EXHIBIT (A)(3)
BKF CAPITAL GROUP, INC.
DEFERRED STOCK AWARD AGREEMENT
THIS DEFERRED STOCK AWARD AGREEMENT (the "Agreement") is made and entered
into as of January 10, 2003 (the "Grant Date"), between BKF Capital Group, Inc.,
a Delaware corporation ("BKF") and (the "Employee") pursuant to the
terms and conditions of the BKF 1998 Incentive Compensation Plan, as amended and
restated (the "Plan"). Capitalized terms not defined in this Agreement shall
have the meanings set forth in the Plan.
1. Award of Deferred Stock. Pursuant to the Plan, BKF hereby awards to
Employee shares of Deferred Stock (the "Deferred Stock") corresponding
to shares of BKF common stock (the "Stock"), subject to the terms and
conditions set forth in this Agreement and the Plan. A copy of the Plan has been
delivered to the Employee. By signing below, the Employee agrees to be bound by
all the provisions of the Plan. Each share of Deferred Stock constitutes an
unsecured promise of BKF to deliver a share of Stock to Employee on the Delivery
Date (as defined below). As a holder of any Deferred Stock, Employee has the
rights of a general unsecured creditor of BKF.
2. Vesting Schedule. Subject to continued employment with BKF and/or its
affiliates as of the vesting date, the Deferred Stock shall vest in two
installments: 50% on December 31, 2003 and 50% on December 31, 2004 (each date,
a "Vesting Date"); provided, however, that, subject to continued employment with
BKF and/or its affiliates, all unvested shares shall vest on the earlier of (i)
a Change in Control (as defined below), (ii) Employee's termination due to
Disability (as defined below) or (iii) Employee's death. In addition, in the
event of Employee's termination by BKF and/or its affiliates without Cause (as
defined below), all unvested shares of Deferred Stock as of the termination date
shall vest as of such date.
3. Payment or Conversion of Deferred Stock.
(a) Subject to Section 4, BKF shall deliver to Employee on the Delivery
Date the number of shares of Stock corresponding to such Deferred Stock, unless
Employee has otherwise elected to defer receipt of such shares in accordance
with Committee authorization.
(b) For so long as Employee holds shares of Deferred Stock, at the time any
dividend is paid with respect to a share of Stock, BKF shall pay to Employee in
respect of each share of Deferred Stock an amount in cash, Stock, or other
property, or in a combination thereof, in each case having a value equal to the
Fair Market Value of such dividend (hereinafter "Dividend Equivalents"), subject
to any deferral election by Employee in accordance with Committee authorization
and/or any determination by the Committee to subject such Dividend Equivalent
payment in respect of stock dividends, dividends in kind or extraordinary
dividends to the delayed delivery provisions applicable to such Deferred Stock.
4. Termination of Deferred Stock and Non-Delivery Upon Certain Other
Events.
(a) Unless the Committee determines otherwise, Employee's rights in respect
of any outstanding Deferred Stock shall immediately terminate and no shares of
Stock shall be delivered in respect of such Deferred Stock if prior to the
Delivery Date (A) Employee engages in conduct specified in Section 4(b), or (B)
Employee fails to provide the representations and certifications required under
Section 4(c); provided, however, that in the event Employee is terminated by BKF
and/or its subsidiaries or affiliates without Cause, Employee shall not be
required to refrain from the conduct specified in Section 4(b) or provide the
representations and certifications required under Section 4(c) in order to
receive on the Delivery Date the number of shares of Stock corresponding to the
number of shares of Deferred Stock that have vested prior to the date of such
Employee's termination without Cause.
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(b) Employee will have engaged in conduct specified in this Section 4(b)
if, as determined by the Committee, at any time prior to the Delivery Date,
Employee:
(i) competes, directly or indirectly, whether as owner, partner,
investor, consultant, agent, employee, co-venturer or otherwise, with BKF
and/or its subsidiaries or affiliates in the United States in the money
management business ("Competitive Endeavors") or undertakes any planning
for any business that would constitute a Competitive Endeavor. For purposes
of this Section 4(b)(i), the business of BKF and/or its subsidiaries or
affiliates shall include all Products and Services (as defined below)
offered by BKF or any of its subsidiaries or affiliates or under
development, and the Employee's undertaking shall encompass all products
and services that may be used in substitution for Products and Services.
(ii) undertakes any outside activity without the prior written
approval of the Committee, whether or not competitive with the business of
BKF and/or its subsidiaries or affiliates, that could reasonably give rise
to a conflict of interest or otherwise interfere with the Employee's duties
and obligations to BKF and/or any of its subsidiaries or affiliates.
Notwithstanding the foregoing, the Employee may (A) to the extent such
activities are not competitive with the business of BKF and/or its
subsidiaries or affiliates, engage in charitable, civic or other community
activities without compensation to the Employee, and (B) render without
compensation investment advisory and trust services to immediate members of
the Employee's family, which shall include the Employee and any trust or
account that is comprised primarily of assets held for the benefit of such
Employee and/or immediate members of his family.
(iii) directly or indirectly, (A) hires or attempts to hire any person
who is, or during the prior six-month period, was an employee of BKF and/or
any of its subsidiaries or affiliates, (B) assists another in hiring or
attempting to hire any such person, (C) encourages any such person to
terminate his or her employment with BKF and/or any of its subsidiaries or
affiliates (other than in the course of the Employee's proper performance
of his duties hereunder), (D) solicits or accepts business from any person
or entity which is, or during the prior six-month period, was a client of
BKF and/or any of its subsidiaries or affiliates, (E) assists another in
soliciting or accepting business from any such person or entity, or (F)
encourages any such person or entity to terminate its business relationship
with BKF and/or any of its subsidiaries or affiliates (other than in the
conduct of the Employee's proper performance of his duties).
(iv) fails to (A) comply with the code of ethics of BKF, as in effect
from time to time, or (B) notify the Committee of all directorships or
memberships on a board of directors or board of trustees held by the
Employee, regardless of whether (y) such office was held by the Employee
prior to the date hereof or (z) such office would require prior written
consent of the Committee.
(c) Employee must certify to BKF, in accordance with procedures established
by the Committee, that Employee has complied with all the terms and conditions
of this Agreement as of the Delivery Date. By accepting the delivery of shares
of Stock under this Agreement, Employee shall be deemed to have represented and
certified at such time that Employee has complied with all the terms and
conditions of this Agreement.
Unless the Committee determines otherwise, if the Delivery Date in respect of
any outstanding Deferred Stock occurs, and shares of Stock with respect to such
Deferred Stock would be deliverable under the terms and conditions of this
Agreement except that Employee has not complied with the conditions or
Employee's obligations under this Section 4 (except in the event of Employee's
death or a Disability that impairs Employee's ability to so comply), all of
Employee's rights with respect to such Deferred Stock shall terminate, and no
shares of Stock shall be delivered. The parties intend that the foregoing
provisions of this Section 4 be deemed to be a series of separate covenants, one
for each and every county of each and every state of the United States of
America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be
effective.
5. Repayment. If, following the delivery of Stock with respect to any
Delivery Date, the Committee determines that all terms and conditions of this
Agreement in respect of such delivery were not satisfied, BKF shall be entitled
to receive, and Employee shall be obligated to pay BKF immediately upon demand
therefor,
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the Fair Market Value of the shares of Stock (determined as of the relevant
Delivery Date) that were delivered with respect to such Delivery Date and
without reduction for any shares of Stock applied to satisfy withholding tax or
other obligations in respect of such shares.
6. Definitions. For purposes of this Agreement:
(a) Unless otherwise defined in any employment agreement between Employee
and BKF (in which case such definition shall apply with respect to such
Employee), "Cause" means Employee's (i) conviction, whether following trial or
by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding
(A) on a misdemeanor charge involving fraud, false statements or misleading
omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or
extortion, or (B) on a felony charge or (C) on an equivalent charge to those in
clauses (A) and (B) in jurisdictions that do not use those designations; (ii)
engaging in any conduct that constitutes an employment disqualification under
applicable law (including statutory disqualification as defined under the
Securities and Exchange Act of 1934, as amended); (iii) willful failure to
perform Employee's duties to BKF and/or any of its subsidiaries or affiliates;
(iv) violation of any securities or commodities laws, any rules or regulations
issued pursuant to such laws, or the rules and regulations of any securities or
commodities exchange or association of which BKF or any of its subsidiaries or
affiliates is a member; (v) violation of any BKF policy concerning hedging or
confidential or proprietary information, or Employee's material violation of any
other BKF policy as in effect from time to time; (vi) engaging in any act or
making any statement that impairs, impugns, denigrates, disparages or negatively
reflects upon the name, reputation or business interests of BKF and/or any of
its subsidiaries or affiliates; or (vii) engaging in any conduct detrimental to
BKF and/or any of its subsidiaries or affiliates. The determination as to
whether "Cause" has occurred shall be made by the Committee in its sole
discretion. The Committee shall also have the authority in its sole discretion
to waive the consequences under the Plan or any Agreement of the existence or
occurrence of any of the events, acts or omissions constituting "Cause".
(b) A "Change in Control" means the occurrence of any of the following:
(i) any "person" as such term is currently used in Section 13(d) of
the Exchange Act, other than Xxxx X. Xxxxx or any entity directly or
indirectly controlled by him, becomes a "beneficial owner", as such term is
currently used in Rule 13d-3 promulgated under that Act, of 50% or more of
BKF's Voting Stock (as defined);
(ii) a majority of BKF's board of directors (the "Board") consists of
individuals other than Incumbent Directors, which term means the members of
the Board on the date of this Agreement; provided that any individual
becoming a director subsequent to such date whose election or nomination
for election was supported by a majority of the directors who then
comprised the Incumbent Directors shall be considered an Incumbent
Director;
(iii) all or substantially all of the assets or business of BKF are
disposed of pursuant to a merger, consolidation, or other transaction,
unless (A) the shareholders of BKF immediately prior to such merger,
consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned BKF's Voting
Stock, all of the Voting Stock or other ownership interests of the entity
or entities, if any, that succeed to the business of BKF, or (B) a majority
of the board of directors of the surviving corporation in such a
transaction consists of Incumbent Directors or directors appointed by Xxxxx
Management Co., Inc. but excluding directors who were members of the other
entity's board of directors;
(iv) the Board adopts any plan of liquidation providing for the
distribution of all or substantially all of BKF's assets; or
(v) BKF combines with another company and is the surviving corporation
but, immediately after the combination, the shareholders of BKF immediately
prior to the combination hold, directly or indirectly, 50% or less of the
Voting Stock of the combined company (there being excluded from the number
of shares held by such shareholders, but not from the Voting Stock of the
combined company, any shares received by affiliates of such other company
in exchange for securities of such other company).
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(c) "Delivery Date" means the earliest to occur of the following: (i) the
occurrence of a Change in Control, (ii) upon Employee's termination due to
Disability (as defined below), (iii) upon Employee's death, (iv) December 31,
2004 or (v) any earlier date as determined by the Committee in its sole
discretion.
(d) "Disability" means the Employee's inability, due to physical or mental
incapacity, to substantially perform his duties and responsibilities of
employment for a period of 180 days in any consecutive nine-month period.
(e) "Products and Services" means all products and services offered,
planned, researched, developed, tested, sold, licensed, marketed or otherwise
provided by BKF and/or any of its subsidiaries or affiliates during the
Employee's employment.
(f) "Voting Stock" means the issued and outstanding capital stock or other
securities of any class or classes having general voting power, under ordinary
circumstances in the absence of contingencies, to elect the directors of a
corporation.
7. Withholding Tax. Employee may be subject to withholding taxes as a
result of the settlement of Deferred Stock. Unless the Committee permits
otherwise, Employee shall pay to BKF in cash, promptly when the amount of such
obligations become determinable, all applicable federal, state, local and
foreign withholding taxes that BKF in its discretion determines result from such
settlement. Unless the Committee otherwise determines and subject to such rules
and procedures as the Committee may establish, Employee may make an election to
have shares of Stock withheld by BKF or to tender any such securities to BKF to
pay the amount of tax that BKF in its discretion determines to be required so to
be withheld by BKF upon settlement of Deferred Stock, subject to satisfying any
applicable requirements for compliance with Section 16(b) of the Exchange Act.
Any shares of Stock or other securities so withheld or tendered will be valued
as of the date they are withheld or tendered, provided that Stock shall be
valued at Fair Market Value on such date. Unless otherwise permitted by the
Committee, the value of shares withheld or tendered may not exceed the minimum
federal, state, local and foreign withholding tax obligations as computed by
BKF.
8. Non-transferability. Except to the extent otherwise determined by the
Committee, no shares of Deferred Stock shall be assignable or otherwise
transferable by Employee other than by will or by the laws of descent and
distribution and, unless otherwise provided by the Committee, during the life of
Employee any elections with respect to Deferred Stock may be made only by
Employee or Employee's guardian or legal representative.
9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to conflict of law principles.
BKF CAPITAL GROUP, INC.
By:
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Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
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[Name of Employee]
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