Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the
9th day of May, 2007 by and between Victor K. Kurylak, residing at 26 Meadow
Lane, Lebanon, New Jersey 08833 (hereinafter referred to as the "Employee") and
First Montauk Financial Corp., a New Jersey corporation with principal offices
Parkway 109, Red Bank, New Jersey 07701 (hereinafter referred to as the
"Company").
W I T N E S S E T H:
WHEREAS, the Company, through its wholly owned subsidiary
First Montauk Securities Corp ("FMSC"), is engaged in the investment banking and
general securities business as a registered broker-dealer; and
WHEREAS, the Company has employed the Employee since before
February 2005 pursuant to an Employment Agreement dated as of February 1, 2005
and desires to continue to employ the Employee in a modified capacity as more
fully described herein; and
WHEREAS, the Employee desires to continue to be employed by
the Company, pursuant to the terms and conditions herein set forth, superseding
all prior oral and written employment agreements, and term sheets and letters
between the Company, its subsidiaries and/or predecessors and Employee;
NOW, THEREFORE, it is mutually agreed by and between the
parties hereto as follows:
ARTICLE I
DEFINITIONS
1.1. Accrued Compensation. Accrued Compensation shall mean an amount which shall
include all amounts earned or accrued through the "Termination Date" (as defined
below) but not paid as of the Termination Date, including (i) Base Salary, (ii)
reimbursement for business expenses incurred by the Employee on behalf of the
Company, pursuant to the Company's expense reimbursement policy in effect at
such time, (iii) vacation pay, and (iv) bonuses and incentive compensation
earned and awarded prior to the Termination Date.
1.2. Cause. Cause shall mean: (i) willful disobedience by the Employee of a
material and lawful instruction of the Board of Directors of the Company; (ii)
formal charge, indictment or conviction of the Employee of any misdemeanor
involving fraud or embezzlement or similar crime, or any felony; (iii) breach by
the Employee of any material provision of this Agreement; (iv) conduct amounting
to fraud, dishonesty, gross negligence, willful misconduct or recurring
insubordination; (v) excessive absences from work, other than for illness or
Disability; or (vi) unsatisfactory performance of duties; provided that the
Company shall not have the right to terminate the employment of Employee
pursuant to the foregoing clauses (i), (iii), (iv), (v) and (vi) above unless
written notice specifying such breach shall have been given to the Employee and,
in the case of breach which is capable of being cured, the Employee shall have
failed to cure such breach within thirty (30) days after his receipt of such
notice.
1.3. Continuation Benefits. Continuation Benefits shall be the continuation of
the Benefits, as defined in Section 5.1, for the period from the Termination
Date to the later of (i) one year from the Termination Date or (ii) the
Expiration Date (as hereinafter defined) (the "Continuation Period") at the
Company's expense on behalf of the Employee and his dependents. The Company's
obligation hereunder with respect to the foregoing benefits shall be limited to
the extent that if the Employee obtains any such benefits pursuant to a
subsequent employer's benefit plans, the Company may reduce the coverage of any
benefits it is required to provide the Employee hereunder as long as the
aggregate coverages and benefits of the combined benefit plans is no less
favorable to the Employee than the coverages and benefits required to be
provided hereunder. This definition of Continuation Benefits shall not be
interpreted so as to limit any benefits to which the Employee, his dependents or
beneficiaries may be entitled under any of the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") or such other similar law, the Company's employee
benefit plans, programs or practices following the Employee's termination of
employment, including, without limitation, retiree medical and life insurance
benefits.
1.4. Disability. Disability shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform his duties with the
Company for a period of ninety (90) consecutive days.
1.5. Termination for Good Reason. Termination for Good Reason shall mean the
Employee's termination of his employment with the Company within six months
following the initial existence of one or more of the following conditions that
arise without the Employee's consent:
(i) A diminution in the Employee's base salary.
(ii) A material diminution in the Employee's authority, duties or
responsibilities.
(iii) A material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Employee is required to report.
(iv) A material diminution in the budget over which the Employee retains
authority.
(v) A material change in the geographic location at which the Employee must
perform his duties.
(vi) Any other action or inaction that constitutes a material breach by the
Company of this Agreement.
The Employee shall provide notice to the Company of the
existence of the condition described above in this Section 1.5 within 90 days of
the initial existence of the condition, and upon its receipt of such notice, the
Company shall have a period of 30 days during which it may remedy the condition
before the Employee shall be entitled to serve a Notice of Termination on the
Company.
1.6. Notice of Termination. Notice of Termination shall mean a written notice
from the Company or the Employee, of termination of the Employee's employment
which indicates the provision in this Agreement relied upon, if any. A Notice of
Termination served by the Company shall specify the effective date of
termination.
1.7. Termination Date. Termination Date shall mean (i) in the case of the
Employee's death, his date of death; (ii) in the case of the expiration of the
Term (as hereinafter defined), the last day of the Term; and (iii) in all other
cases, the date specified in the Notice of Termination.
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1.8. Severance Benefit. Severance Benefit shall mean (i) the amount of Three
Hundred Thousand Dollars ($300,000), which shall be paid in a lump sum payment
as provided in Section 9.4 hereof (the "Severance Payment"), and (ii) the
Continuation Benefits described in clauses (i) and (ii) of Section 5.1 hereof,
which Continuation Benefits shall continue for one (1) year following the later
of (A) the Termination Date, or (B) if the Termination Date results from the
Employee's Disability, the termination by the Company without Cause or the
Termination for Good Reason by the Employee, the Expiration Date, all at the
Company's expense (the "Insurance Benefits").
ARTICLE II
EMPLOYMENT
2.1. Subject to and upon the terms and conditions of this Agreement, the Company
hereby employs and agrees to continue the employment of the Employee, and the
Employee hereby accepts such continued employment in his capacity as President
of the Company and Chief Executive Officer and President of FMSC, the Company's
principal subsidiary. Employee shall immediately resign from the position of
Chief Executive Officer of the Company. In this modified capacity, Employee will
report to the Chief Executive Officer of the Company and the Company's Board of
Directors.
ARTICLE III
DUTIES
3.1. The Employee shall, during the term of his employment with the Company, and
subject to the direction and control of the Chief Executive Officer of the
Company and the Company's Board of Directors, perform such duties and functions
as he may be called upon to perform by the President and Chief Executive Officer
of the Company during the term of this Agreement, consistent with his position
as President of the Company and Chief Executive Officer and President of FMSC.
3.2. The Employee agrees to use his best efforts in the promotion and
advancement of the Company and FMSC and its welfare and business. Employee
agrees to devote his primary professional time to the business of the Company
and FMSC as Employee deems reasonably necessary; provided, however, that the
Company acknowledges that Employee shall be entitled to pursue unrelated
personal business ventures that do not materially conflict with the performance
of Employee's duties to the Company and FMSC.
3.3. Employee shall be based in the Red Bank, New Jersey area, and shall
undertake such occasional travel, within or without the United States as is or
may be reasonably necessary in the interests of the Company and FMSC.
3.4. Licenses and Registrations. During the term of this Agreement, Employee
shall maintain in good standing all required licenses and registrations required
for the proper performance of his duties and functions.
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ARTICLE IV
COMPENSATION
4.1. During the Term, Employee shall be compensated at the rate of $300,000 on
an annualized basis (the "Base Salary"). The Base Salary shall be paid to the
Employee in accordance with the Company's regular executive payroll periods.
4.2. Employee shall be entitled to receive a bonus (the "Bonus") during each
year of this Agreement (inclusive of all of 2007), determined as follows: The
amount to be paid as a Bonus shall be determined as of each December 31 by the
Compensation Committee of the Board of Directors based upon the prior fiscal
year end and shall consist of a portion of an "Executive Bonus Pool." The
Executive Bonus Pool shall be equal to fifteen (15%) percent of the net pre-tax
profit of the Company as determined by the Company's independent auditors, no
later than 90 days following the end of the Company's fiscal year, excluding any
expense deduction attributed to such Executive Bonus Pool (the "Net Pre-Tax
Profit"); provided that, in the event the Net Pre-Tax Profit of the Company for
any fiscal year is less than $500,000, no Executive Bonus Pool shall be
established or Bonus paid by the Company to the Employee pursuant to this
Section 4.2. Such determination, for purposes of this Section 4.2 only, shall be
made in accordance with generally accepted accounting principles, as modified by
these resolutions. If the Termination Date occurs on a date other than December
31, then under the applicable circumstances described in Section 9.3 hereof, the
Employee shall be entitled to a proportionate share of the Bonus for the fiscal
year in which the Termination Date occurs, based upon a fraction, the numerator
of which is the number of complete months in the applicable fiscal year prior to
the Termination Date and the denominator of which is 12 (the "Pro Rata Bonus").
Notwithstanding the foregoing, if the Termination Date occurs prior to the
Expiration Date as a result of the termination by the Company without Cause or
the Termination for Good Reason by the Employee, the Employee shall be entitled
to the Bonus for the entire fiscal year and not just the Pro Rata Bonus.
4.3. Employee shall also be entitled to receive brokerage commissions in
accordance with the commission schedule in effect for other non-affiliate
brokers employed by the Company.
4.4. Employee shall be eligible to purchase from the Company, at Employee's sole
discretion, a portion of the securities contributed to the "Corporate Finance
Bonus Pool" upon the same price, terms and conditions afforded to FMSC. The
Corporate Finance Bonus Pool shall consist of up to 20% of all underwriter's
warrants, placement agent warrants and/or other securities granted to FMSC, in
connection with its service as an underwriter, placement agent or investment
banker; provided however, such amount shall not exceed 50% of the total
securities retained by FMSC after any allocations to the registered
representatives and the corporate finance staff in accordance with the corporate
policies in effect from time to time. The amount Employee shall be entitled to
purchase shall be determined by the Compensation Committee of the Board of
Directors on a transaction-by-transaction basis.
4.5. The Company shall deduct from Employee's compensation all federal, state
and local taxes which it may now or may hereafter be required to deduct.
4.6. Employee may receive such other additional compensation as may be
determined from time to time by the Board of Directors including bonuses and
other long-term compensation plans. Nothing herein shall be deemed or construed
to require the Board to award any bonus or additional compensation.
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ARTICLE V
BENEFITS
5.1. During the term hereof, the Company shall provide Employee with the
following benefits (the "Benefits"): (i) group health care and insurance
benefits as generally made available to the Company's senior management; (ii)
such other insurance benefits obtained by the Company and made generally
available to the Company's senior management; (iii) the Company shall provide
the Employee with an automobile suitable for his position, equipped with a
mobile telephone, or at Employee's option, an appropriate automobile allowance,
and reimburse reasonable automobile expenses including insurance, repairs,
maintenance, gasoline charges, mobile phone, etc. via receipted expense reports;
(iv) reimbursement, upon presentation of appropriate vouchers, for all
reasonable business expenses (including fees for licenses and registrations)
incurred by Employee on behalf of the Company upon presentation of suitable
documentation and (v) payment of country club dues for one golf country club
full family membership at Colonia Country Club or comparable club.
5.2. In the event the Company wishes to obtain Key Man life insurance on the
life of Employee, Employee agrees to cooperate with the Company in completing
any applications necessary to obtain such insurance and promptly submit to such
physical examinations and furnish such information as any proposed insurance
carrier may request.
5.3. For the term of this Agreement, Employee shall be entitled to paid
vacation at the rate of four (4) weeks per annum.
5.4. Employee shall have continued use of a corporate credit card to be used for
all reasonable business expenses incurred by Employee on behalf of the Company
upon presentation of suitable documentation.
ARTICLE VI
NON-DISCLOSURE
6.1. The Employee shall not, at any time during or after the termination of his
employment hereunder, except when acting on behalf of and with the authorization
of the Company, make use of or disclose to any person, corporation, or other
entity, for any purpose whatsoever, any trade secret or other confidential
information concerning the Company's business, finances, marketing, brokerage
accounts, corporate finance transactions and clients, products and services,
accounting, insurance business and personnel of the Company and its
subsidiaries, including information relating to any customer of the Company, or
any other nonpublic business information of the Company and/or its subsidiaries
learned as a consequence of Employee's employment with the Company (collectively
referred to as the "Proprietary Information"). For the purposes of this
Agreement, trade secrets and confidential information shall mean information
disclosed to the Employee or known by him as a consequence of his employment by
the Company, whether or not pursuant to this Agreement, and not generally known
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in the industry. The Employee acknowledges that trade secrets and other items of
confidential information, as they may exist from time to time, are valuable and
unique assets of the Company, and that disclosure of any such information would
cause substantial injury to the Company. Trade secrets and confidential
information shall cease to be trade secrets or confidential information, as
applicable, at such time as such information becomes public other than through
disclosure, directly or indirectly, by Employee in violation of this Agreement.
Notwithstanding the foregoing, information concerning a customer introduced to
the Company by Employee, and known to Employee other than as a consequence of
his employment by the Company, shall not be deemed Propriety Information within
the contemplation of this Section 6.1.
6.2. If Employee is requested or required (by oral questions, interrogatories,
requests for information or document subpoenas, civil investigative demands, or
similar process) to disclose any Proprietary Information, Employee shall, unless
prohibited by law, promptly notify the Company of such request(s) so that the
Company may seek an appropriate protective order.
ARTICLE VII
RESTRICTIVE COVENANT
7.1. In the event of the voluntary termination of employment with the Company
prior to the expiration of the Term hereof, or Employee's discharge in
accordance with Article IX, or the expiration of the Term hereof without
renewal, Employee agrees that he will not, for a period of one (1) year
following such termination of employment, directly or indirectly, solicit
brokers, or employees of the Company, or any sister or subsidiary of the Company
for employment with any other entity, or (ii) solicit or accept (a) any
corporate finance client of the Company or FMSC relating to a transaction,
pending or proposed, involving a public offering, private placement, or merger
and acquisition advisory services, (b) research project of the Company or FMSC
which was under consideration or pending at the time of Employee's termination,
or (c) any brokerage client of the Company, other than brokerage clients
introduced to the Company by Employee, and known to Employee other than as a
consequence of his employment by the Company. Notwithstanding the foregoing, in
addition to any rights or remedies available to the Employee at law or in
equity, all the restrictions contained in this Section 7.1 shall terminate and
be of no further force or effect if the Company fails to make any of the
payments it is required to make to the Employee pursuant to this Agreement.
7.2. If any court shall hold that the duration of non-competition or any other
restriction contained in this Article VII is unenforceable, it is our intention
that same shall not thereby be terminated but shall be deemed amended to delete
therefrom such provision or portion adjudicated to be invalid or unenforceable
or, in the alternative, such judicially substituted term may be substituted
therefor.
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ARTICLE VIII
TERM
8.1. This Amended and Restated Agreement shall be for a term (the "Term")
commencing on May 9, 2007 (the "Commencement Date") and terminating on December
31, 2007, subject to renewal for one additional period of one year unless the
Company provides written notice of its intention not to renew this Agreement at
least 120 days prior to December 31, 2007 (the last day of the Term, the
"Expiration Date").
ARTICLE IX
TERMINATION
9.1. The Company may terminate this Agreement by giving a Notice of Termination
to the Employee in accordance with this Agreement:
a. For Disability; b. For Cause; or c. Without Cause.
9.2. Employee may terminate this Agreement by giving (a) a Notice of Termination
to the Company in the event of a Termination for Good Reason in accordance with
Section 1.5 hereof, or (b) a Notice of Termination in accordance with this
Agreement, at any time, without good reason.
9.3. If the Employee's employment with the Company shall terminate or be
terminated, the Company shall pay and/or provide to the Employee, his designated
beneficiary or his estate, the following compensation and benefits in lieu of
any other compensation or benefits arising under this Agreement or otherwise:
(a) if the Employee is terminated by the Company for Cause, or the Employee
terminates his employment without good reason, the Accrued Compensation;
(b) if the Employee is terminated by the Company for Disability, the Accrued
Compensation, the Benefits and the Base Salary for the remainder of the Term,
plus the Pro Rata Bonus and the Severance Benefit; or
(c) if termination is due to the Employee's death, the Accrued Compensation, the
Pro Rata Bonus and the Severance Benefit; or
(d) if the Employee is terminated by the Company without Cause or there is a
Termination for Good Reason by the Employee, the Accrued Compensation, the
Benefits and the Base Salary for the remainder of the Term, plus the Bonus and
the Severance Benefit; or
(e) if the termination occurs as a result of the expiration of this Agreement
without renewal by the Company at the end of the Term, the Accrued Compensation,
the Bonus and the Severance Benefit.
9.4. The amounts payable under this Section 9 shall be paid as follows:
(a) Accrued Compensation shall be paid within five (5) business days after the
Employee's Termination Date (or earlier, if required by applicable law).
(b) If the Benefits, Continuation Benefits and/or Insurance Benefits are paid in
cash, the payments shall be made on the first day of each month during the
balance of the applicable period described in this Agreement (or earlier, if
required by applicable law), as applicable.
(c) The Base Salary for the remainder of the Term shall be paid in accordance
with the Company's regular pay periods (or earlier, if required by applicable
law).
(d) The Bonus or Pro Rata Bonus shall be paid in accordance with the Company's
regular practice for the payments of the Bonus (or earlier, if required by
applicable law).
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(e) The Severance Payment shall be paid in one lump sum no later than
fifteen (15) business days following the Termination Date.
9.5. Notwithstanding the foregoing, in the event Employee is a member of the
Board of Directors on the Termination Date, the payment of any and all
compensation due hereunder, except Accrued Compensation, is expressly
conditioned on Employee's resignation from the Board of Directors within five
(5) business days of the Termination Date.
9.6. The Employee shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise and no
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to the Employee in any subsequent employment except as
provided in Section 1.3.
9.7. In the event the Termination Date occurs as a result of the Employee's
death or if after the Termination Date, the Employee shall die prior to payment
in full of all the amounts he is entitled to pursuant to this Agreement, the
Company shall make all payments to the beneficiary designated by the Employee by
written notice to the Company from time to time. If no such beneficiary is
designated or if the designated beneficiary has predeceased the Employee, the
payments shall be made pursuant to the Employee's Last Will and Testament or if
there be none, the laws of intestate succession.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
10.1. This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements, letters and understandings between the parties,
whether oral or written prior to the effective date of this Agreement. Employee
expressly acknowledges that the Employment Agreements between Employee and the
Company dated as of February 1, 2004 and February 1, 2005 shall be of no further
force or effect, and that the Employee has fully performed all of his
obligations under those Employment Agreements, and that the Employee has
received all compensation and benefits under those prior Employment Agreements.
ARTICLE XI
STOCK OPTIONS
11.1. Employee has previously received and is fully vested in stock options to
purchase 250,000 shares of the Company's Common Stock which are exercisable at
$.50 per share. The terms of the award shall be deemed amended to provide that
the award shall remain exercisable for the duration of their original term
notwithstanding the occurrence of the Termination Date prior thereto. No further
options are being granted to Employee under this Agreement. Employee shall be
eligible to receive such further options as may be granted by the Board of
Directors during the term hereof.
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ARTICLE XII
REPRESENTATION; ARBITRATION AND INDEMNIFICATION; FEES AND EXPENSES
12.1. The Company represents and warrants to the Employee that this Agreement
complies with the provisions of Section 409A of the Internal Revenue Code of
1986, as amended.
12.2. Any dispute arising out of the interpretation, application, and/or
performance of this Agreement with the sole exception of any claim, breach, or
violation arising under Articles VI or VII hereof relating to a request to a
court for immediate injunctive relief, shall be settled through final and
binding arbitration before a panel of arbitrators in accordance with the rules
of the National Association of Securities Dealers (the "NASD"). Any judgment
upon any arbitration award may be entered in any court, federal or state, having
competent jurisdiction of the parties before a single arbitrator in the State of
New Jersey in accordance with the Rules of the American Arbitration Association.
The NASD shall select the arbitrators. Any judgment upon any arbitration award
may be entered in any court, federal or state, having competent jurisdiction of
the parties.
12.3. The Company hereby agrees to indemnify, defend, and hold harmless the
Employee for any and all claims arising from or related to (a) his employment by
the Company at any time asserted, at any place asserted, to the fullest extent
permitted by law, except for claims based on Employee's fraud, deceit or
willfulness, or (b) any breach of the Company's obligations, covenants or
representations in this Agreement. The Company shall maintain such insurance as
is necessary and reasonable to protect the Employee from any and all claims
arising from or in connection with his employment by the Company during the term
of Employee's employment with the Company and for a period of six (6) years
after the date of termination of employment for any reason, including errors and
omissions insurance, broker-dealer blanket bond and directors and officers
liability insurance. The Company shall be responsible for the payment of any and
all costs and expenses of Employee arising from an indemnifiable claim,
including, but not limited to his attorney's fees. The provisions of this
Section 12.3 are in addition to and not in lieu of any indemnification, defense
or other benefit to which Employee may be entitled by statute, regulation,
common law or otherwise.
12.4. The Company shall pay all reasonable legal fees and related expenses
(including the costs of arbitrators, experts, evidence and counsel) incurred by,
the Employee as they become due as a result of (a) the Employee's termination of
employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment) in violation of this Agreement,
or (b) the Employee seeking to obtain or enforce any right or benefit provided
by this Agreement.
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ARTICLE XIII
SEVERABILITY
13.1. If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIV
NOTICE
14.1. For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, addressed to the respective addresses as set
forth below or to any such other address as the party to receive the notice
shall advise by due notice given in accordance with this paragraph. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
14.2. The current addresses of the parties are as follows:
IF TO THE COMPANY:
First Montauk Financial Corp.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701
Att: General Counsel
With a copy to:
Victor J. DiGioia, Esq.
Goldstein & DiGioia, LLP
45 Broadway
New York, NY 10006
IF TO THE EMPLOYEE: Victor Kurylak
26 Meadow Lane
Lebanon, New Jersey 08833
With a copy to:
William E. Goydan, Esq.
Wolff & Samson PC
1 Boland Drive
West Orange, New Jersey 07052
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ARTICLE XV
WAIVER
15.1. The waiver by either party of any breach or violation of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
16.1. This Agreement has been negotiated and executed in the State of New Jersey
which shall govern its construction and validity.
ARTICLE XVII
JURISDICTION
17.1. Any or all actions or proceedings which may be brought by the Company or
Employee under this Agreement shall be brought in courts having a situs within
the State of New Jersey, and Employee and the Company each hereby consent to the
jurisdiction of any local, state, or federal court located within the State of
New Jersey.
ARTICLE XVIII
ENTIRE AGREEMENT
18.1. This Agreement contains the entire agreement between the parties hereto.
No change, addition, or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and affixed
their hands and seals the day and year first above written.
FIRST MONTAUK FINANCIAL CORP.
By:/s/ Barry Shapiro
--------------------------------------
Name: Barry Shapiro
Title: Compensation Committee Chairman
By:/s/ Victor K. Kurylak
--------------------------------------
Name: Victor K. Kurylak
Title: Employee
By:/s/ Jeffrey J. Fahs
--------------------------------------
Name: Jeffrey J. Fahs
Title: Corporate Secretary
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