<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 30, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to _________.
COMMISSION FILE NUMBER: 333-75119
onlinetradinginc.com corp.
(Exact name of registrant as specified in its charter)
Florida 65-0607814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 North Military Trail, Suite 200
Boca Raton, Florida 33431
(Address of principal executive offices)
(561) 995-1010
(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes No X
--- ---
On June 16, 1999, the registrant had 11,138,888 outstanding shares of
common stock, $0.01 par value.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
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onlinetradinginc.com corp.
INDEX
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations (unaudited) for the Three
Months Ended April 30, 1999 and April 30, 1998
Balance Sheets as of April 30, 1999 (unaudited) and
January 31, 1999
Statements of Cash Flows (unaudited) for the Three
Months Ended April 30, 1999 and April 30, 1998
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II - OTHER INFORMATION
SIGNATURES
EXHIBITS
<PAGE> 3
onlinetradinginc.com corp.
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
APRIL 30
--------------------------
1999 1998
---------- ----------
Revenues
Commissions $2,059,756 $1,342,711
Net dealer inventory and investment gains 314,909 216,184
Interest and dividends 70,442 38,365
---------- ----------
2,445,107 1,597,260
---------- ----------
Expenses
Employee compensation and benefits 1,189,208 973,566
Clearing and other transaction costs 610,440 425,017
Occupancy and administrative 239,489 120,914
Interest expense 6,745 8,985
Depreciation 8,744 7,429
---------- ----------
2,054,626 1,535,911
---------- ----------
Income before income taxes 390,481 61,349
Income Tax Provision 150,338 12,868
---------- ----------
Net Income $ 240,143 $ 48,481
========== ==========
Earnings Per Share
Basic $ 0.027 $ 0.005
========== ==========
Diluted $ 0.027 $ 0.005
========== ==========
Weighted average common shares outstanding
for both basic and diluted 8,888,888 8,857,229
========== ==========
See accompanying notes.
<PAGE> 4
onlinetradinginc.com corp.
BALANCE SHEETS
<TABLE>
<CAPTION>
As of As of
-------------- ----------------
April 30, 1999 January 31, 1999
-------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current Assets
Cash & cash equivalents $1,315,275 $1,005,944
Receivable from clearing organization 677,981 572,433
Other receivables 9,912 6,163
Securities owned, at market value 163,047 381,084
Other current assets -- 9,420
---------- ----------
Total Current Assets 2,166,215 1,975,044
Property and Equipment, net 163,633 136,146
Other Assets 118,222 43,398
---------- ----------
TOTAL ASSETS $2,448,070 $2,154,588
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 189,894 $ 163,074
Accrued payroll 522,660 644,148
Income taxes payable 143,018 38,230
Securities sold but not yet purchased, at market value 9,600 --
Other current liabilities 175,069 141,200
---------- ----------
Total Current Liabilities 1,040,241 986,652
---------- ----------
Deferred Income Taxes 15,150 15,400
---------- ----------
Subordinated Loans 525,000 525,000
---------- ----------
Stockholders' Equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized;
issued and outstanding, 300 shares of Series A, stated value
$1,000, voting, redeemable at 110% of stated value 300,000 300,000
Common stock, $0.01 par value; 100,000,000 shares authorized;
issued and outstanding, 8,888,888 shares 88,888 88,888
Additional-Paid-In-Capital 103,063 103,063
Retained earnings 375,728 135,585
---------- ----------
Total Stockholders' Equity 867,679 627,536
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,448,070 $2,154,588
========== ==========
</TABLE>
See accompanying notes
<PAGE> 5
onlinetradinginc.com corp.
Statements of Cash Flows (unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 240,143 $ 48,481
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 8,744 7,429
Common stock issued for services -- 26,000
Deferred income taxes (250) --
Changes in certain assets and liabilities:
Receivable from clearing organization (105,548) (93,835)
Other receivables (3,749) (2,922)
Securities owned at market value 218,037 (334,357)
Other current assets 9,420 561
Accounts payable 26,820 (65,912)
Accrued payroll (121,488) 601,340
Income taxes payable 104,788 12,868
Other current liabilities 33,869 53,113
Securities sold, but not yet purchased, at market value 9,600 206,762
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 420,386 459,528
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (36,231) (4,726)
Net change in other assets (74,824) (7,062)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (111,055) (11,788)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES -- --
----------- -----------
Net Increase in Cash and Cash Equivalents $ 309,331 $ 447,740
Cash Beginning of Period $ 1,005,944 $ 218,335
----------- -----------
Cash End of Period $ 1,315,275 $ 666,075
=========== ===========
</TABLE>
See accompanying notes.
<PAGE> 6
onlinetradinginc.com corp.
Notes to Financial Statements
April 30, 1999
1. ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's fiscal year end is January 31. The financial information
presented as of any date other than January 31 has been prepared from the books
and records without audit. Financial information as of January 31 has been
derived from the audited financial statements of the Company, but does not
include all disclosures required by generally accepted accounting principles. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial information for
the periods indicated, have been included. The results of operations for the
interim periods shown in this report are not necessarily indicative of results
to be expected for the entire fiscal year.
EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, EARNINGS PER SHARE. Statement No. 128 replaced the
calculation of primary and fully diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options, warrants, and convertible securities. Diluted earnings per share is
very similar to the previously reported fully diluted earnings per share.
2. EARNINGS PER SHARE
The following table sets forth the computation of basis and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months ended
April 30
-----------------------
1999 1998
-----------------------
<S> <C> <C>
Numerator:
Net Income $ 240,143 $ 48,481
Numerator for basic and diluted earnings per share - income
Available to common stockholders $ 240,143 $ 48,481
Denominator:
Denominator for basic earnings per share - weighted average
shares 8,888,888 8,857,229
Denominator for diluted earnings per share - adjusted weighted
average shares and assumed conversions 8,888,888 8,857,229
Basic earnings per share $ 0.027 $ 0.005
Diluted earnings per share $ 0.027 $ 0.005
</TABLE>
<PAGE> 7
3. STOCK SPLIT
A stock split of 11.1111 shares for each 10 shares of common stock
outstanding was effected on April 3, 1999. The number of shares issued and all
per share amounts have been adjusted to retroactively reflect the effect of the
stock split.
4. OPERATING LEASE
On March 2, 1999, the Company signed a three year operating lease to
rent office furniture, office equipment and computer hardware. The monthly
rental payment under the agreement is $6,862 plus applicable taxes.
5. SUBSEQUENT EVENTS
The Company's Articles of Incorporation were amended on May 8, 1999 to
increase its authorized $0.01 par value common stock to 100,000,000 shares.
The Company completed its initial public offering (the "IPO") by
issuing 2,250,000 shares of common stock, $0.01 par value (the "IPO Shares") on
June 11, 1999. The IPO shares were issued in a registered offering pursuant to a
Registration Statement on Form SB-2 (Commission File No. 333-75119; effective
date June 10, 1999) through a syndicate of underwriters, the principal
representatives of which were Werbel-Roth Securities, Inc., onlinetradinginc.com
corp., Seaboard Securities, Inc., and The Agean Group, Inc. The IPO shares were
offered and sold by the underwriters at an initial public offering price of
$7.00 per share, resulting in aggregate gross offering proceeds of $15,750,000.
The Company incurred offering expenses in connection with this offering
as follows:
Underwriting discounts and commissions $1,741,556
Expenses paid to or for underwriters 120,000
Other offering expenses 270,000
----------
Total Expenses $2,131,556
Except for the concessions earned by the Company as a result of
participating in the syndicate, none of the above expenses were paid either
directly to indirectly to directors, officers, general partners of the Company
or its associates, or to persons owning more than 10% of any class of equity
security of the Company or to affiliates of the Company.
On June 16, 1999, the closing date of the IPO, the Company received
$14,025,210 of proceeds after underwriters discounts and other costs totaling
$1,724,790. The Company estimates that it will incur $365,000 in other expenses
associated with the issuance and distribution. As of April 30, 1999, the Company
had $97,237 in deferred registration costs. In conjunction with the IPO, the
Company issued 225,000 warrants to the underwriters. The warrants have an
exercise price of $11.55 (165% of the $7.00 IPO price).
<PAGE> 8
On June 11, 1999, the Company granted to its employees, 325,000 stock
options. The employee options generally vest over five years and have an
exercise price of $7.00.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the level of
operation and financial condition of onlinetradinginc.com. This discussion
should be read with the financial statements appearing in Part I. Item 1 of this
report.
The Company is a brokerage firm registered with the Securities and Exchange
Commission, the National Association of Securities Dealers, the Municipal
Securities Rulemaking Board, and all state securities divisions except Hawaii
and Puerto Rico. We are a full-service firm targeting experienced high net worth
investors and small to mid-sized financial institutions including: hedge funds,
money managers, mutual funds, registered investment advisors and pension funds.
We specialize in offering equity execution systems and services to more active
market participants, and we plan to expand our business by using the Internet to
efficiently market and distribute our products and services to additional
potential clients. In June 1999, we completed an initial public offering (the
"IPO") of shares at a price of $7.00 per share which, including the 15%
overallotment, generated net proceeds of approximately $15.7 million.
IMPACT OF THE YEAR 2000
With the new millenium approaching, many institutions around the world are
reviewing and modifying their computer systems to ensure that they are Year 2000
complaint. The issue, in general terms, is that many existing computer systems
and micro processors with data functions use only two digits to identify a year
in the date field with the assumption that the first two digits of the year are
always "19." Consequently, on January 1, 2000, computers that are not Year 2000
compliant may read the year as 1900. Systems that calculate, compare or sort
using the incorrect date may malfunction.
Our business is extremely dependent on technology. We have conducted an
assessment of the Year 2000 issue and the potential effect it will have on us
and our business. We believe we have materially modified and/or replaced our
previously non-compliant information technology systems to properly recognize
and utilize dates beyond December 31, 1999. We presently believe that with
modifications previously made to existing software, conversions to new software
and replacement of some hardware, the Year 2000 issue will be satisfactorily
resolved in our own systems. However, even if these changes are successful,
failure of third party systems, to which we are financially or operationally
linked, to address their own system problems could have a material adverse
impact on us.
We have budgeted $100,000 for Year 2000 testing and monitoring beyond what we
have already spent. We cannot assure you that this budget will be sufficient as
actual results could differ materially from our plans.
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 1999 COMPARED WITH THREE MONTHS ENDED APRIL 1998
For the three months ended April 30, 1999, the Company realized net income of
$240,143, an increase of 395% when compared to the three month period ended
April 30, 1998.
REVENUES. Gross revenues increased over 53% from the three months ended April
1998 to the three months ended April 1999. The increase is primarily a result of
earning $717,045 (a 53% increase) in additional commission revenue. The
additional commissions are attributed to increasing the Company's sales force by
hiring an additional six registered representatives. The Company intends to
continue recruiting experienced brokers and begin advertising for retail and
institutional customers in an effort to increase revenues and gain market share.
Proprietary trading profits increased by 46% over the same period, and interest
revenues increased by 84% as a result of an improved interest revenue sharing
arrangement with our clearing firm, Bear Stearns Securities Corp.
OPERATING EXPENSES. Total operating expenses increased by 34% from $1,535,911
for the three month period ending April 1998 to $2,054,626 for the three month
period ended April 1999. Our largest operating expense continues to be employee
compensation. Employee compensation includes commissions paid to brokers and
traders and has decreased to 49% of gross revenues for the three months ended
April 30, 1999. We anticipate this expense to continue to increase as we hire
additional brokers, management, and executives.
The next largest operating expense is our cost to execute and clear trades
(i.e., clearing costs) through Bear Stearns Securities Corp, Instinet, floor
brokers, and various other electronic crossing networks. Our clearing costs have
increased in terms of absolute dollars, but the transaction costs have declined
as a percentage of the commission revenues generated. For the three months ended
April 30, 1999 our clearing costs were 30% of our gross commissions as compared
to 32% for the same period ending April 30, 1998. The decrease is a result of a
reduction in costs per trade as our transaction volume increases. We expect this
trend to continue.
Our occupancy and administrative expenses have almost doubled as the Company
continues to expand its office facilities. The dollar increase of $118,575
represents a 2% increase as a percentage of total revenues. We anticipate that
this expense will continue to increase in terms of actual dollars; however, as
our revenues continues to grow, we anticipate this expense to decrease as a
percentage of revenues.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to SEC rule 15c3-1, the Company is required to maintain at least
$100,000 in net capital. The same rule prohibits the Company's aggregate
indebtedness to exceed 15 times its net capital (i.e., its net capital ratio).
As of April 30, 1999, the Company had net capital of $1,094,617 with a net
capital ratio of .94 to 1. The Company remains well within the regulatory
required minimums.
The Company's primary source of operating liquidity continues to be cash
generated from operations. The IPO proceeds, $14,025,210, received on June 16,
1999, provide the Company
<PAGE> 10
with the capital resources to significantly expand its network infrastructure,
implement its marketing strategies, and continuously improve its internet
products.
The Company intends to redeem its preferred stock for 110% of the $300,000
stated value in the second fiscal quarter of 1999. In addition, the Company may
pre-pay $100,000 of its subordinated loans.
The Company believes that the net proceeds from the IPO, together with its
current cash balance and anticipated cash provided by future operations will be
sufficient to meet its working capital and anticipated capital expenditure
requirements at least over the next 12 months. Management expects that, in the
future, cash in excess of current requirements will be invested in short-term
interest bearing securities.
FORWARD LOOKING INFORMATION
Statements contained in this report regarding the Company's future operations,
growth strategy, future performance and results and the anticipated liquidity
are forward looking and therefore are subject to certain risks and
uncertainties, including those discussed on this report and in the Company's
other filings with the SEC. In addition, any forward looking information
regarding the operations of the Company will be effected by management's ability
to: (1) complete its expansion in a timely fashion, (2) manage and operate its
facility as expanded, (3) increase its marketing and sales efforts, and (4)
maintain its existing customers. There can be no assurance that the Company will
be successful in completing its proposed expansion, or, if completed, that it
will be successful in efficiently managing its growth in order to maximize
potential transaction volume.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) On June 11, 1999, the U.S. Securities and Exchange Commission declared
effective the Company's Registration Statement on Form SB-2 (SEC File Number
333-75119). The offering of the securities (the "IPO") registered pursuant to
the Registration Statement also commenced on June 11, 1999. The IPO was
completed after the sale of 2,250,000 shares of the Company's common stock for
$7.00 per share. He managing underwriter, Werbel-Roth Securities, Inc., also
exercised the 15% overallotment option on July 1, 1999 and sold an additional
337,500 shares.
The Company incurred expenses of $2.1 million in connection with the IPO, and an
additional $261,000 in underwriter's discounts and fees with respect to the
overallotment. These expenses represented direct payments to others and not
direct or indirect payments to directors or officers of the Company or to
persons owning more than 10% of any class of securities of the Company. Net
proceeds from the IPO, including the overallotment, were $15.7 million and are
being used for: sales & marketing, website enhancement and programming,
potential acquisitions, increasing the Company's net capital, hiring additional
management and personnel, branch office
<PAGE> 11
expansion, expansion of client service department, network expansion and
upgrades, and Year 2000 readiness and testing. None of the payments from the use
of proceeds were made to officers, directors, or persons owning more than 10% of
any class of securities of the Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11 Computation of Per Share Earnings - See footnote #2
27 Financial Data Schedule (for SEC use only)
99.1 Addendum to Andrew A. Allen's Employment Agreement
99.2 Addendum to Farshid Tafazzoli's Employment Agreement
(b) The Company filed no reports on Form 8-K during the period.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
onlinetradinginc.com corp.
07/12/99 By: /s/ Andrew A. Allen
- --------------------- ----------------------------------------
Date Andrew A. Allen, Chief Executive Officer
07/12/99 By: /s/ Steven zum Tobel
- --------------------- ----------------------------------------
Date E. Steven zum Tobel, President and
Chief Financial Officer
<PAGE> 1
EXHIBIT 99.1
ADDENDUM
This Addendum, entered into as of the 8th day of July, 1999 by and between
onlinetradinginc.com corp. ("employer"), whose principal place of business at
2700 N. Military Trail, Suite 200, Boca Raton, Florida 33431, and ANDREW A.
ALLEN ("employee").
Recitals
A. Employer is a publicly held company. Employer considers it essential to the
best interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, employer recognizes that, as is the
case with many publicly held companies, the possibility of a change in control
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of employer and its stockholders.
B. Employer has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of employee to his/her
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of employer.
C. In order to induce employee to remain in the employ of employer and in
consideration of employee's agreement set forth below, employer agrees that
employee shall receive the severance benefits set forth in this Agreement.
NOW THEREFORE, in consideration of employee's continued employment, the mutual
covenants and agreements contained in this Addendum, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. PURPOSE OF ADDENDUM. This Addendum shall supplement that certain employment
agreement entered between employer and employee dated the 1st day of February,
1999 (the "employment agreement") and where inconsistent with said employment
agreement, this Addendum shall control. In the event employee's employment with
employer is terminated subsequent to a "change in control of employer" (as
defined in Section 2 below) under the circumstances described below, employer
agrees that, in addition to all compensation and benefits payable to employee
pursuant to the employment agreement, employee shall receive the additional
severance benefits set forth in this Addendum.
2. CHANGE IN CONTROL. No benefits shall be payable under this Addendum unless
there shall have been a change in control of employer, as set forth below. For
purposes of this Addendum, a "change in control of employer" shall mean a change
of control of a nature that would be
<PAGE> 2
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not employer is in fact required to comply with that
regulation, provided that, without limitation, such a change in control shall be
deemed to have occurred if:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities under
an employee benefit plan of employer or a employer owned, directly or
indirectly, by the stockholders of employer in substantially the same
proportions as their ownership of stock of employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of employer representing 20% or more of the
combined voting power of employer's then outstanding securities; or
(B) during any period of two consecutive years (not including any period prior
to the execution of this Addendum), individuals who at the beginning of such
period constitute employer's board of directors and any new director (other than
a director designated by a person who has entered into an agreement with
employer to effect a transaction described in clauses (A), (D) or (E) of this
Section) whose election by the Board or nomination for election by employer's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority; or
(C) employer enters into any agreement, the consummation of which would result
in the occurrence of a change in control of employer; or
(D) the stockholders of employer approve a plan of complete liquidation of
employer or an agreement for the sale or disposition by employer of all or
substantially all employer's assets; or
(E) the stockholders of employer approve a merger or consolidation of employer
with any other entity (other than a merger or consolidation which would result
in the voting securities of employer outstanding immediately prior to it
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) greater than 80% of the combined
voting power of the voting securities of employer or such surviving entity
outstanding immediately after such merger or consolidation).
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events described in
Section 2 above constituting a change in control of employer shall have
occurred, and the employee is terminated by employer for any reason, including
termination due to employer's failure to extend the employment agreement
pursuant to its terms, or if employee terminates the employment agreement for
Good Reason (as defined below), employee shall be entitled to the benefits
provided in Subsection 4(ii) below upon the subsequent termination of employee's
employment during the term of this Addendum, unless such termination is because
of employee's death or for "Cause" (as defined in the employment agreement).
(i). GOOD REASON. Employee shall be entitled to terminate employment for Good
Reason. For
2
<PAGE> 3
purposes of this Addendum, "Good Reason" shall mean, without employee's express
written consent, the occurrence after a change in control of employer of any of
the following circumstances unless, in the case of paragraph (A), (E), (F), (G)
or (H), such circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination, as defined in Subsections 3(iii) and
3(ii), respectively, given in respect of them:
(A). the assignment to employee of any duties inconsistent with employee's
status and position as it exists immediately prior to the change in control of
employer or a substantial adverse alteration in the nature or status of
employee's responsibilities from those in effect immediately prior to the change
in control of employer;
(B). a reduction by employer in employee's annual base salary and/or incentive
compensation in effect immediately prior to the change in control of employer or
as the same may be increased from time to time pursuant to the employment
agreement except for across-the-board salary reductions similarly affecting all
key employees of employer and all key employees of any person or entity in
control of employer;
(C). employee's relocation to a location not within ten (10) miles of employee's
present office or job location, except for required travel on employer's
business pursuant to the employment agreement;
(D). the failure by employer, without employee's consent, to pay to employee any
portion of employee's current compensation, or to pay to employee any portion of
an installment of deferred compensation under any deferred compensation program
of employer, within seven days of the date such compensation is due;
(E). the failure by employer to continue in effect any bonus to which employee
were entitled, or any compensation or benefit plan set forth in the employment
agreement or in which employee participated immediately prior to the change in
control of employer which is material to employee's total compensation and/or
benefits, including but not limited to employer's Stock Option Plans, 401(k)
Pre-Tax Retirement Savings Plan, and Flexible Benefit Plan, or any substitute
plans adopted prior to the change of control in employer, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by employer to continue
employee's participation in it (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of employee's participation relative to other
participants, as existed at the time of the change in control;
(F). the failure by employer to continue to provide employee with benefits
substantially similar to those enjoyed by employee under any of employer's life
insurance, medical, health and accident, or disability plans in which employee
were participating at the time of the change in control of employer, the failure
to continue to provide employee with a employer automobile or allowance in lieu
of it, if employee were provided with such an automobile or allowance in lieu of
it at the time of the change of control of employer, the taking of any action by
employer which would directly or indirectly materially reduce any of such
benefits or deprive employee of any
3
<PAGE> 4
material fringe benefit enjoyed by employee at the time of the change in control
of employer, or the failure by employer to provide employee with the number of
paid vacation days to which employee are entitled on the basis of years of
service with employer in accordance with employer's normal vacation policy in
effect at the time of the change in control of employer;
(G). the failure of employer to obtain a satisfactory agreement from any
successor to assume and agree to perform the employment agreement or this
Addendum, as contemplated in Section 5 of this Addendum; or
(H). any purported termination of employee's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Subsection
(ii) below; for purposes of this Addendum, no such purported termination shall
be effective.
Employee's rights to terminate employee's employment pursuant to this Subsection
shall not be affected by employee's incapacity due to physical or mental
illness. employee's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
under this Addendum. In the event employee delivers Notice of Termination based
upon circumstances set forth in Paragraph (A), (E), (F), (G) or (H) above, which
are fully corrected prior to the Date of Termination set forth in employee's
Notice of Termination, such Notice of Termination shall be deemed withdrawn and
of no further force or effect.
(ii). NOTICE OF TERMINATION. Any purported termination of employee's employment
by employer or by employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with Article 12 of the
employment agreement. For purposes of this Addendum, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Addendum relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employee's
employment under the provision so indicated.
(iii). DATE OF TERMINATION. "Date of Termination" shall be determined pursuant
to Section 9.7 of the employment agreement.
4. COMPENSATION UPON TERMINATION. Following a change in control of employer, as
defined by Section 2, upon termination of employee's employment employee shall
be entitled to the following benefits:
(i). If employee's employment shall be terminated by employer for Cause (as
defined in the employment agreement) or by employee other than for Good Reason
(as defined in this Addendum), or death, employer shall pay employee pursuant to
the terms of the employment agreement, plus all other amounts and benefits to
which employee is entitled under any compensation plan of employer at the time
such payments are due, and employer shall have no further obligations to
employee under this Addendum.
(ii). If employee's employment by employer is (a) terminated by employer other
than for Cause
4
<PAGE> 5
(as defined in the employment agreement) or (b) terminated by employee for Good
Reason, then employee shall be entitled to the benefits provided below:
(A). Employer shall pay employee employee's full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
plus all other amounts and benefits to which employee are entitled under any
compensation plan of employer, at the time such payments are due, except as
otherwise provided below.
(B). In lieu of any further salary payments to employee for periods subsequent
to the Date of Termination, employer shall pay as severance pay to employee a
lump sum severance payment (together with the payments provided in paragraphs C
and D, below, the "Severance Payments") equal to 2.99 times the sum of
employee's annual base salary in effect immediately prior to the occurrence of
the circumstance giving rise to the Notice of Termination given in respect of
them.
(C). Employer shall pay to employee any deferred compensation, including, but
not limited to deferred salary, incentive and/or bonuses, allocated or credited
to employee or employee's account as of the Date of Termination.
(D). At employee's sole discretion, in lieu of shares of common stock of
employer (the "employer's Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to employee under employer's Stock Option Plans
(which Options shall be cancelled upon the making of the payment referred to
below) employee shall receive an amount in cash equal to the product of (i) the
excess of the closing price of employer's Shares as reported by the exchange
currently trading said stock (or, if not so reported, on the basis of the
average of the lowest asked and highest bid prices on or nearest the Date of
Termination), over the per share exercise price of each Option held by employee
(whether or not then fully exercisable) plus the amount of any applicable cash
appreciation rights, times (ii) the number of employer's Shares covered by each
such Option.
(E). Employer shall also pay to employee all legal fees and expenses incurred by
employee as a result of such termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by the employment agreement,
this Addendum, or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") to any payment or benefit provided under this
Addendum)).
(F). The payments provided for in paragraphs (B), (C), and (D) above, shall be
made no later than the fifth day following the Date of Termination, provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, employer shall pay to employee on such day an estimate, as
determined in good faith by employer, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount can be
determined but in no event later than the 30th day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by employer to employee payable on or before the 30th day after
5
<PAGE> 6
demand by employer (together with interest from the date of the employer's
demand at the rate provided in Section 1274(b)(2)(B) of the Code).
(iii). In the event that employee is a "disqualified individual" within the
meaning of Section 280G of the Code, the parties expressly agree that the
payments described in this Section 4 and all other payments to employee under
any other agreements or arrangements with any persons which constitute
"parachute payments" within the meaning of Section 280G of the Code are
collectively subject to an overall maximum limit. Such maximum limit shall be $1
less than the aggregate amount which would otherwise cause any such payments to
be considered a "parachute payment" within the meaning of Section 280G of the
Code, as determined by employer. Accordingly, to the extent that such payments
would be considered a "parachute payment" with respect to employee, then the
portions of such payments shall be reduced or eliminated in the following order
until the remaining change of control termination payments with respect to
employee is within the maximum described in this subsection (iii):
(A). First, any cash payment to employee;
(B). Second, any change of control termination payments not described herein;
and
(C). Third, any forgiveness of indebtedness of employee to employer.
Employee expressly and irrevocably waives any and all rights to receive any
change of control termination payments, which exceed the maximum limit described
in this subsection (iii).
(iv). Employee shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by employee as the result of employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by employee to employer, or otherwise except as specifically provided
in this Section 4.
(v). In addition to all other amounts payable to employee under this Section 4,
employee shall be entitled to receive all benefits payable to employee under
employer's 401(k) Pre-Tax Retirement Savings Plan and any other plan or
agreement relating to retirement benefits.
5. SUCCESSORS; BINDING AGREEMENT
(i). Employer will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of employer to expressly assume and agree to perform the
employment agreement and this Addendum in the same manner and to the same extent
that employer would be required to perform it if no such succession had taken
place. Failure of employer to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the employment
agreement and this Addendum and shall entitle employee to compensation from
employer in the same amount and on the same terms as employee would be entitled
to under this Addendum if employee
6
<PAGE> 7
terminate employee's employment for Good Reason following a change in control of
employer, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. However, employer's failure to obtain such agreement shall not
affect said successor's obligations pursuant to this Addendum. As used in this
Addendum, "employer" shall mean employer as defined above and any successor to
its business and/or assets as which assumes and agrees to perform this Addendum
by operation of law, or otherwise.
(ii). This Addendum shall inure to the benefit of and be enforceable by
employee's personal or legal representatives, executors, administrators, heirs,
distributees, and legatees. If employee should die while any amount would still
be payable to employee if employee had continued to live, all such amounts,
unless otherwise provided in this Addendum, shall be paid in accordance with the
terms of this Addendum to employee's legatee or other designee or, if there is
no such designee, to employee's estate.
6. MISCELLANEOUS. No provision of this Addendum may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by employee and such officer as may be specifically designated by the
Board. No waiver by either party to the employment agreement or this Addendum at
any time of any breach by the other party of, or compliance with, any condition
or provision of the employment agreement or this Addendum to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for shall be paid
net of any applicable withholding or deduction required under federal, state or
local law. The obligations of employer under Section 4 shall survive the
expiration of the term the employment agreement and this Addendum.
7. VALIDITY. The invalidity or unenforceability of any provision of the
employment agreement or of this Addendum shall not affect the validity or
enforceability of any other provision of this Addendum, which shall remain in
full force and effect.
9. COUNTERPARTS. This Addendum may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ENTIRE ADDENDUM. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Addendum have
been made by either party which are not expressly set forth in the employment
agreement or this Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date and year
first above written.
ANDREW A. ALLEN For onlinetradinginc.com corp.
/s/ Andrew A. Allen By: /s/ Steven zum Tobel
- ----------------------- ---------------------------
Andrew A. Allen Steven zum Tobel, President
7
<PAGE> 1
EXHIBIT 99.2
ADDENDUM
This Addendum, entered into as of the 8th day of July, 1999 by and between
onlinetradinginc.com corp. ("Employer"), whose principal place of business at
2700 N. Military Trail, Suite 200, Boca Raton, Florida 33431, and FARSHID
TAFAZZOLI ("Employee").
Recitals
A. Employer is a publicly held company. Employer considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel. In this connection, Employer recognizes that, as is the
case with many publicly held companies, the possibility of a change in control
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of Employer and its shareholders.
B. Employer has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of Employee to his/her
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of Employer.
C. In order to induce Employee to remain in the employ of Employer and in
consideration of Employee's agreement set forth below, Employer agrees that
Employee shall receive the severance benefits set forth in this Agreement.
NOW THEREFORE, in consideration of Employee's continued employment, the mutual
covenants and agreements contained in this Addendum, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. PURPOSE OF ADDENDUM. This Addendum shall supplement that certain employment
agreement entered between Employer and Employee dated the 1st day of February,
1999 (the "Employment Agreement") and where inconsistent with said Employment
Agreement, this Addendum shall control. In the event Employee's employment with
Employer is terminated subsequent to a "change in control of Employer" (as
defined in Section 2 below) under the circumstances described below, Employer
agrees that, in addition to all compensation and benefits payable to Employee
pursuant to the Employment Agreement, Employee shall receive the additional
severance benefits set forth in this Addendum.
2. CHANGE IN CONTROL. No benefits shall be payable under this Addendum unless
there shall have been a change in control of Employer, as set forth below. For
purposes of this Addendum, a "change in control of Employer" shall mean a change
of control of a nature that would be
<PAGE> 2
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not Employer is in fact required to comply with that
regulation, provided that, without limitation, such a change in control shall be
deemed to have occurred if:
(A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a trustee or other fiduciary holding securities under
an Employee benefit plan of Employer or a Employer owned, directly or
indirectly, by the shareholders of Employer in substantially the same
proportions as their ownership of stock of Employer, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Employer representing 20% or more of the
combined voting power of Employer's then outstanding securities; or
(B) during any period of two consecutive years (not including any period prior
to the execution of this Addendum), individuals who at the beginning of such
period constitute Employer's Board of directors and any new director (other than
a director designated by a person who has entered into an agreement with
Employer to effect a transaction described in clauses (A), (D) or (E) of this
Section) whose election by the Board or nomination for election by Employer's
shareholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority; or
(C) Employer enters into any agreement, the consummation of which would result
in the occurrence of a change in control of Employer; or
(D) the shareholders of Employer approve a plan of complete liquidation of
Employer or an agreement for the sale or disposition by Employer of all or
substantially all Employer's assets; or
(E) the shareholders of Employer approve a merger or consolidation of Employer
with any other entity (other than a merger or consolidation which would result
in the voting securities of Employer outstanding immediately prior to it
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) greater than 80% of the combined
voting power of the voting securities of Employer or such surviving entity
outstanding immediately after such merger or consolidation).
3. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events described in
Section 2 above constituting a change in control of Employer shall have
occurred, and the Employee is terminated by Employer for any reason, including
termination due to Employer's failure to extend the Employment Agreement
pursuant to its terms, or if Employee terminates the Employment Agreement for
Good Reason (as defined below), Employee shall be entitled to the benefits
provided in Subsection 4(ii) below upon the subsequent termination of Employee's
employment during the term of this Addendum, unless such termination is because
of Employee's death or for "Cause" (as defined in the employment agreement).
(i). GOOD REASON. Employee shall be entitled to terminate employment for Good
Reason. For
2
<PAGE> 3
purposes of this Addendum, "Good Reason" shall mean, without Employee's express
written consent, the occurrence after a change in control of Employer of any of
the following circumstances unless, in the case of paragraph (A), (E), (F), (G)
or (H), such circumstances are fully corrected prior to the Date of Termination
specified in the Notice of Termination, as defined in Subsections 3(iii) and
3(ii), respectively, given in respect of them:
(A). the assignment to Employee of any duties inconsistent with Employee's
status and position as it exists immediately prior to the change in control of
Employer or a substantial adverse alteration in the nature or status of
Employee's responsibilities from those in effect immediately prior to the change
in control of Employer;
(B). a reduction by Employer in Employee's annual base salary and/or incentive
compensation in effect immediately prior to the change in control of Employer or
as the same may be increased from time to time pursuant to the Employment
Agreement except for across-the-board salary reductions similarly affecting all
key Employees of Employer and all key Employees of any person or entity in
control of Employer;
(C). Employee's relocation to a location not within ten (10) miles of Employee's
present office or job location, except for required travel on Employer's
business pursuant to the Employment Agreement;
(D). the failure by Employer, without Employee's consent, to pay to Employee any
portion of Employee's current compensation, or to pay to Employee any portion of
an installment of deferred compensation under any deferred compensation program
of Employer, within seven days of the date such compensation is due;
(E). the failure by Employer to continue in effect any bonus to which Employee
were entitled, or any compensation or benefit plan set forth in the Employment
Agreement or in which Employee participated immediately prior to the change in
control of Employer which is material to Employee's total compensation and/or
benefits, including but not limited to Employer's Stock Option Plans, 401(k)
Pre-Tax Retirement Savings Plan, and Flexible Benefit Plan, or any substitute
plans adopted prior to the change of control in Employer, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by Employer to continue
Employee's participation in it (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of Employee's participation relative to other
participants, as existed at the time of the change in control;
(F). the failure by Employer to continue to provide Employee with benefits
substantially similar to those enjoyed by Employee under any of Employer's life
insurance, medical, health and accident, or disability plans in which Employee
were participating at the time of the change in control of Employer, the failure
to continue to provide Employee with an automobile or allowance in lieu of it,
if Employee were provided with such an automobile or allowance in lieu of it at
the time of the change of control of Employer, the taking of any action by
Employer which would directly or indirectly materially reduce any of such
benefits or deprive Employee of
3
<PAGE> 4
any material fringe benefit enjoyed by Employee at the time of the change in
control of Employer, or the failure by Employer to provide Employee with the
number of paid vacation days to which Employee are entitled on the basis of
years of service with Employer in accordance with Employer's normal vacation
policy in effect at the time of the change in control of Employer;
(G). the failure of Employer to obtain a satisfactory agreement from any
successor to assume and agree to perform the Employment Agreement or this
Addendum, as contemplated in Section 5 of this Addendum; or
(H). any purported termination of Employee's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Subsection
(ii) below; for purposes of this Addendum, no such purported termination shall
be effective.
Employee's rights to terminate Employee's employment pursuant to this Subsection
shall not be affected by Employee's incapacity due to physical or mental
illness. Employee's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
under this Addendum. In the event Employee delivers Notice of Termination based
upon circumstances set forth in Paragraph (A), (E), (F), (G) or (H) above, which
are fully corrected prior to the Date of Termination set forth in Employee's
Notice of Termination, such Notice of Termination shall be deemed withdrawn and
of no further force or effect.
(ii). NOTICE OF TERMINATION. Any purported termination of Employee's employment
by Employer or by Employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with Article 12 of the
Employment Agreement. For purposes of this Addendum, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Addendum relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated.
(iii). DATE OF TERMINATION. "Date of Termination" shall be determined pursuant
to Section 9.7 of the Employment Agreement.
4. COMPENSATION UPON TERMINATION. Following a change in control of Employer, as
defined by Section 2, upon termination of Employee's employment Employee shall
be entitled to the following benefits:
(i). If Employee's employment shall be terminated by Employer for Cause (as
defined in the Employment Agreement) or by Employee other than for Good Reason
(as defined in this Addendum), or death, Employer shall pay Employee pursuant to
the terms of the Employment Agreement, plus all other amounts and benefits to
which Employee is entitled under any compensation plan of Employer at the time
such payments are due, and Employer shall have no further obligations to
Employee under this Addendum.
4
<PAGE> 5
(ii). If Employee's employment by Employer is (a) terminated by Employer other
than for Cause (as defined in the Employment Agreement) or (b) terminated by
Employee for Good Reason, then Employee shall be entitled to the benefits
provided below:
(A). Employer shall pay Employee Employee's full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
plus all other amounts and benefits to which Employee is entitled under any
compensation plan of Employer, at the time such payments are due, except as
otherwise provided below.
(B). In lieu of any further salary payments to Employee for periods subsequent
to the Date of Termination, Employer shall pay as severance pay to Employee a
lump sum severance payment (together with the payments provided in paragraphs C
and D, below, the "Severance Payments") equal to 2.99 times the sum of
Employee's annual base salary in effect immediately prior to the occurrence of
the circumstance giving rise to the Notice of Termination given in respect of
them.
(C). Employer shall pay to Employee any deferred compensation, including, but
not limited to deferred salary, incentive and/or bonuses, allocated or credited
to Employee or Employee's account as of the Date of Termination.
(D). At Employee's sole discretion, in lieu of shares of common stock of
Employer (the "Employer's Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to Employee under Employer's Stock Option Plans
(which Options shall be cancelled upon the making of the payment referred to
below) Employee shall receive an amount in cash equal to the product of (i) the
excess of the closing price of Employer's Shares as reported by the exchange
currently trading said stock (or, if not so reported, on the basis of the
average of the lowest asked and highest bid prices on or nearest the Date of
Termination), over the per share exercise price of each Option held by Employee
(whether or not then fully exercisable) plus the amount of any applicable cash
appreciation rights, times (ii) the number of Employer's Shares covered by each
such Option.
(E). Employer shall also pay to Employee all legal fees and expenses incurred by
Employee as a result of such termination (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by the Employment Agreement,
this Addendum, or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") to any payment or benefit provided under this
Addendum)).
(F). The payments provided for in paragraphs (B), (C), and (D) above, shall be
made no later than the fifth day following the Date of Termination, provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, Employer shall pay to Employee on such day an estimate, as
determined in good faith by Employer, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount can be
determined but in no event later than the 30th day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such
5
<PAGE> 6
excess shall constitute a loan by Employer to Employee payable on or before the
30th day after demand by Employer (together with interest from the date of the
Employer's demand at the rate provided in Section 1274(b)(2)(B) of the Code).
(iii). In the event that Employee is a "disqualified individual" within the
meaning of Section 280G of the Code, the parties expressly agree that the
payments described in this Section 4 and all other payments to Employee under
any other agreements or arrangements with any persons which constitute
"parachute payments" within the meaning of Section 280G of the Code are
collectively subject to an overall maximum limit. Such maximum limit shall be $1
less than the aggregate amount which would otherwise cause any such payments to
be considered a "parachute payment" within the meaning of Section 280G of the
Code, as determined by Employer. Accordingly, to the extent that such payments
would be considered a "parachute payment" with respect to Employee, then the
portions of such payments shall be reduced or eliminated in the following order
until the remaining change of control termination payments with respect to
Employee is within the maximum described in this subsection (iii):
(A). First, any cash payment to Employee;
(B). Second, any change of control termination payments not described herein;
and
(C). Third, any forgiveness of indebtedness of Employee to Employer.
Employee expressly and irrevocably waives any and all rights to receive any
change of control termination payments, which exceed the maximum limit described
in this subsection (iii).
(iv). Employee shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by Employee as the result of employment by
another Employer, by retirement benefits, by offset against any amount claimed
to be owed by Employee to Employer, or otherwise except as specifically provided
in this Section 4.
(v). In addition to all other amounts payable to Employee under this Section 4,
Employee shall be entitled to receive all benefits payable to Employee under
Employer's 401(k) Pre-Tax Retirement Savings Plan and any other plan or
agreement relating to retirement benefits.
5. SUCCESSORS; BINDING AGREEMENT
(i). Employer will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of Employer to expressly assume and agree to perform the
Employment Agreement and this Addendum in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken
place. Failure of Employer to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Employment
Agreement and this Addendum and shall entitle Employee to compensation from
Employer in the same amount
6
<PAGE> 7
and on the same terms as Employee would be entitled to under this Addendum if
Employee terminates Employee's employment for Good Reason following a change in
control of Employer, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. However, Employer's failure to obtain such agreement shall not
affect said successor's obligations pursuant to this Addendum. As used in this
Addendum, "Employer" shall mean Employer as defined above and any successor to
its business and/or assets as which assumes and agrees to perform this Addendum
by operation of law, or otherwise.
(ii). This Addendum shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators, heirs,
distributes, and legatees. If Employee should die while any amount would still
be payable to Employee if Employee had continued to live, all such amounts,
unless otherwise provided in this Addendum, shall be paid in accordance with the
terms of this Addendum to Employee's legatee or other designee or, if there is
no such designee, to Employee's estate.
6. MISCELLANEOUS. No provision of this Addendum may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Employee and such officer as may be specifically designated by the
Board. No waiver by either party to the Employment Agreement or this Addendum at
any time of any breach by the other party of, or compliance with, any condition
or provision of the Employment Agreement or this Addendum to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for shall be paid
net of any applicable withholding or deduction required under federal, state or
local law. The obligations of Employer under Section 4 shall survive the
expiration of the term the Employment Agreement and this Addendum.
7. VALIDITY. The invalidity or unenforceability of any provision of the
Employment Agreement or of this Addendum shall not affect the validity or
enforceability of any other provision of this Addendum, which shall remain in
full force and effect.
9. COUNTERPARTS. This Addendum may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. ENTIRE ADDENDUM. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Addendum have
been made by either party which are not expressly set forth in the Employment
Agreement or this Addendum.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date and year
first above written.
FARSHID TAFAZZOLI For onlinetradinginc.com corp.
/s/ Farshid Tafazzoli By: /s/ Steven zum Tobel
- -------------------------------- ---------------------------------
Farshid Tafazzoli Steven zum Tobel, President
7
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> APR-30-1999
<CASH> 1,315,275
<RECEIVABLES> 677,981
<SECURITIES-RESALE> 0
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<INSTRUMENTS-OWNED> 163,047
<PP&E> 163,633
<TOTAL-ASSETS> 2,448,070
<SHORT-TERM> 125,000
<PAYABLES> 0
<REPOS-SOLD> 0
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<INSTRUMENTS-SOLD> 9,600
<LONG-TERM> 400,000
0
300,000
<COMMON> 88,888
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<TOTAL-LIABILITY-AND-EQUITY> 2,448,070
<TRADING-REVENUE> 314,909
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<COMMISSIONS> 2,059,756
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<INCOME-PRETAX> 390,481
<INCOME-PRE-EXTRAORDINARY> 390,481
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 240,143
<EPS-BASIC> 0.027
<EPS-DILUTED> 0.027
</TABLE>
