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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AS AMENDED AND RESTATED
WHEREAS, Ameritrade Holding Corporation (the "Company") and Xxxxxx X.
Xxxxxx (the "Executive") entered into an employment agreement dated as of March
1, 2001 (the "Prior Agreement"); and
WHEREAS, the parties have agreed to amend, restate and continue the Prior
Agreement in the form hereof (the "Agreement"), all effective as of March 1,
2001 (the "Effective Date");
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Company and the Executive
as follows:
1. Employment Period. Subject to the terms of this Agreement, the Company
hereby agrees to employ the Executive as its Chief Executive Officer during the
Employment Period (as defined below), and the Executive hereby agrees to remain
in the employ of the Company during the Employment Period and to provide
services during the Employment Period in accordance with this Agreement. The
"Employment Period" shall be the period beginning on the Effective Date and
ending on the second anniversary thereof (the "Initial Term"). After the second
anniversary of the Effective Date, the Employment Period shall be automatically
extended for one additional 24-consecutive-month period (the "Subsequent Term"),
unless one party to this Agreement provides written notice of non-renewal to the
other at least 90 days before the last day of the Initial Term.
2. Duties. The Executive agrees that, during the Employment Period, while
he is employed by the Company, he will devote his full business time, energies
and talents to serving as the Chief Executive Officer of the Company, subject to
the reasonable direction of the Chairman of the Board of Directors of the
Company (the "Chairman") or J. Xxx Xxxxxxxx ("Xxxxxxxx") (who, as of the
Effective Date, is the Chairman). The Executive shall have such duties and
responsibilities consistent with his position as Chief Executive Officer as may
be reasonably assigned to him from time to time by the Chairman or Xxxxxxxx. The
Executive shall perform all such duties assigned to him faithfully and
efficiently, subject to the reasonable direction of the Chairman or Xxxxxxxx,
and shall have such authorities and powers as are inherent to the undertakings
applicable to his position and necessary to carry out the responsibilities and
duties required of him hereunder; provided, however, that the Executive shall
not be required to perform any duties while he is disabled (within the meaning
of paragraph 4(e)), while he is otherwise ill or injured or during non-business
time. Notwithstanding the foregoing provisions of this Section 2, during the
Employment Period, the Executive may, subject to the prior approval of the
Chairman or Xxxxxxxx, devote reasonable time to activities other than those
required under this Agreement, including the supervision of his personal
investments, and activities involving professional, charitable, educational,
religious and similar types of organizations, speaking engagements, membership
on the boards of directors of other organizations, and similar type activities,
to the extent that such other activities do not, in the reasonable judgment of
the Chairman or Xxxxxxxx, inhibit or prohibit the performance of the Executive's
duties under this Agreement, or compete or conflict with the business of the
Company or any of its subsidiaries.
3. Compensation, Benefits, Signing Bonus, Insurance, Etc. Subject to the
terms and conditions of this Agreement, during the Employment Period while the
Executive is employed by the
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Company, the Company shall compensate him for his services as set forth in
Exhibits A and B hereto, which are incorporated herein and form a part of this
Agreement.
4. Rights and Payments Upon Termination. The Executive's employment with
the Company may be terminated during the Employment Period by the Company or the
Executive for any reason (subject to any advance notice provisions described in
this Section 4), without breach of this Agreement. The Executive's right to
benefits and payments, if any, for periods after the date on which his
employment with the Company terminates for any reason (his "Termination Date")
shall be determined in accordance with the following provisions of this Section
4:
(a) Termination By Company for Cause; Termination by Executive for
Voluntary Resignation. If the Executive's Termination Date occurs
during the Employment Period and is a result of the Company's
termination of the Executive's employment on account of Cause (as
defined below) or a result of the Executive's termination of
employment due to voluntary resignation (which must be effected
pursuant to a 90 day advance written notice to the Company), then the
Executive shall be entitled to the following payments and benefits:
(i) his earned but unpaid salary or wages (as described in Exhibit
A) for the period ending on his Termination Date;
(ii) his accrued but unpaid vacation pay for the period ending with
his Termination Date;
(iii) his earned but unpaid Bonus (as described in Exhibit A),
pro-rata (on a daily basis) for the period ending on his
Termination Date);
(iv) the pro-rata Stock Options (as defined in Exhibit A) and Account
under the Deferred Compensation Plan (as defined in Exhibit B)
shall be vested and earned (on a daily basis) through his
Termination Date; and
(v) the Noncompetition Payments (as defined in paragraph 4(e)).
For purposes of this Agreement, the term "Cause" shall mean (A) the
willful and continuous failure by the Executive to substantially
perform his duties under this Agreement, other than because he is ill,
injured or disabled, which failure continues for 30 days following
receipt of notice from the Company specifying such failure, (B) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its affiliates, monetarily or
otherwise, or (C) egregious willful misconduct involving serious moral
turpitude to the extent that, in the reasonable judgment of the
Chairman, 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. Except for
the Noncompetition Payments, payments to be made to the Executive
pursuant to this paragraph 4(a) shall be made in a lump sum as soon as
practicable after the Executive's Termination Date.
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(b) Termination by the Company Without Cause; Termination for Constructive
Dismissal. If the Executive's Termination Date occurs during the
Employment Period and is a result of the termination of the
Executive's employment by the Company without Cause (which shall be
effected pursuant to a 90 day advance written notice to the
Executive), and is not on account of any other reason described in
this Section 4, then the Executive shall be entitled to the following
payments and benefits:
(i) his earned but unpaid salary or wages for the period ending on
his Termination Date;
(ii) his accrued but unpaid vacation pay for the period ending with
his Termination Date;
(iii) his earned but unpaid Bonus (pro-rata (on a daily basis) for the
period ending on his Termination Date);
(iv) 100 percent granting and vesting of his Stock Options and
Account under the Deferred Compensation Plan (as defined in
Exhibit B), such granting and vesting to occur as of his
Termination Date, to the extent not previously granted and
vested; and
(v) the Noncompetition Payments.
Except for the Noncompetition Payments, payments to be made to the
Executive pursuant to this paragraph 4(b) shall be made in a lump sum
as soon as practicable after the Executive's Termination Date.
Notwithstanding the foregoing, the Company may, at any time, relieve
the Executive of all (but not part) of his duties for a specified
period of time and such action on the part of the Company shall not be
considered a termination of the Executive's employment hereunder.
During any period that the Executive has been relieved of his duties
pursuant to the foregoing sentence, all provisions of this Agreement,
other than the provisions of Section 2 which require the Executive to
actively perform services for the Company, shall continue to remain in
full force and effect. The Company's notice of non-renewal of the
Employment Period at the end of the Initial Term pursuant to Section 1
shall be considered termination by the Company pursuant to this
paragraph 4(b). Termination by the Company without Cause shall include
a termination by the Executive on account of a Constructive Dismissal
as defined in paragraph 4(e), provided such termination occurs within
90 days after the event giving rise to termination for Constructive
Dismissal.
(c) Change in Control. If a Change in Control (as defined in paragraph
4(e)) occurs, the Executive's employment shall automatically terminate
(unless specifically agreed in writing otherwise between the Company
and the Executive) and the Executive shall be entitled to (i) the
payments and benefits to which he would otherwise be entitled under
this Agreement had he continued in employment with the Company until
the fourth anniversary of the Effective Date, and (ii) the
Noncompetition Payments.
(d) Termination for Other Reasons. If the Executive's Termination Date
occurs for any reason other that those specified in the foregoing
provisions of this Section 4, including on
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account of the Executive's death or because the Executive is disabled,
he shall be entitled to the compensation and benefits to the same
extent as if his employment terminated for Cause; provided, however,
that if the Executive's Termination Date occurs on account of death or
disability, Executive shall be entitled to his salary and Bonus, as
described in Exhibit A, to which he would have been entitled had his
employment continued through the last day of the current Employment
Period.
(e) For purposes of this Agreement:
(i) the "Noncompetition Payments" shall mean continuing payments of
the Executive's salary and Bonus and the provisions by the
Company to the Executive of health and disability insurance
coverage (at the Company's cost) for the Noncompetition Period
(as defined in Section 7);
(ii) the term "Change in Control" shall mean:
(A) the completion of a plan of complete liquidation of the
Company which has been approved by the Company's
shareholders;
(B) the sale or disposition by the Company of all or
substantially all of the assets of the Company (or any
transaction having a similar effect);
(C) the consummation of a merger or consolidation of the Company
with any other corporation other than (1) a merger or
consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation
or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction); or
(D) any event which would be generally considered a change of
control in the securities industry in the United States.
(iii) the term "disabled" shall mean the inability of the Executive to
continue to perform his duties under this Agreement on a
full-time basis as a result of mental or physical illness,
sickness or injury for a period of 180 consecutive days; and
(iv) the term "Constructive Dismissal" shall mean:
(A) a material violation by the Company of the terms of this
Agreement, provided that the Company receives written notice
specifying such violation from the Executive and such
violation is not cured within thirty (30) days of receipt of
such written notice;
(B) a failure to pay any portion of the Executive's compensation
that is properly payable to the Executive within 5 days
after such compensation is due and payable; provided, that
such failure shall not constitute grounds for a
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Constructive Dismissal unless the Executive has given
written notice to the Company stating that such failure
constitutes grounds for a Constructive Dismissal hereunder,
and the Company fails to make such payment within 5 days
thereafter; or
(C) a material reduction or change in the Executive's
responsibilities, authority or duties; provided, that such
material reduction or change shall not constitute grounds
for a Constructive Dismissal unless the Executive has given
written notice to the Company stating that such material
reduction or change constitutes grounds for a Constructive
Dismissal hereunder, and such material reduction or change
is not ameliorated within ten (10) days thereafter.
Notwithstanding any other provision of this Agreement, in the event the
Executive's Termination Date occurs under paragraph 4(c) (relating to
termination in connection with a Change in Control), the Executive shall be
bound by the provisions of Section 7 hereof through the fourth anniversary of
the Effective Date and the Executive shall not be entitled to any Noncompetition
Payments for the period beginning on his Termination Date and ending on the
fourth anniversary of the Effective Date. If the Company desires to have a
Noncompetition Period (as defined in Section 7) which extends beyond the fourth
anniversary of the Effective Date, the Executive shall be entitled to
Noncompetition Payments for any portion of the Noncompetition Period which
extends beyond the fourth anniversary of the Effective Date. Notwithstanding any
other provision of this Agreement, the Executive shall automatically cease to be
an officer and/or director of the Company and its affiliates as of his
Termination Date. Except as may be otherwise expressly provided to the contrary
in this Agreement, nothing in this Agreement shall be construed as requiring the
Executive to be treated as employed by the Company following his Termination
Date for purposes of any employee benefit plan or arrangement in which he may
participate at such time.
5. Mitigation and Set-Off. Upon the occurrence of the Executive's
Termination Date, the Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise. The Company shall not be entitled to set off against
the amounts payable to the Executive under this Agreement 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.
6. Confidential Information. The Executive agrees that:
(a) Except as may be required by law, or except to the extent required to
perform the Executive's duties and responsibilities hereunder, or
except to the extent used to enforce the Executive's rights and
remedies hereunder, or except to the extent that the Executive has
express authorization from the Company, he shall keep secret and
confidential indefinitely all non-public confidential information
(including, without limitation, information regarding costs of new
accounts, activity rates of different market niche customers and
advertising results) concerning the Company and its affiliates which
was acquired by or disclosed to the Executive during the course of his
employment with the Company 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.
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(b) Upon his Termination Date or at the Company's earlier request, he will
promptly return to the Company any and all records, documents,
physical property, information, computer disks or other materials
relating to the business of the Company and its affiliates obtained by
him during his course of employment with the Company.
(c) The Executive shall use his reasonable efforts to keep the Company
informed of, and shall execute such reasonable assignments prepared by
the Company or its designee as may be necessary to transfer to the
Company or its affiliates the benefits of, any inventions,
discoveries, improvements, trade secrets, developments, processes, and
procedures made by the Executive, in whole or in part, or conceived by
the Executive either alone or with others, which result from any work
which the Executive may do for or at the request of the Company,
whether or not conceived by the Executive while on holiday, on
vacation, or off the premises of the Company, including such of the
foregoing items conceived during the course of employment which are
developed or perfected after the Executive's termination of
employment. All such assignments shall be without recourse,
representation or indemnity. The Executive shall reasonably assist the
Company or other person nominated by it (all at the Company's
expense), to obtain patents, trademarks and service marks concerning
such inventions and discoveries made by the Executive, and the
Executive agrees to execute all reasonable documents prepared by the
Company or its designee and to take all other reasonable actions (all
at the Company's expense), which are necessary or appropriate to
secure to the Company and its affiliates the benefits thereof. Such
patents, trademarks and service marks shall become the property of the
Company and its affiliates. The Executive shall deliver to the Company
all sketches, drawings, models, figures, plans, outlines, descriptions
or other information of which he has possession or control with
respect thereto.
(d) To the extent that any court or agency seeks to have the Executive
disclose confidential information, he shall use his reasonable efforts
to promptly inform the Company, and he shall take such reasonable
steps (all at the Company's expense), 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 its affiliates that may
be subject to attorney-client privilege as to the Company's attorneys,
the Executive shall take reasonable steps (at the expense of the
Company) to maintain the confidentiality of such information and to
preserve such privilege.
(e) Nothing in the foregoing provisions of this Section 6 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 its affiliates, knowledge which was acquired by him during
the course of his employment with the Company and its affiliates, and
which is generally known to persons of his experience in other
companies in the same industry.
7. Noncompetition. While he is employed by the Company and for the
Noncompetition Period (as defined below), the Executive shall not, without the
express written consent of the Chairman or J. Xxx Xxxxxxxx:
(a) be employed by, serve as a consultant to, or otherwise assist or,
directly or indirectly, provide services to a Competitor (defined
below) if the services that the Executive is to
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provide to the Competitor are the same as, or substantially similar
to, any of the material services that the Executive provided to the
Company or any of its affiliates, and such services are to be provided
with respect to any location in which the Company or any of its
affiliates had material operations during the 12-month period prior to
the Termination Date, or with respect to any location in which the
Company or any of its affiliates had devoted material resources to
establishing operations during the 12-month period prior to the
Termination Date. 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 and direct supervisory
responsibilities with respect to the provision of such services;
(b) solicit or attempt to solicit any customer or supplier of the Company
or any of its affiliates for the purpose of causing such party to
cease doing business with the Company or any of its affiliates;
provided that the restriction in this paragraph (b) shall not apply to
any activity on behalf of a business that is not a Competitor;
(c) knowingly solicit, entice, persuade or induce any individual employed
by the Company or any of its affiliates 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 affiliates 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; or
(d) directly or indirectly own an equity interest in any Competitor (other
than ownership of 4% 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 its affiliates was engaged during the Executive's employment with the
Company; provided, however, that for periods after the Termination Date, a
Competitor shall include only those entities that were engaged in competitive
activities during the 12-month period prior to the Termination Date. For
purposes of this Agreement, the "Noncompetition Period" shall be the period
commencing on the Termination Date and ending on the date specified by the
Company at the Termination Date, which date the Executive hereby agrees to in
consideration of the Noncompetition Payments for the Noncompetition Period;
provided, however, that in the event the Executive's employment is terminated in
accordance with paragraph 4(c) (relating to termination in connection with a
Change in Control), the Noncompetition Period shall not commence until the
fourth anniversary of the Effective Date. Nothing in this Section 7 or Section 6
shall be construed as limiting the Executive's duty of loyalty to the Company
and its affiliates, or any other duty he may otherwise have to the Company and
its affiliates, while he is employed by the Company. Nothing in Section 6 or 7
shall be construed to adversely affect the rights that the Company would possess
in the absence of the provisions of such Sections. For the avoidance of doubt,
to the extent that the Executive is prohibited or otherwise limited from
engaging in any activity referred to in paragraphs 7(a) through 7(d) above, the
Executive shall not be so prohibited or limited unless he receives, while so
prohibited or limited, either the continued payments described in paragraph
4(c)(i) or the Noncompetition Payments.
8. Equitable Remedies. The Executive acknowledges that the Company
would be irreparably injured by a violation of Section 6 or 7 and agrees that
the Company, in addition to other remedies
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available to it for such breach or threatened breach, shall be entitled to a
preliminary injunction, temporary restraining order, other equivalent relief,
restraining the Executive from any actual or threatened breach of Section 6 or
7.
9. Defense of Claims. The Executive agrees that, on and after the
Effective Date, he will use his reasonable efforts to cooperate with the Company
and its affiliates in the defense of any claims that may be made against the
Company or its affiliates to the extent that such claims may relate to services
performed by him for the Company. To the extent travel is required to comply
with the requirements of this Section 9, the Company, shall to the extent
possible, provide the Executive with notice at least 10 days prior to the date
on which such travel would be required and the Company agrees to reimburse the
Executive for all of his reasonable actual expenses associated with such travel
or, upon the Executive's request, advance the estimated cost of such travel to
the Executive.
10. Notices. Notices provided for in this Agreement shall be in writing
and shall be deemed to have been duly received when delivered in person or sent
by facsimile transmission, on the first business day after it is sent by air
express courier service or on the second business day following deposit in the
United States registered or certified mail, return receipt requested, postage
prepaid and addressed, in the case of the Company to the following address:
Ameritrade Holding Corporation
0000 Xxxxx 000xx Xxxxxx
X.X. Xxx 0000
Xxxxx, Xxxxxxxx 00000-0000
Attention: J. Xxx Xxxxxxxx
or to the Executive:
Xxxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
with copies to
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that a notice of change of address shall be
effective only upon actual receipt.
11. Withholding. All compensation payable under this Agreement shall be
subject to legally required withholding taxes and other employment taxes as
required with respect to compensation paid by the Company to the Executive and
the amount of such required withholding shall be deducted from such compensation
payable hereunder. The Company shall have no obligation to make any additional
payments to the Executive or to make the Executive whole for the amount of any
required withholding taxes.
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12. 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 otherwise expressly provided in this Section 12, 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 within 30 days of the
appointment of the second arbitrator, then the third arbitrator shall be
appointed by the Association.
13. Successors. This Agreement shall be binding on, and inure to the
benefit of (a) the Company and its successors and assigns and any person
acquiring, whether by merger, reorganization, consolidation, by purchase of
assets or otherwise, all or substantially all of the assets of the Company, and
(b) the Executive and his heirs and legal representatives; provided, however,
that the services of the Executive are personal and may be provided only by him.
14. Waiver of Breach. The waiver by either the Company or the Executive
of a breach of any provision of this Agreement shall not operate as or be deemed
a waiver of any subsequent breach by either the Company or the Executive.
Continuation of payments hereunder by the Company following a breach by the
Executive of any provision of this Agreement shall not preclude the Company from
thereafter terminating said payments based upon the same violation.
15. Severability. It is mutually agreed and understood by the parties
that should any of the agreements and covenants contained herein be determined
by any court of competent jurisdiction to be invalid by virtue of being vague or
unreasonable, including but not limited to the provisions of Section 6 or 7,
then the parties hereto consent that this Agreement shall be amended retroactive
to the date of its execution to include the terms and conditions said court
deems to be reasonable and in conformity with the original intent of the parties
and the parties hereto consent that under such circumstances, said court shall
have the power and authority to determine what is reasonable and in conformity
with the original intent of the parties to the extent that said covenants and/or
agreements are enforceable.
16. Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Nebraska, except that all provisions relating to Stock
Options and the Company's securities shall be construed in accordance with the
laws of the State of Delaware.
17. Amendment. This Agreement may be amended or cancelled by mutual
agreement of the parties in writing without the consent of any other person.
18. Survival of Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of this Agreement or the Executive's employment with the
Company.
19. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a copy hereof containing multiple signature
pages, each signed by one party hereto, but together signed by both of the
parties hereto.
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20. Indemnification. Each party shall indemnify the other party against
any loss, cost or damages (including reasonable attorney's fees but excluding
consequential damages) incurred as a result of such party's breach of any
representation, warranty, covenant or agreement in this Agreement, or incurred
as a result of the enforcement of this indemnity.
21. Other Agreements. This Agreement constitutes the sole and complete
Agreement between the Company and the Executive and supersedes all other
agreements (other than those entered into contemporaneously with this
Agreement), both oral and written, between the Company and the Executive with
respect to the matters contained herein including, without limitation any
severance agreements or arrangements between the parties. No verbal or other
statements, inducements, or representations have been made to or relied upon by
the Executive. The parties have read and understand this Agreement.
22. Incentive Plan. Notwithstanding anything in this Agreement to the
contrary, the Company's Incentive Plan (as defined in Exhibit A) shall be
promptly amended to accommodate this Agreement (including Exhibit A).
23. Strike Price. In the event of a Change of Control, the option price
for the Accelerated Options shall be 80% of the Fair Market Value on the date a
letter of intent or agreement is signed, as long as such letter of intent or
agreement is signed before the second anniversary of the Effective Date.
Dated as of the date set forth above.
AMERITRADE HOLDING CORPORATION
By: /s/ J. Xxx Xxxxxxxx
--------------------------------------
Its: Chairman of the Board of Directors
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
XXXXXX X. XXXXXX
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Exhibit A
COMPENSATION
1. Salary - The Executive shall be paid a salary at the rate
of $600,000 per annum (payable at the same times
the other senior executives are paid their
salaries, but not less frequently than every
other week).
2. Bonus - The Executive shall be entitled to a bonus in
the minimum amount of $600,000 per annum (the
"Bonus") and an additional bonus in a maximum
amount of $300,000 (the "Performance Bonus"),
such Performance Bonus being subject to
satisfaction of applicable performance criteria
established by Board of Directors of the Company
(the "Board") and communicated to the Executive.
In no event shall the sum of the Bonus and the
Performance Bonus exceed $900,000 per annum. The
Bonus shall be payable on each anniversary of
the Effective Date and the Performance Bonus, if
any, shall be payable on or as soon as
practicable after each anniversary of the
Effective Date.
3. Signing Bonus - On or as soon as practicable after the first day
of the Employment Period, the Executive shall
receive a one-time signing bonus equal to $1.3
million.
4. D&O Insurance - 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.
Notwithstanding anything herein to the contrary,
all such directors and officers liability
insurance (and the indemnification provided in
Section 5 below) shall cover acts and omissions
of the Executive during the Employment Period,
and shall continue in effect and cover all
claims made after the Executive's Termination
Date with respect to such acts and omissions,
regardless of the reason for such termination,
subject to the terms and conditions of such
insurance coverage.
5. Indemnification - The Executive shall be eligible for
indemnification by the Company to the fullest
extent permitted under the Company by-laws as in
effect on the Effective Date. The Company agrees
that it shall not take any action that would
impair the Executive's rights to indemnification
under the Company by-laws, as in effect as of
the Effective Date. This provision shall survive
the Termination Date.
6. Vacation - The Executive shall be entitled to paid
vacations in accordance with the applicable
policy of the Company for its senior level
executives as in effect from time to time.
7. Employee Benefits - The Executive shall be entitled to participate
in all employee pension and welfare benefit
plans and programs made available to the
Company's senior
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level executives or to its employees generally,
subject to the terms and conditions of such
plans or programs 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 plans or programs, whether
funded or unfunded. The Company, however, shall
not be required to provide benefits under this
paragraph 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 herein, to the extent reasonably
determined to be necessary or appropriate by the
Company or as required under the terms of the
applicable plan or program.
8. Relocation Costs - The Company will promptly reimburse the
Executive for the reasonable costs, fees and
expenses of his family's relocation from the New
York metropolitan area to the Omaha, Nebraska
area. Subject to the preceding sentence, the
Company will reimburse the Executive for realtor
fees incurred by the Executive in the sale of
the Executive's present residence, other
reasonable closing costs associated with that
sale and the purchase of a new residence in
Nebraska, reasonable expenses associated with
packing and moving of household goods, and
reasonable costs incurred in connection with two
househunting trips for the Executive and his
spouse, which trips may include the Executive's
children, and other costs, fees and expenses
associated with the move relative to him and his
family.
9. Options - The Executive will be awarded stock options
("Stock Options") under the Ameritrade Holding
Corporation 1996 Long-Term Incentive Plan (the
"Incentive Plan") in accordance with the
following:
(a) On or before the Effective Date, the
Executive will be awarded stock options
("Initial Stock Options") with respect
that number of shares of common stock of
the Company ("Common Stock") which is
equal to 1 percent of the number of then
outstanding shares of Common Stock. The
Initial Stock Options shall be granted
with an exercise price equal to the Fair
Market Value (as defined in the Incentive
Plan) of a share of Common Stock on the
Effective Date, shall vest pro-rata (on a
daily basis) over a two year period
beginning on the Effective Date (subject
to earlier vesting as provided in Section
4 of the Agreement), shall be for a term
of 10 years and, once vested, shall be
exercisable for the balance of the 10 year
term.
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(b) If the Executive is employed by the
Company as of the first day of the
Subsequent Term, upon the first day of the
Subsequent Term the Executive will be
awarded stock options ("Subsequent Stock
Options") with respect that number of
shares of Common Stock which is equal to 2
percent of the number of then outstanding
shares of Common Stock. The Subsequent
Stock Options shall be granted with an
exercise price equal to the Fair Market
Value (as defined in the Incentive Plan)
of a share of Common Stock on the second
anniversary of the Effective Date, shall
vest pro-rata (on a daily basis) over a
two year period beginning on the first day
of the Subsequent Term (subject to earlier
vesting as provided in Section 4 of the
Agreement), shall be for a term of 10
years and once vested shall be exercisable
for the balance of the 10 year term. The
Executive shall not have a right to an
award of Subsequent Stock Options if he
receives an award of Change in Control
Options as described in paragraph (c).
(c) Notwithstanding the provisions of
paragraph (b), if a Change in Control
occurs prior to the second anniversary of
the Effective Date, while the Executive is
employed by the Company and before any
notice of termination or non-renewal has
been given from one party to the other, or
if the Executive's Termination Date occurs
under paragraph 4(b) of the Agreement
(relating to termination by the Company
for reasons other than Cause) the
Executive shall be awarded stock options
("Accelerated Options") which, in all
respects are the same as the Subsequent
Stock Options that would have been awarded
to him pursuant to paragraph (b);
provided, however, that the Accelerated
Options shall be granted as of the date of
the Change in Control or the Termination
Date, as applicable with an exercise price
equal to 80 percent of the Fair Market
Value (as defined in the Incentive Plan)
of a share of Common Stock on the date of
grant. If the Executive is awarded
Accelerated Options, his right to an award
of the Subsequent Stock Options shall be
without force and effect.
10. Deferred Compensation Plan - The Company agrees to pay to the Executive
$15.55 million in accordance with the
provisions of the Deferred Compensation
Plan (the "Ameritrade Holding Corporation
Deferred Compensation Plan"), attached
hereto as Exhibit B.
(i) The Account under the Deferred
Compensation Plan (as defined in
Exhibit B) will vest upon the second
anniversary of the Effective Date, or
if earlier, upon a Change in Control
or earlier, as provided in Section 4
of the Agreement (the date of vesting
being referred to herein as the
"Vesting Date").
(ii) As defined and administered in
Exhibit B.
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EXHIBIT B
AMERITRADE HOLDING CORPORATION DEFERRED COMPENSATION PLAN
The Company Deferred Compensation Plan is effective as of March 1, 2001.
1. DEFINITIONS. When used herein, the following terms have the following
meanings:
"Account" means the bookkeeping account established and maintained by the
Company for the Participant.
"Account Balance" means the total amount credited to the Participant's Account
at any time.
"Accounting Date" means the last day of each calendar quarter or such other date
that the Committee may designate.
"Affiliate" means any company controlling, controlled by, or under common
control with, the Company.
"Beneficiary" means the beneficiary or beneficiaries designated by the
Participant in accordance with Section 9.
"Board of Directors" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board of Directors.
"Employment Agreement" means that certain employment agreement between the
Participant and the Company, as amended and restated as of the Effective Date.
"Investment Option" means investment alternatives made available from time to
time by the Committee for the deemed investment of the Participant's Account
Balance.
"Plan" means the Deferred Compensation Plan as set forth herein and as amended
from time to time.
"Plan Year" means the 12-month period commencing each January 1 and ending on
December 31.
2. PARTICIPATION. The Executive shall participate in the Plan, beginning as of
the Effective Date, and no other person shall be entitled to participate in
the Plan.
3. CREDITS TO ACCOUNT. The following amounts shall be credited from time to
time to the Account of the Executive:
(i) As of the Effective Date, the Deferred Compensation Account shall be
credited with the principal sum of $15,550,000; and
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(ii) Any other amount of salary, bonus or other incentive compensation
otherwise payable to the Executive that has BEEN directed by the Board
of Directors and the Committee to become part of the plan.
(iii) Adjustment of Account pursuant to Section 4 below.
4. INVESTMENT AND ADJUSTMENT OF ACCOUNT
4.1 Investment. Amounts which are credited to the Executive's Account under
this Plan shall be deemed to be invested in and among the Investment
Options as elected in writing from time to time by the Executive. The
Executive may elect to change his deemed investment election no more than
once per calendar quarter (effective for future calendar quarters) by
written notice from the Executive to the Company no less than two weeks
prior to the beginning of the calendar quarter for which the change will be
effective (or otherwise in accordance with the procedures established from
time to time by the Committee). The Investment Options shall be determined
and communicated to the Executive by the Committee; provided, however, that
the Investment Options may not be changed retroactively.
4.2 Adjustment of Account. As of each Accounting Date the Executive's Account
(a) shall be credited with amounts which are to be credited to such Account
since the last Accounting Date in accordance with Section 3, (b) shall be
debited with any distribution from the Account since the last Accounting
Date in such quarter, and (c) shall be credited with earnings (or debited
for losses) since the last Accounting Date based on the performance of the
Investment Option or Options to which the Executive's Account has been
allocated for that calendar quarter. For purposes of determining the amount
to be credited under paragraph (c), credits to the Executive's Account
pursuant to Section 3 shall be credited or debited as of the date specified
by the Board of Directors or Committee and such amounts shall share in
earnings and losses from the date as of which the contribution is to be
credited and no earnings or losses shall be credited or charged with
respect to the amount of any distribution for periods after the Termination
Date. The Committee may change the date as of which adjustments are to be
made to the Account; provided, however, that in no event shall such
adjustments be made less frequently than quarterly.
5. PAYMENT
5.1 Distribution of Account Balance. Except as otherwise provided in this
Section 5, the Executive's Account Balance shall be paid to the Executive
in accordance with his election pursuant to Section 5.3 hereof, either:
(a) in a single cash lump sum as soon as practicable after the Executive's
Termination Date;
(b) or in annual, monthly or quarterly cash installments for a period of up to
ten years following the Executive's Termination Date, as elected by the
Executive in accordance with the provisions of Section 5.2.
(c) In the event the Executive elects installment distributions pursuant to
paragraph (b), the first such installment shall be payable as soon as
practicable following the Executive's Termination Date and the amount of
each installment shall be determined by dividing the Executive's Account
Balance
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under the Plan as of Termination Date by the number of installments
remaining to be paid (including the then current installment).
5.2 Election. The Executive may elect to have his Account Balance distributed
in accordance with any one of the distribution alternatives set forth in
Section 5.1. Such an election must be made in the form designated by the
Committee from time to time, must be made no later than July 1, 2001 and
shall be irrevocable once filed with the Company; provided, however, that
the Executive may file a new election as to the form of payment if such
election is filed at least twelve months in advance of the Executive's
Termination Date. In the absence of timely election by the Executive
pursuant to this Section 5.3, the Executive shall be deemed to have elected
distribution in accordance with paragraph 5.2(a).
5.3 Beneficiary Payments. Upon the death of the Executive, the Executive's then
remaining Account Balance shall be paid in a single lump sum to the
Executive's Beneficiary as soon as practicable following the Executive's
death.
6. SOURCE OF PAYMENT
6.1 All payments provided for under the Plan shall be paid in cash from the
general funds of the Company. To the extent that the Executive or any
Beneficiary acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of unsecured
creditor of the Company.
7. ADMINISTRATION AND INTERPRETATION OF THE PLAN
7.1 Committee. The Plan shall be administered by the Committee. The Committee
shall have full discretion, power and authority to interpret, construe and
administer the Plan, to provide for claims review procedures, and to review
claims for benefits under the Plan. The Committee's interpretations and
constructions of the Plan and the action taken thereunder by the Committee
shall be binding and conclusive on all persons and for all purposes.
7.2 Advisors. The Committee shall establish and maintain Plan records and may
arrange for the engagement of such accounting, actuarial or legal advisors,
who may be advisors to the Company, and make use of such agents and
clerical or other personnel as it shall require or may deem advisable for
purposes of the Plan. The Committee may rely upon the written opinion of
such advisors engaged by the Committee. The Committee may appoint a
subcommittee to assist it in carrying out its administrative duties under
the Plan.
8. AMENDMENT AND TERMINATION
8.1 Amendment and Termination. The Plan may be amended, suspended or terminated
in whole or in part, by the Board of Directors, but no such action shall
retroactively impair or otherwise adversely affect the rights of any person
to benefits under the Plan which have accrued prior to the date of such
action, as determined by the Board of Directors.
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9. DESIGNATION OF BENEFICIARIES
9.1 Beneficiary Designation. The Executive shall file with the Company a
written designation of one or more persons or trusts as the Beneficiary who
shall be entitled to receive the amount, if any, payable under the Plan
upon his death. The Executive may, from time to time, revoke or change his
Beneficiary designation without the consent of any prior Beneficiary by
filling new designation with the Company. The last such designation
received by the Company shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Company prior to the Executive's death, and in no event
shall it be effective as of a date prior to such receipt.
9.2 Estate. If no such Beneficiary designation is in effect at the time of the
Executive's death, or if no designated Beneficiary survives the Executive,
or if such designation conflicts with law, the Executive's estate shall be
deemed to have been designated his Beneficiary and shall receive the
payment of the amount, if any, payable under the Plan upon his death. If
the Committee is in doubt as to the right of any person to receive such
amount, the Committee may pay such amount into any court of appropriate
jurisdiction and such payment shall be complete discharge of the liability
of the Plan and the Company therefor.
10. GENERAL PROVISIONS
10.1 No Right of Employment. Neither the Plan nor any action taken hereunder
shall be construed as giving to the Executive the right to be retained in
the employ of the Company or any of its Affiliates or as affected in the
right of the Company or such Affiliate to dismiss the Executive for any
reason.
10.2 Not Assignable. No right to any amount payable at any time under the Plan
may be assigned, transferred, pledged, or encumbered, either voluntarily or
by operation of law, except as provided expressly herein as to payments to
a Beneficiary or as may otherwise be required by law.
10.4 Captions. The captions preceding the sections and articles hereof have been
inserted solely as a matter of convenience and in no way define or limit
the scope or intent of any provisions of the Plan.
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