Employment Agreement [Amendment No. 3] - Ladenburg Thalmann Financial Services Inc., Ladenburg Capital Management Inc. and Mark Zeitchick
AMENDMENT TO EMPLOYMENT AGREEMENT
WHEREAS LADENBURG THALMANN FINANCIAL SERVICES INC. (formerly known as
GBI Capital Management Corp.) and LADENBURG CAPITAL MANAGEMENT INC. (formerly
known as GBI Capital Partners Inc.) and MARK ZEITCHICK (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 February 8, 2001, a letter amendment dated May 7,2001, a second
amendment dated August 30, 2001 (dated August 31, 2001 in the Form 8-K/A filed
on September 10, 2001 by LTFS, as hereafter defined), 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 through August 31, 2004 (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
director of LTFS (and LTFS agrees to nominate and elect Executive to serve in
such capacity for as long as Executive wishes to serve; otherwise, effective as
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of the close of business on December 31, 2003, 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 SALARY. Effective as of January 1, 2004, the
full base compensation for all services to be rendered by the
Executive hereunder (including Executive's service as a LTFS
director) that LTCI shall pay to the Executive (or to another
company, employee , or other person or entity designated by
Executive from time to time)shall be amended to a base salary
(gross pretax) at a monthly rate of $3,750.00, in accordance
with usual payroll practices for executives. The monthly base
salary set forth in this Section 3.1 shall hereinafter be
referred to as the "Base Salary." LTCI shall withhold or cause
to be withheld from the Base Salary (and other amounts
hereunder) all taxes and other amounts as are required by law
to be withheld.
3.2 INCENTIVE AND BONUS PLANS. Effective as of
January 1, 2004, the percentage of Total Revenue that the
Executive shall be entitled to receive under the Incentive
Plan shall be amended to 0.25335 per cent. The Company's
obligation to compensate the Executive for the Executive's
participation in the Bonus Plan shall continue for the balance
of the Term, and payment thereunder shall continue in accord
with past practice notwithstanding that actual payment is not
effected until after the expiration of the Term. The Company
shall be obligated to pay all sums due to Executive under
Sections 3.1 and 3.2 hereof, which obligation shall be
absolute and unconditional.
3.3 ADDITIONAL COMPENSATION. 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
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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
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 termed "Additional Compensation." As of January
1, 2004, the Executive shall no longer participate in any
special override or other bonus program not referred to
specifically above; provided, however, that the Executive
shall continue to be paid any such benefits earned through
December 31, 2003 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.
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3.5 OFFICE. During the Term, the Executive shall be
provided with a private office at the Company's office in Boca
Raton, Florida or, if the Company moves, at such other office
of the Company in Florida proximate to the Executive's home.
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
Agreement in favor of the Executive (together, "the
Indemnification Agreements") shall remain in effect as joint
and several obligations of LTFS, LTCI and LCMI. Without
limiting the foregoing, simultaneously with the full execution
of this Agreement, LCMI shall pay the sum of $14,600.00 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 rendered for the benefit of
the Executive in connection with the review and negotiation of
this Agreement 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, Jr., 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 desktop computer, and the
following market data services: Williams O'Neil Direct Access
("WONDA") (two access codes), E-Signal Service, Lancer
Analytics and Washington Service. Provision of WONDA shall
continue until August 31, 2006 or until the Company ceases to
use WONDA, whichever first occurs. LTCI shall pay Executive's
applicable securities registration and licensing costs.
3.9 STOCK OPTIONS. Notwithstanding anything to the
contrary set forth herein, and unless the Executive's
employment hereunder is terminated for cause, the Company
agrees to employ the Executive hereunder as a registered
representative of LTCI, or in
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some other mutually agreed upon capacity, from September 1,
2004 through January 31, 2005 sufficient to cause all
unexercised options heretofore issued to the Executive and to
MZ Trading LLC (including, without limitation, under that
certain letter agreement between LTFS and MZ Trading LLC dated
August 20, 2003) to fully vest in accordance with their terms.
In the event that any sums earned by the Executive or MZ
Trading LLC as a result of exercising stock options heretofore
issued to them are to be returned or recaptured by the Company
pursuant to the 1999 Performance Equity Plan or other plan
under which such options were issued for any reason other than
the termination of the Executive for cause, then the Company
agrees to promptly pay the Executive an equal amount hereunder
as a complete offset such that no sums need actually be paid
by the Executive.
3.10 HEDGE FUND PAYMENT. If Ladenburg Capital Fund
Management Inc., the general partner of the Ladenburg Focus
Fund LP (the "Fund") , is paid any performance, management or
other fee in connection with the Fund (the "Fund Fee") during
or relating to the period ending December 31, 2003, the
Executive shall be paid a percentage of the Fund Fee within 10
days after the Fund's receipt thereof. Such percentage of the
Fund Fee shall be 20%.
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
(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
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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.
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
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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 the Company terminates the Executive's
employment hereunder for any reason, the Company 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. 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, 3.2 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 3.1 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.
Sections 7(A) and 7(E) of the Original Agreement, as amended
in the Amended Agreement, shall remain in effect; provided,
however, that the Executive's (and his dependents')
participation in any and all life, disability, medical and
dental insurance plans shall be continued, or equivalent
benefits provided to him or them by the Company, at no cost to
him or them, with medical insurance and reimbursement
benefits, consistent with past practices, through August 24,
2006.
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5.2 In the event of the Executive's death during the
Term, this Agreement shall be terminated, except that the
Company 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, for one year from the
date of death (which may extend beyond the Term), to the
extent not already paid: (1) an amount equal to the
Executive's Base Salary for such period; (2) the Additional
Compensation, if any, for such period; (3) any remaining
payments due under section 3.1, paid monthly; and (4) benefits
under sections 3.2 and 3.4.
5.3 For the avoidance of doubt, the following
provisions of this Agreement shall survive the termination of
this Agreement for any reason: Sections
3.1,3.2,3.3,3.4,3.6,3.8,3.9,3.10 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
express mail,
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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. Mark Zeitchick
961 Hyacinth Drive
Delray Beach, FL 33483
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. All provisions of the Amended Agreement
are no longer in effect except for those provisions thereof
which are (i) specifically referenced herein, or (ii) which
are related to, dependent upon, or which are necessary to
implement, those provisions of the Amended Agreement described
in this Agreement. Those provisions described in (i) and (ii)
immediately above are hereby confirmed and shall remain in
full force and effect. All capitalized terms which are not
defined herein shall have the respective definitions ascribed
thereto in the Amended Agreement.
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
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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.
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.
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IN WITNESS WHEREOF, this Agreement shall become effective as of the
date that this Agreement is signed and delivered by the parties.
The Representations As to LCMI Ladenburg Thalmann Financial Services Inc.
Set Forth In Section 3.7 Above
Are Hereby Confirmed By the
Undersigned As To Themselves
/s/ Victor M. Rivas By: /s/ Victor M. Rivas
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Victor M. Rivas
/s/ Joseph Giovanniello, Jr.
---------------------------------- Ladenburg Thalmann & Co. Inc
Joseph Giovanniello, Jr.
By: /s/ Victor M. Rivas
----------------------------------------
Ladenburg Capital Management Inc.
By: /s/ Joseph Giovanniello, Jr.
----------------------------------------
/s/ Mark Zeitchick
--------------------------------------------
Mark Zeitchick
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