AMENDED AND RESTATED AGREEMENT RELATING TO RETENTION AND NONCOMPETITION AND OTHER COVENANTS
Exhibit
10.1
RELATING
TO RETENTION
AND
NONCOMPETITION
AND OTHER
COVENANTS
AMENDED
AND RESTATED AGREEMENT by and
among Lazard Ltd, a company incorporated under the laws of Bermuda (the “Company”), Lazard
Group LLC, a Delaware limited liability company (“Lazard Group”), and
Xxxxx Xxxxxxxxxxx (the “Executive”), dated
as
of the 29th day of January, 2008 (the “Agreement”).
The
Company has determined that it is
in the best interests of the Company and its shareholders to assure that
the
Company and Lazard Group will have the continued dedication of the Executive
notwithstanding the scheduled expiration of the Agreement Relating to Retention
and Noncompetition and Other Covenants, dated as of May 4th,
2005, between
the Company and the Executive (the “Prior Retention
Agreement”). Therefore, in order to accomplish these
objectives, the Board of Directors of each of the Company and Lazard Group
has
respectively caused the Company and Lazard Group to enter into this amendment
and restatement of the Prior Retention Agreement and the Special Retention
Award
Agreement (as defined in Section 3 below), as of the date
hereof.
NOW,
THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:
1. Employment
Period. (a) The Company and Lazard Group hereby
agree to continue to employ the Executive, and the Executive hereby agrees
to
continue to be employed by the Company and Lazard Group, subject to the terms
and conditions of this Agreement, for the period commencing on January 29,
2008
(the “Effective
Date”) and ending on December 31, 2012, unless earlier terminated in
accordance with the terms hereof (the “Employment
Period”).
(b) From
and after the Effective Date, this Agreement shall supersede the Prior Retention
Agreement with respect to the subject matter hereof. The execution of
this Agreement shall have no effect on the continuing application or the
terms
of the Agreement Relating to the Reorganization of Lazard, dated as of May
10th,
2005, between
Lazard LLC and the Executive (the “Reorganization
Agreement”) or any other agreements entered into in connection with the
Reorganization (as defined in the Reorganization Agreement) (collectively,
the
“Reorganization
Documents”), including any agreements with respect to the HoldCo
Interests or Exchangeable Interests (each as defined in the Reorganization
Documents), which shall continue in full force and effect in accordance with
their terms, and all references to (including the terms defined by reference
to)
the Prior Retention Agreement contained in any Reorganization Document or
any
other agreement between the Executive and the Company or its affiliates entered
into prior to the Effective Date, including without limitation any stock
unit
award agreements entered into prior to the Effective Date (which for purposes
hereof shall include the stock unit award agreement entered into as of the
date
hereof with respect to 2007 annual compensation), shall continue to refer
to and
be controlled by the Prior Retention Agreement.
2. Terms
of
Employment. (a) Position
and
Duties. (i) During the Employment Period, the
Executive shall serve as Chairman and Chief Executive Officer of each of
the
Company and Lazard Group, with such authority, duties and responsibilities
as
are commensurate with such positions, and shall serve as a member of the
Company’s Board of Directors (the “Board”).
(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 substantially
all of his attention and time during normal business hours to the business
and
affairs of the Company and Lazard Group and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the
Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a
violation of this Agreement for the Executive to, consistent with and subject
to
the policies applicable to members of the Board, (A) serve on corporate,
civic
or charitable boards or committees, (B) deliver lectures or fulfill speaking
engagements and (C) manage personal investments or engage in other activities
consistent with past practice (including, without limitation, with respect
to
Xxxxxxxxxxx & Co., LP consistent with Section 9(b)(ii) of this Agreement),
so long as such activities do not significantly interfere with the performance
of the Executive’s responsibilities as an employee of the Company and Lazard
Group in accordance with this Agreement.
(b) Compensation.
(i) Base
Salary. During the Employment Period, the Executive shall
receive annual base salary (“Annual Base Salary”)
at a rate of no less than $900,000, which shall be payable in accordance
with
the normal payroll practices of Lazard Group. The term “Annual Base
Salary” shall refer to the Annual Base Salary as it may be
increased.
(ii) Incentive
Compensation. With respect to the Company’s 2008, 2009 and
2010 fiscal years, the
Compensation Committee of the Board (the “Compensation
Committee”) and the Board
shall assess the Executive’s performance on the basis of such criteria as they
may deem appropriate in their absolute discretion. Based on such
assessment for each such fiscal year, the Compensation Committee and the
Board
may award the Executive approximately 900,000 restricted stock units
(“RSUs”)
in respect of the Company’s
Class A common stock (“Common
Stock”) (each such award, if
any, an
“Annual
Award”), with such
increases or decreases to the number of such RSUs actually awarded for such
fiscal year as the Compensation Committee and the Board may determine in
their
absolute discretion. The grant of any such RSUs shall be made
pursuant to an award agreement (an “Annual
Award
Agreement”)
containing terms and conditions consistent herewith and otherwise as determined
by the Board and the Committee in their absolute discretion. All RSUs
awarded pursuant to any Annual Award shall vest on (A) December 31, 2012,
subject to the Executive’s continued employment with the Company and Lazard
Group through such date, or (B) if earlier, the occurrence of a Change in
Control (as defined in Company’s 2005 Equity Incentive Plan); provided that, in
the event
that such Change in Control does not qualify as an event described in Section
409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations thereunder, such RSUs shall not be settled until December 31,
2012,
or, if earlier, immediately following any permissible payment event under
Section 409A of the Code and the regulations thereunder (but shall not be
subject to any forfeiture
-
2
-
provisions
following such Change in Control). Notwithstanding the
foregoing, in the event that, during the Employment Period, the Company
terminates the Executive’s employment other than for Cause or the Executive’s
employment terminates due to death or Disability, all RSUs previously awarded
pursuant to any Annual Award shall vest on the earliest of
(A) December 31, 2012, (B) the Executive’s death and (C) the
occurrence of a Change in Control (subject to the proviso contained in the
immediately preceding sentence); provided,
however,
that in the event of any
non-compliance with the restrictive covenants under the applicable Annual
Award
Agreements during the applicable periods specified therein following a
termination other than for Cause or due to the Executive’s Disability (other
than following a Change in Control), all such RSUs shall be
forfeited. Except as otherwise provided above, all RSUs awarded
pursuant to any Annual Award shall be settled as soon as practicable (but
in no
event more than 30 days) after the applicable vesting date. In the
event that, during the Employment Period, the Company terminates the Executive’s
employment for Cause or the Executive terminates his employment for any reason
(other than due to death or Disability), all RSUs awarded pursuant to any
Annual
Award shall be forfeited. The Compensation Committee and the Board
may also award the Executive an additional bonus for each such fiscal year
in
the amount and form and with such other terms and conditions as the Compensation
Committee and the Board may determine in their absolute
discretion.
(iii) With
respect to each of the Company’s
2011 and 2012 fiscal years, the Compensation Committee and the Board shall
assess the Executive’s performance on the basis of such criteria as they may
deem appropriate in their absolute discretion. Based on such
assessment for each such fiscal year, the Compensation Committee and the
Board
may award the Executive for such fiscal year an annual bonus, which shall
be in
the amount and form and have such other terms and conditions as the Compensation
Committee and the Board may determine in their absolute
discretion.
(iv) Other
Benefits. During the Employment Period, the Executive shall be
entitled to participate in all employee pension, welfare and other benefit
plans, practices, policies and programs generally applicable to the most
senior
executives of the Company and Lazard Group on a basis and on terms no less
favorable than that provided to such senior executives; provided that the Executive
shall
not be eligible to participate in any equity-related, bonus, incentive,
severance, profit sharing or deferred compensation plan or any similar plan,
scheme or arrangement without the consent of the Compensation Committee or
the
Board (as applicable) other than (A) as set forth in Section 2(b)(ii) or
(iii)
and Section 3, (B) participation in the tax-qualified and supplemental
retirement plans of Lazard Group or its affiliates or (C) participation in
plans
that provide the Executive only the opportunity to defer the receipt of income
otherwise payable hereunder. In addition, the Executive shall be
entitled to perquisites and fringe benefits no less favorable than those
provided to him by Lazard Group immediately prior to the Effective Date,
to the
extent not inconsistent with the policies of the Company or Lazard Group,
as
applicable, as in effect from time to time.
(v) Expenses. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred by the Executive
in
the performance of his duties in accordance with the policies of the Company
or
Lazard Group, as applicable, as in effect from time to time.
-
3
-
(vi) Vacation. During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the plans, policies, programs and practices of the Company
or
Lazard Group, as applicable, as in effect from time to time with respect
to the
senior executives of the Company and Lazard Group.
3. Special
Retention
Award. Effective as of the Effective Date, the Compensation
Committee shall grant the Executive RSUs in respect of 2,700,000
shares of
Common Stock (the “Special
Retention
Award”), on the terms set forth in the Stock Unit Award Agreement
attached hereto as Exhibit A (“Special
Retention Award
Agreement” and, together with any Annual Award Agreements, the “RSU Award
Agreements”).
4. 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 the Executive written
notice in accordance with Section 11(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
mean the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 180 consecutive days in a 365-day period as a result
of
incapacity due to mental or physical illness that is determined to be total
and
permanent by a physician selected by the Company or its insurers and reasonably
acceptable to the Executive or the Executive’s legal
representative.
(b) By
the
Company. The Company may terminate the Executive’s employment
during the Employment Period either with or without Cause (subject to the
notice
requirements of Section 4(d)). For purposes of this Agreement,
“Cause”
shall
mean:
(i) conviction
of the Executive of, or a guilty or nolo contendere plea (or the
equivalent in a non-United States jurisdiction) by the Executive to, a felony
(or the equivalent in a non-United States jurisdiction), or of any other
crime
that legally prohibits the Executive from working for the Company or its
affiliates;
(ii) breach
by the Executive of a regulatory rule that materially adversely affects the
Executive’s ability to perform his duties;
(iii) willful
and deliberate failure on the part of the Executive (A) to perform his
employment duties in any material respect or (B) to follow specific reasonable
directions received from the Board, in each case following written notice
to the
Executive of such failure and, if such failure is curable, the Executive’s
failing to cure such failure within a reasonable time (but in no event less
than
30 days); or
(iv) a
breach of a Covenant that is (individually or combined with other such breaches)
demonstrably and materially injurious to the Company or any of its
affiliates.
-
4
-
For
purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions
of
the Board or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive
in
good faith and in the best interests of the Company.
The
Executive shall not be terminated (including for Cause) or asked to resign
unless and until there shall have been delivered to the Executive a copy
of the
resolutions duly adopted by the affirmative vote of a majority of the members
of
the Board then in office at a meeting called and held for such purpose, provided that,
with
respect to any such meeting, the Executive and the members of the Board shall
have been given reasonable notice of such meeting (which shall, in any event,
not require more than five (5) days notice) and the Executive shall have
been
given an opportunity, together with counsel, to be heard at such meeting
(it
being understood that the failure to provide such adequate notice shall
invalidate any action or resolution of the Board to terminate the
Executive). The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to
the
Executive a copy of the resolutions complying with the provisions set forth
in
the foregoing sentence, which resolutions find that, in the good faith opinion
of the Board, the Executive is guilty of conduct constituting Cause as described
above, and specifies the particulars thereof in detail. The Executive
agrees that the Company, Lazard Group and their respective affiliates shall
be
entitled, without the consent of the Executive, to amend (a) the proviso
to the
last sentence of Section 24.03 and the last sentence of Section 24.09 of
the
Amended and Restated Bye-Laws of Lazard Ltd, adopted as of May 10, 2005 and
(b) the last sentence to Section 3.01(d) and the proviso to Section
3.01(f) to the Operating Agreement of Lazard Group LLC, dated as of May 10,
2005
to conform to the procedural requirements specified in the prior two
sentences.
(c) By
the
Executive. During the Employment Period, the Executive’s
employment may be terminated by the Executive for any or no reason (subject
to
the notice requirements of Section 4(e)).
(d) Notice
of
Termination. Any termination by the Company for Cause shall be
communicated by Notice of Termination to the Executive given in accordance
with
Section 11(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 Section 4(b) 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 Date of
Termination (which date shall be not more than 30 days after the giving of
such
notice). The failure by the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Cause
shall not waive any right of the Company hereunder or preclude the Company
from
asserting such fact or circumstance in enforcing the Company’s rights
hereunder.
-
5
-
(e) Date
of
Termination. For purposes of this Agreement, “Date of
Termination”
means (i) if the Executive’s employment is terminated by the Company for Cause,
the date of receipt of the Notice of Termination or any later date specified
therein within 30 days of such notice, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other than for Cause, death
or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination, (iii) if the Executive’s employment
is terminated by the Executive, the Date of Termination shall be the date
on
which the Executive notifies the Company of such termination, which date
shall
not be less than three months after the Executive notifies the Company of
such
termination, unless waived in writing by the Company and (iv) 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.
5. Obligations
of the Company
upon Termination. (a) By the
Company Other Than
for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate the Executive’s employment other than for
Cause, death or Disability:
(i) Lazard
Group shall pay to the Executive in a lump sum in cash within 30 days after
the
Date of Termination the sum of (A) the Executive’s Annual Base Salary through
the Date of Termination and (B) any earned and unpaid cash bonus amounts
for
fiscal years of the Company completed prior to the Date of Termination, in
each
case, to the extent not theretofore paid (the sum of the amounts described
in
subclauses (A) and (B), the “Accrued
Obligations”); provided that, notwithstanding the foregoing, if the
Executive has made an irrevocable election under any deferred compensation
arrangement subject to Section 409A of the Code to defer any portion of any
cash
bonus described in clause (B) above, then such deferral election, and the
terms
of the applicable deferred compensation arrangement, shall apply to such
portion
of such cash bonus, and such portion shall not be considered part of the
“Accrued Obligations”
but shall instead be deemed an “Other Benefit” (as defined below) for purposes
of Sections 5(a) through (d);
(ii) (A)
for the remainder of the Executive’s life and that of his current spouse, the
Executive, his spouse and his eligible dependents shall continue to be eligible
to participate in the medical and dental benefit plans of Lazard Group on
the
same basis as the Executive participated in such plans immediately prior
to the
Date of Termination, to the extent that the applicable plan permits such
continued participation for all or any portion of such period (it being agreed
that Lazard Group will use its reasonable efforts to cause such continued
coverage to be permitted under the applicable plan for the entire period)
and
(B) in the event such benefits continuation period is required to be limited
to
a shorter period, the actual period of continuation shall not run concurrently
with or reduce the Executive’s right to continued coverage under COBRA and, for
purposes of determining the Executive’s eligibility for and right to commence
receiving benefits under the retiree health care benefit plans of Lazard
Group,
the Executive shall receive additional years of age and service credit equal
to
the number of years and portions thereof in the applicable benefits continuation
period (collectively, the “Medical Benefits”)
(the amount of Medical Benefits provided in any given calendar year shall
not
affect the amount of Medical Benefits provided in any other calendar year,
and
the Executive’s right to Medical Benefits may not be liquidated or exchanged for
any other benefit); and
-
6
-
(iii) to
the extent not theretofore paid or provided, Lazard Group shall timely pay
or
provide to the Executive any other amounts or benefits required to be paid
or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of Lazard Group and its affiliates
through the Date of Termination (such other amounts and benefits shall be
hereinafter referred to as the “Other
Benefits”).
(b) Death. If
the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive’s legal representatives under this Agreement, other
than for the payment of the Accrued Obligations and the timely payment or
provision of Other Benefits. The Accrued Obligations shall be paid to
the Executive’s estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this
Section
5(b) shall include death benefits as in effect on the date of the Executive’s
death with respect to senior executives of the Company and Lazard Group and
their beneficiaries and the provision of the Medical Benefits to the Executive’s
current spouse and his eligible dependents.
(c) Disability. If
the Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for the payment of the Accrued
Obligations and the timely payment or provision of Other
Benefits. The Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 5(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits as
in
effect at any time thereafter generally with respect to senior executives
of the
Company and Lazard Group and the provision of the Medical Benefits to the
Executive and his current spouse and his eligible dependents.
(d) By
the Company for Cause; By
the Executive; Expiration of the Employment Period. If, during
the Employment Period, the Executive’s employment shall be terminated for Cause
or the Executive terminates his employment for any reason, or if the Executive’s
employment with the Company ceases upon or following the expiration of the
Employment Period, this Agreement shall terminate without further obligations
to
the Executive other than the obligation to pay or provide to the Executive
(i)
the Accrued Obligations, (ii) the Medical Benefits (other than upon a
termination for Cause) and (iii) the Other Benefits, in each case to the
extent
theretofore unpaid.
6. Non-exclusivity
of
Rights. Except as specifically provided, nothing in this
Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its affiliates and for which the Executive may qualify, provided
that
he shall not be entitled to severance pay under any severance policy of the
Company or its affiliates. Amounts or benefits that are vested
benefits or which the Executive is otherwise entitled to receive under any
plan,
policy, practice or program of or any contract or agreement with Lazard Group
or
any of its affiliates (including without limitation the RSU Award Agreements)
at
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
-
7
-
7. Full
Settlement. Lazard Group’s obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company or its affiliates
may
have against the Executive or others. 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 or the RSU Award Agreements and such amounts shall not
be
reduced whether or not the Executive obtains other employment. Lazard
Group agrees to pay as incurred (within 30 days following its receipt of
an
invoice from the Executive), at any time from the Effective Date through
the
Executive’s remaining lifetime (or, if longer, through the 20th
anniversary of
the Effective Date) to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company or its affiliates, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or the RSU Award Agreements or any guarantee
of
performance thereof (including as a result of any contest by the Executive
about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided for
in
Section 7872(f)(2)(A) of the Code, provided that the
Executive prevails on one material issue; provided,
further,
that in the event the final
resolution of any such contest results in the Executive not prevailing on
a
material issue, the Executive shall be required to reimburse the Company
all
sums advanced to the Executive pursuant to this Section 7 within 30 days
of the
date of the final resolution of that claim. In order to comply with
Section 409A of the Code, (a) in no event shall the payments by Lazard Group
under this Section 7 be made later than the end of the calendar year next
following the calendar year in which such fees and expenses were incurred,
provided that the
Executive shall have submitted an invoice for such fees and expenses at least
30
days before the end of the calendar year next following the calendar year
in
which such fees and expenses were incurred, (b) the amount of such legal
fees
and expenses that Lazard Group is obligated to pay in any given calendar
year
shall not affect the legal fees and expenses that Lazard Group is obligated
to
pay in any other calendar year, and (c) the Executive’s right to have Lazard
Group pay such legal fees and expenses may not be liquidated or exchanged
for
any other benefit.
8. Certain
Additional Payments
by the Company. (a) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined that any
payment, benefit or distribution by Lazard Group or its affiliates to or
for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 8) (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, but excluding
any income taxes and penalties imposed pursuant to Section 409A of the Code,
the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. The Company’s obligation to make Gross-Up
Payments under this Section 8 shall not be conditioned upon the Executive’s
termination of employment.
-
8
-
(b) Subject
to the provisions of Section 8(c), all determinations required to be made
under
this Section 8, 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 Deloitte & Touche LLP or
such other nationally recognized certified public accounting firm reasonably
acceptable to the Company as may be designated by the Executive (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 determination by the Accounting Firm shall
be binding upon the Company and its affiliates 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 8(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 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;
-
9
-
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 after-tax 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 8(c), the Company shall control all proceedings taken in connection
with
such contest, and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either pay the tax claimed to the appropriate taxing authority
on
behalf of the Executive and direct the Executive to 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 pays such claim and directs the Executive to xxx for a refund, the
Company shall indemnify and hold the Executive harmless, on an after-tax
basis,
from any Excise Tax or income tax (including interest or penalties) imposed
with
respect to such payment or with respect to any imputed income with respect
to
such payment; 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 the 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 a Gross-Up Payment or payment by the
Company of an amount on the Executive’s behalf pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with respect to the Excise
Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 8(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Company of an amount on
the Executive’s behalf pursuant to Section 8(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 the amount previously paid shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
(e) Any
Gross-Up Payment, as determined pursuant to this Section 8, shall be paid
by the
Company to the Executive within five days of the receipt of the Accounting
Firm’s determination; provided that,
the
Gross-Up Payment shall in all events be paid no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which
the Excise Tax (and any income or other related taxes or interest or penalties
thereon) on a Payment are remitted to the Internal Revenue Service or any
other
applicable taxing authority or, in the case of amounts relating to a claim
described in Section 8(c) that does not result in the remittance of any federal,
state, local and foreign income, excise, social security and other taxes,
the
calendar year in which the claim is finally settled or otherwise
resolved. Notwithstanding any other provision of this Section 8, the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit
of the
Executive, all or any portion of any Gross-Up Payment, and the Executive
hereby
consents to such withholding.
-
10
-
9. Confidential
Information;
Restrictive Covenants. (a) Confidential
Information. In the course of involvement in the Company’s
activities or otherwise, the Executive has obtained or may obtain confidential
information concerning the Company’s businesses, strategies, operations,
financial affairs, organizational and personnel matters (including information
regarding any aspect of the Executive’s tenure as a managing director, member,
partner or employee of the Company or of the termination of such position,
partnership or employment), policies, procedures and other non-public matters,
or concerning those of third parties. The Executive shall not at any
time (whether during or after the Executive’s employment with the Company)
disclose or use for the Executive’s own benefit or purposes or the benefit or
purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than
the
Company, any trade secrets, information, data or other confidential or
proprietary information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, financing methods, plans or the business and affairs of the
Company, provided that the
foregoing shall not apply to information which is not unique to the Company
or
which is generally known to the industry or the public other than as a result
of
the Executive’s breach of this covenant or as required pursuant to an order of a
court, governmental agency or other authorized tribunal. The
Executive agrees that upon termination of the Executive’s employment with the
Company for any reason, the Executive or, in the event of the Executive’s death,
the Executive’s heirs or estate at the request of the Company, shall return to
the Company immediately all memoranda, books, papers, plans, information,
letters and other data and all copies thereof or therefrom, in any way relating
to the business of the Company, except that the Executive (or the Executive’s
heirs or estate) may retain personal notes, notebooks and
diaries. The Executive further agrees that the Executive shall not
retain or use for the Executive’s account at any time any trade names, trademark
or other proprietary business designation used or owned in connection with
the
businesses of the Company. Without limiting the foregoing, the
existence of, and any information concerning, any dispute between the Executive
and the Company shall be subject to the terms of this Section 9(a), except
that
the Executive may disclose information concerning such dispute to the arbitrator
or court that is considering such dispute, and to the Executive’s legal counsel,
spouse or domestic partner and tax and financial advisors, provided that such
persons agree not to disclose any such information other than as necessary
to
the prosecution or defense of the dispute.
(b) Noncompetition. (i) The
Executive acknowledges and recognizes the highly competitive nature of the
businesses of the Company. The Executive further acknowledges and
agrees that in connection with the reorganization of Lazard Group, and in
the
course of the Executive’s subsequent employment, the Executive has been and
shall be provided with access to sensitive and proprietary information about
the
clients, prospective clients, knowledge capital and business practices of
the
Company, and has been and shall be provided with the opportunity to develop
relationships with clients, prospective clients, consultants, employees,
representatives and other agents of the Company, and the Executive further
acknowledges that such proprietary information and relationships are extremely
valuable assets in which the Company has invested and shall continue to invest
substantial time, effort and expense. The Executive hereby agrees
that while employed by the Company during the Employment Period and thereafter
until the date that is (i) three months after the Executive’s Date of
Termination for any reason other than a termination by the Company without
Cause
or (ii) one month after the Executive’s Date of Termination by the Company
without Cause (in either case, such period, the “Noncompete Restriction
Period”), the Executive shall not, directly or indirectly (other than in
respect of the activities of Xxxxxxxxxxx &
-
11
-
Co.,
LP
that do not involve the direct rendering of services by the Executive), on
the
Executive’s behalf or on behalf of any other person, firm, corporation,
association or other entity, as an employee, director, advisor, partner,
consultant or otherwise, engage in a “Competing Activity,” or acquire or
maintain any ownership interest in, a “Competitive Enterprise.” For
purposes of this Agreement, (x) “Competing Activity”
means the providing of services or performance of activities for a Competitive
Enterprise in a line of business that is similar to any line of business
in
respect of which the Executive provided services to the Company and (y) “Competitive
Enterprise” means a business (or business unit) that (1) engages in any
activity or (2) owns or controls a significant interest in any entity that
engages in any activity, that in either case, competes anywhere with any
activity in which the Company is engaged up to and including the Executive’s
Date of Termination. Notwithstanding anything in this Section 9(b),
the Executive shall not be considered to be in violation of this Section
9(b)
solely by reason of owning, directly or indirectly, any stock or other
securities of a Competitive Enterprise (or comparable interest, including
a
voting or profit participation interest, in any such Competitive Enterprise)
if
the Executive’s interest does not exceed 5% of the outstanding capital stock of
such Competitive Enterprise (or comparable interest, including a voting or
profit participation interest, in such Competitive Enterprise).
(ii) The
Executive acknowledges that the Company is engaged in business throughout
the
world. Accordingly, and in view of the nature of the Executive’s
position and responsibilities, the Executive agrees that the provisions of
this
Section 9(b) shall be applicable to each jurisdiction, foreign country, state,
possession or territory in which the Company may be engaged in business while
the Executive is employed by the Company. Notwithstanding anything
contained in Sections 9(b) and 9(c) of this Agreement to the contrary or
in any
restricted stock unit agreement between the Executive and the Company or
its
affiliates entered into on, prior to or after the Effective Date (including,
without limitation, the RSU Award Agreements), in no event shall the Executive’s
services to or relationship with Xxxxxxxxxxx & Co., LP, to the extent
consistent with his relationship with and services to Xxxxxxxxxxx & Co., LP
as of the date hereof, be considered to be in violation of, or give rise
to a
violation of, Section 9(b) or 9(c) of this Agreement (or any similar provisions
in any restricted stock unit agreement between the Executive and the Company
or
its affiliates entered into on, prior to or after the Effective Date (including,
without limitation, the RSU Award Agreements). If the Executive
desires to make available to Xxxxxxxxxxx & Co., LP any corporate opportunity
of the Company that arises from a relationship of the Company (other than
any
relationship of the Executive existing on November 15, 2001), the Executive
shall first receive the written consent of the Nominating and Governance
Committee of the Board; it being understood, for the avoidance of doubt,
that
such written consent shall not be required in connection with the offering
to
Xxxxxxxxxxx & Co., LP of an opportunity by the Company on behalf of a client
of the Company.
-
12
-
(c) Nonsolicitation
of
Clients. The Executive hereby agrees that while employed by
the Company during the Employment Period and thereafter during the Noncompete
Restriction Period, the Executive shall not, in any manner, directly or
indirectly (other than in respect of the activities of Xxxxxxxxxxx & Co., LP
that do not involve the direct rendering of services by the Executive), (i)
Solicit a Client to transact business with a Competitive Enterprise or to
reduce
or refrain from doing any business with the Company, or (ii) interfere with
or
damage (or attempt to interfere with or damage) any relationship between
the
Company and a Client. For purposes of this Agreement, the term “Solicit”
means any
direct or indirect communication of any kind whatsoever, regardless of by
whom
initiated, inviting, advising, persuading, encouraging or requesting any
person
or entity, in any manner, to take or refrain from taking any action, and
the
term “Client”
means any client or prospective client of the Company, whether or not the
Company has been engaged by such client pursuant to a written agreement;
provided that an
entity which is not a client of the Company shall be considered a “prospective
client” for purposes of this sentence only if the Company made a presentation or
written proposal to such entity during the 12-month period preceding the
Date of
Termination or was preparing to make such a presentation or proposal at the
time
of the Date of Termination.
(d) No
Hire of
Employees. The Executive hereby agrees that while employed by
the Company during the Employment Period and thereafter until the date that
is
six months after the Executive's Date of Termination for any reason, the
Executive shall not, directly or indirectly, for himself or on behalf of
any
third party (other than the Company and its affiliates) at any time in any
manner, Solicit, hire or otherwise cause any employee who is at the associate
level or above, officer or agent of the Company to apply for, or accept
employment with, any Competitive Enterprise, or to otherwise refrain from
rendering services to the Company or to terminate his or her relationship,
contractual or otherwise, with the Company, other than in response to a general
advertisement or public solicitation not directed specifically to employees
of
the Company.
(e) Nondisparagement;
Transfer
of Client Relationships. The Executive shall not at any time
(whether during or after the Executive’s employment with the Company), and shall
instruct his spouse, domestic partner, parents, and any of their lineal
descendants (it being agreed that in any dispute between the parties regarding
whether the Executive breached such obligation to instruct, the Company shall
bear the burden of demonstrating that the Executive breached such obligation)
not to, make any comments or statements to the press, employees of the Company,
any individual or entity with whom the Company has a business relationship
or
any other person, if such comment or statement is disparaging to the Company,
its reputation, any of its affiliates or any of its current or former officers,
members or directors, except for truthful statements as may be required by
law. The Company agrees not to, and to cause its Board and senior
executives not to, make any comments or statements to the press, employees
of
the Company, any individual or entity with whom the Company has a business
relationship or any other person, if such statement or comment is disparaging
to
the Executive, except for truthful statements as may be required by
law. During the period commencing on the Executive’s Date of
Termination and ending 90 days thereafter, the Executive hereby agrees to
take
all actions and do all such things as may be reasonably requested by the
Company
from time to time to maintain for the Company the business, goodwill and
business relationships with any of the Clients with whom the Executive worked
during the term of the Executive’s employment, provided that such
actions and things do not materially interfere with other employment of the
Executive.
-
13
-
(f) Notice
of
Termination. Pursuant to Sections 4(d) and 4(e), the Executive
has agreed to provide three months’ written notice to the Company prior to his
termination of employment. The Executive hereby agrees that, if,
during the three-month period after the Executive has provided notice of
termination to the Company or prior thereto, the Executive enters (or has
entered into) a written agreement to perform Competing Activities for a
Competitive Enterprise, such action shall be deemed a violation of Section
9(b).
(g) Covenants
Generally. The Executive’s covenants as set forth in Section 9
of this Agreement are from time to time referred to herein as the “Covenants.” If
any of the Covenants is finally held to be invalid, illegal or unenforceable
(whether in whole or in part), such Covenant shall be deemed modified to
the
extent, but only to the extent, of such invalidity, illegality or
unenforceability and the remaining such Covenants shall not be affected thereby;
provided,
however,
that if any
of such Covenants is finally held to be invalid, illegal or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit
such
provision to be enforceable, such Covenant shall be deemed to be modified
to the
minimum extent necessary to modify such scope in order to make such provision
enforceable hereunder. For purposes of this Section 9, the “Company”
shall mean
the Company and its subsidiaries and affiliates and its and their
predecessors.
(h) Acknowledgement. The
Executive understands that the provisions of the Covenants may limit the
Executive’s ability to work in a business similar to the business of the
Company; however,
the Executive agrees that
in light of the Executive’s education, skills, abilities and financial
resources, the Executive shall not assert, and it shall not be relevant nor
admissible as evidence in any dispute arising in respect of the Covenants,
that
any provisions of the Covenants prevent the Executive from earning a
living. In connection with the enforcement of or any dispute arising
in connection with the Covenants, the wishes or preferences of a Client as
to
who shall perform its services, or the fact that the Client may also be a
client
of a third party with whom the Executive is or becomes associated, shall
neither
be relevant nor admissible as evidence. The Executive hereby agrees
that prior to accepting employment with any other person or entity during
his
employment with the Company or during the Noncompete Restriction Period,
the
Executive shall provide such prospective employer with written notice of
the
provisions of this Agreement, with a copy of such notice delivered no later
than
the date of the Executive’s commencement of such employment with such
prospective employer, to the General Counsel of the Company.
(i) Expiration
of the Employment
Period. The provisions of this Section 9 shall remain in
full force and effect from the Effective Date through the expiration of the
period specified therein notwithstanding the earlier termination of the
Employment Period or the Executive’s employment.
(j) Covenants
Reasonable;
Remedies. The Company and the Executive acknowledge that the
time, scope, geographic area and other provisions of the Covenants have been
specifically negotiated by sophisticated commercial parties and agree that
all
such provisions are reasonable under the circumstances of the activities
contemplated by this Agreement. The Executive acknowledges and agrees
that the terms of the Covenants: (i) are reasonable in light of all of the
circumstances, (ii) are sufficiently limited to protect the legitimate
interests of the Company, (iii) impose no undue hardship on the Executive
and (iv) are not injurious to the public. The Executive further
acknowledges and agrees that the Executive’s breach of the Covenants will cause
the Company irreparable harm, which cannot be adequately compensated by money
damages. The Executive also agrees that the Company shall be entitled
to injunctive relief for any actual or threatened violation of any of the
Covenants in addition to any other remedies it may have, including money
damages. The Executive acknowledges and agrees that any such
injunctive relief or other remedies shall be in addition to, and not in lieu
of,
any forfeitures of awards (required pursuant to the terms of any such awards,
including without limitation the awards granted under the RSU Award Agreements)
that may be granted to the Executive in the future under one or more of the
Company’s compensation and benefit plans.
-
14
-
10. 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
Lazard Group and their respective successors and assigns.
(c) The
Company and Lazard Group 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 or Lazard Group to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company and Lazard Group would be required to perform it if no such
succession had taken place. As used in this Agreement, “Company” and
“Lazard Group” shall mean the Company and Lazard Group as hereinbefore defined
and any successor to their respective businesses and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law or
otherwise.
11. 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. Any dispute, controversy or claim between the parties arising
out of or relating to or in connection with this Agreement, or in any way
relating to any other relationship that exists or has existed between the
parties hereto, or any amendment or modification hereof, shall be settled
by the
courts of the State of New York. Notwithstanding the foregoing, any
dispute regarding the Executive’s HoldCo Interests or Exchangeable Interests
(each as defined in the Reorganization Agreement) or any other matter relating
to the Reorganization, but not any dispute concerning an actual or purported
termination of the Executive’s employment or any actual or purported breach of
the Covenants, or any other dispute required by applicable law or regulation
to
be arbitrated, shall be governed by, and subject to, the dispute resolution
provision in the applicable Reorganization Document.
(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:
-
15
-
If
to the
Executive:
At
the most recent address on file at the Company.
If
to the Company:
Lazard
Ltd
00
Xxxxxxxxxxx Xxxxx
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) For
purposes of this Agreement, “affiliate”
shall mean
any entity controlled by, controlling or under common control with the
Company.
(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. Upon the expiration or other termination of this
Agreement, the respective rights and obligations of the parties hereto shall
survive such expiration or other termination to the extent necessary to carry
out the intentions of the parties under this Agreement.
(e) Lazard
Group 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) The
Executive’s, the Company’s or Lazard Group’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive, the Company or Lazard Group may have hereunder, including,
without limitation, the right of the Company to terminate the Executive for
Cause pursuant to
Section 4(b) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
Section 4(b) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(g) The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect.
(h) 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.
-
16
-
IN
WITNESS WHEREOF, the Executive has
hereunto set the Executive’s hand and, pursuant to the authorization from their
respective Boards of Directors, each of the Company and Lazard Group 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 Xxxxxxxxxxx | |
|
XXXXX
XXXXXXXXXXX
|
| LAZARD LTD | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxxxx | |
| LAZARD GROUP LLC | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxxxx | |
