Exhibit 10.2

BGC PARTNERS, INC.

499 PARK AVENUE

NEW YORK, NEW YORK 10022

August 3, 2011

 

  Re: Amended and Restated Change in Control Agreement

Dear Mr. Merkel:

The following letter agreement amends and restates the Change in Control
Agreement dated March 31, 2008 between you and BGC Partners, LLC.

We understand that a takeover proposal may create uncertainty for highly valued
employees such as yourself. In order to encourage you to remain in the employ of
BGC Partners, Inc. and/or its subsidiaries (collectively, the “Company”) and to
provide additional incentive for you to promote the success of the business of
the Company, the Company has provided you with this agreement (this
“Agreement”), which provides for certain payments and benefits in the event of a
Change in Control. Capitalized terms used but not otherwise defined in this
Agreement are defined in Exhibit A to this Agreement.

If a Change in Control occurs and you elect to terminate your employment with
the Company upon the Change in Control pursuant to a written notice of your
resignation provided to the Company at any time prior to the Change in Control:
(1) the Company shall pay to you, in a lump sum in cash, upon the Change in
Control, an amount equal to the product of (A) two and (B) the sum of (x) your
annual base salary and (y) the annual bonus paid or payable by the Company,
including any bonus or portion thereof that has been earned but deferred, for
the most recently completed fiscal year (the “Bonus Amount”); and (2) you shall
receive the Medical Benefits. If a Change in Control occurs and you do not so
elect: (1) the Company shall pay to you, in a lump sum in cash, upon the Change
in Control, an amount equal to the product of (A) one and (B) the sum of
(x) your annual base salary and (y) the Bonus Amount; and (2) you shall receive
the Medical Benefits. In addition, in the event that, during the three-year
period following the Change in Control, your employment is terminated by the
Company without Cause (and other than by reason of your death or Disability):
(1) the Company shall pay to you, in a lump sum in cash, within 30 days after
your date of termination of employment, an amount equal to the product of
(A) one and (B) the sum of (x) your annual base salary and (y) the Bonus Amount;
and (2) you shall receive the Medical Benefits upon termination, even if you
have received the Medical Benefits during all or a portion of such three-year
period. Notwithstanding the foregoing provisions of this paragraph, in the event
that you are a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) (as determined in
accordance with the methodology established by the Company as in effect on the
date of termination), amounts that would otherwise be payable pursuant to the
immediately preceding sentence

--------------------------------------------------------------------------------

Stephen M. Merkel

Page -2-

 

during the six-month period immediately following your termination of employment
by the Company without Cause 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 your “separation from service” within the meaning of
Section 409A of the Code. Immediately prior to a Change in Control, unless
otherwise provided in an applicable award agreement, all stock options,
restricted stock units, and other awards based on shares of the Company’s
Class A Common Stock shall vest in full and become immediately exercisable, and
all partnership units in BGC Holdings, L.P., including REUs, PSUs, PSIs and any
other units you may hold, shall, if applicable, vest in full and be granted
immediately exchangeable exchange rights for shares of the Company’s Class A
Common Stock.

Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit your
continuing or future participation in any plan, program, policy or practice
provided by the Company or the Affiliated Companies and for which you may
qualify, nor shall anything herein limit or otherwise affect such rights as you
may have under any other contract or agreement with the Company or the
Affiliated Companies. Amounts that are vested benefits or that you are otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract or agreement with the Company or the Affiliated Companies at or
subsequent to your termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if you receive
Payments pursuant to this Agreement, you shall not be entitled to any severance
pay or benefits under any other severance plan, program or policy of the
Company, unless otherwise specifically provided therein by a specific reference
to this Agreement.

No Set-Off; No Duty to Mitigate. The Company’s obligation to make the Payments
and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against you or others except as expressly provided in this
Agreement. In no event shall you be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to you under any of
the provisions of this Agreement. The Company agrees to pay as incurred (within
10 days following the Company’s receipt of an invoice from you), at any time
from the Change in Control through your remaining lifetime (or, if longer,
through the 20th anniversary of the Change in Control) to the full extent
permitted by law, all legal fees and expenses that you may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company, you or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by you about the amount of any Payment pursuant to this
Agreement), plus, in each case, Interest. In order to comply with Section 409A
of the Code, in no event shall the amounts payable by the Company under this
paragraph be made later than the end of the calendar year next following the
calendar year in which such fees and expenses were incurred; provided, however,
that you shall have submitted an invoice for such fees and expenses at least 10
days before the end of the calendar year next following the calendar year in
which such fees and expenses were incurred. The amount of such fees and expenses
that the Company is obligated to pay in any given calendar

--------------------------------------------------------------------------------

Stephen M. Merkel

Page -3-

 

year shall not affect the fees and expenses that the Company is obligated to pay
in any other calendar year, and your right to have the Company pay such fees and
expenses may not be liquidated or exchanged for any other benefit.

Additional Payment. Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
Payment would be subject to the Excise Tax, then you shall be entitled to
receive an additional payment (the “Gross-Up Payment”) in an amount such that,
after payment by you 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, you retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this paragraph, if it shall be determined that you are
entitled to the Gross-Up Payment, but that the Parachute Value of all Payments
does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall
be made to you, and the Payments shall be reduced so that the Parachute Value of
all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of
the Payments, if applicable, shall be made by reducing the cash payment first
and then the Medical Benefits. 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 Payments would not result in a
reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no
Payments shall be reduced pursuant to this Agreement. The Company’s obligation
to make Gross-Up Payments under this Agreement shall not be conditioned upon
your termination of employment.

Subject to the provisions of the following paragraphs, all determinations
required to be made under the immediately preceding “Additional Payment”
paragraph, 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 you (the “Accounting Firm”). The Accounting Firm
shall provide detailed supporting calculations both to the Company and you
within 15 business days after the receipt of notice from you that there has been
a Payment or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, you may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any determination by the Accounting Firm shall be binding
upon the Company and you. 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 this paragraph and you thereafter are
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 your benefit.

--------------------------------------------------------------------------------

Stephen M. Merkel

Page -4-

 

You 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 10 business days after you are informed in writing of such claim.
You shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. You shall not pay such claim prior to the
expiration of the 30-day period following the date on which you give 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 you in writing
prior to the expiration of such period that the Company desires to contest such
claim, you shall:

(i) give the Company any information reasonably requested by the Company
relating to such claim;

(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 you 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 paragraph, 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 your behalf and direct you to sue
for a refund or contest the claim in any permissible manner, and you agree 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 you to sue for a refund, the Company shall indemnify and hold you
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest and 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
your taxable year 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 you 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.

--------------------------------------------------------------------------------

Stephen M. Merkel

Page -5-

 

If, after the receipt by you of a Gross-Up Payment or payment by the Company of
an amount on your behalf pursuant to the immediately preceding paragraph, you
become entitled to receive any refund with respect to the Excise Tax to which
such Gross-Up Payment relates or with respect to such claim, you shall (subject
to the Company’s complying with the requirements of the immediately preceding
paragraph, 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 the payment by the Company of an amount on your behalf
pursuant to the immediately preceding paragraph, a determination is made that
you shall not be entitled to any refund with respect to such claim and the
Company does not notify you 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.

Any Gross-Up Payment shall be paid by the Company to you within five days after
the receipt of the Accounting Firm’s determination; provided, however, that, the
Gross-Up Payment shall in all events be paid no later than the end of your
taxable year next following your taxable year in which the Excise Tax (and any
income or other related taxes or interest or penalties thereon) on a Payment are
remitted to the Internal Revenue Service or any other applicable taxing
authority or, in the case of amounts relating to a claim described above that
does not result in the remittance of any federal, state, local and foreign
income, excise, social security and other taxes, the calendar year in which the
claim is finally settled or otherwise resolved. Notwithstanding any other
provision of the foregoing “Additional Payment” paragraphs, 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 you, all or any
portion of any Gross-Up Payment, and you hereby consent to such withholding.

Assumption. This letter shall be binding upon any successor of the Company or
its business or assets (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Agreement if no succession had taken
place. In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Agreement, the
Company shall require such successor expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. The term “Company,” as used in this
Agreement, shall mean the Company as hereinbefore defined and any successor or
assignee to the business or assets which by reason hereof becomes bound by this
Agreement.

Term. The term of this Agreement shall commence upon the date set forth above.
At any time on or after the tenth anniversary of the closing of the merger of
BGC Partners, LLC with and into eSpeed, Inc. pursuant to the Agreement and Plan
of Merger, dated as of May 29, 2007, as amended as of November 5, 2007 and
February 1, 2008, by and among the Company, Cantor Fitzgerald, L.P., eSpeed,
Inc., BGC Partners, L.P., BGC Global Holdings, L.P. and BGC Holdings,

--------------------------------------------------------------------------------

Stephen M. Merkel

Page -6-

 

L.P, which closing was on April 1, 2008, the Company may terminate this
Agreement upon two years’ advance written notice to you.

Miscellaneous. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without reference to its
conflict of law rules. All Payments hereunder are subject to withholding for
applicable income and payroll taxes or otherwise as required by law. You and the
Company acknowledge that, except as may otherwise be provided under any other
written agreement between you and the Company, your employment by the Company is
“at will” and, prior to a Change in Control, your employment may be terminated
by either you or the Company, in which case you shall have no further rights
under this Agreement.

 

BGC PARTNERS, INC. By:  

/s/ Howard W. Lutnick

  Name:   Howard W. Lutnick   Title:   Chairman and Chief     Executive Officer

 

Accepted and Agreed:

/s/    Stephen M. Merkel        

Stephen M. Merkel Dated: August 3, 2011

[Signature page to Change in Control Agreement, dated August 3, 2011, between
BGC Partners, Inc. and Stephen M. Merkel]

--------------------------------------------------------------------------------

EXHIBIT A

The following terms shall have the meaning set forth below when used in the
attached Agreement:

“Affiliated Company” means any company controlled by, controlling or under
common control with the Company.

“Applicable Board” means the Board, or if the Company is not the ultimate Parent
entity of the Affiliated Companies and is not publicly-traded, the board of
directors or similar body of the ultimate Parent entity of the Company.

“Board” means the Board of Directors of the Company.

“Cause” means

(i) your willful and continued failure to perform substantially your duties with
the Company (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to you by the Applicable Board or the Chief Executive Officer of
the Company that specifically identifies the manner in which the Applicable
Board or the Chief Executive Officer of the Company believes that you have not
substantially performed your duties, or

(ii) the willful engaging by you in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company.

For purposes of the Agreement, no act, or failure to act, on your part shall be
considered “willful” unless it is done, or omitted to be done, by you in bad
faith or without reasonable belief that your action or omission was in the best
interests of the Company. Any act, or failure to act, based upon authority
(A) given pursuant to a resolution duly adopted by the Applicable Board,
(B) based upon the instructions of the Chief Executive Officer of the Company or
a senior officer of the Company or (C) based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by you
in good faith and in the best interests of the Company. The cessation of your
employment shall not be deemed to be for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Applicable
Board (excluding you, if you are a member of the Applicable Board) at a meeting
of the Applicable Board called and held for such purpose (after reasonable
notice is provided to you and you are given an opportunity, together with your
counsel, to be heard before the Applicable Board), finding that, in the good
faith opinion of the Applicable Board, you are guilty of the conduct described
in clause (i) or (ii) above, and specifying the particulars thereof in detail.

--------------------------------------------------------------------------------

“Change in Control” means such date as Cantor Fitzgerald, L.P. or one of its
Affiliates ceases to have a “Controlling Interest” in the Company. For purposes
of this definition, “Affiliate” means any person that directly, or through one
or more intermediaries, controls or is controlled by or is under common control
with Cantor Fitzgerald, L.P., and “Controlling Interest” means (x) beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) of equity securities
representing more than 50% of the voting power of the outstanding equity
securities of the Company or (y) voting control of more than 50% of the voting
power of the Company.

“Disability” means your absence from the performance of your 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 that is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to you or your legal representative.

“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.

“Medical Benefits” means, for two years after your termination of employment and
for two years following a Change in Control in which you do not elect to
terminate your employment with the Company (the “Benefit Continuation Period”),
the Company shall provide health care and life insurance benefits to you and/or
your family substantially similar to, and at the same after-tax cost to you
and/or your family, as those that would have been provided in accordance with
the plans, programs, practices and policies providing health care and life
insurance benefits and at the benefit level provided immediately prior to the
Change in Control or, if more favorable, as in effect generally at any time
thereafter with respect to other peer executives of the Company and their
families; provided, however, that the health care benefits provided during the
Benefit Continuation Period shall be provided in such a manner that such
benefits (and the costs and premiums thereof) are excluded from your income for
federal income tax purposes and, if the Company reasonably determines that
providing continued coverage under one or more of its health care benefit plans
contemplated herein could be taxable to you, the Company shall provide such
benefits at the level required hereby through the purchase of individual
insurance coverage; provided, however, that, if you become re-employed with
another employer and are eligible to receive health care and life insurance
benefits under another employer-provided plan, the health care and life
insurance benefits provided hereunder shall be secondary to those provided under
such other plan during such applicable period of eligibility. Following the end
of the Benefit Continuation Period, you will be eligible for continued health
coverage as required by Section 4980B of the Code or other applicable law
(“COBRA Coverage”), as if your employment with the Company had terminated as of
the end of such period, and the Company shall take such actions as are necessary
to cause such COBRA Coverage not to be offset by the provision of benefits under
this paragraph and to cause the period of COBRA Coverage to commence at the end
of the Benefit Continuation Period.

“Parachute Value” of a Payment shall mean the present value as of the date of
the Change in 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.

--------------------------------------------------------------------------------

“Parent” means any “person” (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) that controls the Company, either directly or indirectly
through one or more intermediaries.

A “Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for your benefit,
whether paid or payable pursuant to this Agreement or otherwise including,
without limitation, the Gross-Up Payment.

The “Safe Harbor Amount” means 2.99 times your “base amount,” within the meaning
of Section 280G(b)(3) of the Code.