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CONFIDENTIAL TREATMENT REQUESTED
WITH RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED WITH "***"
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of
November 28,
2007 ("Agreement Date"), by and between Hudson Securities, Inc.,
a Delaware
corporation ("Company"), having an address of 111 Town Square
Place, 15th Floor,
Jersey City, New Jersey 07310, and Vincent Pelosi (the
"Employee"), residing at
255 Flagg Place, Staten Island, NY 10304.
WITNESSESTH:
WHEREAS, the Company is a registered broker-dealer and member of
the
Financial Industry Regulatory Authority ("FINRA") engaged in the
business of
market making, trading, institutional agency trading, investment
banking and
research; and
WHEREAS, the Company wishes to employ the Employee and the
Employee is
willing to be so employed and to render services to the Company,
all upon the
terms and subject to the conditions contained herein;
NOW THEREFORE, in consideration of the mutual covenants and
agreements
contained herein, and other good and valuable consideration, the
receipt and
sufficiency of which is acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Subject to and upon the terms and conditions
contained
in this Agreement, the Company hereby agrees to employ Employee
and Employee
agrees to enter the employ of the Company, for the period set
forth in Paragraph
2 hereof, to render the services to the Company, its affiliates
and/or
subsidiaries described in Paragraph 3 hereof.
2. TERM. Employee's employment by the Company is at the will of
either
party. Employee's term of employment (the "Agreement Term")
under this Agreement
shall commence on a date no later than November 20, 2007 (such
date, the
"Commencement Date") and shall continue until terminated by
either party for any
reason but subject to the terms and conditions set forth herein,
but in no event
will Employee render any services under this Agreement to the
Company in any
form whatsoever prior to the Commencement Date.
3. DUTIES AND RESPONSIBILITIES OF PARTIES.
(a) Employee shall be employed as the Company's Senior Vice
President ("SVP") of Institutional Sales, as co-Head of the
Institutional Sales
Group with an individual who Employee has the sole approval of
as co-head. It is
agreed that Employee shall perform his services in the Company's
Jersey City,
New Jersey offices, as well as in the offices of the Company's
affiliates and/or
subsidiaries in New Jersey and he will be responsible for
institutional account
coverage and, at the request of the Company, for managing
institutional sales
and sales trading, which duties, responsibilities and work
location may only be
changed by mutual written agreement of the parties. All existing
and future
institutional sales traders or other members of the
Institutional Sales Group
(each, a "Subordinate", and collectively, the "Subordinates")
employed by the
Company will report to the co-Heads of the Institutional Sales
Group, unless
existing employees previously specified by written commitments
of the firm are
prohibited from doing so.
(b) Employee shall report to the Chief Executive Officer of
the Company or any other more senior executive officers
appointed by the Board
of Directors of the Company and agrees to abide by all bylaws
and applicable
policies of the Company promulgated from time to time by the
Board of Directors
of the Company.
(c) The Company represents that it will continue to update
its
technological resources to maintain its current level of
technology.
(d) The Company represents that it has, and will maintain,
the
ability to trade in the overseas markets currently available to
the firm.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
WITH RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED WITH "***"
(e) The Company agrees to implement the employment of a CSA
agreement and soft dollar person with knowledge and expertise of
regulatory and
legal requirements applicable to the Institutional Sales Group
business as
necessitated by the business needs of the Institutional Sales
Group as
determined by the Company.
4. EXCLUSIVE SERVICES AND BEST EFFORTS. Employee shall devote
all of
his working time, attention, best efforts and ability during
regular business
hours exclusively to the service of the Company, its affiliates
and subsidiaries
during the term of this Agreement. Nothing shall preclude
Employee from (i)
engaging in charitable activities and community affairs or (ii)
managing his
personal investments and affairs; provided, however, that such
activities do not
materially interfere with the proper performance of his duties
and
responsibilities as an employee of the Company.
5.1. COMPENSATION AND EXPENSES.
(a) Subject to the limitations set forth in this Agreement,
Company shall pay
out to the Employee a commission that is *** of the "Net
Commissions" generated
by Employee (the "Employee's Commission").
(b) For purposes of this Agreement, the term "Net Commissions"
shall mean gross
commissions that are actually received by the Company and
derived directly from
the Employee's total purchase and sale of securities from
transactions on
accounts that are covered by the Employee for the firm, less any
and all
expenses related to the fees incurred in connection with the
purchase or sale
transactions effectuated by Employee, and any associated trading
system or other
costs including,
(i) all actual, third-party transaction costs
including execution, brokerage fees, give-up, clearing and/or
flip
charges, and processing ticket charges;
(ii) all applicable, direct internal transaction
costs including execution, brokerage fees, give-up, clearing
and/or
flip charges, and processing ticket charges;
(iii) all commission rebates relating to equity
business payable to introducing brokers or account executives
not
employed by the Company, if any, which are approved by the
Company;
(iv) all bad debts of any Employee customer,
including uncollectible commissions;
(v) all errors relating to Employee's customers'
business;
(vi) reasonable travel, entertainment and meal
expenses consistent with the policy determined by Company for
such
matters, so long as approved by Company management prior to
reimbursement;
(vii) expenses incurred directly by Employee related
to recruitment, promotion or marketing by or of Employee, in
each case
as approved by Company management;
(c) Notwithstanding anything to the contrary contained
herein,
and for purposes of clarity, in no event shall Company be
required to pay
Employee's Commission for those sales whose fees are not
actually received by
Company.
(d) Upon his entering into this Agreement, the Company shall
grant to
Employee *** shares of "restricted stock". For so long as
Employee shall remain
in the employ of Company, the "restricted stock" shall vest
equally on an annual
basis over a four (4) year period (the "Vesting Period") from
the Commencement
Date, and the initial *** shares shall begin to vest on the
first anniversary of
the Commencement Date. All vested stock is not forfeited by the
Employee in the
event his employment with the Company ends for any reason. In
the event of a
Change of Control, all previously unvested restricted stock
granted by this
Section 5.1(c) shall automatically vest with Employee,
regardless of the date.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
WITH RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED WITH "***"
For the purposes herein, "Change of Control" shall mean any of
the following:
(i) direct or indirect acquisition by any person (as the term
"person" is used
in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as
amended) of more than fifty percent (51%) of the voting capital
stock of the
Company, in a single or series of related transactions; (ii) the
occurrence of a
sale of all or substantially all of the assets of the Company to
an entity which
is not a direct or indirect subsidiary of the Company; (iii) the
occurrence of a
reorganization, merger, consolidation or similar transaction
involving the
Company, unless (A) the shareholders of the Company immediately
prior to the
consummation of any such transaction will initially own
securities representing
a majority of the voting power of the surviving or resulting
corporation, and
(B) the directors of the Company immediately prior to the
consummation of such
transaction will initially represent a majority of the directors
of the
surviving or resulting corporation; or (iv) any other event
which is at any time
irrevocably designated as "Change in Control" for purposes of
this Agreement by
resolution adopted by a majority of the directors of the
Employer.
(e) The Company will grant options for the purchase of
common
stock of the Company at an exercise price of *** per share to
the Employee in
the following amounts in the event Revenue earned by the
Institutional Sales
Group reaches in the aggregate certain milestones by December
31st, 2008 (the
"Milestone Date"). The options shall be in the same form and
under the same
terms as described under the Company's Stock Option Plan. For
the purpose of
this Agreement, "Revenue" is defined as the total commissions
earned by the
Company on the purchase and sale of securities from transactions
on accounts
that are covered by the Institutional Sales Group for the firm.
In addition, all
stock grants under this section vest immediately upon the
Milestone Date, and
are not forfeited by the Employee in the event his employment
with the Company
ends for any reason after the Milestone Date.
REVENUE MILESTONE OPTION GRANTS
----------------- -------------
*** ***
*** ***
*** ***
(f) The Company agrees to pay Employee a draw against the
Employee's Commissions during the first two months following the
Commencement
Date in the amount of *** per month. Employee agrees to pay back
any deficiency
in the draw beginning in the third month of his employment.
(g) Employee agrees that the Company may, at any time,
demand
and receive payment from the Employee for or deduct from any
Employee's
Commission payable to Employee under this Agreement, any taxes,
withholding
payments, license fees, registration fees, ticket charges,
bonding fees, or such
other expenses, fees or costs payable or chargeable to the
Employee which have
been paid, accrued or otherwise incurred by the Company on
behalf of the
Employee in connection with the Employee's duties under this
Agreement.
(h). With respect to Subordinates, Subordinates shall be
compensated by the Institutional Sales Group in an amount
***
5.2 FORGIVABLE LOAN.
(a) The Employee hereby acknowledges the future receipt of
***
(the "Loan") to be loaned to Employee by the Company, which will
be distributed
in the following manner: *** shall be paid to the attorneys for
the Employee
upon the Company's receipt of Employee's acknowledgement of the
Company's offer
of employment. Such funds shall be placed in an attorney trust
account and not
released until the Employee reports to work on the Commencement
Date and
executes this Agreement, as verified in writing by the Company.
If the Employee
does not report to work by the Commencement Date, such funds
shall be returned
to the Company. If and only if Employee reports to work by the
Commencement Date
and executes this Agreement, the Company shall wire directly to
the Employee on
the Commencement Date an ***, and the remaining *** no later
than the one month
anniversary of the Commencement Date. The Loan shall accrue
interest at the
annual rate of *** from the Commencement Date, up to and
including the two year
anniversary of the Commencement Date (the "Due Date"), and if
payment of the
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
WITH RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED WITH "***"
Loan is accelerated during such period, the total amount due
under the Loan
shall be payable on a demand basis. The Loan shall be evidenced
by a Promissory
Note executed and delivered on or after the date hereof, the
form of which is
annexed hereto as Exhibit "A", and the terms of which
incorporated herein by
this reference.
Employee agrees and acknowledges that the Company may take out
life
insurance and disability policies upon the Employee, with the
Company as sole
beneficiary, in the amount of the Loan and shall keep such
policies in force
until the Loan is repaid in full.
(b) The Loan will be forgiven as follows:
i. In the event the Employee is employed as of the first
anniversary of the Commencement Date (the "First
Anniversary"), the Company will forgive *** of the Loan and
the accrued interest on the forgiven debt. Once forgiven,
the
Company cannot seek repayment of the forgiven debt that is
the
subject of this paragraph.
ii In the event the Employee is employed as of the second
anniversary of the Commencement Date (the "Second
Anniversary"), the Company will forgive the full balance of
the Loan, including all accrued interest and will issue to
the
Employee a written release confirming the cancellation and
forgiveness of the debt and the related document attached as
Exhibit A.
iii In the event that the Company terminates the Employee's
employment without "Good Cause" (as defined herein) prior to
the Due Date, the Company agrees to cancel and forgive the
Loan and any accrued interest and as such the Employee is
not
obligated to repay the Loan and any accrued interest, and
will
issue to the Employee a written release confirming the
cancellation and forgiveness of the debt and the related
document attached as Exhibit A. The termination of
Employee's
employment will be deemed to have been for "Good Cause" as
defined below in paragraph 13.
iv. In the event that the Employee terminates the Agreement
with "Good Reason" (as defined herein) prior to the Due
Date,
the Company agrees to cancel and forgive the Loan and any
accrued interest and as such the Employee is not obligated
to
repay the Loan and any accrued interest, and will issue to
the
Employee a written release confirming the cancellation and
forgiveness of the debt and the related document attached as
Exhibit A. "Good Reason" is defined as any of the following
events which are not cured by Company within thirty (30)
days
after receipt of written notice of termination from Employee
based on: (1) a significant change in the nature or scope of
Employee's authorities, powers, functions or duties, or a
reduction in compensation; (2) a determination by a court
that
there has occurred a material breach by the Company of any
provision of this Agreement which is not remedied within 30
days after receipt by the Company of written notice from
Employee; or (3) a Change in Control as defined in Section
5.1(d).
v. Upon Employee's termination of this Agreement other than
for Good Reason prior to the First Anniversary Date of the
Commencement Date, the Loan shall become immediately due and
payable. Upon Employee's termination of this Agreement other
than for Good Reason after the First Anniversary but prior
to
the Second Anniversary, the remaining balance of the Loan
not
forgiven shall become immediately due and payable, in each
case without further action from the Company on the date
employment ceases. In the event that the Company is forced
to
expend legal or other fees in its effort to the collect the
amount due and payable under the Loan and this paragraph
5.2(b), Employee agrees that such costs shall be borne and
payable exclusively by Employee, and that such costs shall
begin to accrue interest at the rate of 8% from the date
Employee ceases to be in the employ of Company.
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<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
WITH RESPECT TO CERTAIN PORTIONS HEREOF
DENOTED WITH "***"
6. BUSINESS EXPENSES. Subject to 5.1(b), the Employee shall
be
reimbursed by the Company for those business expenses incurred
by him, which are
reasonable and necessary for the Employee to perform his duties
under this
Agreement, upon submission of such accounts and records as may
reasonably be
required by the policies established from time to time by the
Company.
7. CONFIDENTIALITY. Employee shall keep confidential, except as
the
Company may otherwise consent in writing, and not disclose or
make any use of
except for the benefit of the Company and in no way harmful to
the Company, at
any time either during the term of this Agreement or thereafter,
any trade
secrets, knowledge, data, intellectual property or other
information of the
Company relating to the Company and its businesses, including,
without
limitation, information regarding cost of new accounts, customer
lists, customer
activity rates and other customer information, technology
(hardware and
software), discoveries, processes, algorithms, mask works,
strategies, products,
processes, know how, technical data, designs, formulas, test
data, business
plans, marketing plans and advertising results or other subject
matter
pertaining to any business of the Company or any of its clients,
customers,
consultants, licensees or affiliates which Employee may produce,
obtain or
otherwise learn of during the course of Employee's performance
of services
(collectively "CONFIDENTIAL Information"). Employee shall not
deliver,
reproduce, or in any way allow any such Confidential Information
to be delivered
to or used by any third parties without the specific direction
or consent of a
duly authorized representative of the Company, except in
connection with the
discharge of his duties thereunder. The terms of this paragraph
shall survive
termination of this Agreement. Notwithstanding anything to the
contrary herein,
Employee shall not have any obligation to keep confidential any
information
that: (a) is required by law or regulat
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