efc10-60_ex103.htm


    Exhibit 10.3

    
 

    EMPLOYMENT
AGREEMENT

     

    This
EMPLOYMENT AGREEMENT (this “Agreement”) by and
between KBW, Inc. (the “Company”) and Thomas
B. Michaud (the “Executive”), dated as
of February 1, 2010.

     

    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, in consideration of the mutual covenants and promises contained
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, each intending to be legally bound hereby,
agree as follows:

     

    1.   Employment
Period.  Subject to earlier termination in accordance with the
provisions of Section 3 hereof, 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 February 1, 2010 (the “Effective Date”) and
ending on the third anniversary thereof; provided, however, that
beginning on the first anniversary of the Effective Date, and on each subsequent
anniversary of the Effective Date, such period shall be automatically extended
by an additional one (1) year beyond the end of the then-current
period,  unless, at least thirty (30) days before such first
anniversary of the Effective Date, or thirty (30) days before any such
subsequent anniversary of the Effective Date, the Company or the Executive shall
have given notice to the other party that it or he does not desire to extend the
period of this Agreement, in which case, the period of employment hereunder
shall terminate as of the third anniversary of the Effective Date, or the end of
the then-current term, as applicable (the period of employment hereunder,
including any extensions, in accordance with this Section 1, if applicable,
collectively, the “Employment
Period”).

     

    2.   Terms of
Employment.

     

    (a)        
Position and
Duties.  (i)  During the Employment Period, the
Executive shall serve as Vice Chairman and President of Keefe, Bruyette &
Woods, Inc. and as Vice Chairman and Chief Operating Officer of the Company,
with such duties and responsibilities as are commensurate and consistent with
such titles and positions, 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
nominate the Executive for election and re-election to the Board of Directors of
the Company (the “Board of Directors”)
as and when the Executive’s term expires while the Executive remains employed
under this Agreement.

     

    (ii)        
During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive’s
reasonable best efforts to perform faithfully and efficiently such
responsibilities.  During the Employment Period, it shall not be a
violation of this 

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Agreement
for the Executive to serve on corporate, civic or charitable boards or
committees, deliver lectures, fulfill speaking engagements or teach at
educational institutions and manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement.  It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.

     

    (b)        
Compensation  (i)  Base
Salary.  During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”)
of not less than the Executive’s annual base salary as in effect immediately
prior to the Effective Date, in accordance with the Company’s normal payroll
policies.  The Executive’s Annual Base Salary shall be reviewed for
increase (but not decrease) at least annually by the Compensation Committee of
the Board of Directors (the “Compensation
Committee”) pursuant to its normal performance review policies for senior
executives.  Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement.  Annual Base Salary shall not be reduced after any increase
and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased.

     

    (ii)        
Annual
Bonus.  In addition to the Annual Base Salary, the Executive
shall be eligible to be awarded, for each fiscal year of the Company or portion
of a fiscal year ending during the Employment Period, an annual bonus (the
“Annual Bonus”)
pursuant to the terms of the Company’s Annual Incentive Plan or the Company’s
2009 Incentive Compensation Plan, or any successor plan, in each case, as in
effect from time to time, and the terms and conditions established by the
Compensation Committee.  “Annual Bonus” for any given fiscal year
shall mean the amount, if any, of annual bonus earned by the Executive with
respect to the applicable fiscal year of the Company, including amounts deferred
and/or paid in the form of equity compensation.   Each such
Annual Bonus shall be paid no later than two and a half months after the end of
the fiscal year for which the Annual Bonus is awarded, unless (x) it is
administratively impracticable to make such payment by such time and such
impracticability was unforeseeable at the commencement of such fiscal year and
such payment is made as soon as administratively practicable, and/or (y) the
Executive shall elect to defer the receipt of such Annual Bonus pursuant to an
arrangement that meets the requirements of Section 409A of the
Code.

     

    (iii)        
Other
Benefits.  During the Employment
Period:  (A) the Executive shall be entitled to participate in
incentive, savings and retirement plans, practices, policies and programs of the
Company to the same extent as provided generally to similarly situated
executives of the Company; and (B) the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in, and shall receive
benefits under, welfare benefit plans, 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.

     

     

    
      
        
        

      

      
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    (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.

     

    (vi)       
Indemnification; Directors’
and Officers’ Liability Insurance.  The Company shall indemnify
the Executive for actions taken by the Executive as an officer, director,
employee or agent of the Company and its affiliated companies to the fullest
extent permitted by law, and such indemnification shall continue as to the
Executive even if the Executive has ceased to be an officer, director or agent,
or is no longer employed by the Company, and shall inure in all cases to the
benefit of his heirs, executors and/or administrators.  The Company
will promptly advance to the Executive expenses incurred or to be incurred by
him, including without limitation reasonable attorneys’ fees, to defend any
indemnification-eligible proceeding prior to its final disposition, after
receipt by the Company of a written request from the Executive for such advance,
together with documentation reasonably acceptable to the Board or the Company,
subject to an undertaking by the Executive to pay back any advanced amounts for
which it is determined that the Executive was not entitled to indemnification
(provided, however, that the burden of production and persuasion in asserting
and demonstrating that the Executive is not entitled to indemnification shall be
upon the Company); provided, however, that the Company may decline to advance
expenses to the Executive in connection with any claim or proceeding (other than
a shareholder derivative action) between the Executive and the Company or its
affiliated companies.  If the Executive has any knowledge of any
actual action, suit or proceeding, whether civil, criminal, administrative or
investigative, as to which the Executive may request indemnity under this
provision, the Executive shall give the Company prompt written notice
thereof.  The Company shall be entitled to assume the defense of any
such proceeding, and the Executive shall reasonably cooperate with such defense
(provided, however, that the Executive shall also have the right to engage his
own counsel in any such proceeding, and the reasonable fees and expenses of such
counsel shall be borne by the Company as provided hereunder).  The
Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or any affiliates or
subsidiaries thereof, as to which the Executive shall have concluded, based upon
written advice of legal counsel of the Executive, a copy of which is provided to
the Company, that there may be a conflict of interest between the Company (or
any subsidiary or affiliate thereof) and the Executive in the conduct of the
defense of any such action, suit or proceeding.  During and after the
Employment Term (but for at least until all applicable statutes of limitations
have expired against the Executive) the Company shall cover the Executive under
its directors’ and officers’ liability insurance policy to the extent it covers
its other officers and directors (provided that such coverage shall not be less
in amount and scope than that amount and scope maintained by the Company
immediately prior to the date hereof, unless the maintenance of such amount or
scope of such coverage, as the case may be, is not available on commercially
reasonable terms).  The Company shall not be liable to indemnify the
Executive hereunder for any amounts paid in settlement of any action or claim
effected without its consent.  Neither the Company, nor any subsidiary
or affiliate of the Company, shall settle any action or claim in any


     

     

    
      
        
        

      

      
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    manner
which would impose any penalty or limitation on the Executive for which the
Executive is not entitled to indemnification hereunder without the Executive's
prior express written consent. Neither the Company (nor its subsidiaries or
affiliates), nor the Executive, shall unreasonably withhold or delay consent to
any proposed settlement. 

    


    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
12(b) of this Agreement of its intention to terminate the Executive’s
employment.  In such event, the Executive’s employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective
Date”), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties.  For purposes of this
Agreement, “Disability” shall
mean the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total and permanent
by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative.

     

    (b)        
Cause.  The
Company may terminate the Executive’s employment during the Employment Period
either with or without Cause.  For purposes of this Agreement, “Cause” shall
mean:

     

    (i)   the
willful and continued failure substantially to perform the Executive’s duties
pursuant to this Agreement (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 believes that the
Executive has not substantially performed the Executive’s duties;
or

     

    (ii)        
gross
misconduct by the Executive 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 pursuant to subparagraph (i) or (ii) above 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


     

     

    
      
        
        

      

      
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    Board of
Directors called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board of Directors), finding that, in the good
faith opinion of the Board of Directors, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.

     

    (c)   Good
Reason.  The Executive’s employment may be terminated by the
Executive with or without Good Reason.  For purposes of this
Agreement, “Good
Reason” shall mean in the absence of the prior written consent of the
Executive:

     

    (i)   the
failure of the Company to nominate the Executive for election and re-election to
the Board of Directors, or the assignment to the Executive of any duties
inconsistent in any respect with the Executive’s job description, or any change
to the Executive’s reporting obligations set forth in Section 2(a)(i), or any
other action by the Company that results in a diminution in the Executive’s
position, titles, 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 10(c) of this
Agreement.

     

    The
Executive’s mental or physical incapacity or expiration of the
Employment Period following the occurrence of an event described above in
clauses (i) through (v) shall not affect the Executive’s ability to terminate
employment for Good Reason and the Executive’s death following delivery of a
Notice of Termination for Good Reason shall not affect the Executive’s estate’s
entitlement to severance payments or benefits provided hereunder upon a
termination of employment for Good Reason.

    


    (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
12(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 

     

     

    
      
        
        

      

      
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    Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the Date of Termination (which date shall be not more than 30 days
after the giving of such notice).  The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

     

    (e)   Date of
Termination.  “Date of Termination”
means (i) if the Executive’s employment is terminated by the Company for Cause,
or by the Executive with or without Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein within 30 days of such
notice, as the case may be, (ii) if the Executive’s employment is terminated by
the Company other than for Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of such termination and
(iii) if the Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.  Notwithstanding
the foregoing, in no event shall the Date of Termination occur until and unless
the Executive experiences a “separation from service” within the meaning of
Section 409A of the Code, and the date on which such separation from service
takes place shall be the “Date of Termination.”

     

    4.   Obligations of the Company
upon Termination.  (a)  Good Reason; Other Than for
Cause, Death or Disability.  If, during the Employment Period,
the Company shall terminate the Executive’s employment, other than for Cause, or
the Executive shall terminate employment for Good Reason, in each case, other
than a termination due to the Executive’s death or Disability or expiration of
the Employment Period pursuant to Section 1:

     

    (i)   the
Company shall pay to the Executive the aggregate of the following amounts in a
lump sum in cash on the sixty-fifth (65th) day following the Date of Termination
(except that any amount payable as described in the proviso of clause B of this
Section 4(a)(i) shall not be payable earlier than the time specified in such
clause):

     

                  
A.          the sum
of (1) the Executive’s Annual Base Salary, (2) any accrued vacation pay
through the Date of Termination, (3) 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 been earned but not paid as of the Date of Termination,
and (4) 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 (4), shall be hereinafter referred to as the
“Accrued
Obligations”); provided, that
notwithstanding the foregoing, if the Executive has made an irrevocable election
under any deferred compensation arrangement subject to Section 409A of the Code
to defer any portion of the Annual Base Salary or Annual Bonus described in
clause (1) or clause (3) above, then for all purposes of this Section 4
(including, without limitation, Sections 4(b) through 4(d)), such deferral
election, and the terms of the applicable arrangement 

     

     

    
      
        
        

      

      
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    shall
apply to the same portion of the amount described in such clause (1) or clause
(3), and such portion shall not be considered as part of the “Accrued
Obligations” but shall instead be an “Other Benefit” (as defined below);
and

     

                  
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”);
provided, however, that, for purposes of this Section 4(a) only, unless the
Pro-rata Bonus is payable upon a Change in Control (as defined in the Incentive
Plan), as determined by the Board of Directors or the Compensation Committee,
(x) the Pro-rata Bonus shall only be payable if the performance goals applicable
to the Annual Bonus for the fiscal year of the Company in which the Date of
Termination occurs are attained; (y) if such performance goals are attained at
less than the maximum level (if applicable), the amount payable under this
clause B of Section 4(a)(i) shall not exceed the Annual Bonus otherwise payable
at such level of attainment (pro-rated as described above in this clause B); and
(z) such amount shall be payable when the Annual Bonus would otherwise be
payable if such termination had not occurred; 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 (the applicable period hereinafter referred to as the “Benefit Continuation
Period”), the Executive and/or the Executive’s family shall be provided
with health care, life insurance and other benefits at least as favorable, and
at the 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 Benefit
Continuation Period; provided, however, that the health care benefits shall be
provided during the Benefit Continuation Period in such a manner that such
benefits (and the costs and premiums thereof) are excluded from the Executive’s
income for federal income tax purposes (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 the Executive, the Company shall
provide such benefits at the level required hereby through the purchase by the
Company of individual insurance coverage); provided, further, 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 Company shall use its reasonable best

     

     

    
      
        
        

      

      
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    efforts
to ensure that, following the end of the Benefit Continuation Period, the
Executive and the Executive’s spouse and eligible dependents shall be eligible
to elect continued health coverage pursuant to Section 4980B of the Code or
other applicable law, as if the Executive’s employment with the Company had
terminated as of the end of such period.  For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree welfare benefits pursuant to the Company’s retiree welfare benefit
plans, if any, 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)   all stock
options awarded to the Executive by the Company and outstanding on the Date of
Termination shall be immediately 100% vested as of such Date of Termination, and
the post-termination exercisability period shall be the longest period possible
without making the options subject to Section 409A of the Code (but not in any
event to exceed two (2) years following such Date of Termination);
and

     

    (iv)   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”) in
accordance with the terms of the underlying plans and agreements.

     

    Notwithstanding
the foregoing provisions of this Section 4(a), in the event that the Executive
is a “specified employee” within the meaning of Section 409A of the Code (as
determined in accordance with the methodology established by the Company as in
effect on the Date of Termination) (a “Specified Employee”),
amounts that constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code that would otherwise be payable and benefits that
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Code that would otherwise be provided 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”) determined
as of the Date of Termination, or provided on the first business day after the
date that is six months following the Executive’s Date of Termination, or, if
earlier, on the date of the Executive’s death (the “Delayed Payment
Date”).

     

    (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 and the Pro-rata Bonus 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.

     

     

    
      
        
        

      

      
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    (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; provided that, for
this purpose, the Company shall continue the Executive’s Annual Base Salary
(less such amounts, if any, as the Executive receives under the Company’s short
term disability plan) until such time as the Executive is eligible for benefits
pursuant to the Company’s long term disability plan.  In addition, the
Executive shall be entitled to the Pro-rata Bonus.  Accrued
Obligations and the Pro-rata Bonus shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination, provided that, in the
event that the Executive is a Specified Employee, amounts and benefits that
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Code that would otherwise be payable or provided under this Section
4(c) during the six-month period immediately following the Date of Termination
shall instead be paid or provided, with Interest, to the Executive on the
Delayed Payment Date.  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.

     

    (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, in the
event that the Executive is a Specified Employee, amounts and benefits that
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Code that would otherwise be payable or provided under this Section
4(d) during the six-month period immediately following the Date of Termination
shall instead be paid or provided, with Interest, to the Executive on the
Delayed Payment Date.

     

    5.   Non-exclusivity of
Rights.  Except as specifically provided herein, 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


     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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.   Modified
Cutback.  In the event that any payments or benefits received
or to be received by the Executive in connection with the Executive’s employment
with the Company (or termination thereof or otherwise) would subject the
Executive to the excise tax imposed under Section 4999 of the Code (the “Excise
Tax”), and if the net-after-tax amount (taking into account all applicable taxes
payable by the Executive, including without limitation any Excise Tax) that the
Executive would receive with respect to such payments or benefits does not
exceed the net-after tax amount the Executive would receive if the amount of
such payments and benefits were reduced to the maximum amount which could
otherwise be payable to the Executive without the imposition of the Excise Tax,
then, only to the extent necessary to eliminate the imposition of the Excise
Tax, such payments and benefits shall be so reduced in the following
order:  first against the latest scheduled cash payments (if
necessary, to zero), then to current cash payments and benefits (if necessary,
to zero) and then to non-cash payments and benefits.

     

    8.   Release of
Claims.  As a condition of receiving any payments or benefits
for which he otherwise qualifies under Section 4(a), the Executive agrees to
execute, deliver and not revoke, within sixty (60) days following the date of
the Executive’s termination of employment, a separation agreement containing a
general release of the Company and its subsidiaries and their respective
affiliates and their respective employees, officers, directors, and owners,
substantially in the form attached hereto as Exhibit A (modified
as necessary to conform to then existing legal requirements), such release to be
delivered, and to have become fully irrevocable, on or before the end of such
sixty (60)-day period.  If such a general release described in the
immediately preceding sentence has not been executed and delivered and become
irrevocable on or before the end of such sixty (60)-day period, no amounts or
benefits under Section 4(a) shall be or become payable.

     

    9.   Restrictive
Covenants.  (a)  Confidential
Information.  The Executive shall hold in a fiduciary capacity
for the benefit of the Company all 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 six-month 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

        
          

        

      

      
        
        

      

    

     

    (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, securities sales, securities
lending,  securities custody, securities clearance, securities
settlement or securities trading, other than any enterprise that engages in, or
owns or controls a significant interest in any entity that engages in, any of
the foregoing lines of business which are engaged in by the Company and, as of
the end of the then-most recently ended fiscal year of the Company such line of
business constituted less than 10% of the total assets of the Company and
provided less than 10% of the total revenues and net earnings of the Company for
such fiscal year, in each case on a consolidated basis.  It is the
intention of the parties to restrict the activities of the Executive under this
Section 9(b) only to the extent necessary for the protection of the legitimate
business interests of the Company and its affiliated companies.

     

    (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 and its affiliated
companies or (B) interfere with or damage (or attempt to interfere with or
damage) any relationship between the Company or any of its affiliated companies
and a Client.

     

    (ii)   For
purposes of this Section 9, the term “Solicit” means any
direct or indirect communication of any kind whatsoever, inviting, advising,
encouraging or requesting any person or entity, in any manner, to take or
refrain from taking any action, provided, however, that such
term shall not include a circumstance in which a person or an entity, wholly
unsolicited by the Executive, desires that the Executive (or the Executive’s
employer or any affiliate thereof) provide services to such person or
entity.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (iii)   For
purposes of this Section 9, the term “Client” means any
client or prospective client of the Company and its affiliated companies to whom
the Executive provided services, or for whom the Executive transacted or
solicited business.

     

    (d)   Nonsolicitation of
Employees.  The Executive hereby agrees that while he is
employed by the Company and during the twelve-month period following the
Executive’s termination of employment with the Company, the Executive will not,
in any manner, directly or indirectly, Solicit any person who is an employee of
the Company or any of its affiliated companies (or was an employee of the
Company or any of its affiliated companies at any time during the six-month
period prior to any such solicitation) to resign from the Company or any of its
affiliated companies or to apply for or accept employment with any Competitive
Enterprise.  This Section 9(d) shall not prohibit any general
employment solicitation that is not directed at employees of the Company or any
of its affiliated companies.

     

    (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 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 9 are from time to time
referred to herein as the “Executive
Covenants.”   The Company and the Executive mutually agree
that it is in the interest of both parties for the Executive to enter into the
Executive Covenants to, among other things, protect the legitimate business
interests of the Company and its affiliated companies, and that the Executive
Covenants are reasonable in scope and in all other respects given the nature of
the Executive’s duties and the nature of the Company’s and its affiliated
companies’ businesses.

     

    (ii)   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.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (iii)   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 9 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 9.  Accordingly,
if the Company institutes any action or proceeding to enforce any of the
provisions of this Section 9, 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  or other security or to show irreparable harm or lack of an
adequate remedy at law.

     

    10.   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 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.

     

    11.   Attorneys'
Fees.     The Company agrees to pay as incurred
(within ten business days of receipt of an invoice from the Executive), at any
time from the Effective Date through the Executive’s remaining lifetime (or, if
longer, through the 20th
anniversary of the Effective Date) to the full extent permitted by law, all
legal fees and expenses that the Executive may reasonably incur
(i)  in connection with the review and negotiation of this Agreement,
subject to prior approval by the Company (which approval shall not be
unreasonably withheld), and (ii) to enforce this Agreement or as a result of any
contest (regardless of the outcome thereof) 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), plus,
in each case, Interest determined as of the date such legal fees and expenses
were incurred.  In order to comply with Section 409A of the Code, in
no event shall the payments by the Company under this Section 11 be made later
than the end of the calendar year next following the calendar year

     

     

    
      
        
        

      

      
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     in
which such fees and expenses were incurred, provided, that the Executive
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 legal fees
and expenses that the Company is obligated to pay in any given calendar year
shall not affect the legal fees and expenses that the Company is obligated to
pay in any other calendar year, and the Executive’s right to have the Company
pay such legal fees and expenses may not be liquidated or exchanged for any
other benefit.

     

    12.   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.

              

            


    

     

    
    

    
      	
              With a Copy
      To:

            	
              Stephen
      W. Skonieczny, Esq.


                Dechert
      LLP

                1095
      Avenue of the Americas

                New
      York, NY 10036-6797

              

            


    

     

    
    

    
      	
              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.

     

    (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 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.

     

    (f)         
The intent
of the parties is that payments and benefits under this Agreement comply with or
be exempt from Section 409A of the Code, and the Company shall have discretion
to interpret and construe this Agreement and any associated documents in any
manner that establishes an exemption from (or compliance with) the requirements
of Code Section 409A.  If for any reason, such as imprecision in
drafting, any provision of this Agreement (or of any award of compensation,
including, without limitation, equity compensation or benefits) does not
accurately reflect its intended establishment of an exemption from (or
compliance with) Code Section 409A, as demonstrated by consistent
interpretations or other evidence of intent, such provision shall be considered
ambiguous as to its exemption from (or compliance with) Code Section 409A and
shall be interpreted by the Company in a manner consistent with such
intent.  Each payment under this Agreement shall be treated as a
separate payment for purposes of Section 409A of the Code.  In no
event may the Executive, directly or indirectly, designate the calendar year of
any payment to be made under this Agreement.  If the Executive dies
following the Date of Termination and prior to the payment of the any amounts
delayed on account of Section 409A of the Code, such amounts shall be paid to
the personal representative of the Executive’s estate within 30 days after the
date of the Executive’s death.  All reimbursements and in-kind
benefits provided under this Agreement that constitute deferred compensation
within the meaning of Section 409A of the Code shall be made or provided in
accordance with the requirements of Section 409A of the Code, including, without
limitation, that (i) in no event shall such reimbursements and payments by the
Company under this Agreement be made later than the end of the calendar year
next following the calendar year in which the applicable fees and expenses were
incurred, provided, that the Executive 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; (ii)
the amount of such reimbursements, payments and in-kind benefits that the
Company is obligated to pay or provide in any given calendar year shall not
affect the reimbursements and in-kind benefits that the Company is obligated to
pay or provide in any other calendar year; (iii) the Executive’s right to have
the Company pay or provide such reimbursements and in-kind benefits may not be
liquidated or exchanged for any other benefit; and (iv) in no event shall the
Company’s obligations to make such reimbursements or to provide such in-kind
benefits apply later than the Executive’s remaining lifetime (or if longer,
through the 20th anniversary of the Effective Date).

     

    (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.  From and after the date first
written above, except as specifically provided herein, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, including, without limitation, the Amended and Restated
Employment Agreement, by and between the Company and the Executive, dated as
December 31, 2008, as amended, which expires in accordance with its terms on
January 31, 2010.

     

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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
	 	 	 
	 	 	 


               

              	 	 	 	 
	 	KBW,
      INC.	 	 


               

              	 	 	 	 
	 	By	 	 
	 	Name:	 	 
	 	Title:	 	 


            

          

           

           

        

      

       

       

       

       16