Employment Agreement [Amendment] - Ladenburg Thalmann Financial Services Inc., Ladenburg Capital Management Inc. and Richard J. Rosenstock
AMENDMENT TO EMPLOYMENT AGREEMENT
WHEREAS LADENBURG THALMANN FINANCIAL SERVICES INC. and LADENBURG
CAPITAL MANAGEMENT INC. (formerly known as GBI Capital Partners Inc.) and
RICHARD J. ROSENSTOCK (the "Executive") have entered into an EMPLOYMENT
AGREEMENT, dated as of August 24, 1999 ("Original Agreement"), a first amendment
to the Agreement dated February 8, 2001, a letter amendment dated as of February
8, 2001, a second amendment dated August 31, 2001, and a letter amendment dated
October 10, 2002 (together, the "Amended Agreement"); and
WHEREAS the parties desire to further amend the Amended Agreement;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties, intending to be legally
bound, hereby agree as follows ("this Agreement"):
1. TERM OF EMPLOYMENT. The term of the Executive's employment under
this Agreement shall be for three years, from January 1, 2003 through December
31, 2005 (the "Term").
2. DUTIES OF EMPLOYMENT. The Executive hereby agrees that he will serve
as a registered representative of Ladenburg Thalmann & Co. Inc. ("LTCI"), a
wholly owned subsidiary of Ladenburg Thalmann Financial Services Inc. ("LTFS"),
and LTCI and LTFS (sometimes, collectively, the "Company") agree to employ the
Executive, subject to regulatory requirements; Executive will not be required to
enter into any "Association Agreement"; except as may be required for
compliance, registration, or regulatory reasons, Executive will not be subject
to any attendance policy; Executive shall provide such services as may be
mutually agreed upon by LTCI or LTFS, on the one hand, and Executive, on the
other. Except as specifically provided herein, Executive shall have no duty or
obligation to provide any services hereunder. Executive shall remain as (a) a
director of LTFS (and LTFS agrees to nominate and elect Executive to serve in
such capacity for as long as Executive wishes to serve) and (b) Chief Executive
Officer and a director of Ladenburg Capital Management Inc. ("LCMI") until the
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pending Form BDW becomes effective; otherwise, effective as of December 31,
2002, Executive hereby resigns as an officer of LTFS and resigns as an officer
and director of all affiliates and subsidiaries of LTFS. The Executive will
execute such other documents relative to such resignations as may be requested
by LTFS and its affiliates and subsidiaries.
3. COMPENSATION AND OTHER BENEFITS.
3.1 AT SIGNING. The Executive shall be paid $25,000
upon the execution of this Agreement.
3.2. SALARY. As his full base compensation for all
services to be rendered by the Executive hereunder (including
Executive's service as an LTFS director), LTCI shall pay to
the Executive (or to another company, employee , or other
person or entity designated by Executive from time to time) a
base salary (gross pretax) at a monthly rate of $17,083.33 for
the first year, and $15,000 for the second and third years, in
accordance with usual payroll practices for executives. The
monthly base salary set forth in this Section 3.2 shall
hereinafter be referred to as the "Base Salary." LTCI shall
withhold or cause to be withheld from the Base Salary and from
the $25,000 payable under Section 3.1 (and other amounts
hereunder) all taxes and other amounts as are required by law
to be withheld. The Company's obligation to pay the sums due
to Executive under Sections 3.1 and 3.2 hereof shall be
absolute and unconditional.
3.3 ADDITIONAL COMPENSATION. (1) In addition to the
Base Salary, the Executive will be eligible to receive
additional compensation as follows: (i) 50% payout on all of
Executive's retail brokerage production in accordance with
standard LTCI procedures on terms no less favorable than those
currently in effect as of the date of this Agreement, and (ii)
15% of any pay or compensation received by LTCI or any
affiliate thereof as a finders fee for corporate finance
transactions entered into within 18 months after introduction
to LTCI by the Executive (including without limitation the
companies listed on Exhibit A) to be paid on terms no less
favorable than those currently in effect as of the date of
this Agreement which in no event will be more than 30 days
after receipt by LTCI or any such affiliate, provided,
however, that the finder's fee for any single transaction
shall be reduced by any amount that LTCI is obligated to pay
to another finder. The payments under (i) and (ii) shall be
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termed "Additional Compensation." As of January 1, 2003, the
Executive shall no longer participate in any incentive plan
override, special override or other bonus program; provided,
however, that the Executive shall continue to be paid any such
benefits earned through December 31, 2002 in accordance with
past practices. Any outstanding expenses incurred by the
Executive in connection with his employment that remain unpaid
as of the date hereof, as well as any expenses reasonably
incurred by Executive in carrying out his duties for the
Company will be paid in accordance with firm policy. Further,
while he is employed at LTCI, to the extent that LTFS stock
options under the Ladenburg Thalmann Financial Services Inc.
1999 Performance Equity Plan are distributed to registered
representatives based on their level of commission production,
the Executive shall participate in such distribution based on
his level of commission production.
3.4 PARTICIPATION IN INSURANCE AND OTHER PLANS.
Section 5(A) of the Original Agreement, as amended in the
Amended Agreement, shall remain in effect. During the Term,
the Executive shall be promptly reimbursed for all
out-of-pocket expenses, including expenses for spouse and
children (to the extent permitted under the terms of the
plan), not reimbursed under the LTCI health insurance plan.
3.5 OFFICE. During the Term, the Executive shall be
provided with a private office; provided that LTCI has a
branch office on Long Island, the Executive shall be given an
office in the Long Island branch; initially, the Executive's
office shall be in the LTCI Great Neck branch office.
3.6 INDEMNIFICATION. Both (a) the existing
Indemnification Agreement entered into on February 7, 2001 in
favor of the Executive (copy annexed) and (b) Section 5(c) and
8 of the Original Agreement as amended in the Amended
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Agreement in favor of the Executive (together, "the
Indemnification Agreements") shall remain in effect as joint
and several obligations of LTFS, LTCI and LCMI. In addition,
to the extent, if any, that the Executive is liable under the
December 1996 "Guaranty of Lease" executed in connection with
the lease of space at 1055 Stewart Avenue, Bethpage, New York
from Briarcliffe College, Inc., such claim shall be treated as
a covered claim under the Indemnification Agreements. Without
limiting the foregoing, simultaneously with the full execution
of this Agreement, LCMI shall pay the sum of $20,230 to Esanu
Katsky Korins & Siger LLP, which shall constitute full payment
of all time and disbursement charges incurred by such firm in
connection with services for the benefit of the Executive
through the date hereof.
3.7 CLAIMS. LTFS, LTCI and LCMI (in the case of LCMI,
based on the knowledge of Victor M. Rivas, Co-Chairman, and
Joseph Giovanniello, General Counsel) hereby represent to
Executive that none of them or any of their affiliates
presently is aware of facts sufficient to support a claim
against Executive.
3.8 AMENITIES. During the Term, the Executive shall
be provided at LTCI's expense with a sales assistant, desktop
computer, and market data service; LTCI shall pay Executive's
applicable securities registration and licensing costs.
3.9 During the Term, Oscar Sonkin shall continue to
be employed as a registered representative in the LTCI branch
office in Boca Raton, Florida, subject to compliance and
regulatory requirements.
4. CONFIDENTIALITY, ETC.
4.1 The Executive covenants and agrees that he shall
treat as confidential all information and financial matters of
LTFS and its subsidiaries and affiliates, other than
information which becomes generally available to the public
otherwise than through disclosure by the Executive
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(collectively "Confidential Information"), including, without
limitation, trade secrets, client lists, pricing policies,
operational methods, research projects and technical
processes, and that he shall not disclose, communicate or
divulge any Confidential Information to any person or entity
other than LTFS or its subsidiaries and affiliates and that he
shall not use any Confidential Information for the benefit of
any person or entity other than LTFS, its subsidiaries and
affiliates unless expressly authorized in writing by the
Board, provided, however, that the foregoing shall not
preclude the Executive from (a) divulging information in what
he reasonably and in good faith believes is in the ordinary
course of LTCI business or is required to be disclosed
pursuant to regulatory requirement to regulatory agencies or
otherwise required pursuant to applicable law, or (b)
soliciting his existing clients to go to another firm, or from
transacting business with his existing clients.
4.2 The Executive agrees that during the period he is
employed hereunder and for a period of one (1) year
thereafter, he will not, without the prior written consent of
the Company, directly or indirectly (including without
limitation by assisting any other person or entity to do so or
identifying for any other person or entity), solicit, entice,
persuade, or induce any then-current employee, director,
officer, associate, or substantially full-time consultant,
agent or independent contractor of the Company or its
affiliates (i) to terminate such person's employment or
engagement by the Company or an affiliate or (ii) to become
employed by any person, firm, partnership, corporation, or
other entity other than the Company or its affiliates.
4.3 The Executive agrees that during the period he is
employed hereunder and for a period of one (1) year
thereafter, he will not, without the prior written consent of
the Company, directly or indirectly (including without
limitation by assisting any other person or entity to do so or
identifying for any other person or entity), contact any
customer of LTFS or any subsidiary or affiliate for the
purpose of soliciting securities business, except that this
provision shall not preclude Executive from contacting or
transacting business with any of his existing clients.
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4.4 If the Executive commits a material breach, or is
about to commit a material breach, of any of the provisions of
Sections 4.1, 4.2 or 4.3 above, the Company shall have the
right to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction without being
required to post bond or other security and without having to
prove the inadequacy of the available remedies at law (the
foregoing being expressly waived by the Executive hereby), it
being acknowledged and agreed by the Executive hereby that any
such breach or threatened breach will cause irreparable injury
to the Company and that money damages will not provide an
adequate remedy to the Company. In addition, the Company may
take all such other actions and remedies available to it under
the law and in equity and shall be entitled to such damages as
it can show it has sustained by reason of such breach.
5. TERMINATION.
5.1 If LTCI terminates the Executive's employment
hereunder for any reason, LTCI shall be obligated to pay to
the Executive, within 30 days of such termination all sums due
to Executive under this Agreement to the extent they have not
yet been paid, without offset or deduction other than required
withholding amounts; to the extent that any stock options
issued to the Executive have not yet vested as of the date
that LTCI terminates Executive, the vesting of such options
shall proceed on schedule notwithstanding such termination. If
Executive terminates his employment hereunder for a reason not
relating to the Company's breach hereof, the unpaid sums due
under sections 3.1 and 3.3 will be paid within 30 days,
without offset or deduction other than required withholding
amounts; the salary to be paid under section 3.2 will continue
to be paid monthly, without offset or deduction other than
required withholding amounts; Executive shall have no
obligation to mitigate damages; if Executive is employed by or
performs any services for a competitor to LTFS or any of its
affiliates, Executive shall resign from the Board of LTFS.
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5.2 In the event of the Executive's death during the
Term, this Agreement shall be terminated, except that LTCI
shall pay to the Executive's spouse or designated beneficiary,
if he is survived by a spouse or designated beneficiary, or if
not, to his estate (1) any unpaid Base Salary earned through
the date of death; (2) the Additional Compensation, if any, to
the extent not already paid; (3) instead of any remaining
payments due under section 3.2, 12 months' salary, paid
monthly, not to extend beyond the end of the term; (4)
benefits under section 3.4 continuing throughout the remainder
of the term.
5.3 For the avoidance of doubt, the following
provisions shall survive the termination of this Agreement for
any reason: Sections 3.2,3.3,3.4,3.6,3.8 and 5. In addition,
LTFS shall be jointly responsible for and guarantee the
obligations hereunder of LTCI and Ladenburg Capital Management
Inc.
6. NON-ASSIGNMENT. This Agreement and all of the Executive's rights and
obligations hereunder are personal to the Executive and shall not be assignable;
PROVIDED, HOWEVER, that upon his death all of the Executive's rights to cash
payments under this Agreement shall inure to the benefit of his widow, personal
representatives, designees or other legal representatives, as the case may be.
Any person, firm or corporation succeeding to the business of the Company by
merger, purchase, consolidation or otherwise may assume by contract or operation
of law the obligations of the Company hereunder, PROVIDED, HOWEVER, that the
Company shall, notwithstanding such assumption, remain liable and responsible
for the fulfillment of its obligations under this Agreement. This Agreement
shall be binding upon the parties, their successors, heirs, administrators and
permitted assigns.
7. OTHER PROVISIONS.
7.1 NOTICES.Any notice or other communication
required or permitted hereunder shall be in writing and shall
be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or
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express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed, or
sent by facsimile transmission or, if mailed, five days after
the date of deposit in the United States mail, as follows:
(i) if to the Company, to:
Ladenburg Thalmann & Co. Inc.
590 Madison Avenue
New York, NY 10022
Attention: Mr. Victor M. Rivas
(ii) if to the Executive, to;
Mr. Richard J. Rosenstock
78 Tammy's Lane
Muttontown, NY 11791
Any party may change its address for notice hereunder
by notice to the other party hereto.
7.2 ENTIRE AGREEMENT.This Agreement contains the
entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior
representations, warranties and agreements, written or oral,
with respect thereto. To the extent not expressly mentioned
herein, all provisions of the Amended Agreement are no longer
in effect.
7.3 WAIVERS AND AGREEMENTS. This Agreement may be
amended, modified, superseded, canceled, renewed or extended,
and the terms and conditions hereof may be waived, only by a
written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. 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 right, power or
privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege hereunder.
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7.4 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the substantive laws of
the State of New York, without regard to its principle of
conflicts of law.
7.5 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original but
both of which together shall constitute one and the same
instrument.
7.6 HEADINGS. The headings in this Agreement are for
reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
8. ARBITRATION. Section 15 of the Original Agreement, as amended in the
Amended Agreement, shall continue in effect.
9. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
December 31, 2002.
The Representations As to LCMI Ladenburg Thalmann Financial .
Set Forth In Section 3.7 Above Services Inc
Are Hereby Confirmed By the
Undersigned As To Themselves
/s/ Victor M. Rivas By: /s/ Victor M. Rivas
-------------------------------- ----------------------------------
Victor M. Rivas
/s/ Joseph Giovanniello
-------------------------------- Ladenburg Thalmann & Co. Inc
Joseph Giovanniello
By: /s/ Joseph Giovanniello
--------------------------------
Ladenburg Capital Management Inc.
By: /s/ Joseph Giovanniello
--------------------------------
/s/ Richard J. Rosenstock
----------------------------------
Richard J. Rosenstock
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