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Exhibit 10.12
BGC PARTNERS,
LLC
199 WATER
STREET
NEW YORK, NEW YORK
10038
March 31, 2008
Re: Change in Control
Agreement for Howard W. Lutnick
Dear Mr. Lutnick:
We understand that a takeover
proposal may create uncertainty for highly valued employees such as
yourself. In order to encourage you to remain in the employ of BGC
Partners, LLC (the “Company” ) and to provide
additional incentive for you to promote the success of the business
of the Company, the Company has provided you with this agreement
(the “ Agreement ”), which provides for certain
payments and benefits in the event of a Change in Control. This
Agreement will be effective immediately prior to the Closing Date.
If the Closing Date does not occur, this Agreement will be void
ab initio and of no further force or effect. Capitalized
terms used but not otherwise defined in this Agreement are defined
in Exhibit A to this Agreement.
If a Change in Control occurs
and you elect to terminate your employment upon the Change in
Control pursuant to a written notice of your resignation provided
to the Company at any time prior to the Change in Control:
(1) the Company shall pay to you, in a lump sum in cash, upon
the Change in Control, an amount equal to the product of
(A) two and (B) the sum of (x) your annual base
salary and (y) the annual bonus paid or payable by the Company
and its Subsidiaries, including any bonus or portion thereof that
has been earned but deferred for the most recently completed fiscal
year (the “Bonus Amount” ); and (2) you
shall receive the Medical Benefits. If a Change in Control occurs
and you do not so elect, the Company shall pay to you, in a lump
sum in cash, upon the Change in Control, an amount equal to the
product of (1) one and (2) the sum of (A) your
annual base salary and (B) the Bonus Amount, provided ,
that, in the event that, during the three-year period following the
Change in Control, your employment is terminated by the Company for
any reason (other than by reason of your death or Disability),
(1) the Company shall pay to you, in a lump sum in cash,
within 30 days of your date of termination of employment, an amount
equal to the product of (A) one and (B) the sum of
(x) your annual base salary and (y) the Bonus Amount; and
(2) you shall receive the Medical Benefits. Notwithstanding
the foregoing provisions of this paragraph, in the event that you
are a “specified employee” within the meaning of
Section 409A of the Code (as determined in accordance with the
methodology established by the Company as in effect on the date of
termination), amounts that would otherwise be payable pursuant to
the proviso of the immediately preceding sentence during the
six-month period immediately following your termination of
employment shall instead be paid, with interest on any delayed
payment at the applicable federal rate provided for in
Section
Howard W. Lutnick
BGC Partners, Inc. Change in Control
Agreement
Page -2-
7872(f)(2)(A) of the Code
(“Interest”), on the first business day after the date
that is six months following your “separation from
service” within the meaning of Section 409A of the Code.
Upon a Change in Control, unless otherwise provided in an
applicable award agreement, all stock options and restricted stock
units based on shares of the Company’s common stock shall
vest in full and become immediately exercisable.
Non-Exclusivity of
Rights. Nothing in this Agreement shall prevent or limit your
continuing or future participation in any plan, program, policy or
practice provided by the Company or the Affiliated Companies and
for which you may qualify, nor shall anything herein limit or
otherwise affect such rights as you may have under any other
contract or agreement with the Company or the Affiliated Companies.
Amounts that are vested benefits or that you are otherwise entitled
to receive under any plan, policy, practice or program of or any
other contract or agreement with the Company or the Affiliated
Companies at or subsequent to your termination (“Other
Benefits”) shall be payable in accordance with such plan,
policy, practice or program or contract or agreement, except as
explicitly modified by this Agreement. Notwithstanding the
foregoing, if you receive payments and benefits pursuant to this
Agreement, you shall not be entitled to any severance pay or
benefits under any other severance plan, program or policy of the
Company and the Affiliated Companies, unless otherwise specifically
provided therein by a specific reference to this
Agreement.
No Set-Off; No Duty to
Mitigate . The Company’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 may have against you or others. In no event shall
you be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to you under any of the
provisions of this Agreement. The Company agrees to pay as incurred
(within 10 days following the Company’s receipt of an invoice
from you), at any time from the Change in Control through your
remaining lifetime (or, if longer, through the 20
th
anniversary of the Change in
Control) to the full extent permitted by law, all legal fees and
expenses that you may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, you or others
of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by you about the amount of
any payment pursuant to this Agreement), plus, in each case,
Interest. In order to comply with Section 409A of the Code, in
no event shall the payments by the Company under this paragraph 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 you shall have submitted an invoice for such
fees and expenses at least 10 days before the end of the calendar
year next following the calendar year in which such fees and
expenses were incurred. The amount of such legal fees and expenses
that the Company is obligated to pay in any given calendar year
shall not affect the legal fees and expenses that the Company is
obligated to pay in any other calendar year, and your right to have
the Company pay such legal fees and expenses may not be liquidated
or exchanged for any other benefit.
Additional Payment .
Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that
any Payment would be sub-
Howard W. Lutnick
BGC Partners, Inc. Change in Control
Agreement
Page -3-
ject to the Excise Tax, then you shall
be entitled to receive an additional payment (the
“Gross-Up Payment” ) in an amount such that,
after payment by you of all taxes (and 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, you retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this paragraph, if it
shall be determined that you are entitled to the Gross-Up Payment,
but that the Parachute Value of all Payments does not exceed 110%
of the Safe Harbor Amount, then no Gross-Up Payment shall be made
to you and the amounts payable under this Agreement shall be
reduced so that the Parachute Value of all Payments, in the
aggregate, equals the Safe Harbor Amount. The reduction of the
amounts payable hereunder, if applicable, shall be made by reducing
the cash payment first and then the Medical Benefits. For purposes
of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other Payments) shall be
reduced. If the reduction of the amount payable under this
Agreement would not result in a reduction of the Parachute Value of
all Payments to the Safe Harbor Amount, no amounts payable under
the Agreement shall be reduced pursuant to this Agreement. The
Company’s obligation to make Gross-Up Payments under this
Agreement shall not be conditioned upon your termination of
employment.
Subject to the provisions of
the following paragraph, all determinations required to be made
under this “Additional Payment” section, including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at
such determination, shall be made by a nationally recognized
certified public accounting firm designated by you (the
“Accounting Firm” ). The Accounting Firm shall
provide detailed supporting calculations both to the Company and
you within 15 business days of the receipt of notice from you that
there has been a Payment or such earlier time as is requested by
the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change in Control, you may appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). 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
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