FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT (this "FIRST AMENDMENT") is made as of November 24,
2004, by and among Narrowstep Limited (registered number 4412126) (the
"SUBSIDIARY"), Narrowstep Inc., a Delaware corporation (the "COMPANY"), and Iolo
Xxxxx, an individual residing at 000X Xxxxx Xxxx Xxxx, Xxxxxx XX0 0XX (the
"Employee"), to amend, supplement and clarify certain provisions of the
Agreement dated May 10, 2002 between the Subsidiary and the Employee regarding
the terms of the Employee's employment with the Subsidiary (the "EMPLOYMENT
AGREEMENT"). Capitalized terms not defined herein have the meanings set forth in
the Employment Agreement.
W I T N E S S E T H T H A T:
WHEREAS, the Subsidiary and the Employee entered into the Employment
Agreement; and
WHEREAS, the parties hereto desire to add the Company as a party to the
Employment Agreement and to clarify and amend certain provisions of the
Employment Agreement; and
WHEREAS, the Employee has agreed to such clarifications and amendments
and is willing to provide the services under the Employment Agreement as amended
hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. CLARIFICATION AND AMENDMENT OF SCHEDULE 1.
A. Schedule 1 to the Employment Agreement lists Employee's
Remuneration as "(pound)48,000" and states that "Upon the company achieving a
quarterly profit your salary will be reviewed to (pound)90,000 and thereafter
reviewed by the company's remuneration committee." The parties agree that, in
satisfaction and in lieu of such requirements, the Employee's Remuneration shall
initially, commencing on June 1, 2003, be base salary at the annualized rate of
(pound)42,000 per year payable in accordance with the customary payroll
practices of the Subsidiary, as they may be in effect from time to time (the
"BASE SALARY"). The parties further agree that, upon the Company first recording
gross profits (as determined on a consolidated basis and in accordance with U.S.
Generally Accepted Accounting Procedures ("US GAAP")) for any fiscal quarter,
the Employee's Base Salary shall be increased, effective upon the first day of
the next fiscal quarter of the Company, to (pound)90,000, and thereafter will be
reviewed from time to time by the Compensation Committee of the Board of
Directors of the Company or the Subsidiary or the Board of Directors of the
Subsidiary itself if the Company and the Subsidiary do not maintain such a
committee, for further increases (but not decreases), as such body shall
determine in its sole discretion.
B. Schedule 1 to the Employment Agreement states that the
Employee "will be paid a fee equivalent to 5% of the previous year's audited
turnover of any acquisition target if profitable or 1% if not profitable,
subject to Board approval in each case." The parties agree that, in satisfaction
and in lieu of such requirement, upon consummation by the Company, or any
subsidiary of the Company, of the acquisition of another company (the "ACQUIRED
COMPANY"), whether by merger, asset purchase, stock purchase or otherwise, at
the end of the fiscal quarter of the Subsidiary during which such acquisition is
consummated, the Subsidiary shall pay the Employee a fee equal to (a) in the
event that the Acquired Company had gross profits for the fiscal year ended
immediately preceding the date of the consummation of such acquisition (the
"PRIOR FISCAL YEAR"), 5% of the gross revenue of the Acquired Company (as
determined in accordance with US GAAP for the Prior Fiscal Year ("GROSS
REVENUE"); or (b) in the event that the Acquired Company had gross losses for
such Prior Fiscal Year, 1% of the Gross Revenue.
C. Schedule 1 to the Employment Agreement states that
"Share options based on the share price at the time of granting them will be
made to ensure that you do not dilute below 20% as a result of acquisition or
fund raising." The parties agree that, in satisfaction and in lieu of such
requirement, (i) effective as of the date of the Employment Agreement (the
"EFFECTIVE DATE") in the event that the Company issues (each such issuance as
described, a "DILUTIVE ISSUANCE") shares of common stock, or options or warrants
exercisable for or securities convertible into shares of such common stock
(collectively, the "CONVERTIBLE SECURITIES"), of the Company in connection with
any acquisition by the Company, or any subsidiary of the Company, of another
company (whether by merger, asset purchase, stock purchase or otherwise) or in
connection with any fundraising activities of the Company, in each case, on or
after the Effective Date and on or prior to December 31, 2004, and in all cases,
excluding any issuances to the Employee, then in such event, on December 31,
2004 the Company shall grant to the Employee options to purchase that number of
shares of the Company's common stock such that, assuming exercise of such
options, the Employee shall own an aggregate of 20% of the Company's issued and
outstanding common stock less any shares of common stock which he has sold or
transferred prior to the date of such grant (assuming for purposes of such
calculation the exercise of any outstanding Convertible Securities held by the
Employee (including such options) but excluding any other Convertible
Securities) as of such date, and (ii) in the event that the Company makes a
Dilutive Issuance after December 31, 2004 and on or prior to December 31, 2007,
and in all cases, excluding any issuances to the Employee, then in such event,
the Compensation Committee of the Board of Directors of the Company or the
Subsidiary or the Board of Directors of the Subsidiary itself if the Company and
the Subsidiary do not maintain such a committee may, in its sole discretion,
grant to the Employee options to purchase that number of shares of the Company's
common stock such that the Employee shall have the same percentage ownership of
the Company's common stock (assuming the exercise and/or conversion of all
outstanding Convertible Securities held by the Employee (including such options)
but excluding any other Convertible Securities and excluding for purposes of
such percentage ownership calculation in calculating the shares owned by
Employee any shares of common stock or Convertible Securities acquired by the
Employee after the date of this Amendment other than such options as are granted
pursuant to the terms of this paragraph C) after giving effect to such Dilutive
Issuance as the Employee had immediately prior to such Dilutive Issuance;
provided, however that the number of shares for which options shall be granted
pursuant to this clause (ii) shall be calculated at the end of each fiscal year
of the Company and shall be granted on such date. All options granted pursuant
to this paragraph C
-2-
shall have an exercise price per share equal to the fair market value of one
share of the Company's common stock at the time of such grant, shall vest
immediately upon grant, shall have an expiration date of December 31, 2012 and
shall be evidenced by an option agreement between the Company and the Employee
substantially in the form used by the Company to evidence option grants under
its Restated 2004 Stock Plan, as may be amended from time to time.
2. RATIFICATION OF EMPLOYMENT AGREEMENT. Except as expressly
amended or modified pursuant to the terms of this First Amendment, the
Employment Agreement shall continue in full force and effect. Employee hereby
waives any and all rights, whether accrued or contingent, which he may otherwise
have had under the Employment Agreement pursuant to provisions thereof which
have been modified or superceded by this First Amendment, except, in all cases,
as arise as a result of the provisions hereof. The clarifications and amendments
to the Employment Agreement contained in this First Amendment shall be
considered an integral part of the Employment Agreement.
3. CHOICE OF LAW. This First Amendment shall be governed and
interpreted in accordance with English law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
-3-
EXECUTED as a DEED for and on behalf of the Subsidiary by:
/s/ Xxxxx Xxxxx
----------------------------------------
Director
/s/ Xxxxxx Xxxxxxx
----------------------------------------
Secretary
EXECUTED as a DEED for and on behalf of the Company by:
/s/ Xxxx Xxxxxxxx
----------------------------------------
Title:
Signed by the said IOLO XXXXX:
/s/ Iolo Xxxxx
----------------------------------------
Iolo Xxxxx
In the presence of:
/s/ Xxx Xxxxxxx
----------------------------------------
Name:
-4-
