EMPLOYMENT AGREEMENT
AGREEMENT effective as of January 25, 1999 by and between FIRST MONTAUK
SECURITIES CORP., a New Jersey corporation with executive offices at Parkway 109
Office Center, 328 Newman Springs Road 07701-5698 (hereinafter referred to as
the "Employer") and SETH ROSEN with an address at 209 Williamsburg Drive,
Shrewsbury, NJ 07702 (hereinafter referred to as the "Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to secure for itself the benefit of the
Employee's background, experience, ability and expertise as President of FMSC's
Century Discount Securities Division, Paramus NJ ("CDS") and Managing Director
of FMSC's Internet Trading Initiative, and is desirous of employing the Employee
to perform the services as set forth in this Agreement and under the terms
herein provided; and
WHEREAS, the Employee is willing to provide his background, experience,
ability, expertise as President of FMSC's Century Discount Securities Division,
Paramus NJ and Managing Director of FMSC's Internet Trading Initiative, and
perform such services and accept such employment on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual convenants
herein set forth, the parties hereto agree as follows:
1. EMPLOYMENT AND SCOPE OF DUTIES
A. Employer shall employ Employee and the Employee agrees to be employed by
the Employer on a full-time basis during the Employment Period, as President of
FMSC's Century Discount Securities Division, Paramus NJ and Managing Director of
FMSC's Internet Trading Initiative, having and maintaining the requisite
licenses and registrations in order to effectively supervise Employer's
Registered Representatives located in the CDS Paramus office. The Employee shall
report and be responsible to: Herb Kurinsky, the President and C.E.O.; William
Kurinsky, Executive Vice President and Chief Financial Officer (CFO); and Robert
I. Rabinowitz, Chief Administrative Officer. Employee shall be expected to
coordinate with and obtain necessary approvals from General Counsel and the
Legal & Compliance Department on matters involving compliance, regulatory and
legal issues affecting CDS discount brokerage business and Internet Trading for
clients of the Firm. Employee shall, except during vacation periods or absences
due to temporary illness, devote substantially all of his business time,
attention and energies to his duties and responsibilities as President of CDS
hereunder.
B. Subject to the terms and conditions contained herein, Employee shall
also (i) provide administrative expertise, product knowledge, technical and
systems support with respect to the development and implementation of
third-party vendor provided electronic-based order entry and clearing firm
interfaces, including risk management technology for FMSC's trading desk, CDS's
separate trading desk and, (ii) supervise structure, manage, control
expenditures and operations of CDS through daily oversight of operations of CDS
staff including marketing, registration and assurance of regulatory compliance
by CDS; and (iii) from time to time, perform such other services and tasks
related to the foregoing as may be reasonably necessary to the performance of
the above duties and responsibilities, including reporting to FMSC Senior
Management with findings/recommendations to improve efficiencies of CDS and FMSC
Trading Capabilities and Employer hereby engages Employee to provide and perform
the same.
C. The Principal locations of the Employee's employment shall be at 328
Newman Springs Road, Red Bank, New Jersey 07701 and One Mack Cnetre Road,
Paramus, NJ 07652, although the Employee understands and agrees that he may be
required to travel for business reasons to other offices of FMSC and from time
to time to other Firm locations.
D. Employer hereby agrees at its discretion to provide the personnel and
administrative support services to Employee necessary for him to perform the
Services hereunder.
2. TERM
The parties agree that this Agreement shall be terminable at will by either
party, and Employee shall commence employment on or about January 25, 1999 (the
"Commencement Date"). This Agreement shall terminate on the earlier of (i) the
mutual agreement of Employer and Employee upon providing 90 days written notice
to the other party prior to the termination date, or (ii) the demand of either
party to terminate upon 90 days prior written notice.
3. COMPENSATION.
(a). For the first year of the Employment Period, Employer agrees to
compensate the Employee at an annual rate equal to $120,000. Such sums shall be
paid to Employee by Employer in its regular payroll cycle.
(b). Employer also agrees to pay Employee a non guaranteed Incentive Cash
Bonus calculated at ten (10%) percent of Firm retention of the increase in
profits, (i.e., gross commissions, interest and other related revenue, net of
expenses), generated by CDS over the '98 base year level of profit. (Base year
increase).
(c). Employee shall be entitled to receive pursuant to Employer's Stock
Option Plan, an initial grant of Incentive Stock Options of 50,000 FMFK Stock
Options at an exercise price of $2.00. Said options shall be granted pursuant to
all terms and conditions of the Company's Incentive Stock Option Plan, as
amended, and shall vest at the rate of 20% per year of continued employment with
the Employer.
(e). Employer shall pay the cost of Employee's licenses, continuing
education requirements, and costs for E & O insurance coverage.
(f). Employer shall provide Employee with legal counsel selected by
Employer in connection with the defense of any customer initiated claim or
regulatory action.
4. REIMBURSEMENT OF EXPENSES.
During the period of said employment, the Employer shall reimburse the
Employee or pay directly on his behalf, all reasonable and necessary business,
travel and entertainment expenses incurred directly in connection with the
performance of Employee's duties and in furtherance of the business of the
Employer. Employee shall not be reimbursed for any personal expenses or for any
business expense in excess of $1,500.00 which has not been approved in writing
in advance by a Senior Officer of Employer. Employee shall submit periodic
(weekly or monthly) itemized expense reports for out-of-pocket business expenses
paid by the Employee and for which reimbursement is sought from Employer.
5. INSURANCE AND OTHER BENEFITS.
(a). Employee shall be eligible to participate in Employer's medical and
health insurance benefit plans which are currently furnished to Senior
Executives;
(b). Employee shall be eligible to participate in Employer's 401(k) Plan.
6. TERMINATION OF EMPLOYMENT.
This Agreement creates an employment at will. FMSC may voluntarily
terminate its employment with Employee at any time and for any reason after the
date of this Agreement. Employee may voluntarily terminate his association with
FMSC at any time and for any reason after the date of this Agreement. In the
event of a voluntary termination of this Agreement by either party, FMSC shall
have no obligation to pay employee, or his estate, or any other person or
entity, any salary, incentive bonus unreimbursed reasonable and ordinary
business expenses, or Incentive Stock Option Grant provided for in this
Agreement prior to the date of termination, except as shall have been earned by
Employee to the effective date of termination.
In addition to Paragraph 2, during the Initial Term, the Employee's
employment may also be terminated on the occurrence of any one or more of the
following events:
(a) The death of the Employee;
(b) The failure by the Employee to substantially perform his duties and
responsibilities as set forth above, owing to physical or mental incapacity
(hereinafter referred to as "disability"), which disability shall be as defined
under the Company's disability insurance policy and shall continue for more
than three (3) consecutive months.
(c) For "Cause", which shall mean: (i) the failure by the Employee to
substantially perform his duties herein, for reasons other than death or
disability after written notice by Employer and a thirty (30) day period to cure
said failure; (ii) the engaging by the Employee in a material, intentional
breach of the Firm's Policies and Procedures or misconduct materially injurious
to the Employer; or (iii) the commission by the Employee of an act constituting
common law fraud or a felony or any other criminal offense.
(d) In the event that Employee's employment hereunder terminates for any
reason other than for reasons indicated in Paragraph (c) i - iii, the Company
shall pay to Employee all amounts accrued but unpaid hereunder through the date
of termination in respect of Base Salary and unreimbursed business expenses.
Employee's Incentive Bonus and Incentive Stock Option Grant shall be forfeited
by Employee in the event that he has failed to substantially perform his duties
as set forth herein, or is terminated for Cause. Upon any termination of this
Agreement, all of the rights, privileges and duties of the Employee hereunder
shall cease, except for his rights under this Paragraph 6(d) and his continuing
obligations to Employer under Paragraph 7 and 9 hereunder.
7. NO DISCLOSURE OF INFORMATION.
(a) All memoranda, notes, records or other documents made or compiled by
the Employee or made available to him during the term of his employment
concerning the business of the Employer shall be and remain the Employer's
property and shall be delivered by the Employee to Employer at termination of
Employee's employment. Employee shall not use for himself or others or divulge
to others, any proprietary or confidential information of the Employer, obtained
by him as a result of his employment, unless authorized in advance by a Senior
Officer of Employer.
(b) Employee hereby sells, transfers and assigns to Employer, or to any
person or entity designated by the Employer, all of the right, title and
interest of Employee in and to all inventions, sales approaches or materials,
software, ideas, training materials, disclosures and improvements, whether
patented or unpatented, and copyrightable material, made or conceived by the
Employee, solely or jointly, in whole or in part, during the Employee Term which
are not generally known to the public or the industry or recognized as standard
practice and which (i) relate to services, trade marks or names, methods, ideas,
apparatus, designs, products, processes, procedures or devices which may be
sold, leased, used or under construction or development by Employer, its
subsidiaries or affiliates or any franchise affiliated with Employer and (ii)
arise (wholly or partly) from the effort of Employee during his employment with
Employer (hereinafter collectively referred to as an "Invention"). Employee
shall communicate promptly and disclose to Employer, in such form as Employer
requests, all information, details and data pertaining to any such Invention.
Employee hereby irrevocably appoints the Chief Executive Officer and/or
Executive Vice President lawful attorney to execute and deliver, with respect to
any Invention, such form of transfers and assignments and such other papers and
documents as reasonably may be required to permit Employer or any person or
entity designated by Employer to file and prosecute patent applications and, as
to copyrightable material, to obtain copyrights thereon. Employer shall pay all
costs incident to the execution and delivery of such transfers, assignments and
other documents. Any Invention by the Employee within twelve (12) months
following the termination of this Agreement shall be deemed to fall within the
provisions of this Section 7(b) unless Employee bears the burden of proof of
showing that the Invention was first conceived and made following such
termination.
(c) For purposes of this Section 7, the term "proprietary or confidential
information" shall mean all information which is known only to Employee or to
Employee and employees, former employees, consultants or others in a
confidential relationship with Employer and relates to specific matters such as
trade secrets, customers, potential customers and vendor lists, pricing and
credit techniques, research and development activities, books and records and
private processes, as they may exist from time to time, which Employee may have
acquired or obtained by virtue of work heretofore or hereinafter performed for
or on behalf of Employer or which he may acquire or may have acquired knowledge
of during the performance of said work, and which is not known to other, or
readily available to others from sources other than Employee, or is not in the
public domain. In the event of a breach or a threatened breach by Employee of
the provisions of this Section 7, Employer shall be entitled to an injunction
restraining Employee from disclosing, in whole or in part, the aforementioned
proprietary or confidential information of Employer, or from rendering any
services to any person, firm, corporation, association or other entity to whom
such proprietary or confidential information, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein contained shall be
construed as prohibiting Employer from pursuing any other remedies available to
Employer for such breach or threatened breach, including the recovery of damages
from Employee.
8. REPRESENTATIONS OF EMPLOYEE
Employee represents and warrants to Employer that he is not currently
statutorily disqualified or restricted from becoming licensed or registered with
any state or NASD, or of entering into this Employment Agreement by any other
enforceable agreement between Employee and any third party.
9. LIMITATION ON POWERS OF EMPLOYEE.
Employee understands and agrees that he has no power or authority to
conduct any Business for, with or through FMSC, or CDS, other than as granted by
this Agreement. Employee agrees that he will not hold himself out or purport, or
attempt to bind either FMSC or CDS in a manner inconsistent with this Agreement,
applicable law, rules or regulations, or FMSC Policies and Procedures or any
instruction or directive communicated to Employee.
10. NOTICES.
Any notices required or permitted to be given under the provisions of this
Employment Agreement shall be in writing and delivered personally or by
certified or registered mail, return receipt requested, postage prepaid to the
following persons at the following addresses, or to such other person at such
other address as any party may request by notice in writing to the other party
to this Agreement:
TO EMPLOYEE:
SETH ROSEN
209 Williamsburg Drive
Shrewsbury, NJ 07702
TO EMPLOYER:
FIRST MONTAUK SECURITIES CORP.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701
Attn: General Counsel
11. ARBITRATION
Any and all disputes or controversies arising out of or relating to this
Agreement or breach thereof, shall be settled by arbitration under the auspices
of the NASD, Inc. in New York City, New York by a panel of three arbitrators in
accordance with the rules then pertaining to the NASD. The cost of such
arbitration proceeding shall be borne equally by the parties, each of whom shall
bear its or his own attorneys fees.
12. CONSTRUCTION.
This Employment Agreement shall be construed in accordance with, and be
governed by, the laws of the State of New Jersey.
13. SUCCESSOR AND ASSIGNS.
This Employment Agreement shall be binding on the successors and assigns of
the Employer and shall inure to the benefit and be enforceable by and against
its successors and assigns. This Employment Agreement is personal in nature and
may not be assigned or transferred by the Employee without the prior written
consent of the Corporation.
14. ENTIRE AGREEMENT.
This instrument contains the entire understanding and agreement between the
parties relating to the subject matter hereof, and neither this Employment
Agreement nor any provision hereof may be waived, modified, amended, changed,
discharged or terminated, except by an agreement in writing signed by the party
against whom enforcement of any waiver, modification, change, amendment,
discharge or termination is sought.
15. COUNTERPARTS.
This Employment Agreement may be executed simultaneously in counterparts,
each of which shall be deemed an original, and all of which counterparts shall
together constitute a single agreement.
16. ILLEGALITY.
In case any one or more of the provisions of this Employment Agreement
shall be invalid, illegal or unenforceable in any respect, the validity, the
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
17. CAPTIONS.
The captions of the sections hereof are for convenience only and shall not
control or affect the terms or provisions of this Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
SETH ROSEN
(Dated) FIRST MONTAUK SECURITIES CORP.
By:
(Dated)