EXHIBIT 10.1
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FIRST AMENDMENT TO
RETENTION AGREEMENT
This First Amendment to the Retention Agreement (the "Agreement") dated
as of August 11, 2005 by and between BKF Capital Group, Inc. ("BKF") and Xxxxxx
Xxxxxxxx ("Employee") is dated as of November 15, 2005. All defined terms shall
have the respective meanings ascribed to such terms in the Agreement.
WHEREAS, BKF and the Employee entered into the Agreement regarding
continued employment by BKF of Employee;
WHEREAS, BKF and the Employee desire to amend the Agreement in certain
respects to cover the compensation arrangements for the 2006 calendar year, as
provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, BKF and the Executive agree as follows:
1. Section 1(e) of the Agreement is hereby amended by (a) inserting the
words "immediately prior to such change" at the end of subparagraph
(i)(A) before the final "or" appearing therein; and (b) deleting the
word "or" at the end of subparagraph (iv), by adding the word "or"
after subparagraph (v), and by adding the following subparagraph (vi):
any resignation of employment by Employee for any reason during the
30-day period commencing six (6) months after the date of the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company or any of
its Subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination, more than 50% of the
total voting power of (x) the corporation resulting from such Business
Combination (the "Surviving Corporation"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors
of the Surviving Corporation (the "Parent Corporation"), is represented
by Company voting securities that were outstanding immediately prior to
such Business Combination (or, if applicable, is represented by shares
into which such Company voting securities were converted pursuant to
such Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of
such Company voting securities among the holders thereof immediately
prior to the Business Combination.
Section 2 of the Agreement is hereby amended by substituting "2006" for
"2005" in the two instances where it appears in said Section.
2. A new Section 3B of the Agreement shall be added to the Agreement and
Sections 3B and 3C are hereby shall be re-lettered as Sections 3C and 3D,
respectively. Section 3B shall read as follows:
"B. 2006 COMPENSATION
(a) For the calendar/compensation year 2006, Employee's annual
base salary, and the annual base salary of Xxxxxx, shall
continue to be $800,000.
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(b) Except as otherwise provided below, for the
calendar/compensation year 2006, the Company shall pay the
below identified members (the "2006 Group Members") of the
2006 Long Only Investment and Trading Group (the "2006
Group"), which 2006 Group is currently headed by Employee, a
total minimum cash bonus compensation (inclusive of 401k
contributions made by the Company, consistent with prior
policy) of $7,012,721 ("2006 Group Minimum Bonus Compensation
Pool"). Each 2006 Group Member shall be paid his/her 2006
bonus on or before January 15, 2007. Notwithstanding the
foregoing provisions of this paragraph (b), if the Company and
Employee enter into a contract prior to March 31, 2006
involving a bonus pool arrangement for 2006, such pool shall
supersede the 2006 Group Minimum Cash Bonus Compensation Pool
provided in this paragraph (b).
(c) Notwithstanding anything to the contrary stated above, the
2006 Group Minimum Bonus Compensation Pool may be allocated
between and/or among Employee, Xxxxxx, the 2006 Group Members
and/or "Other 2006 Group Members" (as defined below), or some
of them. Such allocation - whether to Employee, Xxxxxx, any
2006 Group Members and/or any Other 2006 Group Members --
shall be made at the sole and exclusive discretion of Employee
(unless Employee leaves the Company for any reason, in which
case Employee and the Company agree that such allocation shall
be made at the sole and exclusive discretion of Xxxxxx) and
shall be delivered to the Company in writing on or about
December 15, 2006. In the event Employee (or Xxxxxx as the
case may be) fails to timely deliver the aforesaid written
allocation, the Company shall advise Employee (or, again,
Xxxxxx as the case may be) in writing, and the Employee (or,
again, Xxxxxx as the case may be) shall deliver such written
allocation within three business days of the Company's
aforesaid notice. In the event neither Employee nor Xxxxxx are
employed by the Company and hence do not make the aforesaid
allocation, each 2006 Group Member and each Other 2006 Group
Member shall be paid a 2006 cash bonus equal to his/her 2005
cash bonus, or in the event such person commenced employment
with the Group after January 1, 2005, his or her 2005 cash
bonus annualized for a full year. Except under the
circumstances noted in Paragraph 2B(m) below, no 2006 Group
Member or Other 2006 Group Member shall receive an allocation
from the 2006 Group Minimum Bonus Compensation Pool if he or
she is involuntarily terminated for cause (in the case of
Employee, if he is involuntarily terminated for "Cause" or if
he voluntarily terminates employment without Good Reason, as
such terms, respectively, are defined herein). For purposes of
this Agreement, "cause" with respect to any 2006 Group Member
(other than Employee), Other 2006 Group Member, Subsequent
2006 Group Member (as defined herein) or Separate 2006 Group
Member (as defined herein), shall have the same meaning as the
"Cause" definition under Section 1(b), as applicable to
Employee, except that it shall apply to actions taken (or
failed to be taken) by the individual to whom it applies.
(d) The 2006 Group Members are:
Rai Xxxxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxx
Xxxxx Xxxxxxxxxx
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Xxxxxx Xxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Head
Xxxxx Xxxxx
Xxxxx Xxxx
Xxxxxx Xxxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
Xxxx Xxxx
Xxx Xxxxxx
Xxxx Xxxxx
Xxxxx Xxxxxx
(e) In the event a 2006 Group Member (other than Employee) who was
employed in the Group in 2005 is terminated without cause,
dies or terminates due to a disability on or after January 1,
2006 and on or before December 31, 2006, he/she, or his/her
estate, shall be paid: (i) a minimum 2006 cash bonus, within
thirty days, at least equal to his/her 2005 cash bonus,
provided, however, that in the event such Group Member was
employed by the Group for less than all of 2005, he/she shall,
or his/her estate, shall instead be paid at least his/her 2005
bonus annualized for a full year (E.G., a person who commenced
employment with the Group on July 1, 2005, who received a cash
bonus for 2005 of $50,000, and who is terminated without Cause
shall be paid a minimum cash bonus for 2006 of $100,000); and
(ii) the equity or cash of equivalent value he/she was
allocated pursuant to paragraph 2B(n) below determined by
applying the Common Stock closing share price on the business
day immediately prior to the Date of Termination.
(f) The 2006 Group Minimum Bonus Compensation Pool shall exclude
and be in addition to any payments made from the other
Alternative groups (including without limitation SR Capital,
RCL Capital, and/or any other Alternative Group).
(g) Except under the circumstances described in paragraph 2B(m)
below, any 2006 Group Member (other than Employee) or Other
2006 Group Member who voluntarily resigns for any reason or
whose employment is terminated for cause prior to December 31,
2006, shall not be paid a bonus for 2006, and the amount of
his/her 2005 cash bonus, or annualized cash bonus in the event
the 2006 Group Member joined the 2006 Group after January 1,
2005, shall be deducted from the 2006 Group Minimum Bonus
Compensation Pool. In the event that a 2006 Group Member
(other than Employee) or Other 2006 Group Member is paid a
bonus pursuant to paragraph 2B(m) below and voluntarily
resigns for any reason or is terminated for cause prior to
December 31, 2006, the 2006 Group Minimum Compensation Pool
shall be reduced by 75% of the 2005 cash bonus, or annualized
cash bonus, as the case may be, of the departed employee.
(h) Any person who joins the 2006 Group in 2006 after execution of
this Agreement ("Subsequent Group Member") shall be paid a
2006 cash bonus by the Company pursuant to a separate written
agreement and not from the 2006 Group Minimum Bonus
Compensation Pool.
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(i) The following persons (the "Separate 2006 Group Members")
shall also be paid 2006 cash bonus compensation by the
Company, separate from and outside of the 2006 Group Minimum
Bonus Compensation Pool, as follows: (i) Xxx Xxxxxx, Xxxxx
Xxxxxxx and Xxx Xxxxxxx - each in amounts at least equal to
their respective 2005 cash bonuses; (ii) Xxxx X'Xxxxxxx, an
amount at least equal to 120% of the 2005 bonus compensation
annualized for a full year; and (iii) Xxxxxxx Xxxxxxx - an
amount at least equal to his 2004 cash bonus annualized for a
full year multiplied by a fraction with the numerator being
the number of business days he works during 2006, if any, and
the denominator being 235. Such bonuses shall be paid on or
before January 15, 2007. In the event a Separate 2006 Group
Member is terminated without cause, dies or terminates
employment due to a long-term disability, he/she shall be
paid, within thirty days of such termination date, a 2006 cash
bonus in an amount at least equal to the amount he/she would
have been paid had he/she not been terminated without cause,
died or terminated due to a disability.
(j) The Subsequent Group Members and Separate Group Members are
collectively referred to herein as the "Other Group Members."
The parties to this Agreement acknowledge and agree that a
reason this Agreement is being entered into is to induce
Xxxxxx, the Group Members and other Group Members to remain
with the Company, and that, as such, Xxxxxx, the Group Members
and other Group Members are intended to be, and are, third
party beneficiaries to this Agreement, and thus have the right
to enforce this Agreement. Such third-party beneficiary rights
shall cease if any such individual enters into a separate
agreement with the Company which specifically acknowledges the
cessation of such rights.
(k) Any terminations from or new hires to the Group, or any
changes to any Group Member's or Other Group Member's base
salary, made by the Company in 2006 after the date hereof
shall not adversely affect any Group Member's, Other Group
Member's, Separate Group Member's or Subsequent Group Member's
right, if any, to (i) participate in the Group Minimum Bonus
Compensation Pool or (ii) receive severance benefits as
provided hereunder unless, if Employee is then still employed
by the Company, Employee consents thereto.
(l) To the extent the Company does not timely and fully make the
aforesaid Group Minimum Compensation Pool payment and other
payments/awards set forth herein, in whole or in part, it is
agreed that such failure shall increase the Group Minimum
Compensation Pool by: (i) interest at the rate and in the
manner set forth in the New York C.P.L.R. for a breach of
contract (from December 31, 2006, until the date paid); and
(ii) 25% of the unpaid principal amount(s), and the Company
shall also pay all reasonable attorneys' fees and costs
incurred in connection with efforts by Employee and/or others
to be paid such compensation.
(m) Unless the Company and Employee enter into a new employment
agreement by March 31, 2006, 25% of the 2006 Group Minimum
Cash Bonus Compensation Pool for 2006 shall be paid by the
Company no later than April 14, 2006 to Employee, Xxxxxx, 2006
Group Members and Other 2006 Group Members employed by the
Company as of March 31, 2006, as determined by Employee (or
Xxxxxx, as applicable) in accordance with Section 2A(c)
hereof.
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(n) In addition to the 2006 Group Minimum Cash Bonus Compensation
Pool, BKF shall also grant restricted stock awards (the "2006
Equity Pool") with respect to 50,000 shares of common stock of
BKF ("Common Stock") no later than March 31, 2006. The terms
and conditions applicable to the 2006 Group Minimum Cash Bonus
Pool shall also apply to the 2006 Equity Pool, except: (i) the
shares in the 2006 Equity Pool shall be allocated no later
than March 31, 2006 by Employee (or Xxxxxx, if applicable, as
provided herein); (ii) the shares so allocated shall vest on
December 31, 2006; and (iii) in the event of a change in
control of BKF prior to the allocation of shares in the 2006
Equity Pool, the Compensation Committee of the Board of
Directors of BKF shall substitute other equity or cash of
equivalent value determined by applying the Common Stock share
price immediately prior to consummation of the change of
control if Common Stock is not then available to be allocated.
(o) If the Company shall make an offering to its security holders
of rights to subscribe to additional shares of the Company's
Common Stock, the Company shall offer Employee, Xxxxxx, each
Group Member and each Other Group Member the election to
either (i) exercise the rights distributed with respect to all
restricted shares of Common Stock then issued to such
individual, or (ii) sell such rights to the Company for a
purchase price equal to the closing price at which such rights
were publicly traded on the business day immediately preceding
the day on such individual gives written notice to the Company
of his/her election to sell such rights to the Company, such
purchase price to be paid in shares of Common Stock based upon
such closing price.
3. Section 3C (formerly Section 3B) is hereby amended to read as follows:
"C. UPON TERMINATION OF EMPLOYMENT.
(a) QUALIFYING TERMINATION - SEVERANCE. If on or prior to December
31, 2005, the employment of Employee shall terminate pursuant
to a Qualifying Termination, then the Company shall provide to
Employee, within ten (10) days following the Date of
Termination, a lump-sum cash amount equal to the sum of: (A)
Employee's unpaid base salary through December 31, 2005; (B)
the amount of Employee's 2004 cash bonus plus $700,000; and
(C) any accrued and unused vacation pay. Similarly, if on or
prior to December 31, 2005, the employment of Xxxxxx shall
terminate pursuant to a Qualifying Termination, then the
Company shall provide to Xxxxxx, within ten (10) days
following the Date of Termination, a lump-sum cash amount
equal to the sum of: (A) Xxxxxx'x unpaid base salary through
December 31, 2005; (B) the amount of Xxxxxx'x 2004 cash bonus
plus $700,000; and (C) any accrued and unused vacation pay. If
after December 31, 2005 and on or prior to December 31, 2006,
the employment of Employee shall terminate pursuant to a
Qualifying Termination, then the Company shall provide to
Employee, within ten (10) days following the Date of
Termination, a lump-sum cash amount equal to the sum of: (A)
Employee's unpaid base salary through December 31, 2006; (B)
the amount of Employee's 2005 cash bonus; (C) the equivalent
value of the equity Employee was allocated determined by
applying the Common Stock closing share price on the date
immediately prior to the date of the Qualifying Termination;
and (D) any accrued and unused vacation pay. Similarly, if on
or prior to December 31, 2006, the employment of Xxxxxx shall
terminate pursuant to a Qualifying Termination, then the
Company shall
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provide to Xxxxxx, within ten (10) days following the Date of
Termination, a lump-sum cash amount equal to the sum of: (A)
Xxxxxx'x unpaid base salary through December 31, 2006; (B) the
amount of Xxxxxx'x 2005 cash bonus; (C) the equivalent value
of the equity Employee was allocated determined by applying
the Common Stock closing share price on the date immediately
prior to the date of the Qualifying Termination; and (D) any
accrued and unused vacation pay.
(b) QUALIFYING TERMINATION - BENEFITS. If, on or prior to December
31, 2006, the employment of Employee shall terminate pursuant
to a Qualifying Termination, the Company shall continue to
provide, for a period of eighteen months following Employee's
Date of Termination, Employee (and Employee's dependents, if
applicable) with the same level of medical and life insurance
benefits upon substantially the same terms and conditions
(including contributions required by Employee for such
benefits) as existed immediately prior to Employee's Date of
Termination; PROVIDED, that if Employee cannot continue to
participate in the Company plans providing such benefits, the
Company shall otherwise provide such benefits on the same
after-tax basis as if continued participation had been
permitted. Notwithstanding the foregoing, in the event
Employee becomes reemployed with another employer and becomes
eligible to receive welfare benefits from such employer, the
welfare benefits described herein shall be secondary to such
benefits during the period of Employee's eligibility, but only
to the extent that the Company reimburses Employee for any
increased cost and provides any additional benefits necessary
to give Employee the benefits provided hereunder.
(c) NONQUALIFYING TERMINATION. If on or prior to December 31,
2006, the employment of Employee shall terminate other than by
reason of a Qualifying Termination, then the Company shall pay
to Employee within thirty (30) days following the Date of
Termination, a lump-sum cash amount equal to the sum of: (i)
Employee's base salary through the Date of Termination; and
(ii) any accrued vacation pay, in each case to the extent not
theretofore paid."
4.
A. The "Restricted Period," as defined in the first paragraph of Section
5(c) of the Agreement shall be amended to extend through March 31,
2006.
B. The last sentence of the third to final paragraph of Section 5(c) of
the Agreement (commencing "For the avoidance of doubt,...") is hereby
amended and restated in its entirety as follows: "Moreover, the
Employee shall not be subject to any of the restrictions set forth in
this Section 5(c) of this Agreement following the later of the Date of
Termination or March 31, 2006; provided, however, that the restriction
in Section 5(c)(i) of this Agreement shall continue to apply through
the later of the Date of Termination or April 30, 2006 with respect to
Clients of the Company as of the later of the Date of Termination or
March 31, 2006 utilizing strategies with respect to which Employee acts
as a portfolio manager.
5. COUNSEL FEES. The Company shall promptly and directly pay the legal fees
incurred by Employee in connection with the negotiation of this First Amendment
to the Agreement, up to $10,000, upon presentation of an invoice for same.
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6. This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
7. Except as hereinabove provided, the Agreement is hereby ratified and
confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment to the Agreement as of the date first above written.
BKF CAPITAL GROUP, INC. XXXXXX XXXXXXXX
By: /s/ Xxxx X. Xxxxxxxxx /s/ Xxxxxx Xxxxxxxx
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XXXXX MANAGEMENT, CO., INC.
By: /s/ Xxxx X. Xxxxxxxxx
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