Employment Agreement [Amendment] - National Association of Securities Dealers Inc. and Frank G. Zarb
INSTRUMENT OF AMENDMENT
INSTRUMENT OF AMENDMENT dated as of August 20, 1999, between
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (the "Association") and
FRANK G. ZARB ("Zarb") to the employment agreement effective on February
24, 1997, as amended effective March 18, 1998, between the Association and
Zarb (the "Employment Agreement").
W I T N E S S E T H:
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WHEREAS, the Association and Zarb have entered into the Employment
Agreement;
WHEREAS, Paragraph 26 of the Employment Agreement provides that
the Employment Agreement may be amended by the mutual consent of the
parties which consent must be evidenced by a document executed with the
same formality as the Employment Agreement;
WHEREAS, the Employment Agreement will continue in effect until
February 24, 2000, unless earlier terminated in accordance with its terms;
WHEREAS, Paragraph 4 of the Employment Agreement provides that the
Employment Agreement may be extended beyond such stated term by written
agreement of Zarb and the Association; and
WHEREAS, the Association and Zarb desire to amend the Employment
Agreement to extend the Employment Agreement for one year beyond such
stated term to allow the Association to select and appoint an individual to
succeed Zarb as its President and Chief Executive Officer and to provide a
transition period for such succession, and, in addition, to amend the
Employment Agreement as otherwise provided herein.
NOW, THEREFORE, it is agreed that the Employment Agreement shall
be and the same hereby is amended in the following manner:
1. Paragraph 1 of the Employment Agreement is amended by
deleting the first two sentences thereof and substituting
the following in lieu thereof:
"Until this Agreement is terminated as hereinafter
provided, the Association shall employ Zarb, and Zarb
shall serve as an employee of the Association, in the
capacity of its President and Chief Executive
Officer, provided, however, that, effective April 10,
1997, Zarb shall be the Association's President,
Chairman and Chief Executive Officer, and, effective
January 22, 1998, Zarb shall be the Association's
Chairman and Chief Executive Officer. During the
period of his employment hereunder, Zarb shall
perform the usual duties to be performed by one
holding such offices, and Zarb shall perform such
other management duties and responsibilities
reasonably related to such offices as may be assigned
to him from time to time by the Board of Governors or
the Executive Committee of the Association."
2. Paragraph 1 of the Employment Agreement is further
amended by designating the existing substantive provision
thereof as subparagraph (a) and by adding a new
subparagraph (b) thereof to read in its entirety as
follows:
"(b) The foregoing subparagraph (a) of
this Paragraph 1 to the contrary notwithstanding,
Zarb shall relinquish his duties or positions as
Chairman and Chief Executive Officer of the
Association during the Additional Term (as
hereinafter defined) if, his successor being duly
appointed, the Association and Zarb mutually
determine that such relinquishment may facilitate his
successor's transition to such office; however, such
relinquishment shall not be considered a termination
of the Term and shall have no effect on the
Association's obligation to continue to pay and
provide Zarb the compensation and benefits otherwise
provided for in this Agreement for the remainder of
the Term. Zarb agrees to make himself available for
the balance of the Term upon reasonable prior notice
to provide consulting services to the Association on
matters relating to the nature and scope of his
duties prior to relinquishment of his duties or
positions pursuant to this Paragraph 1(b)."
3. Paragraph 2 of the Employment Agreement is amended by
designating the existing substantive provision thereof as
subparagraph (a) and by adding new subparagraph (b)
thereof to read in its entirety as follows:
"(b) Notwithstanding any provision of
subparagraph (a) of this Paragraph 2 to the contrary,
during the Additional Term, the aggregate annual base
salary and incentive compensation paid to Zarb by the
Association shall not be less than such aggregate
annual amount paid to Zarb for the second or third
year of the Initial Term, whichever was greater."
4. Paragraph 3 of the Employment Agreement is amended by
deleting so much of such paragraph as precedes
subparagraph (a) thereof and substituting the following
in lieu thereof:
"This Agreement shall continue in effect for an
initial term of three (3) years from the Effective
Date (the "Initial Term") and for an additional one
(1) year commencing immediately upon the close of the
Initial Term (the "Additional Term"), and the Initial
Term together with the Additional Term shall be
referred to herein as the "Term," subject to earlier
termination in one of the following ways:"
5. Subparagraph (a) of Paragraph 5 of the Employment
Agreement is amended to read, in its entirety, as
follows:
"(a) Zarb shall be a "Grandfathered
Participant" in the National Association of
Securities Dealers, Inc. Supplemental Executive
Retirement Plan (the "Supplemental Retirement Plan")
(capitalized terms used in this Paragraph 5(a), but
not otherwise defined in this Agreement shall have
the meanings given such terms in the Supplemental
Retirement Plan). Upon completion of the Initial Term
or as otherwise provided in Paragraph 6 or 7, Zarb
shall be entitled to a Retirement Benefit, as if he
has fully satisfied the Supplemental Retirement
Plan's eligibility and vesting requirements for a
full Retirement Benefit. Such Retirement Benefit
shall be equal to six percent (6%) of Zarb's Final
Average Compensation multiplied by the number of
Years of Service attained by Zarb upon his
termination of employment hereunder, less any vested
benefit that he accrued under the NASD Retirement
Plan. Zarb's Final Average Compensation, for purposes
of the Supplemental Retirement Plan, shall be
computed for the entire period of his actual service
with the Association. Notwithstanding the foregoing
to the contrary, Zarb's Retirement Benefit as
aforesaid shall not be less than the supplemental
retirement benefit to which he would have been
entitled upon his termination of employment under the
terms of this Agreement as in effect immediately
following the amendment of this Agreement dated March
18, 1998. Except as otherwise provided in Paragraph 6
or 7, Zarb shall not be entitled to receive any
Retirement Benefit under this Paragraph 5(a) if his
employment with the Association terminates prior to
his completion of the Initial Term. The Association
shall pay the Retirement Benefit to Zarb in a
lump-sum within fifteen (15) days after Zarb's
termination of employment hereunder or at such other
time as provided in Paragraph 6 or 7."
6. Subparagraph (b) of Paragraph 5 of the Employment
Agreement is amended to read, in its entirety, as
follows:
"(b) Upon completion of the Term, Zarb
shall be entitled to receive at the Association's
expense for a period of three years thereafter (i)
the full-time and exclusive use of an automobile of
his choice and driver, (ii) appropriate office and
secretarial services and (iii) payment or
reimbursement of dues, initiation and other fees and
charges for various clubs in the New York City and/or
Washington, D.C., metropolitan areas upon
presentation of appropriate receipts or other
documentation (in the case of this clause (iii), not
exceeding $20,000 for any year); provided that Zarb's
receipt of the benefits described in this
subparagraph (b) shall be contingent upon his
satisfaction of the consulting duties set forth in
subparagraph (c) below."
7. Clause (iii) of the first sentence of Paragraph 6 of the
Employment Agreement is amended to read, in its entirety,
as follows:
"(iii) the Retirement Benefit described in Paragraph
5 accrued to the date of termination (taking into
account the provisions of the Supplemental Retirement
Plan applicable to a participant's death but
disregarding the portion of the Term following the
date of Zarb's death);"
8. Clause (iii) of the second sentence of Paragraph 6 of the
Employment Agreement is amended to read, in its entirety,
as follows:
"(iii) the Retirement Benefit described in Paragraph
5 accrued to the date of termination (disregarding
the portion of the Term following the date of Zarb's
termination);"
9. Paragraph 7(a) of the Employment Agreement is amended by
substituting "Retirement Benefit" for "supplemental
retirement benefit" where the latter appears in clause
(iii) of the first sentence thereof.
10. Paragraph 9 of the Employment Agreement is amended by
deleting the substantive provisions thereof in their
entirety and substituting "Not used." in lieu thereof.
11. Paragraph 10 of the Employment Agreement is amended by
designating the existing substantive provision thereof as
subparagraph (a) and by adding a new subparagraph (b)
thereof to read in its entirety as follows:
"(b) If Zarb transfers his principal
residence from the Washington, D.C., metropolitan
area to the New York City metropolitan area in
connection with his employment under this Agreement,
the Association shall reimburse Zarb for: (i) moving
expenses (within the meaning of Section 217(b) of the
Internal Revenue Code) incurred in connection with
such establishment of his principal residence in the
New York City metropolitan area; (ii) to ensure his
personal safety, the cost of installing a home
security system in such residence (if recommended by
an independent security study and provided that such
reimbursement shall not exceed $10,000); and (iii)
the cost of an appropriate efficiency apartment in
the Washington, D.C., metropolitan area during the
remaining Term. If, in connection with the
establishment of such residence and within the first
six (6) months following transfer of his employment
under this Agreement from the Washington, D.C.,
metropolitan area to the New York City metropolitan
area, Zarb offers his Washington, D.C., metropolitan
area residence for sale on the general real estate
market, the Association shall provide for the
purchase or sale of such residence at an amount equal
to 100-percent of its fair market value (as
determined in accordance with customary appraisal and
timing standards for such transactions by one or more
appraisers approved by the Association and reasonably
acceptable to Zarb)."
12. All of the terms and conditions of the Employment Agreement
as amended by this Instrument of Amendment shall remain in
full force and effect throughout the term of the Employment
Agreement, as extended hereby.
IN WITNESS WHEREOF, the corporate party hereto has caused
this Instrument of Amendment to be duly executed and delivered on the date
indicated below, and the individual party hereto has executed and delivered
this Instrument of Amendment on the date indicated below, effective for all
purposes as of August 20, 1999.
NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC.
By
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Chairman of the Management
----------------------- Compensation Committee
Date
Compensation Committee
(Corporate Seal)
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Date Frank G. Zarb