TD AMERITRADE HOLDING
CORPORATION
ELLEN L.S. KOPLOW EMPLOYMENT
AGREEMENT
This Agreement is
entered into as of September 26, 2006, by and between TD
Ameritrade Holding Corporation (the “Company”) and
Ellen L.S. Koplow (“Executive”).
1. Duties
and Scope of Employment .
(a)
Positions and Duties . As of September 26, 2006 (the
“Effective Date”), Executive serves, and will continue
to serve, as Executive Vice President, General Counsel and
Secretary, reporting to the Company’s Chief Executive Officer
(the “CEO”). Executive will render such business and
professional services in the performance of her duties, consistent
with Executive’s position within the Company, as will
reasonably be assigned to her by the CEO. The period Executive is
employed by the Company under this Agreement is referred to herein
as the “Employment Term”.
(b)
Obligations . During the Employment Term, Executive will
devote Executive’s full business efforts and time to the
Company and will use good faith efforts to discharge
Executive’s obligations under this Agreement to the best of
Executive’s ability and in accordance with each of the
Company’s corporate guidance and ethics guidelines, conflict
of interests policies and code of conduct. For the duration of the
Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity for any direct
or indirect remuneration without the prior approval of the
applicable committee of the Board of Directors (the
“Board”) or the CEO (which approval will not be
unreasonably withheld); provided, however, that Executive may,
without the approval of the Board, serve in any capacity with any
civic, educational, or charitable organization, provided such
services do not interfere with Executive’s obligations to
Company.
(i) Executive
hereby represents and warrants to the Company that Executive is not
party to any contract, understanding, agreement or policy, written
or otherwise, that would be breached by Executive’s entering
into, or performing services under, this Agreement. Executive
further represents that he has disclosed to the Company in writing
all threatened, pending, or actual claims that are unresolved and
still outstanding as of the Effective Date, in each case, against
Executive of which he is aware, if any, as a result of her
employment with her current employer (or any other previous
employer) or her membership on any boards of directors.
(c)
Other Entities . Executive agrees to serve, if requested and
without additional compensation, as an officer and director for
each of the Company’s subsidiaries, partnerships, joint
ventures, limited liability companies and other affiliates,
including entities in which the Company has a significant
investment as determined by the Company. As used in this Agreement,
the term “affiliates” will include any entity
controlled by, controlling, or under common control of the
Company.
2.
At-Will Employment . Executive and the Company agree that
Executive’s employment with the Company constitutes
“at-will” employment. Executive and the
Company
acknowledge
that this employment relationship may be terminated at any time,
upon written notice to the other party, with or without good cause
or for any or no cause, at the option either of the Company or
Executive. However, as described in this Agreement, Executive may
be entitled to severance benefits depending upon the circumstances
of Executive’s termination of employment.
3. Term
of Agreement . This Agreement will have an initial term of
three (3) years commencing on the Effective Date (the
“Initial Term”). On the third anniversary of the
Effective Date, this Agreement automatically will renew for an
additional one (1) year term (the “Additional
Term”) unless either party provides the other party with
written notice of non-renewal at least sixty (60) days prior
to the date of automatic renewal. Following the Additional Term,
the Agreement will renew for an additional one (1) year term
upon the mutual consent of Executive and the Company.
(a)
Base Salary . Subject to periodic review by the Board, the
Company will pay Executive an annual salary of $300,000 as
compensation for her services (such annual salary, as is then
effective, to be referred to herein as “Base Salary”).
The Base Salary will be paid periodically in accordance with the
Company’s normal payroll practices and be subject to the
usual, required withholdings.
(b)
Annual Incentive . With respect to each full fiscal year
during the Employment Term, Executive will be eligible to
participate in the Ameritrade Holding Corporation Management
Incentive Plan (“MIP”), pursuant to which Executive
will be eligible to earn an annual incentive award (the
“Annual Incentive”) based upon the achievement of
applicable performance criteria established by the Board within the
first ninety (90) days of each fiscal year during the
Employment Term and communicated to Executive. Each Annual
Incentive will have a target value of $350,000 (the
“Target”).
(c)
Equity Awards . During the Employment Term, Executive will
be eligible to participate in the Ameritrade Holding Corporation
1996 Long-Term Incentive Plan (the “LTIP”).
(i)
Special Grant . On March 10, 2006, Executive was
granted a special award under the LTIP of 34,832 performance
restricted share units (the “Special Grant”). The
Special Grant will be scheduled to vest and be settled in
accordance with the performance criteria and vesting schedule set
forth on Exhibit B of the applicable Special Grant
Award Agreement.
(ii)
Annual Award . With respect to each full fiscal year during
the Employment Term, Executive will be eligible for an award under
the LTIP of performance restricted share units with a target value,
determined by the Company pursuant to a reasonable and uniform
methodology, equal to $150,000 on the date of grant (the
“Annual Award”), and will be scheduled to vest and be
settled in accordance with the applicable performance criteria and
vesting schedule provided in the applicable Award
Agreement.
5.
Employee Benefits . Executive will be eligible to
participate in accordance with the terms of all Company employee
benefit plans, policies and arrangements that are applicable to
other executive officers of the Company, as such plans, policies
and arrangements may exist from time to time.
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6.
Expenses . The Company will reimburse Executive for
reasonable travel, entertainment and other expenses incurred by
Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the
Company’s expense reimbursement policy as in effect from time
to time.
7.
Termination of Employment . In the event Executive’s
employment with the Company terminates for any reason, Executive
will be entitled to any (a) unpaid Base Salary accrued up to
the effective date of termination, (b) unpaid, but earned and
accrued Annual Incentive for any completed fiscal year as of her
termination of employment, (c) pay for accrued but unused
vacation that the Company is legally obligated to pay Executive,
(d) benefits or compensation as provided under the terms of
any employee benefit and compensation agreements or plans
applicable to Executive, (e) unreimbursed business expenses
required to be reimbursed to Executive, and (f) rights to
indemnification Executive may have under the Company’s
Articles of Incorporation, Bylaws, the Agreement, or separate
indemnification agreement, as applicable. In addition, if the
termination is by the Company without Cause or if Executive resigns
for Good Reason, Executive will be entitled to the amounts and
benefits specified in Section 8.
(a)
Termination Without Cause or Resignation for Good Reason .
If during the Employment Term Executive’s employment is
terminated by the Company without Cause or if Executive resigns for
Good Reason, then, subject to Sections 9 and 10, Executive
will receive: (i) continued payment of Base Salary for two
(2) years in accordance with the Company’s normal
payroll policies; (ii) continued payment of Executive’s
Annual Incentive at the target level applicable during the year of
Executive’s termination for a period of time equal to two
(2) years in accordance with the Company’s normal
payroll policies, (iii) the current year’s Annual
Incentive pro-rated to the date of termination, with such pro-rated
amount to be calculated by multiplying the current year’s
target incentive compensation by a fraction with a numerator equal
to the number of days between the start of the current fiscal year
and the date of termination and a denominator equal to 365,
(iv) for a period of two (2) years, if the Executive or
any of her dependents is eligible for and elects COBRA continuation
coverage (as described in Section 4980B of the Internal
Revenue Code of 1986, as amended (the “Code”)) under
any Company group medical or dental plan, Executive will not be
charged any premiums for such coverage; provided, however,
Executive will be responsible for any income tax due with respect
to such premiums, and (v) performance restricted share units
granted under the LTIP as part of any Annual Awards or the Special
Grant which would have become vested within two (2) years of
the end of the calendar year of such termination will be considered
earned and vested and such vested shares will be settled according
to the original vesting schedule as set forth in the Award
Agreement.
(b)
Termination due to Death or Disability . In the event of a
termination of Executive’s employment during the Employment
Term due to death or Disability, then, subject to Sections 9
and 10, Executive, or Executive’s estate as applicable, will
be entitled to receive the current year’s Annual Incentive
pro-rated to the date of termination, with such pro-rated amount to
be calculated by multiplying the current year’s target
incentive compensation by a fraction with a numerator equal to the
number of days between the start of the current fiscal year and the
date of termination and a denominator equal to 365.
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9.
Release of Claims; Non-solicitation and Non-competition;
Conditions to Receipt of Severance; No Duty to Mitigate
.
(a)
Separation Agreement and Release of Claims . The receipt of
any severance pursuant to Section 8 will be subject to
Executive signing and not revoking a separation and release of
claims agreement in substantially the form attached as
Exhibit A , but with any appropriate reasonable
modifications, reflecting changes in applicable law, as is
necessary to provide the Company with the protection it would have
if the release were executed as of the Effective Date. No severance
will be paid or provided until the separation agreement and release
agreement becomes effective. The Company agrees that it will
execute and deliver to Executive said separation and release of
claims agreement no later than eight (8) days after it
receives a copy of such agreement executed by Executive. Company
agrees that it will be bound by such separation and release of
claims agreement and that same will become effective from and after
the “Effective Date” thereof (as defined in
Section 28 of such separation and release of claims
agreement), even if Company fails or refuses to execute and deliver
same to Executive.
(b)
Non-solicitation and Non-competition . During the Employment
Term and the Restricted Period (and with respect to the Restricted
Period, only as permitted by applicable law and the Maryland Rules
of Professional Conduct, or such other applicable rules of ethical
conduct in effect in any other State under which the Executive
might be, or might become, authorized to practice law), the
Executive will not (without the written consent of the CEO) engage
or participate in any business within any state in the United
States where the Company conducts business (as an owner, partner,
stockholder, holder of any other equity interest, or financially as
an investor or lender, or in any capacity calling for the rendition
of personal services or acts of management, operation or control)
which is engaged in any activities and for any business competitive
with any of the primary businesses conducted by the Company or any
of its Affiliates (as defined below). For purposes of this
Agreement, the term “primary businesses” is defined as
an on-line brokerage business, including active trader and long
term investor client segments, and also includes any such other
business formally proposed (and considered at a meeting of the
Board) to be conducted by the Company or any of its Affiliates
during the twelve (12) month period prior to the date of
termination (collectively a “Competitive Business”).
Provided that this restriction will not restrict Executive from
being employed by or consulting with a business, firm, corporation,
partnership or other entity that owns or operates an on-line
brokerage, provided that (i) the on-line brokerage business is
de minimis as compared to its core business in terms of
revenue and/or resources, and (ii) Executive’s
involvement with the company excludes, directly or indirectly, the
on-line brokerage business during the Restriction Period.
Notwithstanding the foregoing, Executive may (i) own
securities of a Competitive Business so long as the securities of
such corporation or other entity are listed on a national
securities exchange or on the NASDAQ National Market and the
securities owned directly or indirectly by Executive do not
represent more than 2% of the outstanding securities of such
corporation or other entity; and (ii) during the Restricted
Period, practice law as an attorney in private practice (e.g., as
an attorney affiliated with a law firm or as a solo practitioner)
so long as Executive agrees, to the extent permitted by applicable
law and the Maryland Rules of Professional Conduct, or such other
applicable rules of ethical conduct in effect in any other State
under which the Executive might be, or might become, authorized to
practice law), to not provide legal advice or any assistance of any
nature to any Competitive Business;
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(i) During
the Restricted Period, neither Executive, nor any business in which
Executive may engage or participate in, will directly or
indirectly, (A) knowingly induce any customer or vendor of the
Company or of corporations or businesses which directly or
indirectly are controlled by the Company (collectively, the
“Affiliates”) to patronize any Competitive Business;
(B) knowingly request or advise any customer or vendor to
withdraw, curtail or cancel such customer’s or vendor’s
business with the Company or any of its Affiliates; or
(C) compete with the Company or any of its Affiliates in
merging with or acquiring any other company or business (whether by
a purchase of stock or other equity interests, or a purchase of
assets or otherwise) which is a Competitive Business;
(ii) During
the Restricted Period, neither Executive nor any business in which
Executive may engage or participate in will (A) knowingly
hire, solicit for hire or attempt to hire any employee of the
Company or any of its Affiliates, or (B) encourage any
employee of the Company or any of its Affiliates to terminate such
employment. For purposes of this Agreement, “employee”
means current employees as well as anyone employed by the Company
or any of its Affiliates within the prior six (6) months from
Executive’s date of termination; provided, however, that this
provision will not preclude any business in which Executive may
engage or participate in from soliciting any such employee by means
of or hiring any such employee who responds to a public
announcement placed by the business as long as Executive otherwise
complies with subsections (A) and (B) above;
and
(iii) In
the event that any of the provisions of this Section should ever be
deemed to exceed the time, geographic or occupational limitations
permitted by applicable laws, then such provisions will and are
hereby reformed to the maximum time, geographic or occupational
limitations permitted by applicable law.
(c)
Nondisparagement . During the Employment Term and Restricted
Period, Executive will not knowingly disparage, criticize, or
otherwise make any derogatory statements regarding the Company, its
directors, or its officers. The Company will instruct its officers
and directors to not knowingly disparage, criticize, or otherwise
make any derogatory statements regarding Executive during the
Employment Term and Restricted Period. Notwithstanding the
foregoing, nothing contained in this agreement will be deemed to
restrict Executive, the Company or any of the Company’s
current or former officers and/or directors from providing
information to any governmental or regulatory agency (or in any way
limit the content of any such information) to the extent they are
requested or required to provide such information pursuant to
applicable law or regulation.
(d)
Other Requirements . Executive’s initial receipt of
severance and/or the receipt of continued severance payments will
be subject to Executive complying with the terms and provisions of
Sections 9 and 10. Executive will not be obligated to comply
with Section 9 of this Agreement while the Company is in
material default of its payment and reimbursement obligations under
Sections 7, 8, or 10 of this Agreement. Notwithstanding the
foregoing, the Company will not be considered to be in default of
its payments and reimbursement obligations unless Executive
provides written notice to the Board setting forth her reasons why
he believes the Company is in default and giving the Company
fifteen (15) days to cure such default, if any.
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(e)
No Duty to Mitigate . Executive will not be required to
mitigate the amount of any payment or consideration contemplated by
this Agreement, nor will any earnings that Executive may receive
from any other source reduce any such payment or
consideration.
10.
Confidential Information and Intellectual Property
.
(a) Except
as may be required by law, or except to the extent required to
perform Executive’s duties and responsibilities hereunder,
Executive will keep secret and confidential indefinitely all
non-public confidential information (including, without limitation,
information regarding cost of new accounts, activity rates of
different market niche customers, advertising results, technology
(hardware and software), architecture, discoveries, processes,
algorithms, maskworks, strategies, intellectual properties,
customer lists and other customer information) concerning any of
the Company and its affiliates which was acquired by or disclosed
to Executive during the course of Executive’s employment with
the Company (“Confidential Information”) and not use in
any manner or disclose the same, either directly or indirectly, to
any other person, firm or business entity.
(b) At
the end of the Employment Term (whether by expiration or
termination) or at the Company’s earlier request, Executive
will promptly return to the Company any and all records, documents,
physical property, information, computer disks, drives or other
materials relative to the business of any of the Company and its
affiliates obtained by Executive during the course of her
employment with the Company and not keep any copies
thereof.
(c) Executive
acknowledges and agrees that all right, title and interest in
inventions, discoveries, improvements, trade secrets, developments,
processes and procedures made by Executive, in whole or in part, or
conceived by Executive either alone or with others, when employed
by the Company, including such of the foregoing items conceived
during the course of employment which are developed or perfected
after Executive’s termination of employment, are owned by the
Company (“Company IP”). Executive assigns any and all
right, title and interest he may have to Company IP to the Company
and will promptly assist the Company or its designee, at the
Company’s expense, to obtain patents, trademarks, copyrights
and service marks concerning Company IP made by Executive and
Executive will promptly execute all reasonable documents prepared
by the Company or its designee and take all other reasonable
actions which are necessary or appropriate to secure to the Company
and its affiliates the benefits of Company IP. Such patents,
trademarks, copyrights and service marks will at all times be the
property of the Company and its affiliates. Executive promptly will
keep the Company informed of, and promptly will execute such
assignments prepared by the Company or its designee as may be
necessary to transfer to the Company or its affiliates the benefits
of, any Company IP.
(d) To
the extent that any court or agency seeks to require Executive to
disclose Confidential Information, Executive promptly will inform
the Company and take reasonable steps to endeavor to prevent the
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
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, Executive will promptly inform
the Company and take reasonable steps to endeavor to maintain the
confidentiality of such information and to preserve such
privilege.
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(e) Confidential
Information does not include information already in the public
domain or information which has been released to the public by the
Company. Nothing in this Section 10 will be construed so as to
prevent Executive from using, in connection with her employment for
himself or an employer other than the Company, knowledge which was
acquired by him during the course of her employment with the
Company and which is generally known to persons of her experience
in other companies in the same industry. Subject to
Section 10(d), Executive will be permitted to disclose
Confidential Information if required by a subpoena or court or
administrative order.
(f) The
receipt of any severance pursuant to Section 8 will be subject
to Executive complying with the terms of this
Section 10.
11.
Excise Taxes . In the event that the benefits provided for
in this Agreement constitute “parachute payments”
within the meaning of Section 280G of the Code and will be
subject to the excise tax imposed by Section 4999 of the Code
(the “Excise Tax”), then Executive’s severance
benefits payable under the terms of this Agreement will be either
(i) delivered in full, or (ii) delivered as to such
lesser extent which would result in no portion of such severance
benefits being subject to the Excise Tax, whichever of the
foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the
receipt by Executive on an after-tax basis, of the greatest amount
of severance benefits, notwithstanding that all or some portion of
such severance benefits may be taxable under Section 4999 of
the Code. Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 11 will
be made in writing by the Company’s independent public
accountants (the “Accountants”), whose determination
will be conclusive and binding upon Executive and the Company for
all purposes. For purposes of making the calculations required by
this
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