EMPLOYMENT AGREEMENT
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EXHIBIT
10.38
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THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the Effective Date, by and
between FIRST ALBANY COMPANIES INC., a New York corporation (“Company”) and
XXXXX XxXXXXXXX (“Executive”).
W
I T N E S S E T H:
WHEREAS,
Executive currently serves as the Chief Executive Officer of Company pursuant
to
the terms and conditions of an Employment Agreement dated June 30, 2006 between
Company and Executive (the “Prior Agreement”); and
WHEREAS,
Company and Executive desire to terminate the Prior Agreement and enter into
this Agreement, effective as of and contingent upon the occurrence of the
Effective Date: and
WHEREAS,
Company desires to employ Executive as its President and Chief Operating
Officer, and Executive desires to be employed in that position;
NOW,
THEREFORE, in consideration of the mutual covenants and promises hereinafter
set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Company and Executive hereby agree as
follows:
1. Employment
and Employment Period.
(a)
The
Effective Date of this Agreement shall be the date of closing of the
Recapitalization Transaction that has been agreed to by Company and
MatlinPatterson Global Opportunities Partners II, L.P. and Affiliates, pursuant
to the Investment Agreement, dated as of May 14, 2007, between First Albany
Companies Inc. and MatlinPatterson FA Acquisition LLC (“Recapitalization
Transaction”).
(b)
On the
Effective Date, the Prior Agreement shall terminate. Executive shall, as of
the
Effective Date, forever relinquish all claims to any payment or other benefits
under such Prior Agreement, except for any accrued but unpaid base salary
or other compensation or benefits (including stock incentive rights) as of
the
Effective Date, and except for claims for indemnification arising prior to
the
Effective Date. The Company shall forever relinquish all claims and rights
under
the Prior Agreement, except for any claims or rights arising prior to the
Effective Date for any breach of the restrictive covenants set forth in Section
11 of the Prior Agreement.
(c)
Company
agrees to employ Executive and Executive agrees to be employed by Company,
on
the terms and conditions set forth in this Agreement, for a period commencing
on
the Effective Date and continuing thereafter until the third anniversary
thereof, unless sooner terminated pursuant to Section 5 hereof (the
“Employment Period”). Following the termination of Executive’s employment
for any reason, he shall resign any and all officerships and directorships
he
then holds with Company or any of its Affiliates (as defined
below).
2. Title
and Duties.
(a)
During
the Employment Period, Executive shall serve as the President and Chief
Operating Officer of Company. Executive shall have the duties, responsibilities
and authority commensurate with such position and such other duties and
responsibilities consistent with his position as may be reasonably assigned
to
Executive by Company’s Chief Executive Officer or that are otherwise set forth
in Company’s By-Laws. Within thirty (30) days of the Effective Date, Company’s
Board of Directors (“Board”) shall appoint Executive as a member of the Board
and thereafter shall nominate Executive for election as a member of the Board
when his seat on the Board is up for re-election. Executive shall report to
Company’s Chief Executive Officer and shall perform his assigned duties and
responsibilities at the offices of Company in New York City and other locations
established by Company; provided, that, Executive may be required
to travel on Company business during the Employment Period.
(b)
During
the Employment Period, Executive shall devote substantially all of his working
time and attention during normal working hours to the performance of his duties.
Notwithstanding the foregoing, nothing in this Agreement shall restrict
Executive from managing his personal investments, personal business affairs
and
other personal matters, or serving on civic or charitable boards or committees,
if such activities do not interfere with the performance of his duties hereunder
or conflict with the Company’s interests.
3. Compensation
and Benefits.
For
the
services rendered by Executive to Company during the Employment Period, Company
shall pay to Executive the compensation and benefits set forth in this Section
3.
(a)Base
Salary. As compensation for services performed
under and during the Employment Period, Company shall pay to Executive, in
regular periodic installments as in effect immediately prior to the Effective
Date, a base salary (the “Base Salary”) at the rate of Three Hundred Thousand
Dollars ($300,000) per year. Executive’s Base Salary shall be reviewed by the
Board, and the compensation committee of the Board where appropriate, each
year
and may be adjusted upward from time to time at the discretion of the Board
or
the compensation committee of the Board.
(b)Annual
Cash Bonus. Executive shall participate in
Company’s annual bonus pool for each fiscal year of Company that ends or begins
during the Employment Period. Executive’s annual bonus will be paid under terms
and conditions developed by the Board after good faith consultation with
Executive.
(c)Benefits.
At all times during the Employment Period, Executive shall be entitled
to receive the employee benefits of Company on such basis as is comparable
to
those provided to other senior executives of Company, subject to the terms
and
conditions of the relevant benefits plans and policies. Executive shall be
entitled to vacation and paid holidays consistent with Company’s practices as
adopted from time to time.
(d)Restricted
Stock Units.
(i)
Company shall
grant Restricted Stock Units (“RSUs”) to Executive with respect to the common
stock of the Company in accordance with the following schedule
and subject
to (A) the terms of the First Albany Companies Inc. 2007 Incentive Compensation
Plan and the applicable award agreement (“Incentive Compensation Plan”) and
(B)
the
conditions noted below:
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Grant
Dates
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Vesting
Dates
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Settlement
Dates
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Upon
closing of the Recapitalization Transaction: 600,000
shares
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10%
upon closing of Recapitalization Transaction
30%
on first anniversary of closing
30%
on second anniversary of closing
30%
on third anniversary of closing
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All
shares settle on third anniversary of closing
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June
30, 2008: 125,000 shares
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One-third
on June 30, 2009
One-third
on June 30, 2010
One-third
on June 30, 2011
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All
shares settle on June 30, 2011
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January
1, 2009, Based Upon Achieving Performance Targets: 125,000
shares
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One-third
on January 1, 2010
One-third
on January 1, 2011
One-third
on January 1, 2012
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All
shares settle on January 1, 2012
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June
9, 2009: 125,000 shares
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One-third
on June 30, 2010
One-third
on June 30, 2011
One-third
on June 30, 2012
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All
shares settle on June 30, 2012
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January
1, 2010, Based Upon Achieving Performance Targets: 125,000
shares
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One-third
on January 1, 2011
One-third
on January 1, 2012
One-third
on January 1, 2013
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All
shares settle on January 1, 2013
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(ii)
Performance
Targets to which reference is made in Subsection (d)(i) of this Section 3 shall
be determined by the Board in good faith consultation with
Executive.
(iii)
No RSUs shall
be granted to Executive following the termination of his employment for any
reason.
(iv)
RSUs that have
been granted to Executive during the Employment Period but have not vested
prior
to the termination of Executive’s employment shall upon such
termination
be automatically forfeited and shall never vest, except to the extent that
RSUs granted prior to or upon the termination of Executive’s employment shall
vest in accordance
with the provisions of Subsection (a), (c), (d), (f), or (g) of Section 5
of this Agreement.
(v)
All vested RSUs
shall be payable in shares of common stock upon the earliest of (A) the third
anniversary of the date of grant of such RSUs, (B) the six-month anniversary
of the date of the termination of Executive’s employment, (C) the date of
Executive’s death, or (D) the date of Executive’s disability (within the meaning
of Section
5(g) of this Agreement), reduced by any amount required for withholding of
taxes. All RSUs shall be structured and paid in a manner that complies with
the
requirements
of Section 409A of the Internal Revenue Code (“Section 409A”).
4. Expenses.
Subject
to
the reasonable policies and procedures of Company, Executive shall be entitled
to be fully reimbursed for all reasonable expenses incurred by him in the
performance of his duties hereunder, and Company will reimburse Executive from
time to time for all such reasonable expenses upon presentation of a written
itemized account thereof together with such vouchers, receipts and other
evidence of such expenses to the extent applicable as Company may reasonably
deem to be necessary.
5. Termination
and Termination of Benefits.
Executive’s
employment with Company shall terminate under the following
circumstances:
(a)Expiration
of Employment Period Without Continued Employment of Executive by
Company. Executive’s employment shall
terminate as of the last day of the Employment Period. In such event, and
subject to the other provisions of this Section 5, Executive shall be entitled
only to the following payments and benefits:
(i)
Executive shall
be entitled to receive any accrued but unpaid Base Salary through the last
day
of the Employment Period; any accrued benefits payable to Executive in
accordance
with Company’s benefits policies or the provisions of any benefit plan in which
he is then a participant to the extent provided therein; and equity incentives
that
have
vested prior to the termination of Executive’s employment in accordance with the
terms of Company’s applicable plan, other than the Incentive Compensation
Plan;
(ii)
Company shall
pay Executive a pro-rated bonus for the fiscal year in which termination occurs,
to be paid at the time such bonus would have been paid if Executive remained
employed, and shall also pay Executive any bonus with respect to any completed
fiscal year that had been earned at the time of the termination of Executive’s
employment,
but not yet paid;
(iii)
RSUs granted to
Executive prior to the termination of his employment shall continue to vest
in accordance with the provisions of the Incentive Compensation Plan and
the
schedule set forth in Section 3(d) of this Agreement, on condition that
Executive agrees to remain a member of the Board in good standing and to meet
all obligations of
a
Board
member; and
(iv)
In the event
that Company has not, at least six months prior to expiration of the Employment
Period, offered to enter into a new Employment Agreement with Executive
pursuant
to which he would be employed as Company’s Chief Executive Officer following
such expiration, Executive shall also receive upon such expiration a Severance
Payment.
For purposes of this Agreement, a “Severance Payment” shall be a lump-sum cash
amount equal to One Million Eight Hundred Thousand Dollars ($1,800,000.00)
less
the
publicly-traded market value, as of the date of termination of Executive’s
employment hereunder, of one share of Company’s common stock multiplied by
the
number of RSUs granted to Executive that have become vested (whether or not
paid) on or before the date of termination (adjusted for any splits). As a
condition to receiving
benefits under this Subsection (a)(iv), Executive shall execute and deliver
to
Company an irrevocable general release of claims against the Company, its
Affiliates (as
defined below) and their current and former directors, officers and employees,
in a standard form used by Company in cases of terminations of employment
(a
“Release”). For all purposes under this Agreement, the Severance Payment shall
be structured and paid in a manner that complies with the requirements of
Section 409A, including
any requirement that the Severance Payment (or a portion thereof) be delayed
by
six (6) months following termination of employment in order to comply
with Section
409A.
(b)Termination
By Executive Without Good Reason. Executive may
resign from Company at any time and for any reason that does not constitute
Good
Reason upon sixty (60) days’ prior written notice to the Board. In the event of
resignation by Executive under this Subsection (b), the Board may elect to
waive
the period of notice, or any portion thereof and thereby accelerate the date
of
termination. In the event of termination by Executive of his employment under
this Subsection (b), Executive shall be entitled only to the following payments
and benefits:
(i)
Executive shall
be entitled to receive any accrued but unpaid Base Salary through the effective
date of such termination as soon as practicable following the date of
termination;
any accrued benefits payable to Executive in accordance with Company’s benefits
policies or the provisions of any benefit plan in which he is then a
participant
to the extent provided therein; and equity incentives that have vested prior
to
the termination of Executive’s employment in accordance with the terms of
Company’s
applicable plan, other than the Incentive Compensation Plan;
(ii)
Company shall
pay Executive any bonus with respect to any completed fiscal year that had
been
earned at the time of the termination of Executive’s employment, but
not
yet
paid; and
(iii)
Executive shall
also receive a Severance Payment, as defined in Section 5(a)(iv) of this
Agreement, on condition that Executive shall execute and deliver to Company
a
Release.
(c)Termination
by Company Without Cause. Executive’s
employment under this Agreement may be terminated by Company without Cause
(as defined in Section 5(e) of this Agreement) upon a vote of the majority
of
the members of the Board (excluding Executive)
and sixty (60) days’ prior written notice to Executive. In the event of such
termination, Executive shall be entitled only to the following payments and
benefits:
(i)
Company shall
continue to pay to Executive his Base Salary until the date which is twelve
(12)
months following the termination of his employment under this Section
5(c)
(the
“Severance Period’’). Company shall also pay Executive a pro-rated bonus for the
fiscal year in which the Severance Period ends, to be paid at the time such
bonus would
have been paid if Executive remained employed; and Company shall pay Executive
any bonus with respect to any completed fiscal year that had been earned at
the time
of the termination of
Executive’s employment, but not yet paid;
(ii)
Company shall
maintain in full force and effect, for the continued benefit of Executive for
the Severance Period, the medical, hospitalization and dental insurance plans
and
programs in which Executive was participating immediately prior to the date
of
termination at the level in effect and upon substantially the same terms and
conditions (including,
if applicable, contributions required by Executive for such benefits) as existed
immediately prior to the date of termination; provided, that, if
Executive cannot continue
to participate in Company’s plans and programs providing such benefits, Company
shall arrange to provide Executive with the economic equivalent of such
benefits
which he otherwise would have been entitled to receive under such plans and
programs (“Continued Benefits”). Such Continued Benefits shall terminate on the
date
or
dates Executive receives substantially similar coverage and benefits, without
waiting period or pre-existing condition limitations, under the plans and
programs of a subsequent
employer; provided, that, the determination of coverage and
benefits shall be made on a plan by plan and benefit by benefit basis and
Company’s obligation under
this Section 5(c) shall continue with respect to any plan or benefit that is
not
substantially similar to those in effect when Executive’s employment terminated.
At the end
of the Severance Period, Executive shall have the right to elect continuation
coverage under COBRA to the extent still eligible under applicable
law;
(iii)
Executive shall
be paid or provided any accrued benefits payable to Executive in accordance
with
Company’s benefits policies or the provisions of any benefit plan in
which
he
is then a participant to the extent provided therein; and equity incentives
that
have vested prior to the termination of Executive’s employment in accordance
with the
terms of Company’s applicable plan, other than the Incentive Compensation
Plan;
(iv)
RSUs granted to
Executive prior to the termination of his employment shall continue to vest
under the Incentive Compensation Plan in accordance with the schedule
set
forth
in
Section 3(d) of this Agreement, on condition that Executive shall execute and
deliver to Company a Release and a restrictive covenant agreement
substantially as
set
forth
in Section 8(a) of this Agreement, in accordance with and for a term not to
exceed eighteen (18) months as provided by the Incentive Compensation Plan;
and
(v)
Executive shall
also receive a Severance Payment, as defined in Section 5(a)(iv) of this
Agreement, on condition that Executive shall execute and deliver to Company
a
Release.
(d)Termination
by Executive for Good Reason. Executive may
terminate his employment hereunder for Good Reason by giving written notice
to
the Board within thirty (30) days after the occurrence of any one of the events
specified in Subsection (d)(i) of this Section 5, without his prior written
consent, specifying that such termination shall occur thirty (30) days after
such notice has been given to the Board, provided, however, that such notice
shall not be effective to cause termination under this Subsection (d) if the
specified event is cured by Company within thirty (30) days of such written
notice thereof.
(i)
Only the
following shall constitute “Good Reason” for such termination:
(A)
Failure by
Company to perform fully the terms of this Agreement, or any plan or agreement
referenced in this Agreement, other than an immaterial and inadvertent
failure not occurring in bad faith and remedied by Company promptly (but not
later than five (5) days) after receiving notice thereof from
Executive;
(B)
Any reduction in
Executive’s Base Salary or failure to pay any bonuses or other material amounts
due under this Agreement in accordance herewith;
(C)
The assignment to
Executive of any duties inconsistent in any material respect with his position
or with his authority, duties or responsibilities as President and Chief
Operating Officer, or any other action by Company which results in a
diminution in such position, authority, duties or responsibilities, or
reporting relationship,
excluding for this purpose any immaterial and inadvertent action not taken
in
bad faith and remedied by Company promptly (but not later than ten (10)
days
after receiving notice from Executive);
(D)
Any change in the
place of Executive’s principal place of employment to a location outside New
York City;
(E)
Any failure by
Company to obtain an assumption and agreement to perform this Agreement by
a successor.
(ii)
In the event of
termination by Executive for Good Reason, Executive shall be entitled only
to
the following payments and benefits:
(A)
Executive shall
be entitled to receive any accrued but unpaid Base Salary through the effective
date of such termination as soon as practicable following the date of
termination; any accrued benefits payable to Executive in accordance with
Company’s benefits policies or the provisions of any benefit plan in which he is
then a participant
to the extent provided therein; and equity incentives that have vested prior
to
the termination of Executive’s employment in accordance with the terms of
Company’s
applicable plan, other than the Incentive Compensation Plan;
(B)
Company shall pay
Executive a pro-rated bonus for the fiscal year in which termination occurs,
to
be paid at the time such bonus would have been paid if Executive
remained employed, and shall also pay Executive any bonus with respect to any
completed fiscal year that had been earned at the time of the termination
of
Executive’s
employment, but not yet paid; and
(C)
Executive shall
receive the benefits set forth in Section 5(c)(iv) and (c)(v) of this
Agreement.
(e)Termination
by Company for Cause. Executive’s employment
hereunder may be terminated by Company for Cause, subject to the following
conditions:
(i)
Only the
following shall constitute Cause for termination:
(A)
Executive’s
conviction of, or plea of guilty or “no contest” to, any felony;
(B)
Executive’s
conviction of, or plea of guilty or “no contest” to, a violation of criminal law
involving Company and its business;
(C)
Executive’s
commission of an act of fraud or theft, or material dishonesty in connection
with his performance of duties to Company; or
(D)
Executive’s
willful refusal or gross neglect by Executive to perform the duties reasonably
assigned to him and consistent with his position with Company or otherwise
to comply with the material terms of this Agreement, which refusal or gross
neglect continues for more than fifteen (15) days after Executive receives
written
notice thereof from Company providing reasonable detail of the asserted refusal
or gross neglect (and which is not due to a physical or mental
impairment).
(ii)
In no event
shall Executive’s employment be considered to have been terminated for Cause
unless and until Executive receives a copy of a resolution adopted by the
Board
finding that, in the good faith opinion of the Board, Executive is guilty of
acts or omissions constituting Cause, which resolution has been duly adopted
by
an affirmative
vote of a majority of the Board, excluding Executive and any individual alleged
to have participated in the acts constituting Cause. Any such vote shall be
taken at
a
meeting of the Board called and held for such purpose, after reasonable written
notice is provided to Executive setting forth in reasonable detail the facts
and
circumstances
claimed to provide a basis of termination for Cause and Executive is given
an
opportunity, together with counsel, to be heard before the Board.
(iii)
In the event
Executive is terminated for Cause, Executive shall be entitled only to the
payments and benefits described in Subsection (b) of this Section 5, and Company
shall
have no further obligations to Executive under this Agreement.
(f)Death.
Executive’s employment shall terminate upon his death. In such event, Executive
shall be entitled only to the following payments and benefits:
(i)
Executive shall
be entitled to receive any accrued but unpaid Base Salary through the effective
date of such termination as soon as practicable following the date of
termination;
any accrued benefits payable to Executive in accordance with Company’s benefits
policies or the provisions of any benefit plan in which he is then a
participant
to the extent provided therein; and equity incentives that have vested prior
to
the termination of Executive’s employment in accordance with the terms of
Company’s
applicable plan, other than the Incentive Compensation Plan;
(ii)
Company shall
pay Executive a pro-rated bonus for the fiscal year in which termination occurs,
to be paid at the time such bonus would have been paid if Executive remained
employed, and shall also pay Executive any bonus with respect to any completed
fiscal year that had been earned at the time of the termination of Executive’s
employment,
but not yet paid;
(iii)
RSUs granted to
Executive prior to the termination of his employment shall vest upon such
termination in accordance with the provisions of the Incentive Compensation
Plan; and
(iv)
Executive shall
also receive a Severance Payment, as defined in Section 5(a)(iv) of this
Agreement.
(g)Disability.
In the event that Executive becomes disabled, as determined under
Company’s long-term disability income plan, and receives income replacement
benefits under such plan or another accident and health plan covering employees
of Company for a period of not less than three (3) months; or, in the absence
of
such plan or plans, by reason of Executive’s inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than twelve (12) months, Executive’s
employment shall be deemed terminated by reason of disability; provided,
that, in no event shall Executive be terminated by reason of disability
unless Executive receives written notice from Company, at least fifteen (15)
days in advance of such termination, stating its intention to terminate
Executive by reason of disability. In the event of termination by reason of
disability, Executive shall be entitled only to the payments and benefits
described in Subsection (f) of this Section 5, provided, that, as
a condition to receipt of a Severance Payment, Executive shall execute and
deliver to Company a Release.
6. Tax
Indemnity.
Anything
in
this Agreement to the contrary notwithstanding, in the event it is determined
that any payment or distribution by Company to Executive or for his benefit,
whether paid or payable or distributed or distributable pursuant to the terms
of
this Agreement or otherwise (a “Payment”) would be subject to an excise tax
under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)
(or any successor provision) (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”),
Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount that, after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Such Gross-Up Payment shall be made to Executive
within thirty (30) days following the date of determination that a Gross-Up
Payment is required to be paid to Executive in accordance with the remaining
terms of this Section 6(b). Subject to the provisions of this Section 6(b),
all
determinations required to be made under this Section 6, including whether
a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall
be
made by Company’s principal independent accounting firm at the time such
determination is made (the “Accounting Firm”). Executive agrees to promptly
furnish information requested by the Accounting Firm in connection with such
determinations. The Accounting Firm shall provide detailed supporting
calculations both to Company and Executive within thirty (30) days following
the
date an event occurs that could give rise to an excise tax on a Payment, or
such
earlier time as is requested by Company. Any determination by the Accounting
Firm shall be binding upon Company and Executive except as provided elsewhere
in
this Section 6. 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 a Gross-Up Payment which will not have been
made
by Company should have been made (the “Underpayment”), consistent with the
calculations required to be made hereunder. In the event that Company
exhausts its remedies pursuant to this Section 6 and 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, together with any penalties and interest related to such
Underpayment, if any, shall be made promptly by Company to Executive or for
his
benefit. Executive shall notify Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by Company of
the
Gross-Up Payment. Such notification shall be given as soon as practicable after
Executive knows of such claim and shall apprise Company of the nature of the
claim and the date on which the claim is requested to be paid. Executive shall
not pay such claim prior to the expiration of the thirty (30) day period
following the date on which Executive gives such notice to Company (or such
shorter period ending on the date that any payment of taxes with respect to
such
claim is due). If Company notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive
shall:
(i)
give Company any
information reasonably requested by Company relating to such claim,
(ii)
take such action
in connection with contesting the claim as Company reasonably requests in
writing from time to tune, including, without limitation, accepting legal
representation
with regard to the claim by an attorney selected by Company, and acceptable
to
Executive,
(iii)
cooperate with
Company (at no cost to Executive) in good faith in order effectively to contest
the claim, and
(iv)
permit Company
to participate in any proceedings relating the claim;
provided,
however, that 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 Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest
and penalties with respect thereto, imposed as a result of such representation
and payments of costs and expenses. Without limitation of the foregoing
provisions of this Section 6, 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 Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and 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 Company determines;
provided, further, however, that (A) if Company directs Executive to pay such
claim and xxx for a refund, Company shall advance the amount of such payment
to
Executive on an interest-free basis and shall indemnify and hold 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; and (B) any request by Company that Executive extend the statute of
limitations relating to payment of taxes for his taxable year with respect
to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, Company’s control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable hereunder
and 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. If, after the receipt by Executive of an amount advanced by Company
pursuant to this Section 6, Executive becomes entitled to receive any refund
with respect to such claim, Executive shall (subject to Company’s complying with
the requirements of this Section 6) promptly pay to Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount advanced
by
Company pursuant to this Section 6, a determination is made that Executive
shall
not be entitled to any refund with respect to such claim and Company does not
notify Executive in writing of its intent to contest such denial of refund
prior
to the expiration of thirty (30) days after such determination, then such
advance 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.
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7.
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Confidential
Information; Removal of Documents; Certain Post-Employment
Undertakings.
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(a)
Except
(i) as required in order to perform his obligations under this Agreement, (ii)
as may otherwise be required by law or any legal process, or (iii) as is
necessary in connection with any adversarial proceeding against Company (in
which case Executive shall use his reasonable best efforts in cooperating with
Company in obtaining a protective order against disclosure by a court of
competent jurisdiction), Executive shall not, without the express prior written
consent of Company, disclose or divulge to any other person or entity, or use
or
modify for use, directly or indirectly, in any way, for any person or entity
any
of Company’s or an Affiliate’s (as defined below) Confidential Information at
any time during or after Executive’s employment. For purposes of this Agreement,
“Confidential Information” shall mean any valuable, competitively sensitive or
proprietary data and information related to business carried on by Company
or
any Affiliate (the “Business”), including, without limitation, Trade Secrets (as
defined below), that are not generally known by or readily available to
Company’s or any Affiliate’s competitors. “Trade Secrets” shall mean information
or data of Company or any Affiliate in connection with the Business, including,
but not limited to, technical or non-technical data,
financial information, programs, devices, methods, techniques, drawings,
processes, financial plans, product plans, or lists of actual or potential
customers or suppliers, that: (A) derive economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from their disclosure
or
use; and (B) are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy. “Affiliate” shall mean an entity in
control of, controlled by or under common control with Company.
(b)
All
records, files, drawings, documents, models, equipment, and the like containing
Confidential Information or needed in the Business over which Executive has
control shall not be removed from Company’s premises without its written
consent, unless such removal is in the furtherance of the Business or is in
connection with Executive’s carrying out his duties under this Agreement and, if
so removed, shall be returned to Company promptly after termination of
Executive’s employment hereunder, or otherwise promptly after removal if such
removal occurs following termination of employment. Company shall be the owner
of all Trade Secrets and other products relating to the Business developed
by
Executive alone or in conjunction with others as part of his employment with
Company.
(c)
In the
scope of Executive’s employment with Company, Executive may be requested, alone
or with others, to create, invent, enhance, and modify items which are or could
be deemed to be Confidential Information. Executive acknowledges and agrees
that
all such information is intended to be, and will remain, the sole and exclusive
property of Company. If Executive’s employment with Company terminates for any
reason, he shall promptly and fully disclose all such property to Company,
shall
provide Company with any information that it may reasonably request about such
property and shall execute such agreements, assignments or other instruments
as
may be reasonably requested by Company to reflect such ownership by Company
and
shall fully cooperate with Company to protect the business relationships of
Company and to insure that there will be no unreasonable interference or
disruption of such business relationships.
8. Restrictive
Covenants.
(a)
Executive
covenants that, during the Employment Period, he will not, without the prior
written consent of Company, participate in the ownership, management, operation
or control of a Competitor or be employed by or perform services for a
Competitor in a position substantially similar to Executive’s position with
Company; provided, however, that Executive may own, solely as a passive
investment, securities of any entity traded on any national securities exchange
if Executive is not a controlling person of (nor owns individually or as a
member of a group, 5% or more of) such entity. For purposes of this Section
8,
“Competitor” means any broker-dealer or financial advisory firm whose principal
place of business is in the United States.
(b)
Executive
covenants that in the event his employment by the Company shall terminate for
any reason, then during a period of twelve (12) months after the date of such
termination, Executive shall not, directly or indirectly, solicit for employment
or hire anyone who was an employee of Company within the period of 180 days
prior to such termination.
9.
Remedy.
(a)
Executive
acknowledges that: (i) as a result of Executive’s employment by Company,
Executive will obtain Confidential Information; (ii) the Confidential
Information has been developed and created by Company at substantial
expense and the Confidential Information constitutes valuable proprietary assets
and Company will suffer substantial damage and irreparable harm which will
be
difficult to compute if during the term of employment and thereafter, Executive
should divulge such Confidential Information in violation of the provisions
of
this Agreement; (iii) the nature of Company’s business is such that it could be
conducted anywhere in the world and that it is not limited to a geographic
scope
or region, (iv) Company will suffer substantial damage which will be difficult
to compute if Executive should compete with Company or solicit or interfere
with
Company’s employees, customers or clients in violation of this Agreement; (v)
the provisions of this Agreement are reasonable and necessary for the protection
of Company’s business; (vi) Executive will not be unreasonably precluded from
earning a living following his termination of employment if the provisions
of
Sections 7 and 8 of this Agreement are fully enforced; and (vii) Company would
not have entered into this Agreement unless Executive agreed to be bound by
the
terms of Sections 7 and 8 of this Agreement.
(b)
Should
Executive engage in or perform any of the acts prohibited by Section 7 or
Section 8 hereof, it is agreed that Company shall be entitled to full injunctive
relief, to be issued by any competent court of equity, enjoining and restraining
Executive and each and every other person, firm, organization, association,
or
corporation concerned therein, from the continuance of such volatile
acts.
10. Assignment.
This
Agreement shall be binding upon and shall inure to the benefit of Company,
its
successors and any person, firm, corporation or other entity that succeeds
to
all or substantially all of the business, assets or property of Company,
including without limitation in connection with any sale of Company. This
Agreement may be assigned, in whole but not in part, by Company to any successor
to the Company or its business or any subsidiary or Affiliate of Company,
provided, that, such assignment does not relieve Company of its
obligations under this Agreement if the assignee fails to perform. Executive
may
not assign any rights or delegate any duties in or under this
Agreement.
11. Waiver.
The
waiver by
either party of a breach of any provision of this Agreement shall not operate
as
or be construed as a waiver of any prior or subsequent breach
thereof.
12. Amendment
or Modification.
No
provision
of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by Executive and a
duly
authorized officer of Company (other than Executive) acting on behalf of the
Board.
13. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, without regard to choice or conflict of law
principles.
14. Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect.
15. Notices.
Any
notices
required or permitted to be given hereunder shall be sufficient if in writing,
and if delivered by hand, by courier, by facsimile, or sent by certified mail,
return receipt requested, prepaid, to the address set forth below or such other
address as either party may from time to time designate in writing to the other
and shall be deemed given as of the date of the delivery if delivered by hand
or
by courier, if mailed, four (4) days after the date of mailing.
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If
to Executive:
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Xxxxx
XxXxxxxxx
c/o
First Albany Capital Inc.
Xxx
Xxxx Xxxxx - 00xx xxxxx
Xxx
Xxxx, XX 00000
With
a copy to:
Xxxx
X. Xxxxxx
Milbank,
Tweed, Xxxxxx & XxXxxx LLP
0
Xxxxx Xxxxxxxxx Xxxxx
Xxx
Xxxx, XX 00000
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|
If
to Company:
|
000
Xxxxxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxx
With
a copy to:
Xxxxx
Xxxxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxxxxx X. Xxxxxxxx
|
16. Entire
Agreement and Binding Effect.
This
Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in
respect of such subject matter. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, permitted
assigns, and legal representatives.
17. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument, and in pleading or providing any provision of this Agreement it
shall not be necessary to produce more than one of such
counterparts.
18. Headings.
The
Section
headings appearing in this Agreement are for reference purposes only and shall
not be considered a part of this Agreement or in any way modify, amend or affect
its provisions.
19. Indemnification.
Company
will,
to the maximum extent permitted under applicable law and Company’s By-Laws and
consistent therewith, indemnify and hold Executive harmless against expenses
and
other amounts actually and reasonably incurred in connection with any proceeding
arising by reason of Executive’s employment by Company. In addition, Company
shall cover Executive under directors’ and officers’ liability insurance both
during and, while potential liability exists, after the term of employment
in
the same amount and to the same extent as Company covers its other officers
and
directors.
20. Drafting.
The
parties hereto acknowledge and agree that this Agreement has been drafted
jointly by Company and Executive and each has had ample opportunity to review
and understand its provisions and seek competent legal advice.
21. Dispute
Resolution.
Except
as
provided in Section 9 of this Agreement, all disputes arising out of, or related
to, this Agreement, or the breach thereof, shall be settled by binding
arbitration in the City of New York, New York, in accordance with the applicable
rules then in effect of the American Arbitration Association, and the
arbitrator’s decision shall be binding and final, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof.
22. Survival.
The
respective obligations of, and benefits offered to Executive and Company as
provided in this Agreement shall survive the termination of this Agreement
to
carry out their intended purpose.
23. Compliance
with Section 409A.
Notwithstanding
any
provision of this Agreement to the contrary, no payment or benefit shall be
paid at any time or in any manner that would result in the imposition of
additional tax pursuant to Section 409A of the Code. The parties agree that
any
such payment or benefit will be restructured in order to comply with the
requirements of Section 409A on a basis that preserves to the maximum extent
possible the economic rights of Executive hereunder.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 15th day of May, 2007.
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/s/
Xxxxxx XxXxxxx
By:
Xxxxxx XxXxxxx
Title:
Chairman, First Albany Companies Inc.
|
|
EXECUTIVE:
|
|
/s/
Xxxxx XxXxxxxxx
XXXXX
XxXXXXXXX
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