This exhibit
amends and restates the agreement between KBW, Inc. and the
executive that was included as an exhibit to KBW Inc.’s
previously filed periodic reports with the Securities and Exchange
Commission. The agreement was amended and restated as set forth
below in order to comply with certain technical requirements of
Section 409A of the Internal Revenue Code.
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between KBW, Inc.
(the “ Company ”) and John G. Duffy (the “
Executive ”), dated as December 31,
2008.
WHEREAS,
the Company and the Executive are parties to that certain
employment agreement dated as of November 1, 2006 (the “
Prior Agreement ”);
WHEREAS,
the Company is desirous of continuing to employ the Executive in an
executive capacity on the terms and conditions, and for the
consideration, hereinafter set forth, and the Executive is desirous
of being employed by the Company on such terms and conditions and
for such consideration; and
WHEREAS,
certain revisions to the Prior Agreement are necessary to cause it
to comply with, or to cause it not to be subject to,
Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”), and the final regulations
thereunder;
NOW,
THEREFORE, in order to comply with, or cause it not to be subject
to, Section 409A of the Code and final regulations thereunder,
the Prior Agreement is hereby amended and restated as of the date
first written above as follows:
1.
Employment Period . The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to continue
to serve the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date (as
defined below) and ending on the third anniversary thereof, subject
to earlier termination in accordance with the provision of
Section 3 hereof (the “ Employment Period
”). “ Effective Date ” shall mean the date
immediately prior to the date on which the registration statement
filed by the Company under the Securities Act of 1933, as amended,
registering the initial public offering of the common stock of the
Company, par value $0.01, is effective.
(a)
Position and Duties . (i) During the Employment Period,
the Executive shall serve as Chairman and Chief Executive Officer
of the Company, with such duties and responsibilities as are
commensurate and consistent with such title and position, report
directly and exclusively to the Board of Directors of the Company
(the “ Board of Directors ”) and perform his
services at the headquarters of the Company in New York, New York.
In addition,
the Company
shall cause the Executive to be appointed as a member of the Board
of Directors, and shall nominate the Executive for election and
re-election to the Board of Directors as and when the
Executive’s term expires while the Executive remains employed
under this Agreement.
(ii) During
the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees
to devote substantially all of his attention and time during normal
business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a
violation of this Agreement for the Executive to serve on
corporate, civic or charitable boards or committees, deliver
lectures, fulfill speaking engagements or teach at educational
institutions and manage personal investments, so long as such
activities do not significantly interfere with the performance of
the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
(b)
Compensation (i) Base Salary . During the Employment
Period, the Executive shall receive an annual base salary (“
Annual Base Salary ”) of not less than the
Executive’s annual base salary as in effect immediately prior
to the Effective Date, in accordance with the Company’s
normal payroll policies. The Executive’s Annual Base Salary
shall be reviewed for increase (but not decrease) at least annually
by the Compensation Committee of the Board of Directors (the
“ Compensation Committee ”) pursuant to its
normal performance review policies for senior executives. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any increase and the term
Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.
(ii)
Annual Bonus . In addition to the Annual Base Salary, the
Executive shall be eligible to be awarded, for each fiscal year of
the Company or portion of a fiscal year ending during the
Employment Period, an annual bonus (the “ Annual Bonus
”) pursuant to the terms of the Company’s Annual
Incentive Plan, as in effect from time to time. “Annual
Bonus” for any given fiscal year shall mean the amount, if
any, of annual bonus earned by the Executive with respect to the
applicable fiscal year of the Company, including amounts deferred
and/or paid in the form of equity compensation. Each such Annual
Bonus shall be paid no later than two and a half months after the
end of the fiscal year for which the Annual Bonus is awarded,
unless the Executive shall elect to defer the receipt of such
Annual Bonus pursuant to an arrangement that meets the requirements
of Section 409A of the Code.
(iii)
Other Benefits . During the Employment Period: (A) the
Executive shall be entitled to participate in incentive, savings
and retirement plans, practices, policies and programs of the
Company to the same extent as provided generally to similarly
situated executives of the Company; and (B) the Executive
and/or the Executive’s family, as the case may be, shall be
eligible for participation in, and shall receive benefits under,
welfare benefit plans,
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practices,
policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, employee
life insurance, group life insurance, accidental death and travel
accident insurance plans and programs) to the same extent as
provided generally to similarly situated executives of the
Company.
(iv)
Expenses . During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the
Company’s policies.
(v)
Office and Support Staff . During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments and with secretarial and
support staff, no less favorable than that provided similarly
situated executives of the Company.
3.
Termination of Employment . (a) Death or Disability .
The Executive’s employment shall terminate automatically upon
the Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability (as defined
below) of the Executive has occurred during the Employment Period,
it may provide the Executive with written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “
Disability Effective Date ”), provided that,
within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “ Disability
” shall mean the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for
180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive’s legal
representative.
(b)
Cause . The Company may terminate the Executive’s
employment during the Employment Period either with or without
Cause. For purposes of this Agreement, “ Cause ”
shall mean:
(i) the willful
and continued failure substantially to perform the
Executive’s duties (other than as a result of physical or
mental illness or injury), after the Board of Directors delivers to
the Executive a written demand for substantial performance that
specifically identifies the manner in which the Board of Directors
believes that the Executive has not substantially performed the
Executive’s duties; or
(ii) illegal
conduct or gross misconduct by the Executive, in either case that
is willful and results in material and demonstrable damage to the
business or reputation of the Company; or
(iii) conviction
of, or plea of guilty or nolo contendere to, a charge of commission
of a felony.
For purposes of
this provision, 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
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without
reasonable belief that the Executive’s action or omission was
in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by
the Board of Directors or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than two-thirds of the entire
membership of the Board of Directors at a meeting of the Board of
Directors called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board of
Directors), finding that, in the good faith opinion of the Board of
Directors, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c)
Good Reason . The Executive’s employment may be
terminated by the Executive with or without Good Reason. For
purposes of this Agreement, “ Good Reason ”
shall mean in the absence of the prior written consent of the
Executive:
(i) the failure of
the Company to nominate the Executive for election and re-election
to the Board of Directors, or the assignment to the Executive of
any duties inconsistent in any respect with the Executive’s
job description, or any other action by the Company that results in
a diminution in the Executive’s position, authority, duties
or responsibilities, other than an isolated, insubstantial and
inadvertent action that is not taken in bad faith and is remedied
by the Company promptly after receipt of notice thereof from the
Executive;
(ii) any failure
by the Company to comply with any of the provisions of Section 2(b)
of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) any
requirement by the Company that the Executive’s services be
rendered primarily at a location or locations other than the
location set forth in this Agreement;
(iv) any purported
termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement;
or
(v) any failure by
the Company to comply with and satisfy Section 9(c) of this
Agreement.
(d)
Notice of Termination . Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination (as defined below) to the other party
hereto given in accordance with Section 11(b) of this Agreement.
For purposes of this Agreement, a “ Notice of
Termination ” means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment
under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of
such notice, specifies
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the termination
date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
(e)
Date of Termination . “ Date of Termination
” means (i) if the Executive’s employment is
terminated by the Company for Cause, or by the Executive with or
without Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days
of such notice, as the case may be, (ii) if the
Executive’s employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be. Notwithstanding the
foregoing, in no event shall the Date of Termination occur until
the Executive experiences a “separation from service”
within the meaning of Section 409A of the Code, and the date
on which such separation from service takes place shall be the
“Date of Termination.”
4.
Obligations of the Company upon Termination . (a) Good
Reason; Other Than for Cause, Death or Disability . If, during
the Employment Period, the Company shall terminate the
Executive’s employment other than for Cause, death or
Disability or the Executive shall terminate employment for Good
Reason:
(i) the Company
shall pay to the Executive the aggregate of the following amounts
in a lump sum in cash within 30 days after the Date of
Termination:
A. the sum of
(1) the Executive’s Annual Base Salary and any accrued
vacation pay through the Date of Termination, (2) the
Executive’s Annual Bonus for the fiscal year immediately
preceding the fiscal year in which the Date of Termination occurs
if such bonus has not been paid as of the Date of Termination, and
(3) the Executive’s business expenses that have not been
reimbursed by the Company as of the Date of Termination that were
incurred by the Executive prior to the Date of Termination in
accordance with the applicable Company policy, in each case, to the
extent not theretofore paid (the sum of the amounts described in
clauses (1) through (3), shall be hereinafter referred to as
the “ Accrued Obligations ”); provided ,
that notwithstanding the foregoing, if the Executive has made an
irrevocable election under any deferred compensation arrangement
subject to Section 409A of the Code to defer any portion of the
Annual Base Salary or Annual Bonus described in clause (1) or
clause (3) above, then for all purposes of this Section 4
(including, without limitation, Sections 4(b) through 4(d)), such
deferral election, and the terms of the applicable arrangement
shall apply to the same portion of the amount described in such
clause (1) or clause (3), and such portion shall not be
considered as part of the “Accrued Obligations” but
shall instead be an “Other Benefit” (as defined below);
and
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B. the product of
(1) the highest Annual Bonus earned by the Executive for the
last three full fiscal years of the Company ending prior to the
year in which the Date of Termination occurs (including any amounts
deferred or satisfied with equity award grants) (the “
Highest Annual Bonus ”) and (2) a fraction, the
numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of
Termination, and the denominator of which is 365 (the “
Pro-rata Bonus ”); and
C. an amount equal
to three times the sum of (1) the Executive’s Annual
Base Salary, (2) the Highest Annual Bonus and (3) the
Company’s contribution on behalf of the Executive to the
Company’s Profit Sharing Retirement Plan (or successor plan)
for the plan year ending immediately prior to the plan year during
which the Date of Termination occurs; and
(ii) during the
three-year period following the Date of Termination or such longer
period as may be provided by the terms of the appropriate plan,
program, practice or policy, but, to the extent required in order
to comply with Section 409A, in no event beyond the end of the
second calendar year that begins after the Executive’s
“separation from service” within the meaning of
Section 409A (the “ Benefit Continuation Period
”), the Executive and/or the Executive’s family shall
be provided with welfare benefits at least as favorable, and at the
after-tax same cost to the Executive and/or the Executive’s
family, as those that would have been provided to them under
Section 2(b)(iii)(B) of this Agreement if the
Executive’s employment had continued until the end of the
Continuation Period; provided , however , that during
any period when the Executive is eligible to receive such benefits
under another employer-provided plan, the benefits provided by the
Company under this Section 4(a)(ii) may be made secondary to
those provided under such other plan. The Executive’s
entitlement to COBRA continuation coverage under Section 4980B
of the Code (“ COBRA Coverage ”) shall not be
offset by the provision of benefits under this
Section 4(a)(ii) and the period of COBRA Coverage shall
commence at the end of the Benefit Continuation Period. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until the
end of the Benefit Continuation Period and to have retired on the
last day of such period; and
(iii) to the
extent not theretofore paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible
to receive under any plan, program, policy or practice or contract
or agreement of the Company and its affiliated companies through
the Date of Termination (such other amounts and benefits shall be
hereinafter referred to as the “ Other Benefits
”).
Notwithstanding
the foregoing provisions of this Section 4(a), to the extent
required in order to comply with Section 409A of the Code,
cash amounts that would otherwise be payable under this Section
4(a) during the six-month period immediatel
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