Document:

Exhibit
10.7

 

Investools
Inc.

2001 STOCK OPTION PLAN

Notice and Agreement of Grant of Stock Option

 

 

	
  TO:

  	
  Tom
  Sosnoff

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
  Compensation
  Committee of the Board of Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
  February
  15, 2007

  	
   

  

 

 

At the direction of the
Compensation Committee (the “Committee”) of the Board of Directors of
Investools Inc. (the “Company”), you are hereby notified that on February 15,
2007 (the “Date of Grant”) the Committee has granted to you an option to
purchase shares of Common Stock of the Company (the “Option”), pursuant to the
Investools Inc. 2001 Stock Option Plan (the “Plan”), as amended from time to
time, which is incorporated herein by reference and made a part of this
agreement.  This agreement evidences the Option that was granted to
you.  Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan.

 

1.          This
Option is intended to be a Nonstatutory Option.

 

2.          Subject
in all respects to the Plan and the terms and conditions set forth herein and
therein, you are hereby granted an Option to purchase from the Company 228,891 shares of Common Stock at the exercise price of $15.69 per share (the “Option Price”).  It is the determination of the Committee that
on the Date of Grant, the Fair Market Value of a share of Common Stock was not
more than the Option Price.

 

3.          The
Option may be exercised only by you and, subject to your Continuous Service,
shall become exercisable in installments at a rate of one-fourth (1/4) of the
total number of Shares subject to the Option per year commencing on the first
anniversary of the Date of Grant, and with respect to an additional one-fourth
(1/4) on each anniversary of the Date of Grant thereafter, provided that your
Continuous Service has not terminated with the Employer prior to that date.  In the event a Change of Control occurs during
your Continuous Service, the Option, to the extent not exercisable, shall
become fully exercisable immediately prior to such Change of Control.  If your Continuous Service is terminated for
any reason, the Option, to the extent not exercisable, shall be cancelled
without consideration.  For purposes
hereof,  “Continuous Service” includes
your periods of service with the Company during the Employment Period and, if
applicable, any subsequent Consulting Period, each as defined in the Employment
Agreement between you and the Company dated as of February 15, 2007.

 

4.          The
Option shall expire on the day prior to the tenth anniversary of the Date of
Grant (the “Expiration Date”).  Notwithstanding the foregoing, if your
Continuous Service is terminated prior to the Expiration Date, the vested
portion of the Option shall remain exercisable for the period set forth below:

 

a.               If
your Continuous Service is terminated by the Company or its affiliates for
Cause, the Option shall immediately expire on the effective date of the
termination of your Continuous Service;

 

b.              If
your Continuous Service is terminated due to your retirement on or after age
65, the vested portion of the Option shall remain exercisable for a period of
three (3) months following the effective date of the termination of your
Continuous Service;

 

c.               If
your Continuous Service is terminated due to your death or total and permanent
disability (within the meaning of Section 422 of the Internal Revenue Code),
the vested portion of the Option shall remain exercisable for a period of
twelve (12) months following the effective date of the termination of your
Continuous Service; and

 

d.              If
your Continuous Service is terminated other than due to your death, disability
or retirement on or after age 65, or by the Company or its affiliates for
Cause, the vested portion of the Option shall remain exercisable for a period
of ten (10) days following the effective date of the termination of your
Continuous Service.

 

5.          The
option is nontransferable, other than as may be occasioned by your death, and
then only to your estate or according to the terms of your will or the
provisions of applicable laws of descent and distribution.

 

In the event that the right to exercise the Option is
passed to your estate, or to a person to whom such right devolves by reason of
your death, then the Option shall be nontransferable in the hands of your
executor or administrator or of such person, except that the Option may be
distributed by your executor or administrator to the distributees of your
estate as a part of your estate.

 

6.          Enclosed
for your careful review is a copy of the Plan governing the Option, and a
Description of the 2001 Stock Option Plan, otherwise known as the “Plan
Prospectus.”  At the time or times when you wish to exercise the Option,
in whole or in part, please refer to the provisions of the Plan dealing with
methods and formalities of exercise of the Option.  The Company shall have
the right, and is hereby authorized, to withhold from any payment due or
transfer made under the Option, or from any compensation owing to you,
applicable withholding taxes, if any.

 

Neither the Plan nor this agreement will be construed as
giving you the right to be retained in the employ of the Company or its
affiliates, and the Company or its affiliates may at any time terminate your
employment free from any liability or any claim under the Plan or this
agreement, except as otherwise expressly provided herein.

 

7.          This
agreement shall be governed by and construed in accordance with the laws of
Delaware, without regard to the conflicts of laws provisions thereof, and shall
be subject in all respects to the terms of the Plan.  If any one or more provisions of this
agreement shall be found to be 

 

2

 

            illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.  This
agreement and the Plan contain the entire agreement between the Company and you
relating to the Option and the other matters set forth herein.  This agreement is subject to the terms and
conditions of the Plan.  In the event of
any inconsistent provisions between this agreement and the Plan, the Plan shall
govern.  Except as expressly provided in
this agreement or the Plan with respect to certain actions permitted to be
taken by the Committee with respect to this agreement and the terms of the
Option, this agreement may not be amended, modified, changed, or waived other
than by written instrument signed by the parties hereto.  This agreement may be executed in
counterparts, each of which shall be an original with the same effect as if the
signatures were upon the same instrument.

 

 

 

 

	
  Investools
  Inc. Compensation Committee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ida K. Kane

  	
   

  
	
  Ida
  K. Kane, Chief Financial Officer

  	
   

  

 

 

 

 

 

I hereby acknowledge
receipt of a copy of the Plan and the Plan Prospectus, copies of which are
annexed hereto, and represent that I am familiar with the terms and provisions
thereof and hereby accept the Option, subject to all the terms and provisions
of the Plan and this agreement.  I hereby agree to accept as binding,
conclusive and final all decisions or interpretations of the Compensation Committee
with respect to any question arising under the Plan.

 

 

	
  Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Tom Sosnoff

  	
   

  	
   

  
	
  Tom Sosnoff

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  February 15, 2007

  	
   

  	
   

  
				

 

3

Investools Inc.

2001 STOCK OPTION PLAN

Notice and Agreement of Grant of
Stock Option

TO:         Tom
Sosnoff

FROM:   Compensation
Committee of the Board of Directors

DATE:    February
15, 2007

At the direction of the Compensation Committee (the “Committee”)
of the Board of Directors of Investools Inc. (the “Company”), you are hereby
notified that on February 15, 2007 (the “Date of Grant”) the Committee has
granted to you an option to purchase shares of Common Stock of the Company (the
“Option”), pursuant to the Investools Inc. 2001 Stock Option Plan (the “Plan”),
as amended from time to time, which is incorporated herein by reference and
made a part of this agreement.  This agreement evidences the Option that
was granted to you.  Capitalized terms
not otherwise defined herein shall have the same meanings as in the Plan.

1.          This Option is intended to be a Nonstatutory Option.

2.          Subject in all respects to the Plan and the terms and
conditions set forth herein and therein, you are hereby granted an Option to
purchase from the Company 228,891 shares
of Common Stock at the exercise price of $23.545 per
share (the “Option Price”).  It is the
determination of the Committee that on the Date of Grant, the Fair Market Value
of a share of Common Stock was not more than the Option Price.

3.          The Option may be exercised only by you and, subject to
your Continuous Service, shall become exercisable in installments at a rate of
one-fourth (1/4) of the total number of Shares subject to the Option per year
commencing on the first anniversary of the Date of Grant, and with respect to
an additional one-fourth (1/4) on each anniversary of the Date of Grant
thereafter, provided that your Continuous Service has not terminated with the
Employer prior to that date.  In the
event a Change of Control occurs during your Continuous Service, the Option, to
the extent not exercisable, shall become fully exercisable immediately prior to
such Change of Control.  If your
Continuous Service is terminated for any reason, the Option, to the extent not
exercisable, shall be cancelled without consideration.  For purposes hereof,  “Continuous Service” includes your periods of
service with the Company during the Employment Period and, if applicable, any
subsequent Consulting Period, each as defined in the Employment Agreement
between you and the Company dated as of February 15, 2007.

4.          The Option shall expire on the day prior to the tenth
anniversary of the Date of Grant (the “Expiration Date”).  Notwithstanding
the foregoing, if your Continuous Service is terminated prior to the Expiration
Date, the vested portion of the Option shall remain exercisable for the period
set forth below:

a.               If your Continuous Service is terminated by the Company
or its affiliates for Cause, the Option shall immediately expire on the effective
date of the termination of your Continuous Service;

b.              If your Continuous Service is terminated due to your
retirement on or after age 65, the vested portion of the Option shall remain
exercisable for a period of three (3) months following the effective date of
the termination of your Continuous Service;

c.               If your Continuous Service is terminated due to your
death or total and permanent disability (within the meaning of Section 422 of
the Internal Revenue Code), the vested portion of the Option shall remain
exercisable for a period of twelve (12) months following the effective date of
the termination of your Continuous Service; and

d.              If your Continuous Service is terminated other than due
to your death, disability or retirement on or after age 65, or by the Company
or its affiliates for Cause, the vested portion of the Option shall remain
exercisable for a period of ten (10) days following the effective date of the
termination of your Continuous Service.

5.          The option is nontransferable, other than as may be
occasioned by your death, and then only to your estate or according to the
terms of your will or the provisions of applicable laws of descent and
distribution.

In the
event that the right to exercise the Option is passed to your estate, or to a
person to whom such right devolves by reason of your death, then the Option
shall be nontransferable in the hands of your executor or administrator or of
such person, except that the Option may be distributed by your executor or
administrator to the distributees of your estate as a part of your estate.

6.          Enclosed for your careful review is a copy of the Plan
governing the Option, and a Description of the 2001 Stock Option Plan,
otherwise known as the “Plan Prospectus.”  At the time or times when you
wish to exercise the Option, in whole or in part, please refer to the
provisions of the Plan dealing with methods and formalities of exercise of the
Option.  The Company shall have the right, and is hereby authorized, to
withhold from any payment due or transfer made under the Option, or from any
compensation owing to you, applicable withholding taxes, if any.

Neither
the Plan nor this agreement will be construed as giving you the right to be
retained in the employ of the Company or its affiliates, and the Company or its
affiliates may at any time terminate your employment free from any liability or
any claim under the Plan or this agreement, except as otherwise expressly
provided herein.

7.          This agreement shall be governed by and construed in
accordance with the laws of Delaware, without regard to the conflicts of laws
provisions thereof, and shall be subject in all respects to the terms of the
Plan.  If any one or more provisions of
this agreement shall be found to be

 2
 

illegal
or unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.  This agreement and the Plan
contain the entire agreement between the Company and you relating to the Option
and the other matters set forth herein. 
This agreement is subject to the terms and conditions of the Plan.  In the event of any inconsistent provisions
between this agreement and the Plan, the Plan shall govern.  Except as expressly provided in this
agreement or the Plan with respect to certain actions permitted to be taken by
the Committee with respect to this agreement and the terms of the Option, this
agreement may not be amended, modified, changed, or waived other than by
written instrument signed by the parties hereto.  This agreement may be executed in
counterparts, each of which shall be an original with the same effect as if the
signatures were upon the same instrument.

Investools Inc. Compensation Committee

	
  /s/ Ida K. Kane

  	
   

  
	
  Ida K. Kane,
  Chief Financial Officer

  

 

I hereby acknowledge receipt of a copy of the Plan and
the Plan Prospectus, copies of which are annexed hereto, and represent that I
am familiar with the terms and provisions thereof and hereby accept the Option,
subject to all the terms and provisions of the Plan and this agreement.  I
hereby agree to accept as binding, conclusive and final all decisions or
interpretations of the Compensation Committee with respect to any question
arising under the Plan.

Employee:

	
  

  
	
   

  
	
  /s/ Tom Sosnoff

  	
   

  
	
  Tom Sosnoff

  
	
  Date:

  	
  February 15,
  2007

  	
   

  
				

 

 3Exhibit 10.8

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment
Agreement (the “Agreement”) is made and entered into as of the 15th day of February,
2007, by and between Scott Sheridan (the “Executive”) and INVESTools Inc. (the “Company”).

WHEREAS, pursuant to
that certain Agreement and Plan of Merger, dated as of September 18, 2006,
among INVESTools Inc., Atomic Acquisition Corp. and thinkorswim Group, Inc.
(the “Merger Agreement”), the Company will acquire all of the outstanding
common stock of thinkorswim Group, Inc.;

WHEREAS, pursuant to
the Merger Agreement, the Company will acquire Executive’s equity interest in
thinkorswim Group, Inc. for the consideration set forth in the Merger
Agreement;

WHEREAS, the Company
desires to employ Executive and to enter into an agreement, subject to the
Closing (as defined in the Merger Agreement) and effective as of the Effective
Date, embodying the terms of such employment; and

WHEREAS, Executive
desires to accept such employment and enter into such an agreement, subject to
the Closing and Effective as of the Effective Time;

NOW, THEREFORE, in
consideration of the premises and mutual covenants herein and for other good
and valuable consideration, the parties agree as follows:

1.     Term
of Employment.  Subject to the provisions of Section 8 of
this Agreement, Executive shall be employed by the Company for a period
commencing on the Effective Date and ending on the third anniversary of the
Effective Date (the “Employment Term”); provided, however, the
Employment Term may be extended for additional one-year periods by mutual
written agreement of the Company and Executive.

2.     Position.

a.             During the Employment Term, Executive shall serve as
Executive Vice President of thinkorswim Group, Inc. (“thinkorswim”) and its
subsidiaries.  In such position,
Executive shall have such duties and authority as shall be determined from time
to time by the Chief Executive Officer of the Company consistent with such position.  If requested,
Executive shall also serve as a member of the Boards of Directors of the
Company and any of its subsidiaries without additional compensation.  During the Employment Term, no officer of
thinkorswim or any of its subsidiaries shall hold an office at thinkorswim or any
of its subsidiaries that is more senior than President.

b.             During the Employment Term, Executive will devote Executive’s
full business time and best efforts
to the performance of Executive’s duties hereunder and will not engage in any
other business, profession or occupation for compensation or otherwise which
would conflict or interfere with the rendition of such services, either
directly or indirectly, 

without
the prior written consent of the Chief Executive Officer of the Company; provided
that nothing herein shall preclude Executive, subject to the prior approval of
the Chief Executive Officer of the Company, which approval will not be
unreasonably withheld, from accepting appointment to or continuing to serve on
any board of directors or trustees of any business corporation or any charitable
organization; provided, in each case, and in the aggregate, that such
activities do not conflict or interfere with the performance of Executive’s
duties hereunder or conflict with Section 9 or Section 10.  Set forth on Exhibit A hereto is a
complete list, as of the Effective Date, of the Executive’s positions on any
board of directors or trustees of any business corporation or any charitable
organization.

c.             At
all times during the Employment Term, Executive shall adhere to and obey all of
the Company’s written rules, regulations and policies, including without
limitation the INVESTools code of business ethics, which govern the operation
of the Company’s business and the conduct of employees of the Company.

3.     Base
Salary.  During the Employment Term, the Company shall
pay Executive a base salary at the annual rate of $120,000, payable in regular
installments in accordance with the Company’s usual payment practices.  Executive shall be entitled to such increases
in Executive’s base salary, if any, as may be determined from time to time in
the sole discretion of the Compensation Committee of the Board of Directors of
the Company (the “Compensation Committee”). 
Executive’s annual base salary, as in effect from time to time, is
hereinafter referred to as the “Base Salary.”

4.     Annual
Bonus.  With respect to each full fiscal year during
the Employment Term, Executive shall be eligible to earn an annual bonus award
(an “Annual Bonus”) in such amount, if any, as determined in the sole
discretion of the Compensation Committee of the Company, but in no event less
than $225,000 (“Bonus Floor”).  The Bonus
Floor will be deemed to be earned ratably on a monthly basis throughout the
applicable fiscal year.  The Annual Bonus
shall be paid to Executive within two and one-half (2.5) months after the end
of the applicable fiscal year.

5.     Initial
Stock Option Award. On or as soon as practicable following the Effective
Date, Executive will be granted a non-qualified stock option under the Company’s Amended and
Restated 2001 Stock Option Plan (the “Option Plan”), to purchase up to 230,891 shares of the Company’s common
stock, and a non-qualified stock option under the Option Plan to purchase up to
230,890 shares of the Company’s common stock, each subject to the terms and conditions
of the Company’s Amended and Restated Stock Option Plan, and subject to the
action of the committee that administers such plan (each, a “Stock Option”).  Such Stock Options will include the following
terms.  The per-share exercise price for
one such Stock Option will be the fair market value of a share of the Company’s
common stock on the date of grant, and the per-share exercise price for the
other such Stock Option will be 150% of the fair market value of a share of the
Company’s common stock on the date of grant, in each case determined in
accordance with the terms of the Option Plan. 
Each Stock Option will vest, subject to Executive’s continuous service
through the applicable vesting date, with respect to 25% of the shares
initially covered by the Option on each of the first, second, third and fourth
anniversaries of the date of grant.  In
the event a “Change of Control” of the Company (as defined under the Option
Plan) occurs during the Employment Term or a subsequent Consulting Period (as
defined in Section 12), any unvested Stock Option shall become vested
immediately 

2

prior
to such Change of Control.  Each Stock
Option shall have a ten year term, subject to earlier expiration upon and
following Executive’s termination of continuous service during the periods as
specified in Section 7(f)-(j) of the Option Plan.

6.     Employee
Benefits.  During the Employment Term, Executive shall
be entitled to participate in the employee benefit plans of the Company or
thinkorswim Group, Inc. (other than annual bonus plans, severance plans, and
incentive plans) as in effect from time to time (collectively, “Employee
Benefits”), on the same basis as those benefits are generally made available to
other similarly situated executives.

7.     Business
Expenses.  During the Employment Term, reasonable
business expenses incurred by Executive in the performance of Executive’s
duties hereunder shall be reimbursed by the Company in accordance with Company
policies.

8.     Termination.  The Employment Term
and Executive’s employment hereunder may be terminated by either party at any
time and for any reason; provided that Executive will be required to
give the Company at least 15 days advance written notice of any resignation of
Executive’s employment other than for Constructive Termination and the Company
will be required to give Executive at least 15 days advance written notice of
termination if terminated by the Company without Cause.  Notwithstanding any other provision of this
Agreement, the provisions of this Section 8 shall exclusively govern Executive’s
rights upon termination of employment with the Company and its affiliates.

a.             By
the Company For Cause or By Executive Resignation Other Than For Constructive
Termination.

(i)  The Employment Term and
Executive’s employment hereunder may be terminated by the Company for Cause (as
defined below) and shall terminate automatically upon Executive’s resignation
other than for Constructive Termination (as defined below); provided
that Executive shall be required to give the Company at least 15 days advance
written notice of a resignation other than for Constructive Termination.

For purposes of this Agreement, “Cause” shall mean:

 

(A)                              Executive becomes subject to
a statutory or other disqualification that prevents Executive from performing
Executive’s assigned duties under this Agreement;

 

(B)                                willful and material breach
by Executive of any provision of this Agreement; provided the Company has
delivered to Executive a written notice setting forth with particularity such
breach and shall have given Executive an opportunity to meet with the Company
and to cure such breach within 15 business days following delivery of such
written notice;

 

(C)                                  any act by Executive of
material fraud or dishonesty including, but not limited to, stealing or
falsification of company records, with respect to any aspect of the business of
the Company or its affiliates;

 

3

(D)                               material failure by
Executive to follow the lawful instructions or directions of the Chief
Executive Officer of the Company; provided the Company has delivered to
Executive a written notice setting forth with particularity such failure and
shall have given Executive an opportunity to meet with the Company and to cure
such failure within 15 business days following delivery of such written notice;

 

(E)                                 failure by Executive to
perform in any material manner under this Agreement other than due to
Disability; provided the Company has delivered to Executive a written notice
setting forth with particularity such failure and shall have given Executive an
opportunity to meet with the Company and to cure such failure within 15
business days following delivery of such written notice;

 

(F)                                   misappropriation
of company funds or of any corporate opportunity;

 

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

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

(I)                                    gross, willful or wanton
negligence or misconduct which constitutes a breach of any fiduciary duty or
duty of loyalty owed to the Company by Executive;

 

(J)                                   material violation of any
lawful policy, rule, regulation or directive of the Company or any of its
affiliates; provided the Company has delivered to Executive a written notice
setting forth with particularity such violation and shall have given Executive
an opportunity to meet with the Company and to cure such violation within 15
business days following delivery of such written notice;

 

(K)                               conduct on the part of
Executive, even if not in connection with the performance of Executive’s duties
contemplated under this Agreement, that could result in serious prejudice to
the interests of the Company or any of its affiliates, as determined by the
Company in its sole discretion, and failure by Executive to cease such conduct
within 15 business days following receipt of notice to cease such conduct;

 

4

(L)                                 acceptance by Executive of
employment with another employer without the consent of the Company; or

 

(M)                            violation of any material
federal or state securities laws, rules or regulations; provided the Company
has delivered to Executive a written notice setting forth with particularity
such violation and shall have given Executive an opportunity to meet with the
Company and to cure such violation within 15 business days following delivery
of such written notice.

 

(ii)  If Executive’s employment is
terminated by the Company for Cause, or if Executive resigns other than for
Constructive Termination, Executive shall be entitled to receive:

(A)          the Base Salary
through the date of termination;

(B)           any Annual
Bonus earned, but unpaid, as of the date of termination for the immediately
preceding fiscal year, paid in accordance with Section 4;

(C)           reimbursement,
within 30 days following submission by Executive to the Company of appropriate
supporting documentation, for any unreimbursed business expenses properly
incurred by Executive in accordance with Company policy prior to the date of
Executive’s termination; provided claims for such reimbursement
(accompanied by appropriate supporting documentation) are submitted to the
Company within 90 days following the date of Executive’s termination of
employment; and

(D)          such Employee
Benefits, if any, as to which Executive may be entitled under the employee
benefit plans as described in Section 6 (the amounts described in clauses (A)
through (D) hereof being referred to as the “Accrued Rights”).

Following such termination of Executive’s employment
by the Company for Cause or resignation by Executive other than for
Constructive Termination, except as set forth in this Section 8(a)(ii),
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

b.             Disability
or Death.

(i)  The Employment Term and
Executive’s employment hereunder shall terminate upon Executive’s death and may
be terminated by the Company if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) consecutive
months or for an aggregate of nine (9) months in any twenty-four (24)
consecutive month period to perform Executive’s duties (such incapacity is
hereinafter referred to as “Disability”). 
Any question as to the existence of the Disability of Executive as to
which Executive and the Company cannot agree shall be determined in writing by
a qualified independent physician mutually acceptable to Executive and the
Company.  If Executive and the Company
cannot agree 

5

as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who
shall make such determination in writing. 
The determination of Disability made in writing to the Company and
Executive shall be final and conclusive for all purposes of the Agreement.

(ii)  Upon termination of
Executive’s employment hereunder for either Disability or death, Executive or
Executive’s estate (as the case may be) shall be entitled to receive:

(A)          the Accrued
Rights; and

(B)           subject to
Executive’s continued compliance with the provisions of Sections 9 and 10,
continued payment of the Base Salary in accordance with the Company’s normal
payroll practices, as in effect on the date of termination of Executive’s
employment, for a period of three months following the date of such
termination.

Following Executive’s termination of employment due to
death or Disability, except as set forth in this Section 8(b)(ii), Executive
shall have no further rights to any compensation or any other benefits under
this Agreement.

c.             By
the Company Without Cause.

(i)  The Employment Term and
Executive’s employment hereunder may be terminated by the Company without
Cause.

(ii)  If Executive’s employment is
terminated by the Company without Cause (other than by reason of death or
Disability), Executive shall be entitled to receive:

(A)          the Accrued
Rights; and

(B)           subject to
Executive’s continued compliance with the provisions of Sections 9 and 10,
continued payment of the Base Salary in accordance with the Company’s normal
payroll practices, as in effect on the date of termination of Executive’s
employment, for a period equal to the longer of (i) 12 months following the
date of such termination and (ii) the end of the Employment Term.

Following Executive’s
termination of employment by the Company without Cause (other than by reason of
Executive’s death or Disability), except as set forth in this Section 8(c)(ii),
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

d.             Termination by Executive for
Constructive Termination.

(i)  The Employment Term and
Executive’s employment hereunder may be terminated by the Executive for
Constructive Termination (as defined below).

For purposes of this Agreement, “Constructive
Termination” shall mean:

 

6

 

(A)
a material breach of the terms of this Agreement by the Company which remains
uncorrected for 30 days following written notice setting forth with
particularity such breach given by Executive to the Company;

 

                (B) a material diminution in
Executive’s title, duties, responsibilities or authority or the assignment to
Executive of duties materially inconsistent with his position which remains
uncorrected for 30 days following written notice setting forth with
particularly such events given by Executive to the Company; or

 

                (C) relocation of Executive from
the Chicago office of thinkorswim or relocation of the Chicago office of
thinkorswim without the consent of Executive;

 

provided that, in each
case, Executive must have notified the Company in writing of the event
constituting Good Reason not later than sixty (60) days following the later to
occur of the occurrence of the event constituting Good Reason or Executive’s
actual knowledge thereof.

 

(ii)  If Executive’s employment is
terminated by the Executive for Constructive Termination, Executive shall be
entitled to receive:

(A)          the Accrued
Rights; and

(B)           subject to Executive’s continued
compliance with the provisions of Sections 9 and 10, continued payment of the
Base Salary in accordance with the Company’s normal payroll practices, as in
effect on the date of termination of Executive’s employment, for a period equal
to the longer of (i) twelve months following the date of such termination and
(ii) the end of the Employment Term.

                               Following Executive’s resignation for
Constructive Termination, except as set forth in this Section 8(d)(ii),
Executive shall have no further rights to any compensation or any other
benefits under this Agreement.

e.             Expiration
of Employment Term.

(i)  Unless Executive’s
employment is earlier terminated pursuant to paragraphs (a), (b), (c) or (d) of
this Section 8, Executive’s termination of employment hereunder (whether or not
Executive continues as an employee of the Company thereafter) shall be deemed
to occur on the close of business on the last day of the Employment Term
(including any extensions pursuant to Section 1) and Executive shall be
entitled to receive the Accrued Rights.

Following such termination
of Executive’s employment hereunder as a result of the expiration of the
Employment Term, except as set forth in this Section 8(d)(i), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement.

(ii)  Unless the parties otherwise
agree in writing, continuation of Executive’s employment with the Company
beyond the expiration of the Employment Term shall be deemed an employment
at-will and shall not be deemed to extend any of the provisions of this
Agreement and Executive’s employment may thereafter be terminated at will by
either Executive 

7

or the Company; provided that the provisions
of Sections 9, 10 and 11 of this Agreement shall survive any termination of
this Agreement or Executive’s termination of employment hereunder.

f.              Notice
of Termination.  Any purported termination of employment by
the Company or by Executive (other than due to Executive’s death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 14(i) hereof. 
For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under
the provision so indicated.

g.             Board/Committee
Resignation.  Upon termination of Executive’s employment
for any reason, Executive agrees to resign, as of the date of such termination
and to the extent applicable, from the Board of Directors of the Company (and
any committees thereof) and the Board of Directors (and any committees thereof)
of any of the Company’s affiliates.

9.     Non-Competition.

a.             Executive
acknowledges and recognizes the highly competitive nature of the businesses of
the Company and its affiliates and accordingly agrees as follows:

(1)   During the Employment Term
and for a period of 12 months following the date Executive ceases to be
employed by the Company, or, if longer, for a period lasting through the
scheduled expiration date of the Employment Term as though no such termination
of employment had occurred (the “Restricted Period”), Executive will not,
whether on Executive’s own behalf or on behalf of or in conjunction with any
person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise whatsoever (“Person”), directly or
indirectly:

(i)                                     engage in any
business that competes with the businesses of the Company or its affiliates
(including, without limitation, businesses which the Company or its affiliates
have specific plans to conduct in the future and in connection with which the
Company and/or its affiliates have expended more than nominal time and/or
capital and as to which plans Executive is aware) in any geographical area in
which the Company or its affiliates produces, sells, leases, rents, licenses or
otherwise provides its products or services, including without limitation any
retail and institutional securities and brokerage business that has a niche
market in or is focused on offering services that facilitate the trading of
exchange traded equity and index options (an “Options B-D”), the investor
education business, and the business of developing financial services software
or technology for an Options B-D or the investor education market (a “Competitive
Business”);

(ii)                                  enter the
employ of, or render any services to, any Person (or any division or controlled
or controlling affiliate of any Person) who or which engages in a Competitive
Business;

8

(iii)                               acquire
a financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant; or

(iv)                              interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between the Company or any of
its affiliates and customers, clients, contractors, managers, consultants,
suppliers or investors of the Company or its affiliates.

(2)   Notwithstanding anything to the
contrary in this Agreement, Executive may, directly or indirectly, own, solely
as an investment, securities of any Person engaged in the business of the
Company or its affiliates which are publicly traded on a national or regional
stock exchange or on the over-the-counter market if Executive (i) is not a
controlling person of, or a member of a group which controls, such person and
(ii) does not, directly or indirectly, own 5% or more of any class of
securities of such Person.

(3)   During the Restricted Period,
Executive will not, whether on Executive’s own behalf or on behalf of or in
conjunction with any Person, directly or indirectly:

(i)                                     solicit
or encourage any employee of the Company or any of its affiliates to leave the
employment of the Company or its affiliates; provided that the foregoing shall
not prohibit a general solicitation for employment not directed to employees of
the Company or any of its affiliates; or

(ii)                                  hire
any employee who was employed by the Company or its affiliates as of the date
of Executive’s termination of employment with the Company or who left the
employment of the Company or its affiliates coincident with, or within six
months prior to or after, the termination of Executive’s employment with the
Company;

provided
that the foregoing restrictions of this Paragraph (3) shall not apply to the
employee who served as Executive’s secretary (or administrative assistant) at
the time of Executive’s termination of employment.

(4)   During
the Restricted Period, Executive will not, directly or indirectly, solicit or
encourage to cease to work with the Company or its affiliates any consultant
then under contract with the Company or its affiliates.

b.             It is
expressly understood and agreed that although Executive and the Company
consider the restrictions contained in this Section 9 to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is
an unenforceable restriction against Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such 

 9
 

court may judicially determine or indicate to
be enforceable.  Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein. 
The provisions of this Section 9 shall survive the termination of
Executive’s employment for any reason.

10.   Confidentiality;
Intellectual Property.

a.             Confidentiality.

(i) 
Executive will not at any time (whether during or after Executive’s
employment with the Company) (x) retain or use for the benefit, purposes or
account of Executive or any other Person, or (y) disclose, divulge, reveal,
communicate, share, transfer or provide access to any Person outside the
Company (other than its professional advisers who are bound by confidentiality
obligations), any non-public, proprietary or confidential information
(including without limitation trade secrets, research and development,
software, consulting techniques, source codes, databases, inventions,
processes, formulae, methods and methodologies for analyzing and investing in
the stock market, software, databases, technology, designs and other
intellectual property, information concerning finances, investments,
projections, profits, strategies, pricing, costs, products, services, service
providers, vendors, customers, clients, partners, investors, personnel,
compensation, recruiting, training, advertising, sales, marketing, promotions,
government and regulatory activities and approvals), in whatever form or media,
concerning the past, current or future business, activities and operations of
the Company, its subsidiaries or affiliates and/or any third party that has
disclosed or provided any of same to the Company on a confidential basis,
including any such information obtained prior to the Effective Date (“Confidential
Information”) without the prior written authorization of the Chief Executive
Officer of the Company.

(ii)  “Confidential
Information” shall not include any information that is (x) generally known to
the industry or the public other than as a result of Executive’s breach of this
covenant, (y) made legitimately available to Executive by a third party without
breach of any confidentiality obligation, or (z) required by law to be
disclosed; provided that Executive shall give prompt written notice to
the Company of such requirement, disclose no more information than is so
required, and cooperate with any attempts by the Company, at the Company’s
expense, to obtain a protective order or similar treatment.

(iii)  Upon termination of Executive’s
employment with the Company for any reason, Executive shall (y) cease and not
thereafter commence use of any Confidential Information or intellectual
property (including without limitation, any patent, invention, copyright, trade
secret, trademark, trade name, logo, domain name or other source indicator)
owned or used by the Company or any of its affiliates and (z) immediately destroy,
delete, or return to the Company, at the Company’s option, all originals and
copies in any form or medium (including memoranda, books, papers, plans,
computer files, letters and other data) in Executive’s possession or control
(including any of the foregoing stored or located in Executive’s office, home,
laptop or other computer, whether or not company property) that contain
Confidential Information or otherwise relate to the business of the Company or
any of its affiliates, except that Executive may retain only those portions of
any personal notes, notebooks and diaries that do not contain any Confidential
Information.

 10
 

b.             Intellectual
Property.

(i)  If Executive creates, invents,
designs, develops, contributes to or improves any works of authorship, inventions,
materials, documents or other work product fixed in any tangible medium of
expression (including without limitation, research, reports, software,
databases, systems, applications, presentations, textual works, content, or
audiovisual materials), either alone or with third parties, at any time during
Executive’s employment by the Company and within the scope of such employment
and/or with the use of any the Company resources (“Company Works”), Executive
shall promptly and fully disclose same to the Company and hereby irrevocably
assigns, transfers and conveys, to the maximum extent permitted by applicable
law, all rights and intellectual property rights therein (including rights
under patent, industrial property, copyright, trademark, trade secret, unfair
competition and related laws) to the Company to the extent ownership of any
such rights does not vest originally in the Company.

(ii)  Executive shall take all
reasonably requested actions and execute all reasonably requested documents
(including any licenses or assignments required by a government contract) at
the Company’s expense (but without further remuneration) to assist the Company
in validating, maintaining, protecting, enforcing, perfecting, recording,
patenting or registering any of the Company’s rights in the Company Works.  If the Company is unable for any other reason
to secure Executive’s signature on any document for this purpose, then
Executive hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as Executive’s agent and attorney in fact, to
act for and in Executive’s behalf and stead to execute any documents and to do
all other lawfully permitted acts in connection with the foregoing.

(iii)  Executive shall comply with all
relevant policies and guidelines of the Company, including regarding the
protection of confidential information and intellectual property and potential
conflicts of interest.  Executive
acknowledges that the Company may amend any such policies and guidelines from
time to time, and that Executive remains at all times bound by their most
current version.

(iv)  The provisions of Section 10
shall survive the termination of Executive’s employment for any reason.

11.   Specific Performance.  Executive acknowledges and agrees that the
Company’s remedies at law for a breach or threatened breach of any of the
provisions of Section 9 or Section 10 would be inadequate and the Company would
suffer irreparable damages as a result of such breach or threatened
breach.  In recognition of this fact,
Executive agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting any bond, shall
be entitled to cease making any payments or providing any benefit otherwise
required by this Agreement and obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.

12.   Consulting
Period.  In the event that, during
the Employment Term and prior to a Change of Control of the Company (as defined
under the Option Plan), Executive’s employment hereunder is terminated by the
Company without Cause or by Executive for Constructive Termination, and at the
time of such termination the Company is actively engaged 

 11
 

in substantive
negotiations (and has conducted more than preliminary due diligence
investigations) with respect to a transaction that, if consummated, would
result in a Change of Control of the Company, then Executive agrees to continue
to serve the Company and
its Subsidiaries and Affiliates as a consultant for a period of 12 months
following such termination of Executive’s employment and the Employment Term
(the “Consulting Period”).  In such role,
Executive will advise the Chief Executive Officer of the Company on such
matters as the Chief Executive Officer shall reasonably request (including
advising on strategic matters and working with the Chief Executive Officer
towards the successful completion of a Change in Control of the Company), shall
meet with the Board periodically as requested by it, and shall assume such
other responsibilities as the Executive and the Company’s Chief Executive
Officer or the Board shall mutually agree. 
Executive shall not be required to provide such consulting services in
any Company office or to maintain any specified or minimum office hours, but
agrees to make himself reasonably available to the Company in connection with
such consulting services.  As consideration
for such consulting services, Executive shall continue to vest in Executive’s
then unvested Stock Options in accordance with the normal vesting
schedule during the period of continuous service (i.e., with the period of
consultancy being treated as “continuous services” for purposes of the Stock
Options, and with the potential for accelerated vesting in connection with a
Change of Control during the Consulting
Period,), Executive shall be paid a per diem amount for his consulting
services, and Executive shall be promptly reimbursed for travel, food, lodging
and other out-of pocket expenses reasonably incurred by Executive in performing
such services, in each case on terms mutually agreed to by the Executive and
the Company’s Chief Executive Officer or the Board.  If the Change of Control occurs prior to the
end of such 12 month period, then the Consulting Period shall terminate
immediately following the effective date of the Change of Control.

13.   Exams; Form U-4’s; Rules
and Regulations.  Executive shall
register all of Executive’s securities licenses with thinkorswim, Inc. and
shall remain registered with thinkorswim, Inc. during the Employment Term.  Executive represents and warrants to the
Company that Executive has passed the following qualification examinations and
Executive’s registrations associated with such examinations have not lapsed:

[EXECUTIVE
TO COMPLETE]

 Executive covenants and agrees to promptly
report in writing to the Compliance Department of thinkorswim Inc. (with a copy
to the Chief Executive Officer of the Company) any material changes to
Executive’s Form U-4.

Executive
certifies and agrees that all statements made by Executive on any application
form submitted to the Company for the Company’s use or for filing with any
federal or state authority or any regulatory or self-regulatory organization
are and will be true and accurate to the best of Executive’s knowledge, after
reasonable investigation.

14.   Background Check.  Executive hereby authorizes and requests any
and all former employers, and any other person with whom Executive was
associated in a business capacity, to furnish to the Company or to any other
person authorized to act on the Company’s behalf, any information they have
concerning the background and creditworthiness of Executive.  Executive hereby grants to the Company and to
anyone authorized to act on the Company’s 

 12
 

behalf the right
to conduct a thorough investigation of past employment, engagement and
associations, creditworthiness, character, ability, activities and reputation.

15.   Miscellaneous.

a.             Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois
without regard to conflicts of laws principles thereof.

b.             Entire
Agreement/Amendments.  This Agreement
contains the entire understanding of the parties with respect to the employment
of Executive by the Company.  There are
no restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein.  This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.

c.             No
Waiver.  The failure of a party to
insist upon strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver of such party’s rights or deprive such party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement.

d.             Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

e.             Assignment.  This Agreement, and all of Executive’s rights
and duties hereunder, shall not be assignable or delegable by Executive.  Any purported assignment or delegation by
Executive in violation of the foregoing shall be null and void ab initio and of no force and effect.  This Agreement may be assigned by the Company
to a person or entity which is an affiliate or a successor in interest to
substantially all of the business operations of the Company.  Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate or successor person or entity.

f.              No
Mitigation; Set-Off.  Executive shall
not be required to mitigate the amount of any payment provided for pursuant to
this Agreement by seeking other employment. 
The Company’s obligation to pay Executive the amounts provided and to
make the arrangements provided hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by Executive to the Company or its
affiliates in his capacity as an employee of the Company and its affiliates.

g.             Compliance with IRC Section 409A.  Notwithstanding anything herein to the
contrary, (i) if at the time of Executive’s termination of employment with the
Company Executive is a “specified employee” as defined in Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the deferral of the
commencement of any payments or benefits otherwise payable hereunder as a
result of such termination of employment is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the Company
will defer the commencement of the payment of any such payments or

 13
 

benefits
hereunder (without any reduction in such payments or benefits ultimately paid
or provided to Executive) until the date that is six months following Executive’s
termination of employment with the Company (or the earliest date as is
permitted under Section 409A of the Code) and (ii) if any other payments of
money or other benefits due to Executive hereunder could cause the application
of an accelerated or additional tax under Section 409A of the Code, such
payments or other benefits shall be deferred if deferral will make such payment
or other benefits compliant under Section 409A of the Code, or otherwise such
payment or other benefits shall be restructured, to the extent possible without
any additional liability for the Company, in a manner, determined by the Chief
Executive Officer of the Company, that does not cause such an accelerated or
additional tax.

h.             Successors;
Binding Agreement.  This Agreement
shall inure to the benefit of and be binding upon personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

i.              Notice.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered by hand or overnight
courier or three days after it has been mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth below in this Agreement, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

If to the Company:

INVESTools Inc.

13947 South Minuteman
Drive

Draper, UT 84020

Attention: Chief
Financial Officer

Fax 801-816-6010

Attention:

If to Executive:

To the
most recent address of Executive set forth in the personnel records of the
Company.

j.              Executive
Representation.  Executive hereby
represents to the Company that the execution and delivery of this Agreement by
Executive and the Company and the performance by Executive of Executive’s
duties hereunder shall not constitute a breach of, or otherwise contravene, the
terms of any employment agreement or other agreement or policy to which
Executive is a party or otherwise bound.

k.             Prior
Agreements.  This Agreement
supercedes all prior agreements and understandings (including verbal
agreements) between Executive and the Company and/or its affiliates regarding
the terms and conditions of Executive’s employment with the Company and/or its
affiliates.

 14
 

l.              Cooperation.  Executive shall provide Executive’s
reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or proceeding) which relates to events occurring during
Executive’s employment hereunder.  This
provision shall survive any termination of this Agreement.

m.            Withholding
Taxes.  The Company may withhold from
any amounts payable under this Agreement such Federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.

n.             Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 15
 

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

	
  INVESTOOLS INC.

  	
   

  	
  SCOTT SHERIDAN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Lee K. Barba

  	
   

  	
  /s/ Scott Sheridan

  
	
   

  	
   

  	
   

  
	
  By: Lee K. Barba

  	
   

  	
   

  
	
  Title: Chief
  Executive Officer

  	
   

  	
   

  

 

 16

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