THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 1st day of January, 2007, by and between the CHICAGO BOARD OPTIONS EXCHANGE (“Employer”) and EDWARD TILLY (“Employee”), to be effective August 21, 2006 (the “Effective Date”).
WHEREAS, Employer desires that Employee continue to provide services for the benefit of the Employer and its affiliates;
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:
(a) Employer shall employ Employee on the terms hereinafter set forth. Employee shall 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, 2008 (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 April 1 of the year immediately following the year in which it was earned.