XXXXXX INTERACTIVE CORP.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
As of November 15, 1995
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, X.X. 00000-0000
Re: Employment Agreement
Dear Xxxxxxx:
We refer to the Stock Purchase Agreement dated concurrently herewith
(the "Purchase Agreement") between Xxxxxx Interactive Corp. (the "Company"), Xxx
X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and Capital Express, L.L.C.
("CapEx").
This will confirm our understanding as to the terms of your employment
by the Company in connection with the closing (the "Closing") of the
transactions contemplated by the Purchase Agreement:
1. Position and Duties. You will be employed as a senior executive of
the Company. You may also be elected an officer and director of the Company and
serve as such for no additional compensation. You will perform such duties as
the Board of Directors of the Company may from time to time determine consistent
with your position and prior experience. You will devote such working time as
you deem necessary, in good faith, to perform your duties.
2. Compensation. (a) Your initial base salary shall be at the monthly
full-time rate (based on an average of 40 hours per week) of $10,000, which will
be prorated based on the amount of time you work on Company business each month.
The amount of time worked by you in any month will be calculated by you;
provided that, if there is a dispute as to the number of hours worked by you on
Company business in any month, the Company's Board of Directors will review such
number of hours within 30 days thereafter (or the number shall be deemed
accepted) and its decision will be final.
(b) Until the conclusion of the contemplated marketing test,
but not longer than 120 days from the date hereof, your salary shall accrue in
lieu of payment. Thereafter, and until June 30, 1996, you will be paid 50% of
your base salary and the balance shall accrue. Beginning July l, 1996, you will
be paid 75% of your base salary in accordance with the Company's policy for its
senior executives, and the balance shall accrue. Commencing as of January 1,
1997, you will be paid 100% of your base salary on a current basis with no
accrual requirement.
(c) Upon the closing of the books for the Company's fiscal
year ending December 31, 1996 (which shall occur not later than [30] days after
the end of such fiscal year, you shall be paid all accrued salary, including
interest thereon from the date accrued to payment at the interest rate presently
charged by Citibank, N.A. for a one-year commitment to its preferred customers
plus 5%, provided that (i) the Company's gross revenues for such fiscal year
exceed $1,000,000 and (ii) the payment of such accrued salary and interest
thereon would not either (x) cause the then current ratio of current assets to
current liabilities to fall below 1.75:1 or (y) working capital (i.e., current
assets minus current liabilities) to be less than an amount equal to 60 days of
"Operating Losses". For purposes of this subparagraph (c), the term "Operating
Losses" means the average of the Company's operating losses for the immediately
preceding three-month period, excluding extraordinary marketing expenses. If
such tests would not be met as a result of payment of all of your accrued salary
and interest thereon, the Company shall pay you such portion, on a pro rata
basis with that of Xxxxxxx X. Xxxxxx and Xxx X. Xxxxxx, as it is able to so pay
without failing such tests, and the balance of the accrued salary and interest
thereon will be paid in the first fiscal quarter following December 31, 1996 as
such tests are met.
(d) The Board of Directors may by majority vote eliminate the
provisions of subparagraphs (b) and (c) of this paragraph 2. Any compensation
payable by the Company to you in your capacity as an employee pursuant to
subparagraph (a) or otherwise shall not be increased for two years after the
date hereof and thereafter shall not be increased by more than 10% in any year,
and except as provided in the previous sentence, no provision of this agreement
shall be amended, modified or eliminated except by unanimous vote of the Board
of Directors.
3. Benefits. In the event that you devote at least 90% of your normal
business hours to the Company's business for a period of twelve consecutive
weeks, the Company will provide health insurance for you and your spouse and
children having the same coverage as that presently contemplated to be provided
to Xxx Xxxxxxxx or its cash equivalent.
4. Employee-at-Will. You expressly acknowledge that you are an
employee-at-will of the Company.
5. Miscellaneous. (a) This agreement sets forth the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
there are no other terms or agreements with respect to your employment by the
Company.
(b) This letter agreement will be governed by, and construed
and enforced in accordance with, the internal laws of the State of New York,
without regard to principles of conflicts of law.
2
Please acknowledge your understanding of, and agreement with, the
foregoing by signing your name in the space indicated below, whereupon this
letter agreement will become a binding agreement upon the parties.
Very truly yours,
XXXXXX INTERACTIVE CORP.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: President
Agreed to and acknowledged as of
the date first written above:
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
XXXXXX INTERACTIVE CORP.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
January 5, 1998
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Re: Employment Agreement dated as of November 15, 1995 (the
"Employment Agreement")
Dear Xxxxxxx:
When signed by each of us, this letter will constitute our agreement to
amend the Employment Agreement. We hereby agree as follows:
1. Section 2 of the Employment Agreement is amended by adding thereto a
new paragraph (e) which shall read in full as follows:
"(e) The Company hereby grants to you an option, exercisable at any
time within five (5) years from the date hereof, to purchase up to
500,000 shares of the Company's common stock, of which 150,000 shares
shall be purchasable at an exercise price of $.60 per share; 100,000
shares shall be purchasable at an exercise price of $1.60 per share;
100,000 shares shall be purchasable at an exercise price of $3.00 per
share, and 150,000 shares shall be purchasable at an exercise price of
$6.00 per share. Options with respect to 150,000 of such shares shall
vest on the date of grant and the remaining options shall vest at the
rate of 100,000 shares every six (6) months hereafter until full
vested, provided that the lowest prices options shall vest first. Such
options shall be evidenced by an option certificate in the form annexed
hereto and shall be subject to the further terms and conditions set
forth in such option certificate."
2. The Employment Agreement shall be further amended by deleting the
existing Section 4 thereof and substituting, in place of such Section, a new
Section 4 which shall read in full as follows:
"4. Term of Employment This Employment Agreement shall continue in full
force and effect from the date hereof through June 30, 2000, unless
sooner terminated as provided herein. Either party may terminate this
agreement upon written notice to the other party in the event of any
material breach not cured within thirty (30) days after written notice
of such breach is given to the other party hereto, which notice shall
specify the nature of the alleged breach in reasonable detail."
3. Except as amended hereby, the Employment Agreement shall continue in
full force and effect in accordance with its terms.
Kindly indicate your agreement to the foregoing by executing the
enclosed copy of this letter in the space provided below and return it to the
undersigned at your earliest convenience.
Very truly yours,
XXXXXX INTERACTIVE CORP.
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: X. Xxxxxx
Title: President
Agreed to and acknowledged as of
the date first written above:
/s/ Xxxxxxx X. Xxxxxx
---------------------
XXXXXXX X. XXXXXX
