THE MARQUEE GROUP, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 18, 1997
Mr. Xxxxxxx Xxxxxx
c/o ProServ, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 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 Xxxxxxx 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, you 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).
Xxxxxx X. Xxxxxxxxx
July 18, 1997
Page 2
(b) Your bonus formula will be:
(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% off all Operating Income about 110% of 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 Xxxxxxx's Class A
Common Stock:
(i) One 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 110% of budgeted Revenue, stock options to
purchase 5,000;
(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
July 18, 1997
Page 3
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 you 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
July 18, 1997
Page 4
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
Xxxxxx and accepted this 18th day of July, 1997:
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
