FIRST AMENDMENT
TO THE
EMPLOYMENT AGREEMENT
WHEREAS, GBI CAPITAL PARTNERS, INC. (formerly known as XXXXXX, XXXXXXX
INC.) (the "Company"), a New York corporation, has entered into an employment
agreement (the "Agreement") with XXXX XXXXXXXXX (the "Executive"), dated August
24, 1999;
WHEREAS, the Company is a wholly-owned subsidiary of GBI Capital
Management Corp. (the "Parent"), a Florida corporation;
WHEREAS, NEW VALLEY CORPORATION ("New Valley"), a Delaware corporation,
and Parent have entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") dated as of February 8, 2001 by which New Valley will acquire
beneficial ownership of in excess of 50% of the stock of the Parent (such
corporate transaction, the "Acquisition");
WHEREAS, the Company and the Executive desire to amend the Agreement in
order to facilitate the Acquisition;
WHEREAS, Section 13 of the Agreement provides that no modification of
or addition to the Agreement or waiver or cancellation of any provision therein
shall be valid except by a signed writing;
NOW THEREFORE, in consideration of the promises and mutual
representations, covenants and agreements set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend the Agreement as follows:
1. The Executive's participation in the Annual Incentive Bonus
Plan (the "Bonus Plan") and the Special Performance Incentive
Plan (the "Incentive Plan") may be limited by the Compensation
Committee so that the Executive may not receive in excess of
22 1/2% of the bonus pool ("Pool") per fiscal year under the
Bonus Plan and in excess of the percentage set forth on
Exhibit A hereto of Total Revenue (as defined below) per year
under the Incentive Plan; provided, however, that for the
fiscal year ending September 30, 2001, Total Revenue shall
include the total revenue of the Parent, including the total
revenue of Ladenburg Xxxxxxxx & Co. Inc., for only the period
commencing with the first day following the end of the
commission month in which the closing of the Stock Purchase
Agreement occurs. As used herein, "Total Revenue" for any
fiscal year means the Parent's total consolidated revenues, as
reported in the Parent's audited consolidated financial
statements for the year. The Executive hereby agrees that the
imposition of such limits is permitted under the Agreement,
and the imposition of such limits shall not provide Reason (as
defined in the Agreement) under the Agreement.
During the term of the Agreement, Reason shall be deemed to
exist under the Agreement if any of the following shall occur:
any amendment of the Bonus Plan or the Incentive Plan in a
manner adverse to the Executive (including any change in the
performance criteria, the percentage of Net Income Before
Taxes allocated to the Pool or the computation of the
Override) or the failure by the Compensation Committee during
any year to award the Executive, upon satisfaction of the
performance criteria in the plans, 22 1/2% of the Pool or the
percentage set forth on Exhibit A hereto of Total Revenue.
2. For the period commencing October 1, 2000 through the end of
the commission month in which the closing of the Stock
Purchase Agreement occurs, the Executive shall participate in
the Bonus Plan and the Incentive Plan on the same basis as he
currently participates in such plans on the date hereof.
3. During the term of the Agreement, (i) the Executive's services
shall be rendered primarily from the Company's Bethpage, New
York location unless he consents in writing to another
location; (ii) the Company shall pay for the existing
subscription to O'Neil Services; (iii) the Parent shall use
its best effort to cause the Executive to be nominated to
continue to serve as a director of the Parent and his failure
to be elected shall constitute Reason as defined in Section
7(D) of the Agreement; (iv) the Executive shall be reimbursed
consistent with past practices for all out-of-pocket medical
expenses; (v) as long as there is no conflict or violation
withss.162(m) of the Code, Executive may instruct the Company
(and the Company shall follow such instructions) to pay up to
$20,000 of his annual compensation to other employees of the
Company; and (vi) the Executive's annual vacation period, as
set forth in Section 5(B) of the Agreement, is hereby amended
so that the Executive shall have five weeks of paid vacation
annually.
4. Section 6(B) is hereby amended to read as follows: "The
Executive agrees that if the Company has made and is
continuing to make all required payments to him upon and after
termination of his employment, then for a period commencing on
the date of termination of the Executive's employment pursuant
to this Agreement and ending on the earlier of twelve (12)
months thereafter or August 24, 2004, the Executive shall
neither directly and/or indirectly (a) solicit, hire and/or
contact any prior (within six (6) months of termination) or
then current employee of the Company, Ladenburg Xxxxxxxx & Co.
Inc. and/or the Parent nor any of their respective direct
and/or indirect subsidiaries (collectively, the "Applicable
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Entities"), nor (b) solicit or transact any business with any
prior (within six (6) months of termination) or then current
customer and/or client of the Applicable Entities. In
addition, the Executive shall not attempt (directly and/or
indirectly), to do anything either by himself or through
others that he is prohibited from doing pursuant to this
Section 6."
5. Given that the Executive is a significant shareholder in the
Parent and the Parent and New Valley have entered into the
Stock Purchase Agreement by which New Valley will acquire
beneficial ownership of in excess of 50% of the stock of the
Parent, and the Stock Purchase Agreement is providing
significant benefits to the Executive, the Executive hereby
agrees that, from the date of the closing of the Stock
Purchase Agreement until the earlier of 12 months following
the Executive's termination of employment hereunder or August
24, 2004, without the prior written consent of the Parent, he
will not, directly or indirectly, either as principal,
manager, agent, consultant, officer, director, stockholder,
partner, investor, lender or employee or in any other
capacity, carry on, be engaged in or have any financial
interest in, any business which is in competition with any
business of the Applicable Entities. For purposes of this
section, a business shall be deemed to be in competition with
any business of the Applicable Entities if it is materially
involved in the purchase, sale or other dealing in any
property or the rendering of any service purchased, sold,
dealt in or rendered by any member of the Applicable Entities
as a material part of the business of such member of the
Applicable Entities within the same geographic area in which
such member of the Applicable Entities effects such purchases,
sales or dealings or renders such services; provided, however,
that for the period commencing with the termination of
Executive's employment, (i) a business shall be deemed to be
in competition with any business of the Applicable Entities
only if it is materially involved in the retail brokerage
business and (ii) the provisions of this Section 5 shall apply
to the Executive only if the Company has made and is
continuing to make all required payments to him upon and after
termination of his employment. Notwithstanding the foregoing,
Executive shall be allowed to make passive investments in
publicly held competitive businesses as long as his ownership
is less than 5% of such business.
6. Section 7(A) is hereby amended to add the following sentence:
"In addition, Executive's beneficiary and/or dependents shall
be entitled, through August 24, 2006, to continuation, at the
Company's expense, of such medical insurance and reimbursement
benefits as are being provided to them, consistent with past
practices, prior to termination of Executive's employment."
7. Section 7(B) is hereby amended to add the following sentence:
"In addition, Executive and his dependents, as the case may
be, shall be entitled, through August 24, 2006, to
continuation, at the Company's expense, of such medical
insurance and reimbursement benefits as are being provided to
them, consistent with past practices, prior to termination of
Executive's employment."
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8. Clauses (iii) and (iv) of Section 7(C)(i) are hereby amended
to read as follows: "or (iii) the continued and willful
failure by Executive to substantially and materially perform
his material duties hereunder after a reasonable notice and an
opportunity to cure same."
9. Section 7(E) is hereby amended to read as follows: "In the
event Executive's employment hereunder shall be terminated by
the Executive for Reason or by the Company for other than
Cause, Death or Disability: (1) the Executive shall receive as
severance pay in a lump sum no later than sixty (60) days
following such termination, an amount equal to the sum of (i)
the salary the Executive would have received for the remaining
term of this Agreement had there been no termination, (ii) all
accrued Override payments earned as of the date of such
termination, and (iii) the Termination Bonus Amount times the
remaining number of years (or portion thereof) of the
Agreement had there been no termination of the Executive, and
(2) 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, through August
24, 2004, with medical insurance and reimbursement benefits,
consistent with past practices, continuing through August 24,
2006. The Termination Bonus Amount shall equal the greater of
the bonus paid or payable to the Executive under the Bonus
Plan (i) for the year ended September 30, 2000, (ii) for the
year immediately preceding the year in which such termination
of the Executive occurs and (iii) for the year in which such
termination of the Executive occurs calculated using financial
information through the date of such termination annualized
for the full year."
10. Section 7(H) is hereby amended to read as follows: "For
purposes hereof, a Change of Control shall be deemed to have
occurred if a "Change of Control" as defined in the Senior
Convertible Promissory Note attached as Exhibit B to the Stock
Purchase Agreement has occurred." The Executive hereby agrees
that the Acquisition and the other transactions contemplated
by the Stock Purchase Agreement shall not constitute a Change
of Control under the Agreement.
11. In the event the Executive's employment is terminated due to
Disability, by the Executive without Reason or by the Company
for Cause, in addition to, and without duplication of, any
other payments or other benefits currently provided in the
Agreement, the Executive shall be entitled to all salary,
Override and bonus payments, if any, earned and/or prorated
through the date of termination of his employment. In
addition, Executive's beneficiary and/or dependents shall be
entitled, through August 24, 2006, to continuation, at the
Company's expense, of such medical insurance and reimbursement
benefits as are being provided to them, consistent with past
practices, prior to termination of Executive's employment.
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12. Any references in the Agreement to benefits to be provided to
the Company's executive officers shall also include benefits
provided to Ladenburg's executive officers.
13. To the extent Section 8 of the Agreement is inconsistent with
the Indemnification Agreement dated February 7, 2001 between
Executive and the Company, the Indemnification Agreement shall
prevail.
14. Section 2 is hereby amended to add the following: "(C)
Charitable and Other Activities: The Executive shall be
allowed, to the extent such activities do not substantially
interfere with the performance of his duties and
responsibilities hereunder, (i) to manage his personal,
financial and legal affairs, (ii) to be engaged in civic,
charitable, religious and educational activities, and (iii) to
serve on corporate boards with the prior written approval of
the Company's board."
15. This First Amendment to the Agreement shall become effective
only upon the closing of the Stock Purchase Agreement. This
First Amendment to the Agreement shall become null and void on
the termination of the Stock Purchase Agreement prior to the
consummation of the transactions contemplated thereby.
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IN WITNESS WHEREOF, the parties have duly executed this First Amendment
to the Agreement as of February 8, 2001.
GBI CAPITAL PARTNERS, INC.
/s/ Xxxxxxx X. Xxxxxxxxxx /s/ Xxxx Xxxxxxxxx
----------------------------- ------------------------
Name: Xxxxxxx X. Xxxxxxxxxx XXXX XXXXXXXXX,
Title: EXECUTIVE
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Exhibit A
Incentive Award as %
Total Revenues of Total Revenues
--------------- ---------------------
$0 - $150,000,000 0.6167%
$150,000,001 - $170,000,000 0.6000%
$170,000,001 - $190,000,000 0.5833%
$190,000,001 - $210,000,000 0.5667%
$210,000,001 - $230,000,000 0.5500%
$230,000,001 - $250,000,000 0.5333%
$250,000,001 - $270,000,000 0.5167%
$270,000,001 - and above 0.5000%
