desires that any such information not be disclosed to other parties or
otherwise used for unauthorized purposes.


 


NOW, THEREFORE, in
consideration of the mutual covenants and promises contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:


 


1.             Employment.


 


(a)           Employer shall continue to employ
Employee on the terms hereinafter set forth. 
Employee shall continue to be employed as Executive Vice Chairman of
Employer during the Term.  Employee shall
perform such duties as may be prescribed for such office in the Constitution
and Rules of Employer, and those consistent with the office of Executive
Vice Chairman that may be assigned to him from time to time by the Chief Executive
Officer and Chairman of the Board of Directors (“Board”) of Employer.


 


(b)           Employee agrees to devote his full
business time and efforts to the affairs of Employer and to the performance of
his duties as its Executive Vice Chairman. 
In 


 

















 


doing so, he agrees to conduct himself at all times in
a manner consistent with the excellent reputation of Employer.


 


(c)           Employee agrees not to accept any
membership on the board of directors of any private or public corporation
without the prior written approval of the Board.  The Board will grant such approval if, in its
discretion, such membership will present no conflict of interest or
interference with Employee’s duties as Executive Vice Chairman of Employer.


 


2.             Term and Severance Payment.  This Agreement shall commence on the
Effective Date and shall expire on December 31, 2009 (the “Initial Term”),
unless terminated earlier pursuant to the provisions of Sections 5, 6, 7 or
8.  The term of employment shall be
renewed automatically for successive periods of one (1) year each (a “Renewal
Term”) after the expiration of the Initial Term, unless Employer provides
Employee, or Employee provides Employer, with written notice to the contrary at
least one hundred eighty (180) days prior to the end of the Initial Term or any
Renewal Term.  The Initial Term and the
Renewal Terms are collectively referred to herein as the “Term.” If either
Employer or Employee elect not to renew the Term of this Agreement in
accordance with this Section 2 and Employee thereafter continues in
employment with Employer, Employee shall be employed on an at-will basis and
the terms of such employment and any subsequent termination of employment shall
be subject solely to the general employment practices and policies of Employer.


 


3.             Compensation.  Employer shall pay to Employee for all
services to be performed by Employee during the Term:


 


(a)           A Base Salary at the rate of $600,000
per annum.  Base Salary shall be payable
in substantially equal regular installments in accordance with Employer’s practices
for other senior executives, as such practices may be determined from time to
time.  The Compensation Committee of the
Board (“Committee”) shall review the rate of Base Salary in such manner and at
such time as is applicable to other senior executives.  In no event shall Employee’s Base Salary be
decreased below the Base Salary in effect as of the Effective Date.


 


(b)           In addition to the aforementioned
annual Base Salary, Employee shall be eligible to participate in any bonus or
incentive program applicable to other senior executives of Employer, other than
the Chairman and the Chief Executive Officer, during the Term.  Any bonus or incentive payment for a fiscal
year of Employer shall be payable to Employee as soon as practicable after the
end of such year, and in any event no later than March 15 of the year
immediately following the year in which it was earned.


 


(c)           Upon Employer’s adoption of a stock
option or similar equity incentive plan, Employer shall grant Employee options
to purchase shares of its common stock in amounts and subject to such terms as
determined by the Board in its sole discretion.


 


(d)           All payments of Base Salary and bonus
or incentive payment or severance payment, if any, shall be subject to such
deductions as may be required to be made 


 


2

















 


pursuant to law, government regulation or order, or by
agreement with, or consent of, Employee.


 


4.             Additional
Benefits.


 


(a)           Membership and Business Expenses.  Employer will pay or promptly reimburse
Employee for all the following:


 


(i)            all initiation fees, annual dues and
membership expenses in one country club selected and joined by Employee in
which membership is useful for or necessary to the performance of Employee’s
duties hereunder, and all reasonable expenses incurred in furtherance of, or in
connection with the transaction of, the business of Employer hereunder at such
country club;


 


(ii)           all reasonable initiation fees,
annual dues and membership expenses in one civic or lunch club selected by
Employee in which membership is useful or necessary to the performance of
Employee’s duties hereunder, and all reasonable expenses incurred in
furtherance of, or in connection with the transaction of, the business of
Employer hereunder at such civic or lunch club; and


 


(iii)          all reasonable business expenses
incurred by Employee in the performance of his duties during the Term.


 


All amounts subject to
reimbursement by Employer to Employee pursuant to this paragraph (a) shall
be subject to an accounting by Employee and approval by Employer.


 


(b)           Benefit Plans.  During the Term, Employee shall be entitled
to participate in, and receive benefits under, (i) any qualified or
supplemental retirement, savings or deferred compensation plan, program or arrangement
currently made available by Employer for its senior executives, and (ii) any
such additional or substitute plan, program or arrangement that Employer may
make available in the future and during the Term for its senior executives (“Benefit
Plans”), subject to and on a basis consistent with the terms, conditions and
overall administration of each such Benefit Plan.  The amount of any lump sum severance payment
payable to Employee pursuant to any provision of this Agreement shall be deemed
compensation for purposes of any such Benefit Plan; provided, however, that the
amount of any such lump sum severance payment shall be deemed compensation for
purposes of any tax-qualified Benefit Plan only to the extent permitted by the
terms of such Benefit Plan and by applicable provisions of the Internal Revenue
Code of 1986, as amended (the “Code”) and regulations issued thereunder.


 


(c)           Vacations and Holidays.  Employee shall be entitled to five weeks paid
vacation during each calendar year commencing during the Term.  Employee shall also be entitled to all paid
holidays given by Employer to its other senior executives.


 


(d)           Insurance Benefits.  During the Term, Employee and his dependents
shall be entitled to participate in, and receive benefits under, (i) any health
and dental plan, disability plan, accidental death and dismemberment plan,
survivor income plan, and life 


 


3

















 


insurance plan or arrangement currently made available
by Employer for its senior executives, and (ii) any such additional or
substitute plan or arrangement that Employer may make available in the future
and during the Term for its senior executives (“Insurance Plans”), subject to
and on a basis consistent with the terms, conditions, and overall
administration of each such Insurance Plan.


 


(e)           Professional Services.  Employee shall be entitled to reimbursement
from Employer for his expenses for professional services, including legal,
accounting and investment advice, relating to his negotiations for employment
and preparation of this Agreement, continued employment with Employer and the
performance of duties and reporting obligations related to his employment with
Employer, and management of personal finances, income tax advice, and estate
planning advice.  The total reimbursable
amount hereunder for each calendar year commencing or ending during the Term
shall not exceed $10,000.


 


(f)            Parking.  Employer shall provide, without charge, a
reserved automobile parking space for the exclusive use of Employee.  Such parking space is being provided at the
request of Employer to facilitate the services rendered by Employee to Employer
hereunder.


 


(g)           Reimbursements.  Except as otherwise provided herein, to the
extent any reimbursements or in-kind benefit payments hereunder are subject to Section 409A
of the Code, such reimbursements and in-kind benefit payments will be made in
accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) (or any similar
or successor provisions).


 


5.             Termination.  For purposes of this Agreement, Employee’s
employment with Employer shall be deemed to be terminated when Employee has a “separation
from service” within the meaning of Section 409A of the Code, and
references to termination of employment shall be deemed to refer a separation
from service.


 


(a)           Termination For Cause.  The Board, by vote of a majority of its
members, may terminate the employment of Employee with Employer at any time
during the Term for “Cause”.  For
purposes of this Agreement, “Cause” shall be deemed to exist if, and only if:


 


(i)            Employee shall engage, during the
performance of his duties hereunder, in acts or omissions constituting
dishonesty, intentional breach of fiduciary obligation or intentional
wrongdoing or malfeasance which result in material harm to Employer;


 


(ii)           Employee shall intentionally disobey
or disregard a lawful and proper direction of the Board or Employer;


 


(iii)          Employee shall materially breach this
Agreement, and such breach by its nature, is incapable of being cured, or such
breach remains uncured for more than 30 days following receipt by Employee of
written notice from Employer specifying the nature of the breach and demanding
the cure thereof.  For purposes of this
clause (iii), a material breach of this Agreement which 


 


4

















 


involves inattention by Employee to his duties under
this Agreement shall be deemed a breach capable of cure; or


 


(iv)          The Securities and Exchange
Commission, the Employer or another regulatory or law enforcement authority
institutes regulatory or law enforcement proceedings against the Employee or a
firm with which the Employee previously was associated, which proceedings
(regardless of the underlying merits) the Employer believes in its sole
discretion could be detrimental to the Employer or its reputation.


 


Without limiting the
generality of the foregoing, the following shall not constitute Cause for
termination of Employee or the modification or diminution of any of his
authority hereunder: (i) any personal or policy disagreement between
Employee and Employer, or any member of Employer or its Board; or (ii) any
action taken by Employee in connection with his duties hereunder or any failure
to act, if Employee acted or failed to act in good faith and in a manner Employee
reasonably believed to be in, and not opposed to, the best interest of
Employer, and Employee has no reasonable cause to believe his conduct was
unlawful.


 


Notwithstanding anything
herein to the contrary, if Employer shall terminate the employment of Employee
hereunder for Cause, Employer shall give at least 30 days prior written notice
to Employee specifying in detail the reason or reasons for Employee’s
termination.  If the employment of
Employee is terminated by Employer for Cause, Employee’s accrued but unpaid
Base Salary (based upon the annual rate in effect on the date of termination),
shall be paid to Employee through the date of his termination, and, except as
otherwise provided in any Benefit Plan or Insurance Plan, Employer shall have
no further obligation, including any obligation for severance payments, to
Employee under this Agreement.  Such
termination shall have no effect upon Employee’s rights under the Benefit
Plans, the Insurance Plans and other employee policies and practices of Employer
applicable to such termination.


 


(b)           Termination Without Cause.  The Board, by vote of a majority of its
members, may terminate the employment of Employee without Cause, at any time
during the Term, as of a date at least 30 days after the date a written notice
of such termination is delivered by Employer to Employee.  In such event, Employer shall pay to Employee
within 30 days following the date of termination of employment (i) his
accrued but unpaid Base Salary (based upon the annual rate in effect on the
date of termination) through the date of termination, (ii) a pro-rated
Bonus equal to the Employee’s annual target Bonus for the calendar year in
which Employee’s employment terminates multiplied by a fraction, the numerator
of which shall equal the number of calendar days Employee was employed by
Employer for the year in which his employment terminates and the denominator of
which shall equal 365 (the “Pro-Rated Bonus”), and (iii) a lump sum cash
severance payment in an amount equal to the sum of (A) two times Employee’s
annual rate of Base Salary in effect on the date of termination and (B) two
times the target bonus for the year in which Employee’s employment is
terminated (such Base Salary and bonus payment to be referred to herein as the “Salary
and Bonus Payment”).  Employer shall also
pay Employee’s COBRA premiums (or an amount equal to 


 


5

















 


Employee’s COBRA premiums) (sufficient to cover full
family health care) for a period of eighteen (18) months following the
termination of his employment if Employee elects such COBRA coverage and, at
the end of such period, if Employee is eligible and elects to enroll in
Employer’s retiree medical plan, if any, Employer shall pay Employee’s premiums
for such coverage for a period of six (6) months; provided, that any
payments or reimbursements for retiree medical plan premiums will be made in
accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) (or any similar
or successor provisions).  The foregoing
notwithstanding, Employer’s obligation to pay the COBRA and retiree medical
insurance premiums described in the preceding sentence (collectively, the “Insurance
Premiums”) shall cease on the date Employee becomes eligible for coverage under
another group health plan that does not impose pre-existing condition
limitations on Employee’s coverage. 
Nothing herein shall be construed to extend the period of time over
which COBRA continuation coverage may be provided to Employee or his dependents
beyond that mandated by law.  (The Salary
and Bonus Payment and the Insurance Premiums described in this Section 5(b) shall
be referred to herein collectively as the “Severance Benefits”.)  Subject to Section 12 and Section 21
of this Agreement, the Salary and Bonus Payment shall be paid within thirty
days following the termination of Employee’s employment.


 


(c)           Termination for Good Reason.  Employee may terminate his employment at any
time during the Term for “Good Reason” as of a date at least 30 days after the
date a written notice of such termination is delivered by Employee to Employer
but within two years after the initial existence of the condition constituting
Good Reason, unless the condition constituting Good Reason is fully corrected
within 30 days after Employee gives Employer written notice thereof.  For purposes of this Agreement, “Good Reason”
shall be deemed to exist if, and only if, without Employee’s express written
consent:


 


(i)            Employer shall assign to Employee
authorities (including officer titles), duties or responsibilities that are
inconsistent in any material and adverse respect with Employee’s current
authorities, duties or responsibilities with Employer (including any material
and adverse diminution of such authorities, duties or responsibilities);


 


(ii)           Employer shall materially reduce the
base compensation and benefits package of Employee;


 


(iii)          Employer shall require Employee to
relocate his principal business office or his principal place of residence
outside the Chicago metropolitan area, or assign to Employee duties that would
reasonably require such relocation;


 


(iv)          Employer shall terminate, reduce or
limit Employee’s participation in any bonus or incentive arrangement, Benefit
Plan or Insurance Plan relative to the level of participation of other senior
executives of similar rank, based upon an arbitrary decision of Employer rather
than a decision reasonably related to the level of job performance of Employee,
provided, however, that such action with respect to Employee’s participation
shall only constitute Good Reason under this Agreement if the action results in
materially reducing the aggregate value of 


 


6

















 


Employee’s incentive compensation and benefits below
their aggregate value as of the date hereof; or


 


(v)           Employer shall materially breach any
of the terms of this Agreement.


 


A termination of Employee’s
employment for Good Reason shall be effectuated by giving Employer written
notice of the termination within sixty (60) days of the event constituting Good
Reason, setting forth in reasonable detail the specific conduct of Employer
that constitutes Good Reason and the specific provisions of this Agreement on
which Employee relies.  Notwithstanding
anything herein to the contrary, if Employee shall terminate his employment for
Good Reason, Employer shall pay to Employee his accrued but unpaid Base Salary
(based upon the annual rate in effect on the date of termination or the date
immediately prior to Employer’s actions described in subsections (ii) and (iv) above,
whichever is greater) through the date of termination, the Pro-Rated Bonus and
the Severance Benefits on the same terms and subject to the same conditions as
described in Paragraph 5(b).


 


(d)           Voluntary Termination without Good
Reason.  Employee may terminate his
employment without Good Reason at any time during the Term as of a date at
least 30 days after the date a written notice of such termination is delivered
by Employee to Employer.  If the employment
of Employee is terminated by Employee without Good Reason, Employee’s accrued
but unpaid Base Salary (based upon the annual rate in effect on the date of
termination), shall be paid to Employee through the date of his termination,
and, except as otherwise provided in any Benefit Plan or Insurance Plan,
Employer shall have no further obligation, including any obligation for
Severance Benefits, to Employee under this Agreement.  Such termination shall have no effect upon
Employee’s rights under the Benefit Plans, the Insurance Plans and other employee
policies and practices of Employer applicable to such termination.


 


6.             Death.  If Employee dies during the Term, Employer
shall pay (i) Employee’s Base Salary (based on the annual rate in effect
on the date of death) through the date of death, (ii) the Pro-Rated Bonus,
and (iii) within 90 days following the date of death, the Salary and Bonus
Payment to his beneficiary last designated by written instrument delivered by
Employee to Employer prior to the date of death.  If no such designated beneficiary shall
survive Employee, such amount shall be paid to Employee’s surviving spouse, or
if none, to his lawful descendants per stirpes
then living, or if none shall survive him, to the legal representative of his
estate, or if none is appointed within 90 days of the date of his death, to his
heirs at law under the laws of the state in which he is domiciled at the date
of his death.  Any death benefit payable
under this Section 6 is in addition to any other benefits due to Employee’s
beneficiaries or dependents from Employer, under any Benefit Plan or Insurance
Plan.  Except as otherwise provided in
this Section 6, or in any Benefit Plan or Insurance Plan, Employer shall
have no further obligations with respect to Employee or his beneficiaries or
dependents under this Agreement following the date of his death.


 


7

















 


7.             Disability.


 


(a)           If Employee is “Permanently Disabled”
for a continuous period of six (6) months during the Term, Employer may
terminate Employee’s employment under this Agreement upon 30 days prior written
notice to Employee.  In such event
Employer shall pay to Employee (i) his accrued but unpaid Base Salary
(based on the annual rate in effect on the date of termination) through the
date of termination, (ii) the Pro-Rated Bonus, and (iii) within 30
days following the date of such termination, the Salary and Bonus Payment.  The payment of the Salary and Bonus Payment
shall be conditioned upon Employee’s execution of the Release as described in Section 12
of this Agreement.


 


(b)           For purposes of this Agreement, the
term Permanently Disabled shall have the meaning set forth in the long-term
disability policy or plan maintained by Employer for its senior executives then
in effect, provided that the definition of a Permanent Disability applied under
such a policy or plan is consistent with the definition of disability or
disabled under Section 409A of the Code, and the regulations and guidance
promulgated thereunder.  In the absence
of such a policy or plan, disability or disabled shall have the meaning
ascribed to such terms under Section 409A of the Code and the regulations
and guidance promulgated thereunder.


 


(c)           Except as otherwise provided in this Section 7,
and in any Benefit Plan or Insurance Plan of Employer, Employer shall have no
further obligation to Employee under this Agreement following the date of his
disability.  Such termination shall have
no effect upon Employee’s rights under the Benefit Plans, the Insurance Plans
and other employee policies and practices of Employer applicable to such
termination.


 


8.             Change in Control.


 


(a)           If during the eighteen (18) month
period following a Change in Control that occurs during the Term of the
Agreement (i) Employee is terminated by Employer or a successor employer
without Cause or (ii) Employee terminates his employment with Employer for
Good Reason, and in lieu of any payments to which Employee may otherwise be
entitled under Section 5, Employee shall be paid (i) his accrued but
unpaid Base Salary (based upon the annual rate in effect on the date of
termination) through the date of termination, (ii) the Pro-Rated Bonus,
and (iii) a lump sum severance payment in an amount equal to the sum of (A) three
times Employee’s annual rate of Base Salary in effect on the date of
termination and (B) three times the target bonus for the year in which
Employee’s employment is terminated (the “Sale Payment”).  The Sale Payment shall be payable on the same
terms and subject to the same conditions as described in Section 5(b) of
this Agreement for the Salary and Bonus Payment.  In addition, Employee shall be entitled to
the Insurance Premiums on the same terms and subject to the same conditions as
described in Section 5(b) of this Agreement; provided, however, that
Employer’s obligation to reimburse any retiree medical premiums shall be for a
period of eighteen (18) months instead of six (6) months, subject to
earlier termination on the terms as described in Section 5(b); provided,
that any payments or reimbursements for retiree medical plan premiums will be
made in accordance with Treasury Regulation § 1.409A-3(i)(1)(iv) (or any
similar or successor provisions).  For
purposes of this Agreement, a “Change in Control” of Employer shall be deemed
to occur on the effective time of (i) a merger or consolidation of
Employer with one or more other corporations as a result of 


 


8

















 


which holders of the outstanding capital stock of
Employer entitled to vote for the election of directors (“Voting Stock”) of
Employer immediately prior to such merger hold less than 50% of the Voting
Stock of the surviving or resulting corporation, or (ii) a transfer of
substantially all of the property of Employer other than to an entity of which
Employer owns at least 50% of the Voting Stock.


 


(b)           In the event that a Change in Control
shall occur, and a final determination is made by legislation, regulation,
ruling directed to Employee or Employer, by court decision, or by independent
tax counsel described in paragraph (c) next below, that the aggregate
amount of any payment made to Employee (1) under this Agreement, and (2) pursuant
to any Benefit Plan, Insurance Plan or plan, program or policy of Employer in
connection with, on account of, or as a result of, such Change in Control (“Total
Payments”) will be subject to the excise tax provisions of Section 4999 of
the Code, or any successor section thereof, Employee shall be entitled to
receive from Employer, in addition to any other amounts payable hereunder, a
lump sum payment (the “Excise Tax Gross-Up Payment”) sufficient to cover the
full cost of such excise taxes and Employee’s federal, state and local income
and employment taxes on the Excise Tax Gross-Up Payment, so that the net amount
retained by Employee, after the payment of all such excise taxes on the Total
Payments, and all federal, state and local income and employment taxes and
excise taxes on the Excise Tax Gross-Up Payment (at the highest applicable
marginal rate of taxation for the applicable calendar years), shall be equal to
the Total Payments.  The Total Payments
shall be subject to any federal, state and local income and employment taxes
thereon.  The Excise Tax Gross-Up Payment
shall be made at the same time as the payments described in clauses (1) and
(2) of this paragraph (b), provided that in no event will the Excise Tax
Gross-Up Payment be made later than the end of Employee’s taxable year next
following the Employee’s taxable year in which Employee remits the related
taxes, in accordance with Section 409A of the Code and Treas. Reg. §
1.409A-3(i)(1)(v) (or any similar or successor provision).


 


(c)           Employer and Employee shall mutually
and reasonably determine the amount of the Excise Tax Gross-Up Payment to be
made to Employee pursuant to the preceding paragraph (b). Prior to the making
of any such Excise Tax Gross-Up Payment, either party may request a
determination as to the amount of such Excise Tax Gross-Up Payment.  If such a determination is requested, it
shall be made promptly, at Employer’s expense, by independent tax counsel
selected by Employee and approved by Employer (which approval shall not be
unreasonably withheld), and such determination shall be conclusive and binding
on all parties.  Employer shall provide
such information as such counsel may reasonably request, and such counsel may
engage accountants or other experts at Employer’s expense to the extent that
they deem necessary or advisable to enable them to reach a determination.  The term “independent tax counsel,” as used
herein, shall mean a law firm of recognized expertise in federal income tax
matters that has not previously advised or represented either party.  It is hereby agreed that neither Employer nor
Employee shall engage any such firm as counsel for any purpose, other than to
make the determination provided for herein, for three years following such firm’s
announcement of its determination.


 


9

















 


(d)           In the event the Internal Revenue
Service subsequently adjusts the excise tax computation made pursuant to
paragraphs (b) and (c) of this Section 8, Employer shall pay to
Employee, or Employee shall pay to Employer, as the case may be, the full
amount necessary to make either Employee or Employer whole had the excise tax initially
been computed as subsequently adjusted, including the amount of any underpaid
or overpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service. 
Notwithstanding the foregoing, in no event will the adjustment payment
amount described in the preceding sentence be made later than the end of
Employee’s taxable year next following the Employee’s taxable year in which the
Internal Revenue Service makes such adjustment, in accordance with Section 409A
of the Code and Treas. Reg. § 1.409A-3(i)(1)(v) (or any similar or
successor provision).


 


9.             Restrictive Covenant.  During the period of his employment and for a
period of two years following a termination of Employee’s employment pursuant
to Section 5(a)(i), 5(a)(ii), 5(a)(iii), 5(b), 5(c), 5(d), 7 or 8, the
Employee shall not:


 


(a)           singly, jointly, or in any other
capacity, directly or beneficially, manage, join, participate in the
management, operation or control of, or work for (as an employee, consultant or
independent contractor), or permit the use of his name by, or provide financial
or other assistance to, or be connected in any manner with, any securities or
futures exchange, alternative trading system or electronic communications
network (including any derivatives market) providing for the trading of
securities or futures derivatives, located in the United States or any other
country, or any affiliate thereof, without the express written approval of the
Chief Executive Officer and Chairman of the Board of Employer;


 


(b)           provide any service or assistance
which (1) is of the general type of service or assistance provided by
Employee to Employer, (2) relates to any technology, account, product,
project or piece of work, with which Employee was involved during his employment
with Employer, and (3) contributes to causing an entity to come within the
definition described in paragraph (a) above;


 


(c)           solicit or accept if offered to him,
with or without solicitation, on his own behalf or on behalf of any other
person, the services of any person who is a then current employee of Employer
(or was an employee of Employer during the year preceding such solicitation),
nor solicit any of Employer’s then current employees (or an individual who was
employed by or engaged by Employer during the year preceding such solicitation)
to terminate employment or an engagement with Employer, nor agree to hire any
then current employee (or an individual who was an employee of Employer during
the year preceding such hire) of Employer into employment with himself or any
company, individual or other entity; or


 


(d)           directly or indirectly divert or
attempt to divert from Employer any business in which Employer has been
actively engaged during the term hereof, nor interfere with the relationships
of Employer with its sources of business.


 


10














 


10.           Confidentiality.  Employee acknowledges that Employer may
disclose secret or confidential information to Employee during the Term to
enable him to perform his duties hereunder. 
Employee agrees that, subject to the following sentence, he shall not
during the Term (except in connection with the proper performance of his duties
hereunder) and thereafter, without the prior written consent of Employer,
disclose to any person or entity any material or significant secret or
confidential information concerning the business of Employer that was obtained
by Employee in the course of his employment by Employer.  This paragraph shall not be applicable if and
to the extent Employee is required to testify in a legislative, judicial or
regulatory proceeding pursuant to an order of Congress, any state or local
legislature, a judge, or an administrative law judge, or if such secret or
confidential information is required to be disclosed by Employee by any law,
regulation or order of any court or regulatory commission, department or
agency.  Employee further agrees that if
his employment by Employer is terminated for any reason, he will not take with
him, but will leave with Employer, all records and papers and all matter of
whatever nature that bears secret or confidential information of Employer.  For purposes of this Agreement, the term “secret
or confidential information” shall include, but not be limited to, any and all
records, notes, memoranda, data, writings, research, personnel information,
customer information, clearing members’ information, Employer’s financial
information and plans, processes, methods, techniques, systems, formulas,
patents, models, devices, compilations or any other information of whatever
nature in the possession or control of Employer, that has not been published or
disclosed to the general public, the options industry or the commodities
futures industry; provided that such term shall not include knowledge, skills,
and information that is common to the trade or profession of Employee.


 


11.           Remedies.  Employee consents and agrees that if he
violates any provisions of Sections 9 or 10 of this Agreement, Employer or its
successors in interest shall be entitled, in addition to any other remedies
that they may have, including money damages, to an injunction to be issued by a
court of competent jurisdiction, restraining him from committing or continuing
any violation of Sections 9 or 10.


 


If, at any time, Employee
violates, to any material extent, any of the covenants or agreements set forth
in Sections 9 or 10 of this Agreement, Employer shall have the right to
terminate the employment of Employee for Cause in accordance with the
provisions of paragraph (a) of Section 5.


 


In the event that Employee
is found to have breached any provision set forth in Section 9 of this
Agreement, the time period provided for in that provision shall be deemed
tolled (i.e., it will not begin to run) for so
long as Employee was in violation of that provision.


 


12.           Release.  Notwithstanding anything herein to the
contrary, as a condition to receiving severance payments under this Agreement,
Employee agrees to execute a release of claims (in a form substantially similar
to the form set forth in Exhibit A, which is attached hereto and made a
part hereof) (the “Release”).  Employer
shall deliver the Release to Employee within ten (10) days of Employee’s
termination of employment.  No payments
under this Agreement shall be made prior to the date that both (i) Employee
has delivered an original, signed Release to the Employer and (ii) the
revocability period (if any) has elapsed; provided, however, that any payments
that would otherwise have been made prior to such date but for the fact that
Employee had not yet delivered an original, signed Release (or the revocability
period had not yet elapsed) 


 


11

















 


shall be made as soon as
administratively practicable but not later than the seventy-fourth (74th) day
following Employee’s termination of employment. 
If Employee does not deliver an original, signed Release to the Employer
within forty-five (45) days after receipt of the same from the Employer, (i) Employee’s
rights shall be limited to those made available to Employee as if Employee were
terminated under Section 5(d) above, and (ii) the Employer shall
otherwise have no obligation to pay or provide to Employee any amount or
benefits described in this Agreement, or any other monies on account of the
termination of Employee’s employment.


 


13.           Assignment.  Neither Employee nor Employer may assign this
Agreement, except that Employer’s obligations hereunder shall be binding legal
obligations of any successor to all or substantially all of Employer’s business
by purchase, merger, consolidation, or otherwise.


 


14.           Employee Assignment.  No interest of Employee or his spouse,
dependent or any other beneficiary under this Agreement, or any right to
receive any payment or distribution hereunder, shall be subject in any manner
to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind, nor may such interest or right to
receive a payment or distribution be taken, voluntarily or involuntarily, for
the satisfaction of the obligations or debts of, or other claims against,
Employee or his spouse, dependent or any other beneficiary, including claims
for alimony, support, separate maintenance, and claims in bankruptcy
proceedings.


 


15.           Benefits Unfunded.  (i) All rights of Employee and his
spouse, dependent or any other beneficiary under this Agreement shall at all
times be entirely unfunded and no provision shall at any time be made with
respect to segregating any assets of Employer for payment of any amounts due
hereunder; (ii) neither Employee nor his spouse, dependent or any other
beneficiary shall have any interest in or rights against any specific assets of
Employer; and (iii) Employee and his spouse, dependent or any other
beneficiary shall have only the rights of a general unsecured creditor of
Employer.


 


16.           Waiver.  No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party shall be deemed a waiver of
any other provisions or conditions at the same time or at any prior or
subsequent time.


 


17.           Applicable Law.  This Agreement shall be construed and
interpreted pursuant to the internal laws of the State of Illinois, without
regard to principles of conflicts of laws.


 


18.           Entire Agreement.  This Agreement contains the entire agreement
between Employer and Employee, and supersedes any and all other previous
agreements, written or oral, between the parties relating to the subject matter
hereof, including, without limitation, the Prior Agreement.  No amendment or modification of the terms of this
Agreement shall be binding upon either of the parties hereto unless reduced to
writing and signed by each of the parties hereto.


 


12

















 


19.           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original.


 


20.           Severability.  The parties agree that this Agreement shall
be construed in a way to make each of its provisions enforceable, but that the
unenforceability of one or more provisions in one or more instances will not
make invalid the entire Agreement or any other provisions of this Agreement as
all of its provisions are severable.  In
the event a provision may be unenforceable as written, the parties agree that
it shall be partially enforced to the extent permitted by law.  The unenforceability of a provision in one
instance shall not affect its enforceability in other instances.


 


21.           Compliance.


 


(a)           The payments and benefits under this
Agreement are intended to comply with or be exempt from Section 409A of
the Code and the interpretative guidance thereunder, including the exceptions
for short-term deferrals, separation pay arrangements, reimbursements, and
in-kind distributions, and shall be administered accordingly.  The Agreement shall be construed and
interpreted with such intent.  If any
provision of this Agreement needs to be revised to satisfy the requirements of Section 409A
of the Code, then such provision shall be modified or restricted to the extent
and in the manner necessary to be in compliance with such requirements of the
Code and any such modification will attempt to maintain the same economic
results as were intended under this Agreement. 
Employer cannot guarantee that the payments and benefits that may be paid
or provided pursuant to this Agreement will satisfy all applicable provisions
of Section 409A of the Code.  Each
payment under this Agreement is intended to be treated as one of a series of
separate payment for purposes of Section 409A of the Code and Treasury
Regulation § 1.409A-2(b)(2)(iii) (or any similar or successor provisions).


 


(b)           Notwithstanding any provision to the
contrary, to the extent Employee is considered a “specified employee” (as
defined in Section 409A of the Code and Treasury Regulation § 1.409A-1(c)(i) or
any similar or successor provision) and would be entitled to a payment during
the six month period beginning on Employee’s date of termination that is not
otherwise excluded under Section 409A of the Code under the exception for
short-term deferrals, separation pay arrangements, reimbursements, in-kind
distributions, or any otherwise applicable exemption, the payment will not be
made to Employee until the earlier of the six month anniversary of Employee’s
date of termination or Employee’s death and will be accumulated and paid on the
first day of the seventh month following the date of termination.


 


22.           Successors.  This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs,
representatives and successors.


 


23.           Notices.  Notices required under this Agreement shall
be in writing and sent by personal delivery, or by registered U.S. mail, return
receipt requested, to the following addresses, or to such other address as the
party being notified may have previously furnished to the other by written
notice:


 


13

















 


If
to Employer:


 


Chicago
Board Options Exchange


400
S. LaSalle Street


Chicago,
Illinois 60605


Attention: Chief Executive Officer and Chairman of
the Board


 


If
to Employee:


 


Edward
Tilly


417
Caesar Drive 


Barrington,
IL 60010


 


24.           Indemnity.  Employer shall indemnify, protect, defend and
save Employee harmless from and against any threatened, pending, contemplated
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which Employee is made a party by reason of
the fact that Employee is or was an officer, employee or agent of Employer, or
any judgment, amount paid in settlement (with the consent of Employer), fine,
loss, expense, cost, damage and reasonable attorneys’ fees incurred by reason
of the fact that Employee is or was an officer, employee or agent of Employer;
provided, however, that Employee acted in good faith and in a manner he
reasonably believed to be in the best interests of Employer, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.  Employer, at its
expense, shall have the right to purchase and maintain insurance or fidelity
bonds on behalf of Employee against any liability asserted against him and
incurred by him in his capacity as an officer, employee or agent of
Employer.  Employee shall also be
indemnified under Employer’s Articles of Incorporation and By-Laws, and covered
by directors’ and officers’ liability insurance policies that are the same as
or equivalent to those Employer currently carries for its other executives.


 


25.           Headings.  The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.


 


IN WITNESS WHEREOF, Employee has
hereunto set his hand, and Employer has caused these presents to be executed in
its name on its behalf, all as of the date first above written.


 


	
  Chicago
  Board Options Exchange

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  /s/
  William J. Brodsky

  	
   

  	
  /s/
  Edward Tilly

  
	
  Title:

  	
  Chief
  Executive Officer and

  	
   

  	
  Edward Tilly

  
	
   

  	
  Chairman
  of the Board of Directors

  	
   

  	
   

  



 


14

















 


Exhibit A


 


RELEASE
OF CLAIMS


 


THIS RELEASE OF CLAIMS (“Release”)
is made and entered into this         
day of
                        ,
20    , to be effective as of
                                                    
(the “Effective Date”), by and between CHICAGO BOARD OPTIONS EXCHANGE,
INCORPORATED, a Delaware corporation (“CBOE”), and EDWARD TILLY, a resident of
the State of Illinois (“Tilly”).


 


1.             In consideration of CBOE’s payment
to Tilly of the severance pay and benefits described in the Amended and
Restated Employment Agreement by and between CBOE and Tilly (the “Employment
Agreement”), to which Tilly is not otherwise entitled and the sufficiency of
which Tilly acknowledges, Tilly does hereby fully, finally and unconditionally
release and forever discharge CBOE and CBOE’s former and current officers, directors,
employees, members, representatives and agents and all of their respective
predecessors, successors, and assigns (collectively “Released Parties”), in
their personal, corporate and representative capacities, from any and all
rights, claims, liabilities, obligations, damages, costs, expenses, attorneys’
fees, suits, actions, and demands, of any and every kind, nature and character,
known or unknown, liquidated or unliquidated, absolute or contingent, in law
and in equity, enforceable or arising under any local, state or federal common
law, statute or ordinance relating to Tilly’s past employment with CBOE or any
past actions, statements, or omissions of CBOE or any of the Released Parties
occurring prior to Tilly’s execution of this Release, including but not limited
to all claims for defamation, wrongful termination, back pay and benefits, pain
and suffering, negligent or intentional infliction of emotional distress,
breach of contract, and interference with contractual relations, tort claims,
employment discrimination claims, and all claims arising under the Age
Discrimination in Employment Act of 1967, as amended (“ADEA”), Title VII of the
Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866, as amended
by the Civil Rights Act of 1991 (42 U.S.C. § 1981), the Family and Medical
Leave Act, the Equal Pay Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Older Workers Benefit Protection Act, the Illinois Human
Rights Act, the Workers Adjustment and Retraining Act, and the Chicago and Cook
County Human Rights Ordinances, and any other statutory, contract, implied
contract, or common law claim arising out of or involving Tilly’s employment,
the termination of Tilly’s employment, or any continuing effects of Tilly’s employment
with OBOE.


 


2.             Tilly agrees not to sue CBOE or any
of the Released Parties with respect to rights and claims covered by this
Release.  If any government agency or
court assumes jurisdiction of any charge, complaint, or cause of action covered
by this Release, Tilly will not seek and will not accept any personal equitable
or monetary relief in connection with such investigation, action, suit, or
legal proceeding.


 


3.             Tilly has forty-five (45) days
(until
                            )
within which to consider this Release, although Tilly may accept it at any time
within those forty-five (45) days.  Once
Tilly has signed this Release, Tilly will still have seven (7) days in
which to revoke his acceptance of the ADEA portion of the Release by notifying
CBOE, and specifically, Deborah Woods, Human Resources Department.  The ADEA portion of the Release will not be
effective 


 


A-1

















 


or enforceable until the
seven (7) day revocation period has expired.  If the ADEA portion of the Release is
revoked, the remainder of this Release shall remain in full force and effect as
to all of its terms except for the release of claims under the ADEA, and CBOE
will have three (3) business days to rescind the entire Release by so
notifying Tilly.


 


4.             Tilly agrees that he will continue
to be governed by those obligations arising under Paragraphs 9, 10 and 11 of
the Employment Agreement, which are incorporated by reference herein, shall not
be released, shall be unaffected hereby, and shall remain in full force and
effect.


 


5.             This Release shall be binding upon
and inure to the benefit of CBOE and its successors and assigns and Tilly and
his heirs, executors and administrators.


 


6.             This Release shall be construed and
interpreted under the laws of the State of Illinois to the extent not preempted
by applicable laws of the United States.


 


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Edward Tilly

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  CHICAGO
  BOARD OPTIONS EXCHANGE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  



 


A-2