EXHIBIT 10.1
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RETENTION AGREEMENT
THIS AGREEMENT is entered into as of August 11, 2005 by and
between
Levin Management Co., Inc. and BKF CAPITAL
GROUP, INC., both Delaware
corporations (referred to collectively
herein as the "Company"), and PHILIP
FRIEDMAN ("Employee").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and maintenance of
a
sound and vital employee infrastructure to
be essential to protecting and
enhancing the best interests of the Company
and its stockholders; and
WHEREAS, the Board (as defined in Section 1) has determined that it
is
in the best interests of the Company and
its stockholders to secure Employee's
and certain other employees of the Company
(identified below) continued services
and to ensure Employee's and such other
employees' continued and undivided
dedication to his and their duties,
respectively; and
WHEREAS, the Board has authorized the Company to enter into
this
Agreement,
NOW, THEREFORE, for and in consideration of the promises and the
mutual
covenants and agreements herein contained,
the Company and Employee hereby agree
as follows:
1.
DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings set
forth below:
(a) "Board"
means the Board of Directors of the Company.
(b) "Cause"
means: (i) the willful and continued failure
of Employee to substantially perform his
duties with the Company (other than any
such failure resulting from Employee's
incapacity due to physical or mental
illness or any such failure subsequent to
Employee being delivered a Notice of
Termination without Cause by the Company or
delivering a Notice of Termination
for Good Reason to the Company) after a
written demand for substantial
performance is delivered to Employee by the
Board which specifically identifies
the manner in which the Board believes that
Employee has not substantially
performed Employee's duties and Employee
has not cured to the satisfaction of
the Board any such failure that is capable
of being cured in all respects within
ten (10) days of receiving such written
demand; (ii) the willful engaging by
Employee in misconduct which is
demonstrably and materially injurious to the
Company or its affiliates; or (iii)
Employee's conviction of, or plea of guilty
or no contest to, any felony. For purpose
of the preceding sentence, no act or
failure to act by Employee shall be
considered "willful" unless done or omitted
to be done by Employee in bad faith and
without reasonable belief that
Employee'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, based upon the advice
of counsel for the Company (or upon
the instructions of an officer of the
Company) shall be conclusively presumed to
be done, or omitted to be done, by Employee
in good faith and in the best
interests of the Company. "Cause" shall not
include mere poor performance or
underperformance of the Company's Long Only
Investment and Trading Group
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and/or any fund(s) managed by it and/or
Employee. The Company must notify
Employee of any event constituting Cause
within thirty (30) days following the
Company's knowledge of its existence or
such event shall not constitute Cause
under this Agreement.
(c) "Date of
Termination" means (i) the effective date on
which Employee's employment by the Company
terminates as specified in a prior
written notice by the Company or Employee,
as the case may be, to the other,
delivered pursuant to Section 10 or (ii) if
Employee's employment by the Company
terminates by reason of death, the date of
death of Employee.
(d)
"Disability" means termination of Employee's
employment by the Company due to Employee's
absence from Employee's duties with
the Company on a full-time basis for at
least one hundred eighty (180)
consecutive days as a result of Employee's
incapacity due to physical or mental
illness; PROVIDED, THAT, the Company may
not terminate the Employee's employment
as a result of Disability unless it has
first given the Employee notice of such
termination and, within thirty (30) days
after such notice is given, the
Employee has not returned to the full-time
performance of the Employee's duties.
(e) "Good
Reason" means, without Employee's express
written consent, the occurrence of any of
the following events:
(i) (A) any
change in the duties or
responsibilities (including reporting responsibilities) of
Employee that is inconsistent in any material and adverse
respect with Employee's position(s), duties, responsibilities
or status with the Company (including any material and adverse
diminution of such duties or responsibilities) or (B) a
material and adverse change in Employee's titles or offices
with the Company;
(ii)
a reduction by the Company in Employee's
rate of annual base salary as the same may be increased from
time to time thereafter;
(iii) any
requirement of the Company that Employee
be based anywhere other than the office where Employee is
located at the date of this Agreement, if such relocation
increases Employee's commute by more than thirty-five (35)
miles;
(iv)
the failure by the Company or any of its
affiliates to pay any compensation to Employee within seven
(7) days of its becoming due; or
(v) the
failure of the Company to obtain the
assumption (and, if applicable, guarantee) of this Agreement
from any successor (and Parent Corporation) as contemplated in
Section 9(b);
PROVIDED, that, in the case of any event
described in clauses (i) through (v)
which is an isolated, insubstantial and
inadvertent event, the Company has not
cured such change, reduction, requirement
or failure within thirty (30) days
after receiving written notice thereof from
Employee.
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(f)
"Qualifying Termination" means a termination of
Employee's employment: (i) by the Company
other than for Cause; (ii) by Employee
for Good Reason; or (iii) due to his death
or Disability.
(g) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect
ownership interest of 50% or more of
the total combined voting power of the then
outstanding securities or interests
of such corporation or other entity
entitled to vote generally in the election
of directors or in which the Company has
the right to receive 50% or more of the
distribution of profits or 50% of the
assets upon liquidation or dissolution.
2.
TERM: The term of this Agreement shall run from the date set
forth above through December 31, 2005
except that the respective provisions of
Section 3 (to the extent any amount due
under such section shall not have been
paid by December 31, 2005), Section 4,
Section 7 and Section 8 shall survive the
expiration of the term.
3.
PAYMENTS
A. 2005
COMPENSATION
(a) Employee's
annual base salary, and the annual base
salary of Jack Murphy ("Murphy"), shall be increased
on a going forward basis effective August 1, 2005 for
the remainder of the term hereof to $800,000, without
retroactive adjustment for periods prior August 1,
2005.
(b) Except as
otherwise provided below, for the
calendar/compensation year 2005, the Company shall
pay the below
identified members (the "Group
Members") of the 2005 Long Only Investment and
Trading Group (the "Group"), which 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
$7,012,740 ("Group Minimum Bonus Compensation Pool"),
consisting of the Group Members' total 2004 and/or
2004 annualized cash bonuses of $5,612,740 plus an
additional $1,400,000. Each Group Member shall be
paid
his/her 2005 bonus on or before January 15,
2006.
(c)
Notwithstanding anything to the contrary stated
above, the Group Minimum Bonus Compensation Pool may
be allocated between and/or among Employee, Murphy,
the Group Members and/or "Other Group Members" (as
defined below), or some of them. Such allocation -
whether to Employee, Murphy, any Group Members and/or
any Other 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
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and exclusive discretion of Murphy) and shall be
delivered to the Company in writing on or about
December 15, 2005. In the event Employee (or Murphy
as the case may be) fails to timely deliver the
aforesaid written allocation, the Company shall
advise Employee (or, again, Murphy as the case may
be) in writing, and the Employee (or, again, Murphy
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 Murphy are employed by the Company and
hence do not make the aforesaid allocation, each
Group Member shall be paid; (i) a 2005 cash bonus
equal to his/her 2004 cash bonus, or in the event the
Group Member commenced employment with the Group
after January 1, 2004, his or her 2004 cash bonus
annualized for a full year; and (ii) his/her PRO
RATA, portion of
the aforesaid $1.4 million (based
upon such individual's respective total 2004 cash and
equity (for this purpose, "equity" means the value
(as determined by the Company in good faith) of any
equity awarded in 2004 as measured at the time of the
award) compensation (annualized where applicable)).
In no event shall any Group Member receive an
allocation from the 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 Group Member (other than Employee),
Other Group Member, Subsequent Group Member (as
defined herein) or Separate 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 Group
Members are:
Rai Archibold
Barbara Augustin
Karen Beyer
Liz Boardman
Peter Dannenbaum
Philip Friedman
Phyllis Head
David Heide
Bart Ice
Kathy Knox
Jack Murphy
James Mylett
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Marc Nabi
Ben Shyman
Neil Stein
David Sultan
Mike Vecchiarelli
Mark Werst
(e) In the
event a Group Member (other than Employee) who
was employed in the Group in 2004 is terminated
without cause, dies or terminates due to a disability
on or before December 31, 2005, he/she, or his/her
estate, shall be paid a minimum 2005 cash bonus,
within thirty days, at least equal to his/her 2004
cash bonus, provided, however, that in the event such
Group Member was employed by the Group for less than
all of 2004, he/she shall, or his/her estate, shall
instead be paid at least his/her 2004 bonus
annualized for a full year (E.G., a person who
commenced employment with the Group on July 1, 2004,
who received a cash bonus for 2004 of $50,000, and
who is terminated without Cause shall be paid a
minimum cash bonus for 2005 of $100,000).
(f) The 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, Island Drive,
and/or any other Alternative Group).
(g) Any Group
Member (other than Employee) or Other Group
Member who voluntarily resigns for any reason or
whose employment is terminated for cause prior to
December 31, 2005, shall not be paid a bonus for
2005, and the amount of his/her 2004 cash bonus, or
annualized cash bonus in the event the Group Member
joined the Group after January 1, 2004, shall be
deducted from the Group Minimum Bonus Compensation
Pool.
(h) Any person
who joins the Group in 2005 after
execution of this Agreement ("Subsequent Group
Member") shall be paid a 2005 cash bonus by the
Company pursuant to a separate written agreement and
not from the Group Minimum Bonus Compensation Pool.
(i) The
following persons (the "Separate Group Members")
shall also be paid 2005 cash bonus compensation by
the Company, separate from and outside of the Group
Minimum Bonus Compensation Pool, as follows: (i) Dan
Aron, Chris Susanin and Ari Zweiman - each in amounts
at least equal to their respective 2004 cash and
equity bonuses; (ii) Les Ravitz - an amount at least
equal to his 2004 cash and equity bonus annualized
for a full year; (iii) John
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O'Donnell - at least 25% of his 2005 annualized
salary in cash; (iv) Marvin Fong - at least 25% of
his 2005 annualized salary in cash; (v) Kendall
Hochman - 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 2005, if any, and the
denominator being 235; and (vi) Jordan Alexander and
Steve Friscia - each to be paid a cash bonus at least
equal to 50% of their combined 2004 cash bonuses.
Such bonuses shall be paid on or before January 15,
2006. Additionally, the Company shall award to each
of Jordan Alexander and Steve Friscia 4,500 shares of
BKF stock, such stock award shall be separate from
and outside of the Group Minimum Bonus Compensation
Pool and shall vest and be delivered to them in equal
tranches on December 31, 2005, 2006 and 2007,
respectively, so long as they do not resign and are
not terminated for cause prior to such dates. In the
event a Separate 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 2005 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 (and with respect to Jordan Alexander and
Steve Friscia, they shall at the same time be vested
in and distributed their aforesaid BFK shares to the
extent not already done).
(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 Murphy, the Group
Members and other Group Members to remain with the
Company, and that, as such, Murphy, 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 2005
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
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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, 2005, 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.
B. 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 Murphy shall terminate
pursuant to a Qualifying Termination, then
the Company shall provide to Murphy, within
ten (10) days following the Date of
Termination, a lump-sum cash amount equal
to the sum of: (A) Murphy's unpaid
base salary through December 31, 2005; (B)
the amount of Murphy's 2004 cash
bonus plus $700,000; and (C) any accrued
and unused vacation pay.
(b) QUALIFYING
TERMINATION - BENEFITS. If, on or prior to
December 31, 2005, 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 s
