THE MARQUEE GROUP, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Mr. Xxxxxxx Xxxxxx July 18, 1997
c/o ProServ, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Dear Xxxx:
As you know, we have been in active negotiations concerning your
employment by The Marquee Group ("Marquee") in anticipation of Marquee's
purchase of ProServ, Inc. Although we have now reached agreement, it appears
that we will not have sufficient time to revise and finalize your Employment
Agreement prior to the filing of our securities documents. Accordingly, by our
signatures below, you and we agree that the following are the principal terms
and conditions of your employment by Marquee and for the purchase of your
shares in ProServ. This letter will serve as a binding agreement between us
unless and until it is supplemented by a formal Employment Agreement. Unless
defined in this letter, capitalized terms below follow the definitions in the
draft Employment Agreement which we sent to you on July 1, 1997 (the "July 1
Draft")).
Term.
The term of your employment will commence on the Effective Date and
terminate on December 31, 2000. Neither party will have a contractual right to
an Extension Term.
Title and Duties.
You will serve as "President and Chief Operating Officer" of ProServ. You
will report directly to the CEO of Marquee. You will also serve as a "Managing
Director" of ProServ, and you will be a member of the Marquee board of
directors. As Chief Operating Officer, your duties will include operating
control, including authority over hiring and firing, budget development and
control, event planning and commitments, promotional matters, new venues, and
administrative matters.
Compensation.
(a) Your base compensation will be $300,000 per year. (Your base
compensation will be paid pro rata over the stub year in calendar
1997).
(b) Your bonus formula will be:
Xxxxxx X. Xxxxxxxxx
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(i) $100,000 for each fiscal year (i.e., January 1-December 31) in which
ProServ achieves either 75% of its budgeted Operating Income ("BOI")
or 90% of its budgeted Revenue;
(ii) $150,000 for each fiscal year in which ProServ achieves either 90% of
its BOI or 100% of its budgeted Revenue;
(iii) $200,000 for each fiscal year in which ProServ achieves either 100%
of its BOI or 110% of its budgeted Revenue;
(iv) 10% of all Operating Income about 110% or BOI.
1997 Bonus.
You will receive, on December 31, 1997, a bonus of $25,000 for your
performance for calendar/fiscal 1997.
Options.
You will receive the following stock options for Marquee's Class A Common
Stock:
(i) On the Effective Date, stock options for 25,000 shares;
(ii) On each anniversary of the Effective Date, stock options for 25,000
shares;
(iii) Within 60 days after each fiscal year, if ProServ has achieved 90%
of its BOI during that fiscal year or 100% of budgeted Revenue, stock
options to purchase 5,000 shares;
(iv) Within 60 days after each fiscal year, if ProServ has achieved 100%
of its BOI during that fiscal year or 110% of budgeted Revenue, stock
options to purchase 5,000 shares (in addition to the 5,000 shares for
90% of BOI).
All stock options will be issued pursuant to a qualified plan, bear an exercise
price based upon the closing price of Marquee's stock on the date of issuance,
shall vest on the date of issuance, and shall be exercisable for 10 years.
Xxxxxx X. Xxxxxxxxx
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Sale of ProServ Stock.
You agree to sell and we agree to purchase, on or before the Effective
Date, all of your stock and stock options in ProServ, for the purchase price of
$605,040, payable in cash.
Noncompetition Covenants.
You and we agree that the Restrictive Covenants, as drafted in Section 8
of the July 1 Draft, shall not apply if (i) your employment is terminated
without cause, or (ii) your employment agreement expires without renewal. If
your employment is terminated during the term for cause, the Company may, but
shall not be obligated to trigger a one-year covenant by you, under the terms
of Section 8(b) of the July 1 Draft. If the Company opts to bind you to these
covenants, it will pay you $150,000 in consideration for your compliance with
those covenants.
Severance.
If your employment is terminated without cause, the Company will pay you
the greater of (i) the balance of the obligations owed to you under this letter
or your employment agreement, or (ii) one year's base compensation, provided
however, that if you receive severance compensation from the Company relating
to the period after December 31, 2000, and you obtain other employment, any
amounts earned by you after December 31, 2000 will be credited against the such
severance payments. (If you are terminated without cause, you will in all events
receive full payment of obligations owed to you through December 31, 2000
without set-off). If your employment is terminated with cause, you will not be
entitled to this severance minimum.
Cause for Termination.
The Company shall have the right to terminate your employment for "Cause"
only under the terms of Sections 9(a)(B), (D) and (E) of the July 1 Draft.
(Sections 9(A) and (C) of Section 9(a) shall not apply to your employment,
and, if and when we execute a final Employment Agreement, they will be
deleted).
Xxxxxx X. Xxxxxxxxx
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Other Benefits.
You will receive such other benefits as are provided from time-to-time to
senior executives of the Company.
We look forward to a long and profitable association with you.
Sincerely,
THE MARQUEE GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx,
------------------------
Xxxxxx X. Xxxxxxxxx,
President
Agreed and accepted this 19th day of July, 1997:
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
