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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of February 15,1999 (the
Effective Date"), by and between Xxxxxx Xxxxx (the "Executive") and Ameritrade
Corporation (the "Company");
WITNESSETH THAT:
WHEREAS, the parties desire to enter into this Agreement pertaining to
the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Executive and the
Company as follows:
1. Performance of Services. The Executive's employment with the Company
shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby agrees to
employ the Executive as its Co-Chief Executive Officer ("Co-CEO")
during the first twelve months of the Agreement Term (as defined
below), after which the Executive shall be employed as its Chief
Executive Officer ("CEO") and the Executive hereby agrees to remain in
the employ of the Company during the Agreement Term.
(b) During the Agreement Term, while the Executive is employed by the
Company, the Executive shall devote his full time, energies and talents
to serving as its Co-CEO or CEO, as the case may be.
(c) The Executive agrees that he shall perform his duties faithfully and
efficiently subject to the directors of J. Xxx Xxxxxxxx, Co-CEO and
Chairman of the Board of Directors of the Company (the "Board") during
the first twelve months of the Agreement term, after which the
Executive shall perform his duties faithfully and efficiently subject
to the directions of J. Xxx Xxxxxxxx, the Chairman of the Board, or the
successor to J. Xxx Xxxxxxxx as Chairman of the Board. The Executive's
duties may include providing services for both the Company and the
Subsidiaries (as defined below), as determined by the Board; provided,
that the Executive shall not, without his consent, be assigned tasks
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that would be inconsistent with those of Co-CEO or CEO, as the case may
be. The Executive shall have such authority, power, responsibilities
and duties as are inherent in his positions (and the undertakings
applicable to his positions) and necessary to carry out his
responsibilities and the duties required of him hereunder.
(d) Notwithstanding the foregoing provisions of this paragraph 1, during
the Agreement Term, the Executive may devote reasonable time to
activities other than, those required under this Agreement, including
the supervision of his personal investments, and activities involving
professional, charitable, community, educational, religious and similar
types of organizations, speaking engagements, membership on the boards
of directors of other organizations, and similar types of activities,
to the extent that such other activities do not, in the judgement of
the Board, inhibit or prohibit the performance of the Executive's
duties under this Agreement, or conflict in any material way with the
business of the Company or any Subsidiary; provided, however, that the
Executive shall not serve on the board of any business, or hold any
other position with any business, without the consent of the Board.
(e) Subject to the terms of this Agreement, the Executive shall not be
required to perform services under this Agreement during any period
that he is Disabled. The Executive shall be considered Disabled during
any period in which be has a physical or mental disability which
renders him incapable, after reasonable accommodation, of performing
his duties under this Agreement. In the event of a dispute as to
whether the Executive is Disabled, the Company may refer the same to a
licensed practicing physician of the Company's choice, and the
Executive agrees to submit to such tests and examinations as such
physician shall deem appropriate. During the period in which the
Executive is Disabled, the Company may appoint a temporary replacement
to assume the Executive's responsibilities.
(f) The "Agreement Term" shall be the period beginning on the Effective
Date and ending on the fifth anniversary of the Effective Date. If a
Change in Control occurs during the Agreement Term less than two years
before the date on which the Agreement Term would otherwise end, the
Term shall automatically be extended to the two-year anniversary of the
Change in Control date.
(g) For purposes of this Agreement, the term "Subsidiary" shall mean any
corporation, partnership, joint venture or other entity during any
period in which at least a fifty percent interest in such entity is
owned, directly or indirectly, by the Company (or a successor to the
Company).
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2. Compensation. Subject to the terms of this Agreement, during the
Agreement Term, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:
(a) The Executive shall receive, for each 12-consecutive month period
beginning on the Effective Date and each anniversary thereof, in
substantially equal monthly or more frequent installments, an annual
base salary of not less than, $346,500 (the "Salary"). The Executive's
Salary rate shall be reviewed by the Compensation Committee of the
Board (the "Committee"), while the Executive is employed by the
Company, to determine whether an increase in the amount of Salary is
appropriate. In no event shall the Salary of the Executive be reduced
to an amount that is less than, the amount specified in this paragraph
(a), or to an amount that is less than, the amount that he was
previously receiving, except to the extent that reductions of the same
percentage are being made at the same time to the salaries of all other
Company officers in the corporate office at or above the vice-president
level, and such Salary shall be restored to its prior level when, and
to the same extent, as the restoration that applies to the other
officers.
(b) The Executive shall be entitled to incentive compensation in the form
of an annual cash bonus of up to 60% (but not less than 30% for the
first two years of this Agreement) of his Salary, as provided for in
paragraph 2(a), as in effect as of the first day of the Performance
Period (as defined below), as it is adjusted from time to time. Subject
to the immediately preceding sentence, the amount of such bonus, if
any, shall be determined by the Committee taking into consideration
whether the Executive has met the performance targets that have been
set by the Committee for such year, the relative contribution by the
Executive to the business of the Company, general economic conditions,
and such other factors as the Committee deems relevant. For purposes of
this paragraph, the term Performance Period shall mean the period of
time established by the Committee, which is used for the calculation of
annual bonuses paid to other senior executives of the Company and
which has historically been the fiscal year of the Company.
(c) The Executive shall be granted stock options, under the terms and in
accordance with the Company's 1996 Long Term Incentive Plan (the
"Incentive Plan"), at the same time as grants are made to other senior
executives of the Company, with each such bi-annual grant, having a
present value (determined using the Black-Scholes methodology, but
excluding any deferred vesting or other contingencies) of not less than
$480,000 based on target payout (or $960,000 based on maximum payout)
determined as of the date of grant. The
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initial grant, to be made during October of 1999 (the "Initial grant"),
shall be for a two year period with the next anticipated grant being
made in the fall of 2001. The value used to determine the number of
shares to be covered by the option grant shall be adjusted due to
changes in the Executive's Salary, as in effect on the grant date, in a
manner consistent with the methodology used by the Company's
compensation consultants when making such adjustments for other senior
executives of the Company. All shares issuable upon the exercise of
options awarded to the Executive hereunder shall be duly registered
under the Securities Act of 1933 and all other applicable federal and
state laws and listed on the national securities exchange on which the
Company's shares are otherwise listed.
(d) One-Time Payments. To compensate the Executive for forgoing alternative
business opportunities, the Company shall provide to the Executive, as
soon as practicable after the Effective Date, the following one-time
payments:
(i) The Executive shall receive a one time bonus payment of
$25,000.00.
(ii) The Executive shall receive a non-qualified stock option award
(the "Option") to purchase 57,800 shares of Company stock
pursuant to the terms and conditions of the Incentive Plan.
The per share price of the option shall be the fair market
value of a share of the Company's common stock on the date of
such award. This Option shall be immediately vested and shall
become exercisable with respect to 1/5 of the shares of stock
awarded on the first anniversary of the grant date and with
respect to an additional 1/5 on each subsequent anniversary
date until such time as this Option is fully exercisable. The
option shall be exercisable for a period as determined under
the terms of the Incentive Plan, but in no event shall the
options granted under this paragraph be exercisable after the
tenth anniversary of the date of grant. By acceptance of the
Option agreement, the Executive hereby represents, warrants
and confirms that he has been fully informed as to the
business, affairs and financial condition of the Company and
that all information requested by him in respect thereof has
been furnished and any questions he may have had have been
answered, and that no representation has been made to him as
to the value for the Options or the prospects are highly
speculative and may ultimately prove to have little or no
value.
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(e) The Executive shall be entitled to participate in all employee pension
and welfare benefit plans and programs made available to the Company's
senior level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including, without
limitation, pension, profit sharing, savings and other retirement plans
or programs, medical, dental hospitalization, short-term and long-term
disability and life insurance plans, supplemental life insurance,
accidental death and dismemberment protection, travel accident
insurance, and any other pension or retirement plans or programs and
any other employee welfare benefit plans or programs that may be
sponsored by the Company from time to time, including any plans that
supplement the above-listed types of plan or programs, whether funded
or unfunded. The Company, however, shall not be required to provide a
benefit under this paragraph (e) if such benefit would duplicate (or
otherwise be of the same type as) a benefit specifically required to be
provided under another provision of this Agreement. The Executive shall
complete all forms and physical examinations, and otherwise take all
other similar actions to secure coverage and benefits described in this
paragraph 2, to the extent determined to be necessary or appropriate by
the Company.
(f) The Executive shall be provided by the Company a monthly automobile
allowance of $800, and is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in
promoting the Company's business. The Company will reimburse the
Executive for all reasonable expenses so incurred in accordance with
the normal practices of the Company.
(g) The Company shall maintain directors and officers liability insurance
in commercially reasonable amounts (as reasonably determined by the
Board), and the Executive shall be covered under such insurance to the
same extent as other senior management employees of the Company. The
Executive shall be eligible for indemnification by the Company under
the Company by-laws as currently in effect. The Company agrees that it
shall not take action that would impair the Executive's rights to
indemnification under the Company by-laws, as currently in effect.
(h) The Company shall pay for the Executive's transition expenses relating
to moving, temporary housing, and traveling between locations as set
forth in Exhibit A to this Agreement. In the event that any of the
benefits relating to temporary housing or travel, as provided for in
this subparagraph (h), are determined to be properly included in the
taxable income of the Executive, the
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Company shall pay to the Executive a one time payment in an amount
equal to the additional income taxes so incurred by the Executive due
to such inclusion.
(i) The Company shall provide for reasonable spousal travel expenses for
any Company related out of town events, and will provide for up to four
personal visits during the period the Executive is provided temporary
housing in Omaha, Nebraska, as provided in Exhibit A of this Agreement
(to the Omaha, Nebraska location).
(j) The Executive shall be entitled to paid vacations in accordance with
the applicable policy of the Company as in effect from time to time,
subject to a minimum of 4 weeks per annum.
(k) The Company shall provide the Executive an annual allowance of $8,000
to provide for the purchase by the Executive of additional insurance
coverages in excess of that which is provided by the Company in
paragraph (e), above. Such payment shall be made as soon as practicable
after the commencement of employment and subsequently on each
anniversary of the Effective Date.
3. Termination. The Executive's employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement only under the circumstances described in paragraphs
3(a) through 3(g):
(a) Death. The Executive's employment hereunder will terminate upon his
death.
(b) Permanent Disability. The Company may terminate the Executive's
employment during any Period in which he is Permanently Disabled. The
Executive shall be considered "Permanently Disabled" during any period
in which he is Disabled; provided, however, that the Executive shall
not be considered to be "Permanently Disabled" until, for a period of
180 consecutive days, the Executive, as a result of a physical or
mental disability, is incapable, after reasonable accommodation, of
performing his duties under this Agreement on a permanent, full-time
basis, and is eligible for income replacement benefits under the
Company's long-term disability plan during such period of disability.
In the event of a dispute as to whether the Executive is Permanently
Disabled, the Company may refer the same to a mutually acceptable
licensed practicing physician, and the Executive agrees to submit to
such tests and as such physician shall deem appropriate.
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(c) Cause. The Company may terminate the Executive's employment hereunder
at any time for Cause. For purposes of this Agreement, the term "Cause"
shall mean:
(i) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than
any such failure resulting from the Executive's being
Disabled), within a reasonable period of time after a written
demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has
not substantially performed his duties;
(ii) the willful engaging by, the Executive in, conduct which is
demonstrably and materially injurious to the Company,
monetarily or otherwise; or
(iii) the engaging by the Executive in egregious misconduct
involving serious moral turpitude to the extent that, in the
reasonable judgment of the Company's Board, the Executive's
credibility and reputation no longer conform to the standard
of the Company's executives.
For purposes of this Agreement, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to
be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest
of the Company.
(d) Constructive Discharge. If the Executive (i) provides written notice to
the Company of the occurrence of Good Reason (as defined below) within
a reasonable time after the Executive has knowledge of the
circumstances constituting Good Reason, which notice shall specifically
identifies the circumstances which the Executive believes constitute
Good Reason; (ii) the Company fails to notify the Executive of the
Company's intended method of correction within a reasonable period of
time after the Company receives the notice, or the Company fails to
correct the circumstances within a reasonable time after such notice
(except that no such opportunity to correct shall be applicable if the
circumstances constituting Good Reason are those described in paragraph
(C) below, relating to relocation); and (iii) the Executive resigns
within a reasonable time after receiving the Company's response, if
such notice does not indicate an intention to correct such
circumstances; or within a reasonable time after the Company fails to
correct such circumstances, then the Executive shall be considered to
have been subject to a Constructive Discharge
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by the Company. For purposes of this Agreement, "Good Reason" shall
mean, without the Executive's express written consent (and except in
consequence of a prior termination of the Executive's employment), the
occurrence of any of the following circumstances:
(A) The assignment to the Executive of any duties inconsistent
with the Executive's position and status as Co-CEO or CEO, as
the case may be, of the Company.
(B) A reduction by the Company in the Executive's Salary, to an
amount that is less than required under paragraph 2(a).
(C) The relocation of the Executive's base office to an office
that is more than 50 highway miles of the Executive's base
office on the Effective Date, (other than the relocation from
Maryland to Omaha, Nebraska,) or a requirement that the
Executive engage in travel that is materially greater than is
reasonably required by the Company's business.
(D) The failure of the Company, without the Executive's consent,
to pay to the Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred
compensation program of the Company, within ten (10) business
days of the date such compensation is due.
(E) The failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement.
(F) Any purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (h) below (and, if applicable,
the requirements of paragraph (b) above), and for purposes of
this Agreement, no such purported termination shall be
effective.
(G) The failure of the Company to name the Executive as CEO of the
Company as of the first anniversary of the Effective Date.
(H) The failure of the Executive to receive the Initial Option
Grant as described in paragraph 2(c) of this Agreement, the
failure of such grant to provide that they will vest ratably
over the three year period following the grant, will become
exercisable ratably over such three
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year period and, once vested, will have an Expiration Date (as
defined in the Incentive Plan) not earlier than the latest
permissible Expiration Date set forth in Sections 10(a)
through 10(e)(as applicable) of the Incentive Plan, or the
failure of such grant to be approved in advance by the Board
of Directors or a committee thereof, so as to be exempt from
Section 16(b) of the Securities Act of 1934.
(I) Any material breach of this Agreement by the Company not
described in paragraphs (A) through (H) next above.
The Executive's right to terminate his employment pursuant to this
paragraph (d) shall not be affected by his incapacity due to the
Executive's Disability. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(e) Termination by Executive. The Executive may terminate his employment
hereunder at any time for any reason by giving the Company prior
written Notice of Termination (as defined in paragraph 3(h)), which
Notice of Termination shall be effective not less than 30 days after it
is given to the Company, provided that nothing in this Agreement shall
require the Executive to specify a reason for any such termination.
However, to the extent that the specified in paragraph 3(d) are
required, the procedures of this paragraph 3(e) may not be used in lieu
of the procedures required under paragraph 3(d).
(f) Non-Renewal of Agreement. Except as otherwise agreed to in writing by
the parties, this Agreement shall not apply to employment after the end
of the Agreement Term, however, non-renewal of this Agreement will not
otherwise limit or interfere with the benefits which the Executive has
accrued under any welfare, pension or other plan as of the end of the
Agreement Term.
(g) Termination by Company. The Company may terminate the Executive's
employment hereunder at any time for any reason, by giving, the
Executive prior written Notice of Termination, which Notice of
Termination shall be effective immediately, or such later time as is
specified in such notice. The Company shall not be required to specify
a reason for the termination under paragraph 3(g), provided that
termination of the Executive's employment by the Company shall be
deemed to have occurred under this paragraph 3(g) only if it is not for
reason described in paragraph 3(b), 3(c), 3(d), 3(e) or 3(f).
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Notwithstanding the foregoing provisions of this paragraph (g), if the
Executive's employment is terminated by the Company in accordance with
this paragraph (g), and within a reasonable time period thereafter, it
is determined by the Board that circumstances existed which would have
constituted a basis for termination of the Executive's employment for
Cause in accordance with paragraph 3(c)(disregarding circumstances
which could have been remedied if notice had been given in accordance
with paragraph 3(c)(i)), the Executive's employment will be deemed to
have been terminated for Cause in accordance with paragraph 3(c).
(h) Notice of Termination. Any termination of the Executive's employment by
the Company or the Executive (other than a termination pursuant to
paragraph 3(a) or paragraph 3(f)) must be communicated by a written
Notice of Termination to the other party hereto. For purposes of this
Agreement a "Notice of Termination" means a dated notice which
indicates the Date of Termination (not earlier than the date on which
the notice is provided), and which indicates the specific termination
provision in this Agreement relied on and which sets forth in
reasonable detail the facts and circumstances if any, claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(i) Date of Termination. "Date of Termination" means the last day the
Executive is employed by the Company, provided that the Executive's
employment is terminated in accordance with the foregoing provisions of
this paragraph 3.
(j) Effect of Termination. If, on the Date of Termination, the Executive is
a member of Board of Directors of the Company or any of the
Subsidiaries, or holds any other position with the Company and the
Subsidiaries (other than the position described in paragraph 1(a)), the
Executive shall resign from all such positions as of the Date of
Termination.
4. Rights and Payments Upon Termination or Change in Control. The
Executive's right to payment and benefits under this Agreement for periods after
his Date of Termination shall be determined in accordance with the following
provisions of this paragraph 4:
(a) If the Executive's Date of Termination occurs during the Agreement Term
for any reason, the Company shall pay to the Executive:
(i) The Executive's Salary for the period ending on the Date of
Termination.
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(ii) Payment for unused vacation days, as determined in Company
policy as in effect from time to time.
(iii) If the Date of Termination occurs after the end of a
performance period and prior to the payment of the performance
bonus (as described in paragraph 2(b)) for the period, the
Executive shall be paid such bonus amount at the regularly
scheduled time.
(iv) Any other payments or benefits to be provided to the Executive
by the Company pursuant to any employee benefit plans or
arrangements adopted by the Company, to the extent such
amounts are due from the Company.
Except as may otherwise be expressly provided to the contrary in this
Agreement, noting in this Agreement shall be construed as requiring the
Executive to be treated as employed by the Company for purposes of any
employee benefit plan or arrangement following the date of the
Executive's Date of Termination.
(b) If the Executive's Date of Termination occurs during the Agreement Term
under circumstances described in paragraph 3(a) (relating to the
Executive's death), paragraph 3(b) (relating to the Executive's being
Disabled, paragraph 3(c) (relating to the Executive's termination for
Cause), paragraph 3(e) (relating to, the Executive's resignation),
then, except as otherwise expressly provided in this Agreement or
otherwise agreed in writing between the Executive and the Company, the
Company shall have no obligation to make payments under the Agreement
for periods after the Executive's Date of Termination. If the
Executive's employment with the Company terminates after the end of the
Agreement Term, the Company shall have no obligation to make payments
for periods after the Executive's Date of Termination.
(c) If the Executive's Date of Termination occurs during the Agreement Term
under circumstances described in paragraph 3(d) (relating to
Constructive Discharge) or paragraph 3(g) (relating to termination by
the Company without Cause), then, in addition to the amounts payable in
accordance with paragraph 4(a):
(i) If the termination of employment occurs prior to a Change in
Control (as defined below) the Executive shall receive from
the Company for the period continuing through the later of (A)
the end of the Agreement Term, but not beyond the third
anniversary of the Date of
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Termination or, (B) the first anniversary of the Date of
Termination, the Salary amount described in paragraph 2(a), as
in effect on his Date of Termination, in monthly or more
frequent installments as is required under the paragraph, and
the bonus amount described in paragraph 2(b). The
determination of the bonus payable for the performance period
in which the Date of Termination occurs shall be based on
actual performance for the entire Period. The bonus payable
for any performance period thereafter shall be at the same
rate as the rate determined in accordance with the preceding
sentence; provided, however, that the bonus for the
performance period that includes the one-year anniversary of
the Date of Termination shall be subject to a pro-rata
reduction to reflect the portion of the performance period
following such anniversary. Payment, under this paragraph (i),
of any bonus described in paragraph 2(b) shall be made at the
regularly scheduled time for payment of such amounts to active
employees. The Company's obligation to make payments under
this paragraph (i) shall cease with respect to periods after
the earlier to occur of the date of the Executive's death, or
a date, if any, of the breach by the Executive of the
provisions of paragraph 7 or paragraph 8. The stock options
provided for under paragraph 2(d)(ii) of this Agreement shall
become fully exercisable as of the Date of Termination (under
this paragraph) and shall remain exercisable for the period as
determined under the terms and conditions of the Incentive
Plan.
(ii ) If the Date of Termination of employment occurs within 2 years
after a Change in Control the Executive shall receive from the
Company; (A) for the period continuing through the third
anniversary of the Date of Termination, the Salary amount
described in paragraph 2(a), as in effect on his Date of
Termination, in monthly or more frequent installments as is
required under the paragraph, and the bonus amount described
in paragraph 2(b), and (B) a lump sum payment equal to the
value of the estimated stock option grants which would have
been granted at target payout levels, in the ordinary course
of business, during such three year period following
termination. The determination of the bonus payable for the
performance period in which the Date of Termination occurs
shall be based on actual performance for the entire period.
The bonus payable for any performance period thereafter shall
be at the same rate as the rate determined in accordance with
the preceding sentence; provided, however, that the bonus for
the performance period that includes the
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three-year anniversary of the Date of Termination shall be
subject to a pro-rata reduction to reflect the portion of the
performance period following such anniversary. Payment under
this paragraph (ii) of any bonus described in paragraph 2(b)
shall be made at the regularly scheduled time for payment of
such amounts to active employees. The Company's obligation to
make payments under this paragraph (ii) shall cease with
respect to periods after the earlier to occur of the date of
the Executive's death, or a date, if any, of the breach by the
Executive of the provisions of paragraph 7 or paragraph 8. The
present value of the anticipated stock option grants in (B)
above shall be determined using the Black-Scholes methodology,
but excluding the any deferred vesting or other contingencies,
as of the date the options would have been granted in the
ordinary course of business. As of the Date of Termination
(under this paragraph), all outstanding stock options then
held by the Executive which are not yet exercisable shall
become fully exercisable and shall remain exercisable for the
period as determined under the terms and conditions of the
Incentive Plan.
(iii) For purposes of this Agreement, a Change in Control will be
deemed to have occurred on the first day on which J. Xxx
Xxxxxxxx, together with the members of his immediate family
(as defined below), and trusts, partnerships, or limited
liability companies established and maintained to primarily
benefit J. Xxx Xxxxxxxx and/or his immediate family have not
appointed more than 50% of the then members of the Board, and
do not directly or indirectly have the power to appoint more
than 50% of the members of the Board. For purposes of the
preceding sentence, the term immediate family of J. Xxx
Xxxxxxxx shall mean his spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers and
grandchildren or any trust, partnership or limited liability
company of which such persons control a majority of the voting
rights.
(iv) For such period of the time that the Executive or any of his
dependents is eligible for and elects COBRA continuation
coverage (as described in section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code")) under any
Company group health plan, the Company shall pay 100% of the
premiums necessary to maintain such COBRA continuation
coverage. The Company's obligation to make payments under this
paragraph (iv) shall cease with respect to periods after the
earlier to occur of the date of the
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Executive's death, or a date, if any, of the breach by the
Executive of the provisions of paragraph 7 or paragraph 8.
(d) Except as may be otherwise specifically provided in an amendment of
this paragraph (d) adopted in accordance with paragraph 12, the
Employee's rights under this paragraph 4 shall be in lieu of any
benefits that may be otherwise payable to or on behalf of the Executive
pursuant to the terms of any severance pay arrangement of the Company
or any Subsidiary or any other, similar arrangement of the Company or
any Subsidiary providing benefits upon involuntary termination of
employment.
(e) If the Executive's Date of Termination occurs after the end of the
Agreement Term under circumstances described in paragraph 3(f)
(relating to the termination of employment after the end of the
Agreement Term) then, except as otherwise expressly provided in this
Agreement, or otherwise agreed in writing between the Executive and the
Company, the Company shall have no obligation to make payments under
the Agreement for periods after the Executive's Date of Termination.
However, to the extent that the Executive has been granted any stock
options which are not fully vested on the Date of Termination, under
this subparagraph (e), then such options shall become fully vested and
fully exercisable on such date and shall remain exercisable for the
period as provided under the terms and conditions of the plan from
which such options were granted.
5. Duties on Termination. Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice of
Termination, and ending on the Date of Termination, the Executive shall continue
to, perform his duties as set forth in this Agreement, and shall also perform
such services for the Company as are necessary and appropriate for a smooth
transition to the Executive's successor, if any. Notwithstanding the foregoing
provisions of this paragraph 5, the Company may suspend the Executive from
performing his duties this Agreement following the delivery of a Notice of
Termination providing for the Executive's resignation, or delivery by the
Company of a Notice of Termination providing for the Executive's termination of
employment for any reason; provided, however, that during the period of
suspension (which shall end on the Date of Termination), the Executive shall
continue to be treated as employed by the Company for other purposes, and his
rights to compensation or benefits shall not be reduced by reason of the
suspension.
6. Mitigation and Set-Off. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment
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or otherwise. The Company shall not be entitled to set off against the amounts
payable to the Executive under this Agreement any amounts owed to the Company
by the Executive, any amounts earned by the Executive in other employment after
termination of his employment with the Company, or any amounts which might have
been earned by the Executive in other employment had he sought such other
employment.
7. Noncompetition. While he is employed by the Company, and for a
period of 18 months after termination of the Executive's employment with the
Company for any reason:
(a) The Executive shall not, without the express written consent of the
Chairman of the Board of the Company, be employed by, serve as a
consultant to, or otherwise assist or directly or indirectly provide
services to a Competitor (defined below) if: (i) the services that the
Executive is to provide to the Competitor are the same as, or
substantially similar to, any of the services that the Executive
provided to the Company or the Subsidiaries, and such services are to
be provided with respect to any location in which the Company or a
Subsidiary had material operations during the 12-month period prior to
the Date of Termination, or with respect to any location in which the
Company or a Subsidiary had devoted material resources to establishing
operations during the 12-month period prior to the Date of Termination;
or (ii) the trade secrets, confidential information, or proprietary
information (including, without limitation, confidential or proprietary
methods) of the Company and the Subsidiaries to which the Executive had
access could reasonably be expected to benefit the Competitor if the
Competitor were to obtain access to such secrets or information. For
purposes of this paragraph(a), services provided by others shall be
deemed to have been provided by the Executive if the Executive had
material supervisory responsibilities with respect to the provision of
such services.
(b) The Executive shall not, without the express written consent of the
Chairman of the Board of the Company, solicit or attempt to solicit any
party who is then or, during the 12-month period prior to such
solicitation or attempt by the Executive was (or was solicited to
become), a customer or supplier of the Company, provided that the
restriction in this paragraph (c) shall not apply to any activity on
behalf of a business that is not a Competitor.
(c) The Executive shall not, without the express written consent of the
Chairman of the Board of the Company, solicit, entice, persuade or
induce any individual who is employed by the Company or its
Subsidiaries (or was so employed
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within 90 days prior to the Executive's action) to terminate or refrain
from renewing or extending such employment or to become employed by or
enter into contractual relations with any other individual or entity
other than the Company or its subsidiaries, and the Executive shall not
approach any such employee for any such purpose or authorize or
knowingly cooperate with the taking of any such actions by any other
individual or entity.
(d) The Executive shall not, without the express written consent of the
Chairman of the Board of the Company, directly or indirectly own an
equity interest in any Competitor (other than ownership of 1% or less
of the outstanding stock of any corporation listed on the New York
Stock Exchange or the American Stock Exchange or included in the NASDAQ
System).
The term "Competitor" means any enterprise (including a person, firm or
business, whether or not incorporated) during any period in which it is
materially competitive in any way with any business in which the Company or any
of the Subsidiaries was engaged during the 12-month period prior to the
Executive's termination of employment. Nothing in this paragraph 7 or paragraph
8 shall be construed as limiting Executive's duty of loyalty to the Company, or
any other duty he may have to the Company, while he is employed by the Company.
Nothing in paragraphs 7, 8 or 9 shall be construed to adversely affect the
rights that the Company possess in the absence of the provisions of such
paragraphs.
8. Confidential Information. The Executive agrees that, during the
Agreement Term and for a period of 18 months after termination of the
Executive's employment the Company for any reason:
(a) Except as may be required by the lawful order of a court or agency of
competent jurisdiction, except as necessary to carry out his duties to
the Company and its Subsidiaries, or except to the extent that the
Executive has express authorization from the Company, the Executive
agrees to keep secret and confidential indefinitely, all Confidential
Information, and not to disclose the same, either directly or
indirectly, to any other person, firm, or business entity, or to use it
in any way.
(b) To the extent that any court or agency seeks to have the Executive
disclose Confidential Information, he shall promptly inform the
Company, and he shall take such reasonable steps to prevent disclosure
of Confidential Information until the Company has been informed of such
requested disclosure and the Company has an opportunity to respond to
such court or agency. To the extent that the Executive obtains
information on behalf of the Company or any of the
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Subsidiaries that may be subject to attorney-client privilege as to
the Company's attorneys, the Executive shall take reasonable steps to
maintain the confidentiality of such information and to preserve such
privilege.
(c) Nothing in the foregoing provisions of this paragraph 8 shall be
construed so as to prevent the Executive from using, in connection with
his employment for himself or an employer other than the Company or any
of the Subsidiaries, knowledge which was acquired by him during the
course of his employment with the Company and the Subsidiaries, and
which is generally known to persons of his experience in other
companies in the same industry.
(d) For purposes of this Agreement, the term "Confidential Information"
shall include all non-public information (including, without
limitation, information regarding litigation and pending litigation)
concerning the Company and the Subsidiaries which was acquired by or
disclosed to the Executive during the course of his employment with the
Company, or during the course of his consultation, with the Company
following his Date of Termination (regardless of whether consultation
is pursuant to paragraph 11). For purposes of this Agreement, the term,
"Confidential Information" shall also include all non-public
information concerning any other company that was shared with the
Company or a Subsidiary subject to an agreement to maintain the
confidentiality of such information.
(e) This paragraph 8 shall not be construed to unreasonably restrict the
Executive's ability to disclose confidential information in an
arbitration proceeding or a court proceeding in connection with the
assertion of, or defense against any claim of breach of this Agreement
in accordance with paragraph 10. If there is a dispute between the
Company and the Executive as to whether information may be disclosed in
accordance with this paragraph (e), the matter shall be submitted to
the arbitrators or the court (whichever is applicable) for decision.
9. Assistance with Claims. The Executive agrees that, for the period
beginning on the Effective Date, and continuing for a reasonable period after
the Executive's Date of Termination, the Executive will provide reasonable
assistance to the Company and the Subsidiaries in defense of any claims that may
be made against the Company and the Subsidiaries, and will provide reasonable
assistance to the Company the Subsidiaries in the prosecution of any claims that
may be made by the Company and the Subsidiaries in the prosecution of any claims
that may be made by the Company or the Subsidiaries, to the extent that such
claims may relate to services performed by the Executive for the Company and the
Subsidiaries. The Executive agrees to promptly inform the Company if he becomes
aware of any lawsuits involving such claims that may be filed against the
Company or any Subsidiary. The
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Company agrees to reimburse the Executive for all of the Executive's reasonable
out-of-pocket expenses associated with such assistance, including travel
expenses. For periods after the Executive's employment with the Company
terminates, the Company agrees to provide reasonable compensation to the
Executive for such assistance. The Executive also agrees to promptly inform the
Company if he is asked to assist in any investigation of the Company or the
Subsidiaries (or their actions) that may relate to services performed by the
Executive for the Company or the Subsidiaries, regardless of whether a lawsuit
has then been filed against the Company or the Subsidiaries with respect to such
investigation. For any required assistance under this paragraph, the Company
shall take into consideration the Executive's then current employment situation
and all other relevant personal factors as presented by the Executive in order
to determine what is reasonable in the given circumstances.
10. Equitable Remedies. The Executive acknowledges that the Company
would be irreparably injured by a violation of paragraph 7 or 8, and he agrees
that the Company, in addition to any other remedies available to it for such
breach or threatened breach, shall be entitled to a preliminary injunction,
temporary remaining order, or other equivalent relief, restraining the Executive
from any actual or threatened breach of either paragraph 7 or paragraph 8. If a
bond is required to be posted in order for the Company to secure an injunction
or other equitable remedy, the parties agree that said bond need not be more
than a nominal sum.
11. Nonalienation. The interests of the Executive under this Agreement
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.
12. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
13. Applicable Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Nebraska, without regard to the
conflict of provisions of any state. All disputes shall be arbitrated or
litigated (whichever is applicable) in Omaha, Nebraska.
14. Severability. The invalidity or unenforceability of any provision
of this will not affect the validity or enforceability of any other provision of
this Agreement, and this Agreement will be construed as if such invalid or
unenforceable
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provision were omitted (but only to the extent that such provision appropriately
reformed or modified).
15. Waiver of Breach. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
16. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business, and the successor
shall be substituted for the Company under this Agreement.
17. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, and other communication shall be deemed
given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service are to be delivered to
the addresses set forth below:
to the Company
Ameritrade Holding Corporation
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0000 X. 000xx Xxxxxx
Xxxxx, XX 00000
or to the Executive:
Xxxxxx Xxxxx
X.X. Xxx 00
Xxxxxxxxxxx, Xxxxxxxx 00000
All notices to the Company shall be directed to the attention of J. Xxx
Xxxxxxxx, of the Company, with a copy to the Secretary of the Company. Each
party, by written notice furnished to the other party, may modify the applicable
delivery address, except notice of change of address shall be effective only
upon receipt.
18. Arbitration of All Disputes. Any controversy or claim arising out
of or relating to this Agreement (or the breach thereof) shall be settled by
final, binding and non-appealable arbitration in Omaha, Nebraska by three
arbitrators. Except as expressly provided in this Paragraph 18, the arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association (the "Association") then in effect. One of the arbitrators shall be
appointed by the Company, one shall be appointed by the Executive, and the third
shall be appointed by the first two arbitrators. If the first two arbitrators
cannot agree on the third arbitrator 30 days of the appointment of the second
arbitrator, then the third arbitrator shall be appointed by the Association.
This paragraph 18 shall not be construed to limit the Company's right to obtain
relief under Paragraph 10 with respect to any matter or controversy subject to
paragraph 10, and, pending a final determination by the arbitrator with respect
to any such matter or controversy, the Company shall be entitled to obtain any
such relief by direct application to a court of law, without being required to
first arbitrate such matter or controversy. Any and all proceedings, hearings,
findings or any other record of a dispute under this paragraph 18 shall be
private and shall be held in the strictest confidence of all parties so
involved, including not limited to the parties to this Agreement and any
appointed arbitrators.
19. Survival of Agreement. Except as otherwise expressly provided in
this Agreement, the rights and obligations of the parties to this Agreement
shall survive termination of the Executive's employment with the Company.
20. Entire Agreement. Except as otherwise noted herein or in any
separation agreement subsequently entered into by the Executive and the Company,
this Agreement, including any Exhibit(s) attached hereto, constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior and
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contemporaneous agreements, if any, between, the parties relating to the subject
matter hereof.
21. Prior Agreements. The Executive represents that, he has not
signed, and is not currently subject to, any written agreement or policy that
restricts his ability to be employed by the Company, to compete with a former
employer, or to use information, and that his employment by the Company will not
violate the terms of any policy of any prior employer of the Executive regarding
competition or confidentiality.
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the day and year first
above written.
/s/ XXXXXX XXXXX
-------------------------------------------
Xxxxxx Xxxxx
Ameritrade Holding Corporation
By /s/ XXXX XXX XXXXXXXX
-------------------------------------------
Its Chairman & CEO
-------------------------------------------
ATTEST:
----------------------------
(Seal)
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EXHIBIT A
TRANSITION RELATED EXPENSES
A-1. PURPOSE. This Exhibit A is attached to and forms a part of the
employment agreement (the "Agreement"), dated February 15, 1999, between Xxxxxx
Xxxxx (the "Executive") and Ameritrade Holding Corporation (the "Company").
The purpose of this Exhibit A is to set forth the terms of the transition
related expenses that the Company will either pay directly or reimburse the
Executive for as described in paragraph 2(i) of the Agreement.
A-2. COVERED EXPENSES.
(a) Relocation Expenses.
(i) All associated reasonable selling expenses, such as real
estate commission, legal fees, transfer and title costs and
other such costs customarily covered by the Company.
(ii) All associated reasonable packing, storage and moving
expenses, related insurance coverage and other such costs
customarily covered by the Company.
(iii) All associated reasonable purchasing expenses, such as real
estate commission, legal fees, transfer and title costs,
initial utility hook up fees and other such costs
customarily covered by the Company.
(b) Temporary Housing for a period of less than 12 months.
(i) Housing in the Omaha metropolitan area consisting of not
less than a furnished two bedroom apartment with an
attached garage.
(ii) All associated rent, utilities, dinner meals and weekly
housekeeping and laundry service.
(c) Travel Costs. For as long as the Executive is residing in the above
temporary residence, and the Executive continues to work partially in the
Baltimore, MD area, the Company will provide for travel related expenses
incurred traveling between business locations.
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