ar magazine: zentz complaint against fxc

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF KINGS

MICHAEL ZENTZ,

Plaintiff, Date Index No. Purchased:

\2-/3/rD-against { i

FOREIGN, SUMMONS

EXCHANGE CONCEPTS. LLC

AND JOHN R. TAYLOR

Defendant.

To the Person Named as Defendant Above:

PLEASE TAKE NOTICE THAT YOU ARE HEREBY

SUMMONED to answer the complaint of the plaintiff herein and to serve a copy of your

answer on the plaintiff at the address indicated below ·within 20 days after the service of

this Summons (not counting the day of the summons itself), or within 30 days after the

service is complete if the Summons is not delivered personally to you within the State of

New York.

YOU ARE HEREBY NOTIFIED THAT should you fail to answer, a judgment

will be entered against you by default for the relief demanded in the complaint.

Date: December 2, 2010

Michael Zentz

Plaintiff

888 Park Place

Brooklyn, New York 11216

917-971-1952

Defendants' Addresses: FOREIGN EXCHANGE CONCEPTS INTERi\lATIONAL,

LLC, 225 West 341h

Street, Suite 7\0, New York, New York 10122; and JOHN R. TAYLOR, (Place of Business) 225 West 34

1h Street. Suite 710, New York, New York

10122

Venue: Plaintiff designates Kings as the place of trial. The basis of this designation is

__Plaintiff's Residence in King County

2L-Defendant's Residence in Kings County

Other--Describe:

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF KINGS

MICHAEL T. ZENTZ, )

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Plaintiff, )

)

v. ) Index No. ;-:; 9<sV 2/10 INTERl'\JATIONAL FOREIGN EXCHANGE CONCEPTS, LLC., ("IFEC") AND JOHN R. TAYLOR

Defendants.

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COMPLAINT

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TO THE SUPREME COURT OF NEW YORK

COMPLAINT

Plaintiff, Michael Thomas Zentz, representing himself, for his Complaint against Defen-

dants, International Foreign Exchange. LLC ("IFEC," "FX-Concepts," "FXC"), and John R. Taylor,

Chief Operating Officer ("CEO") of "IFEC," respectfully shows and alleges as follows:

PRELIMINARY STATEMENT

1. The following are actions to recover damages arising from (1) the breach of a contract by

Defendants (Defendants refuse to pay Plaintiff trading commission he earned while in their em-

ploy), (2) the unjust enrichment of Defendants who accepted the services of Plaintiff with full

knowledge that he understood those services to be in exchange for the "Trading Commission," (3)

the em bezzlement, or otherwise di version, of corporate funds by a Defendant corporate officer for

personal use, resulting in the undervaluation of shareholder interest of Plaintiff (corporate officer

used corporate funds for services, vacations, and other inappropriate uses for himself and family

members and for Defendant's outside business enterprises, (4) the conversion of personal property

by Defendant "IFEC" (Defendant refuses to return all personal property of Plaintiff), (5) the breach

of a contract and Fiduciary Duty by Defendants with regard to the ownership of corporate stock

(Defendants refuse to pay "Dividend" (a.ka. "Keyman Bonus") promised to employee shareholders

as consideration for the purchase of corporate stock), (6) the wrongful termination of employment

of plaintiff by Defendants as Defendants (a) breached explicit and implied agreements of continued

employment, (b) breached agreements to follow specific procedures in the event that termination of

employment is considered, and as (c) Defendant John R. Taylor made false and malicious misrepre-

sentations that resulted in the termination of Plaintiffs employment, (7) the intentional infliction of

1

emotional injury inflicted upon plaintiff by Defendants (Defendants engaged in a deliberate course

of action to cause Plaintiff emotional and financial harm in an effort to, among other things, (a)

force Plaintiff into a settlement agreement to insulate the corporation and individuals from further

legal liability, (b) retaliate against Plaintiff for raising concerns about various unethical and possibly

illegal practices at the firm, and (c) to force Plaintiff into a confidentiality agreement that would

preclude Plaintiff from exercising rights to publicly discuss past unethical and possibly illegal be-

havior by the Corporate Officers), and (8) the tortious interference with business advantage (the

intentional impeding of business relationships by Defendants, Defendants, under fraudulent

pretenses, intentionally impeded the communication and relationship of Plaintiff with other

associates with full knowledge that such contacts are vital in the financial industry for, among other

things, the search for future employment).

THE PARTIES

2. A resident of New York City (Brooklyn), Plaintiff worked for Defendants as an Analyst

from on or about March 1997 until on or about December 2000, and as a Trader and Portfolio Man-

ager from on or about January 2001 until December 14, 2007. As a Trader and Portfolio Manager,

the Plaintiff managed the Fixed Income futures portfolio in the firm's family of investment funds.

3. Upon information and belief, Defendant International Foreign Exchange Concepts Incor-

porated (a.k.a. FX-Concepts, hereafter "IFEC," but also known as "FX-Concepts," and "FXC") was

and is a corporation organized and existing under the laws of the State ofNew York, with an office

and headquarters and its principal place of business located at 225 West 34th

Street, Suite 710, New

York, NY 10122. Defendant "IFEC" is a hedge fi.md-type entity that engages in the investment of

funds for mostly institutional clients in primarily the foreign exchange and interest rate markets.

4. Upon information and belief, Defendant John R. Taylor, an individual, was and is the

Chief Executive Officer ("CEO") of "IFEC," with his principal place of residence located in Man-

hattan, New York. Taylor is also, on information and belief, the majority shareholder of"IFEC,"

and his principal place of employment is 225 West 34th

Street, Suite 71 0, New York, New York

10122.

5. Given the refusal of"IFEC" and Defendant corporate officers to pay Plaintiff back pay

that was earned by Plaintiff and owed to Plaintiff by "IFEC," Plaintiff is unfortunately unable to

afford the expensive of an investigation into more detailed background information on Defendants

at this time. Plaintiff anticipates curing any defects to this background information following dis-

covery.

JURISDICTION AND VENUE

6. This court has personal and subject matter jurisdiction over this case because (a) Plaintiff

resides in the City and State of New York, and in the County of Kings County, (b) upon information

and belief, Defendant "IFEC's" principal place of business is located in the City and State of New

York, (c) upon information and belief, Defendant John R. Taylor's principal place of business, and

his residence, is located in the City and State of New York, and (d) the disputes raised hereby in-

volve (i) Defendants' breach of an employment contract for the performance of services that was

primarily negotiated and entirely performed in the City and State of New York; (ii) the Breach of

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Fiduciary Duty by Defendant 10hn R. Taylor as corporate officer for "IFEC," a company headquar-

tered in New York City and incorporated in New York State; (iii) the tortious acts largely per-

formed by Defendants in New York, New York, which inflicted injuries on Plaintiff in the city and

state of New York, and (iv) violations by Defendants of New York State securities law and New

York state labor law.

7. Venue is proper in this Court because (a) Plaintiff, at the time these transactions occurred,

did reside in Brooklyn, New York of Kings County and because the Plaintiff currently resides in

Brooklyn, New York of Kings County; (b) upon information and belief, Defendant "IFEC" is a

New York corporation with its principal office located in New York, New York; (c) upon informa-

tion and belief, Defendants 10hn R. Taylor is a New York City and New York State resident with

principal place of employment in New York, New York. Section 503(a) ofthe CPLR provides, in

part, "the place of trial shall be in the county in which one of the parties resided when it was com-

menced."

8. Venue is also proper given that (a) on information and belief, "IFEC" is an investment

management corporation wi th billions of dollars under management and hundreds of millions of

dollars of revenue on arumal basis, generating hundreds of millions of dollars of net income per year

for the corporation, and (b) as is true for Plaintiff, venue is only a short, $2.25 subway ride from the

corporate headquarters, and therefore (c) venue is not even an inconvenience much less a hardship;

and venue is proper given that (d) on information and belief (i) Defendant 10hn R. Taylor earns on

average between $50 million and $250 million annually, and (ii) has as his principle place of busi-

ness the "IFEC" headquarters located in New York, New York and (iii) resides in New York, New

York, only a short, $2.25 subway ride away from the place of venue, and therefore venue is not

even an inconvenience much less a hardship; and as (d) "IFEC" has retained one of the largest law

firms located in New York, New York, located only a short, $2.25 subway ride away from the place

of venue, and therefore venue is not even an inconvenience much less a hardship.

SUMMARY OF FACTS

PLAINTIFF'S EMPLOYMENT AND COMPENSATION

9. On or about February 1997, following interviews with Plaintiff, "IFEC" sent Plaintiff an

offer of employment dated February 26, 1997 ("Offer Letter"). Per the "Offer Letter" and in pre-

liminary interviews, Plaintiff was offered a pay package that would consist of at least three compo-

nents, (a) a starting salary in the amount of $60,000 a year, (b) a non-refundable draw of $5,000,

and (c) a Bonus/Commission tied to sales of subscriptions to the research letter that Plaintiff would

be involved in producing and marketing (CompI. Ex. A).

10. In addition to the bonus/commission tied to subscriptions of the research letter, the "Of-

fer Letter" made mention of the possibility of "Discretionary Bonus payments," but the letter noted

that these "Discretionary Bonus payments" were to be paid at the discretion of management.

11. Per (a) the clear language of the "Offer Letter," (b) the ongoing relationship and discus-

sions between the Parties over the next ten years, (c) the supporting documentation, and (d) the in-

ternal consistency of the "Offer Letter" itself, "Discretionary Bonus payments" were understood to

be only one of many types of bonuses, or extra-salary remuneration, that would be negotiated be-

tween "IFEC" and its employees. For example, within the same "Offer Letter" that the "Discretion-

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ary Bonus payments" clause appears, "IFEC" also writes of the "Bonus/Commission" percentage to

be included the Plaintiffs compensation, and this is clearly not discretionary.

12. On or about March 1997, on reliance of the promises made during the interviews and in

the offer of employment, the Plaintiff tendered his resignation at Thomson Financial Services and

accepted employment at "IFEC" in the position of "Analyst."

13. During the following two to three years after accepting employment at "IFEC," Plaintiff

received regular complimentary progress reports, as well as a gradual increase in base salary to ap-

proximately $89,000 annually. Plaintiff also received Bonus/Commission payments tied to sub-

scriptions of the research letter.

14. During the following two to three years after accepting employment at "IFEC," Plaintiff

also received periodic "Discretionary Bonus" payments in amounts approximately between $5,000

and $10,000, or in other words, less than 15% of total compensation.

15. On or about the summer of2000, Plaintiff was asked by "IFEC," and Plaintiff agreed, to

take over the management of the fixed income futures investment fund following the termination of

employment of the Information Teclmology ("IT" or "Computer") person who had previously been

managing the fund. At that time the fund was relatively small by industry standards, at $2.5 mil-

lion.

16. Given the change in responsibilities and position, Defendant and Plaintiff agreed to

abandon the original compensation and employment agreement. The old compensation package

was scrapped at the beginning of 200 1, and the parties mutually agreed to a nondiscretionary com-

pensation package including a base salary and an incentive scheme tied to management and asset

fees.

17. Soon after January 2001, "IFEC" decided to aggressively promote the fixed income fu-

tures fund and in doing so brought about several changes, including a large increase in the amount

of funds under management and the application of more complex trading models.

18. Simultaneous with this decision, the Defendants and the Plaintiff agreed to abandon the

second employment and compensation agreement. The third agreement that followed included a

formal change of position to "Portfolio Manager." The terms of the agreement also included a

complete restructuring of the Plaintiffs compensation package.

19. The Plaintiffs new, primary duty was to manage the fixed income fund, as evidenced

by his change in job title and description, and as evidenced by his completely restructured compen-

sation package which shifted the majority of the Plaintiff s compensation to personal performance

incentives tied to the management of the fixed income futures fund and to increased responsibilities

and duties that were tied to the size of the funds under management. Given that Plaintiff had be-

come so proficient at his previous "Analyst" responsibilities, Plaintiff agreed to continue to perform

his previous responsibilities, with the understanding that his salary reflected additional compensa-

tion for essentially performing the functions of two positions.

20. Further evidence that the Plaintiff s compensation and job title had significantly

changed was the fact that the Plaintiff no longer received the Bonus/Commission that was tied to

subscriptions to the research letters.

21. Under the terms of the new agreement, the Plaintiffs annual salary was increased to ap-

proximately $95,000, and the Plaintiff and Defendants entered into an agreement to further compen-

sate the Plaintiff based on Plaintiffs new responsibilities managing the fixed income futures fund.

22. Also under the terms of the new agreement, this restructured compensation program

was instituted through a formula that included, among other things, the amount of addition return

the Plaintiff was able to generate over and above the hypothetical model returns. Given that one of

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the primary duties of the Portfol io Manager was to execute the firm's transactions for the fund, and

given that these transactions as a rule generally resulted in transaction costs that were expensed to

the Plaintiff's Profit and Loss statement, the incentive programs factored in the acknowledgement

of such costs by compensating the Portfolio Manager even if he incurred a moderate loss or broke

even. For example, breaking even against the "Model Returns" meant that the Portfolio Manager

had actually saved the firm significant transaction costs. Therefore a mechanism for paying for this

positive performance was factored into the design of the formula.

23. Pay tied to management of the fixed income futures fW1d, as was true for all Portfolio

Managers at the firm, was also tied to the amount of the total fW1ds W1der management. This was

fair and equitable as it was agreed by the Parties, and is commonly W1derstood in the industry, that

management of investment funds as a Portfolio Manager, in addition to income generating or cost

saving duties, also entails many other maintenance and marketing assistance functions that are not

directly reflected in the fW1d's percentage returns, but which nevertheless are very important and

increase proportionally with an increase in the amount of funds under management.

24. Plaintiff was then compensated under this new agreement for approximately the next 6

to 7 years. Every six months, Plaintiff met with an officer of the firm, usually the President, Phil

Simotas, for a periodic review of the compensation formula. Minor changes to the formula would

be discussed in these meeting, and agreed to, but the core features of the compensation formula re-

mained the same. These features included the likelihood of a relatively smaller annual base salary

versus the personal performance incenti ves and pay tied to the maintenance duties of the fixed in-

come fund. Compensation apart from the base salary that was instead tied to the management of the

funds was known as the "Trading Commission" (sometimes informally called a "Bonus"), and it

was calculated and reported to the Plaintiff every six months in spreadsheet form (See e.g., Compl.

Ex. B).

25. In the securities and investment fund industry, it is a regularly observed usage that the

Commission or Bonus component of a trader, broker, or portfolio manager's salary is the more im-

portant component and the source of a large majority of the compensation.

26. It is also understood that traders, brokers, and portfolio managers accept a relatively

smaller base salary, given the extent of the duties and responsibilities they assume, as a trade-off for

the potential upside potential of tying to the remainder of the compensation package to sales, size of

assets under management, and/or investment performance. The employer prefers such a scheme

because, as consideration, it incentivizes the employee trader, sales person or portfolio manager to

spend more time and energy to increase performance. As further consideration, the company also

shifts a great deal of risk to the shoulders of the employee. The portfolio manager therefore accepts

the risk against the promise of higher compensation based on personal performance and/or personal

maintenance linked to the size of the funds under management.

27. Plaintiff successfully performed his duties and obligations under the new compensation

program for the following 6 to 7 years, including the period in question here (the second half of

2007), earning the "Trading Commission" component of his salary which was payable shortly after

the Plaintiff's dismissal.

28. The "Trading Commission" component constituted an integral part of Plaintiffs com-

pensation package.

29. As is evident in Compl. Ex. B, a true and correct copy of a "Trading Conunission" cal-

culation sheet issued to Plaintiff by "IFEC, in addition to the completely overhauled pay structure,

the Plaintiff also continued to be eligible for periodic "Discretionary Bonuses," similar to the old

compensation package, but this compensation single item was completely distinct from the agreed

5

compensation tied to the management of the fixed income futures fund, as is evidenced by its sepa-

rate line item status in the compensation calculations (see e.g. Compl. Ex. B).

30. Despite full knowledge and agreement of the facts alleged in paragraphs 1 through 28,

Defendants unilaterally claimed that payment of the "Trading Commission" was discretionary based

on the willful misconstruction of the "Discretionary Bonus payments" clause in the "OfIer Letter."

31. Defendants refused to pay Plaintiff his rightfully earned and owed wages and compensa-

tion despite the fact that Defendants solicited and had already accepted and received the services.

32. Defendants withheld Plaintiffs rightfully earned and owed compensation based on a

willful misconstruction of the "Discretionary Bonuses" clause in the abandoned initial employment

agreement memorialized in the "Offer Letter" dated February 26, 1997 (see "Offer Letter"). This

purposeful misconstruction wrongfully conflated all additional forms of payment by the firm other

than the base salary to be "Discretionary Bonuses," rather than the actual practice at the finn, in

which there were a number of compensation schemes, commissions and types of bonuses, of which

"Discretionary Bonuses" was just one kind.

33. Defendants' construction of the "Discretionary Bonuses" clause in the abandoned initial

employment agreement or "Offer Letter" (see Compl. Ex. A) is directly contradicted by Defen-

dants' own compensation calculations that list "Discretionary Bonus" as a separate line item (see

Compl. Ex. B), and by the four corners of the "Offer Letter" in which the "Discretionary Bonus"

clause appears (Compl. Ex. A), in so much as the "Offer Letter" also details a compensation pack-

age of base salary plus an additional CommissionIBonus linked to subscriptions to the research let-

ter.

PLAINTIFF'S OWNERSHIP OF '{FEe' SHARES AND DIVIDEND (KEYMAN BONUS)

34. On June 18,2003, Defendant "IFEC" and corporate officers issued a letter to employees

attempting to induce the purchase of "IFEC shares." (Compl. Ex. C).

35. On information and belief, the shares for these purchases were primarily to come from

the stock owned and held by the company's founder, Defendant John R. Taylor.

36. On information and belief, at least one motivation of this dumping of the shares on the

employees was that it constituted a method by which Defendant John R. Taylor could cash out and

convert a portion of his ownership into useable funds, and to reduce the risk of Defendant John R.

Taylor in having such a large portion of is assets tied up in the company.

37. On information and belief, given that the company had, at least twice in the memory of

current employees, been near to being unable to continue operations due to cash shortages, some

additional consideration was needed to induce employees to invest in shares of the company.

38. Among other forms of consideration, a dividend, or "Keyman Bonus" was promised to

employees who purchased shares. A true and correct copy of the share offering is attached hereto

as Complaint Exhibit "e." As indicated in CompI. Ex. C, the employee was merely required to buy

shares to satisfy his portion of the bargain. The consideration for this purchase as promised by

"IFEC" and its officers was the promise of inclusion of the shareholder in a pool from which the

dividend was paid.

39. It was the usual practice of Defendants to issue these "Keyman Bonuses/Dividends"

shortly after the start of the new year, for those shareholders who were owners during the July-

December period of the previous year. These payments were not made any later than the end of

March.

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40. On information and belief, Defendants made such distributions of the "Keyman Bo-

nuslDividend" in the early part of2008.

41. Plaintiff was owner ofIFEC shares during the biannual period of July - December 2007,

and also into late April of2008.

42. Defendants refused to pay Plaintiff the "Keyman BonuslDividend Plaintiff that was

owed to Plaintiff despite repeated requests.

43. Plaintiff was owed "Keyman BonuslDividend", as Plaintiff satisfied his half of the bar-

gain by (a) purchasing "IFEC" shares, and (b) maintaining ownership of those shares through the

usual and ordinary dividend payment period.

CORPORATE OFFICER'S EMBEZZLEMENT, OR OTHERWISE 'DIVERSION'

OF CORPORATE FUNDS FOR PERSONAL USE

44. On or about May of2009, Plaintiff received information by way ofa current employee

that the CEO of"IFEC," Defendant John R. Taylor, had converted corporate funds for personal use

(among other things, to pay for a vacation for a niece).

45. This information gave explanation to previous discussions that the Plaintiff had over-

heard between "IFEC's" Chief Financial Officer ("CFO") Hugh Tilney and the company's Presi-

dent, Philip Simotas. In these discussions, Hugh Tilney informed Philip Simotas of discussions he

claimed to have had with Defendant John R. Taylor and Taylor's inappropriate use of corporate

funds to purchase goods and services for himself and for his family members, (citing for example,

car services for his wife and son to school and to shopping, and the application of expenses that

were more appropriately applied to other, money losing companies founded and run by John R.

Taylor against the profits of"IFEC"). Hugh Tilney claimed that he had warned Defendant John R.

Taylor that investors would be upset if they learned of this behavior.

46. Upon receiving the information by way of the current employee, on or about June 7,

2009, Plaintiff infolmed counsel to "IFEC," Attorney Philippe Salomon of Wilkie, Farr, and Galla-

gher, of this information and of Plaintiffs rights to an accounting and compensation of any lost

value as a shareholder.

47. Upon communication of the information concerning the embezzlement of corporate

funds, neither "IFEC's" counsel, nor John R. Taylor, nor any other officers of "IFEC," have denied

the allegations.

CONVERSION OF PERSO AL PROPERTY

48. As a part of the Plaintiffs new responsibilities as a Portfolio Manager, Plaintiff was ex-

pected to manage the fixed income futures portfolio on a 24-hour basis. That is, the portfolio was

not "handed off' to another individual during overnight trading hours in New York, despite the fact

that management of the portfolio required monitoring and trading in overseas markets like Asia and

Europe. This, in effect, required the portfolio manager to work to some degree 24 hours a day,

every day of the business week.

49. This expectation for Portfolio Managers to be on 24-hour duty was underscored by the

description of the duties of the Portfolio Managers to prospective clients. Prospective clients doing

due diligence often asked who took over portfolio manager's duties during overnight trading and

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hours, and the standard response to this question was that the Portfolio Managers operated on a 24-

hour basis.

50. Due to the 24-hour nature of the job, Portfolio Managers were required to maintain some

market monitoring capability and equipment at home, most of which the Plaintiff maintained at his

own expense and for which the Plaintiff has yet to be reimbursed. It was also understood that Port-

folio Managers, given that they were on duty 24-hours, could maintain some personal effects and

computer files at the "IFEC" office (not unlike any employee).

51. Upon termination, some, but not all, of these personal files and effects were returned to

the Plaintiff. Requests forwarded through the Defendants' counsel for the remainder of these per-

sonal belongings were ignored.

WRONGFUL TERMINATION OF PLAINTIFF

52. "IFEC" is a corporation employing in excess of twenty individuals in its New York of-

fice and over 40 people worldwide.

53. Defendants made various assurances over the course of Plaintiffs decade-plus employ-

ment, through written and oral medium, that Plaintiff was a "long-term employee," that this status

afforded privileges beyond at-will employment, including procedural protections in the event that

dismissal is considered, including but not limited to dismissal only for "good cause." Nevertheless,

on December 14,2007, Defendants terminated Plaintiffs in absence of any of these procedural pro-

tections and in breach of explicit and implied promises.

54. In exchange for these assurances, Defendants extracted from Plaintiff promises of com-

mitment to continued employment as consideration, and the purchase of"IFEC" shares.

55. On reliance of assurances of procedural protections in the event that dismissal was con-

sidered, Plaintiff confirmed commitment to remain employed at "IFEC," Plaintiff rejected opportu-

nities of employment at other hedge funds and similar firms, and Plaintiff purchased "IFEC" shares.

WRONGFUL TERMINATION OF PLAINTIFF DUE TO FALSE STATEMENTS

AND WILLFUL MISREPRESENTATIONS

56. During the course of Plaintiffs employment at "IFEC," Plaintiff developed a painful

medical condition.

57. At times, the pain from this medical condition would cause Plaintiff some moderate

anxiety and irritability.

58. Defendant John R. Taylor was aware of this medical condition and its side effects.

59. Upon information and belief, Plaintiffs discharge from his position was brought about

by Defendant John R. Taylor's willful and malicious acts, and his false and misleading statements

and charges made to the human resource manager related to the medical condition, included but not

limited to at least one instance in which Plaintiff knowingly made a false report to human resources

and to the police that Defendant had threatened another employee.

60. On information and belief, the employee who was allegedly threatened (he is now a for-

mer employee) reported to Defendant that Plaintiff did not threaten him.

61. Upon information and belief, Defendant knew that the statements and charges made by

him against plaintiff were false and malicious and were being made for the purpose of causing

plaintiffs discharge from his position.

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INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

62. Prior to December 14,2007, on numerous occasions, Defendants and other corporate of-

ficers, including Jonathan Clark, had related to Plaintiff and other employees their past experiences

of being successfully sued for sexual harassment and other employment related lawsuits.

63. Prior to December 14,2007, on numerous occasions, Defendant John R. Taylor, had in-

dicated an almost obsessive concern over potential future lawsuits.

64. On December 14,2007, "IFEC" terminated Plaintiffs employment at "IFEC" following

over a decade of service by Plaintiff.

65. On information and belief, in the immediate days and weeks following the Plaintiffs

dismissal, Defendants did conduct a scheme to intentionally inflict emotional distress and pain upon

plaintiff in an effort to coerce Plaintiff into accepting a settlement agreement which largely only of-

fered to pay Plaintiff wages that he had already earned, and which notably would have signed away

Plaintiffs right to future legal remedies. Defendants' acts were motivated, by among other things

intentions to retaliate against Plaintiff for exposing and criticizing past unethical and possibly illegal

acts by Defendants.

66. On information and belief, in an effort to coerce Plaintiff into signing the settlement

agreement, and to retaliate for the Plaintiff s criticisms of past unethical and possibly illegal behav-

iors by Defendant John R. Taylor and various corporate officers, Defendants engaged in a course of

conduct to intentionally inflict emotional distress upon Plaintiff, a course of conduct which in-

cluded, but was not limited to, the following acts: (a) purposely initiating the creation a false police

report; (b) the willful withholding of the rightfully earned wages of Plaintiff in an attempt to cause

financial distress; (c) the intentional delay and obstruction of the reimbursement of business ex-

penses due to the plaintiff in order to run-up Plaintiff s legal bills (where during the past decade of

employment, the reimbursement of such expenses had otherwise been a routine matter); (d) the or-

dering of friends and business associates of the Plaintiff to cease contact with Plaintiff under the

implied threat of retaliation; and (e) the willful misrepresentation of facts in the case at hand by the

Defendants and possibly also by Defendant's counsel.

67. On information and belief, Defendants engaged in obstruction and possible destruction

of evidence in order to keep knowledge of the Defendants' wrongful behavior from Plaintiff. This

obstruction included, but was not limited to, the withholding of Plaintiff s rightfully earned and

owed wages (in order that Plaintiff could not afford counselor an investigator), the destruction of

evidence, and the ordering of all employees to cease contact with Plaintiff under the implied threat

of retaliation.

68. Plaintiff recently discovered, by way of an ex-employee who has now left the firm, of

key evidence as to the intentional nature of Defendant's infliction of emotional distress upon the

Plaintiff. This evidence was otherwise purposefully and willfully concealed by Defendant in order

to hide their wrongdoing and legal liability.

TORTIOUS INTERFERENCE WITH PROSPECTIVE ADVANTAGE

69. On information and belief, Defendant "IFEC" and its corporate officers, including De-

fendant John R. Taylor, ordered employees to refrain from contact with Plaintiff.

9

70. Among other purposes, Defendant "IFEC" and its corporate officers, including Defen-

dant John R. Taylor, issued the order referred to in paragraph 64 to employees with full knowledge

that contacts with former coworkers in hedge fund industry are crucial to finding to new work and

to the continued success in the industry and that such interfere with Plaintiff's ability to search for

new work or effectively engage in his livelihood after employment.

71. The order discussed in paragraph 64, made by Defendant "IFEC" and its corporate offi-

cers, including Defendant John R. Taylor, was wrongful as it was issued with the threat ofretalia-

tion against employees who violated the order.

72. The order by Defendant "IFEC" and its corporate officers, including Defendant John R.

Taylor, was also wrongful as it was combined with false information and other misrepresentations

concerning the Plaintiff, fabrication that Defendants knowingly fabricated.

AS AND FOR A FIRST CAUSE OF ACTION

(Breach of Oral Contract)

73. Plaintiffrepeats and realleges the allegations set forth in paragraphs 1 through 33 above

as if fully set forth herein.

74. Defendant "IFEC" and its corporate officers, including Defendant John R. Taylor, en-

tered into an oral contract with Plaintiff Michael Zentz to pay a "Trading Commission" to the Plain-

tiff in exchange for performing the functions of a portfolio manager for the fixed income futures

fund and for meeting certain performance objectives.

75. Plaintiff performed the services of a portfolio manager and achieved certain performance

targets and therefore earned the "Trading Commission" in the second half of 2007.

76. Defendants wrongfully refuse to pay Plaintiff the second half of2007 "Trading Com-

mission," unilaterally claiming that payment of the "Commission" is discretionary. Defendants are

in breach of the oral contract.

77. As a consequence of Defendants' failure to perform their obligations lmder oral contract,

Plaintiff is entitled to an amount not less than $250,000 plus interest at the appropriate statutory

rate.

AS AND FOR A SECOND CAUSE OF ACTION

(Breach of Implied Contract)

78. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 through 33 above

as if fully set forth herein. 79. Defendants entered into an implied contract with Plaintiff Michael Zentz to pay a "Trad-

ing Commission" to the Plaintiff in exchange for performing the functions of a portfolio manager

and for meeting certain performance objectives.

80. Plaintiff performed the services of a portfolio manager and achieved certain performance

targets and therefore eamed the "Trading Commission" in the second half of2007.

81. Defendants wrongfully refuse to pay Plaintiff the second half of 2007 "Trading Com-

mission" by unilaterally claiming that payment of the "Commission" is discretionary. Defendants are in breach of the implied contract.

82. As a consequence of Defendants' failure to perform their obligations under implied con-

10

tract, Plaintiff is entitled to an amount not less than $250,000 plus interest at the appropriate statu-

tory rate.

AS AND FOR A THIRD CAUSE OF ACTION

(Quantum MeruitlUnjust Enrichment)

83. Plaintiff repeats and realleges the allegations set forth in paragraphs I through 33 above


84. Plaintiff provided substantial services to Defendants during the second half of2007.

85. Defendants accepted and benefited from Plaintiffs services.

86. Plaintiff expected to be paid for such services and efforts over and above the amount of

the Plaintiffs base salary through the mechanism of the "Trading Commission", and Defendants

were aware of this fact.

87. Notwithstanding the foregoing, Defendants failed and refused to pay Plaintiff the proper

amount of "Commission" compensation for work performed in the latter half of 2007.

88. Accordingly, Plaintiff suffered damages, and Defendants should be required to pay

Plaintiff the reasonable value of the services he provided to the firm during the second halfof2007,

in an amount to be determined at trial, but not less than $250,000, plus attorneys' fees, costs and in-

terest at the appropriate statutory rate.

AS A D FOR A FOURTH CAUSE OF ACTION

(Violation of Article 6 of the New York Labor Law)



90. The second half of 2007 "Trading Commission" constitutes "wages" within 13 190(1) of

Article 6 of the New York Labor Law, j3j3 190 to 199-a (McKinney 1986, 1988 & Supp.1998) ("La-

bor Law"). Plaintiff is an "employee" withinj3 190(2) ofthe Labor Law. Defendants are "employ-

ers" withinj3 190(3) ofthe Labor Law.

91. Defendants' willful failure to pay the second half of 2007 "Trading Commission" com-

pensation due to plaintiff constitutes a willful withholding of wages in violation of Article 6 of the

Labor Law, specifically 1313 191 (2) and 191 (3).

92. As a consequence of Defendants' failure to comply with Article 6 of the Labor Law,

Plaintiff has been damaged in an amount not less than $250,000, liquidated damages equal to 25%

of the compensation withheld, plus attorneys' fees, costs and interest at the appropriate statutory

rate.

AS AND FOR A FIFTH CAUSE OF ACTION

(Breach of Fiduciary Duty/Conversion-Against John R. Tavlor)

93. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 through 12 and 44

through 47 above as if fully set forth herein.

94. Defendant John R. Taylor currently, and at the time of the complained conduct, above,

11

holds the position of "CEO" at "IFEC."

95. As a corporate officer and fiduciary, Defendant John R. Taylor owes a duty of the high-

est loyalty and utmost good faith to the shareholders of "IFEC."

96. Defendant John R. Taylor's misappropriation of corporate funds is a violation of loyalty

and good-faith to the shareholders. It also rises to the level of a Breach of Fiduciary Duty, as well

as Conversion of Property, and Larceny/Embezzlement as defined in relevant part by New York

Penal Law § 155.05(2)(a):

"Larceny includes a wrongful taking, obtaining or withholding of another's property with

the intent prescribed in subdivision one of this section committed in any of the follow

ing ways: (a) By conduct heretofore defined or known as common law larceny by trick, em-

bezzlement, or obtaining property by false pretenses:"

And where "Embezzlement" is defined by Blacks Law Dictionary as:

"The fraudulent taking of personal property in which one has been entrusted, esp. as a fidu-

ciary."

97. Plaintiff sues the Defendant and "CEO" John R. Taylor both derivatively on behalf of

other shareholders and directly. Plaintiff is excused from making any demand on "IFEC" to sue De-

fendant John R. Taylor. Such demand would be futile because individual remains an Officer and

Director of "IFEC" and he cannot be expected to sue himself.

AS AND FOR A SIXTH CAUSE OF ACTION

(Conversion)

98. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 through 12 and 48

through 51 above as if fully set forth herein.

99. Defendants, by ignoring and therefore refusing requests to return personal files and other

property have intentionally and willfully deprived Plaintiff of his property.

100. Defendants, by refusing to return Plaintiffs property, intentionally and unlawfully con-

verted Plaintiffs property.

101. As a direct and proximate result of Defendant's intentional and unlawful conversion,

Plaintiff has been damaged in that he lost the ability to lawful use of the property, and in the costs

necessary to reconstitute the property.

102. Plaintiff has been damaged in an amount to be determined at trial, but believed to be in

excess of $ 10,000.00, and Plaintiff is entitled to judgment in such amount, plus interest at the ap-

propriate statutory rate.

AS AND FOR A SEVENTH CAUSE OF ACTION

(Breach of Contract/Breach of Fiduciary Duty)

103. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 through 12 and

34 through 43 above as if fully set forth herein.

12

104. The Share Offer Agreement (Comp!. Ex. C) constitutes a valid offer, and Plaintiff s

purchase of "IFEC" shares in reliance of the offer constitutes a valid and binding contract.

105. Plaintiff has performed all of his obligations under the Share Offer Agreement.

106. Whereas, the Defendants paid themselves and other shareholders said "Keyman Bo-

nuses/Dividends" based on their shares, or intentionally delayed the payment of said "Keyman Bo-

nuses/Dividends" until after forcing the sale of Plaintiffs shares back to "IFEC," and

107. Whereas Defendants have wrongfully and willfully refused to pay Plaintiff "Key-

man/Dividend," upon repeated requests, despi te Plaintiff s satisfaction of the consideration on his

end of the bargain, Defendants have (a) failed to perform their obligations under the contract, and

(b) have violated their fiduciary duty to a shareholder of the corporation.

108. As a consequence of Defendants' failure to perform their obligations under the contract

and as a consequence of Defendant John R. Taylor failing to perform his fiduciary duty as a corpo-

rate officer, Plaintiff is entitled to the amount of the "Keyman Bonus/Dividend" owed, an amount to

be determined at trial, but not less than $250,000 plus interest at the appropriate statutory rate.

AS AND FOR A EIGHTH CAUSE OF ACTION

(Violation of Securities Law NY CIS Gen Bus!J 352-c(6))



110. Whereas Defendants induced the purchase of "IFEC" shares with material misrepresen-

tations that Plaintiff would be included in the dividend pool, and

Ill. Whereas, the Defendants paid themselves said "Keyman Bonuses/Dividends" based on

their shares, or intentionally delayed the payment of said "Keyman Bonuses/Dividends" until after

forcing the sale of Plaintiff s shares back to "IFEC," and

112. Whereas Defendants have wrongfully and willfully refused to pay Plaintiff the "Key-

manIBonus/Dividend," upon repeated requests and despite Plaintiffs satisfaction of the considera-

tion on his end of the bargain, i.e. the purchase of IFEC shares,

113. Defendants have violated NY CLS Gen Bus fJ 352-c(6), a Class E Felony.

114. NY CLS Gen BusfJ 352-c(6) provides in relevant part:

"Any person, partnership, corporation, company, trust or association, or any agent or

employee thereof who intentionally engages in fraud, deception, concealment, suppress-

ion, false pretense or fictitious or pretended purchase or sale, or who makes any material

false representation or statement with intent to deceive or defraud, while engaged in

inducing or promoting the issuance, distribution, exchange, sale, negotiation or purchase

within or from this state of any securities or commodities, as defined in this article,

and thereby wrongfully obtains property of a value in excess of two hundred fifty dollars,

shall be guilty of a class E felony."

115. As a consequence of Defendants' violation of New York Securities Law NY CLS Gen

Bus fJ 352-c(6), Plaintiff is entitled to the amount to be determined at trial, but not less than

$250,000 plus interest at the appropriate statutory rate, plus attorneys' fees, and costs.

13

AS AND FOR A NINTH CAUSE OF ACTION

(Wrongful Termination Because of False and Malicious Reports by a Superior, Willful Mis-

representation Causing Discharge of Plaintiff from Emplovment)



117. Upon information and belief, Defendant Jolm R. Taylor knew that the statements and

charges made by him against plaintiff were false and malicious and were being made for the pur-

pose of causing plaintiffs discharge from his position.

118. Solely by reason of the false statements made by defendant, "IFEC" discharged plain-

tiff from his employment.

119. Upon information and belief, but for the willful and malicious acts of defendant, plain-

tiff would have been retained indefinitely in his employment by "IFEC."

120. Solely by reason of defendant's false statements to "IFEC," plaintiff has lost his em-

ployment and has been unable to secure further employment.

121. Plaintiff has been unemployed since December 14,2007.

122. At the time of plaintiffs discharge, "IFEC" withheld salary due plaintiff in an amount

not less than $500,000 because of the alleged misrepresentations by Defendant, and plaintiff has

otherwise been damaged in a total in an amount not less than $500,000.

123. By reason of Defendant's willful and malicious acts, plaintiff lost his position and sal-

ary as Portfolio Manager and has been greatly injured in his good name, credit and reputation, and

has been unable to find similar employment, all to his damage in the amount of $ 4,500,000 plus

interest at the appropriate statutory rate.

AS AND FOR A TENTH CAUSE OF ACTION

(Wrongful Termination, Breach of Agreed Terms of Share Ownership

and Terms of Employment)

124. Plaintiffrepeats and realleges the allegations set forth in paragraphs 1 through 12 and


125. Defendants communicated and established over the more than ten years of Plaintiffs

employment through various documents and oral assurances that termination of Plaintiff s employ-

ment was conditioned on the execution of certain procedural protections including but not limited to

"good cause."

126. Failure to adhere to the procedural protections for Plaintiffs dismissal constituted a

violation of the terms of Plaintiff s share ownership, the terms of Plaintiff s long-term employment,

and the terms of employed agreed to by parties.

127. As a consequence of Defendants' breach of the agreed terms of share ownership and

employment resulting in the wrongful dismissal of the Plaintiff, Plaintiff is entitled to the amount to

be determined at trial, but not less than $4,000,000 plus interest at the appropriate statutory rate.

14

AS AND FOR A ELEVENTH CAUSE OF ACTJON

(Wrongful Dismissal, Breach of the Covenant of "Good Faith and Fair Dealing")



129. After over a decade of employment, relationship of Defendant Employer and Plaintiff

employee developed to a degree in which the Defendant employer entered a covenant of "good faith

and "fair dealing" with Plaintiff employee.

130. The arbitrary termination of Plaintiffs employment without procedure, and including,

but not limited to, the filing of a false police report, and the willful and wrongful withholding of

Plaintiff employee's rightfully earned wages, violated this covenant of "good faith and fair dealing."

131. As a consequence of Defendants' breach of "good faith and fair dealing," Plaintiff em-

ployee was wrongfully dismissed and suffered damages in an amount to be determined at trial, but

not less than $4,000,000 plus interest at the appropriate statutory rate.

AS AND FOR A TWELTH CAUSE OF ACTION

(Intentional In11iction of Emotional Distress)



133. The acts of harassment and intimidation committed by Defendants against Plaintiff

were committed with the intent to cause, or with the knowledge that they would cause, severe men-

tal distress to plaintiff.

134. Defendants maliciously embarked on the course of conduct described above intending

to cause Plaintiff to suffer mental and emotional distress, tension and anxiety in order to (a) induce

him to sign a and agreement forfeiting valuable rights, (b) to smother exposure of past unethical and

possibly illegal acts by Defendants (c) to obtain an agreement from Plaintiff that would shield De-

fendants from legal liability for his wrongful acts, and (d) in order to retaliate against Plaintiff.

135. As a result of defendants' conduct, Plaintiff has become tense, nervous, initable, has

suffered great mental anguish and was forced to endure a great deal of mental and physical suffer-

ing and inconvenience.

136. Defendants' intentional and reckless acts were the direct and proximate causes of the

Plaintiffs extreme emotional distress.

137. Defendants' intentional and reckless acts rise to the level of extreme and outrageous

behavior that shocks the conscience. These acts include, but are not limited to, (a) the ordering of

friends and business associates to sever contact with Plaintiff under the threat of retaliation, causing

Plaintiff severe financial distress, and (b) the knowing and intentional filing of a false police report

as defined by New York Penal Law § 240.50(3)(a) and (c) "Falsely Reporting and Incident in the

Third Degree," which states in relevant part:

"A person is guilty of falsely reporting an incident in the third degree when, know-

ing the information reported, conveyed or circulated to be false or baseless, he:

3. Gratuitously reports to a law enforcement officer of agency (a) the alleged occur-

rence of an offense or incident which did not in fact occur; or. ... (c) false information re-

lating to an actual offense or incident or to the alleged implication of some person

15

therein ...."

138. Furthermore, given that the evidence ofa key element of this cause of action, "intent,"

was purposefully concealed by acts of the Defendants, and given that the Plaintiff only recently be-

came aware of this information due to the intentional concealment of the evidence by the Defen-

dants, the statute of limitations should not begin tolling on this cause of action until the date that the

Plaintiff became aware of this information.

139. Additionally, the statute of limitations should be measured from the date of the accrual

of the action to the date of the commencement of the action. In this case, Plaintiff asserts his claim

based on numerous incidents ranging in dates from December of 2007 and continuing unabated

through and including November of2010, and is ongoing. As the allegations are continuing in na-

ture, the latest conduct alleged was in November of 2010, and well within the one-year statute of

limitations.

140. As a consequence of the Defendants' intentional and reckless wrongful acts, the Plain-

tiff suffered severe emotional distress.

141. As a consequence of that severe emotional distress, Plaintiff suffered damage in an

amount to be determined at trial but anticipated to be not less than $1,000,000 plus interest at the

appropriate statutory rate.

AS AND FOR A THIRTEENTH CAUSE OF ACTION

(Tortious'nterference with Prospective Advantage)

142. Plaintiff repeats and realleges the allegations set forth in paragraphs I through 12, 52

through 61, and 69 through 72 above as if fully set forth herein.

143. Defendants engaged in the wrongful and intentional Interference with Plaintiffs ability

to find and successfully perform new employment by wrongfully interfering with crucial business

relationships that Plaintiff had developed over the previous ten years.

144. Defendants wrongfully interfered with these relationships by promulgating information

concerning the Plaintiff that the evidence will show the Defendants knew to be false and possibly

fabricated themselves, and by threatening the employment of any employees who maintained con-

tact with Plaintiff.

145. The interference with the Plaintiffs relationships was the direct and proximate cause

for Plaintiffs inability to obtain comparable employment in the hedge fund industry.

146. This interference is continuous and ongoing.

147. As a consequence of Defendants' willful and wrongful conduct, Plaintiff suffered dam-

ages in an amount to be determined at trial, but anticipated to be not less than $4,000,000 plus inter-

est at the appropriate statutory rate.

WHEREFORE, Plaintiffrequests that the Court:

A. Award monetary damages in favor of Plaintiff in an amount not less than $ 5,510,000.00 from

Defendant "IFEC"

B. Award monetary damages in favor of Plaintiff in an amount not less than $5,500,000 from De-

16

fendant John R. Taylor.

C. Award Plaintiff reasonable attorneys' fees and penalties in accordance withfi 198(1-a) ofthe La-

bor Law and NY CLS Gen Bus fi 352-c of the New York Securities Law.

D. Pursuant to the fifth cause of action (Breach of Fiduciary Duty and Conversion against Defen-

dant John R. Taylor), Plaintiff requests an accounting, and should that accounting show that funds

were improperly diverted, Plaintiff requests that the value of Plaintiffs shares forfeited on the

forced sale to "IFEC" be recalculated to reflect the loss of value due to the improper diversions. The

accounting should also include disclosure of the method of valuation of Plaintiffs shares for the

forced sale back to "IFEC" in April 2008.

E. Award Plaintiff such other relief as the Court may deem just and proper.

Dated: Brooklyn, New York

December 2, 2010

Respectfully submitted,

Michael T. Zentz, pro se

888 Park Place

Brooklyn, New York 11216

(917) 971-1952

email: michael::entz:@gmai!.com

Attorneys for Defendants

"Villkie, Farr, and GaJJagber, LLP

Philippe M. Salomon, Esq.

787 Seventh Avenue

New Yark, New York 10019-6099

Tel: (212) 728-8262

Tel: (212) 728-8000

Fax: (212) 728-8111

17

7/2 FIFTH A VENuE

FLOOR

NEW YORK, NY 10:J19 212-554·6800

212·554-690f! February 26, 1997

46 AVENUE KLEBEi1 75016 PARi-

FRANCE (31· I) 5370-13{)()

FAX: (33,1) 5370-1308

Mr, Michael Zenll GATEWAY, 1 MACQUARiE STREET 515 East 75th Slreet, #1 E LEVEL 19

f:.....

New York. NY 10021 1/' " SYDNEY, NSW 2000

'1.' / AUSTRALIA

Dear Michael i (612) 251-881: , ", I r' FAX: (672) 251-8308

On behalf of International Foreign Exaange Concepts, Inc. (FX Concepts), I am pleased to offer you the position of analyst, to begin on March W1997 Should you accept this offer of employment, your salary will be al a rate of $60.000 per annum with a non-refundable draw of $5,000 per annum You also will be

paid 3 per cent of all Interest Rate commissions generated from the sales areas serviced by the New York office, Similar to the other employees of FX Concepts, you may alSO receive periodic discretionary bonus payments, Suet: bonus payments are made at the discretion of the firm's senior management and may only be disbursed to IndiViduals wtlO remain actively employed by the company at the time of distribution,

Dunng the periOd of your employment with FX Concepts, you Will be entitled to the stanoard benefits of the firm as they are in effect from time 10 time FX Concepts reserves the nght 10 change the standard benefits of Ihe firm at any lime Currently these benefits inclUde up to fourteen days of paid vacation/sick leave during the remainder of calendar 1997 (nineteen days in 1998), health and disability insurance coverage, and eligibility in the company's defined comnbutlon plan upon completion of the plans' minimum length of employment requiremeG:s

Our offer and this letter sl'ould not he construed as a guarantee of employment for any speCific dc;ration FX Concepts or you, ot "ourse, are tree 10 terminate thiS employment relationship at any time If the company or you determine that such action IS In its or you; respective best interests In addition, your employment is contingent upon the execution of the firm's standard confidentiality letter, pursuant to which you agree to Keep all proprietary information and trade secrets of the firm confidential

To Indicate your acceptance r.i thiS offer. piease sign both this letter and the confidentiality letter where tndicated, Once signed, bOlll QriginaJ letters should be returned to :.JS as soon 2S pOSSible You may keep the enclosed photocopies of these leIters for vour records

Michaei we have no doubt thaI your tuture at FX Concepts w;!I be both challenging and rewarding All of uS look forwarc1 to your JOining us :ioon,

Reacl and Accepted

.-r''>.---'""",,,--,y-.r/

J /

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INTER;,/, nONA/. FORE/(j\, EXCHANGE cONCEprs, INC,

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N3lre• June 18, 2003

• J

, ,I

• r

Michael Zentz

Dear Mike:

\. ,,;',

As you know the share ownership of FX Concepts was widened significantly last

year. I sold 10,000 shares to people within the company, and Michael Manning

sold the remainder of his holding, which amounted to 14,000 shares. also to

employees. I believe that there are several people within the Company who

would like to become shareholders for the first time. and that some of the existing

shareholders would like to increase their holdings

To achieve that end, I have decided to offer a further 10,540 shares, or 4.25% of

the company's outstanding shares to existing employee shareholders, plus an

additional group of key employees, of whom you are one. As you read below, I

hope that you find this process is one that you can do. I am happy to say that all

six members of the management committee are shareholders, and I hope that

you will agree to join them

The offer will work as follows: In order to assist you to become a shareholder, the

company will loan you the money if you wish. The interest rate charged on these

loans will be 3.04%, which is the lowest rate the Fed will allow without imposing a

tax penalty.. You will be expected to repay this loan out of your bonuses, but

your bonus will be higher as a key employee as you will be eligible for a Keyman

bonus.. At this point, I should mention how the bonus is calculated. First the

employee's bonuses are paid. The amount left over is divided three ways: 40%

is kept to fund the company's future growth. 20% is used as further discretionary

bonuses for those not included in other bonus schemes, and 40% is paid to

those designated as "key employees" which includes all shareholders. I will be

happy to give you more information as to how this policy will benefit you if you

indicate an interest in becoming a shareholder.

Your benefits as a shareholder are many First, you are part of the key

employees bonus pool; second, you get the benefit of the growth of the company

over the long term; third, you will make a windfall profit if the company is sold to

an outside party in the future; and fourth, you enjoy the leverage of owning the

stock with a very low interest cost. which is tax deductible against other

investment income. You will also get to know more about the financial health of

the company and where it is going in the future because you will be a stockholder in the firm.

You may apply for as many shares as you wish at the current valuation price for

the stock option plan. which is $68. You can ask for as many of the available shares that you want, but if more than 10,540 are requested, all allotments will be reduced on a pro rata basis

I am very excited about having an even wider share ownership among our key

employees, and I very much hope that you will be able to take part in realizing this objective. I would like you to let Hugh Tilney know whether you wish to take up this offer or not, by Wednesday June 25 If you have any questions please feel to ask Hugh or myself.

All of us on the management committee very much hope that you will wish to become a shareholder, thereby sharing in a very direct way in the future prosperity of Company.

Sincerely yours.

I

John R Taylor, Jr. Chairman and CEO

VERIFICATION

Michael Zentz, being duly sworn, deposes and says:

I am the plaintiff in the above-entitled actions. I have

read the foregoing complaints and know the contents thereof. The same are true to my knowledge, except as to matters therein stated

to be alleged on information and belief and as to those matters I believe them to be true.

Michael Zentz Plaintiff

Sworn to me before this

2nd day of December 2010

b:fP/--yl ,

I. ". I : _, .... 1'

._//Notary Public

18

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