EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into as of June 1, 1997 by and between
Internet Financial Services, Inc., a Delaware corporation, with principal
offices at 33 West 17th Street, New York, New York 10011 ("Employer") and Steven
Malin, c/o the Company ("Executive").
A. Employer, directly and through its A.B. Watley, Inc. subsidiary, is
engaged in the business of providing electronic brokerage services and
electronic trading programs for use by professional and other retail
customers including allowing such customers to trade through their own
home or office computers, and services incident thereto ("Employer's
Business"); and
B. Employer wants to employ Executive, and Executive wants to accept such
employment, on the terms and conditions set forth in this Agreement.
In consideration of the facts mentioned above, and of the covenants and
conditions set out below, the parties agree as follows:
1. Employment
(a) During the Term of Employment as defined in Section 2, Employer
agrees to employ Executive as an executive, subject to the direction
and control at all times of the Chairman of the Board of Directors and
Chief Executive Officer of Employer and the Board of Directors of
Employer. Executive agrees to act in the foregoing capacity, in
accordance with the terms and conditions contained in this Agreement.
It is anticipated that Executive will have the title of Chairman of the
Board of Directors and Chief Executive Officer.
(b) Executive shall devote substantially all of his working time to
Employer's Business as conducted from time to time. Executive shall
render services, without additional compensation, in connection with
the operation of Employer's Business, including activities of
affiliates and subsidiaries of the Employer as may exist from time to
time, including, without limitation, A.B. Watley, Inc. Executive also
agrees to serve as a member of the board of directors, if elected, of
Employer and/or any subsidiaries or affiliates, without additional
compensation.
2. Term
The term of Executive's employment under this Agreement shall commence
on June 1, 1997 and end on May 31, 2002 (the "Initial Term").
Thereafter, this Agreement shall be automatically renewed and extended
for consecutive one year renewal terms, unless either party sends to
the other party a notice of non-renewal at least one hundred and eighty
days prior to the expiration of the Initial Term or any renewal term
(the "Renewal Term"). The Initial Term and Renewal Term are subject to
earlier termination as set forth in Section 5. The actual term of
employment is defined as "Term of Employment."
3. Compensation
(a) Employer shall pay to Executive an annual base salary of $70,000
per annum during the first year of the Initial Term. Thereafter, the
amount of Executive's annual base salary shall be subject to annual
review by the Board of Directors of Employer, provided, however, that
in no event shall such base salary be less than $70,000 per annum.
(b) In addition to the compensation set forth in Section 3(a),
Executive may receive an annual bonus, solely in the discretion of the
Board of Directors. Any payments to be made under this Section shall be
paid within 120 days of the end of the calendar year for which such
incentive bonus relates.
(c) All payments shall be made in equal monthly installments, in
arrears, or such other installments as may be consistent with the
payroll practices of Employer for its executives.
4. Additional Executive Benefits
(a) Employer shall reimburse Executive for all expenses reasonably
incurred by Executive in connection with the performance of Executive's
duties under this Agreement against Executive's pre-submitted
documented vouchers for such expenses, which must be approved in
writing prior to the incurrence of such expense. Such approval shall be
required by either the Chairman or Vice Chairman of the Board of
Directors.
(b) Executive shall be entitled to reasonable vacation periods each
year (which shall be in accordance with Employer's policy for
executives) and other general medical and Executive benefit plans
(including profit sharing or pension plans) as shall have been
established and are continuing for executives of Employer.
(c) Executive has subscribed to purchase shares of Employer's common
stock, par value $.001 per share ("Employer's Common Stock"), which are
only being offered to certain employees and other consultants to
Employer. The purchase of such shares of Employer's Common Stock was
and is subject to the right of Employer to repurchase the same from
Executive in certain circumstances, including upon termination of
employment under this Agreement, with such repurchase rights and
obligations in the form of a Repurchase and Lock-Up Agreement being
executed by the parties simultaneously herewith.
5. Termination
(a) Employer may terminate this Agreement for cause.
(b) "Cause" within the meaning of this Agreement shall mean:
(i) Executive's breach of the provisions of Section 6(c).
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(ii) Executive's failure or refusal to follow any specific
written directions of the Board of Directors of
Employer (which directions include a statement to the
effect that failure or refusal to follow such
directions shall constitute cause for termination of
the employment of Executive hereunder).
(iii) Executive's failure or refusal to perform Executive's
duties in accordance with Section 1 hereof; provided,
however, that no discharge "for cause" under this
paragraph 5(b)(iii) shall be deemed effective unless
Executive shall have first received written notice
from the President or Board of Directors of Employer
advising Executive of the specific acts or omission
alleged to constitute a failure or refusal to perform
Executive's duties, and such failure or refusal
continues after Executive shall have had a reasonable
opportunity (which shall be defined as a period of
time consisting of at least ten (10) days from the
date Executive receives said notice from the Board of
Directors) to correct the acts or omissions so
complained of.
(iv) Failure by Executive to comply in any material
respect with the terms of this Agreement, if any, or
any written policies or directives of the Board as
determined by the Board in good faith in its sole
discretion, which has not been corrected by Executive
within 10 days after written notice from the Employer
of such failure.
(v) Physical incapacity or disability of Executive to
perform the services required to be performed under
this Agreement. For purposes of this Section 5(b)(v),
Executive's incapacity or disability to perform such
services for any cumulative period of one hundred
twenty (120) days during any twelve-month period, or
for any consecutive period of ninety (90) days, shall
be deemed "cause" hereunder.
(vi) Executive is convicted of, pleads guilty to,
confesses to any felony or any act of fraud,
misappropriation or embezzlement.
(vii) Executive engages in a fraudulent act or dishonest
act to the damage or prejudice of Employer and its
affiliates or in conduct or activities damaging to
the property, business or reputation of Employer and
its affiliates, all as determined by the Board in
good faith in its sole discretion.
(c) If Employer notifies Executive of its election to terminate this Agreement
for cause, this termination shall become effective at the time notice is deemed
to have been given in accordance with Section 9.
(d) This Agreement shall automatically terminate upon the death of Executive.
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6. Non-Competition and Non-Disclosure
(a) Notwithstanding any other provisions in this Agreement, nothing in
this Agreement shall prohibit Executive from acquiring or owning
without disclosure to the Employer less than 1% of the outstanding
securities of any class of any corporation that are listed on a
national securities exchange or traded in the over-the-counter market.
(b) During and after the Term of Employment and for a period of two
years thereafter, Executive covenants and agrees that Executive shall
keep strictly confidential all non-public proprietary information which
Executive may obtain during the course of Executive's employment with
respect to the business practices, finances, developments, marketing,
sales, customers, affairs, trade secrets and other confidential
information of Employer which shall remain the Employer's exclusive
property and the Executive shall not disclose the same, except solely
in the course of business on behalf of and for the benefit of Employer
pursuant to this Agreement. Executive further agrees that immediately
upon the termination of his employment (irrespective of the time,
manner or cause of termination), Executive will surrender and deliver
to Employer all (1) lists, books, records, memoranda and data, computer
discs, computer access codes, magnetic media, software, of every kind
relating to or in connection with Employer's Business and customers and
suppliers of Employer, and (2) all of Employer's personal and physical
property.
(c) During the Term of Employment and for a period of two years
thereafter, Executive covenants and agrees that Executive shall not
compete, directly or indirectly, with Employer in Employer's Business.
(d) During the Term of Employment and for a period of two years
thereafter, Executive covenants and agrees that Executive shall not,
alone or with others, directly or indirectly:
(i) solicit for Executive's benefit or the benefit of any
person or organization other than Employer, the
employment or other services of any Executive or
consultant of Employer; or
(ii) solicit for Executive's benefit or the benefit of any
person or organization other than Employer, the
employment of any Executive of any customer of
Employer, to compete in an area of business activity
similar to that conducted by Employer.
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7. Representation and Indemnification
Executive hereby represents and warrants that he is not a party to any
agreement, whether oral or written, which would prohibit him from being employed
by Employer, and Executive further agrees to indemnify and hold Employer, its
directors, officers, shareholders and agents, harmless from and against any and
all losses, cost or expense of every kind, nature and description (including,
without limitation, whether or not suit be brought, all reasonable costs,
expenses and fees of legal counsel), based upon, arising out of or otherwise in
respect of any breach of such representation and warranty.
8. Injunctive Relief
The parties acknowledge that the services to be rendered hereunder by
Executive are special, unique and of extraordinary character, and that in the
event of a breach or a threatened breach of Executive of any of Executive's
obligations under this Agreement, Employer will not have an adequate remedy at
law. Accordingly, in the event of any breach or threatened breach of Executive,
Employer shall be entitled to such equitable and injunctive relief as may be
available to restrain Executive and any business, firm, partnership, individual,
corporation or entity participating in the breach of this agreement. Nothing in
this agreement shall be construed as prohibiting Employer from pursing any other
remedies available at law or in equity for such breach or threatened breach,
including the recovery of damages and the immediate termination of the
employment of Executive under this agreement.
9. Notices
All notices shall be in writing and shall be delivered personally
(including by courier), sent by facsimile transmission (with appropriate
documented receipt thereof), by overnight receipted courier service (such as UPS
or Federal Express) or sent by certified, registered or express mail, postage
prepaid, to the parties at their address set forth at the beginning of this
Agreement with Employer's copy being sent to Employer at its then principal
office. Any such notice shall be deemed given when so delivered personally, or
if sent by facsimile transmission, when transmitted, or, if mailed, forty-eight
(48) hours after the date of deposit in the mail. Any party may, by notice given
in accordance with this Section to the other party, designate another address or
person for receipt of notices hereunder. Copies of any notices to be given to
Employer shall be given simultaneously to: Hartman & Craven LLP, 460 Park
Avenue, New York, New York 10022, Attention: Edward I. Tishelman, Esq..
10. Miscellaneous
(a) This Agreement shall be governed in all respects, including
validity, construction, interpretation and effect, by New York law.
(b) This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written
instrument signed by authorized
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representatives of the parties or, in the case of a waiver, by an
authorized representative of the party waiving compliance. No such
written instrument shall be effective unless it expressly recites that
it is intended to amend, supersede, cancel, renew or extend this
Agreement or to waive compliance with one or more of the terms hereof,
as the case may be. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of any party of any such right, power
or privilege, or any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of any
rights or remedies that any party may otherwise have at law or in
equity.
(c) If any provision or any portion of any provision of this Agreement
or the application of any such provision or any portion thereof to any
person or circumstance, shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining provisions of
this Agreement, or the application of such provision or portion of such
provision as is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and such provision or
portion of any provision as shall have been held invalid or
unenforceable shall be deemed limited or modified to the extent
necessary to make it valid and enforceable; in no event shall this
Agreement be rendered void or unenforceable.
(d) The headings to the Sections of this Agreement are for convenience
of reference only and shall not be given any effect in the construction
or enforcement of this Agreement.
(e) This Agreement shall inure to the benefit of and be binding upon
the successor and assigns of Employer, but no interest in this
Agreement shall be transferable in any manner by Executive.
(f) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes all prior discussions, agreements
and undertakings, written or oral, of any and every nature with respect
thereto.
(g) This Agreement may be executed by the parties hereto in separate
counterparts which together shall constitute one and the same
instrument.
(h) In the event of the termination or expiration of this Agreement,
the provisions of Sections 4(d) and 6 hereof shall remain in full force
and effect, in accordance with their respective terms.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
stated at the beginning of this Agreement.
INTERNET FINANCIAL SERVICES, INC.
By: /s/ Steven Malin
--------------------------------------------------
Steven Malin, Chairman and Chief Executive Officer
/s/ Steven Malin
--------------------------------------------------
Executive - Steven Malin
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AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT dated as of October 1, 1998 ("Amendment") to a certain
employment agreement entered into as of May 1, 1997 ("Employment Agreement") by
and between Internet Financial Services Inc., a Delaware corporation, with
principal offices at 33 West 17th Street, New York, New York 10011 ("Employer")
and Steven Malin, c/o the Company ("Executive").
WITNESSETH:
A. Employer is contemplating filing a registration statement on Form SB-2
covering an initial public offering of Employer's shares of common
stock (the "Registration Statement"); and
B. Employer and Executive desire to amend the terms of the Employment
Agreement in certain respects hereinafter set forth in this Amendment,
conditioned upon the effectiveness of the Registration Statement and
the consummation of the public offering provided for therein.
In consideration of the facts mentioned above, and of the covenants and
conditions set out below, the parties agree as follows:
1. Incorporation by Reference
(a) The Employment Agreement is hereby incorporated by reference as if
fully set forth herein.
(b) Unless expressly modified herein, the Employment Agreement and the
terms thereof remain in full force and effect.
(c) The definitions in the Employment Agreement shall have the same
meanings when used in this Amendment, unless otherwise specified
herein.
(d) In the event of any conflict between the terms of the Employment
Agreement and the terms of this Amendment, the terms of this Amendment
shall prevail.
2. Term
The Initial Term of Executive's employment, as provided in Section 2 of
the Employment Agreement, is hereby extended from April 30, 2002 to the
close of business on September 30, 2002.
3. Base Compensation
(a) Section 3(a) of the Employment Agreement is hereby amended to
substitute the number "$90,000" for the number "$70,000" in the two
places in which the number appears.
(b) Effective upon the consummation of the initial public offering
covered by the Registration Statement, the number "$110,000" shall be
substituted for the number "$90,000" in section 3(a) of the Employment
Agreement, as heretofore modified in subparagraph (a) of this paragraph
3.
4. Bonus
(a) Section 3(b) of the Employment Agreement, providing for an annual
bonus, is hereby modified by being stricken in its entirety. In lieu
thereof, there shall be inserted the following:
"(b) In addition to the compensation set forth in Section
3(a), from and after the effectiveness of the offering
pursuant to the Registration Statement referred to
hereinabove, Executive shall receive a semi-annual bonus,
calculated from the time of effectiveness of the Registration
Statement. The first calculation period ("Calculation Period")
shall commence as of the first day of the month in which such
offering occurs and end six months thereafter, and each
Calculation Period shall run for a consecutive six month
period, following expiration of the prior Calculation Period.
Such bonus shall only be due if the Company, whose
determination shall be final, as contained on its internally
prepared financial statements, evidences at least a 30%
increase in gross revenues during a Calculation Period in
excess of the gross revenues for the corresponding six month
period in the prior year. If such increase in gross revenues
is achieved by the Company, then Executive shall receive a
bonus equal to 20% of the base compensation payable to him
during such six month Calculation Period. If, at the
termination or expiration of this Employment Agreement, there
is a Calculation Period through the date of termination or
expiration of less than six months, then the entitlement to
bonus shall be determined, and the bonus shall be calculated,
on a pro rata basis, by multiplying the gross revenues or
bonus amount, as the case may be, by a fraction whose
numerator consists of the number of months from the start of
the Calculation Period to the termination or expiration of his
employment hereunder, and whose denominator shall be six
months."
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IN WITNESS WHEREOF, this Amendment has been executed by the parties on
the day and year first above written.
INTERNET FINANCIAL SERVICES INC.
By: /s/ Steven Malin
-------------------------------
Steven Malin, Chairman and
Chief Executive Officer
/s/ Steven Malin
-------------------------------
Executive - Steven Malin
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