INDEX NO /2010 4NED NYSCEF ON DOC. NO. 1 RECEIVED NYSCEF: 09/15/2010. Plaintiffs,

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1 Q 1 * I INDEX NO /2010 4NED NYSCEF ON DOC. NO. 1 RECEIVED NYSCEF: 09/15/2010 c 1. 4 ZUKERMAN GORE BRANDEIS & CROSSMAN, LLP John K. Crossman Jeffrey L. Friesen 875 Third Avenue New York, New York Telephone: (212) Facsimile: (212) Attorneys for Plaintifs HENRY AUFFARTH, MARSHALL PERRIN, COSTAS ZIOZIS, CARL BRONSTEIN, JOSEPH BmTT, and LAWRENCE GORE, Index No. Plaintiffs, TO: Herald National Bank 623 FiRh Avenue, 1 1 th Floor New York, NY You are hereby summoned and required to serve upon plaintiffs attorney an answer to the complaint in this action within twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after service is complete if this summons is not personally delivered to you within the State of New York). In case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. The basis of the venue designated is C.P.L.R , as at least one of the parties resides in New York County. Plaintiff designates New York County as the place of trial. Supreme Court Records OnLine Library - page 1 of 29

2 Dated: New York, New York March 29,2010 ZUKERMANCrORE BRANDEIS. Friesen Telephone: (212) Attorneys for Plaintifs -2- Supreme Court Records OnLine Library - page 2 of 29

3 ZUKERMAN GORE BRANDEIS & CROSSMAN, LLP John K. Crossman Jeffiey L. Friesen 875 THIRD AVENUE NEW YON, NEW YORK (212) Attorneys for Plaintifs Henry Aufarth, Marshall Perrin, Costas Ziozis, Carl Bronstein, Joseph Barnett, and Lawrence Gore HENRY AUFFARTH, MARSHALL P EW, COSTAS ZIOZIS, CARL BRONSTEIN, JOSEPH BARNETT, and LAWRENCE GORE, Index No. - against - Plaintiffs, HERALD NATIONAL BANK, Defendant. Plaintiffs Henry Auffarth, Marshall Perrin, Costas Ziozis, Carl Bronstein, Joseph Barnett, and Lawrence Gore (collectively, Plaintiffs ), through their undersigned counsel, bring this complaint for breach of contract and violations of the New York Labor Law Sections 190 et seg. against the Defendant Herald National Bank ( Herald or the Bank ) as follows: 1. In an effort to compensate for massive management and equity-raising failures, in February 2010, Herald National Bank announced massive terminations of employees - terminations in which the Bank would refhe to pay the workers the wages they were owed. Herald s unheralded effort to pay for its mistakes on the backs of its employees put dozens of Supreme Court Records OnLine Library - page 3 of 29

4 highly skilled, hard-working bankers out on the street. This action is brought by six of those persons. 2. This is an action to remedy the massive, willful failure of Herald to pay its employees what it owes them. Specifically, this action seeks unpaid wages owed by Herald to the Plaintiffs, who are each former employees of Herald. Each of Plaintiffs was summarily terminated by Herald in February 2010, and despite the fact that each of the Plaintiffs is owed some combination of salary, guaranteed bonuses and separation pay, Herald has failed to pay it to them. In addition, Herald has failed to give the Plaintiffs stock options, stock, and other compensation to which they are clearly entitled under their employment contracts. Herald is well-aware that it is in violation of the Labor Law and its contractual obligations, but it has reneged on its obligations to its employees in bad faith, in a brazen attempt to avoid paying them. PARTIES 3. Plaintiff Henry Auffarth is an individual residing in New Rochelle, New York. Mr. Auffarth held the position of Senior Vice President and Senior Managing Director at Herald fiom March 2,2009 until February 12,2010, when Herald terminated him. 4. Plaintiff Carl Bronstein is an individual residing in Englewood, New Jersey. Mr. Bronstein held the position of Senior Vice President and Managing Director at Herald fiom March 23, 2009 until February 12,2010, when Herald terminated him. 5. Plaintiff Joseph Barnett is an individual residing in New York, New York. Mr. Barnett held the position of Senior Vice President and Managing Director at Herald from March 23,2009 until February 12,2010, when Herald terminated him. 6. Plaintiff Lawrence Gore is an individual residing in Chappaqua, New York. Mr. Gore held the position of Senior Vice President, Managing Director, Director of Wealth Supreme Court Records OnLine Library - page 4 of 29 2

5 Management at Herald from October 20,2008 until February 12,2010, when Herald terminated him. 7. Plaintiff Marshall Perrin is an individual residing in Westport, Connecticut. Mr. Perrin held the position of Senior Vice President and Managing Director at Herald from November 12,2008 until February 12,2010, when Herald terminated him. 8. Plaintiff Costas Ziozis is an individual residing in New York, New York. Mr. Ziozis held the position of Senior Vice President and Managing Director at Herald from November 3,2008 until February 12,2010, when Herald terminated him. 9. Defendant Herald National Bank is a national banking association with its principal place of business located in New York, New York. Prior to January 2009, Herald was known as Heritage Bank, N.A. Throughout this complaint Defendant is identified as Herald or the Bank..JURISDICTION 10. This Court has jurisdiction over this matter pursuant to N.Y. Const. Article 7, and N.Y. Judiciary Law Section 140-b. FACTS Herald s Recruitment of Plaintiffs 1 1. From 2007 through November 23,2008, Herald was not yet a licensed, operating Bank. During that time period, Herald was intended to be a start-up bank, and as the Bank worked to obtain a license to operate, the Bank s President and Chief Executive Officer, David Bagatelle, set out to hire a team of bankers to staff the Bank s operations. 12. Mr. Bagatelle had had previous experience with another start-up bank, Signature Bank. Mr. Bagatelle represented that he was one of the founders of Signature Bank, where he Supreme Court Records OnLine Library - page 5 of 29 3

6 r~ R i,- \ became Executive Vice President. In his meetings with prospective recruits for Herald, Mr. Bagatelle would emphasize the experience he gained at Signature Bank, and how that experience taught him about the necessary steps to start a new bank. 13. At various points in time starting in 2007 and continuing until the Bank opened its doors on November 24,2008, Mr. Bagatelle approached each of Plaintiffs. 14. At the time that Mr. Bagatelle sought to lure them to Herald, Plaintiffs Auffarth, Perrin, Ziozis, Bronstein, and Barnett (collectively, the Commercial Banker Plaintiffs ) were commercial bankers working at other banks. Messrs. Auffarth, Perrin and Ziozis were working at Citibank. Mr. Bronstein was working at BH Capital. Mr. Barnett was at Bank of America Merrill Lynch. When Mr. Bagatelle approached him, Mr. Gore was a wealth manager at UBS. 15. One of the first people that Mr. Bagatelle approached was Mr. Gore. Mr. Bagatelle told Mr. Gore that he understood that the wealth management business platform would be in development over the first three to four months after the Bank opened, and then there would still be some lag effect before the wealth management business could be built, because it depended in part on a pipeline of business from commercial banking customers, which had to be brought to the Bank first. 16. When Mr. Bagatelle turned his attention to the Commercial Banker Plaintiffs, in each case, he made a similar pitch to each of them. Mr. Bagatelle told Plaintiffs that he knew how to build a start-up bank because he had been a founder of Signature Bank. He told Plaintiffs that getting the Bank off the ground was a three-year proposition. He said that he expected it would take two years for the banking teams to break even and then become profitable in the third year. He also told the Commercial Banker Plaintiffs that that what the new bank needed was to Supreme Court Records OnLine Library - page 6 of 29 4

7 *, get the best people, and that in order to get the best commercial bankers, the Bank had to guarantee them two years of salary and guaranteed bonus. 17. Consistent with the Bank s three-year proposition, Mr. Bagatelle asked the Commercial Banker Plaintiffs to provide the Bank with three-year plans for their teams, including goals for loan and deposit amounts. They did so, either by preparing and submitting team plans themselves, or by asking Mr. Bagatelle to prepare pro-formas which the teams adopted. The Bank s Emalovmeat Apreements with Plaintiffs 18. Induced by the Bank s promises of guarantees of two years of salary and guaranteed bonus, each of the Commercial Banker Plaintiffs entered into a written employment agreement with Herald. Each such agreement was a contract of employment that specified a two year duration, salaries and the clear and unambiguous words guaranteed cash bonus - in addition to a promise to develop an incentive compensation plan, and other benefits. 19. The Bank opened for business on November 24,2008. The Auffarth Emplovment Avreement 20. Mr. Auffarth s contract (the Auffarth Employment Agreement ) is attached hereto as Exhibit A, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about December 29,2008, by Mr. Auffarth on January 12,2009, and provides for a start date of March 2, The Auffarth Employment Agreement is a contract of employment with a duration of two years. As set forth in the contract, for the two years commencing March 2,2009, Mr. Auffarth is entitled to an annual salary of $250, and a guaranteed cash bonus of $250, for each of those two years. Supreme Court Records OnLine Library - page 7 of 29

8 i... 1 I follows: follows: 22. The Auffarth Employment Agreement contains a separation pay provision as If you are terminated without cause during the first two years of employment, for each of those years Heritage will pay you a lump sum in a gross amount equal to one (1) times yow Base Salary and each Year s Bonus (minus applicable taxes and withholdings), less the amount of Base Salary and Bonus already paid to you for that year, (e.g. If you are terminated after 6 months, you would receive 18 months of both salary and bonus). This lump sum payment will be made to you within thirty (30) days of such termination. 23. The Auffarth Employment Agreement contains a stock option provision as You shall receive options to purchase no less than 10,000 shares of common stock of the Bank at an exercise price to be determined. The options shall have a term of ten years from the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options. The options shall vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. The Barnett Employment Agreement 24. Mr. Barnett s contract (the Barnett Employment Agreement ) is attached hereto as Exhibit B, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about March 10,2009, by Mr. Barnett on March 16,2009, and provides for a start date of March 23, The Barnett Employment Agreement is a contract of employment with a duration of two years, As set forth in the contract, dwing that two-year period, Mr. Barnett is entitled to an annual salary of $200, and a guaranteed cash bonus of $100, for each of those two years. 26. The Barnett Employment Agreement contains a stock option provision as follows: Supreme Court Records OnLine Library - page 8 of 29

9 1 8 t You shall receive options to purchase no less than 5,000 shares of common stock of the Bank at an exercise price to be determined. The options shall have a term of ten years fkom the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options. The options shall vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. 27. The Barnett Employment Agreement also contains a grant of shares as follows: You shall receive a grant of 10,645 [based on change in stock price of BAC upon resignation] shares of restricted stock vesting ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested shares shall become vested immediately upon a change in control of the Bank. The Bronstein Employment Ameement 28. Mr. Bronstein s contract (the Bronstein Employment Agreement ) is attached hereto as Exhibit C, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about March 10,2009, by Mr. Bronstein on March 13, 2009, and provides for a start date of March 23, The Bronstein Employment Agreement is a contract of employment with a duration of two years. As set forth in the contract, during that two-year period, Mr. Bronstein is entitled to an annual salary of $200, and a guaranteed cash bonus of $1 00, for each of those two years. follows: 30. The Bronstein Employment Agreement contains a stock option provision as You shall receive options to purchase no less than 5,000 shares of common stock of the Bank at an exercise price to be determined. The options shall have a term of ten years from the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options. The Supreme Court Records OnLine Library - page 9 of 29 7

10 s * options shall vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. The Gore Emdoyment Agreement 3 1. Mr. Gore s contract (the Gore Employment Agreement ) is attached hereto as Exhibit D, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about October 15,2008 and by Mr. Gore on October 20, The Gore Employment Agreement is a contract of employment with a duration of one year. As set forth in the contract, during that one-year period, Mr. Gore is entitled to an annual salary of $185, and a guaranteed cash bonus of $165, for each year. 33. The Gore Employment Agreement contains a stock option provision as follows: You shall receive options to purchase no less than 10,000 shares of common stock of the Bank at an exercise price of $ The options shall have a term of ten years from the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options, The options shall vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. 34. The Gore Employment Agreement also contains a grant of shares as follows: You shall receive a grant of 2,000 shares of restricted stock, issuable when the Bank opens for business and vesting ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested shares shall become vested immediately upon a change in control of the Bank. Supreme Court Records OnLine Library - page 10 of 29 8

11 r c b The Perrin Emwlovment Agreement 35. Mr. Perrin s contract (the Perrin Employment Agreement ) is attached hereto as Exhibit F, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about October 1,2008, and by Mr. Perrin on October 8, The Perrin Employment Agreement is a contract of employment with a duration of two years. As set forth in the contract, during that two-year period, Mr. Pein is entitled to an annual salary of $250, and a guaranteed cash bonus of $100, for each of those two years, as follows: 37. Moreover, the Perrin Employment Agreement contains a separation pay provision If you are terminated without cause as determined in the discretion of Heritage, during the first two full years of your employment, Heritage will pay you a lump sum in a gross amount equal to one (1) times your Base Salary and Bonus (minus applicable taxes and withholdings), less the amount of Base Salary and Bonus already paid during the first two years. This lump sum payment will be made to you within thirty (30) days of such termination. Heritage will provide you ninety (90) days notice of termination and that all unvested options shall vest immediately upon such termination. 38. The Perrin Employment Agreement contains a stock option provision as follows: You shall receive options to purchase no less than 10,000 shares of common stock of the Bank at an exercise price of $ The options shall have a term of ten years from the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options. The options shall vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. 39. The Perrin Employment Agreement also contains a grant of shares as follows: Supreme Court Records OnLine Library - page 11 of 29 9

12 1 u 1 You shall receive a grant of 2,500 shares or the number of shares calculated at the closing price of Citi stock on October 24,2008 times 1825 shares divided by 10, whichever is greater of restricted stock, issuable when the Bank opens for business and vesting ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested shares shall become vested immediately upon a change in control of the Bank or termination. The Ziozis Employment Agreement 40. Mr. Ziozis s contract (the Ziozis Employment Agreement ) is attached hereto as Exhibit E, and its terms are incorporated herein by reference. It was signed by Mr. Bagatelle on behalf of the Bank on or about October 1,2008, and by Mr. Ziozis on October 6, , The Ziozis Employment Agreement is a contract of employment with a duration of two years. As set forth in the contract, during that two-year period, Mr. Ziozis is entitled to an annual salary of $185, and a guaranteed cash bonus of $100, for each of those two years. as follows: 42. Moreover, the Ziozis Employment Agreement contains a separation pay provision If you are terminated without cause as determined in the discretion of Heritage, during the first two full years of your employment, Heritage will pay you a lump sum in a gross mount equal to one (1) times your Base Salary and Bonus (minus applicable taxes and withholdings), less the amount of Base Salary and Bonus already paid during the first two years. This lump sum payment will be made to you within thirty (30) days of such termination. Heritage will provide you ninety (90) days notice of termination and that all unvested options shall vest immediately upon such termination. 43. The Ziozis Employment Agreement contains a stock option provision as follows: You shall receive options to purchase no less than 10,000 shares of common stock of the Bank at an exercise price of $ The options shall have a term of ten years from the date of issuance, which shall be the Effective Date, and to the extent permitted by law, shall be treated as incentive stock options. The options shall Supreme Court Records OnLine Library - page 12 of 29 10

13 I h vest ratably over a period of three years, beginning on the first anniversary date of the Effective Date; provided however that all unvested options shall become vested immediately upon a change in control of the Bank. Plaintiffs Employment at the Bank Mr. Gore started working at the Bank on October 20,2008. Mr. Ziozis started working at the Bank on November 3,2008. Mr. Perrin started working at the Bank on November 12,2008. Mr. Auffarth started working at the Bank on March 2,2009. Mr. Bronstein and Mr. Barnett started working at the Bank on March 23,2009. From the outset, Mr. Bagatelle approved the projections and budgets that had been tendered by Plaintiffs. Mr. Bagatelle provided Plaintiffs with guidelines for maximum loan amounts and other pertinent information. Plaintiffs set about the task of meeting these budgets and goals. 50. Plaintiffs worked diligently to attract both deposit and loan customers to the Bank. They did what they were hired to do: help build the Bank. During the course of their employment, Mr. Bagatelle repeatedly assured each of them that they were on track. During that same period of time, Mr. Bagatelle assured each Plaintiff that the Bank would honor its commitments to them. 51. For example, in late 2009, Mr. Bagatelle told Messrs. Bronstein and Barnett that Rome wasn t built in a day by way of expressing his appreciation of a fact that Mr. Bagatelle had communicated to them as part of his inducement for them to join the Bank: that a start-up bank would take three years to reach profitability. Mr. Bagatelle also told Messrs. Bronstein and Supreme Court Records OnLine Library - page 13 of 29 11

14 Barnett at the end of December 2009, I m not the type not to honor my commitments. As another example, in or about January 2010, Mr. Bagatelle told Mr. Perrin that his team was doing fine. 52. In fact, Plaintiffs did their work very well. On multiple occasions, Plaintiffs bought loans to the Bank that were well within the criteria that had been identified by Mr. Bagatelle as the acceptable range for the Bank, only to be told that the Bank was so short on capital that it could not afford to fund the loans, even though they were within the Bank s own guidelines. The Bank s Termination of Plaintiffs and Breach 53. On February 12,2010, the Bank terminated Plaintiffs, along with many other Bank employees. The Bank s termination of Plaintiffs was accomplished for no reason other than to facilitate the Bank s scheme to avoid paying Plaintiffs wages and other compensation that they were owed. Although the Bank implied or hinted that some of Plaintiffs were being terminated for cause, in fact no cause for termination existed, and any such implication or assertion was sham, false, and baseless. 54. Despite demand by Plaintiffs, the Bank has refused to honor and has breached their employment contracts, and has not paid them wages (as defined in the New York Labor Law Section 190 et seq.) due and owing. 55. Mr. Auffarth was employed for 11.5 months of his 24-month employment contract. Accordingly, he is entitled to 12.5 months of salary and guaranteed bonus under his separation pay provision or, alternatively, under the terms of the agreement as a two-year employment contract. Mr. Auffarth has not been paid a penny of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $500, of guaranteed bonus, and 12.5 months of Supreme Court Records OnLine Library - page 14 of 29 12

15 salary, which is $260, He is also entitled to the value of 6, stock options (constituting two-thirds of 1 O,OOO), as set forth in his contract, none of which he has received. 56. Mr. Perrin was employed for 15 months of his 24-month employment contract. Accordingly, he is entitled to 9 months of salary and guaranteed bonus under his separation pay provision or, alternatively, under the terms of the agreement as a two-year employment contract. Mr. Perrin has been paid $100, of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $100, of guaranteed bonus, and 9 months of salary, which is $187, He is also entitled to the value of 10,000 stock options and 2,500 shares, as set forth in his contract, none of which he has received. 57. Mr. Ziozis was employed for months of his 24-month employment contract. Accordingly, he is entitled to 8.75 months of salary and guaranteed bonus under his separation pay provision or, alternatively, under the terms of the agreement as a two-year employment contract. Mr. Ziozis has been paid $100, of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $100, of guaranteed bonus, and 9.25 months of salary, which is $134, He is also entitled to the value of 10,000 stock options, as set forth in his contract, none of which he has received. 58. Mr. Bronstein was employed for 11 months of his 24-month employment contract. Accordingly, he is entitled to 13 months of salary and guaranteed bonus under the terms of the agreement as a two-year employment contract. Mr. Bronstein has not been paid a penny of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $200, of guaranteed bonus, and 13 months of salary, which is $216, He is also entitled to the value of 3, stock options (constituting two-thirds of 5,000), as set forth in his contract, none of which he has received. 13 Supreme Court Records OnLine Library - page 15 of 29

16 59. Mr. Barnett was employed for 11 months of his 24-month employment contract. Accordingly, he is entitled to 13 months of salary and guaranteed bonus under the terms of the agreement as a two-year employment contract. Mr. Barnett has not been paid a penny of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $200, of guaranteed bonus, and 13 months of salary, which is $216, He is also entitled to the value of 6, stock options (constituting two-thirds of 10,000) and 7,090 shares (constituting two-thirds of 10,635), as set forth in his contract, none of which he has received. 60. Mr. Gore was employed for 16 months. Accordingly, he is entitled to his Year 1 guaranteed bonus under the terms of the agreement as an employment contract in addition to a pro rata portion of the guaranteed bonus for the amount of time he worked past the end of Year 1. Mr. Gore has not been paid a penny of guaranteed bonus since starting work for the Bank. Thus, he is entitled to $216, of guaranteed bonus. He is also entitled to the value of 3, stock options (constituting one-third of 10,000) and shares (constituting onethird of 2,000), as set forth in his contract, none of which he has received. COUNT ONE (On Behalf of Auffarth; Breach of Contract) Plaintiffs repeat and reallege paragraphs 1 through 60. The Auffarth Employment Agreement is an enforceable contract. In the Auffarth Employment Agreement, Defendant agreed to pay Mr. Auffarth separation pay, to pay him salary and guaranteed bonus for two years, and to provide him with stock options, as set forth above. 64. Mr. Auffarth fully performed all of his obligations under the Auffarth Employment Agreement. Supreme Court Records OnLine Library - page 16 of 29 14

17 65. Defendant has failed to comply with the terms of the Auffarth Employment Agreement and is in breach of the Auffarth Employment Agreement. 66. As a direct, proximate and foreseeable result of Defendant s breach of contract, Mr. Auffarth has been damaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $760, in addition to the fair value of options to purchase shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance. COUNT TWO ( O K Plaintiff repeat and reallege paragraphs 1 through 66. For the period beginning on March 2,2009 and ending on February 12,2010, Mi. Auffarth was Defendant s employee for purposes of Article 6 of the New York Labor Law. 69. Defendant willfully failed to pay and in fact withheld wages (including separation pay) that were due and owing to Mr. Auffarth under the Labor Law. 70. Specifically, Defendant willfully failed to pay and in fact withheld $260, in salary and $500, in guaranteed bonus from Mr. Auffarth. 71. As a result of Defendant s improper deductions and withholdings, Mr. Auffarth was damaged in an amount to be determined at trial, but which presently exceeds $760, Mr. Auffarth is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law. 73. Defendant s failure to pay Mr. Auffarth s required wages was willhl, and Mr. Auffarth is entitled to collect an additional amount as liquidated damages equal to twenty- Supreme Court Records OnLine Library - page 17 of 29

18 i' 6 five percent of the total amount of the wages found to be due pursuant to Section 198 of the New York Labor Law. COUNT THREE (On Behalf of Penin; Breach of Contract) Plaintiffs repeat and reallege paragraphs 1 through 73. The Perrin Employment Agreement is an enforceable contract. 76. In the Penin Employment Agreement, Defendant agreed to pay Mr. Perrin separation pay, to pay him salary and guaranteed bonus for two years, to provide him with stock options, and to provide him with shares, as set forth above. 77. Mr. Perrin hlly performed all of his obligations under the Perrin Employment Agreement e 78. Defendant has failed to comply with the terms of the Perrin Employment Agreement and is in breach of the Perrin Employment Agreement. 79. As a direct, proximate and foreseeable result of Defendant's breach of contract, Mr. Perrin has been damaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $287, ($1 87, in unpaid salary and $100, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 10,000 shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, and the fair value of 2,500 shares of Herald. COUNT FOUR (On Behalf of Penin; Violation of New York Labor Law) 80, Plaintiff repeat and reallege paragraphs 1 through 79. Supreme Court Records OnLine Library - page 18 of 29 16

19 For the period beginning on November 12,2008 and ending on February 12, 2 10, Mr. Perrin was Defendant s employee for purposes of Article 6 of the New York Labor Law. 82. Defendant willfully failed to pay and in fact withheld wages (including separation pay) that were due and owing to Mr. Perrin under the Labor Law. 83. Specifically, Defendant willfully failed to pay and in fact withheld $187, in salary and $100, in guaranteed bonus from Mr. Pein. 84. As a result of Defendant s improper deductions and withholdings, Mr. Penin was damaged in an amount to be determined at trial, but which presently exceeds $287, Mr. Perrin is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law. 86. Defendant s failure to pay Mr. Perrin s required wages was willful, and Mr. Perrin is entitled to collect an additional amount as liquidated damages equal to twenty-five percent of the total amount of the wages found to be due pursuant to Section 198 of the New York Labor Law. COUNT FIVE (On Behalf of Ziozis; Breach of Contract) Plaintiffs repeat and reallege paragraphs 1 through 86. The Ziozis Employment Agreement is an enforceable contract. In the Ziozis Employment Agreement, Defendant agreed to pay Mr. Ziozis separation pay, to pay him salary and guaranteed bonus for two years, and to provide him with stock options, as set forth above. 90. Mr. Ziozis fully performed all of his obligations under the Ziozis Employment Agreement. Supreme Court Records OnLine Library - page 19 of 29 17

20 9 1. Defendant has failed to comply with the terms of the Ziozis Employment Agreement and is in breach of the Ziozis Employment Agreement. 92. As a direct, proximate and foreseeable result of Defendant s breach of contract, Mr. Ziozis has been damaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $234, ($134, in unpaid salary and $100, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 10,000 shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance. COUNT SIX (On Behalf of Ziozis; Violation of New York Labor Law) Plaintiff repeat and reallege paragraphs 1 through 92. For the period beginning on November 3,2008 and ending on February 12,2010, Mr. Ziozis was Defendant s employee for purposes of Article 6 of the New York Labor Law. 95. Defendant willfully failed to pay and in fact withheld wages (including separation pay) that were due and owing to Mr. Ziozis under the Labor Law. 96. Specifically, Defendant willfully failed to pay and in fact withheld $134, in salary and $100, in guaranteed bonus from Mr. Ziozis. 97. As a result of Defendant s improper deductions and withholdings, Mr. Ziozis was damaged in an amount to be determined at trial, but which presently exceeds $234, Mr. Ziozis is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law. 99. Defendant s failure to pay Mr. Ziozis s required wages was willful, and Mr. Ziozis is entitled to collect an additional amount as liquidated damages equal to twenty-five 18 Supreme Court Records OnLine Library - page 20 of 29

21 percent of the total amount of the wages found to be due pursuant to Section 198 of the New York Labor Law. COUNT SEVEN (On Behalf of Bronstein; Breach of Contract) Plaintiffs repeat and reallege paragraphs 1 through 99. The Bronstein Employment Agreement is an enforceable contract. In the Bronstein Employment Agreement, Defendant agreed to pay Mr. Bronstein salary and guaranteed bonus for two years, and to provide him with stock options, as set forth above Mr. Bronstein fully performed all of his obligations under the Bronstein Employment Agreement Defendant has failed to comply with the terms of the Bronstein Employment Agreement and is in breach of the Bronstein Employment Agreement As a direct, proximate and foreseeable result of Defendant s breach of contract, Mr. Bronstein has been darnaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $416, ($216, in unpaid salary and $200, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 3, shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance. COUNT EIGHT E 106. Plaintiff repeat and reallege paragraphs 1 through 105. Supreme Court Records OnLine Library - page 21 of 29 19

22 c 107. For the period beginning on March 23,2009 and ending on February 12,2010, Mr. Bronstein was Defendant s employee for purposes of Article 6 of the New York Labor Law Defendant willfully failed to pay and in fact withheld wages that were due and owing to Mr. Bronstein under the Labor Law Specifically, Defendant willfully failed to pay and in fact withheld $100, in guaranteed bonus from Mr. Bronstein. 1 10, As a result of Defendant s improper deductions and withholdings, Mr. Bronstein was damaged in an amount to be determined at trial, but which presently exceeds $100, Mr. Bronstein is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law Defendant s failure to pay Mr. Bronstein s required wages was willful, and Mr. Bronstein is entitled to collect an additional amount as liquidated damages equal to twenty- five percent of the total amount of the wages found to be due pwsuant to Section 198 of the New York Labor Law. COUNT NINE e 113. Plaintiffs repeat and reallege paragraphs 1 through The Barnett Employment Agreement is an enforceable contract In the Barnett Employment Agreement, Defendant agreed to pay Mr. Barnett salary and guaranteed bonus for two years, to provide him with stock options, and to provide him with shares, as set forth above Mr. Barnett fully performed all of his obligations under the Barnett employment Agreement. 20 Supreme Court Records OnLine Library - page 22 of 29

23 117. Defendant has failed to comply with the terms of the Barnett Employment Agreement and is in breach of the Barnett Employment Agreement, 118. As a direct, proximate and foreseeable result of Defendant s breach of contract, Mr. Barnett has been damaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $416, ($216, in unpaid salary and $200, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 6, shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, and the fair value of 7,090 shares of Herald. COUNT TEN (On Behalf of Barnett; Violation of New York Labor Law) 119. Plaintiff repeat and reallege paragraphs 1 through For the period beginning on March 23,2009 and ending on February 12,2010, Mr. Barnett was Defendant s employee for purposes of Article 6 of the New York Labor Law. 12 1, Defendant willfully failed to pay and in fact withheld wages that were due and owing to Mr. Barnett under the Labor Law Specifically, Defendant willfully failed to pay and in fact withheld $100, in guaranteed bonus from Mr. Barnett As a result of Defendant s improper deductions and withholdings, Mr. Barnett was damaged in an amount to be determined at trial, but which presently exceeds $100, Mr. Barnett is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law Defendant s failure to pay Mr. Barnett s required wages was willful, and Mr. Barnett is entitled to collect an additional mount as liquidated damages equal to twenty-five Supreme Court Records OnLine Library - page 23 of 29 21

24 COUNT TWELVE (a percent of the total amount of the wages found to be due pursuant to Section 198 of the New York Labor Law. COUNT ELEVEN (W 126. Plaintiffs repeat and reallege paragraphs 1 through The Gore Employment Agreement is an enforceable contract. In the Gore Employment Agreement, Defendant agreed to pay Mr. Gore guaranteed bonus for one year, to provide him with stock options, and to provide him with shares, as set forth above Mr. Gore fully performed all of his obligations under the Gore Employment Agreement Defendant has failed to comply with the terms of the Gore Employment Agreement and is in breach of the Gore Employment Agreement. 131, As a direct, proximate and foreseeable result of Defendant s breach of contract, Mr. Gore has been damaged and continues to be damaged in an amount to be proven at trial, but which presently exceeds $216, in unpaid guaranteed bonus in addition to the fair value of options to purchase 3, shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, and the fair value of shares of Herald Plaintiff repeat and reallege paragraphs 1 through 13 1, 133. For the period beginning on October 20,2008 and ending on February 12,2010, Mr. Gore was Defendant s employee for purposes of Article 6 of the New York Labor Law. Supreme Court Records OnLine Library - page 24 of 29 22

25 c 134. Defendant willfully failed to pay and in fact withheld wages that were due and owing to Mr. Gore under the Labor Law Specifically, Defendant willfully failed to pay and in fact withheld $216, in guaranteed bonus from Mr. Gore As a result of Defendant s improper deductions and withholding, Mr. Gore was damaged in an amount to be determined at trial, but which presently exceeds $216, Mr. Gore is entitled to an award of costs, expenses, and reasonable attorney s fees pursuant to Section 198 of the New York Labor Law Defendant s failure to pay Mr. Gore s required wages was willful, and Mr. Gore is entitled to collect an additional amount as liquidated damages equal to twenty-five percent of the total amount of the wages found to be due pursuant to Section 198 of the New York Labor Law. DEMAND FOR RELIEF WHEREFORFi plaintiffs demand judgment against the defendant as follows: A. On the first count, damages to Mr. Auffarth in an amount to be determined at trial, but presently exceeding $760, in addition to the fair value of options to purchase shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, with interest and costs. B. On the second count, damages to Mr. Auffarth in an amount to be determined at trial, but presently exceeding $760, , statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. Supreme Court Records OnLine Library - page 25 of 29 23

26 c..i C. On the third count, damages to Mr. Perrin in an amount to be proven at trial, but presently exceeding $287, ($187, in unpaid salary and $100, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 10,000 shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, and the fair value of 2,500 shares of Herald, with interest and costs. D. On the fourth count, damages to Mr. Perrin in an amount to be proven at trial, but presently exceeding $287,500.00, statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. E. On the fifth count, damages to Mr. Ziozis in an amount to be proven at trial, but presently exceeding $234, ($134, in unpaid salary and $100, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 10,000 shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, with interest and costs. F. On the sixth count, damages to Mr. Ziozis in an amount to be proven at trial, but presently exceeding $234,896.00, statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. G. On the seventh count, damages to Mr. Bronstein in an amount to be proven at trial, but presently exceeding $416, ($216, in unpaid salary and $200, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 3, shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, with interest and costs. Supreme Court Records OnLine Library - page 26 of 29 24

27 c 4 H. On the eighth count, damages to Mr. Bronstein in an amount to be proven at trial, but presently exceeding $100,000.00, statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. I. On the ninth count, damages to Mr. Barnett in an amount to be proven at trial, but presently exceeding $416, ($216, in unpaid salary and $200, in unpaid guaranteed bonus) in addition to the fair value of options to purchase 6, shares of common stock of Herald at an exercise price of $10.00, having a term of ten years from the date of issuance, and the fair value of 7,090 shares of Herald, with interest and costs. J. On the tenth count, damages to Mr. Barnett in an amount to be proven at trial, but presently exceeding $100,000.00, statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. K. On the eleventh count, damages to Mr. Gore in an amount to be proven at trial, but presently exceeding $165, in unpaid guaranteed bonus in addition to the fair value of options to purchase 3, shares of common stock of Herald at an exercise price of $10.00, having a tern of ten years from the date of issuance, and the fair value of shares of Herald, with interest and costs. L. On the twelfth count, damages to Mr. Gore in an amount to be proven at trial, but presently exceeding $2 16,825.00, statutory liquidated damages equal to twenty-five percent of the total amount of the wages found to be due, attorney s fees, interest, costs and expenses. Supreme Court Records OnLine Library - page 27 of 29 25

28 M. Such other, fkther or different relief as the Court deems just or equitable. Dated: New York, New York March 29,2010 ZUKERMA.I$ GORE B WEIS TO: The above named defendant. Attorneys for Plaint@ Henry AufSarth, Marshall Perrin, Costas Ziozis, Carl Bronstein, Joseph Barnett, and Lawrence Gore Supreme Court Records OnLine Library - page 28 of 29 26

29 HENRY AUFFARTH, MARSHALL PERRIN, COSTAS ZIOZIS, CARL BRONSTEIN, JOSEPH BARNETT, and LAWRENCE GORE, - against - Plaintiffs, HERALD NATIONAL BANK, Defendant. SUMMONS AND COMPLAINT ZUKERMAN GORE BRANDEIS & CROSSMAN, LLP ATTORNEYS FOR Plaintiffs Henry Auffarth, Marshall Perrin, Costas Ziozis, Carl Bronstein, Joseph Barnett, and Lawrence Gore OFFICE AND POST OFFICE ADDRESS 875 THIRD AVENUE NEW YORK, NEW YORK TELEPHONE Supreme Court Records OnLine Library - page 29 of 29