EXHIBIT 10(iii)(A)(1)
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT by and between Bankers
Trust New York Corporation, a New York corporation (the
"Company") and Xxxxx X. Xxxxxxxx (the "Executive"), dated as of
the 21st day of April, 1997.
1. Employment Period. Subject to the consummation of
the transactions contemplated by the Agreement and Plan of Merger
among the Company, Merger Sub and Alex. Xxxxx Incorporated, a
Maryland corporation ("Pathfinder") dated as of April 6, 1997
(the "Merger Agreement"), the Company hereby agrees to employ the
Executive, and the Executive hereby agrees to remain in the
employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the closing date of the
transactions contemplated by the Merger Agreement (the
"Commencement Date") and ending on December 31, 1999 (the
"Employment Period").
2. Terms of Employment. (a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as a
Vice Chairman of the Board of Directors of the Company, reporting
directly to the Chief Executive Officer of the Company. The
Executive's office shall be located in Baltimore, Maryland. The
Company agrees to nominate the Executive to serve as a member of
its board of directors following the Commencement Date.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote full attention and time
during normal business hours to the business and affairs of the
Company and to use the Executive's reasonable best efforts to
perform such responsibilities in a professional manner. It shall
not be a violation of this Agreement for the executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Commencement
Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Commencement Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the
Company.
(b) Compensation. (i) Base Salary. Until such
time as the long-term incentives described in Section 2(b)(iii)
below are fully vested, the Executive shall receive an annual
base salary ("Annual Base Salary") of $350,000 payable in cash.
The Annual Base Salary shall be paid no less frequently than in
equal monthly installments.
(ii) Annual Bonus. For calendar year 1997,
the Executive will receive the Executive's current salary plus a
bonus on a basis consistent with Pathfinder's past practices.
Until such time as the long-term incentives described in Section
2(b)(iii) below are fully vested, in addition to Annual Base
Salary, the Executive shall be awarded an annual bonus (the
"Annual Bonus") which is consistent with Company practice and
policy with respect to its investment banking division but which
for calendar years 1998 and 1999 will not be less than $3,500,000
(the "Minimum Bonus"), payable in the same ratio of cash and
equity incentives as peer executives of the Company.
(iii) Long-Term Incentives. Upon
commencement of the Employment Period, the Executive shall
receive a grant of 60,000 Company stock options (the "Initial
Grant") and additional grants of 60,000 stock options in calendar
years 1998 and 1999 (the "Additional Grants"), in each case with
an exercise price equal to the Fair Market Value of the stock
subject thereto on the date of grant (collectively, the "Stock
Options"). The Initial Grant shall vest and become exercisable
one-third on the first anniversary of the date of grant, an
additional one-third on the second anniversary of the date of
grant and a final one-third on the third anniversary of the date
of grant. The Additional Grants shall vest and become
exercisable on the first anniversary of the date of grant. For
purposes this Section 2(b)(iii), the "Fair Market Value" of the
Company's common stock shall be the average closing price of the
Company's common stock on the New York Stock Exchange for the
five trading days prior to the date of grant. The Stock Options
shall provide that if the Company shall terminate the Executive's
employment other than for Cause during or after the Employment
Period, including by reason of the Executive's death or
Disability, or the Executive shall terminate employment for Good
Reason during or after the Employment Period, such Stock Options
shall become immediately vested. The Executive shall also be
granted 75,000 PEP units in each of calendar years 1998 and 1999
pursuant to the Company's Partnership Equity Plan (the "PEP
Units"). The Company agrees to consider the participation of the
Executive in incentive compensation plans applicable to peer
executives, with such participation being in the Company's sole
discretion.
(iv) Savings and Retirement Plans. During
the Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans, practices,
policies and programs to the extent applicable generally to other
peer executives of the Company and its affiliated companies,
provided that the Executive's participation in the Company's
qualified retirement plan may be delayed until the effectiveness
of the Company's cash balance pension plan. For purposes of all
such plans, the Company shall credit the Executive with full
credit for all service credited under the Pathfinder Retirement
Savings Plan (including service with Pathfinder prior to the
Commencement Date) for purposes of eligibility to participate and
receive benefits and vesting but not for benefit accruals in any
Company retirement plan.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the Executive's
family, as the case may be, shall be eligible for participation
in and shall receive all benefits under welfare, fringe, change
of control protection, vacation and other similar benefit plans,
practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies. For
purposes of all such plans, the Company shall credit the
Executive with full credit for all service credited under the
corresponding Pathfinder benefit plans for purposes of
eligibility to participate and receive benefits but not for
purposes of vesting benefit accruals. With respect to the
Company's welfare benefit plans, the Company shall cause any such
plan to waive any pre-existing condition exclusions and actively-
at-work requirements thereunder with respect to the Executive and
his eligible dependents and shall ensure that any covered
expenses incurred on or before the Commencement Date shall be
taken into account for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions
after the Commencement Date to the extent that such expenses are
taken into account for the benefit of peer executives of the
Company.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement
for all reasonable business expenses incurred by the Executive,
in accordance with the policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in connection
with the Executive's status as an employee, officer, director or
agent of the Company in accordance with the Company's indemnity
policies for its senior executives, subject to applicable law.
3. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance
with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" shall have the meaning set forth in
the Company's Long-Term Disability Plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for Cause.
For purposes of this Agreement, "Cause" shall mean:
(i) intentional gross misconduct by the
Executive damaging in a material way to the Company, or
(ii) a material breach of this Agreement,
after the Company has given the Executive notice thereof and a
reasonable opportunity to cure.
(c) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean a material breach by the
Company of this Agreement after the Executive has given the
Company notice of the breach and a reasonable opportunity to
cure.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 10(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving
of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the date
of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may
be.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause, including by reason of the
Executive's death or Disability, or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive
in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the amounts set forth in clauses A
and B below:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent
not theretofore paid, (2) the product of (x) the Minimum Bonus and
(y) a fraction (the"Proration Fraction"), the numerator of which is the
number of days in the current calendar year through the
Date of Termination, and the denominator of which is 365
and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) to the extent
not theretofore paid (the sum of the amounts described in clauses
(1), (2), and (3) shall be hereinafter referred to as the
("Accrued Obligations"); and
B. the amount equal to the product of
(1) the number of years (including fractions thereof)
remaining from the Date of Termination until December
31, 1999 and (2) the sum of (x) the Executive's
Annual Base Salary and (y) the Minimum Bonus, which
amount shall be discounted to present value at
the applicable federal rate, as defined in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended; and
(ii) the Stock Options and PEP Units shall
become immediately vested;
(iii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the
Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled to
receive under any plan, program, policy or practice
or contract or agreement of the Company and its affiliated
companies, excluding any severance plan or policy except
to the extent that such plan or policy provides, in
accordance with its terms, benefits with a value in
excess of the benefits payable to the Executive under this
Section 4 (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (x) Accrued Obligations less the amount determined
under Section 4(a)(i)A(2) hereof, and (y) Other Benefits, in each
case to the extent theretofore unpaid.
5. Arbitration. The Company and the Executive
agree that any disputes with respect to this Agreement shall be
subject to binding arbitration in New York City in accordance
with the rules of the American Arbitration Association. The
proceedings and the results of such arbitration shall be treated
as confidential information subject to Section 6(a) hereof. The
Company agrees to pay for the costs of arbitration and shall
reimburse the Executive for his reasonable attorney's fees
provided that the Executive prevails on at least one material
issue in the arbitration.
6. Confidential Information/Noncompetition.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which
shall have been obtained by the Executive during the Executive's
employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has been
given notice of and opportunity to challenge or limit the scope
of disclosure purportedly so required), communicate or divulge
any such information, knowledge or data to anyone other than the
Company and those designated by it.
(b) While employed by the Company, the
Executive shall comply with the rules and policies of the
Company, including without limitation the Company's Rules for
Business Conduct and compliance policies. After termination of
the Executive's employment with the Company, the Executive shall
comply with those aspects of such rules and policies which apply
to conduct after termination of employment.
(c) Until December 31, 1999, the Executive
will not directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control
of, or be connected as an officer, employee, partner, director or
otherwise with, or have any financial interest in, any business
which is in competition with the investment banking, corporate
finance, corporate advisory, asset management or M&A business
conducted by Pathfinder or the Company or any of its affiliates
in any geographic area where such business is being conducted
during such period. Ownership, for personal investment purposes
only, of not to exceed 2% of the voting stock of any publicly
held corporation shall not constitute a violation hereof.
(d) While employed by the Company or any of
its affiliates or Pathfinder and for one year after the
Executive's termination of employment, the Executive will not,
directly or indirectly, solicit for employment by other than the
Company any person employed by the Company or its affiliates or
Pathfinder at the effective time of the Merger (as defined in the
Merger Agreement) (the "Merger"), nor will the Executive,
directly or indirectly, solicit for employment by other than the
Company any person known by him to be employed at the time by
Pathfinder or the Company or its affiliates.
(e) The provisions of Section 6(c) and (d)
shall remain in full force and effect until the expiration of the
period specified herein notwithstanding the earlier termination
of the Executive's employment hereunder.
7. Specific Performance. The Executive
acknowledges that a violation on his part of any of the covenants
contained in Section 6 hereof would cause immeasurable and
irreparable damage to the Company. Accordingly, the Executive
agrees that the Company shall be entitled to injunctive relief in
any court of competent jurisdiction for any actual or threatened
violation of any such covenant in addition to any other remedies
it may have. The Executive agrees that in the event that any
arbitrator or court of competent jurisdiction shall finally hold
that any provision of Section 6 hereof is void or constitutes an
unreasonable restriction against the Executive, the provisions of
such Section 6 shall not be rendered void but shall apply to such
extent as such arbitrator or court may determine constitutes a
reasonable restriction under the circumstances.
8. Successors. (a) This Agreement is
personal to the Executive and without the prior written consent
of the Company shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and
assigns.
(c) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
not-withstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of
the Executive whether pursuant to this Agreement or otherwise,
and determined without regard to any additional payments required
under this Section 9) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(b) Subject to the provisions of Section 9(c),
all determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by KPMG
Peat Marwick (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-
Up Payment, as determined pursuant to this Section 9, shall be
paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company
to or for the benefit of the Executive.
(c) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-
Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an aftertax basis,
for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such
claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-
Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
10. Miscellaneous. (a) This Agreement shall
be governed by and construed in accordance with the laws of the
State of New York, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications
hereunder shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
c/o Xxxx Xxxxx Incorporated
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to the Company:
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others, other
than claims for a breach of Section 6 of this Agreement. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not
the Executive obtains other employment.
(d) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(e) The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(f) On and after the Commencement Date, this
Agreement shall supersede any other agreement between the parties
or between Pathfinder and the Executive with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the Executive has hereunto
set the Executive's hand and, pursuant to the authorization from
its Board of Directors, the Company has caused these presents to
be executed in its name on its behalf, all as of the day and year
first above written.
/S/ XXXXX X. XXXXXXXX
XXXXX X. XXXXXXXX
BANKERS TRUST NEW YORK CORPORATION
By /S/ XXXX XXXXXX
XXXX XXXXXX
