SEPARATION AGREEMENT, GENERAL RELEASE AND WAIVER OF CLAIMS

 

 

 

 

                                                                 Exhibit 10.279

 

 

           SEPARATION AGREEMENT, GENERAL RELEASE AND WAIVER OF

                                     CLAIMS

 

     This    Separation    Agreement,    General    Release   and   Waiver   of   Claims

("Agreement") is entered into by and between Alan J. Weber ("Mr. Weber"), on the

one hand, and The Charles Schwab Corporation and U.S. Trust   Corporation,   their

respective   affiliates and the   predecessors,   successors and assigns of each of

the foregoing (collectively "Schwab" or the "Company"), on the other hand, dated

as of May 23, 2005 (the   "Execution   Date") and effective upon the expiration of

the Revocation Period described in Paragraph 25(g),   below   ("Effective   Date").

Together,   Mr.   Weber   and the   Company   shall be   referred   to   herein   as "the

Parties."

 

                                    RECITALS

 

     WHEREAS,   the Parties agreed that Mr. Weber stepped down from his positions

as Chief Executive Officer and Chairman of U.S. Trust Corporation ("U.S. Trust")

and Executive   Vice-President   of The Charles Schwab   Corporation on May 9, 2005

and the employment   relationship   will end as of May 19, 2005 as a result of Mr.

Weber's retirement;

 

     WHEREAS, the Parties now desire to definitively resolve, fully and finally,

all   differences,   disputes   and claims Mr. Weber might have against the Company

and   anyone   connected   with   it   through   and   including   the   Execution   Date,

including,   but not limited to, those arising out of or relating to Mr.   Weber's

employment relationship with Schwab and the termination thereof.

 

     NOW,   THEREFORE,   in consideration of the mutual covenants set forth herein

and for other   good and   valuable   consideration,   the   sufficiency   of which is

hereby acknowledged, the Company and Mr. Weber hereby agree as follows:

 

                                    AGREEMENT

 

     1.      Separation   from   Positions.   Mr. Weber is deemed to have retired as

a Schwab Officer, from any and all U.S. Trust and Schwab directorships he holds,

and from the   Policy   and   Executive   Committees   effective   as of May 19,   2005

("Separation   Date").   Mr.   Weber   shall be treated as having   retired   only for

purposes of his long-term   awards, as set forth below, and for no other purpose.

Mr.   Weber   acknowledges   and   agrees   that with the   exception   of his   accrued

vacation and final paycheck for the period May 16, 2005 through May 19, 2005, he

has   received   all wages   due to him for   services   rendered   as a result of his

employment   as Chief   Executive   Officer and Chairman   with,   and services as an

officer and director of, the Company up to and including May 19, 2005.

 

     2.      Consideration. Subject to and upon satisfaction by Mr.   Weber of the

terms and conditions set forth in this   Agreement,   Schwab agrees to provide Mr.

Weber the following consideration:

 

     (i)     a lump sum payment in the amount of eight hundred and forty thousand

            six hundred eighty-one   dollars and no cents ($840,681),   less usual

            and customary taxes, withholding, and authorized deductions, payable

            within ten (10) business days from the Effective Date;

 

     (ii)    a lump sum payment in the amount of three hundred and three thousand

            dollars and no cents   ($303,000),   less usual and   customary   taxes,

            withholding,   and   authorized   deductions,   representing a pro-rated

            bonus for 2005 under the   Corporate   Executive   Bonus Plan,   payable

            within ten (10) business days from the Effective Date;

 

     (iii)   a lump sum payment in the amount of two hundred sixty-five   thousand

            dollars and no cents,   less usual and customary taxes,   withholding,

            and   authorized   deductions,   payable   within ten (10) business days

            from the Effective Date; and

 

     (iv)    Schwab   will   cause to be   fully   vested   and,   in the case of stock

            options,   fully   exercisable   as of the Effective Date the following

            awards:   (a) all restricted shares under the Restricted Shares Award

            Agreements   dated   October 23, 2002 and February   25, 2003;   (b) all

            stock options under the Nonqualified   Stock Option   Agreements dated

            October 23, 2002 and November 8, 2002 and the Incentive Stock Option

            Agreement   dated October 23, 2002;   and (c) all units awarded by the

            LTIP Award   Agreement   granted   as of   January   1,   2003;   provided,

            however,   that such awards shall otherwise continue to be subject to

            the   terms of the   applicable   plan and award   agreement,   except as

            provided in paragraph 6.

 

     3.      No Other Employee Benefits.   Mr. Weber is not eligible for any other

benefits or payments not specifically provided for in this Agreement.   Mr. Weber

will be offered group health   continuation   coverage under COBRA. Mr. Weber will

not be eligible to accrue   vacation or   floating   holidays   after May 19,   2005.

Schwab will pay Mr. Weber all accrued but unused vacation and floating   holidays

accrued through May 19, 2005 on the next regularly   scheduled   payday   following

the Effective Date.

 

     4.      Waiver of Benefits under   The Charles Schwab Severance Pay   Plan and

The U.S.   Trust Special   Severance   Benefits Plan.   Mr. Weber   acknowledges   and

agrees that the consideration described in Paragraph 2, above, is in lieu of and

a substitute   for any   severance   benefits he may have been   eligible to receive

under The Charles Schwab   Severance Pay Plan,   The U.S. Trust Special   Severance

Benefits Plan, or under any other   severance or termination   pay or benefits for

which he may be eligible from the Company.   Mr. Weber   expressly   agrees that he

waives any such   rights or   benefits   in   exchange   for the rights and   benefits

provided under this Agreement.

 

     5.      Retirement Plans. Mr. Weber's active participation in all retirement

plans   sponsored by the Company   including   without   limitation   the   SchwabPlan

 

                                     - 2 -

 

Retirement Savings and Investment Plan and the U.S. Trust Corporation Employees'

Retirement   Plan shall   cease as of May 19,   2005.   Mr.   Weber will not   receive

Company   contributions   or accrue any   benefit   under any such   plans   after his

Separation Date. Mr. Weber's vested interest in any pension benefits and Company

contributions   (other than matching   contributions   under the   Company's   401(k)

plan,   which are   automatically   fully vested) will be   determined   based on his

service through the Separation Date.

 

     6.      The     Charles    Schwab    Corporation     Stock     Incentive    Plans.

Notwithstanding anything to the contrary in this Agreement, Mr. Weber agrees and

acknowledges   that the   Nonqualified   Stock Option   Agreements dated October 23,

2002 and November 8, 2002 are hereby   amended to provide that the options   under

such   agreements will expire and will be exercisable no later than the date that

is two (2)   years   after   the   Separation   Date.   Under   the   provisions   of the

Company's stock incentive   plans, Mr. Weber retains the right to exercise vested

options   for a specific   period of time   after his   Separation   Date.   Except as

provided in Paragraph   2(iii),   any stock   options that are not vested as of his

Separation   Date   are   immediately    canceled.    The   applicable    Stock   Option

Agreement(s)   and Plan   documents   govern the   vesting and   exercising   of stock

options.   Except as   provided in   Paragraph 2(iii),   any LTIP units that are not

vested as of Mr. Weber's   Separation   Date are immediately   forfeited.   The LTIP

Award Agreement and Plan document govern the vesting of LTIP units.

 

     7.      Tax Treatment. Mr. Weber   understands   and   agrees   that   Schwab   is

providing no tax or legal   advice,   and makes no   representations   regarding tax

obligations   or   consequences,   if any,   related to any part of this   Agreement,

including any   consequences   that may result with respect to the modification of

stock options   pursuant to section 409A of the Internal Revenue Code of 1986, as

amended (the "Code").   Mr. Weber further agrees that he will be responsible   for

his   tax   obligations   or   consequences   that   may   arise   from   this   Agreement

(including   without   limitation   the   accelerated   vesting of stock   options and

restricted shares under Paragraph 2), and he shall not seek any   indemnification

from Schwab in this regard.   Mr.   Weber   further   agrees to   indemnify   and hold

Schwab harmless from any claims,   demands,   deficiencies,   levies,   assessments,

executions,   judgments,   penalties,   taxes, attorneys' fees or recoveries by any

governmental entity against Schwab for any failure by Mr. Weber to pay his taxes

due and owing,   if any, as a result of any payments   under this   Agreement.   The

Agreement is not intended to constitute a   "nonqualified   deferred   compensation

plan"   within   the   meaning   of section   409A of the Code.   Notwithstanding   the

foregoing,   in the   event   this   Agreement   or any   benefit   paid   to Mr.   Weber

hereunder   is deemed to be   subject   to   section   409A of the   Code,   Mr.   Weber

consents to the Company adopting such conforming amendments as the Company deems

necessary,   in its sole   discretion,   to comply with   section   409A of the Code,

without reducing the amounts of any benefits due to Mr. Weber hereunder.

 

     8.      Authorization to   Sell   Restricted   Shares.   Mr.   Weber   agrees   and

expressly   authorizes   the   Company to sell the   required   number of   restricted

shares   from   the   grants   set   forth   in   Paragraph   2(iv)(a)   to   satisfy   any

withholding tax   obligations   that arise by reason of the awarding or vesting of

such shares. Mr. Weber understands that no

 

                                     - 3 -

 

shares   will   be   issued   to him   pursuant   to   Paragraph   2(iv)(a)   until   such

obligation is satisfied.

 

     9.      No Filings.   Mr. Weber   represents that as of the Execution Date, he

has not filed any action, claim, charge, or   complaint   against   Schwab   or   any

other   Releasee   identified   in Paragraph 11 below,   with any local,   state,   or

federal agency,   self-regulatory organization ("SRO"), or court and that he will

not make such a filing at any time hereafter   based upon any events or omissions

occurring prior to and up to the Execution Date. In the event that any agency or

court   assumes   jurisdiction   of any lawsuit,   claim,   charge or   complaint,   or

purports   to bring any legal or   regulatory   proceedings   against   Schwab or any

other   Releasee   identified   in Paragraph   11 below on Mr.   Weber's   behalf,   he

promptly   will request that the agency,   SRO, or court   withdraw from or dismiss

the lawsuit, claim, charge, or complaint with prejudice.

 

     10.     Covenant Not to Sue.   Mr. Weber   covenants   that he will   not   file,

participate   in, or instigate the filing of any lawsuits,   complaints or charges

by himself or by any other person or party in any state or federal   court or any

proceedings   before   any local,   state,   or federal   agency,   or SRO,   except as

required   by law,   claiming   that   Schwab or any other   Releasee   identified   in

Paragraph   11 below has   violated   any law or   obligation   based upon   events or

omissions occurring prior to and including the effective date of this Agreement.

Notwithstanding   the   provisions of this   Paragraph,   nothing in this   Agreement

shall be construed to preclude Mr. Weber from timely filing a complaint with the

U.S.   Equal   Employment   Opportunities   Commission   ("EEOC")   or   assisting   any

investigation   conducted   by the EEOC to the   extent   that such   rights   are not

subject to waiver.   In the event Mr. Weber   breaches   the covenant   contained in

this Paragraph 10, Mr. Weber agrees that he will indemnify   Schwab and any other

Releasee   identified   in   Paragraph 11 below for all   damages,   fees,   costs and

expenses,   including   legal   fees,   incurred   by Schwab   or any   other   Releasee

identified   in   Paragraph   11   below,    in   defending,    participating    in,   or

investigating any matter or proceeding covered by this Paragraph 10.

 

     11.   Complete   Release by Mr.   Weber.   Mr.   Weber - for himself and for his

heirs, representatives,   attorneys, executors,   administrators,   successors, and

assigns - releases Schwab, and all of its affiliates,   subsidiaries,   divisions,

parent corporations, and stockholders,   officers, directors, partners, servants,

agents, employees,   representatives,   attorneys, employee welfare and retirement

plans and the respective plan administrators and fiduciaries, past, present, and

future,   all persons acting under, by, through,   or in concert with any of them,

and each of them (all of whom are hereinafter referred to as "Releasees"),   from

any and all actions, causes of action, grievances, obligations, costs, expenses,

damages,   losses,   claims,   liabilities,   suits,   debts,   demands,   and benefits

(including attorneys' fees and costs actually incurred),   of whatever character,

in law or in equity,   known or unknown,   suspected   or   unsuspected,   matured or

unmatured, of any kind or nature whatsoever,   based on any act, omission, event,

occurrence,   or nonoccurrence from the beginning of time up to and including the

Execution   Date of this   Agreement,   including   but not limited to any claims or

causes of action arising out of or in any way relating to Mr. Weber's employment

relationship with Schwab or any other Releasee.

 

                                     - 4 -

 

     This release of claims   includes,   but is not limited to, claims for breach

of any implied or express contract or covenant;   claims for promissory estoppel;

claims of entitlement to any pay (other than the payments   promised in Paragraph

2); claims of wrongful denial of insurance and employee benefits,   or any claims

for wrongful   termination,   public policy   violations,   defamation,   invasion of

privacy, fraud, misrepresentation, unfair business practices, emotional distress

or other   common   law or tort   matters;   claims of   harassment,   retaliation   or

discrimination under federal,   state, or local law; claims based on any federal,

state or other governmental statute, regulation or ordinance, including, without

limitation,    Title   VII   of   the   Civil    Rights   Act,   as   amended,    the   Age

Discrimination   in Employment Act, the Older Worker Benefit   Protection Act, the

Labor Management   Relations Act, the Americans with Disabilities Act, the Family

and   Medical   Leave   Act,   the New York   Human   Rights   Law,   the New York   City

Administrative   Code, the New York Labor Law, the California Fair Employment and

Housing Act, the California Labor Code, the California   Government Code, and the

Employee   Retirement   Income Security Act of 1974; and claims under the state or

federal   constitution.   It is expressly   understood   by Mr. Weber that among the

various   rights and claims being waived by Mr. Weber in this Agreement are those

for age discrimination arising under the Age Discrimination in Employment Act of

1967 (29 U.S.C. sec. 621, et seq.), as amended.

 

     12.     Release of Unknown Claims. In order to make this   release   effective

as to unknown, unsuspected or concealed claims,   Mr. Weber expressly   waives the

benefits of Section 1542 of the California Civil Code, which provides:

 

     A GENERAL   RELEASE DOES NOT EXTEND TO CLAIMS   WHICH THE   CREDITOR   DOES NOT

     KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,

      WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE

     DEBTOR.

 

     In   making   this   waiver,   Mr.   Weber   acknowledges   that he may   hereafter

discover   facts in addition to or different   from those which he now believes to

be true with respect to the subject matter released   herein,   but agrees that he

has taken that   possibility   into account in reaching   this   Agreement and that,

notwithstanding   the discovery or existence of any such   additional or different

facts,   Mr. Weber fully,   finally,   and forever settles and releases any and all

such claims.

 

     13.     Successors. This Agreement shall be binding upon   the   Parties,   and

their heirs, representatives,   executors, administrators,   successors, insurers,

and assigns,   and shall inure to the administrators,   predecessors,   successors,

and assignees of each of the Parties.   In the event of Mr.   Weber's   death,   the

benefits payable to Mr. Weber under this Agreement shall inure to the benefit of

his heirs, successors, and assigns.

 

     14.     Indemnification.   Nothing in this Agreement (including   the   release

contained    herein)    shall   be   construed   to   limit   Mr.    Weber's    right   to

indemnification   or contribution   pursuant to Delaware,   New York,