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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into as of September 1, 1999 by and
between A.B. WATLEY GROUP INC., FORMERLY KNOWN AS INTERNET FINANCIAL SERVICES
INC., a Delaware corporation, with principal offices at 40 Wall Street, New
York, New York 10005 ("Employer") and PETER WIGGER, with an address at
245-10 Grand Central Parkway, Bellrose, NY 11426 ("Employee").
A. Employer, directly and through its subsidiaries, is engaged in the
business of providing electronic brokerage services and electronic
trading programs for use by professional and other retail customers
including allowing such customers to trade through their own home or
office computers, development of computer software and systems for
implementing the foregoing, operating a block trading desk for
institutional and other large accounts, disseminating financial and
trading information and services incident thereto ("Employer's
Business"); and
B. Employer wants to employ Employee, and Employee desires to accept such
employment, on the terms and conditions set forth in this Agreement, to
perform certain accounting and/or financial functions for Employer.
In consideration of the facts mentioned above, and of the covenants and
conditions set out below, the parties agree as follows:
1. Employment
(a) During the Term of Employment as defined in Section 2, Employer
agrees to employ Employee as Executive Vice President - Operations. In
the event that Employer deems it feasible, it may conduct Employer's
back office operations in a separate corporate entity, in which case
(i) Employee shall become President of such entity; and (ii) the
benefits of this Agreement may be assigned to such entity provided that
A.B. Watley Group Inc. remains liable as guarantor of Employer's duties
and obligations under this Agreement. The duties of Employee shall be
to increase the scope of Employer's back office operations and
functions, interact with clearing firms and review and potentially
implement, subject to the decision and discretion of Employer's
Chairman, President and/or board of directors, any decision respecting
clearing or self-clearing potential. Employee agrees to act in the
foregoing capacity, in accordance with the terms and conditions
contained in this Agreement.
(b) Employee shall devote substantially all of Employee's working time
to Employer's Business as conducted from time to time. Employee shall
render services, without additional compensation, in connection with
the operation of Employer's Business, including activities of
affiliates and subsidiaries of the Employer as may exist from time to
time. As used in this Agreement, the term "affiliate" shall mean any
entity or person that, directly or indirectly, is controlled or under
common control with Employer.
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2. Term
(a) The initial term of Employee's employment under this Agreement
shall commence on September 1, 1999 and end on September 30, 2002 (the
"Initial Term"). Thereafter, this Agreement shall be automatically
renewed and extended for consecutive one year renewal terms, unless
either party sends to the other party a notice of non-renewal at least
ninety (90) days prior to the expiration of the Initial Term or any
renewal term (the "Renewal Term"). The Initial Term and Renewal Term
are subject to earlier termination as set forth in subsection (b) below
and in Section 5. The actual term of employment is defined as "Term of
Employment."
(b) Notwithstanding, anything to the contrary set forth in this
Agreement:
(i) Employer shall have the right to terminate this Agreement
and Employee's employment hereunder effective on or after
February 1, 2000 if Employer is not fully self-clearing on or
prior to such date. While the parties have a present intent to
become self-clearing in an effort to achieve increased
profitability, the final decision shall be in the sole
discretion of Employer's board of directors, giving such
weight as the board may deem appropriate to the views of
Employee and other members of Employer's management. However,
this right of termination shall exist even if Employer
determines not to attempt to become a self-clearing firm. Such
right of termination may be exercised by Employer's giving ten
days prior written notice to Employee (so long as Employer is
not then fully self-clearing), following which this Agreement
shall terminate and all of Employee's rights hereunder shall
cease.
(ii) In the event that Employer is not fully self-clearing but
Employer's Board of Directors has both (A) made the final
decision to attempt to become self-clearing and (B) following
a change in constitution of the majority of Employer's Board
of Directors which is incident to a sale of at least 20% of
Employer's shares, the sale of a major portion of Employer's
assets or a corporate transaction with another entity,
Employer has decided to cease attempting to become
self-clearing, then Employer shall have the right to terminate
this Agreement and Employee's employment hereunder effective
at any time prior to October 1, 2000.
In the event of termination of this Agreement by Employer
pursuant to this Section 2(b) hereof, then:
(I) Annual base compensation shall be paid to Employee to
date of termination;
(II) The bonus payment under Section 3(b) shall be pro
rated for the number of months (or part thereof) that
the Agreement has been in existence; and
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(III) Employee's uninvested stock options shall terminate
except to the extent of (I) options to acquire 13,900
of the 50,000 shares scheduled to vest on October 1,
2000 if such termination of employment pursuant to
section 2(b) occurs on or prior to February 1, 2000
and (II) options to acquire 41,700 of the 50,000
shares scheduled to vest on October 1, 2000 if such
termination of employment pursuant to section 2(b)
occurs after February 1, 2000. In the event of such
termination, Employee shall have the right to
exercise options to acquire such 13,900 shares or
41,700 shares, as the case may be for a period of
sixty days following date of termination of
employment (despite the fact that such exercise
occurs prior to October 1, 2000); notwithstanding the
foregoing, in the event that Employee delivers a
customary New York form of general release to
Employer within ten (10) business days of termination
of employment pursuant hereto, Employee's right to
exercise such options to acquire 13,900 shares or
41,700 shares, as the case may be, shall be extended
from sixty (60) days following termination of
employment to one (1) year following termination of
employment.
(IV) In addition, so long as Employee covenants and agrees
in writing that he shall not compete with Employer's
Business through the close of business on October 1,
2000, and abides by such covenant and agreement,
Employee shall be entitled to payment of his annual
base compensation under Section 3(a) and bonus
payment under Section 3(b) calculated on a pro rata
basis through October 1, 2000.
3. Compensation
(a) Employer shall pay Employee as a base salary the aggregate sum of
$175,000 for the thirteen month period from September 1, 1999 through
September 30, 2000 and shall thereafter pay Employee an annual base
salary of $175,000 per annum for each twelve month period thereafter.
All such payments shall be made in equal monthly installments, in
arrears, or such other installments as may be consistent with the
payroll practices of Employer for its employees. After the Initial
Term, the amount of Employee's annual base salary shall be subject to
annual review by the Board of Directors of Employer; provided, however,
that in no event shall such base salary be less than $175,000 per
annum.
(b) Employee shall also receive a minimum bonus of $50,000 for the
thirteen month period of the Term of Employment and a minimum bonus of
$50,000 for each twelve month period thereafter, with such bonus
payable within thirty days following the expiration of each such period
or within ten business days of termination of employment, if sooner.
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(c) Employer's Compensation Committee shall review Employee's
performance on at least an annual basis to determine Employee's
eligibility for increases in base salary or bonus payments, as the case
may be.
4. Additional Employee Benefits
(a) (i) Employee shall, on September 20, 1999 and priced at the
closing price at that date, receive a grant of options under
Employer's 1998 Restated and Amended Stock Option Plan (the
"Plan") covering 150,000 shares of Employer's common stock at
an exercise price equal to the fair market value thereof under
said Plan as determined in good faith by Employer's board of
directors. The right to exercise such option shall vest, on a
cumulative basis, to the extent of 50,000 shares on October 1,
2000; an additional 50,000 shares on October 1, 2001; and the
balance of 50,000 shares on October 1, 2002. The terms of such
option grant shall be in accordance with the Plan and the
grant letter to be issued to Employee thereunder.
Notwithstanding the foregoing, in the event that for any
reason, Watley is not fully self-clearing while this Agreement
is in effect, or if Watley is self-clearing and the net
clearing cost to Watley of its ticket charges over any
consecutive six month period is not equal to or less than
$3.50 per ticket, then options to purchase 25,000 of the
shares under the Plan shall not be exercisable by Employee,
notwithstanding anything to the contrary contained in this
Agreement. Such 25,000 options shall be comprised of options
vesting October 1, 2000 to acquire 8,300 shares, options
vesting October 1, 2001 to acquire 8,300 shares, and options
vesting October 1, 2002 to acquire 8,400 shares, respectively.
For purposes hereof, net ticket charges shall be finally
calculated in good faith by Employer's senior management and
shall be comprised of all of the gross amounts and costs of
clearing including service bureau charges, fees, labor, error
account charges and employee costs but without taking into
account revenues or costs relating to margin or available
funds in a client's account, including, without limitation,
Loanet, NSCC Stock Loan Expense, DTC - Stock Pledges, banking
line items, interest and bank loan expense.
(ii) In the event that the net clearing cost to Watley of its
ticket charges over any consecutive six month period during
the term of this Agreement shall be equal to or less than
$3.00 per ticket, then Employee shall be granted, on and as of
the expiration of such six month period, options under the
Plan covering an additional 25,000 shares of Employer's common
stock, which options shall immediately be vested. The exercise
price thereof shall be the fair market value of such common
stock on the date of grant, as established by the Employer's
Board of Directors, and such options shall first become
exercisable, on a cumulative basis, to the extent of 50% on
the first anniversary of the date of grant and the remaining
50% on the second anniversary of the date of grant.
(b) Employer shall reimburse Employee for all expenses reasonably
incurred by
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Employee in connection with the performance of Employee's duties under
this Agreement against Employee's documented vouchers for such
expenses, which must be approved in writing prior to the incurrence of
such expense for any item over $1,000.
(c) Employee shall be entitled to not less than five (5) weeks vacation
each year no more than three (3) weeks of which shall be taken in any
consecutive six month period and other general medical and employee
benefit plans (including profit sharing or pension plans) as shall have
been established and are continuing for employees of Employer.
(d) Employer shall pay directly or reimburse Employee for lease
payments on the existing Lexus automobile leased by Employee (or any
substitute vehicle reasonably agreed to by Employer) and monthly garage
space in New York City for such vehicle throughout the term of this
Agreement.
5. Termination
(a) Employer may terminate this Agreement only for cause. In the event
of termination, Employee shall be paid salary to termination and upon
termination, a pro rated bonus amount. In addition, no vested options
shall be forfeited.
(b) "Cause" within the meaning of this Agreement shall mean:
(i) (intentionally omitted)
(ii) (intentionally omitted)
(iii) (intentionally omitted)
(iv) Failure by Employee to comply in any material respect
with the terms of this Agreement, if any, or any
written policies or directives of the Board as
determined by the Board in good faith in its sole
discretion, which has not been corrected by Employee
within 10 days after written notice from the Employer
of such failure.
(v) Physical incapacity or disability of Employee to
perform the services required to be performed under
this Agreement. For purposes of this Section 5(b)(v),
Employee's incapacity or disability to perform such
services for any cumulative period of one hundred
twenty (120) days during any twelve-month period, or
for any consecutive period of ninety (90) days, shall
be deemed "cause" hereunder.
(vi) Employee is convicted of, pleads guilty to, confesses
to any felony or any act of fraud, misappropriation
or embezzlement.
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(vii) Employee engages in a fraudulent act or dishonest act
to the damage or prejudice of Employer and its
affiliates or in conduct or activities damaging to
the property, business or reputation of Employer and
its affiliates.
(viii) If Employee is registered or licensed with the
National Association of Securities Dealers, Inc. or
any other regulatory authority, federal or state, and
has violated any material applicable rule of any such
regulatory authority.
(c) If Employer notifies Employee of its election to terminate this
Agreement for cause, this termination shall become effective at the
time notice is deemed to have been given in accordance with Section 9.
(d) This Agreement shall automatically terminate upon the death of
Employee.
6. Non-Solicitation, Non-Disclosure,
Shop Rights and Insider Trading
(a). (Intentionally omitted)
(b). Non-Solicitation.
For one year following termination of employment (unless termination is
due to breach by Employer), Employee covenants and agrees that Employee
will not, directly or indirectly, either for itself or for any other
person or business entity, (i) solicit any employee of Employer to
terminate his employment with Employer or employ such individual during
his employment with Employer and for a period of one (1) year after
such individual terminates his employment with Employer, or (ii) make
any disparaging statements concerning Employer, Employer's business or
its officers, directors, or employees, that could injure, impair or
damage the relationships between Employer or Employer's business on the
one hand and any of the employees, customers or suppliers of Employer's
business, or any lessor, lessee, vendor, supplier, customer,
distributor, employee or other business associate of Employer's
business; provided, however, that nothing herein shall restrict
Employee from responding truthfully to inquiries regarding such matters
pursuant to lawful court order provided that Employer has prompt prior
written notice of any such request.
(c). Non-Disclosure and Non-Use.
(i) Description of Confidential Information. For purposes of
this Section (c), Confidential Information means any information
disclosed during the Employee's employment, which is clearly either
marked or reasonably understood as being confidential or proprietary
including, but not limited to, information disclosed in discussions
between the parties in connection with technical information, data,
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proposals and other documents of Employer pertaining to its business,
products, services, finances, product designs, plans, customer lists,
public relations and other marketing information and other unpublished
information. Confidential Information shall include all tangible
materials containing Confidential Information including, but not
limited to, written or printed documents and computer disks and tapes,
whether machine or user readable.
(ii) Standard of Care. Employee shall protect the Confidential
Information from disclosure to any person other than other employees of
Employer who have a need to know, by using a reasonable degree of care,
to prevent the unauthorized use, dissemination, or publication of the
Confidential Information.
(iii) Exclusion. This Section (c) imposes no obligation upon
Employee with respect to information that: (a) was in Employee's
possession before receipt from Employer; (b) is or becomes a matter of
public knowledge through no fault of Employee; (c) is rightfully
received by Employee from a third party who does not have a duty of
confidentiality; (d) is disclosed under operation of law, except that
Employee will disclose only such information as is legally required and
give Employer prompt prior notice; or (e) is disclosed by Employee with
Employer's prior written consent.
(iv) Stock Trading. If the information disclosed or of which
Employee becomes aware is material non-public information about the
Employer, then Employee agrees not to trade in the securities of A.B.
Watley Group Inc., or in the securities of or any appropriate and
relevant third party until such time as no violation of the applicable
federal and state securities laws would result from such securities
trading.
(v) Return of Confidential Information. The Employee will
immediately destroy or return all tangible material embodying
Confidential Information (in any form and including, without
limitation, all summaries, copies and excerpts of Confidential
Information) upon the earlier of (i) the completion or termination of
the dealings between the Employer and Employee under the Agreement or
(ii) at such time that Employer may so request provided that such
return does not interfere with Employee's performance of his duties
hereunder.
(vi) Notice of Breach. Employee shall notify Employer
immediately upon discovery of any unauthorized use or disclosure of
Confidential Information, or any other breach of the Agreement by
Employee, and will cooperate with Employer in every reasonable way to
help Employer regain possession of Confidential Information and
prevents its further unauthorized use.
(vii) Injunctive Relief. The Employee acknowledges that
disclosure or use of Confidential Information in violation of the
Agreement could cause irreparable harm to the Employer for which
monetary damages may be difficult to ascertain or an inadequate remedy.
The Employee therefore agrees that the Employer will have the
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rights in addition to its other rights and remedies, to seek and obtain
injunctive relief from any violation of the Agreement.
(d). Shop Rights and Inventions, Patents, and Technology.
Employee shall promptly disclose to Employer any developments, designs,
patents, inventions, improvements, trade secrets, discoveries,
copyrightable subject matter or other intellectual property conceived,
either solely or jointly with others, developed, or reduced to practice
by Employee during Employee's Term of Employment in connection with the
services performed for Employer (the "Company Developments") and shall
treat such information as proprietary to Employer. Employee agrees to
assign to Employer any and all of Employee's right, title and interest
in the Company Developments and Employee hereby agrees that Employee
shall have no rights in the Company Developments. Any and all Company
Developments in connection with the services performed for Employer
pursuant to the Agreement are "works for hire" created for and owed
exclusively by Employer.
7. Representation and Indemnification
Employee hereby represents and warrants that Employee is not a party to
any agreement, whether oral or written, which would prohibit Employee from being
employed by Employer, and Employee further agrees to indemnify and hold
Employer, its directors, officers, shareholders and agents, harmless from and
against any and all losses, cost or expense of every kind, nature and
description (including, without limitation, whether or not suit be brought, all
reasonable costs, expenses and fees of legal counsel), based upon, arising out
of or otherwise in respect of any breach of such representation and warranty.
8. Injunctive Relief
The parties acknowledge that the provisions of paragraph 6 hereof are
of great value to the Employer, are special, unique and of extraordinary
character, and that in the event of a breach or a threatened breach of Employee
of any of Employee's obligations under paragraph 6 of this Agreement, Employer
will not have an adequate remedy at law. Accordingly, in the event of any breach
or threatened breach by Employee of the provisions of paragraph 6 hereof,
Employer shall be entitled to such equitable and injunctive relief as may be
available to restrain Employee and any business, firm, partnership, individual,
corporation or entity participating in such a breach of this Agreement. Nothing
in this Agreement shall be construed as prohibiting Employer from pursing any
other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Employee under this Agreement.
9. Notices
All notices shall be in writing and shall be delivered personally
(including by courier), sent by facsimile transmission (with appropriate
documented receipt thereof), by overnight
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receipted courier service (such as UPS or Federal Express) or sent by certified,
registered or express mail, postage prepaid, to the parties at their address set
forth at the beginning of this Agreement with Employer's copy being sent to
Employer at its then principal office. Any such notice shall be deemed given
when so delivered personally, or if sent by facsimile transmission, when
transmitted, or, if mailed, forty-eight (48) hours after the date of deposit in
the mail. Any party may, by notice given in accordance with this Section to the
other party, designate another address or person for receipt of notices
hereunder. Copies of any notices to be given to Employer shall be given
simultaneously to: Hartman & Craven LLP, 460 Park Avenue, New York, New York
10022, Attention: Edward I. Tishelman, Esq..
10. Miscellaneous
(a) This Agreement shall be governed in all respects, including
validity, construction, interpretation and effect, by New York law,
without giving effect to conflicts of laws. The parties hereby agree
that any action, proceeding or claim arising out of, or relating in any
way to, this Agreement shall be brought and enforced in the courts of
the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submit to such
jurisdiction, and waive any claim that such courts represent an
inconvenient forum.
(b) This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written
instrument signed by authorized representatives of the parties or, in
the case of a waiver, by an authorized representative of the party
waiving compliance. No such written instrument shall be effective
unless it expressly recites that it is intended to amend, supersede,
cancel, renew or extend this Agreement or to waive compliance with one
or more of the terms hereof, as the case may be. 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 such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power
or privilege. The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
(c) In view of Employer's need and desire to maintain a proper working
environment with suitable demeanor of its employees and in light of
Employer's sensitivity to the views of its customers and potential
customers and to regulatory bodies having jurisdiction over Employer's
business activities, Employer has instituted a policy of requiring
employees to be subject to, at Employer's reasonable discretion,
alcohol and drug testing procedures and requirements. Employee
specifically consents to the same, agrees to be subject to whatever
procedures may now or hereinafter be put in place covering such testing
and understands and agrees that Employee's consent to this is a
material inducement to Employer to enter into this Agreement and to
provide for the employment of Employee hereunder.
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(d) If any provision or any portion of any provision of this Agreement
or the application of any such provision or any portion thereof to any
person or circumstance, shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining provisions of
this Agreement, or the application of such provision or portion of such
provision as is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and such provision or
portion of any provision as shall have been held invalid or
unenforceable shall be deemed limited or modified to the extent
necessary to make it valid and enforceable; in no event shall this
Agreement be rendered void or unenforceable.
(e) The headings to the Sections of this Agreement are for convenience
of reference only and shall not be given any effect in the construction
or enforcement of this Agreement.
(f) This Agreement shall inure to the benefit of and be binding upon
the successor and assigns of Employer, but no interest in this
Agreement shall be transferable in any manner by Employee.
(g) This Agreement constitutes the entire agreement and understanding
between the parties and supersedes all prior discussions, agreements
and undertakings, written or oral, of any and every nature with respect
thereto.
(h) This Agreement may be executed by the parties hereto in separate
counterparts which together shall constitute one and the same
instrument.
(i) In the event of the termination or expiration of this Agreement,
the provisions of Sections 6, 7, 8 and 10 hereof shall remain in full
force and effect, in accordance with their respective terms.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
stated at the beginning of this Agreement.
A.B. WATLEY GROUP INC.
By: /s/ Harry Simpson
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/s/ Peter Wigger
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Peter Wigger - Employee
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