AGREEMENT made
as of the 28 th day of September, 2005, between BKF Capital
Group, Inc., a Delaware corporation (the “ Company
”), and John C. Siciliano (the “ Executive
”).
The Board of
Directors of the Company (the “ Board ”) desires
to provide for the employment of the Executive. The Executive is
willing to commit himself to serve the Company on the terms and
conditions herein provided.
In order to
effect the foregoing, the Company and the Executive wish to enter
into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the
respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
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1.
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Employment. The Company hereby agrees to employ
the Executive, and the Executive hereby agrees to serve the
Company, on the terms and conditions set forth herein.
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2.
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Term. The employment of the Executive by
the Company as provided in Section 1 will commence on
September 28, 2005 (the “Effective Date”) and end
on the fourth anniversary of the Effective Date (the
“Original Term”), unless further extended or sooner
terminated as hereinafter provided (as extended or sooner
terminated, the “Term”). Commencing on the expiration
of the Original Term, the Term of the Executive’s employment
shall automatically be extended for successive additional one-year
periods, thereafter, unless, not later than 60 days prior to
the expiration of the Original Term or any one-year extension
thereof, either party shall have given notice to the other party
hereto that it does not wish to extend this Agreement.
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3.
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Position and Duties.
The Executive shall
serve as Chief Executive Officer and President of each of the
Company and John A. Levin & Co., Inc. and he shall have such
responsibilities, duties and authority commensurate with such
positions (or any position to which he may be promoted after the
date hereof) and as may from time to time be assigned to the
Executive by the Board that are consistent with such
responsibilities, duties and authority. As of the Effective Date,
the Executive shall be appointed as a member of the Board and the
Company shall nominate the Executive for re-election to the Board
upon the expiration of each of the Executive’s terms as a
director that occurs during the Term. The Executive, in carrying
out his duties under this Agreement, shall report directly to the
Board. During the Term, the Executive shall devote substantially
all his working time (excluding periods of vacation and other
approved leaves of absence) and efforts to the business and affairs
of the Company.
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4.
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Place of Performance.
In connection with the
Executive’s employment by the Company during the Term, the
Executive shall be based at the principal executive offices of the
Company in New York City, New York, except for required travel on
the Company’s business.
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5.
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Compensation and Related
Matters.
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(a)
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Salary. During the Term, the Company shall
pay to the Executive an annual base salary at a rate of $950,000
per annum or such higher rate as may from time to time be
determined by the Board, such salary to be paid in substantially
equal installments in accordance with Company policy (but in any
event not less frequently than monthly). The Executive’s base
salary shall be subject to annual review for increase or decrease
by the Board (or a committee thereof); provided that in no event
shall the Executive’s base salary be payable at a rate of
less than $950,000 per annum. Compensation of the Executive by
salary payments shall not be deemed exclusive and shall not prevent
the Executive from participating in any other compensation or
benefit plan of the Company.
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(b)
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Annual Bonus.
The Executive will be
eligible to receive an annual bonus (including for the 2005
calendar year) in an amount to be set at the sole discretion of the
compensation committee of the Board. The Executive’s annual
bonus will be paid in the form (and at the same general time) as
bonuses are generally paid to senior managers and portfolio
managers of the Company.
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(c)
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Equity Grants.
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(i)
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On
the Effective Date the Executive shall be granted 250,000
restricted shares of the Company’s common stock, par value
$.01 per share (“Stock”) (the “Sign-On Restricted
Stock”). On December 30, 2005 (provided that Executive
is then still in employment with the Company), the Executive shall
be granted 250,000 stock options (the “Sign-On
Options”) to acquire Stock for an exercise price per share
equal to the fair market value of a share of Stock on the date of
grant as determined by the Compensation Committee in accordance
with the terms of the Company’s 1998 Incentive Compensation
Plan, as amended (the “Company Equity Plan”). The
Sign-On Restricted Stock and Sign-On Options (collectively, the
“Sign-On Equity Grants”) shall each be 20% vested on
December 30, 2005 and the remaining 80% of each type of grant
shall vest ratably in 20% (i.e., 25% of the unvested 80%)
installments on the first through fourth anniversaries of the
Effective Date. Upon the death or disability (as described in
Section 7(b) hereof) of the Executive, the Sign-On Equity Grants
shall be vested (to the extent not then already vested) and, in the
case of the Sign-On Options, shall remain exercisable in accordance
with the terms of the Company Equity Plan and the Option Agreement
evidencing such grant as described in Section 5(c)(iii)
hereof.
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(ii)
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The
Sign-On Restricted Shares and, on or following December 30,
2005, the Sign-On Options, shall vest on an accelerated basis if
performance measures (including EBITDA and assets under management
targets) to be agreed upon by the Company and the Executive are
achieved. The Company and the Executive shall negotiate the terms
of such performance objectives in good faith and shall use their
reasonable best efforts to reach an agreement on such terms as soon
as reasonably practicable but in no event later than March 31,
2006. In addition, immediately prior to the occurrence of a
“Change in Control of the Company” (as defined herein),
all Sign-On Equity Grants shall immediately vest.
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(iii)
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All
Sign-On Equity Grants shall be awarded pursuant to the Company
Equity Plan. The Sign-On Restricted Stock award shall be evidenced
by a written Restricted Stock Agreement in substantially the form
attached hereto as Exhibit A and the Sign-On Options
shall be evidenced by a written Option Agreement in substantially
the form attached hereto as Exhibit B , in each case
modified, as necessary, to reflect the specific provisions of this
Agreement. All shares of the Sign-On Restricted Stock and all
shares of Stock that may be issued upon the exercise of the Sign-On
Options shall have been timely registered with the Securities &
Exchange Commission pursuant to a Form S-8 or otherwise.
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(iv)
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For
purposes hereof, a “Change in Control of the Company”
shall be deemed to have occurred upon (A) the acquisition
(other than from the Company) by any “person” (as such
term is defined in Sections 13(d) of 14(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”)) of
beneficial ownership (within the meaning of rule 13d-3 promulgated
under the 1934 Act) of 50% or more of the combined voting power of
the Company’s then outstanding voting securities; or (B)
(1) a merger of consolidation involving the Company if the
stockholders of the Company, immediately before such merger or
consolidation, do not, as result of
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such merger or
consolidation, own, directly or indirectly, more than 50% of the
combined voting power of the then outstanding voting securities of
the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company
outstanding immediately before such merger or consolidation, or
(2) the adoption by the Board of a plan of liquidation
providing for the distribution of substantially all of the assets
of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company (including
without limitation a sale or other disposition of more than 50% of
the capital stock of John A. Levin & Co., Inc). Notwithstanding
the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because 50% or more of the combined voting
power of the Company’s then outstanding securities is
acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by
the Company or any of its subsidiaries or (ii) any corporation
which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately
prior to such acquisition.
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(v)
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The
Executive shall be eligible for additional equity grants during the
Term as determined by the Compensation Committee in its sole
discretion.
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(d)
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Expenses/Short Term Living and
Commuting Expenses. The Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred
by the Executive in performing services hereunder, including all
expenses of travel and living while away from home on business or
at the request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company and applicable
to its senior executives. In addition, the Executive shall be
reimbursed for his temporary housing costs in the New York City
metropolitan region and for any reasonable commuting expenses (at
economy fare rates for airplane travel) incurred between his
current residence in California and New York City through the
earlier of December 31, 2005 and the date that the Executive
permanently relocates to the New York City metropolitan region,
provided that the Executive provides the Company with written
verification of such expenses and further provided, that such
reimbursement will not exceed $50,000 in the aggregate.
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(e)
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Other Benefits.
The Executive shall be
entitled to participate in all of the current employee benefit
plans, fringe and perquisite plans, practices, programs, policies
and arrangements the Company generally makes available to its
executives and key management employees at a level and on such
terms as are commensurate with his positions (including, without
limitation, each retirement plan, annual and long-term incentive
compensation plans, stock option and purchase plans, group life
insurance and accident plan, medical and dental insurance plans,
and disability plan). The Executive shall be entitled to
participate in or receive benefits under any employee benefit plan,
fringe and perquisite plans, practices, programs, policies and
arrangement generally made available by the Company in the future
to its executives and key management employees at a level and on
such terms as are commensurate with his positions, subject to and
on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing herein shall
be construed as preventing the Company from amending or terminating
any current or future employee benefit plan or arrangement. Unless
otherwise agreed to in writing by the Executive, nothing paid to
the Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the
salary payable to the Executive pursuant to paragraph (a) of
this Section.
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(f)
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Vacations. The Executive shall be entitled to
not less than four weeks’ paid vacation for each twelve-month
period during the Term (prorated for partial years). The Executive
shall also be entitled to all paid holidays and personal days given
by the Company to its executives.
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(g)
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Services Furnished.
The Company shall
furnish the Executive with office space, stenographic assistance
and such other facilities and services as shall be suitable to the
Executive’s position and adequate for the performance of his
duties as set forth in Section 3.
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6.
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Offices. The Executive shall serve without
additional compensation as a director of the Company and, if
elected or appointed, any of its subsidiaries, and in one or more
executive offices of any of the Company’s subsidiaries,
provided that the Executive is indemnified for serving in any and
all such capacities on a basis no less favorable than is currently
provided by the Company or any of its subsidiaries.
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7.
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Termination. The Executive’s employment
hereunder may be terminated only under the following
circumstances:
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(a)
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Death. The Executive’s employment
hereunder shall terminate upon his death.
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(b)
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Disability. If, as a result of the
Executive’s incapacity due to physical or mental illness, the
Executive shall have been absent from his duties hereunder on a
full-time basis for the entire period of six consecutive months and
within thirty (30) days after written notice of such
termination is received by the Executive (after the end of such
six-month period) Executive shall not have returned to the
performance of his duties hereunder on a full-time basis, the
Company may terminate Executive’s employment
hereunder.
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(c)
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Termination by the
Company.
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(i)
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The
Company may terminate the Executive’s employment hereunder
with or without Cause. For purposes of this Agreement, the Company
shall have “Cause” to terminate the Executive’s
employment hereunder upon (i) the willful and continued
failure of Executive to substantially perform his duties with the
Company (other than any such failure resulting from
Executive’s incapacity due to physical or mental illness or
any such failure subsequent to Executive 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 Executive by the
Board which specifically identifies the manner in which the Board
believes that Executive has not substantially performed
Executive’s duties and Executive 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 Executive in
misconduct which is demonstrably and materially injurious to the
Company or its affiliates; (iii) any act of willful dishonesty
towards the Company that has a material adverse effect on the
Company; (iv) Executive’s willful, material, knowing and
intentional failure to comply with applicable laws with respect to
the execution of the Company’s business operations;
(v) Executive’s theft, fraud, embezzlement, dishonesty
or similar conduct which has resulted or is likely to result in
material damage to the Company or any of its affiliates or
subsidiaries; (vi) Executive’s habitual intoxication or
continued abuse of illegal drugs which materially interferes with
Executive’s ability to perform his assigned duties and
responsibilities; or (vii) Executive’s conviction of, or
plea of guilty or no contest to, any felony. For purposes of this
Section 7(c), no act or failure to act by Executive shall be
considered “willful” unless done or omitted to be done
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Executive in
bad faith and without reasonable belief that Executive’s
action or omission was in the best interests of the Company.
Without in any way limiting the acts or failures to act which shall
not be considered willful, 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 Executive in good
faith in the best interests of the Company. “Cause”
shall not include mere poor performance or underperformance of the
Company, John A. Levin & Co., Inc., the Executive (other than
in respect of an action or inaction specifically provided in the
second sentence of this Section 7(c)(i)), or any funds,
trading groups or other business units thereof. The Company must
notify Executive 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.
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(ii)
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The
Company may not terminate the Executive for Cause under clauses
(i)-(v) of Section 7(c)(i) above unless: (i) prior to the
Date of Termination (as defined herein), the Company provides the
Executive with a Notice of Termination (as defined herein) of its
intent to consider termination of the Executive’s employment
for Cause, including a description of the specific reasons which
form the basis for such consideration; (ii) the Executive is
given reasonable advance notice by the Board and shall have the
opportunity to appear before the Board, with or without legal
representation, at the Executive’s election, to present
arguments and evidence on his own behalf; and (iii) the Board,
by a majority of its members (excluding the Executive), determines
in good faith that the actions or inactions of the Executive
specified in the Notice of Termination occurred, that such actions
or inactions constitute Cause, and that the Executive’s
employment should accordingly be terminated for Cause.
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(d)
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Termination by the
Executive.
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(i)
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The
Executive may terminate his employment hereunder with or without
Good Reason.
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(ii)
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For
purposes of this Agreement, “Good Reason” shall
mean
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(A)
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(1) any material diminution or
material adverse change in the duties or responsibilities of the
Executive, (2) any adverse change in the Executive’s
titles or offices with the Company or reporting responsibilities or
obligations, including, without limitation, any failure to nominate
the Executive to the Board or removal of the Executive from the
Board other than for an event or circumstance constituting Cause or
(3) any assignment of duties or responsibilities that are
materially inconsistent with the Executive’s
position;
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(B)
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a
reduction by the Company in the Exe
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