Exhibit 10.263
SEPARATION AGREEMENT, GENERAL RELEASE AND WAIVER OF CLAIMS
This Separation Agreement, General Release and Waiver of Claims
("Agreement") is entered into by and between Xxxxx X. Xxxxxxxx ("Xx. Xxxxxxxx"),
on the one hand, and The Xxxxxxx Xxxxxx Corporation and Xxxxxxx Xxxxxx & Co.,
Inc., their respective affiliates and the predecessors, successors and assigns
of each of the foregoing (collectively "Schwab" or the "Company"), on the other
hand, dated as of August 2, 2004 (the "Execution Date") and effective upon the
expiration of the Revocation Period described in Paragraph 27(g), below
("Effective Date"). Together, Xx. Xxxxxxxx and the Company shall be referred to
herein as "the Parties."
RECITALS
WHEREAS, Xx. Xxxxxxxx was requested by the Board of Directors of The
Xxxxxxx Xxxxxx Corporation to step down from his position as Chief Executive
Officer, whereupon he did so effective July 20, 2004.
WHEREAS, the Parties now desire to definitively resolve, fully and finally,
all differences, disputes and claims Xx. Xxxxxxxx might have against the Company
and anyone connected with it through and including the Execution Date,
including, but not limited to, those arising out of or relating to Xx.
Xxxxxxxx'x employment relationship with Schwab and the termination thereof.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the Company and Xx. Xxxxxxxx hereby agree as follows:
AGREEMENT
1. Resignation of Positions. Xx. Xxxxxxxx is deemed to have resigned as a
Schwab Officer, from any and all Schwab directorships he holds, and from the
Executive Committee effective as of July 20, 2004. Xx. Xxxxxxxx acknowledges and
agrees that with the exception of his accrued vacation, he has received all
wages due to him for services rendered as a result of his employment as Chief
Executive Officer with, and services as an officer and director of, the Company
up to and including July 20, 2004.
2. Consideration. Subject to and upon satisfaction by Xx. Xxxxxxxx of the
terms and conditions set forth in this Agreement, Schwab agrees to provide Xx.
Xxxxxxxx the following consideration:
(i) Schwab will continue to employ Xx. Xxxxxxxx, which it is not otherwise
obligated to do, subject to the terms and conditions of this
Agreement. Xx. Xxxxxxxx'x employment with Schwab will end on the
earlier of: 1) January 31, 2007; 2) the date Xx. Xxxxxxxx becomes
employed by another employer, becomes an independent contractor,
consultant, or a sole proprietor of a business, or acts as an officer,
director, or partner in another
public or privately held company (except as otherwise expressly
provided in Paragraphs 8 and 9, below, with respect to approved
outside business activity consistent with continued Schwab
employment); or 3) on a date resulting from a violation by Xx.
Xxxxxxxx of his obligations under Paragraphs 8 or 9 below. The date
Xx. Xxxxxxxx'x employment ends will be his Termination Date. Xx.
Xxxxxxxx shall perform such duties as are reasonably assigned to him
by Xxxxxxx Xxxxxx and shall report solely to Xx. Xxxxxx regarding
those duties. Except as specifically provided herein to the contrary,
Xx. Xxxxxxxx agrees to comply with all Company policies (including but
not limited to human resources, information security, compliance, the
Code of Business Conduct, and all Compliance policies on outside
business activities), up through and including his Termination Date;
(ii) Schwab will pay Xx. Xxxxxxxx a monthly salary of eighty-three thousand
three hundred thirty-three dollars and thirty-three cents
($83,333.33), less usual and customary taxes, withholding, and
authorized deductions, in accordance with its usual payroll practices
for the period commencing on August 1, 2004 and ending on September
30, 2004. Commencing on October 1, 2004 and ending on the Termination
Date, Schwab will pay Xx. Xxxxxxxx a monthly salary of one-hundred
thirty-five thousand seven hundred fourteen dollars and twenty-eight
cents ($135,714.28), less usual and customary taxes, withholding and
authorized deductions, in accordance with its usual payroll practices;
(iii)On and following the Effective Date, Xx. Xxxxxxxx will continue to be
eligible for all regular employee insured benefits (including life
insurance, the executive medical plan, vision, and dental and
excluding Short and Long Term Disability, except as otherwise required
by law) on the same terms and conditions as the other plan
participants in accordance with the terms of each plan through the
Termination Date except to the extent the Termination Date is beyond
twenty-four (24) months, the continuation of life insurance will cease
after twenty-four (24) months;
(iv) Schwab will pay Xx. Xxxxxxxx a lump sum payment of six million two
hundred thousand dollars ($6,200,000.00), payable as soon as
practicable after the Effective Date, less usual and customary taxes,
withholding, and authorized deductions;
(v) Schwab will allow Xx. Xxxxxxxx to continue to vest in the 365,498
Performance Shares awarded by the Performance Shares Award Agreement
dated March 14, 2003 in accordance with the terms of the applicable
plan documents and award agreement; provided that, subject to
Xxxxxxxxx 0, Xxxxxx will cause all such Performance Shares to be fully
vested without restriction as of Xx. Xxxxxxxx'x Termination Date, and
delivered to him as soon as practicable after the Termination Date and
after Xx. Xxxxxxxx has made arrangements satisfactory to Schwab for
the
- 2 -
satisfaction of any withholding tax obligations that arise by reason
of the vesting of such Performance Shares;
(vi) Schwab will allow Xx. Xxxxxxxx to continue to vest in (a) 1,405,839
shares of Schwab Common Stock ("Schwab Stock") under the Nonqualified
Stock Option Agreement dated May 9, 2003 and (b) 11,261 shares of
Schwab Stock under the Incentive Stock Option Agreement dated May 9,
2003 in accordance with the terms and conditions of the applicable
plan documents and option agreements; provided that, subject to
Xxxxxxxxx 0, Xxxxxx will cause all such stock options to be fully
vested and exercisable as of Xx. Xxxxxxxx'x Termination Date;
(vii)Schwab will allow Xx. Xxxxxxxx to continue to vest in 1,500,000 units
awarded by the LTIP Award Agreement granted as of January 1, 2003 in
accordance with the terms of the applicable plan document and award
agreement, subject to Paragraph 8; and
(viii)Schwab will provide appropriate office space that is agreeable to
both parties provided, however, that if such space is located in a
current Schwab location, Xx. Xxxxxxxx will be provided the use of the
space for up to twenty-eight (28) months from the date of occupancy or
until his Termination Date, whichever is earlier but if such space is
not located in a current Schwab location and is leased from an outside
source, Xx. Xxxxxxxx will have the use of the space for up to twelve
(12) months from the date of occupancy or until his Termination date,
whichever is earlier. Schwab will also provide one senior-level
secretarial assistant and Executive Technology Group (ETG) support for
twelve (12) months or until the Termination Date, whichever is
earlier.
3. No Other Employee Benefits. Xx. Xxxxxxxx is not eligible for any other
benefits or payments not specifically provided for in this Agreement. Upon
reaching the Termination Date, in accordance with federal and state regulations,
Xx. Xxxxxxxx will be offered the opportunity to continue receiving certain
insured group benefit coverage, such as medical benefits, for a period of time
not to exceed eighteen (18) additional months, provided Xx. Xxxxxxxx pays the
appropriate premiums for the coverage and returns the necessary paperwork. Xx.
Xxxxxxxx will not be eligible to accrue vacation or floating holidays after July
20, 2004. Schwab will pay Xx. Xxxxxxxx all accrued but unused vacation and
floating holidays accrued through July 20, 2004 on the next regularly scheduled
payday following the Effective Date.
4. Waiver of Benefits under The Xxxxxxx Xxxxxx Xxxxxxxxx Pay Plan. Xx.
Xxxxxxxx acknowledges and agrees that the consideration described in Paragraph
2, above, is in lieu of and a substitute for any severance benefits he may have
been eligible to receive under The Xxxxxxx Xxxxxx Corporation's Severance Pay
Plan or under any other severance or termination pay or benefits for which he
may be eligible from the Company or any affiliates or subsidiaries. Xx. Xxxxxxxx
expressly agrees that he waives
- 3 -
any such rights or benefits in exchange for the rights and benefits provided
under this Agreement.
5. Retirement Savings and Investment Plan. Xx. Xxxxxxxx'x active
participation in The SchwabPlan Retirement Savings & Investment Plan shall cease
as of September 30, 2004. Xx. Xxxxxxxx will not receive matching contributions
or any discretionary profit sharing for 2004. Xx. Xxxxxxxx'x vested interest in
Company contributions (other than matching contributions, which are
automatically fully vested) will be determined based on his service through the
Termination Date.
6. The Xxxxxxx Xxxxxx Corporation Stock Incentive Plans. Notwithstanding
anything to the contrary in this Agreement, Xx. Xxxxxxxx agrees and acknowledges
that (i) the nonqualified stock option agreement dated May 11, 1998 for
3,111,093 shares of Schwab Stock with an exercise price of $7.708 per share is
hereby amended to provide that the options under such agreement will expire and
will be exercisable no later than the date that is two (2) years after the
Effective Date; and (ii) the incentive stock option agreement dated May 11, 1998
for 38,907 shares of Schwab Stock with an exercise price of $7.708 is hereby
amended to provide that the options under such agreement will expire and will be
exercisable no later than the date that is three (3) months after the Effective
Date. Under the provisions of The Xxxxxxx Xxxxxx Corporation Stock Incentive
Plans, Xx. Xxxxxxxx retains the right to exercise vested options for a specific
period of time after his Termination Date. Except as provided in Paragraph
2(vi), any stock options that are not vested as of his Termination Date or as a
result of his Termination Date are immediately canceled. (For clarity, as an
example, this means that if a stock option plan provides for accelerated vesting
upon an employee's termination by virtue of being age fifty (50) and having at
least seven (7) years of service with the Company, then such a provision shall
not be overridden by this Agreement, except as provided in Paragraph 8). The
applicable Stock Option Agreement(s) and Plan documents govern the vesting and
exercising of stock options. Except as provided in Paragraph 2(v), any
performance shares that are not vested as of Xx. Xxxxxxxx'x Termination Date or
as a result of his Termination Date are immediately forfeited. The LTIP Award
Agreement and Plan document govern the vesting of LTIP units. Any LTIP units
that are not vested as of Xx. Xxxxxxxx'x Termination Date or as a result of his
Termination Date are immediately forfeited.
7. Tax Treatment. Xx. Xxxxxxxx understands and agrees that Schwab is
providing no tax or legal advice, and makes no representations regarding tax
obligations or consequences, if any, related to any part of this Agreement. Xx.
Xxxxxxxx further agrees that he will be responsible for his tax obligations or
consequences that may arise from this Agreement (including without limitation
the accelerated vesting of performance shares under Section 2), and he shall not
seek any indemnification from Schwab in this regard. Xx. Xxxxxxxx further agrees
to indemnify and hold Schwab harmless from any claims, demands, deficiencies,
levies, assessments, executions, judgments, penalties, taxes, attorneys' fees or
recoveries by any governmental entity against Schwab for any failure by Xx.
Xxxxxxxx to pay his taxes due and owing, if any, as a result of any payments
under this Agreement.
- 4 -
8. Early Termination Date. Xx. Xxxxxxxx understands and agrees that, except
as permitted under Paragraph 9, if he accepts a position as an employee, acts as
an independent contractor, consultant or sole proprietor, or acts as an officer,
director, or partner in another public or privately held company at any time
prior to January 31, 2007, he will notify Xxxxxx Xxxxx, EVP Corporate Oversight
(or her designee), at (000) 000-0000 immediately. If Xx. Xxxxxxxx accepts any
such position or otherwise begins to act in any such capacity with a company or
entity that is not a Competitor Business ("Competitor Business" is defined for
purposes of this Agreement on Exhibit A to this Agreement) then, except as
otherwise provided in Paragraph 9, below, Xx. Xxxxxxxx'x Termination Date will
be deemed to be the next business day following his acceptance of and
commencement of service in such position and he will receive a lump sum payment
for the unpaid portion of the remainder of any payments due under Paragraph 2
(ii) and (iv), less usual and customary taxes, withholding and authorized
deduction. (For avoidance of doubt, Xx. Xxxxxxxx will not be eligible for any
further continued benefits pursuant to Paragraph 2(iii) or any further continued
vesting pursuant to Paragraph 6 as of the new Termination Date, except as may be
provided in the applicable plan or agreement, and resulting from the Termination
Date.) The mere formation of a business entity in which Xx. Xxxxxxxx is a sole
proprietor, member, shareholder, or employee will not, in and of itself,
accelerate the Termination Date; however, Xx. Xxxxxxxx remains subject to the
notification provisions of this Paragraph 8 and the provisions of Paragraph 9
with respect to any such business entity. If Xx. Xxxxxxxx accepts any such
position or otherwise begins to act in any capacity with a Competitor Business
at any time prior to January 31, 2007 without the written authorization of
Xxxxxx Xxxxx (or her designee), his Termination Date will be deemed to be the
next business day following his acceptance of such position, all remaining
payments, benefits and continued vesting of performance shares and stock options
under this Agreement shall cease immediately and all performance shares
described in Paragraph 2(v), stock options described in Paragraph 2(vi) and LTIP
units described in Paragraph 2(vii) that have not vested as of his Termination
Date will be forfeited and cancelled as if Xx. Xxxxxxxx had been terminated for
cause under the terms of the applicable performance share and stock option
agreements. (For avoidance of doubt, Xx. Xxxxxxxx will not receive any payments
for the unpaid portion of the remainder of the payments under paragraph 2(ii) or
(iv), his eligibility for any further benefits and vesting will cease as of the
new Termination Date, any unvested performance shares, stock options, and LTIP
units will be immediately canceled, and Xx. Xxxxxxxx shall not be entitled to
any additional vesting as set forth in any retirement or any other provision
under the applicable award agreements.) If Xx. Xxxxxxxx undertakes any
activities in violation of this Xxxxxxxxx 0, Xxxxxxxxx 9, or this Agreement, his
Termination Date will be accelerated immediately and all payments and benefits
from the Company to Xx. Xxxxxxxx under this Agreement shall cease as of the new
Termination Date and all such performance shares, stock options, and LTIP units
that have not vested as of his Termination Date will be forfeited and cancelled
as if Xx. Xxxxxxxx had been terminated for cause under the terms of the
applicable agreements.
9. Outside Business Activity. Notwithstanding the preceding Paragraph 8,
Xx. Xxxxxxxx acknowledges while he is employed by the Company pursuant to the
terms of this Agreement, he must continue to seek pre-approval from the Company
for any
- 5 -
outside business activities he may wish to undertake with other groups,
organizations, companies, associations, etc., (non-profit or otherwise), in
accordance with the Company's Compliance policies, regardless of whether he
would receive compensation for the activity. For any type of proposed outside
business activity, Xx. Xxxxxxxx agrees to inform Xxxxxx Xxxxx, EVP Corporate
Oversight (or her designee), in advance, of the scope of the business activity,
the time commitment, and his anticipated compensation, if any, for that
activity. Outside business activity for purposes of this Paragraph 9 includes
participation as a member of the Board of Directors of, or services as a
consultant to, an outside organization and speaking engagements for any outside
organization. Xx. Xxxxxxxx acknowledges and agrees that during the time he is
employed by the Company pursuant to the terms of this Agreement, he shall not
serve as a member of the Board of Directors of, or provide any services as a
consultant to, any financial services firms that currently compete, or have
announced their intention to compete, directly and materially with the Company.
Schwab agrees that it will not unreasonably withhold its approval for Xx.
Xxxxxxxx to participate on the Board of Directors of, provide services as a
consultant to, or give speeches to non-profits and non-financial services firms,
or financial services firms that do not currently directly compete with the
Company.
10. No Filings. Xx. Xxxxxxxx represents that as of the Execution Date, he
has not filed any action, claim, charge, or complaint against Schwab or any
other Releasee identified in Paragraph 12 below, with any local, state, or
federal agency, self-regulatory organization ("SRO"), or court and that he will
not make such a filing at any time hereafter based upon any events or omissions
occurring prior to and up to the Execution Date. In the event that any agency or
court assumes jurisdiction of any lawsuit, claim, charge or complaint, or
purports to bring any legal or regulatory proceedings against Schwab or any
other Releasee identified in Paragraph 12 below on Xx. Xxxxxxxx'x behalf, he
promptly will request that the agency, SRO, or court withdraw from or dismiss
the lawsuit, claim, charge, or complaint with prejudice.
11. Covenant Not to Xxx. Xx. Xxxxxxxx covenants that he will not file,
participate in, or instigate the filing of any lawsuits, complaints or charges
by himself or by any other person or party in any state or federal court or any
proceedings before any local, state, or federal agency, or SRO, except as
required by law, claiming that Schwab or any other Releasee identified in
Paragraph 12 below has violated any law or obligation based upon events or
omissions occurring prior to and including the effective date of this Agreement.
Notwithstanding the provisions of this Paragraph, nothing in this Agreement
shall be construed to preclude Xx. Xxxxxxxx from timely filing a complaint with
the U.S. Equal Employment Opportunities Commission ("EEOC") or assisting any
investigation conducted by the EEOC to the extent that such rights are not
subject to waiver. In the event Xx. Xxxxxxxx breaches the covenant contained in
this Paragraph 11, Xx. Xxxxxxxx agrees that he will indemnify Schwab and any
other Releasee identified in Paragraph 12 below for all damages, fees, costs and
expenses, including legal fees, incurred by Schwab or any other Releasee
identified in Paragraph 12 below, in defending, participating in, or
investigating any matter or proceeding covered by this Paragraph 11.
- 6 -
12. Complete Release by Xx. Xxxxxxxx. Xx. Xxxxxxxx - for himself and for
his heirs, representatives, attorneys, executors, administrators, successors,
and assigns - releases Schwab, and all of its affiliates, subsidiaries,
divisions, parent corporations, and stockholders, officers, directors, partners,
servants, agents, employees, representatives, attorneys, employee welfare and
retirement plans and the respective plan administrators and fiduciaries, past,
present, and future, all persons acting under, by, through, or in concert with
any of them, and each of them (all of whom are hereinafter referred to as
"Releasees"), from any and all actions, causes of action, grievances,
obligations, costs, expenses, damages, losses, claims, liabilities, suits,
debts, demands, and benefits (including attorneys' fees and costs actually
incurred), of whatever character, in law or in equity, known or unknown,
suspected or unsuspected, matured or unmatured, of any kind or nature
whatsoever, based on any act, omission, event, occurrence, or nonoccurrence from
the beginning of time up to and including the Execution Date of this Agreement,
including but not limited to any claims or causes of action arising out of or in
any way relating to Xx. Xxxxxxxx'x employment relationship with Schwab or any
other Releasee.
This release of claims includes, but is not limited to, claims for breach
of any implied or express contract or covenant; claims for promissory estoppel;
claims of entitlement to any pay (other than the payments promised in Paragraph
2); claims of wrongful denial of insurance and employee benefits, or any claims
for wrongful termination, public policy violations, defamation, invasion of
privacy, fraud, misrepresentation, unfair business practices, emotional distress
or other common law or tort matters; claims of harassment, retaliation or
discrimination under federal, state, or local law; claims based on any federal,
state or other governmental statute, regulation or ordinance, including, without
limitation, Title VII of the Civil Rights Act, as amended, the Age
Discrimination in Employment Act, the Older Worker Benefit Protection Act, the
Labor Management Relations Act, the Americans with Disabilities Act, the Family
and Medical Leave Act, the California Fair Employment and Housing Act, the
California Labor Code, the California Government Code, and the Employee
Retirement Income Security Act. It is expressly understood by Xx. Xxxxxxxx that
among the various rights and claims being waived by Xx. Xxxxxxxx in this
Agreement are those for age discrimination arising under the Age Discrimination
in Employment Act of 1967 (29 U.S.C. sec. 621, et seq.), as amended.
13. Release of Unknown Claims. In order to make this release effective as
to unknown, unsuspected or concealed claims, Xx. Xxxxxxxx expressly waives the
benefits of Section 1542 of the California Civil Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
In making this waiver, Xx. Xxxxxxxx acknowledges that he may hereafter
discover facts in addition to or different from those which he now believes to
be true with respect to the subject matter released herein, but agrees that he
has taken that possibility
- 7 -
into account in reaching this Agreement and that, notwithstanding the discovery
or existence of any such additional or different facts, Xx. Xxxxxxxx fully,
finally, and forever settles and releases any and all such claims.
14. Successors. This Agreement shall be binding upon the Parties, and their
heirs, representatives, executors, administrators, successors, insurers, and
assigns, and shall inure to the administrators, predecessors, successors, and
assignees of each of the Parties. In the event of Xx. Xxxxxxxx'x death, the
benefits payable to Xx. Xxxxxxxx under this Agreement shall inure to the benefit
of his heirs, successors, and assigns.
15. Indemnification. Nothing in this Agreement (including the release
contained herein) shall be construed to limit Xx. Xxxxxxxx'x right to
indemnification or contribution pursuant to Delaware or California law or the
Company's bylaws arising from actions actually or allegedly taken in the scope
of his employment with the Company.
16. Release by Schwab. In consideration of this Agreement, Schwab, its
former and current officers, directors, employees, representatives, attorney,
subsidiaries, insurers, predecessor, affiliates, and successors hereby release
and discharge Xx. Xxxxxxxx from any and all claims, liabilities, or obligations
of every kind and nature, whether now known or unknown, suspected or
unsuspected, arising out of or in connection with or relating to Xx. Xxxxxxxx'x
employment with Schwab, provided, however, that Schwab, its former and current
officers, directors, employees, representatives, attorneys, subsidiaries,
insurers, predecessor, affiliates, and successors do not release Xx. Xxxxxxxx
from any misconduct other than ordinary negligence in the performance of his
duties at Schwab, nor any loan, mortgage, or other personal obligation incurred
with Schwab or any affiliated institution.
17. No Attorney's Fees and Costs. The Parties will bear their own
respective costs and fees, including attorney's fees incurred in connection with
the negotiation and execution of this Agreement, except that Xx. Xxxxxxxx will
be reimbursed for his attorneys' fees reasonably incurred in the negotiation and
execution of this Agreement in an amount not to exceed $75,000, subject to
review and approval by Xxxxxx Xxxxx (or her designee) of all appropriately
documented invoices for the claimed attorneys' fees.
18. Non-Disparagement and Cooperation.
18.1 Non-Disparagement.
Xx. Xxxxxxxx shall not make any oral or written statement which (a) is
disparaging to the Company, or to the past or present directors, officers or
employees of the Company, or any Releasee as defined above, or (b) is calculated
to, or which foreseeably will, disrupt, disparage, damage, impair or otherwise
interfere with the business or reputation of the Company, its past or present
directors, officers or employees, or any Releasee as defined above, or (c) will
disrupt, impair or otherwise interfere with the
- 8 -
Company's relationships with its employees, customers, agents, representatives
or vendors (individually and collectively "disparaging statements"). Xx.
Xxxxxxxx also agrees that he will direct his immediate family members and
representatives not to make any disparaging statements. Xx. Xxxxxxxx further
agrees to refrain from acting as a source (attributable or otherwise) or
engaging in any formal or informal dialogue with the press or media regarding
his experiences with or at Schwab that in any way injure or are detrimental to
Schwab, or its past or present directors, officers or employees of the Company,
or any Releasee as defined above, or regarding any information Xx. Xxxxxxxx may
have acquired (first hand or otherwise) concerning Schwab operations, marketing
or advertising strategies or plans, financial performance, recruitment or
retention strategies, or internal policies and procedures or any other Schwab
information (including but not limited to Schwab services, products, or
offerings referenced in this Agreement). Nothing herein shall preclude Xx.
Xxxxxxxx from cooperating with a governmental or SRO, in an investigation
initiated by such agency, or testifying in a court of law if compelled by legal
process to testify as a witness in a lawsuit in which Schwab or any Releasee is
a defendant.
18.2 Cooperation.
Xx. Xxxxxxxx agrees not to encourage or assist in any litigation against
Schwab or any Releasee or provide testimony in any matter in which Schwab or any
Releasee has an interest unless he is required by law to do so. Xx. Xxxxxxxx
agrees to cooperate fully with any Releasee, and any corporate affiliate of any
Releasee, specifically including any attorney retained by any of the Releasees,
in connection with any pending or future litigation or investigatory matter
(including but not limited to any Schwab investigation into Compliance or other
policy violations) in which and to the extent Schwab reasonably deems his
cooperation to be necessary. Xx. Xxxxxxxx acknowledges and agrees that such
cooperation may include, but shall in no way be limited to, Xx. Xxxxxxxx being
available for an interview with any of the Releasees, or any attorney or agent
retained by any of the Releasees, providing to any of the Releasees any
documents in his possession or under his control relating to the litigation or
investigatory matter, and providing truthful sworn statements in connection with
the litigation or investigatory matter. Xx. Xxxxxxxx agrees to appear and give
truthful testimony as a witness in any judicial, administrative,
quasi-governmental, or investigatory proceeding as requested by Schwab. He also
agrees, upon request by Schwab, to provide information to Schwab that he learned
during the course of his employment relationship with Schwab. If Xx. Xxxxxxxx is
served with process concerning any matter in which Schwab or any Releasee has an
interest, he agrees to immediately notify Schwab. Schwab will reimburse Xx.
Xxxxxxxx for reasonable travel expenses in accordance with the travel policies
then in effect. This reimbursement is for Xx. Xxxxxxxx'x convenience. Schwab
confirms its expectation that Xx. Xxxxxxxx will provide truthful information in
accordance with this paragraph.
18.3 Non-Disparagement by Schwab.
The current members of Xxxxxx'x Board of Directors and each current member
of Xxxxxx'x Executive Committee will not make any oral or written statement to
the press
- 9 -
or media or to any persons not employed by the Company that is disparaging to
Xx. Xxxxxxxx. Nothing herein shall preclude each current member of the Board of
Directors and each current Executive Committee member from making disclosures as
are necessary to Xxxxxx'x insurance carrier or cooperating with a governmental
or SRO, in an investigation initiated by such agency, or testifying in a court
of law if compelled by legal process to testify as a witness in a lawsuit.
19. Confidential Information. Xx. Xxxxxxxx acknowledges that by reason of
his employment as Chief Executive Officer with the Company (and, before
attaining that position, as a senior executive with the Company), he had access
to and did receive knowledge of Xxxxxx'x trade secrets and proprietary and
confidential information ("Confidential Information"). Xx. Xxxxxxxx acknowledges
and affirms his obligations to maintain the confidentiality of Confidential
Information and not to use it or to disclose it to any third party in the
future. Xx. Xxxxxxxx understands and agrees that the term "Confidential
Information" includes, but is not limited to, customer identity, customer
account, personal or business information, customer lists, lead information,
employee information (employment, personal, financial or account information),
employee lists, know-how, computer hardware or software configuration or design,
research and development, product designs, plans and/or methods (whether
currently in use or in development), source codes, future developments, costs,
profits, account valuation, pricing and pricing structure, technical, marketing,
business, financial, or other information that constitute trade secret
information, or information not available to competitors of the Company, the use
or disclosure of which might reasonably be construed to be contrary to the
interests of the Company. Xx. Xxxxxxxx also agrees that Confidential Information
is a valuable and unique asset that Schwab actively protects and that
unauthorized use and/or disclosure of Confidential Information could cause
immediate and irreparable harm to Schwab.
20. Non-Solicitation of Employees. Xx. Xxxxxxxx agrees that any attempt on
his part to induce any employee, consultant or contractor to leave his/her
assignment or employment with any Schwab entity, or any other effort by Xx.
Xxxxxxxx to interfere in those relationships will be harmful and damaging to the
Schwab entity. Therefore Xx. Xxxxxxxx will not, at any time up to and including
January 31, 2007, in any way (directly or indirectly), on his own behalf or on
behalf of any other person or entity solicit or attempt to solicit or induce
(which shall include, but is not limited to, contact or communication in any
manner for the purpose of soliciting or inducing) any employee, vendor or
independent contractor of, or consultant to a Schwab entity to leave his or her
employment or assignment. Nothing in this paragraph is intended to prevent Xx.
Xxxxxxxx from discussing possible employment or assignments with any employee,
consultant, or independent contractor who contacts him directly of his or her
own volition without Xx. Xxxxxxxx'x solicitation or attempted solicitation of
him or her.
21. Non-Solicitation of Customers. Xx. Xxxxxxxx acknowledges that his
position as Chief Executive Officer with the Company (and, before attaining that
position, as a senior executive with the Company) has been special, unique, and
intellectual in character, has placed him in a position of particular confidence
and trust
- 10 -
with Schwab customers, and has given him unique access to confidential and
proprietary information concerning, among other things, Xxxxxx'x business and
customers. Accordingly, Xx. Xxxxxxxx will not, at any time up to and including
January 31, 2007, directly or indirectly, either for himself or for any other
person or entity, (i) make known to any person, firm, or corporation the names
or addresses of or any information pertaining to the Company's customers
(including any person or entity who during the twelve (12) months prior to such
time was a customer of any Schwab affiliate or subsidiary) or (ii) solicit or
attempt to solicit (which shall include, but is not limited to, contact or
communication in any manner for the purpose of soliciting or inducing) any of
the Company's customers in an attempt to divert, transfer, or otherwise take
away business or prospective business from Schwab, including without limitation
those on whom he called or whom he solicited or with whom he became acquainted
while engaged as an employee with the Company.
22. Injunctive Relief. Xx. Xxxxxxxx acknowledges and agrees that the
restrictions contained in Paragraphs 18, 19, 20, and 21 are material inducements
to the Company's willingness to enter into this Agreement and necessary to
protect the good will, trade secrets, and confidential and proprietary
information of the Company. Xx. Xxxxxxxx further acknowledges that the
restrictions contained in these Paragraphs are reasonable in scope and duration,
will not prevent him from earning a livelihood during the applicable period of
restriction, are necessary to protect the legitimate interests of the Company,
and that any breach by Xx. Xxxxxxxx of any provision contained in Paragraphs 18,
19, 20, and 21 will result in immediate irreparable injury to the Company for
which a remedy at law will be inadequate. Accordingly, Xx. Xxxxxxxx acknowledges
that the Company shall be entitled to seek permanent injunctive relief against
him in the event of any breach or threatened breach by Xx. Xxxxxxxx of the
provisions of Paragraphs 18, 19, 20, or 21 in addition to any other remedy that
may be available to the Company, whether at law or in equity. The provisions of
Paragraphs 18, 19, 20, or 21 shall remain unmodified and in full force and
effect following the Termination Date. It is the intention of the Parties to
this Agreement that the covenants and restrictions set forth in Paragraphs 18,
19, 20, and 21 be given the broadest interpretation permitted by law.
23. Return of Confidential and Proprietary Information. Xx. Xxxxxxxx
acknowledges that he has returned to Schwab any and all property, files,
materials, records, manuals, written communications, or other items (including
hard copy and electronic documents, disks, and files) that he received, obtained
and/or created as part of his employment (excluding information Xx. Xxxxxxxx
received about insured benefits) or that are in his possession or control
belonging to Schwab or any of the Releasees, including but not limited to
company sponsored credit cards or calling cards, pagers, computer software or
hardware, keys, and identity badges. Xx. Xxxxxxxx agrees that in the event he
later locates any such document, he will return it to Schwab immediately. The
Parties agree to mutually cooperate in the Company's retention and protection of
any material that may be necessary in the event of future circumstances that
require reference to such materials.
- 11 -
24. Breach of Agreement. If Xx. Xxxxxxxx undertakes any activities in
violation of Paragraphs 8, 9, 18, 19, 20, or 21 or otherwise breaches any of his
obligations under this Agreement, his Termination Date will be accelerated
immediately and all payments and other benefits conferred under this Agreement
(with the exception of unused vacation and floating holidays as set forth in
Paragraph 3) shall cease; provided, however, that such breach by Xx. Xxxxxxxx
and/or cessation of payments and benefits by the Company will not affect the
validity or enforceability of the Parties' commitments under this Agreement
(including but not limited to Xx. Xxxxxxxx'x general release and waiver of
claims contained herein).
25. Corporate Approvals. The Company represents that it has obtained all
necessary Corporate approvals in order to enter this Agreement.
26. Licenses. Within thirty (30) days of Xx. Xxxxxxxx'x Termination Date, a
Form U-5 will be filed with the Central Registration Depository terminating his
registration. Xx. Xxxxxxxx agrees that prior to Xxxxxx'x filing a Form U-5
terminating his registration, he will ensure compliance with all continuing
education requirements for the licenses he holds. Additionally, Xx. Xxxxxxxx
agrees that to the extent he maintains brokerage accounts at financial services
firms other than the Company, he will identify the outside accounts and arrange
for the submission of duplicate statements and trade confirmations for all
outside accounts to the Chief Compliance Xxxxxxx, Xxxxxxx Xxxxxx & Co., Inc.,
000 Xxxxxxxxxx Xxxxxx, XX000XXX-00-000, Xxx Xxxxxxxxx, XX 00000. In the event
Xx. Xxxxxxxx fails to meet the continuing education requirements, ensure that
duplicate statements and trade confirmations are provided to Schwab, or violates
any Company policy, the Company will immediately file a Form U-5 terminating his
registration.
27. Agreement is Knowing and Voluntary. Xx. Xxxxxxxx understands and agrees
that he:
a. has had 21 days within which to consider this Agreement before
executing it;
b. has carefully read and fully understands all of the provisions of
this Agreement;
c. is, through this Agreement, releasing Schwab and the other
Releasees from any and all claims he may have against Schwab and
the other Releasees, as stated herein, that have arisen up to the
date of execution of this Agreement;
d. knowingly and voluntarily agrees to all of the terms set forth in
this Agreement;
e. knowingly and voluntarily intends to be legally bound by the
same;
- 12 -
f. was advised, and hereby is advised in writing, to consider the
terms of this Agreement and consult with an attorney of his
choice prior to executing this Agreement; and
g. has seven (7) days after signing this Agreement to revoke it; the
Agreement will not become effective or enforceable until the
seven-day revocation period has passed. Revocation can be made by
delivering written notice of revocation to Xxxxxx Xxxxx, EVP
Corporate Oversight, Xxxxxxx Xxxxxx & Co., Inc., 000 Xxxxxxxxxx
Xxxxxx, XX000XXX-00-000, Xxx Xxxxxxxxx, XX 00000. For this
revocation to be effective, written notice must be received by
Xxxxxx Xxxxx no later than the close of business on the seventh
(7th) calendar day after Xx. Xxxxxxxx signs this Agreement. If
Xx. Xxxxxxxx revokes this Agreement, it shall not be effective or
enforceable and Xx. Xxxxxxxx will not receive the benefits
provided herein.
28. Full and Independent Knowledge. The Parties represent that they have
discussed thoroughly all aspects of this Agreement with their respective
attorneys, fully understand all of the provisions of the Agreement, and are
voluntarily entering into this Agreement.
29. No Representations. The Parties acknowledge that, except as expressly
set forth herein, no representations of any kind or character have been made to
induce the execution of this Agreement.
30. Ownership of Claims. Xx. Xxxxxxxx represents that he has not
transferred or assigned, or purported to transfer or assign, any claim released
by this Agreement. Xx. Xxxxxxxx further agrees to indemnify and hold harmless
each and all of the Releasees against any and all claims based upon, arising out
of, or in any way connected with any such actual or purported transfer or
assignment.
31. Non-Admission of Liability. Neither Party, by entering into and
fulfilling this Agreement, admits to any wrongdoing or liability and each Party
denies all allegations of wrongdoing.
32. Other Representations. Xx. Xxxxxxxx represents that he has no pending
claim for any work-related injury, and that his is not aware of any existing
injury that would give rise to such a claim, whether under applicable worker's
compensation laws or otherwise.
33. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of California applicable to contracts made and to be
performed entirely within California.
- 13 -
34. Arbitration. Except with respect to judicial injunctive relief as
provided in Paragraph 22 above, any dispute or breach arising out of the
interpretation or performance of this Agreement shall be settled by arbitration
before a single arbitrator in accordance with the Commercial Arbitration Rules
of the American Arbitration Association in San Francisco, California, to be
administered by the American Arbitration Association or JAMS/Endispute, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. With the exception of initial forum fees, the
Company shall bear all costs imposed by the American Arbitration Association or
JAMS/Endispute to administer the arbitration including arbitrator's fees. The
parties shall be allowed to conduct such discovery as permitted by the
Commercial Arbitration Rules of the American Arbitration Association or by the
arbitrator. At the conclusion of arbitration, the arbitrator shall issue an
award in writing setting forth the basis for the award. The decision of the
arbitrator shall be final and conclusive, and the Parties waive the right to
trial de novo or appeal. Further, the prevailing party shall be entitled to
recover its reasonable costs and attorney's fees. Excepted from this Paragraph
is a complaint with the EEOC, including a challenge to the validity of this
Agreement under the law, to the extent such an exception is required by law.
35. Waiver. The failure of any Party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver thereof
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
36. Miscellaneous.
a. Both parties have participated in the drafting of this Agreement.
The language of all parts in this Agreement shall be construed as a whole,
according to its fair meaning, and not strictly for or against either
party.
b. Should any provision in this Agreement be declared or determined to
be illegal or invalid, the validity of the remaining parts, terms, or
provisions shall not be affected thereby, and the illegal or invalid part,
term, or provision shall be deemed not to be part of this Agreement, and
all remaining provisions shall remain valid and enforceable.
c. This Agreement sets forth the entire agreement between the Parties
and fully supersedes any and all prior agreements and understandings,
written or otherwise, between the Parties pertaining to the subject matter
of this Agreement.
d. The headings used herein are for reference only and shall not
affect the construction of this Agreement.
37. Counterparts. This Agreement may be executed in one or more
counterparts, by facsimile or original signature, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
- 14 -
38. Notification. Notice to be given under this Agreement to Schwab shall
be to Xxxxxx Xxxxx, EVP Corporate Oversight, Xxxxxxx Xxxxxx & Co., Inc., 000
Xxxxxxxxxx Xxxxxx, XX 000XXX-00-000, Xxx Xxxxxxxxx, XX 00000 and to Xx. Xxxxxxxx
shall be to Xxxx Xxxxxxxx, Xxxxxxxx, Patch, Xxxxx & Bass, LLP, Xxx Xxxxx
Xxxxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX 00000-0000.
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES THE RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
XXXXX X. XXXXXXXX XXXXXXX XXXXXX & CO., INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------- --------------------------------
Its: EVP - Chief Financial Officer
-------------------------------
Date: August 2, 2004 Date: August 3, 2004
--------------------------- ------------------------------
Approved as to Form and Content: THE XXXXXXX XXXXXX CORPORATION
/s/ Xxxx Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------- --------------------------------
Xxxx Xxxxxxxx Its: EVP - Chief Financial Officer
Attorney for Xxxxx X. Xxxxxxxx -------------------------------
Date: August 3, 2004
------------------------------
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Its: EVP, General Counsel and
Secretary
-------------------------------
Date: August 3, 2004
------------------------------
- 15 -
EXHIBIT A - COMPETITOR BUSINESSES
Except as otherwise agreed to in writing by an authorized representative of the
Company, a Competitor Business will be defined as follows: 1) E*Trade Financial
Corporation; E*Trade Financial Corporate Services, Inc.; E*Trade Access, Inc.;
E*Trade Brokerage Holdings, Inc.; TD Waterhouse Investor Services, Inc.;
Ameritrade Online Holdings Corporation; Ameritrade Advisory Services; Fidelity
Brokerage Services, LLC; Fidelity Investments Institutional Services Company,
Inc.; 2) any other company that is a financial institution regulated or
registered by the federal banking regulators, the Securities Exchange
Commission, the Commodity Futures Trading Commission, the National Association
of Securities Dealers, or any equivalent state law that allows individuals or
institutions to place or process orders for securities and/or other financial
instruments (including, but not limited to banking functions and instruments)
through any medium now known or later developed; or 3) any business that is
determined in Xxxxxx'x sole and reasonable discretion to be competitive with the
business activities of the Company or its affiliates or subsidiaries.
- 16 -
