Severance 
Amendment To Employment Agreement
 
Employment Agreement - Charles R. Schwab
 
 
 
                              EMPLOYMENT AGREEMENT
 
     This Agreement,  as amended, is made and entered into effective as of March
31, 2003 by and between The Charles Schwab Corporation,  a Delaware  Corporation
(hereinafter referred to as the "Company"), and Charles R. Schwab, an individual
(hereinafter referred to as the "Executive").
 
                                   WITNESSETH:
 
     WHEREAS,  the Company  desires to reward the Executive  for his  continuing
contribution  to the Company and provide  additional  security for the Executive
and to provide an inducement to the Executive to remain with the Company and not
to engage in competition with it.
 
     NOW THEREFORE, in consideration of the mutual obligations herein contained,
the parties hereto,  intending to be legally bound hereby, covenant and agree as
follows:
 
1.   EMPLOYMENT
 
          (a) The Company hereby employs the Executive to render services to the
          Company in the  positions  of  Chairman  of the Board in the  capacity
          defined in the By-laws of the Company,  as may be amended from time to
          time. The Executive  shall perform such duties  commensurate  with his
          position and shall have authority and  responsibility  in working with
          the Chief  Executive  Officer,  subject to the control of the Board of
          Directors,  for the overall strategic  direction and leadership of the
          Company.
 
          (b) Throughout the term of this Agreement,  the Executive shall devote
          his full  business  time and  undivided  attention to the business and
          affairs of the Company  and its  subsidiaries,  except for  reasonable
          vacations  and except for  illness or  incapacity,  but nothing in the
          Agreement  shall  preclude  the  Executive  from  devoting  reasonable
          periods required for serving,  as appropriate,  on Boards of Directors
          of other companies, and from engaging in charitable and public service
          activities  provided such activities do not materially  interfere with
          the  performance  of  his  duties  and  responsibilities   under  this
          Agreement.
 
2.   TERM
 
     This Agreement shall commence on March 31, 2003, and shall continue through
     March 31,  2008,  subject  to the terms and  conditions  herein  set forth.
     Beginning on March 31, 2004,  and on each  subsequent  anniversary  of this
     date, one year shall be added to the term of the Agreement,  unless,  prior
     to such  anniversary,  the Company or the  Executive has notified the other
     party hereto that such extension will not become effective.
 
3.   COMPENSATION
 
     For services  rendered by the Executive  during the term of this Agreement,
     and for his  performance of all additional  obligations of employment,  the
     Company agrees to pay the Executive and the Executive  agrees to accept the
     following salary, other compensation, and benefits:
 
          (a) Base Salary. During the term of this Agreement,  the Company shall
          pay the  Executive  in  periodic  installments,  a base  salary at the
          annual rate of $900,000,  such base salary to be reviewed on March 31,
          2004, and on each subsequent anniversary the Board may adjust it up or
          down, taking into account, among other things, individual performance,
          competitive practice, and general business conditions.
 
          (b) Annual  Incentive.  In  addition  to the base  salary  provided in
          Section  3(a)  above,  the  Executive  shall be eligible to receive an
          annual  incentive  award  based  upon  the  Company's   attainment  of
          pre-established  performance targets relative to specified performance
          standards.  The  performance  standards  upon which  annual  incentive
          payments will be earned shall be adopted at the beginning of each year
          by  the  Compensation   Committee  of  the  Board  of  Directors  (the
          "Committee"),   to  be  selected  by  the  Committee  from  among  the
          following:  revenue  growth,  net revenue  growth,  operating  revenue
          growth,   consolidated  pretax  profit  margin,   consolidated  pretax
          operating margin,  consolidated after-tax profit margin,  consolidated
          after-tax  operating  profit  margin,  customer net new asset  growth,
          stockholder  return,  return on assets,  earnings per share, return on
          equity, and return on investment.
 
          For  each  fiscal  year  during  the  term  of  this  Agreement,   the
          Executive's  incentive  opportunity shall be computed as the amount of
          total cash compensation  earned pursuant to the formula-based  matrix,
          which shall be adopted each year by the Compensation  Committee of the
          Board of Directors of the Company,  minus the Executive's  actual base
          salary  paid during that year.  For the 2003 fiscal  year,  the target
          total  annual cash  compensation  amount  (including  base  salary) is
          $5,400,000;   therefore,   the  incentive  target  is  $4,500,000  for
          achieving specified objectives (see above).
 
          The  formula-based  matrix,  as amended at the sole  discretion of the
          Committee,  shall be the sole basis for  determining  the  Executive's
          annual  incentive  award.  The  Committee  shall  annually  review and
          approve the  performance  standards  and targets  with  respect to the
          Executive's incentive opportunity,  which review and approval shall be
          completed no later than the 90th day of the Company's  fiscal year for
          which such incentive opportunity may be earned.
 
          Notwithstanding  anything to the  contrary,  the  Executive's  maximum
          annual cash compensation  (including base salary and annual incentive)
          may not exceed $8,000,000.
 
          (c) Long-Term  Incentive.  The Executive  will be considered for stock
          options in accordance with the Company's 2001 Stock Incentive Plan, as
          amended,  or any successor  thereto  ("Stock Option  Program") and any
          other long-term  incentives offered to other executives of the Company
          from time to time during the term of this Agreement.
 
          (d) Benefits. The Executive shall be entitled to participate,  as long
          as he is an employee of the Company,  in any and all of the  Company's
          present or future employee benefit plans, including without limitation
          pension plans,  thrift and savings plans,  insurance  plans, and other
          benefits  that are generally  applicable to the Company's  executives;
          provided, however, that the accrual and/or receipt by the Executive of
          benefits  under and  pursuant to any such  present or future  employee
          benefit plan shall be determined by the provisions of such plan.
 
          (e)  Perquisites.  The  Executive  will be  provided  such  additional
          perquisites  as are  customary  for  senior  level  executives  of the
          Company  provided  that each  perquisite  is  approved by the Board of
          Directors.
 
          (f)  Business  Expenses.  The  Executive  will be  reimbursed  for all
          reasonable  expenses  incurred in  connection  with the conduct of the
          Company's business upon presentation of evidence of such expenditures,
          including but not limited to travel expenses incurred by the Executive
          in the  performance  of his duties,  security for the  Executive,  his
          family, and principal residence,  professional  organization dues, and
          club initiation fees, dues and expenses.
 
          (g) Any annual  incentive award earned by Executive under this Section
          3 shall be paid as soon as reasonably  practical  after the end of the
          Company's fiscal year end; provided, however, that if any such payment
          would be  nondeductible  to the Company  under  Internal  Revenue Code
          Section 162(m), then any nondeductible  amounts shall be deferred from
          year to year until the payment of such  amounts is  deductible  by the
          Company.
 
4.   TERMINATION OF EMPLOYMENT
 
          (a) Resignation.  Notwithstanding Section 2 hereof, this Agreement may
          be terminated by the Executive at any time upon six (6) months written
          notice of  resignation  by the  Executive to the Company,  and in such
          event any payments pursuant to Section 3 and 4 of this Agreement shall
          automatically terminate (except for the Company's obligations relating
          to voluntary  termination under its compensation and benefit plans, as
          specified  in  the  various  plan   documents,   and  the  Executive's
          obligations set forth in Section 5).  Subsequent  payments may be made
          to the Executive as provided pursuant to Section 6 of this Agreement.
 
          (b)  Termination  by the Company Other Than for Cause.  Termination of
          the  Executive  by the  Company  other than for  Cause,  as defined in
          Section  4(c) below,  shall cause the Company to make  payments to the
          Executive  hereunder  pursuant to the provisions of this Section 4(b).
          Such a termination  shall  require at least sixty (60) business  days'
          prior notice and must be signed by at least three-fourths (3/4) of all
          the non-employee members of the Board of Directors.
 
          Notwithstanding anything to the contrary contained in the Stock Option
          Program or any agreement or document related thereto,  the Executive's
          total  outstanding  and unvested shares and/or options under the Stock
          Option  Plan  shall at the date of  termination  be  deemed to be 100%
          vested.  No further grants of stock or options shall be made under the
          Plan after such termination.
 
          With  respect to base salary and annual  incentive  compensation,  the
          Company's  obligation shall be to pay the Executive,  according to the
          terms of this Agreement and for a period of thirty-six (36) months, an
          amount equal to the annual salary and incentive  paid to the Executive
          at the bonus level for the year prior to which such termination occurs
          unless  performance of the Company as defined in the matrix referenced
          in Section 3(b) is better in the year of  termination,  in which event
          such bonus shall be based on the matrix  calculation  as  described in
          Section  3(b),  such  annual  amounts  to be  paid  in  equal  monthly
          installments.
 
          During the 36-month  severance payment period,  the Executive shall be
          entitled to all payments,  benefits and perquisites as provided for in
          this Agreement, and office space and secretarial support comparable to
          that provided to the Executive  during his  employment by the Company.
          The  Executive  shall be  entitled  to all  payments  and  benefits as
          provided for in this Section for a period of thirty-six (36) months.
 
          If the Board of Directors fails to reelect the Executive to a position
          comparable  to that  described in Section 1(a) of this  Agreement  or,
          without terminating the Executive's employment,  removes the Executive
          from his position for reasons other than Cause,  substantively reduces
          the Executive's  duties and  responsibilities,  reduces his pay and/or
          benefits  without  the  written  consent  of  the  Executive,   forces
          relocation,  or requires excessive travel,  then the Executive may, by
          notice to the Company,  treat such action or removal as a  termination
          of the Executive by the Company pursuant to this Section 4(b).
 
          In the event of the  Executive's  death before the  completion  of the
          payments  pursuant  to  this  Section  4(b),  the  remaining  payments
          hereunder shall be made to the beneficiary or beneficiaries designated
          by  the  Executive  to  the  Company  in  writing  or,  absent  such a
          designation, to his estate.
 
          (c)  Termination  by the Company for Cause.  The Company may terminate
          the Executive's  employment for Cause if the Executive has committed a
          felonious act, or the Executive,  in carrying out his duties hereunder
          has been willfully and grossly  negligent or has committed willful and
          gross  misconduct  resulting,  in either case, in material harm to the
          Company. An act or omission shall be deemed "willful" only if done, or
          omitted to be done, in bad faith and without reasonable belief that it
          was in the best interest of the Company.  In the event of  termination
          of the  Executive  by the Company for Cause,  the  Executive  shall no
          longer be  entitled to receive  any  payments  or any other  rights or
          benefits under this Agreement.
 
          (d) Disability. In the event the Executive's employment terminates due
          to total and permanent  disability (for the purposes of this Agreement
          "disability"  shall  have  the  same  meaning  as  applies  under  the
          Company's Long-Term  Disability Plan), he will continue to receive the
          same base salary and  benefits  which he was  receiving  prior to such
          disability  for 36  months,  offset by  payments  under the  Company's
          Long-Term  Disability Plan. In addition,  he shall receive a pro-rated
          annual  incentive  payment  for the  year in which  is  employment  is
          terminated, based on the formula described in Section 3(b).
 
          (e) Death. In the event of the death of the Executive  during the term
          of this  Agreement,  the rights and benefits  under  employee  benefit
          plans and programs of the Company,  including life insurance,  will be
          determined in accordance  with the terms and  conditions of such plans
          and  programs as in effect on his date of death.  In such  event,  the
          Company  shall pay in a lump sum to the  Executive's  estate an amount
          equal to five  times the then  current  rate of the  Executive's  base
          salary,  and no further  payments  shall be required  pursuant to this
          Agreement.
 
          (f)  Change in  Control.  In the event of a change in  control  of the
          Company,  as set forth below, the Executive may at any time and in his
          complete  discretion  during a 24-month  period  following a change in
          control,  elect to terminate  his  employment  with the  Company.  For
          purposes of this Agreement,  a "change in control" shall mean a change
          in  ownership  of the Company that would be required to be reported in
          response to Item 1(a) of a Current  Report on Form 8-K pursuant to the
          Securities and Exchange Act of 1934 ("Exchange  Act"), as in effect on
          the date hereof,  except that any merger,  consolidation  or corporate
          reorganization  in which the owners of the capital  stock  entitled to
          vote in the  election  of  directors  of the  Employer  or the Company
          ("Voting  Stock")  prior to said  combination,  own 75% or more of the
          resulting  entity's  Voting Stock shall not be  considered a change in
          control for the purposes of this  Agreement;  provided  that,  without
          limitation,  such a change in control shall be deemed to have occurred
          if (i) any  "person"  (as  that  term is used in  Sections  13(d)  and
          14(d)(2) of the Exchange Act), other than a trustee or other fiduciary
          holding securities under an employee benefit plan of the Company is or
          becomes the beneficial owners (as that is used in Section 13(d) of the
          Exchange Act),  directly or  indirectly,  of 30% or more of the Voting
          Stock of the  Company or its  successor;  or (ii) during any period of
          two consecutive years, individuals who at the beginning of such period
          constitute the Board of Directors of the Company  ("Incumbent  Board")
          cease  for any  reason  to  constitute  at least a  majority  thereof;
          provided,  however, that any person becoming a director of the Company
          after the  beginning  of the period  whose  election was approved by a
          vote  of at  least  three-quarters  of the  directors  comprising  the
          incumbent  Board shall,  for the purposes  hereof,  be  considered  as
          though he were a member of the incumbent  Board;  or (iii) there shall
          occur  the  sale  of all or  substantially  all of the  assets  of the
          Company. Notwithstanding anything in the foregoing to the contrary, no
          change in control of the Company  shall be deemed to have occurred for
          purposes of this Agreement by virtue of any transaction  which results
          in the  Executive,  or a group of persons which includes the Executive
          acquiring,  directly  or  indirectly,  more  than  30  percent  of the
          combined voting power of the Company's outstanding securities.  If any
          of the events  constituting  a change in control  shall have  occurred
          during  the  term  hereof,  the  Executive  shall be  entitled  to the
          privilege  provided  in  subparagraph  (f)  herein  to  terminate  his
          employment.
 
          Any  termination  by the  Executive  pursuant to this Section shall be
          communicated by a written "Notice of Termination."
 
          If, following a change in control,  the Executive shall for any reason
          voluntarily  terminate  his  employment  during  the  24-month  period
          following a change in control,  then the Company shall pay base salary
          up to the date of termination  and a prorated  annual  incentive award
          based  on the  calculated  bonus  for the  year in  which  termination
          occurred,  as defined in Section  3(b), in a lump sum on the thirtieth
          (30th) day following the Date of Termination.
 
5.   COVENANT NOT TO COMPETE
 
          (a) As a  material  inducement  to the  Company's  entering  into this
          Agreement,   the  Executive  agrees  that  during  the  term  of  this
          Agreement,  he will not become  associated with,  render service to or
          engage  in  any  other  business  competitive  with  any  existing  or
          contemplated business of the Company or its subsidiaries,  except that
          the Executive may serve as a member of the board of directors of other
          companies or  organizations,  provided that he provides written notice
          to the Board of each significant activity, and that he will do nothing
          inconsistent with his duties and responsibilities to the Company.
 
          (b) If the  Executive  voluntarily  resigns  from  the  employ  of the
          Company  prior to the  expiration  of the term of this  Agreement,  he
          specifically  agrees  that for a period of five (5)  years  commencing
          with the date of his  voluntary  resignation  he will not engage in or
          perform  any  services  either on a full-time  or a part-time  or on a
          consulting or advisory basis for any business  organization that is in
          competition  with the  Company  at the time  such  services  are being
          performed  by  Executive,  with the  exception  that this Section 5(b)
          shall  not  apply  in the  event  the  Executive  resigns  voluntarily
          following  a change in  control  of the  Company as defined in Section
          4(f).
 
          (c) The Executive will not at any time,  whether while employed by the
          Company  or  after  voluntary  or  involuntary  termination  or  after
          retirement, reveal to any person, firm or entity any trade or business
          secrets or confidential,  secret, or privileged  information about the
          business of the Company or its  subsidiaries  or affiliates  except as
          shall be required in the proper conduct of the Company's business.
 
6.   CONSULTING ARRANGEMENT
 
     Following a voluntary  termination  of employment  pursuant to Section 4(a)
     and 4(f), or an involuntary  termination  subsequent to a change in control
     of the  Company,  for any reason but during a 24-month  period  following a
     change in control as defined in Section 4(f), after the Executive ceases to
     render services as the Chairman, he may in his sole discretion elect to act
     as a consultant to the Company for a period of five (5) years.  During this
     period of consulting services, the Executive shall, at reasonable times and
     places,  taking into account any other employment or activities he may then
     have,  hold  himself  available  to consult  with and advise the  officers,
     directors,  and  other  representatives  of the  Company.  As  compensation
     therefore,  the Executive  shall be entitled to receive,  and Company shall
     pay, an annual  amount equal to  seventy-five  percent  (75%) of his annual
     base  salary  rate  in  effect  immediately  prior  to his  termination  of
     employment, but in no event an annual amount to exceed $1,000,000, for each
     year of such period, payable in equal monthly installments.
 
7.   WITHHOLDING
 
     All  amounts  payable   hereunder  which  are  or  may  become  subject  to
     withholding  under  pertinent  provisions  of law or  regulation  shall  be
     reduced  for  applicable  income  and/or  employment  taxes  required to be
     withheld.
 
8.   MISCELLANEOUS
 
          (a) This Agreement  supersedes any prior agreements or understandings,
          oral or written,  with  respect to  employment  of the  Executive  and
          constitutes  the entire  Agreement  with  respect  thereto;  provided,
          however,  that nothing  contained  herein shall supercede that certain
          Assignment and License Agreement entered into as of March 31, 1987, as
          amended. This Agreement cannot be altered or terminated orally and may
          be amended only by a subsequent  written agreement executed by both of
          the parties  hereto or their legal  representatives,  and any material
          amendment must be approved by a majority of the voting shareholders of
          the Company.
 
          (b) This  Agreement  shall be governed by and  construed in accordance
          with the laws of the State of California.
 
          (c) This  Agreement  shall be  binding  upon  and  shall  inure to the
          benefit of the Company and its  successors  and assigns.  In that this
          constitutes a personal  service  agreement,  it may not be assigned by
          the  Executive  and  any  attempted  assignment  by the  Executive  in
          violation of this covenant shall be null and void.
 
          (d)  For  the  purpose  of  this  Agreement,  the  phrase  "designated
          beneficiary  or  beneficiaries"  shall  include  the  estates  of such
          beneficiaries  in the event of their  death  before the receipt of all
          payments  under this Agreement and shall also include any alternate or
          successor  beneficiaries  designated  in writing to the Company by the
          Executive.
 
          (e)  The  invalidity  or  unenforceability  of any  provision  of this
          Agreement shall not affect the validity or enforceability of any other
          provisions, which shall remain in full force and effect.
 
          (f) The  Section  and  Paragraph  headings  contained  herein  are for
          reference  purposes  only and shall not in any way affect the meanings
          or interpretation of this Agreement.
 
          (g) Any dispute or  controversy  arising under or in  connection  with
          this Agreement shall be settled exclusively by arbitration,  conducted
          before a panel of  arbitrators  in  accordance  with the  rules of the
          American  Arbitration  Association  then in effect.  Judgement  may be
          entered on the arbitrators award in any court having jurisdiction. The
          expense of such arbitration shall be borne by the Company.
 
          (h) Any notices, requests or other communications provided for by this
          Agreement  shall be sufficient if in writing and if sent by registered
          or certified mail to the Executive at the last address he has filed in
          writing  with  the  Company  or,  in the case of the  Company,  at its
          principal offices.
 
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
 
 
                              Company:
ATTEST                        THE CHARLES SCHWAB CORPORATION
 
By:  Carrie Dwyer             By: Mary McLeod
     ------------                 -----------
Corporate Secretary           Title:  Executive Vice President - Human Resources
                                      ------------------------------------------
 
                              Executive:  /s/  Charles R. Schwab
                                          ----------------------
                                               Charles R. Schwab
 
 
 

CHARLES SCHWAB SEVERENCE PAY PLAN

Exhibit 10.284

 


 

THE CHARLES SCHWAB

 

SEVERANCE PAY PLAN

 

(As Amended and Restated Effective January 1, 2006)

 

(Includes Amendment Numbers 1 and 2)

 



TABLE OF CONTENTS

 

 

 

 

 

 

 

 

ARTICLE 1 - PURPOSE OF PLAN

  

1

 

 

ARTICLE 2 - DEFINITIONS

  

1

 

 

ARTICLE 3 – PARTICIPATION

  

7

 

 

3.1.

  

Commencement of Participation

  

7

 

 

3.2

  

Termination of Participation

  

7

 

 

ARTICLE 4 - EFFECT ON OTHER BENEFITS

  

7

 

 

4.1.

  

Eligibility for Benefits

  

7

 

 

4.2

  

Paid Time Off Benefits

  

7

 

 

ARTICLE 5 - NOTICE PERIOD

  

7

 

 

5.1

  

Notice Period.

  

7

 

 

5.2

  

Participants Requested to Work During Notice Period.

  

7

 

 

5.3

  

Acceleration of Termination Date.

  

8

 

 

ARTICLE 6 - BENEFITS

  

8

 

 

6.1

  

Non-Officers Severance Pay.

  

9

 

 

6.2

  

Officer Severance Pay

  

10

 

 

6.3

  

Group Health Plan Coverage Payment and Long-Term Awards

  

10

 

 

6.4

  

Additional Provisions Related to Severance Benefits.

  

11

 

 

ARTICLE 7 - FUNDING

  

13

 

 

ARTICLE 8 - ADMINISTRATION

  

13

 

 

8.1

  

Administrator’s Authority.

  

13

 

 

8.2

  

Claims for Benefits

  

14

 

 

8.3

  

Indemnification

  

14

 

 

ARTICLE 9 - AMENDMENT AND TERMINATION

  

14

 

 

ARTICLE 10 - MISCELLANEOUS

  

15

 

 

ARTICLE 11 - EXECUTION

  

15

 

 

APPENDIX A

  

A-1

 

i.


ARTICLE 1 - PURPOSE OF PLAN

 

The purpose of this Plan is to set forth the terms and conditions under which severance pay and other severance benefits will be provided to employees of the Company. This Plan is intended to constitute an employee welfare benefit plan within the meaning of section 3(1) of ERISA, and is intended to memorialize the provisions of the Company’s severance pay program.

 

The effective date of this restatement is January 1, 2006. The rights of any person whose Notice Period Start Date is prior to the Restated Effective Date shall be determined solely under the terms of the Plan provisions as in effect on such date, unless such person is thereafter reemployed and again becomes a Participant. The rights of any other person shall be determined solely under the terms of this restated Plan, except as may be otherwise required by law.

 

This Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). In the event that that any benefit hereunder is deemed by the Administrator to be subject to section 409A of the Code, the Administrator may modify such benefit as it deems necessary to comply with, or to qualify for an exemption from, Code section 409A.

 

ARTICLE 2 - DEFINITIONS

 

A. “Administrator” means Schwab or such person or committee as may be appointed from time to time by Schwab to supervise the administration of the Plan.

 

B. “Affiliate” means any company which is a member of a controlled group of corporations (within the meaning of section 414(b) of the Code) or a group of trades or businesses under common control (within the meaning of section 414(c) of the Code) that includes the Company.

 

C. “Base Salary” means the Participant’s annual “pay rate” maintained under the authoritative system of record used to produce the Participant’s regular semi-monthly pay. Base Salary shall be determined as of the Participant’s Notice Period Start Date. Unless included by the Company in a Participant’s “pay rate,” Base Salary shall exclude all other earnings or paid amounts such as bonuses, overtime, commissions, all differentials, variable pay, incentive pay, the value of employee benefits and any other amounts that are treated as “other earnings” under the Company’s payroll system. In the case of an Eligible Employee who is classified by the Administrator as a branch manager or a financial consultant of a retail, national or satellite branch, the Administrator may determine, in its sole discretion, that such individual’s Base Salary, for purposes of calculating Severance Benefits, shall be supplemented with the amount that the Administrator determines, in its sole discretion, to be the Participant’s “practice service” payment in effect as of the Participant’s Notice Period Start Date and as annualized by the Plan Administrator. In the case of an Eligible Employee

 

1


who is classified by the Administrator as a regional branch executive, the Administrator may determine, in its sole discretion, that such individual’s Base Salary, for purposes of calculating Severance Benefits, shall be supplemented with 50% of the amount that the Administrator determines, in its sole discretion, to be the Participant’s “regional revenue” payment in effect as of the Participant’s Notice Period Start Date and as annualized by the Plan Administrator. The Administrator shall have sole discretionary authority to determine a Participant’s Base Salary for all purposes, and the Administrator’s discretionary determinations shall be conclusive and binding on all persons.

 

D. “Code” means the Internal Revenue Code of 1986, as amended.

 

E. “Company” means The Charles Schwab Corporation, a Delaware corporation, and (unless the context requires otherwise) any Participating Company.

 

F. “Comparable Position” means a position that is comparable, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation the similarity of duties and salary and any increase in the commuting distance to the individual’s principal place of employment.

 

G. “Corporate Transaction” means a merger, acquisition, spin-off, stock sale, sale of assets or portions of a business, outsourcing of all or any portion of a business or any other similar corporate transaction.

 

H. “Eligible Employee” means an individual classified by the Administrator as a Regular Employee who has incurred a Job Elimination. The term “Eligible Employee” shall not include (i) individuals employed pursuant to the terms of a collective bargaining agreement between the Company or an Affiliate and a bargaining unit representing such individuals; (ii) an employee who is on an unpaid leave of absence and has no right to reinstatement under applicable law upon completion of the leave; and (iii) any individual who the Administrator, in its sole discretion, determines to be covered by a Guaranteed Payments Arrangement or any arrangement that, by its terms, makes the individual ineligible for Plan benefits. Notwithstanding the foregoing, the Administrator may, in its sole discretion, determine that an individual who is a party to a Guaranteed Payments Arrangement is an Eligible Employee eligible to receive benefits under Section 6.4(g).

 

I. “Guaranteed Payments Arrangement” is any guarantee or agreement, offer letter, policy, arrangement or plan (regardless of whether it is written or oral) that provides for guaranteed payments of any nature, severance benefits of any kind, cash payments representing the value of stock options or restricted stock, and/or similar amounts.

 

J. “Job Elimination” means involuntary termination of employment solely on account of changes in the Company’s operations or organization that result in the elimination of the employee’s job, as determined by the Administrator in its sole and absolute discretion taking into account such factors as it deems appropriate including without limitation (i) a

 

2


relocation or dissolution of a portion of the business of the Company; (ii) a withdrawal by the Company from a segment of a market served by the Company; (iii) the elimination of one or more Company product lines; (iv) an elimination, reduction, or change in the Company’s need for one or more specialized skills provided by the employee; (v) an organizational change in the Company, including without limitation a business redesign, reorganization or consolidation; (vi) a significant change in the Company’s systems or technology; and (vii) a reduction in the Company’s staffing levels. Notwithstanding anything to the contrary contained herein, a Job Elimination shall not result (A) from retirement, death or voluntary resignation (whether or not in response to changes in the Company’s operations or organization or in an individual’s title, duties, responsibilities, compensation or benefits) prior to Notice of Eligibility; (B) if the Company or any successor employer or successor organization offers the employee a Comparable Position; (C) from termination prior to or after Notice of Eligibility on account of unsatisfactory performance, failure of a condition of employment, breach of any agreement to which the employee and the Company are parties, or violation of any law, regulation, or Company policy (including but not limited to the Code of Business Conduct and Ethics, Compliance Manual, and HR Policies); (D) where, in connection with a Corporate Transaction, an employee is employed in the same or a substantially similar position at the closing of the Corporate Transaction or the employee is offered a Comparable Position; (E) from the employee’s failure to return to work within the time required following an approved leave of absence; (F) from a change in employment that results from a natural disaster, unforeseeable governmental action, act of war, or other similar unanticipated business disaster; (G) from a transfer of employment among the Company and any of its Affiliates; (H) where, in connection with the outsourcing of all or any a portion of a business, the employee is offered a position by the successor organization at substantially the same salary level and commuting distance to the employee’s principal place of employment; and (I) from the Company’s modification or termination of any telecommuting arrangement.

 

K. “Long-Term Award” means a long-term award outstanding as of the Participant’s Termination Date and granted under the plan of a Participating Company that provides for long-term or stock-based awards.

 

L. “Non-Officer” means an Eligible Employee who is not an Officer.

 

M. “Notice of Eligibility” means a written or electronic notice, in a form approved by the Administrator, provided to an Eligible Employee that there will be a Job Elimination and that he or she is eligible for Severance Benefits under the Plan.

 

N. “Notice Period” means a sixty (60) calendar day period commencing on the date specified in the Notice of Eligibility. Except as provided in Section 5.2, Participants are relieved from job responsibilities during the Notice Period and generally are not required to report to work. Also during the Notice Period, all Compliance, Human Resources and Information Security policies and procedures that applied to Participants before receiving Notice of Eligibility continue in full force and effect and Participants remain subject to those

 

3


policies and procedures. Participants will continue to receive Base Salary and to participate in certain employee benefits. Except as otherwise provided under the applicable bonus or incentive plan, Participants shall not be eligible for bonuses and other incentive pay during the Notice Period. In all cases, non-production-based bonuses will be pro-rated to reflect the Participant’s service prior to the Notice Period Start Date and will be subject to discretionary adjustments by the Company in its sole and absolute discretion.

 

O. “Notice Period Start Date” means the first day of the Notice Period.

 

P. “Officer” means an Eligible Employee who is classified by the Company as an “officer” based on job grade, designation and such other factors the Company deems relevant.

 

Q. “Participant” means any person who is participating in the Plan as provided in Article 3.

 

R. “Participating Company” means the Company and any Affiliate that participates in the Plan (as determined by the Company or Schwab in its sole discretion). A current list of Participating Companies is set forth in Appendix A. Notwithstanding the foregoing, if a Participating Company ceases to be an Affiliate by reason of a Corporate Transaction, then such entity shall cease to be a Participating Company upon the closing of such Corporate Transaction. Notwithstanding anything to the contrary in this Plan, no benefits shall be payable under the Plan on account of any employment termination (actual or constructive) that occurs on or after the closing of such Corporate Transaction in which such entity ceases to be a Participating Company.

 

S. “Plan” means The Charles Schwab Severance Pay Plan.

 

T. “Regular Employee” means an individual who (i) is directly employed and paid by the Company and on whose behalf the Company withholds income tax from his or her compensation; (ii) has regular full-time or part-time employment with the Company; and (iii) is considered and classified by the Company as a “regular employee.” Notwithstanding the foregoing, a “Regular Employee” shall not include any of the following:

 

(A) a temporary employee, intern, co-op or floater;

 

(B) an agency temporary or leased employee;

 

(C) an employee on an unpaid leave of absence who does not have a job guarantee upon completion of the leave;

 

(D) an individual who is not directly paid by the Company through its payroll system (without regard to his or her common law employment status);

 

(E) consultants, contingent workers, independent contractors, persons who have

 

4


signed independent contractor, consultant or vendor agreement(s) or provide services to the Company pursuant to an independent contractor, consultant or vendor agreement, or pursuant to an agreement with any third party, irrespective of whether any such individuals are determined by any third party (including without limitation any court, arbitrator or governmental or regulatory agency) to constitute an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee); and

 

(F) persons (including but not limited to those identified in subparagraphs (A) through (E)) not otherwise considered by the Company to be a Regular Employee, irrespective of whether any such individuals are deemed by a court, arbitrator or government agency or other third party to be an employee of the Company or any Affiliate (including but not limited to, a common law employee, a joint employee or a leased employee).

 

If, during any period, the Company has not treated an individual as a common law employee and, for that reason, has not withheld income and employment taxes with respect to that individual, then that individual shall not be a Regular Employee for that period, even if the individual is determined, retroactively, to have been a common law employee during all or any portion of that period by the Internal Revenue Service or other third party or pursuant to a court decree, judgment or settlement in a judicial proceeding or otherwise.

 

U. “Restated Effective Date” means January 1, 2006.

 

V. “Return Date” means the date specified in the Participant’s Notice of Eligibility by which the Participant must sign and return a Severance Agreement.

 

W. “Revocation Period” means the seven calendar day (or other longer legally required calendar day) period immediately following the date the Participant signs the Severance Agreement during which a Participant who is either: (i) at least forty (40) years old; or (ii) is under forty (40) years old and is employed in a state that requires a specific Revocation Period, may revoke his or her signed Severance Agreement. To be effective, a written request to revoke must be received by the Administrator (as defined by applicable law) no later than 5:00 p.m. PST on the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement or, if mailed, be postmarked no later than the seventh calendar day (or other longer period required by law) from the date the Participant signed the Severance Agreement.

 

X. “Schwab” means Charles Schwab & Co., Inc., a California corporation.

 

Y. “Severance Agreement” means a written agreement in a form satisfactory to the Administrator in exchange for payment of Severance Benefits as provided in Article 6. In the sole discretion of the Administrator, such agreement may include without limitation, but is not limited to, provisions relating to (i) non-disparagement and non-disclosure; (ii) non-solicitation of customers, clients and employees; (iii) use of confidential and proprietary

 

5


information; (iv) return of company property; (v) cooperation with investigations, arbitrations, and litigation; (vi) release and waiver of all legal claims; and (vii) authorized deductions (if any). To be effective, a Severance Agreement must be signed and returned by the Return Date (and not revoked during any applicable Revocation Period). Severance Agreements are not required to be identical among Participants.

 

Z. “Severance Benefits” means all payments and benefits provided for in this Plan, including but not limited to all salary and benefits for periods during which a Participant remains an employee after being provided a Notice of Eligibility (such as the Notice Period), all forms of compensation and/or benefits of any kind for or in connection with such periods, and all other amounts paid or payable to Participants in accordance with the Plan. The Severance Benefits a Participant may be eligible for are gross amounts from which applicable taxes, withholding and appropriate deductions will be taken, including but not limited to, deduction of any outstanding amount owed to the Company by the Participant regardless of the reason for or source of the amount due. In order to receive Severance Benefits under Article 6, a Participant must timely sign and return (and not revoke, where a Revocation Period applies) a Severance Agreement. All Severance Benefits shall be applied toward satisfaction of the Company’s WARN obligations, if any, and shall constitute WARN notice and/or WARN benefits where WARN applies.

 

AA.Severance Period” means the period of time determined by adding, to the Participant’s Termination Date, the number of months for which the Participant is eligible to receive severance pay under Section 6.2.

 

BB.Termination Date” means the earlier of (i) last day that the Participant is employed by the Company; or (ii) day that the Participant’s Notice Period ends (as it may be accelerated under Article 5).

 

CC. “U.S. Trust” means U.S. Trust Corporation and each of its subsidiaries.

 

DD. “WARN” means the Federal Worker Adjustment Retraining and Notification Act, as amended, and any applicable state plant or facility closing or mass layoff law. In the event WARN applies to a Participant, any Notice Period and/or Severance Period, and all compensation and all benefits of any kind due or paid with respect to either are also deemed to constitute WARN notice and/or WARN benefits, and will be applied toward satisfying the Company’s obligations under WARN.

 

EE.Year of Service” means each 12-month period of service completed by a Participant while a Regular Employee including any service commencing on the Participant’s date of hire and ending on the Participant’s Notice Period Start Date and any service prior to a break in service for any reason other than Job Elimination. A Participant will receive credit for service with a predecessor employer that was acquired by the Company or an Affiliate if such service must be credited for purposes of an “employee benefit plan” within the meaning of ERISA under the applicable purchase agreement. Except as provided in Section 6.4(a), a

 

6


Participant’s Years of Service shall exclude service previously used to determine a Participant’s severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement.

 

ARTICLE 3 – PARTICIPATION

 

3.1. Commencement of Participation. An Eligible Employee will become a Participant as of the date he or she is issued a Notice of Eligibility.

 

3.2 Termination of Participation. A Participant’s participation in the Plan shall terminate on the earlier of (i) the date when his or her entire Plan benefit has been paid; or (ii) the date that his or her participation ends under Section 5.3(b) or 6.4(b).

 

ARTICLE 4 - EFFECT ON OTHER BENEFITS

 

4.1. Eligibility for Benefits. A Participant’s eligibility for all employee benefits (including without limitation medical, dental and vision insurance) will cease in accordance with the terms of each respective plan no later than the last day of the month that includes the Termination Date except as may be otherwise required by applicable law.

 

4.2 Paid Time Off Benefits. A Participant will continue accruing paid time off benefits until the Termination Date. The rate of accrual during the Notice Period will be the same as the rate of accrual prior to the Participant’s Notice of Eligibility.

 

ARTICLE 5 - NOTICE PERIOD

 

5.1 Notice Period. Following an Eligible Employee’s Notice of Eligibility, the Participant will enter a Notice Period for a period of sixty (60) calendar days. Except as provided in Section 5.2, during the Notice Period Participants shall not be required to report to work but shall remain subject to the Company’s policies and procedures. If WARN is applicable to a Participant, the Notice Period and all compensation (including but not limited to salary/wages, benefits and benefit plan participation) attributable to the Notice Period shall constitute WARN notice and the payment of WARN benefits, respectively, and will be applied against any notice period or other payments that would otherwise be due to satisfy the Company’s obligations under WARN.

 

5.2 Participants Requested to Work During Notice Period. If a Participant is requested to work during the Notice Period, then the Participant will be entitled to Severance Benefits only if the Participant continues to perform his or her assigned duties and responsibilities to the satisfaction of the Company through the date established by the Company in its discretion.

 

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5.3 Acceleration of Termination Date. The Termination Date, which is originally established as the end of the 60 day Notice Period, will be accelerated or otherwise changed if any of the following events occur:

 

(a) If, prior to the end of the Notice Period, a Participant resigns or otherwise obtains an external position or acts as an employee, consultant or independent contractor or as a sole proprietor of a business or acts as an officer, director, or partner in another public or privately held company. In that case, the Participant is required to notify the Administrator immediately, the end of the Notice Period and the Termination Date will be accelerated to coincide with the next day after the Participant resigned or otherwise obtained that position. The Participant will receive a payment reflecting the balance of the Base Salary attributable to the unused portion of the original Notice Period; however, no payment will be made for the value of bonuses, or other incentive compensation or the value of other employee benefits that might otherwise have been received if the Termination Date had not been accelerated. The Participant remains eligible to sign and return the applicable Severance Agreement by the Return Date in order to obtain additional Severance Benefits under Article 6.

 

(b) Except as provided in Section 5.2 as determined by the Administrator, if a Participant provides substantial services to the Company or any Affiliate as an employee (full-time, part-time or seasonal), consultant or independent contractor of the Company or any Affiliate within the Notice Period (without regard to whether the end of the Notice Period has been accelerated pursuant to Section 5.3(a)), his or her Termination Date under the Plan will be accelerated or cancelled (as appropriate), his or her participation will end, and the Participant will no longer be eligible to receive any Severance Benefits or any payment of any kind for compensation (including benefits) otherwise attributable to the unused portion of the Notice Period. If a Participant already received payment of lump sum severance pay under Section 6.1, 6.2 and/or 6.3 (as applicable), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, to repay the lump sum severance pay, including the COBRA payment, in full, as a condition of employment or providing services. In addition, if a Participant already received a lump sum payment for the unused portion of the Notice Period under Section 5.3(a), the Participant is required, except as the Administrator otherwise determines in its sole discretion, to repay the amount by which this lump sum payment exceeds the amount the Participant would have received if the payment had been calculated based on the number of business days that actually elapsed between the beginning of the Notice Period and the date of his or her commencement of service, as a condition of employment or providing services.

 

ARTICLE 6 - BENEFITS

 

Upon being provided with a Notice of Eligibility, a Participant becomes eligible to receive the Severance Benefits described in Sections 6.1, 6.2, and 6.3 (as applicable) only if the Participant returns to the Administrator a signed Severance Agreement no later than the

 

8


Return Date. If a Revocation Period applies, a Participant’s eligibility to receive these Severance Benefits also is conditioned upon the Participant not revoking (or attempting to revoke) the Severance Agreement during the Revocation Period. Subject to those conditions and such other conditions set forth in this Plan, the Participant will be entitled to receive the benefits set forth in Sections 6.1 and 6.2, or 6.3 (as applicable).

 

6.1 Non-Officers Severance Pay.

 

(a) Schwab Non-Officers. A Non-Officer Participant employed by a Participating Company other than U.S. Trust as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit equal to the greater of the amount determined under (i) or (ii) below:

 

(i) The amount of the Participant’s Base Salary that would have been payable for one-half month of active employment (i.e., 11 business days) multiplied by the Participant’s full Years of Service (but in no event to exceed the maximum amount equivalent to 220 business days of Base Salary). The Participant also will receive credit for a partial Year of Service (after aggregation of partial years), based on the following table:

 

 

 

 

Length of Partial Year


  

Number of Business Days


Less than 3 months

  

3 days

At least 3 months but less than 6 months

  

6 days

At least 6 months but less than 9 months

  

9 days

At least 9 months but less than 12 months

  

11 days

 

or

 

(ii) The amount of the Participant’s Base Salary that would have been payable for the number of business days determined under the following table:

 

 

 

 

Base Salary


  

Number of Business Days


$29,999 or less

  

22 days

$30,000 to $39,999

  

44 days

$40,000 to $54,999

  

66 days

$55,000 to $74,999

  

88 days

$75,000 and over

  

110 days

 

The length of service formula under Section 6.1(a)(i) will be used in the event application of Section 6.1(a)(i) and 6.1(a)(ii) results in the same amount. Notwithstanding the foregoing, the Severance Benefit that a Participant shall be eligible to receive under this Section 6.1(a) shall be no less than the amount of Base Salary that would have been payable to the Participant for 22 business days.

 

9


(b) U.S. Trust Non-Officers. A Non-Officer Participant employed by U.S. Trust as of his or her Notice of Eligibility will be eligible to receive a lump sum severance payment in an amount equal to two (2) weeks of the Participant’s Base Salary, multiplied by the Participant’s full Years of Service. Notwithstanding the foregoing, the Severance Benefit that a Participant shall be eligible to receive under this Section 6.1(b) shall be no less than the amount of Base Salary that would have been payable to the Participant for two (2) weeks and shall be no greater than the amount of Base Salary that would have been payable to the Participant for thirteen (13) weeks.

 

6.2 Officer Severance Pay.

 

(a) Schwab Officers. An Officer Participant employed by a Participating Company other than U.S. Trust as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit in an amount equal to the number of months determined under the table below, multiplied by one-twelfth (1/12) of the Participant’s Base Salary.

 

 

 

 

 

 

Years of Service


  

Vice President


  

Senior Vice President or
Executive Vice President


Less than 1 year

  

5 months

  

8 months

At least 1 year but less than 2 years

  

9 months

  

12 months

At least 2 years but less than 5 years

  

11 months

  

14 months

5 years or more

  

12 months

  

16 months

 

(b) U.S. Trust Officers. An Officer Participant employed by U.S. Trust as of his or her Notice of Eligibility will be eligible to receive a lump sum severance pay benefit in an amount equal to the number of months determined under the table below, multiplied by one-twelfth (1/12) of the Participant’s Base Salary.

 

 

 

 

Officer Title


  

No. of Months


First Level Officer, Assistant Vice President or Vice President

  

6 months

Senior Vice President, Managing Director or Executive Vice President

  

12 months

 

6.3 Group Health Plan Coverage Payment and Long-Term Awards.

 

(a) A Participant who becomes entitled to receive Severance Benefits will be eligible to receive a single lump sum payment to cover a portion of the cost of group health plan coverage for the Participant and his or her enrolled spouse, domestic partner and dependents (“Dependents”). The amount of such payment shall be based on the period of time for which the Participant is eligible to receive severance pay and COBRA rates for group health plan coverage in effect for the Participant and his or her Dependents as of the Participant’s Notice of Eligibility, without regard to changes in COBRA rates or coverage after Notice of Eligibility.

 

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(b) If an Officer Participant described in Section 6.2(a) or a Senior Vice President, Managing Director or Executive Vice President described in Section 6.2(b) becomes entitled to Severance Benefits, then:

 

(i) The portion of each of the Participant’s Long-Term Awards that would have vested if the Participant had remained employed during the Severance Period shall be vested as soon as administratively practicable after the Participant’s Termination Date, subject to subparagraph (iii) below; and

 

(ii) The determination of whether the Participant has satisfied the conditions of “retirement” under each Long-Term Award agreement (to the extent applicable) shall be made as of his or her Termination Date, without regard to the Participant’s Severance Period.

 

The Severance Period shall not modify or extend the exercise period of any Long-Term Award, and, except as set forth in Section 6.3(b)(i), the Plan shall not provide any benefit with respect to any Long-Term Award.

 

6.4 Additional Provisions Related to Severance Benefits.

 

(a) If a Participant receives severance benefits under this Plan, any predecessor plan or any other Affiliate-sponsored severance arrangement and if the Participant subsequently provides services to the Company or an Affiliate, then any Severance Benefits that may become payable to the Participant under this Plan following the date of recommencement of service shall be based solely on the Participant’s Years of Service following the date of such recommencement and, in the case of a Non-Officer Participant, shall be calculated without regard to Section 6.1(a)(ii); provided, however, the Administrator shall have the discretionary authority to suspend the application of this provision to a Participant who repaid more than 80% of his or her Severance Benefits pursuant to Section 5.3(b) or 6.4(d).

 

(b) Notwithstanding anything to the contrary contained herein, (i) an employee or Participant whose employment with the Company (or an Affiliate) is terminated before or after receipt of Notice of Eligibility for any reason other than Job Elimination shall not be entitled to receive any Severance Benefits hereunder, (ii) a Participant shall lose eligibility to receive Severance Benefits if (A) after receipt of Notice of Eligibility, the employee fails to work satisfactorily at the request of the Company through the date it specifies; or (B) the Company becomes aware of circumstances which could or would have caused a Participant’s termination from employment including but not limited to misconduct or any violation of law, regulation or Company policy, and (iii) in the case of an Regular Employee who the Administrator determines, in its sole discretion, is covered by a Guaranteed

 

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Payments Arrangement, except as provided in Section 6.4(g), the calculation of any payment to such Regular Employee upon such termination or resignation shall be governed by the terms of such arrangement, and not by this Article 6.

 

(c) Lump sum benefits payable pursuant to Section 6.1, 6.2 or 6.3(a) shall be paid during the next payroll processing cycle that follows the later of (i) the date the Severance Agreement is received, assuming it is signed and returned to the Administrator in the required time and is not revoked in accordance with any applicable Revocation Period; or (ii) the Termination Date, as it may be accelerated under Article 5 or 6.

 

(d) If a Participant receives payment of any or all of his or her Severance Benefit under Section 6.1, 6.2 and/or 6.3 and after his Termination Date subsequently provides substantial services to the Company or any Affiliate as an employee, consultant or independent contractor (other than pursuant to a Corporate Transaction), the Participant will be required, except as the Administrator otherwise determines in its sole discretion, as a condition of reemployment or otherwise providing services, to repay the amount (if any) by which the lump sum payment (including COBRA payments) exceeds the amount the Participant would have received if such payment had been calculated based on the number of business days that have actually elapsed between the Termination Date and the date that the Participant started to provide such services. The repayment obligation is applicable regardless of whether the Participant’s severance pay was paid under Section 6.1, 6.2 and/or 6.3(a); provided, however, the repayment obligation shall not apply to benefits provided under Section 6.3(b). Repayment of a pro rata share of severance benefits does not affect the validity of the Severance Agreement.

 

(e) Notwithstanding anything to the contrary contained in this Plan, in the event WARN is applicable to a Participant: (i) any Notice Period and/or Severance Benefits paid or payable to the Participant will be deemed to constitute and shall be attributed to WARN notice and/or WARN benefits; (ii) all Severance Benefits under this Plan will be reduced and/or offset by any notice, payments or benefits to which the Participant may be entitled under WARN; and (iii) all Severance Benefits under this Plan will be reduced and/or offset by any amount of paid days and/or paid benefits in lieu of notice the Participant is given or is required to be given by the Company to satisfy its obligations under WARN. A Severance Agreement is not required for receipt of WARN benefits.

 

(f) Notwithstanding anything to the contrary contained herein, the Company may revoke a Participant’s Severance Agreement during any applicable Revocation Period.

 

(g) Notwithstanding anything to the contrary contained herein, in the event that the Administrator determines, in its sole discretion, that an individual is a party to a Guaranteed Payments Arrangement and that such individual would otherwise be entitled to a benefit under Section 6.1 or 6.2 and/or 6.3, then the Administrator may determine, in its sole

 

12


discretion, that such individual shall be eligible to receive a cash severance benefit (instead, and in lieu, of any and all payments under such Guaranteed Payments Arrangement) equal to the greater of either (i) the amount that the Administrator determines, in its sole discretion, to be the amount of the Participant’s payments under the Guaranteed Payments Arrangement; or (ii) the total amount of the cash severance payments to which the Administrator determines, in its sole discretion, the Participant otherwise would have been entitled under Section 6.1, 6.2 and/or 6.3. Payment of such cash severance benefit shall be deemed to be subject to all of the terms and conditions of the Plan relating to the payment of benefits under Article 6, as construed by the Administrator in its sole discretion.

 

ARTICLE 7 - FUNDING

 

The amount required to be paid as Severance Benefit under this Plan shall be paid from the general assets of the Company at the time such Severance Benefits are to be paid.

 

ARTICLE 8 - ADMINISTRATION

 

8.1 Administrator’s Authority. The administration of the Plan shall be under the supervision of the Administrator. It shall be the responsibility of the Administrator to assure that the Plan is carried out in accordance with its terms. The Administrator shall have full power and sole discretionary authority to administer, interpret and construe the Plan, and to determine all claims for benefits, subject to the requirements of ERISA. For this purpose, the Administrator shall have discretionary authority:

 

(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;

 

(b) To interpret and construe the plan, its interpretation and construction thereof to be final and conclusive on all persons claiming benefits under the Plan;

 

(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;

 

(d) To compute the amount of benefits which will be payable to any Participant accordance with the provisions of the Plan, and to determine the person or persons to whom such benefits will be paid;

 

(e) To authorize the payment of benefits;

 

(f) To appoint such agents, counsel, accountants, consultants and actuaries as may be required to assist in administering the Plan; and

 

(g) To allocate and delegate its responsibilities under the Plan and to designate other persons to carry out any of its responsibilities under the Plan, and such allocation, delegation or designation to be by written instrument and in accordance with Section 405 of ERISA.

 

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The interpretations and determinations of the Administrator shall be final and binding and are not required to be uniform among similarly situated individuals. The Administrator also reserves the right to provide additional benefits, in the Administrator’s sole discretion. Determinations to be made in the discretion of the Company are made by the Company in its non-fiduciary capacity, with regard to the best interests of the Company, and are not required to be uniform among similarly situated individuals. In administering the Plan, the Administrator shall be entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by any accountant, counsel or other expert who is employed or engaged by the Administrator. Schwab shall be the “named fiduciary” for purposes of section 402(a)(1) of ERISA with authority to control and manage the operation and administration of the Plan, and shall be responsible for complying with all of the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA.

 

8.2 Claims for Benefits. No person shall be entitled to benefits under this Plan unless the Administrator has determined that he or she is entitled to them. All applications for benefits, and all inquiries concerning the Plan or present or future rights to benefits under the Plan, must be submitted to the Administrator in accordance with the established claims procedure set forth in the summary plan description. Notwithstanding anything to the contrary in this Plan, no person shall have a colorable claim for vested or unvested benefits under this Plan unless the Administrator (i) has determined that the person has incurred a Job Elimination; and (ii) has issued to the person a Notice of Eligibility.

 

8.3 Indemnification. The Company agrees to indemnify, defend and hold harmless to the fullest extent permitted by law any employee serving as or on behalf of the Administrator or as a member of a committee designated as Administrator (including any employee or former employee who formerly served as Administrator or as a member of such committee) against all liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Company) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith.

 

ARTICLE 9 - AMENDMENT AND TERMINATION

 

The Plan and/or any of its terms may be amended, suspended or terminated at any time with or without prior notice by action of the Board of Directors of Schwab or the Company or their respective delegates. Schwab’s Executive Vice President – Human Resources shall have the authority to adopt amendments that do not materially increase the cost of the Plan.

 

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ARTICLE 10 - MISCELLANEOUS

 

Except where otherwise indicated by the context, any masculine terminology used herein shall also include the feminine and vice versa, and the definition of any term herein in the singular shall also include the plural, and vice versa.

 

This Plan shall not be deemed to constitute a contract between the Company and any Eligible Employee or to be a consideration or an inducement for the employment of any Eligible Employee. Nothing contained in this Plan shall be deemed to give any Eligible Employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Eligible Employee at any time, irrespective of the effect which such discharge shall have upon such individual as an Eligible Employee of this Plan.

 

This Plan shall be construed and enforced according to federal law, except where not preempted, by the laws of the State of California other than its laws respecting choice of law.

 

ARTICLE 11 - EXECUTION

 

To record the amendment and restatement of the Plan to read as set forth herein effective as of January 1, 2006, Charles Schwab & Co., Inc. has caused its authorized officer to execute the same this 10th day of October, 2005.

 

 

CHARLES SCHWAB & CO., INC.

 

/s/ Charles R. Schwab


Charles R. Schwab

 

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APPENDIX A

 

Charles Schwab & Co., Inc.

Charles Schwab Bank, National Association

Charles Schwab Investment Management, Inc.

CyBerCorp Holdings, Inc.

CyberTrader, Inc

Mayer & Schweitzer, Inc.

Schwab Performance Technologies, Inc.

Schwab Holdings, Inc.

Schwab International Holdings, Inc.

The Charles Schwab Trust Company

Schwab Retirement Plan Services, Inc.

Schwab

Retirement Technologies, Inc.

Schwab (SIS) Holdings, Inc. I

U.S. Trust Corporation

CTC Consulting, Inc.

Fernhill Holding, Inc.

Fund Five Financial, Inc.

U.S. Trust Company of Delaware

U.S. Trust Company, National Association

Excelsior LaSalle Property Fund, Inc.

U.S. Trust Hedge Fund Management, Inc.

United States Trust Company of New York

United States Trust Company International Corporation

UST Mortgage Company

Co-Op Holdings, Inc.

UST Securities Corp.

UST Advisers, Inc.

US Trust Technology and Support Services, Inc.

 

A-1

 

 



Exhibit 10.314

EMPLOYMENT AGREEMENT

This Agreement, as amended, is made and entered into effective as of March 13, 2008 by and between The Charles Schwab Corporation, a Delaware Corporation (hereinafter referred to as the “Company”), and Charles R. Schwab, an individual (hereinafter referred to as the “Executive”).

WITNESSETH:

WHEREAS, the Company desires to reward the Executive for his continuing contribution to the Company and provide additional security for the Executive and to provide an inducement to the Executive to remain with the Company and not to engage in competition with it.

NOW THEREFORE, in consideration of the mutual obligations herein contained, the parties hereto, intending to be legally bound hereby, covenant and agree as follows:

 

1.

EMPLOYMENT

(a) The Company hereby employs the Executive to render services to the Company in the position of Chairman of the Board in the capacity defined in the Bylaws of the Company, as may be amended from time to time. The Executive shall perform such duties commensurate with his position and shall have authority and responsibility in working with the Chief Executive Officer, subject to the control of the Board of Directors, for the overall strategic direction and leadership of the Company.

(b) Throughout the term of this Agreement, the Executive shall devote his full business time and undivided attention to the business and affairs of the Company and its subsidiaries, except for reasonable vacations and except for illness or incapacity, but nothing in the Agreement shall preclude the Executive from devoting reasonable periods required for serving, as appropriate, on Boards of Directors of other companies, and from engaging in charitable and public service activities provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement.

 

2.

TERM

This Agreement shall commence on March 31, 2003, and shall continue through March 31, 2008, subject to the terms and conditions herein set forth. Beginning on March 31, 2004, and on each subsequent anniversary of this date, one year shall be added to the term of the Agreement, unless, prior to such anniversary, the Company or the Executive has notified the other party hereto that such extension will not become effective.

 

3.

COMPENSATION

For services rendered by the Executive during the term of this Agreement, and for his performance of all additional obligations of employment, the Company agrees to pay the Executive and the Executive


agrees to accept the following salary, other compensation, and benefits:

(a) Base Salary. During the term of this Agreement, the Company shall pay the Executive in periodic installments, a base salary at the annual rate of $900,000, such base salary to be reviewed on March 31, 2004, and on each subsequent anniversary the Board may adjust it up or down, taking into account, among other things, individual performance, competitive practice, and general business conditions.

(b) Annual Incentive. In addition to the base salary provided in Section 3(a) above, the Executive shall be eligible to receive an annual incentive award based upon the Company’s attainment of pre-established performance targets relative to specified performance standards. The performance standards upon which annual incentive payments will be earned shall be adopted at the beginning of each year by the Compensation Committee of the Board of Directors (the “Committee”), to be selected by the Committee from among the following: revenue growth, net revenue growth, operating revenue growth, consolidated pretax profit margin, consolidated pretax operating margin, consolidated after-tax profit margin, consolidated after-tax operating profit margin, customer net new asset growth, stockholder return, return on assets, earnings per share, return on equity, and return on investment.

For each fiscal year during the term of this Agreement, the Executive’s incentive opportunity shall be computed as the amount of total cash compensation earned pursuant to the formula-based matrix, which shall be adopted each year by the Compensation Committee of the Board of Directors of the Company, minus the Executive’s actual base salary paid during that year. For the 2003 fiscal year, the target total annual cash compensation amount (including base salary) is $5,400,000; therefore, the incentive target is $4,500,000 for achieving specified objectives (see above).

The formula-based matrix, as amended at the sole discretion of the Committee, shall be the sole basis for determining the Executive’s annual incentive award. The Committee shall annually review and approve the performance standards and targets with respect to the Executive’s incentive opportunity, which review and approval shall be completed no later than the 90th day of the Company’s fiscal year for which such incentive opportunity may be earned.

Notwithstanding anything to the contrary, the Executive’s maximum annual cash compensation (including base salary and annual incentive) may not exceed $8,000,000.

(c) Long-Term Incentive. The Executive will be considered for stock options in accordance with the Company’s 2001 Stock Incentive Plan, as amended, or any successor thereto (“Stock Option Program”) and any other long-term incentives offered to other executives of the Company from time to time during the term of this Agreement.

(d) Benefits. The Executive shall be entitled to participate, as long as he is an employee of the Company, in any and all of the Company’s present or future employee benefit plans, including without limitation pension plans, thrift and savings plans, insurance plans,

 

2


and other benefits that are generally applicable to the Company’s executives; provided, however, that the accrual and/or receipt by the Executive of benefits under and pursuant to any such present or future employee benefit plan shall be determined by the provisions of such plan.

(e) Perquisites. The Executive will be provided such additional perquisites as are customary for senior level executives of the Company provided that each perquisite is approved by the Board of Directors.

(f) Business Expenses. The Executive will be reimbursed for all reasonable expenses incurred in connection with the conduct of the Company’s business upon presentation of evidence of such expenditures, including but not limited to travel expenses incurred by the Executive in the performance of his duties, security for the Executive, his family, and principal residence, professional organization dues, and club initiation fees, dues and expenses.

(g) Any annual incentive award earned by Executive under this Section 3 shall be paid on or after January 1st and on or before March 15th of the calendar year immediately following the end of the fiscal year on which the award is based; provided, however, that if any such payment would be nondeductible to the Company under Section 162(m) of the Internal Revenue Code (the “Code”), then any nondeductible amounts shall be deferred from year to year until the payment of such amounts is deductible by the Company.

 

4.

TERMINATION OF EMPLOYMENT

(a) Resignation. Notwithstanding Section 2 hereof, this Agreement may be terminated by the Executive at any time upon six (6) months written notice of resignation by the Executive to the Company, and in such event any payments pursuant to Section 3 and 4 of this Agreement shall automatically terminate (except for the Company’s obligations relating to voluntary termination under its compensation and benefit plans, as specified in the various plan documents, and the Executive’s obligations set forth in Section 5). Subsequent payments may be made to the Executive as provided pursuant to Section 6 of this Agreement.

Termination under this Section 4(a) shall continue to be a “Voluntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(b) Separation from Service Other Than for Cause. An involuntary Separation from Service (as defined below) other than for Cause, as defined in Section 4(c) below, shall cause the Company to make payments to the Executive hereunder pursuant to the provisions of this Section 4(b). Such involuntary Separation from Service shall require at least sixty (60) business days’ prior notice and must be signed by at least three-fourths (3/4) of all the non-employee members of the Board of Directors.

Notwithstanding anything to the contrary contained in the Stock Option Program or any agreement or document related thereto, the Executive’s total outstanding and unvested shares and/or options under the Stock Option Program shall at the date of Separation from Service

 

3


under this Section 4(b) be 100% vested. No further grants of stock or options shall be made under the Stock Option Program after such termination.

With respect to base salary and annual incentive compensation, the Company’s obligation shall be to pay the Executive, according to the terms of this Agreement and for a period of thirty-six (36) months, an amount equal to the annual salary and incentive paid to the Executive at the bonus level for the year prior to which such Separation from Service occurs unless performance of the Company as defined in the matrix referenced in Section 3(b) is better in the year of Separation from Service, in which event such bonus shall be based on the matrix calculation as described in Section 3(b), such annual amounts to be paid in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee (as defined below), a lump sum representing six (6) of the monthly installment payments under this Section 4(b) shall be paid, and the remaining thirty (30) monthly installments payable under this Section 4(b) shall commence upon the first day of the seventh month following the Executive’s Separation from Service (or on the date of the Executive’s death, if earlier).

If the Board of Directors fails to reelect the Executive to a position comparable to that described in Section 1(a) of this Agreement or, without terminating the Executive’s employment, removes the Executive from his position for reasons other than Cause, substantively reduces the Executive’s duties and responsibilities, reduces his pay and/or benefits without the written consent of the Executive, forces relocation, or requires excessive travel, then the Executive may, by notice to the Company, Separate from Service and treat such Separation from Service as an involuntary Separation from Service pursuant to this Section 4(b).

In the event of the Executive’s death before the completion of the payments pursuant to this Section 4(b), the remaining payments hereunder shall be made to the beneficiary or beneficiaries designated by the Executive to the Company in writing or, absent such a designation, to his estate.

The term “Specified Employee” means an employee treated as a “specified employee” as defined under Code Section 409A as of the date of his Separation from Service. Generally, a specified employee is one of the top 50 most highly compensated officers.

The term “Separation from Service” or “Separate(s) from Service” shall mean a “separation from service” within the meaning of Code Section 409A. Generally, a separation from service occurs when an individual ceases to provide services for the Company and its affiliates.

Termination under this Section 4(b) shall continue to be an “Involuntary Termination” for purposes of the Assignment and License Agreement entered into as of March 31, 1987, as amended.

(i) Post-Employment Benefits. In the event the Executive’s employment terminates under Section 4(b), the Executive

 

4


shall be entitled to all benefits and perquisites as provided for in this Agreement, including office space and secretarial support, comparable to that provided to the Executive during his employment by the Company for a period of thirty-six (36) months following his Separation from Service. All benefits or perquisites that the Executive receives following his Separation from Service that are covered under Code Section 409A (“409A Benefits”) shall be administered consistent with the following requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (1) Executive’s eligibility for benefits in one year will not affect Executive’s eligibility for benefits in any other year; (2) any reimbursement of eligible expenses will be made on or before the last day of the year following the year in which the expense was incurred; and (3) Executive’s right to benefits is not subject to liquidation or exchange for another benefit.

If the Executive is a Specified Employee, then the Executive shall pay all applicable costs associated with the provision of 409A Benefits during the first six (6) months following the Executive’s Separation from Service. The Company shall reimburse the Executive for all expenses actually paid by the Executive under this Section 4(b) (i) upon the first day of the seventh month following the Executive’s Separation from Service.

(c) Termination by the Company for Cause. The Company may terminate the Executive’s employment for Cause if the Executive has committed a felonious act, or the Executive, in carrying out his duties hereunder has been willfully and grossly negligent or has committed willful and gross misconduct resulting, in either case, in material harm to the Company. An act or omission shall be deemed “willful” only if done, or omitted to be done, in bad faith and without reasonable belief that it was in the best interest of the Company. In the event of termination of the Executive by the Company for Cause, the Executive shall no longer be entitled to receive any payments or any other rights or benefits under this Agreement.

(d) Disability. In the event the Executive becomes Disabled (as defined below), he will continue to receive the same base salary and benefits which he was receiving prior to such disability for 36 months, offset by payments under the Company’s Long-Term Disability Plan. Such payments shall commence within 90 days of such disability. In addition, he shall receive a pro-rated annual incentive payment for the year in which his employment is terminated, based on the formula described in Section 3(b). Such payment shall be made as soon as practicable following the Executive becoming Disabled, but in no event later than 90 days following the Executive becoming Disabled. The term “Disabled” under this Section 4(d) means disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Executive is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of a medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

 

5


(e) Death. In the event of the death of the Executive during the term of this Agreement, the rights and benefits under employee benefit plans and programs of the Company, including life insurance, will be determined in accordance with the terms and conditions of such plans and programs as in effect on his date of death. In such event, the Company shall pay in a lump sum to the Executive’s estate an amount equal to five times the then current rate of the Executive’s base salary, and no further payments shall be required pursuant to this Agreement. The lump-sum described in this Section 4(e) shall be paid to the Executive’s estate as soon as practicable following the date of the Executive’s death, but in no event later than 90 days following the Executive’s death.

(f) Change in Control. In the event of a change in control of the Company, as set forth below, the Executive may at any time and in his complete discretion during a 24-month period following a change in control, elect to terminate his employment with the Company. For purposes of this Agreement, a “change in control” shall mean a change in ownership of the Company that would be required to be reported in response to Item 1(a) of a Current Report on Form 8-K pursuant to the Securities and Exchange Act of 1934 (“Exchange Act”), as in effect on the date hereof, except that any merger, consolidation or corporate reorganization in which the owners of the capital stock entitled to vote in the election of directors of the Employer or the Company (“Voting Stock”) prior to said combination, own 75% or more of the resulting entity’s Voting Stock shall not be considered a change in control for the purposes of this Agreement; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company is or becomes the beneficial owners (as that is used in Section 13(d) of the Exchange Act), directly or indirectly, of 30% or more of the Voting Stock of the Company or its successor; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (“Incumbent Board”) cease for any reason to constitute at least a majority thereof; provided, however, that any person becoming a director of the Company after the beginning of the period whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board shall, for the purposes hereof, be considered as though he were a member of the Incumbent Board; or (iii) there shall occur the sale of all or substantially all of the assets of the Company. Notwithstanding anything in the foregoing to the contrary, no change in control of the Company shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in the Executive, or a group of persons which includes the Executive acquiring, directly or indirectly, more than 30 percent of the combined voting power of the Company’s outstanding securities. If any of the events constituting a change in control shall have occurred during the term hereof, the Executive shall be entitled to the privilege provided in subparagraph (f) herein to terminate his employment.

Any termination by the Executive pursuant to this Section shall be communicated by a written “Notice of Termination.”

 

6


If, following a change in control, the Executive shall for any reason voluntarily terminate his employment during the 24-month period following a change in control, then the Company shall pay base salary up to the date of termination and a prorated annual incentive award based on the calculated bonus for the year in which termination occurred, as defined in Section 3(b), in a lump sum on the thirtieth (30th) day following the Date of Termination.

 

5.

COVENANT NOT TO COMPETE

(a) As a material inducement to the Company’s entering into this Agreement, the Executive agrees that during the term of this Agreement, he will not become associated with, render service to or engage in any other business competitive with any existing or contemplated business of the Company or its subsidiaries, except that the Executive may serve as a member of the board of directors of other companies or organizations, provided that he provides written notice to the Board of each significant activity, and that he will do nothing inconsistent with his duties and responsibilities to the Company.

(b) If the Executive voluntarily resigns from the employ of the Company prior to the expiration of the term of this Agreement, he specifically agrees that for a period of five (5) years commencing with the date of his voluntary resignation he will not engage in or perform any services either on a full-time or a part-time or on a consulting or advisory basis for any business organization that is in competition with the Company at the time such services are being performed by Executive, with the exception that this Section 5(b) shall not apply in the event the Executive resigns voluntarily following a change in control of the Company as defined in Section 4(f).

(c) The Executive will not at any time, whether while employed by the Company or after voluntary or involuntary termination or after retirement, reveal to any person, firm or entity any trade or business secrets or confidential, secret, or privileged information about the business of the Company or its subsidiaries or affiliates except as shall be required in the proper conduct of the Company’s business.

 

6.

CONSULTING ARRANGEMENT

Following the Executive’s Separation from Service pursuant to Section 4(a) or Separation from Service following a change in control under Section 4(f), or an involuntary Separation from Service subsequent to a change in control of the Company, for any reason but during a 24-month period following a change in control as defined in Section 4(f), after the Executive ceases to render services as the Chairman, he may in his sole discretion elect to act as a consultant to the Company for a period of five (5) years. During this period of consulting services, the Executive shall, at reasonable times and places, taking into account any other employment or activities he may then have, hold himself available to consult with and advise the officers, directors, and other representatives of the Company. As compensation therefore, the Executive shall be entitled to receive, and Company shall pay, an annual amount equal to seventy-five percent (75%) of his annual base salary rate in effect immediately prior to his Separation from Service, but in no event an annual amount to exceed

 

7


$1,000,000, for each year of such period, payable in equal monthly installments commencing on Separation from Service.

If the Executive is a Specified Employee, a lump sum representing six (6) of the monthly installment payments under this Section 6 shall be paid, and the remaining monthly installments payable under this Section 6 shall commence upon the first day of the seventh month following the Executive’s Separation from Service.

 

7.

WITHHOLDING

All amounts payable hereunder which are or may become subject to withholding under pertinent provisions of law or regulation shall be reduced for applicable income and/or employment taxes required to be withheld.

 

8.

MISCELLANEOUS

(a) This Agreement supersedes any prior agreements or understandings, oral or written, with respect to employment of the Executive and constitutes the entire Agreement with respect thereto; provided, however, that nothing contained herein shall supersede that certain Assignment and License Agreement entered into as of March 31, 1987, as amended. This Agreement cannot be altered or terminated orally and may be amended only by a subsequent written agreement executed by both of the parties hereto or their legal representatives, and any material amendment must be approved by a majority of the voting shareholders of the Company.

(b) This Agreement shall be governed by and construed in accordance with the laws of the State of California.

(c) This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns. In that this constitutes a personal service agreement, it may not be assigned by the Executive and any attempted assignment by the Executive in violation of this covenant shall be null and void.

(d) For the purpose of this Agreement, the phrase “designated beneficiary or beneficiaries” shall include the estates of such beneficiaries in the event of their death before the receipt of all payments under this Agreement and shall also include any alternate or successor beneficiaries designated in writing to the Company by the Executive.

(e) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions, which shall remain in full force and effect.

(f) The Section and Paragraph headings contained herein are for reference purposes only and shall not in any way affect the meanings or interpretation of this Agreement.

(g) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be

 

8


entered on the arbitrators’ award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company.

(h) Any notices, requests or other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices.

 

9.

COMPLIANCE WITH CODE SECTION 409A

With respect to any compensation payable or benefits to be provided under this Agreement that are subject to Code Section 409A, this Agreement is intended to comply with the provisions of Code Section 409A. In furtherance of this intent, to the extent that any compensation payable or benefits to be provided under this Agreement are subject to Code Section 409A, this Agreement shall be interpreted, operated, and administered in a manner consistent with these intentions, and the parties agree to amend this Agreement further (if necessary) in order to avoid the adverse tax consequences of Code Section 409A.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

 

 

ATTEST

 

 

Company:

THE CHARLES SCHWAB CORPORATION

By:

 

/s/ Carrie Dwyer

 

 

By:

 

/s/ Jay Allen

 

Carrie Dwyer

Corporate Secretary

 

 

 

Jay Allen

Executive Vice President - Human Resources

Executive:

 

/s/ Charles R. Schwab

 

Charles R. Schwab

 

9