Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

AGREEMENT by and between KBW, Inc. (the “Company”) and Thomas B. Michaud (the
“Executive”), dated as of the 1st of November, 2006.

 

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.

 

NOW, THEREFORE, IT IS HEREBY AGREED 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.

 

2.             TERMS OF EMPLOYMENT.

 

(A)           POSITION AND DUTIES. (I)  DURING THE EMPLOYMENT PERIOD, THE
EXECUTIVE SHALL SERVE AS VICE CHAIRMAN, CHIEF OPERATING OFFICER, PRESIDENT OF
THE COMPANY, WITH SUCH DUTIES AND RESPONSIBILITIES AS ARE COMMENSURATE AND
CONSISTENT WITH SUCH TITLE AND POSITION, REPORT DIRECTLY AND EXCLUSIVELY TO THE
CHIEF EXECUTIVE OFFICER OF THE COMPANY 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
OF THE COMPANY (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)

 

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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.

 

(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,
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

 

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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 CHIEF EXECUTIVE OFFICER OF THE COMPANY DELIVERS TO THE
EXECUTIVE A WRITTEN DEMAND FOR SUBSTANTIAL PERFORMANCE THAT SPECIFICALLY
IDENTIFIES THE MANNER IN WHICH THE CHIEF EXECUTIVE OFFICER OF THE COMPANY
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 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:

 

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(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 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.

 

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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”); AND

 

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

 

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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 Internal Revenue Code of
1986, as amended (the “Code”), cash amounts that would otherwise be payable
under this Section 4(a) during the six-month period immediately following the
Date of Termination shall instead be paid, with interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code
(“Interest”), on the first business day after the date that is six months
following the Executive’s “separation from service” within the meaning of
Section 409A.

 

(B)           DEATH. IF THE EXECUTIVE’S EMPLOYMENT IS TERMINATED BY REASON OF
THE EXECUTIVE’S DEATH DURING THE EMPLOYMENT PERIOD, THIS AGREEMENT SHALL
TERMINATE WITHOUT FURTHER OBLIGATIONS TO THE EXECUTIVE’S LEGAL REPRESENTATIVES
UNDER THIS AGREEMENT, OTHER THAN FOR PAYMENT OF ACCRUED OBLIGATIONS AND THE
TIMELY PAYMENT OR PROVISION OF OTHER BENEFITS. IN ADDITION, THE EXECUTIVE SHALL
BE ENTITLED TO THE PRO-RATA BONUS. ACCRUED OBLIGATIONS SHALL BE PAID TO THE
EXECUTIVE’S ESTATE OR BENEFICIARY, AS APPLICABLE, IN A LUMP SUM IN CASH WITHIN
30 DAYS OF THE DATE OF TERMINATION. WITH RESPECT TO THE PROVISION OF OTHER
BENEFITS, THE TERM OTHER BENEFITS AS UTILIZED IN THIS SECTION 4(B) SHALL INCLUDE
DEATH BENEFITS AS IN EFFECT ON THE DATE OF THE EXECUTIVE’S DEATH WITH RESPECT TO
SIMILARLY SITUATED EXECUTIVES OF THE COMPANY AND THEIR BENEFICIARIES.

 

(C)           DISABILITY. IF THE EXECUTIVE’S EMPLOYMENT IS TERMINATED BY REASON
OF THE EXECUTIVE’S DISABILITY DURING THE EMPLOYMENT PERIOD, THIS AGREEMENT SHALL
TERMINATE WITHOUT FURTHER OBLIGATIONS TO THE EXECUTIVE, OTHER THAN FOR PAYMENT
OF ACCRUED OBLIGATIONS AND THE TIMELY PAYMENT OR PROVISION OF OTHER BENEFITS. IN
ADDITION, THE EXECUTIVE SHALL BE ENTITLED TO THE PRO-RATA BONUS. ACCRUED
OBLIGATIONS SHALL BE PAID TO THE EXECUTIVE IN A LUMP SUM IN CASH WITHIN 30 DAYS
OF THE DATE OF TERMINATION, PROVIDED, THAT TO THE EXTENT REQUIRED IN ORDER TO
COMPLY WITH SECTION 409A OF THE CODE, AMOUNTS AND BENEFITS TO BE PAID OR
PROVIDED UNDER THIS SECTION 4(C) SHALL BE PAID, WITH INTEREST, OR PROVIDED TO
THE EXECUTIVE ON THE FIRST BUSINESS DAY AFTER THE DATE THAT IS SIX MONTHS
FOLLOWING THE EXECUTIVE’S “SEPARATION FROM SERVICE” WITHIN THE MEANING OF
SECTION 409A. WITH RESPECT TO THE PROVISION OF OTHER BENEFITS, THE TERM OTHER
BENEFITS AS UTILIZED IN THIS SECTION 4(C) SHALL INCLUDE, AND THE EXECUTIVE SHALL
BE ENTITLED AFTER THE DISABILITY EFFECTIVE DATE TO RECEIVE, DISABILITY AND OTHER
BENEFITS AS IN EFFECT AT ANY TIME THEREAFTER GENERALLY WITH RESPECT TO SIMILARLY
SITUATED EXECUTIVES OF THE COMPANY.

 

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(D)           CAUSE; OTHER THAN FOR GOOD REASON. IF THE EXECUTIVE’S EMPLOYMENT
SHALL BE TERMINATED FOR CAUSE OR THE EXECUTIVE TERMINATES HIS EMPLOYMENT OTHER
THAN FOR GOOD REASON DURING THE EMPLOYMENT PERIOD, THIS AGREEMENT SHALL
TERMINATE WITHOUT FURTHER OBLIGATIONS TO THE EXECUTIVE OTHER THAN THE OBLIGATION
TO PAY TO THE EXECUTIVE (I) THE ACCRUED OBLIGATIONS THROUGH THE DATE OF
TERMINATION AND (II) OTHER BENEFITS, IN EACH CASE TO THE EXTENT THERETOFORE
UNPAID. ACCRUED OBLIGATIONS SHALL BE PAID TO THE EXECUTIVE IN A LUMP SUM IN CASH
WITHIN 30 DAYS OF THE DATE OF TERMINATION, PROVIDED, THAT TO THE EXTENT REQUIRED
IN ORDER TO COMPLY WITH SECTION 409A OF THE CODE, AMOUNTS AND BENEFITS TO BE
PAID OR PROVIDED UNDER THIS SENTENCE OF THIS SECTION 4(D) SHALL BE PAID, WITH
INTEREST, OR PROVIDED TO THE EXECUTIVE ON THE FIRST BUSINESS DAY AFTER THE DATE
THAT IS SIX MONTHS FOLLOWING THE EXECUTIVE’S “SEPARATION FROM SERVICE” WITHIN
THE MEANING OF SECTION 409A.

 

5.             NON-EXCLUSIVITY OF RIGHTS. EXCEPT AS SPECIFICALLY PROVIDED,
NOTHING IN THIS AGREEMENT SHALL PREVENT OR LIMIT THE EXECUTIVE’S CONTINUING OR
FUTURE PARTICIPATION IN ANY PLAN, PROGRAM, POLICY OR PRACTICE PROVIDED BY THE
COMPANY OR ANY OF ITS AFFILIATED COMPANIES AND FOR WHICH THE EXECUTIVE MAY
QUALIFY, NOR SHALL ANYTHING HEREIN LIMIT OR OTHERWISE AFFECT SUCH RIGHTS AS THE
EXECUTIVE MAY HAVE UNDER ANY CONTRACT OR AGREEMENT WITH THE COMPANY OR ANY OF
ITS AFFILIATED COMPANIES. AMOUNTS THAT ARE VESTED BENEFITS OR WHICH THE
EXECUTIVE IS OTHERWISE ENTITLED TO RECEIVE UNDER ANY PLAN, POLICY, PRACTICE OR
PROGRAM OF OR ANY CONTRACT OR AGREEMENT WITH THE COMPANY OR ANY OF ITS
AFFILIATED COMPANIES AT OR SUBSEQUENT TO THE DATE OF TERMINATION SHALL BE
PAYABLE IN ACCORDANCE WITH SUCH PLAN, POLICY, PRACTICE OR PROGRAM OR CONTRACT OR
AGREEMENT EXCEPT AS EXPLICITLY MODIFIED BY THIS AGREEMENT.

 

6.             FULL SETTLEMENT. THE COMPANY’S OBLIGATION TO MAKE THE PAYMENTS
PROVIDED FOR IN, AND OTHERWISE TO PERFORM ITS OBLIGATIONS UNDER, THIS AGREEMENT
SHALL NOT BE AFFECTED BY ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, DEFENSE OR OTHER
CLAIM, RIGHT OR ACTION THAT THE COMPANY MAY HAVE AGAINST THE EXECUTIVE OR
OTHERS. IN NO EVENT SHALL THE EXECUTIVE BE OBLIGATED TO SEEK OTHER EMPLOYMENT OR
TAKE ANY OTHER ACTION BY WAY OF MITIGATION OF THE AMOUNTS PAYABLE TO THE
EXECUTIVE UNDER ANY OF THE PROVISIONS OF THIS AGREEMENT AND, EXCEPT AS
SPECIFICALLY PROVIDED IN SECTION 4(A)(II), SUCH AMOUNTS SHALL NOT BE REDUCED,
REGARDLESS OF WHETHER THE EXECUTIVE OBTAINS OTHER EMPLOYMENT.

 

7.             CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (A)  ANYTHING IN THIS
AGREEMENT TO THE CONTRARY NOTWITHSTANDING AND EXCEPT AS SET FORTH BELOW, IN THE
EVENT IT SHALL BE DETERMINED THAT ANY PAYMENT (AS DEFINED BELOW) WOULD BE
SUBJECT TO THE EXCISE TAX (AS DEFINED BELOW), THEN THE EXECUTIVE SHALL BE
ENTITLED TO RECEIVE AN ADDITIONAL PAYMENT (THE “GROSS-UP PAYMENT”) IN AN AMOUNT
SUCH THAT, AFTER PAYMENT BY THE EXECUTIVE 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, THE EXECUTIVE
RETAINS AN AMOUNT OF THE GROSS-UP PAYMENT EQUAL TO THE EXCISE TAX IMPOSED UPON
THE PAYMENTS. NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 7(A), IF
IT SHALL BE DETERMINED THAT THE EXECUTIVE IS ENTITLED TO THE GROSS-UP PAYMENT,
BUT THAT THE PARACHUTE VALUE (AS DEFINED BELOW) OF ALL PAYMENTS DOES NOT EXCEED
110% OF THE SAFE HARBOR AMOUNT, THEN NO GROSS-UP PAYMENT SHALL BE MADE TO THE
EXECUTIVE 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 (AS DEFINED BELOW). THE REDUCTION OF THE AMOUNTS

 

7

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PAYABLE HEREUNDER, IF APPLICABLE, SHALL BE MADE BY FIRST REDUCING THE PAYMENTS
UNDER SECTION 4(A)(I)(C), UNLESS AN ALTERNATIVE METHOD OF REDUCTION IS ELECTED
BY THE EXECUTIVE, AND IN ANY EVENT SHALL BE MADE IN SUCH A MANNER AS TO MAXIMIZE
THE VALUE (AS DEFINED BELOW) OF ALL PAYMENTS ACTUALLY MADE TO THE EXECUTIVE. 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 SECTION
7(A). THE COMPANY’S OBLIGATION TO MAKE GROSS-UP PAYMENTS UNDER THIS SECTION 7
SHALL NOT BE CONDITIONED UPON THE EXECUTIVE’S TERMINATION OF EMPLOYMENT.

 

(B)           SUBJECT TO THE PROVISIONS OF SECTION 7(C), ALL DETERMINATIONS
REQUIRED TO BE MADE UNDER THIS SECTION 7, 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 THE EXECUTIVE AND
REASONABLY ACCEPTABLE TO THE COMPANY (THE “ACCOUNTING FIRM”). THE ACCOUNTING
FIRM SHALL PROVIDE DETAILED SUPPORTING CALCULATIONS BOTH TO THE COMPANY AND THE
EXECUTIVE WITHIN 15 BUSINESS DAYS OF THE RECEIPT OF NOTICE FROM THE EXECUTIVE
THAT THERE HAS BEEN A PAYMENT OR SUCH EARLIER TIME AS IS REQUESTED BY THE
COMPANY. ALL FEES AND EXPENSES OF THE ACCOUNTING FIRM SHALL BE BORNE SOLELY BY
THE COMPANY. ANY GROSS-UP PAYMENT, AS DETERMINED PURSUANT TO THIS SECTION 7,
SHALL BE PAID BY THE COMPANY TO THE EXECUTIVE WITHIN FIVE DAYS OF THE RECEIPT OF
THE ACCOUNTING FIRM’S DETERMINATION. ANY DETERMINATION BY THE ACCOUNTING FIRM
SHALL BE BINDING UPON THE COMPANY AND THE EXECUTIVE. AS A RESULT OF THE
UNCERTAINTY IN THE APPLICATION OF SECTION 4999 OF THE CODE AT THE TIME OF THE
INITIAL DETERMINATION BY THE ACCOUNTING FIRM HEREUNDER, IT IS POSSIBLE THAT
GROSS-UP PAYMENTS THAT WILL NOT HAVE BEEN MADE BY THE COMPANY SHOULD HAVE BEEN
MADE (THE “UNDERPAYMENT”), CONSISTENT WITH THE CALCULATIONS REQUIRED TO BE MADE
HEREUNDER. IN THE EVENT THE COMPANY EXHAUSTS ITS REMEDIES PURSUANT TO SECTION
7(C) AND THE EXECUTIVE THEREAFTER IS REQUIRED TO MAKE A PAYMENT OF ANY EXCISE
TAX, THE ACCOUNTING FIRM SHALL DETERMINE THE AMOUNT OF THE UNDERPAYMENT THAT HAS
OCCURRED AND ANY SUCH UNDERPAYMENT SHALL BE PROMPTLY PAID BY THE COMPANY TO OR
FOR THE BENEFIT OF THE EXECUTIVE.

 

(C)           THE EXECUTIVE SHALL NOTIFY THE COMPANY IN WRITING OF ANY CLAIM BY
THE INTERNAL REVENUE SERVICE THAT, IF SUCCESSFUL, WOULD REQUIRE THE PAYMENT BY
THE COMPANY OF THE GROSS-UP PAYMENT. SUCH NOTIFICATION SHALL BE GIVEN AS SOON AS
PRACTICABLE, BUT NO LATER THAN TEN BUSINESS DAYS AFTER THE EXECUTIVE IS INFORMED
IN WRITING OF SUCH CLAIM. THE EXECUTIVE SHALL APPRISE THE COMPANY OF THE NATURE
OF SUCH CLAIM AND THE DATE ON WHICH SUCH CLAIM IS REQUESTED TO BE PAID. THE
EXECUTIVE SHALL NOT PAY SUCH CLAIM PRIOR TO THE EXPIRATION OF THE 30-DAY PERIOD
FOLLOWING THE DATE ON WHICH THE EXECUTIVE GIVES SUCH NOTICE TO THE COMPANY (OR
SUCH SHORTER PERIOD ENDING ON THE DATE THAT ANY PAYMENT OF TAXES WITH RESPECT TO
SUCH CLAIM IS DUE). IF THE COMPANY NOTIFIES THE EXECUTIVE IN WRITING PRIOR TO
THE EXPIRATION OF SUCH PERIOD THAT THE COMPANY DESIRES TO CONTEST SUCH CLAIM,
THE EXECUTIVE SHALL:

 

(I)            GIVE THE COMPANY ANY INFORMATION REASONABLY REQUESTED BY THE
COMPANY RELATING TO SUCH CLAIM,

 

8

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(II)           TAKE SUCH ACTION IN CONNECTION WITH CONTESTING SUCH CLAIM AS THE
COMPANY SHALL REASONABLY REQUEST IN WRITING FROM TIME TO TIME, INCLUDING,
WITHOUT LIMITATION, ACCEPTING LEGAL REPRESENTATION WITH RESPECT TO SUCH CLAIM BY
AN ATTORNEY REASONABLY SELECTED BY THE COMPANY,

 

(III)          COOPERATE WITH THE COMPANY IN GOOD FAITH IN ORDER EFFECTIVELY TO
CONTEST SUCH CLAIM, AND

 

(IV)          PERMIT THE COMPANY TO PARTICIPATE IN ANY PROCEEDINGS RELATING TO
SUCH CLAIM;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 7(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of the Executive
and direct the Executive to sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

 

(D)           IF, AFTER THE RECEIPT BY THE EXECUTIVE OF A GROSS-UP PAYMENT OR
PAYMENT BY THE COMPANY OF AN AMOUNT ON THE EXECUTIVE’S BEHALF PURSUANT TO
SECTION 7(C), THE EXECUTIVE BECOMES ENTITLED TO RECEIVE ANY REFUND WITH RESPECT
TO THE EXCISE TAX TO WHICH SUCH GROSS-UP PAYMENT RELATES OR WITH RESPECT TO SUCH
CLAIM, THE EXECUTIVE SHALL (SUBJECT TO THE COMPANY’S COMPLYING WITH THE
REQUIREMENTS OF SECTION 7(C), IF APPLICABLE) PROMPTLY PAY TO THE COMPANY THE
AMOUNT OF SUCH REFUND (TOGETHER WITH ANY INTEREST PAID OR CREDITED THEREON AFTER
TAXES APPLICABLE THERETO). IF, AFTER PAYMENT BY THE COMPANY OF AN AMOUNT ON THE
EXECUTIVE’S BEHALF PURSUANT TO SECTION 7(C), A DETERMINATION IS MADE THAT THE
EXECUTIVE SHALL NOT BE ENTITLED TO ANY REFUND WITH RESPECT TO SUCH CLAIM AND THE
COMPANY DOES NOT NOTIFY THE EXECUTIVE IN WRITING OF ITS INTENT TO CONTEST SUCH
DENIAL OF REFUND PRIOR TO THE EXPIRATION OF 30 DAYS AFTER SUCH DETERMINATION,
THEN THE AMOUNT OF SUCH PAYMENT SHALL OFFSET, TO THE EXTENT THEREOF, THE AMOUNT
OF GROSS-UP PAYMENT REQUIRED TO BE PAID.

 

9

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(E)           NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION 7, THE COMPANY
MAY, IN ITS SOLE DISCRETION, WITHHOLD AND PAY OVER TO THE INTERNAL REVENUE
SERVICE OR ANY OTHER APPLICABLE TAXING AUTHORITY, FOR THE BENEFIT OF THE
EXECUTIVE, ALL OR ANY PORTION OF ANY GROSS-UP PAYMENT, AND THE EXECUTIVE HEREBY
CONSENTS TO SUCH WITHHOLDING.

 

(F)            DEFINITIONS. THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING
MEANINGS FOR PURPOSES OF THIS SECTION 7:

 

(I)            “EXCISE TAX” SHALL MEAN THE EXCISE TAX IMPOSED BY SECTION 4999 OF
THE CODE, TOGETHER WITH ANY INTEREST OR PENALTIES IMPOSED WITH RESPECT TO SUCH
EXCISE TAX.

 

(II)           “PARACHUTE VALUE” OF A PAYMENT SHALL MEAN THE PRESENT VALUE AS OF
THE DATE OF THE CHANGE OF CONTROL FOR PURPOSES OF SECTION 280G OF THE CODE OF
THE PORTION OF SUCH PAYMENT THAT CONSTITUTES A “PARACHUTE PAYMENT” UNDER SECTION
280G(B)(2), AS DETERMINED BY THE ACCOUNTING FIRM FOR PURPOSES OF DETERMINING
WHETHER AND TO WHAT EXTENT THE EXCISE TAX WILL APPLY TO SUCH PAYMENT.

 

(III)          A “PAYMENT” SHALL MEAN ANY PAYMENT, DISTRIBUTION OR BENEFIT IN
THE NATURE OF COMPENSATION (WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE
CODE) TO OR FOR THE BENEFIT OF THE EXECUTIVE, WHETHER PAID OR PAYABLE PURSUANT
TO THIS AGREEMENT OR OTHERWISE.

 

(IV)          THE “SAFE HARBOR AMOUNT” MEANS 2.99 TIMES THE EXECUTIVE’S “BASE
AMOUNT,” WITHIN THE MEANING OF SECTION 280G(B)(3) OF THE CODE.

 

(G)           “VALUE” OF A PAYMENT SHALL MEAN THE ECONOMIC PRESENT VALUE OF A
PAYMENT AS OF THE DATE OF THE CHANGE OF CONTROL FOR PURPOSES OF SECTION 280G OF
THE CODE, AS DETERMINED BY THE ACCOUNTING FIRM USING THE DISCOUNT RATE REQUIRED
BY SECTION 280G(D)(4) OF THE CODE.

 

8.             RESTRICTIVE COVENANTS. (A)  CONFIDENTIAL INFORMATION. THE
EXECUTIVE SHALL HOLD IN A FIDUCIARY CAPACITY FOR THE BENEFIT OF THE COMPANY ALL
SECRET OR CONFIDENTIAL INFORMATION, KNOWLEDGE OR DATA RELATING TO THE COMPANY OR
ANY OF ITS AFFILIATED COMPANIES, AND THEIR RESPECTIVE BUSINESSES, WHICH SHALL
HAVE BEEN OBTAINED BY THE EXECUTIVE DURING THE EXECUTIVE’S EMPLOYMENT BY THE
COMPANY OR ANY OF ITS AFFILIATED COMPANIES AND WHICH SHALL NOT BE OR BECOME
PUBLIC KNOWLEDGE (OTHER THAN BY ACTS BY THE EXECUTIVE OR REPRESENTATIVES OF THE
EXECUTIVE IN VIOLATION OF THIS AGREEMENT). AFTER TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY, THE EXECUTIVE SHALL NOT, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMPANY OR AS MAY OTHERWISE BE REQUIRED BY LAW OR LEGAL PROCESS,
COMMUNICATE OR DIVULGE ANY SUCH INFORMATION, KNOWLEDGE OR DATA TO ANYONE OTHER
THAN THE COMPANY AND THOSE DESIGNATED BY IT.

 

(B)           NON-COMPETITION. WHILE EMPLOYED BY THE COMPANY AND DURING THE
TWO-YEAR PERIOD FOLLOWING THE EXECUTIVE’S TERMINATION OF EMPLOYMENT WITH THE
COMPANY (THE “COVENANT PERIOD”), THE EXECUTIVE SHALL NOT:

 

(I)            FORM, OR ACQUIRE A FIVE PERCENT OR GREATER EQUITY OWNERSHIP,
VOTING OR PROFIT PARTICIPATION INTEREST IN, ANY COMPETITIVE ENTERPRISE (AS
DEFINED BELOW); OR

 

10

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(II)           ASSOCIATE (INCLUDING, BUT NOT LIMITED TO, ASSOCIATION AS AN
OFFICER, EMPLOYEE, PARTNER, DIRECTOR, CONSULTANT, AGENT OR ADVISOR) WITH ANY
COMPETITIVE ENTERPRISE AND IN CONNECTION WITH SUCH ASSOCIATION ENGAGE IN, OR
DIRECTLY OR INDIRECTLY MANAGE OR SUPERVISE PERSONNEL ENGAGED IN, ANY ACTIVITY:

 

A.            WHICH IS SIMILAR OR SUBSTANTIALLY RELATED TO ANY ACTIVITY IN WHICH
THE EXECUTIVE WAS ENGAGED, IN WHOLE OR IN PART, AT THE COMPANY,

 

B.            FOR WHICH THE EXECUTIVE HAD DIRECT OR INDIRECT MANAGERIAL OR
SUPERVISORY RESPONSIBILITY AT THE COMPANY, OR

 

C.            WHICH CALLS FOR THE APPLICATION OF THE SAME OR SIMILAR SPECIALIZED
KNOWLEDGE OR SKILLS AS THOSE UTILIZED BY THE EXECUTIVE IN THE EXECUTIVE’S
ACTIVITIES AT THE COMPANY, AND, IN ANY SUCH CASE, IRRESPECTIVE OF THE PURPOSE OF
THE ACTIVITY OR WHETHER THE ACTIVITY IS OR WAS IN FURTHERANCE OF ADVISORY,
AGENCY, PROPRIETARY OR FIDUCIARY BUSINESS OF EITHER THE COMPANY OR THE
COMPETITIVE ENTERPRISE.

 

For purposes of the Executive Covenants (as defined below), a “Competitive
Enterprise” is a business enterprise that engages in, or owns or controls a
significant interest in any entity that engages in financial services such as
investment banking, public or private finance, financial advisory services,
private investing (for anyone other than the Executive and members of the
Executive’s family), merchant banking, asset or hedge fund management,
securities brokerage, sales, lending, custody, clearance, settlement or trading.
It is the intention of the parties to restrict the activities of the Executive
under this Section 8(b) only to the extent necessary for the protection of the
legitimate business interests of the Company.

 

(C)           NON-SOLICITATION OF CLIENTS.

 

(I)            THE EXECUTIVE HEREBY AGREES THAT DURING THE COVENANT PERIOD, THE
EXECUTIVE WILL NOT, IN ANY MANNER, DIRECTLY OR INDIRECTLY, (A) SOLICIT (AS
DEFINED BELOW) A CLIENT (AS DEFINED BELOW) TO TRANSACT BUSINESS WITH A
COMPETITIVE ENTERPRISE OR TO REDUCE OR REFRAIN FROM DOING ANY BUSINESS WITH THE
COMPANY OR (B) INTERFERE WITH OR DAMAGE (OR ATTEMPT TO INTERFERE WITH OR DAMAGE)
ANY RELATIONSHIP BETWEEN THE COMPANY AND A CLIENT.

 

(II)           FOR PURPOSES OF THIS SECTION 8, THE TERM “SOLICIT” MEANS ANY
DIRECT OR INDIRECT COMMUNICATION OF ANY KIND WHATSOEVER, REGARDLESS OF BY WHOM
INITIATED, INVITING, ADVISING, ENCOURAGING OR REQUESTING ANY PERSON OR ENTITY,
IN ANY MANNER, TO TAKE OR REFRAIN FROM TAKING ANY ACTION.

 

(III)          FOR PURPOSES OF THIS SECTION 8, THE TERM “CLIENT” MEANS ANY
CLIENT OR PROSPECTIVE CLIENT OF THE COMPANY TO WHOM THE EXECUTIVE PROVIDED
SERVICES, OR FOR WHOM THE EXECUTIVE TRANSACTED BUSINESS, OR WHOSE IDENTITY
BECAME KNOWN TO THE EXECUTIVE IN CONNECTION WITH THE EXECUTIVE’S RELATIONSHIP
WITH OR EMPLOYMENT BY THE COMPANY.

 

(D)           NONSOLICITATION OF EMPLOYEES. THE EXECUTIVE HEREBY AGREES THAT
DURING THE COVENANT PERIOD, THE EXECUTIVE WILL NOT, IN ANY MANNER, DIRECTLY OR
INDIRECTLY, SOLICIT ANY PERSON WHO IS AN EMPLOYEE OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES (OR WAS AN EMPLOYEE OF THE

 

11

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COMPANY OR ANY OF ITS SUBSIDIARIES AT ANY TIME DURING THE SIX-MONTH PERIOD PRIOR
TO ANY SUCH SOLICITATION) TO RESIGN FROM THE COMPANY OR ANY OF ITS SUBSIDIARIES
OR TO APPLY FOR OR ACCEPT EMPLOYMENT WITH ANY COMPETITIVE ENTERPRISE.

 

(E)           TRANSFER OF CLIENT RELATIONSHIPS. DURING THE PORTION OF THE
COVENANT PERIOD FOLLOWING THE DATE OF THE EXECUTIVE’S TERMINATION OF EMPLOYMENT,
THE EXECUTIVE HEREBY AGREES TO TAKE ALL ACTIONS AND DO ALL SUCH THINGS AS MAY BE
REASONABLY REQUESTED BY THE COMPANY FROM TIME TO TIME TO MAINTAIN FOR THE
COMPANY THE BUSINESS, GOODWILL AND BUSINESS RELATIONSHIPS WITH ANY OF THE
COMPANY’S CLIENTS WITH WHOM THE EXECUTIVE WORKED DURING THE EMPLOYMENT PERIOD.

 

(F)            PRIOR NOTICE REQUIRED. THE EXECUTIVE HEREBY AGREES THAT PRIOR TO
ACCEPTING EMPLOYMENT WITH ANY OTHER PERSON OR ENTITY DURING THE COVENANT PERIOD,
THE EXECUTIVE WILL PROVIDE SUCH PROSPECTIVE EMPLOYER WITH WRITTEN NOTICE OF THE
PROVISIONS OF THIS AGREEMENT, WITH A COPY OF SUCH NOTICE DELIVERED
SIMULTANEOUSLY TO THE GENERAL COUNSEL OF THE COMPANY.

 

(G)           EXECUTIVE COVENANTS GENERALLY.

 

(I)            THE EXECUTIVE’S COVENANTS AS SET FORTH IN THIS SECTION 8 ARE FROM
TIME TO TIME REFERRED TO HEREIN AS THE “EXECUTIVE COVENANTS.”  IF ANY OF THE
EXECUTIVE COVENANTS IS FINALLY HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE
(WHETHER IN WHOLE OR IN PART), SUCH EXECUTIVE COVENANT SHALL BE DEEMED MODIFIED
TO THE EXTENT, BUT ONLY TO THE EXTENT, OF SUCH INVALIDITY, ILLEGALITY OR
UNENFORCEABILITY AND THE REMAINING EXECUTIVE COVENANTS SHALL NOT BE AFFECTED
THEREBY; PROVIDED, HOWEVER, THAT IF ANY OF THE EXECUTIVE COVENANTS IS FINALLY
HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE BECAUSE IT EXCEEDS THE MAXIMUM
SCOPE DETERMINED TO BE ACCEPTABLE TO PERMIT SUCH PROVISION TO BE ENFORCEABLE,
SUCH EXECUTIVE COVENANT WILL BE DEEMED TO BE MODIFIED TO THE MINIMUM EXTENT
NECESSARY TO MODIFY SUCH SCOPE IN ORDER TO MAKE SUCH PROVISION ENFORCEABLE
HEREUNDER.

 

(II)           THE EXECUTIVE UNDERSTANDS THAT THE EXECUTIVE COVENANTS MAY LIMIT
THE EXECUTIVE’S ABILITY TO EARN A LIVELIHOOD IN A BUSINESS SIMILAR TO THE
BUSINESS OF THE COMPANY.

 

(H)           REMEDIES. THE EXECUTIVE ACKNOWLEDGES THAT THE COMPANY WOULD BE
IRREPARABLY INJURED BY A VIOLATION OF THIS SECTION 8 AND THAT IT IS IMPOSSIBLE
TO MEASURE IN MONEY THE DAMAGES THAT WILL ACCRUE TO THE COMPANY BY REASON OF A
FAILURE BY THE EXECUTIVE TO PERFORM ANY OF HIS OBLIGATIONS UNDER THIS SECTION 8.
ACCORDINGLY, IF THE COMPANY INSTITUTES ANY ACTION OR PROCEEDING TO ENFORCE ANY
OF THE PROVISIONS OF THIS SECTION 8, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE EXECUTIVE HEREBY WAIVES THE CLAIM OR DEFENSE THAT THE COMPANY HAS AN
ADEQUATE REMEDY AT LAW, AND THE EXECUTIVE SHALL NOT URGE IN ANY SUCH ACTION OR
PROCEEDING THE DEFENSE THAT ANY SUCH REMEDY EXISTS AT LAW. FURTHERMORE, IN
ADDITION TO OTHER REMEDIES THAT MAY BE AVAILABLE, THE COMPANY SHALL BE ENTITLED
TO SPECIFIC PERFORMANCE AND OTHER INJUNCTIVE RELIEF, WITHOUT THE REQUIREMENT TO
POST BOND.

 

9.             SUCCESSORS. (A)  THIS AGREEMENT IS PERSONAL TO THE EXECUTIVE AND
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY SHALL NOT BE ASSIGNABLE BY THE
EXECUTIVE OTHERWISE THAN

 

12

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BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION. THIS AGREEMENT SHALL INURE TO
THE BENEFIT OF AND BE ENFORCEABLE BY THE EXECUTIVE’S LEGAL REPRESENTATIVES.

 

(B)           THIS AGREEMENT SHALL INURE TO THE BENEFIT OF AND BE BINDING UPON
THE COMPANY AND ITS SUCCESSORS AND ASSIGNS.

 

(C)           THE COMPANY WILL REQUIRE ANY SUCCESSOR (WHETHER DIRECT OR
INDIRECT, BY PURCHASE, MERGER, CONSOLIDATION OR OTHERWISE) TO ALL OR
SUBSTANTIALLY ALL OF THE BUSINESS AND/OR ASSETS OF THE COMPANY TO ASSUME
EXPRESSLY AND AGREE TO PERFORM THIS AGREEMENT IN THE SAME MANNER AND TO THE SAME
EXTENT THAT THE COMPANY WOULD BE REQUIRED TO PERFORM IT IF NO SUCH SUCCESSION
HAD TAKEN PLACE. AS USED IN THIS AGREEMENT, “COMPANY” SHALL MEAN THE COMPANY AS
HEREINBEFORE DEFINED AND ANY SUCCESSOR TO ITS BUSINESS AND/OR ASSETS AS
AFORESAID WHICH ASSUMES AND AGREES TO PERFORM THIS AGREEMENT BY OPERATION OF
LAW, OR OTHERWISE. AS USED IN THIS AGREEMENT, THE TERM “AFFILIATED COMPANIES”
SHALL INCLUDE ANY COMPANY CONTROLLED BY, CONTROLLING OR UNDER COMMON CONTROL
WITH THE COMPANY.

 

10.           ATTORNEYS’ FEES. THE COMPANY AGREES TO PAY, AS INCURRED (WITHIN
TEN BUSINESS DAYS OF RECEIPT OF AN INVOICE FROM THE EXECUTIVE), TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL LEGAL FEES AND EXPENSES THAT THE EXECUTIVE MAY
REASONABLY INCUR AS A RESULT OF ANY CONTEST BY THE COMPANY, THE EXECUTIVE OR
OTHERS OF THE VALIDITY OR ENFORCEABILITY OF OR LIABILITY UNDER, OR OTHERWISE
INVOLVING, ANY PROVISION OF THIS AGREEMENT (WHETHER SUCH CONTEST IS BETWEEN THE
COMPANY AND THE EXECUTIVE OR BETWEEN EITHER OF THEM AND ANY THIRD PARTY),
TOGETHER WITH INTEREST.

 

11.           MISCELLANEOUS. (A)  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. THE CAPTIONS OF THIS AGREEMENT ARE
NOT PART OF THE PROVISIONS HEREOF AND SHALL HAVE NO FORCE OR EFFECT. THIS
AGREEMENT MAY NOT BE AMENDED OR MODIFIED OTHERWISE THAN BY A WRITTEN AGREEMENT
EXECUTED BY THE PARTIES HERETO OR THEIR RESPECTIVE SUCCESSORS AND LEGAL
REPRESENTATIVES.

 

(B)           ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE IN WRITING
AND SHALL BE GIVEN BY HAND DELIVERY TO THE OTHER PARTY OR BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, ADDRESSED AS FOLLOWS:

 

If to the Executive:                                             At the most
recent address
on file at the Company.

 

If to the Company:                                             KBW, Inc.
787 Seventh Avenue
New York, New York 10019
Attention:  Mitchell B. Kleinman, Esq.
Executive Vice President and General Counsel
Facsimile:  (212) 541-6668

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

13

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(C)           THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION
OF THIS AGREEMENT.

 

(D)           THE COMPANY MAY WITHHOLD FROM ANY AMOUNTS PAYABLE UNDER THIS
AGREEMENT SUCH FEDERAL, STATE, LOCAL OR FOREIGN TAXES AS SHALL BE REQUIRED TO BE
WITHHELD PURSUANT TO ANY APPLICABLE LAW OR REGULATION.

 

(E)           THE EXECUTIVE’S OR THE COMPANY’S FAILURE TO INSIST UPON STRICT
COMPLIANCE WITH ANY PROVISION OF THIS AGREEMENT OR THE FAILURE TO ASSERT ANY
RIGHT THE EXECUTIVE OR THE COMPANY MAY HAVE HEREUNDER, INCLUDING, WITHOUT
LIMITATION, THE RIGHT OF THE EXECUTIVE TO TERMINATE EMPLOYMENT FOR GOOD REASON
PURSUANT TO SECTION 3(C)(I)-(V) OF THIS AGREEMENT, SHALL NOT BE DEEMED TO BE A
WAIVER OF SUCH PROVISION OR RIGHT OR ANY OTHER PROVISION OR RIGHT OF THIS
AGREEMENT.

 

(F)            IF ANY COMPENSATION OR BENEFITS PROVIDED BY THIS AGREEMENT MAY
RESULT IN THE APPLICATION OF SECTION 409A OF THE CODE, THE COMPANY SHALL, IN
CONSULTATION WITH THE EXECUTIVE, MODIFY THE AGREEMENT IN THE LEAST RESTRICTIVE
MANNER NECESSARY IN ORDER TO EXCLUDE SUCH COMPENSATION FROM THE DEFINITION OF
“DEFERRED COMPENSATION” WITHIN THE MEANING OF SUCH SECTION 409A OR IN ORDER TO
COMPLY WITH THE PROVISIONS OF SECTION 409A, OTHER APPLICABLE PROVISION(S) OF THE
CODE AND/OR ANY RULES, REGULATIONS OR OTHER REGULATORY GUIDANCE ISSUED UNDER
SUCH STATUTORY PROVISIONS AND WITHOUT ANY DIMINUTION IN THE VALUE OF THE
PAYMENTS TO THE EXECUTIVE.

 

(G)           ANY PROVISION OF THIS AGREEMENT THAT BY ITS TERMS CONTINUES AFTER
THE EXPIRATION OF THE EMPLOYMENT PERIOD OR THE TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT SHALL SURVIVE IN ACCORDANCE WITH ITS TERMS.

 

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

 

THOMAS B. MICHAUD

 

 

 

 

 

 

 

 

/s/ Thomas B. Michaud

 

 

 

 

 

 

 

 

KBW, INC.

 

 

 

 

 

 

 

 

By

/s/ Mitchell B. Kleinman

 

 

Name: Mitchell B. Kleinman

 

 

Title:   General Counsel

 

 

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