Exhibit 10.2
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “ Agreement ”) dated as of
August 6, 2008 between Investment Technology Group, Inc.,
a Delaware corporation (the “ Company ”), and
Robert C. Gasser (the “ Executive
”).
WHEREAS, the Company and the
Executive previously entered into an employment agreement on
September 15, 2006 (the “ Prior Agreement
”); and
WHEREAS, the parties now wish to
amend the Prior Agreement to provide that payments due to the
Executive under the Prior Agreement upon the Executive’s
termination of employment will be compliant with the applicable
requirements of section 409A of the Code (as defined below) and the
regulations promulgated thereunder, to cause the payments and
benefits to which the Executive may become entitled following a
change in control to substantially conform to the payments and
benefits to which other senior executive employees are entitled
under existing change in control agreements with the Company, and
to make certain other desired changes.
NOW, THEREFORE, in consideration of
the foregoing and of the respective covenants and agreements herein
set forth, the Company and the Executive agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01
Definitions. For purposes of this Agreement, the following
terms have the meanings set forth below:
“ Board ” means
the Board of Directors of the Company.
“ Cause ” means
the occurrence of any one or more of the following: (i) the
Executive’s willful failure to substantially perform his
duties with the Company (other than any such failure resulting from
the Executive’s Disability), after a written demand for
substantial performance is delivered to the Executive that
specifically identifies the manner in which the Company believes
that the Executive has not substantially performed his duties, and
the Executive has failed to remedy the situation within fifteen
(15) business days of such written notice from the Company;
(ii) gross negligence in the performance of the
Executive’s duties which results in material financial harm
to the Company; (iii) the Executive’s conviction of, or
plea of guilty or nolo contendere to, any crime involving the
personal enrichment of the Executive at the expense of the Company,
or any felony; (iv) the Executive’s willful engagement
in conduct that is demonstrably and materially injurious to the
Company, monetarily or otherwise; or (v) the Executive’s
willful violation of any material provision of the Company’s
code of conduct. For purposes of this definition, no act or
failure to act, on the part of the Executive, shall be considered
“ willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that his
action or omission was in the best interests of the Company, or the
Executive is grossly negligent.
“ Change in Control
” means and shall be deemed to have occurred:
(a)
if any person (within the meaning of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”)), other
than the Company or a Related Party, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of Voting Securities
representing thirty-five percent (35%) or more of the total voting
power of all the then-outstanding Voting Securities; or
(b)
if the individuals who, as of the date hereof, constitute the
Board, together with those who first become directors subsequent to
such date and whose recommendation, election or nomination for
election to the Board was approved by a vote of at least a majority
of the directors then still in office who either were directors as
of the date hereof or whose recommendation, election or nomination
for election was previously so approved, cease for any reason to
constitute a majority of the members of the Board; or
(c)
upon consummation of a merger, consolidation, recapitalization or
reorganization of the Company, reverse split of any class of Voting
Securities, or an acquisition of securities or assets by the
Company other than (A) any such transaction in which the
holders of outstanding Voting Securities immediately prior to the
transaction receive (or retain), with respect to such Voting
Securities, voting securities of the surviving or transferee entity
representing more than fifty percent (50%) of the total voting
power outstanding immediately after such transaction, with the
voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction, or
(B) any such transaction which would result in a Related Party
beneficially owning more than fifty percent (50%) of the voting
securities of the surviving or transferee entity outstanding
immediately after such transaction; or
(d)
upon consummation of the sale or disposition by the Company of all
or substantially all of the Company’s assets, other than any
such transaction which would result in a Related Party owning or
acquiring more than fifty percent (50%) of the assets owned by the
Company immediately prior to the transaction; or
(e)
if the stockholders of the Company approve a plan of complete
liquidation of the Company.
“ Code ” means
the Internal Revenue Code of 1986, as amended and the regulations
promulgated thereunder.
“ Confidential
Information ” means information that is not generally
known to the public and that was or is used, developed or obtained
by the Company or its Subsidiaries in connection with their
business and which constitutes trade secrets or information which
the Company has made reasonable efforts to protect. It shall
not include information (i) required to be disclosed by court
or administrative order; (ii) lawfully obtainable from other
sources or which is in the public domain through no fault of the
Executive; or (iii) the disclosure of which is consented to in
writing by the Company.
“ Good Reason ”
means as follows:
(a)
Prior to a Change in Control, “ Good Reason ”
means, without the Executive’s written consent, (i) the
material diminution of the Executive’s duties,
responsibilities, powers or
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authorities, including the assignment of any
duties and responsibilities inconsistent with his position as
President and Chief Executive Officer; (ii) the removal of the
Executive from his office as Chief Executive Officer;
(iii) the failure to obtain a written assumption of the
employment agreement by any person acquiring all or substantially
all of the assets of the Company, whether effected by purchase of
shares, purchase of assets, merger or otherwise, prior to such
acquisition; (iv) a material reduction by the Company of the
Executive’s Base Salary in effect on the date hereof, or as
the same shall be increased from time to time, unless such
reduction applies on substantially the same percentage basis to all
executive officers of the Company generally, (v) written
notice to Executive from the Company to stop the automatic renewal
of the Employment Period pursuant to Section 2.01 hereof;
provided that the Executive is willing and able to execute a new
contract providing terms and conditions substantially similar to
those in this Agreement and to continue providing services to the
Company, (vi) material breach by the Company of the terms of
this Agreement, or (vii) relocation of the Executive’s
principal place of business to a location more than fifty (50)
miles from its current location; provided, however, that for any of
the foregoing to constitute Good Reason, the Executive must provide
written notification of his intention to resign within sixty (60)
days after the Executive knows or has reason to know of the
occurrence of any such event or condition, and, the Company shall
have had thirty (30) business days from the date of receipt of such
notice to effect a cure of the event or condition constituting Good
Reason and shall have failed to do so and the Executive actually
resigns from employment within the sixty (60) day period following
the expiration of the foregoing cure period. In the event of
a cure of such event or condition constituting Good Reason by the
Company, such event or condition shall no longer constitute Good
Reason.
(b)
On or after a Change in Control, “ Good Reason ”
means, without the Executive’s express written consent, the
occurrence on or after a Change in Control of the Company of any
one or more of the following:
(i)
(A) the removal of the Executive from his office as Chief
Executive Officer, or (B) a material reduction of the
Executive’s primary functional authorities, duties, or
responsibilities as President and Chief Executive Officer of the
Company from those in effect immediately prior to the Change in
Control or the assignment of duties to the Executive inconsistent
with those of President and Chief Executive Officer of the Company,
other than an insubstantial and inadvertent reduction or assignment
that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii)
the Company’s requiring the Executive to be based at a
location in excess of fifty (50) miles from the location of the
Executive’s principal job location or office immediately
prior to the Change in Control;
(iii)
a material reduction by the Company of the Executive’s Base
Salary in effect on the date hereof, or as the same shall be
increased from time to time, unless such reduction applies on
substantially the same percentage basis to all employees of the
Company generally;
(iv)
a material reduction in the Executive’s participation in, any
of the Company’s annual incentive compensation plans in which
the Executive participates prior to the Change in Control unless
such failure applies to all plan participants generally;
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(v)
the failure of the Company to obtain the assumption of the
obligations contained herein by any successor;
(vi)
a material breach of this Agreement by the Company; or
(vii)
written notice to Executive from the Company to stop the automatic
renewal of the Employment Period pursuant to Section 2.01
hereof; provided that the Executive is willing and able to execute
a new contract providing terms and conditions substantially similar
to those in this Agreement and to continue providing services to
the Company;
provided , however , that for any of the foregoing
(i) through (vii) to constitute Good Reason, the
Executive must provide written notification of his intention to
resign within thirty (30) days after the Executive knows or has
reason to know of the occurrence of any such event or condition,
and, the Company shall have had thirty (30) business days from the
date of receipt of such notice to effect a cure of the event or
condition constituting Good Reason and shall have failed to do so
and the Executive actually resigns from employment within the
eighteen (18) month period following the Change in Control as
provided in Section 5.03. In the event of a cure of such
event or condition constituting Good Reason by the Company, such
event or condition shall no longer constitute Good Reason. A
termination of employment by the Executive within the eighteen (18)
month period following a Change in Control shall be for a Good
Reason if one of the occurrences specified above shall have
occurred, notwithstanding that the Executive may have other reasons
for terminating employment, including employment by another
employer which the Executive desires to accept.
On or after a Change in Control, for
purposes of this Agreement, it shall be a material breach of this
Agreement by the Company if the Company decreases the sum of the
Executive’s base salary and target annual cash incentives as
in effect immediately prior to a Change in Control, by more than
ten percent (10%).
“ Person ” means
an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, an estate, a trust,
a joint venture, an unincorporated organization or a governmental
entity or any department, agency or political subdivision
thereof.
“ Permanent Disability
” means those circumstances under which the Executive is
determined to be eligible to receive disability benefits under the
Company’s long-term disability plan or program, or, in the
absence of such a plan or program, “Disability” will be
as defined in Section 22(e)(3) of the Code.
“ Related Party ”
means (i) a Subsidiary of the Company; (ii) an employee
or group of employees of the Company or any Subsidiary of the
Company; (iii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any majority-owned
Subsidiary of the Company; or (iv) a corporation owned
directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of Voting
Securities.
“ Subsidiary ” or
“ Subsidiaries ” means, with respect to any
Person, any corporation, partnership, limited liability company,
association or other business entity of which (i) if a
corporation, fifty percent (50%) or more of the total voting power
of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or
trustees
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thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or combination thereof; or (ii) if
a partnership, limited liability company, association or other
business entity, fifty percent (50%) or more of the partnership or
other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For
purposes of this definition, a Person or Persons will be deemed to
have a fifty percent (50%) or more ownership interest in a
partnership, limited liability company, association or other
business entity if such Person or Persons are allocated fifty
percent (50%) or more of partnership, limited liability company,
association or other business entity gains or losses or control the
managing director or member or general partner of such partnership,
limited liability company, association or other business
entity.
“ Voting Securities or
Security ” means any securities of the Company which
carry the right to vote generally in the election of
directors.
ARTICLE 2
EMPLOYMENT
SECTION 2.01
Employment . The Company shall employ the Executive,
and the Executive shall accept employment with the Company, upon
the terms and conditions set forth in this Agreement for the period
beginning on October 4, 2006 (the “ Start Date
”) and ending as provided in Section 5.01 (the “
Employment Period ”); provided that the Employment
Period shall automatically be extended for periods of one-year
unless either party gives written notice to the other party at
least 90 days prior to the end of the Employment Period or at least
90 days prior to the end of any one-year renewal period that the
Employment Period shall not be further extended.
ARTICLE 3
POSITION AND DUTIES
SECTION 3.01
Position and Duties . During the Employment Period,
the Executive shall serve as Chief Executive Officer and President
of the Company and shall have all duties, authority and
responsibilities normally incident to such position. In such
capacity, the Executive shall report to the Board and shall have
such responsibilities, powers and duties as may from time to time
be prescribed by the Board; provided that such responsibilities,
powers and duties are substantially consistent with those
customarily assigned to individuals serving in such position at
comparable companies. During the Employment Period, the
Executive shall devote substantially all of his working time and
efforts to the business and affairs of the Company and its
Subsidiaries. The Executive shall not directly or indirectly
render any services of a business, commercial or professional
nature to any other person or for-profit organization not related
to the business of the Company or its Subsidiaries, whether for
compensation or otherwise, without prior written consent of the
Board, such consent not to be unreasonably withheld; provided that
the foregoing shall not be construed as preventing the Executive
from serving on civic, educational, philanthropic or charitable
boards or committees, maintaining his personal investments, or,
serving with the prior written consent of the Board, in its sole
discretion, on corporate boards.
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SECTION 3.02
Board Seat . On the Start Date, the Company caused the
Executive to be elected to the Board, and the Executive serves as a
member of the Board. During the Employment Period, the
Company shall use its best efforts to cause the Executive to be
nominated and reelected to the Board.
SECTION 3.03
Executive Representations . The Executive hereby
represents and warrants to the Company that he is not subject or a
party to any employment agreement, non-competition covenant,
non-disclosure agreement or other agreement, covenant,
understanding or restriction of any nature whatsoever which would
prohibit the Executive from executing this Agreement and performing
fully his duties and responsibilities hereunder, or which would in
any manner, directly or indirectly, limit or affect the duties and
responsibilities which may now or in the future be assigned to the
Executive by the Company. Further, the Company expects the
Executive not to, and the Executive hereby acknowledges and agrees
that he will not, use any proprietary or confidential information
of any prior employer in the performance of his duties for the
Company.
ARTICLE 4
BASE SALARY, BONUS AND BENEFITS
SECTION 4.01
Base Salary . During the Employment Period, the
Executive’s base salary will be $750,000 per annum (the
“ Base Salary ”); provided that for the period
from the Start Date through December 31, 2006, the Executive
was paid an aggregate of $250,000. The Executive’s Base
Salary shall be reviewed periodically for increase, but not
decrease, by the Compensation Committee of the Board (the “
Committee ”) pursuant to the Committee’s normal
performance review policies for senior level executives; provided
that no provision of this Agreement shall prohibit a reduction in
the Executive’s Base Salary as part of an across the board
reduction in the base salaries of executive officers generally, so
long as such reduction applies on substantially the same percentage
basis to all executive officers of the Company generally. The
Base Salary will be payable in accordance with the normal payroll
practices of the Company.
SECTION 4.02
Bonuses . In addition to the Base Salary, during the
Employment Period, the Executive received or shall be eligible to
receive bonus payments as follows: (a) For the period from the
Start Date through December 31, 2006, the Executive received a
guaranteed bonus of $520,000; (b) For the 2007 calendar year,
the Executive was eligible to receive a performance bonus of up to
a maximum of $1,575,000 based upon attainment of performance
objectives established by the Committee in accordance with
Exhibit B hereto; (c) For the 2008 calendar year
and each calendar year thereafter, the Executive shall be eligible
to receive a performance bonus subject to attainment of performance
objectives to be established by the Committee pursuant to the terms
of the Company’s Amended and Restated Pay-for-Performance
Incentive Plan, as may be further amended, or under any replacement
or successor plan and the requirements (if any) to qualify as
“performance-based” compensation under section
162(m) of the Code. In addition, the Executive shall be
eligible to receive such other performance-based, discretionary or
other bonuses as the Committee may determine, in its sole and
absolute discretion. The Executive’s guaranteed bonus
hereunder was paid prior to December 31, 2006.
Performance bonuses, if any, shall be paid on or after
January 1 but before March 15 of the calendar year
following the calendar year for which the performance bonus is
earned.
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SECTION 4.03
Equity Awards .
(a)
Contemporaneously with the Executive’s Start Date, the
Executive was granted 31,250 restricted stock units (“
RSUs ”), which number of RSUs represented 6,250 RSUs
for the period October 4, 2006 through December 31, 2006
and 25,000 RSUs for the 2007 calendar year. The foregoing
RSUs shall vest in three equal annual installments commencing on
the first anniversary of the date of grant; provided that the
performance objective established by the Committee in accordance
with Exhibit B hereof is satisfied. The RSUs
shall be subject in all respects to terms of the Restricted Share
Agreement by and between the Company and the Executive dated as of
the Start Date and in substantially the form provided to the
Executive and the Company’s 1994 Stock Option and Long-Term
Incentive Plan, as amended and restated.
(b)
Contemporaneously with the Executive’s Start Date, the
Executive was granted a nonqualified stock option to purchase a
number of shares of the Company’s common stock equal to a
Black Scholes value for the option of $1,156,000, which represented
$231,000 for the period October 4, 2006 through
December 31, 2006 and $925,000 for the 2007 calendar
year. The foregoing option shall become exercisable in three
equal annual installments commencing on the first anniversary of
the date of grant and shall be subject in all respects to the terms
of the Stock Option Agreement by and between the Company and the
Executive dated as of the Start Date and in substantially the form
provided to the Executive and the Company’s 1994 Stock Option
and Long-Term Incentive Plan, as amended and restated. In the
event of a Change in Control at a time when the Executive is
employed by the Company (including all Subsidiaries), the Option
shall become fully vested and exercisable and shall remain
exercisable until 5:00 pm, Eastern time, on the fifth anniversary
of the Start Date, without regard to whether the Executive’s
employment with the Company or any of its Subsidiaries continues
after such Change in Control.
(c)
On March 24, 2008, the Executive was granted RSUs representing
a number of shares of the Company’s common stock equal to
$925,000 and on January 2, 2008, the Executive was granted an
additional nonqualified stock option grant representing a number of
shares of the Company’s common stock equal to a Black Scholes
value for the option of $925,000, in each case based on the current
stock price of a share of Company common stock on the date of
grant. The foregoing RSU grant shall vest according to
performance objectives established by the Committee and in
accordance with the requirements of section 162(m) of the Code
relating to the “performance-based” compensation (if
any) and shall be subject to terms of the agreement pursuant to
which it is granted (which shall reflect the provisions hereof) and
the Company’s 2007 Omnibus Equity Compensation Plan (the
“ 2007 Equity Compensation Plan ”). The
foregoing nonqualified stock option grant shall vest and become
exercisable, as applicable, in equal annual installments over the
three-year period commencing on the first anniversary of the date
of grant and shall be subject in all respects to terms of the
agreement pursuant to which it is granted (which agreement shall
reflect the provisions hereof) and the 2007 Equity Compensation
Plan.
(d)
For calendar years during the Employment Period following the 2008
calendar year, the Executive shall be eligible to receive equity
awards as and when equity awards are granted to senior officers
generally, with the amount and terms of such awards determined on
the same bases as awards granted to senior officers
generally.
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(e)
All equity awards granted to the Executive shall be subject in all
respects to the Company’s Net Share Retention
Program.
SECTION 4.04
Benefits . The Executive shall be eligible for the
following benefits during the Employment Period:
(a)
participation in such retirement, medical, life insurance and
disability insurance coverages and fringe benefit plans and
programs as are, or may during the Employment Period be, made
available generally for other senior executive officers of the
Company, subject in all respects to the terms of the applicable
plans and programs, as in effect from time to time;
(b)
participation in the Company’s Stock Unit Award Program,
pursuant to which the Executive may elect to defer a part of his
Base Salary and bonus compensation, subject in all respect to the
terms of the plan; and
(c)
up to a maximum of five (5) weeks of paid vacation annually
during the Employment Period, in accordance with the
Company’s vacation policy.
SECTION 4.05
Expenses . The Company shall reimburse the Executive
for all reasonable expenses incurred by him in the course of
performing his duties under this Agreement which are consistent
with the Company’s policies in effect from time to time with
respect to travel, entertainment and other business expenses
(“ Reimbursable Expenses ”), subject to the
Company’s requirements with respect to reporting and
documentation of expenses.
ARTICLE 5
TERM AND TERMINATION
SECTION 5.01
Term . Subject to the renewal provisions of
Section 2.01, the Employment Period will terminate on
December 31, 2009; provided that (a) the Employment
Period shall terminate prior to such date upon the
Executive’s death, and (b) the Employment Period may be
terminated by either party at any time pursuant to this
Article 5.
SECTION 5.02
Termination for Good Reason or Without Cause Prior to a Change
in Control . If the Employment Period shall be terminated
prior to a Change in Control (a) by the Executive for Good
Reason or (b) by the Company not for Cause, in either case
subject to the Executive’s execution and non-revocation of a
Release (as defined below), the Executive shall be provided
solely:
(i)
an amount equal to the Executive’s Base Salary payable
through the Date of Termination,
(ii)
the amount of the Executive’s Base Salary at the rate in
effect on the Date of Termination (before any reduction thereof
giving rise to Good Reason) plus an amount equal to the average
annual bonus paid or payable to Executive under Section 4.02
hereof with respect to the three calendar years preceding the
calendar year in which the Date of Termination occurs. If the
number of calendar years during which the Executive has been
employed by the Company prior to the calendar year of the Date of
Termination is less than three, then the foregoing
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average shall be based on the annual bonuses
paid or payable to the Executive for the actual number of calendar
years during which the Executive was employed by the Company
preceding the calendar year of termination. In addition, for
purposes of the foregoing calculation only, the Executive’s
bonus with respect to the 2006 calendar year shall be deemed to be
$1,575,000,
(iii)
a pro rated portion of the bonus for the calendar year in which the
Executive’s Date of Termination occurs, determined by
multiplying the full year bonus that would otherwise have been
payable to the Executive based upon the achievement of applicable
performance objectives by a fraction, the numerator of which is the
number of days during which Executive was employed by the Company
in the year of his termination and the denominator of which is
365,
(iv)
all outstanding options held by the Executive that are vested as of
the Date of Termination shall remain exercisable by the Executive
until the earlier of the first anniversary of the Date of
Termination or the expiration of the option term in accordance with
the terms of the Company’s 1994 Stock Option and Long-Term
Incentive Plan, as amended and restated, the 2007 Equity
Compensation Plan, or under any replacement or successor
plan,
(v) &nb
