SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS
Exhibit
10.1
AND
GENERAL RELEASE OF CLAIMS
This
Agreement is between Xxxxxxxx X. Xxxxxx (“Employee”) and E*TRADE Financial
Corporation (the “Company”) (the “Parties”) and is effective as of the eighth
day after it is signed by Employee (the “Effective Date”), provided that
Employee has not revoked this Agreement (by written notice as set forth in
Section 16 below) prior to that date. The parties hereby agree that
Employee’s employment with the Company will terminate effective December 31,
2007 (the “Separation Date”).
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1.
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Consideration: In
consideration for the release of claims set forth below, the Company
agrees to pay or provide Employee with the following payments and
benefits:
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a.
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A
lump sum payment of $10.9 million, representing the sum of (x) two
years
of Employee’s base salary and (y) two times the bonus paid to Employee
under the Company’s bonus plan for fiscal year 2006, to be paid within 30
days following the Effective Date.
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b.
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Reimbursement
for the cost of medical insurance coverage at a level equivalent
to that
provided by the Company to Employee and his dependents immediately
prior
to the Separation Date and elected by Employee through COBRA (or,
if
Employee is no longer eligible for COBRA continuation coverage, through
a
lump sum payment in an amount necessary to permit Employee to obtain
medical insurance coverage at a level equivalent to that provided
by the
Company immediately prior to the Separation Date, which lump sum
payment
shall be made to the Employee within 30 days after the second anniversary
date of the Separation Date) and for the cost of life and disability
insurance coverage at a level equivalent to that provided by the
Company
to Employee, for a period from the Separation Date through the earlier
of
(i) the two-year anniversary of the Separation Date or (ii) the time
Employee begins alternative
employment.
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c.
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Reimbursement
for the reasonable attorney’s fees and expenses incurred by Employee in
connection with the review and negotiation of this Agreement, in
an amount
not to exceed $10,000, such reimbursement to be paid within 30 days
following the Effective Date.
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2.
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Full
Release: In exchange for the benefits
described in Section 1 above, Employee and his successors and assigns
release and absolutely discharge the Company and its subsidiaries
and
other affiliated entities, and each of their respective shareholders,
directors, employees, agents, attorneys, legal successors and assigns
of
and from any and all claims, actions and causes of action, whether
now
known or unknown, which Employee now has, or at any other time had,
or
shall or may have, against those released parties arising out of
or
relating to any matter, cause, fact, thing, act or omission whatsoever
occurring or existing at any time to and including the date of execution
of this Agreement by Employee, including, but not limited to, claims
relating to any letter offering Employee employment with the Company,
the
Employment Agreement between Employee and the Company dated as of
September 1, 2004 (as amended, the “Employment Agreement”), the parties’
employment relationship, the termination of that relationship, the
Employee’s purchase or right to purchase shares of the Company’s stock,
and any claims for breach of contract, infliction of emotional
distress, fraud, defamation, personal injury, wrongful discharge
or age,
sex, race, national origin, industrial injury, physical or mental
disability, medical condition, sexual orientation or other discrimination,
harassment or retaliation, claims under the federal Americans with
Disabilities Act, Title VII of the federal Civil Rights Act of 1964,
as
amended, the Age Discrimination in Employment Act, 42 U.S.C. Section
1981,
the federal Fair Labor Standards Act, the federal Employee Retirement
Income Security Act, the federal Worker Adjustment and Retraining
Notification Act, the federal Family and Medical Leave Act, the National
Labor Relations Act, the Virginians with Disabilities Act and the
Virginia
Human Rights Act, which prevent employment discrimination, Virginia
Code
sections 40.1-29, et
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seq.;
or any other federal, state or local law, all as they have been
or may be
amended, and all claims for attorneys fees and/or costs, to the
full
extent that such claims may be released. This Release does
not apply to (i)
claims which cannot be released as a matter of law, including claims
for indemnification under applicable state law, (ii) any right
Employee may have to enforce this Agreement, (iii) any right or
claim that
arises after the date of this Agreement, (iv) Employee’s eligibility for
indemnification and advancement of expenses in accordance with
applicable
laws or the certificate of incorporation and by-laws of Company
and/or its
subsidiaries, or any applicable insurance policy or (v) any right
Employee
may have to obtain contribution as permitted by law in the event
of entry
of judgment against Employee as a result of any act or failure
to act for
which Employee, on the one hand, and Company or any other releasee
hereunder, on the other hand, are jointly
liable.
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3.
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Resignations:
As of the Separation Date, Employee hereby resigns (and the
Company hereby accepts such resignations) from the Company’s Board of
Directors and from any and all other director, manager or officer
positions he may hold with the Company, its subsidiaries and any
of its
affiliates.
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4.
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All
Claims Waived: Employee understands
that he is releasing claims that he may not know about. That is
Employee’s knowing and voluntary intent even though he recognizes that
someday he may regret having signed this
Agreement. Nevertheless, by signing this Agreement, Employee
agrees that he is assuming that risk, and he agrees that this Agreement
shall remain effective in all respects in any such
case. Employee expressly waives all rights he may have under
any law that is intended to protect him from waiving unknown
claims.
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5.
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Reimbursements: Employee
will be reimbursed for outstanding business expenses incurred prior
to the
date Employee ceased being the Company’s chief executive officer (“Covered
Business Expenses”) in accordance with the Company’s standard
procedures. Employee
will
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have
45 days from the Separation Date to submit all outstanding Covered
Business Expenses, if any, with appropriate documentation for
reimbursement by the Company. Failure to submit documented
Covered Business Expenses for reimbursement within this time period
will
be considered a representation by Employee that he has been reimbursed
for
all business expenses.
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6.
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Vested
and Accrued Benefits: Employee
understands and acknowledges that he shall be entitled to no benefits
from
the Company other than those expressly set forth in Section 1 and
any
vested and accrued benefits earned under employee benefit plans through
the Separation Date, which shall be paid or provided by the Company
to
Employee in accordance with the terms and conditions of such
plans. All provisions of the stock option and restricted stock
agreements applicable to any stock option or restricted stock grant
shall
remain in full force and effect. All unvested stock options and
all shares of unvested restricted stock shall terminate as of the
Separation Date. Employee understands that he will receive no
bonus payment for the 2007 fiscal
year.
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7.
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Tax
Matters: All amounts referenced in Section 1 and
elsewhere in this Agreement shall be subject to any required tax
withholding by the Company. Notwithstanding any other provision
in this Agreement to the contrary, all expenses eligible for reimbursement
hereunder shall be paid to Employee promptly in accordance with the
Company’s customary practices (if any) applicable to the
reimbursement of expenses of such type, but in any event by no
later than March 15 of the calendar year following the calendar year
in
which such expenses were incurred.
The expenses incurred by Employee in any calendar
year that are eligible for reimbursement under this Agreement shall
not
affect the expenses incurred by Employee in any other calendar year
that
are eligible for reimbursement hereunder. Employee’s right to receive any
reimbursement hereunder shall not be subject to liquidation or exchange
for any other benefit. The parties acknowledge that they
believe in good faith that Employee’s termination of employment is an
“involuntary separation from service”
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for
purposes of Section 409A of the Internal Revenue Code of 1986,
as amended,
and the regulations promulgated
thereunder.
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8.
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No
Admission: This Agreement constitutes a
mutually acceptable vehicle for effecting Employee’s departure from the
Company and shall not be used or treated or deemed to be an admission
of
liability or responsibility on the part of any released person or
entity.
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9.
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Continuing
Agreements: Employee acknowledges and agrees that
he shall continue to be bound by and comply with the Company’s Employee
Inventions and Proprietary Rights Assignment Agreement, which is
attached
hereto as Exhibit A. Without limiting the foregoing, Employee
agrees that for a period of one year after the Separation Date, he
shall
not, either directly or indirectly, solicit the services, or attempt
to
solicit the services, of any employee of the Company to any other
person
or entity. Anything to the contrary notwithstanding, the
Company agrees that the following shall not be deemed a violation
of this
Section 9: (i) Employee’s responding to an unsolicited request
for an employment reference regarding any former employee of
the Company from such former employee, or from a third party,
by providing a reference setting forth his personal views about
such former employee, or (ii) if an entity with which Employee
is associated hires or engages any employee of the Company or any
of its
subsidiaries, if Employee was not, directly or indirectly, involved
in
hiring or identifying such person as a potential recruit or assisting
in
the recruitment of such employee. For purposes hereof, Employee shall
only
be deemed to have been involved "indirectly" in soliciting, hiring
or
identifying an employee if Employee (x) directs a third party to
solicit
or hire the employee, (y) identifies an employee to a third party
as a
potential recruit or (z) aids, assists or participates with a third
party
in soliciting or hiring an
employee.
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10.
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Agreement
Not to Compete; Return of Company
Property: Employee agrees that he shall
not compete with the Company in any unfair manner, including, without
limitation, using any
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confidential
or proprietary information of the Company to compete with the Company
in
any way. Employee represents that he has returned to the
Company all documents, property, and other records of the Company
or any
affiliate of the Company, and all copies thereof, within Employee’s
possession, custody or control. Anything to the contrary
notwithstanding, Employee shall be entitled to retain (i) papers
and other
materials of a personal nature, including, but not limited to,
photographs, correspondence, personal diaries, calendars and rolodexes,
personal files and phone books, (ii) information showing his
compensation or relating to reimbursement of expenses,
(iii) information that he reasonably believes may be needed for tax
purposes, (iv) copies of plans, programs and agreements relating to his
employment, or termination thereof, with the Company and (v) copies
of
minutes, presentation materials and personal notes from any meeting
of the
Board of Directors of the Company or any of its subsidiaries, or
any
committee thereof, while he was a member of any such Board of Directors
or
committee thereof.
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11.
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Non-Disparagement;
Disclosure of Agreement: Employee agrees
that he shall not disparage the Company or any of its former, current
or
future officers, directors, employees, products or services, and
the
Company agrees that it will not (and will cause each of its subsidiaries
not to) disparage Employee in the course of any authorized internal
or
external communication. Notwithstanding the foregoing, nothing contained
in this Agreement shall prohibit Employee or the Company from (x)
responding publicly to incorrect, disparaging or derogatory public
statements to the extent reasonably necessary to correct or refute
such
public statement or (y) making any truthful statement to the extent
(i)
necessary with respect to any litigation, arbitration or mediation
involving this Agreement, including, but not limited to, the enforcement
of this Agreement or (ii) required by law or by any court, arbitrator,
mediator or administrative or legislative body (including any committee
thereof) with apparent jurisdiction over Employee or the
Company. Employee and the Company acknowledge that the Company
will be required to disclose this Agreement and its terms in its
public
filings with the SEC.
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12.
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Cooperation
Clause: Employee agrees that, as
requested by the Company or its counsel, he will fully cooperate
with the
Company and its counsel in any internal review, investigation, or
audit;
and any formal or informal inquiry, investigation, disciplinary or
other
proceeding initiated by any government, regulatory or law enforcement
agency (including without limitation the Securities and Exchange
Commission, FINRA, formerly the National Association of Securities,
Inc.,
or the Office of Thrift Supervision). Employee further agrees to
fully
cooperate with the Company and its counsel in both the pursuit or
prosecution of any claim or right the Company may hold against others
for
damages or relief and in defending the Company against any pending
or
future claims, complaints or actions brought against the Company,
including but not limited regulatory actions, administrative proceedings,
arbitration claims, or lawsuits. In this regard, Employee agrees
that he
will promptly provide all information or documents he may possess
relevant
to the subject matter of any inquiry, and that he will testify truthfully
and with complete candor in connection with any such regulatory,
administrative or legal action or proceeding. To the extent
possible, the Company will try to limit Employee’s participation to
regular business hours. Any request for cooperation by the
Company hereunder will take into account, to the extent practicable,
Employee's reasonable, good faith personal commitments and business
commitments. The Company agrees to provide Employee reasonable
notice, to the extent practicable, in the event his assistance is
required. The Company will reimburse Employee for reasonable
travel expenses (including lodging and meals) incurred by him in
connection with providing such assistance and for legal fees to the
extent
Employee reasonably believes that separate representation is warranted,
in
either case within 30 days of the submission of the appropriate
documentation to the Company. Employee’s entitlement to such
reimbursement, including legal fees, pursuant to this Section 12,
shall in
no way affect Employee’s rights to be indemnified and/or advanced expenses
in accordance with the Company’s or any of its subsidiaries’ corporate or
other organizational documents, or any applicable insurance
policy.
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13.
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Dispute
Resolution: In the event of any dispute or claim
relating to or arising out of this Agreement (including, but not
limited
to, any claims of breach of contract, wrongful termination or age,
sex,
race or other discrimination), Employee and the Company agree that
all
such disputes shall be fully and finally resolved by binding arbitration
conducted through the American Arbitration Association in Arlington,
Virginia in accordance with its National Employment Dispute Resolution
rules. The Parties acknowledge that by accepting this
arbitration provision that they are waiving any right to a jury
trial in the event of such dispute. In connection with any such
arbitration, the Company shall bear all costs not otherwise born
in a
court proceeding.
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14.
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Prevailing
Party: The prevailing party shall be
entitled to recover from the losing party its attorneys’ fees
and costs incurred in any action or proceeding brought to enforce
any
right arising out of this
Agreement.
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15.
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Entire
Agreement: This Agreement, any confidentiality,
proprietary rights and dispute resolution agreement between Employee
and
the Company, and any agreement concerning any stock options and other
equity awards issued to Employee, constitute the entire agreement
between
the parties with respect to the subject matter hereof and thereof
and
supersede all prior negotiations and agreements, whether written
or oral,
including without limitation the Employment Agreement. This
Agreement may not be altered or amended except by a written document
signed by Employee and an authorized representative of the Company.
This
Agreement shall be governed by the internal laws of the State of
New
York.
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16.
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Older
Workers Benefit Protection Act: In accordance with
the Older Workers Benefit Protection Act, Employee understands and
acknowledges that he has been advised to consult an attorney before
accepting this Agreement. Employee further understands and
acknowledges that he has up to 21 days from the date this Agreement
is
presented to Employee to accept this Agreement by dating and signing
a
copy of this Agreement and returning it to the Company, although
it may be
accepted at any time within such period. Employee further
understands that,
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once
having accepted this Agreement, Employee will have an additional
seven (7)
days within which to revoke his acceptance, by delivering written
notice
of execution of the Agreement to Xxxxxxxxx Xxxx, Managing Director,
Human
Resources. If Employee revokes this Agreement during the
seven-day period, Employee will not be eligible for and will be
required
to return all consideration received under this
Agreement.
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17.
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Indemnification: Nothing
herein shall affect or otherwise limit any indemnification of Employee
provided by the Company’s (or its subsidiaries’) bylaws, charter or other
corporate or organizational
documents.
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EMPLOYEE
UNDERSTANDS THAT HE IS ENTITLED TO CONSULT WITH, AND HAS CONSULTED WITH, AN
ATTORNEY PRIOR TO SIGNING THIS AGREEMENT AND THAT HE IS GIVING UP ANY LEGAL
CLAIMS HE HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS
AGREEMENT. EMPLOYEE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY
AND VOLUNTARILY IN EXCHANGE FOR THE BENEFITS DESCRIBED IN SECTION
1.
| Dated: | December 27, 2007 | Employee | |
| /s/ Xxxxxxxx X. Xxxxxx | |||
| Xxxxxxxx X. Xxxxxx | |||
| Dated: | December 27, 2007 | E*TRADE Financial Corporation | |
| /s/ Xxxxxx X. Xxxxxx | |||
| By: | Xxxxxx X. Xxxxxx | ||
| Chairman of the Board of Directors | |||
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