Skyline Multimedia Entertainment, Inc.
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June 15, 1998
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Dear ▇▇▇:
This letter will confirm our understanding and your agreement with
Skyline Multimedia Entertainment, Inc. and its subsidiaries (collectively, the
"Company"), as follows:
1. Employment. You will be employed as Executive Director of
Marketing and Business Development and Co-Chief Executive Officer (or such
other similar title as designated by the Board) of the Company subject to the
direction of the Board of Directors. You agree to devote substantially all of
your time and attention to the affairs of the Company to fulfill your
responsibilities hereunder during the Term of this Agreement. You shall report
directly to the Board of Directors of the Company or to such person as
directed by the Board of Directors.
2. Term. Your employment with the Company will commence as
of June 15, 1998 for a period ending on the second anniversary hereof (the
"Term") unless terminated sooner in accordance with the provisions of
Paragraphs 10A or 10B. This Agreement may be renewed from year to year upon
written notice by the Company of same, including in such notice any
modifications of the terms hereof, delivered to you not less than three months
prior to the end of the then current Term and accepted by you within 30 days
of such notice. Prior to the commencement date of your employment, the Company
may utilize your services as a consultant to the Company.
3. (a) Annual Salary. During the Term, the Company will pay
you an annual salary of $140,000 (the "Base Salary") payable in equal
installments every two weeks. Increases in Base Salary will be subject to the
discretion of the Board of Directors.
(b) Special Bonus. At your election, upon notice to the
Company within 90 days of the date hereof, the Company will pay you a special
bonus of either (i) an aggregate of $30,000 payable during the period from the
date of election hereunder through December 31, 1998 in equal payments every
two weeks in accordance with the Company's regular payroll policies; provided,
however, that such payments will cease in the event of termination of your
employment for any reason prior to December 31, 1998, or (ii) an aggregate
of 100,000 shares of restricted common stock of the Company, which shares
shall vest on December 31, 1998; provided, however that your employment with
the Company has not been terminated prior to such date.
(c) Signing Bonus. Upon commencement of employment
hereunder, you will be entitled to receive a signing bonus equal to $25,000
payable in two equal installments on the 15th and 30th day subsequent to your
commencement of employment; provided, however that such payments shall cease
in the event of the termination of your employment for any reason on or prior
to such payment dates.
(d) Board Membership. Upon the execution of this Agreement,
the Company and its current directors will use their best efforts to elect you
to the Board of Directors of the Company.
4. Stock Options. You will be eligible to receive grants of
stock options under the Company's Stock Incentive Plan as the Board of
Directors shall determine. In addition to the grant of options or shares of
common stock pursuant to Paragraph 3 herein, upon execution of this Agreement,
you shall be entitled to receive stock options under the Company's Stock
Incentive Plan exercisable for 200,000 shares of common stock of the Company
at an exercise price per share equal to the fair market value on the date
hereof, which options shall vest 50% on June 30, 1999 and 50% on June 30, 2000
in the event your employment with the Company has not been terminated prior to
each such vesting date, as the case may be. Additionally, you shall receive
stock options under the Company's Stock Incentive Plan exercisable for 300,000
shares of common stock of the Company, subject to satisfaction of the
performance criteria as set forth on Schedule A hereto.
5. Sale Event/Put Option. In the event of a sale of the
Company, disposition of substantially all of the assets of the Company, a
merger in which the Company is not the survivor or other business combination
(each a "Sale Event") during the Term, all the restricted shares and the stock
options identified in this Agreement that have not vested as of the date of
such Sale Event, shall accelerate and automatically vest. Therefore and
consequent to such Sale Event, you shall be entitled to receive the greater of
(i) $200,000 (Two Hundred Thousand Dollars) or (ii) the restricted shares
pursuant to Paragraph 3 and the stock options pursuant to Paragraph 4 (an
aggregate of 600,000 shares (or 500,000 shares in the event you elect not to
take the shares pursuant to Paragraph 3(b)(ii) hereof)). Should you elect to
receive the cash payment set forth in subclause (i), it is understood and
agreed that the shares and option identified in this Agreement shall
automatically be cancelled and revert back to the Company.
6. Benefits. You will be entitled to participate in and be
covered by all health, insurance, bonus, pension and other employee plans and
benefits established by the Company for its employees generally, subject to
meeting applicable eligibility requirements.
7. Vacations and Holidays. During the Term, you will be
entitled to an annual vacation leave of three weeks at full pay. You will be
entitled to such holidays as are
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established by the Company for all employees. In addition, you will be
entitled to four personal days at your choosing at full pay.
8. Confidential Information. During the Term as same may be
renewed and thereafter, you agree that you will not make use of any
information you become aware of in connection with your duties hereunder
unless such information is in the public domain, for your own purposes or for
the benefit of anyone other than the Company, whether or not such information
is specifically treated or marked as "Confidential". In the event of the
termination of your employment with the Company (irrespective of the cause of
termination) you will promptly deliver to the Company all materials,
property, documents, data and other information belonging to the Company or
pertaining to Confidential Information. You shall not take any materials,
property, documents or other information, or any reproduction or excerpt
thereof, belonging to the Company or pertaining to any Confidential
Information.
"Confidential Information" shall mean any information
regarding the business methods, business policies, procedures, techniques,
research or processes of or developed by the Company, or any names and
addresses of customers, vendors, strategic partners or joint venturers or
clients or any data on or relating to past, present or prospective customers,
clients, vendors, strategic partners or joint venturers or any other
confidential information relating to or dealing with the business operations
or activities of the Company, made known to you or learned or acquired by you
while in the employ of the Company.
9. Injunctive Relief. You agree that the Company cannot be
adequately compensated in damages in an action at law in the event that you
have breached your obligations under Paragraph 8 of this Agreement. Therefore,
you expressly agree that the Company shall be entitled to injunctive and other
relief without the posting of a bond or other security in addition to any
other rights or remedies which the Company may possess. In the event that any
of the prohibitions of this Agreement relating to the scope or period of
restriction shall be deemed to exceed the maximum scope or period of time
which a Court deems valid and enforceable, such scope or period shall be
reduced to the maximum deemed allowable by such court.
10. A. Termination. The Board of Directors may terminate
your employment hereunder as follows:
(a) upon your death, whereupon this Agreement shall
immediately terminate;
(b) upon a determination of Permanent Disability;
"Permanent Disability" shall mean a physical or mental
incapacity as a result of which you become totally unable to
continue the performance of your duties hereunder for a
period of 90 consecutive days. A determination of Permanent
Disability shall be subject to the certification of a
qualified medical doctor agreed to by the Company and you or
your legal representative. In the absence of agreement
between the Company and you, each party shall nominate a
qualified medical doctor and the
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two doctors so nominated shall select a third doctor, who
shall make the determination as to the occurrence and
continuance of a Permanent Disability; or
(c) for Cause, whereupon this Agreement shall
immediately terminate. "Cause" shall mean only the
following:
(i) the willful and, after notice and a
reasonable opportunity to cure, continued failure
by you to substantially perform your duties
hereunder (other than such failure resulting from
your incapacity due to physical or mental illness);
(ii) personal dishonesty in the
performance of your duties to the Company;
(iii) willful misconduct by you in
performance of your duties to the Company (which
includes a willful, material breach of this
Agreement by you);
(iv) conviction of a felony;
(v) willful theft from the Company or
misuse of Company funds or assets; or
(vi) a willful violation of any law, rule
or regulation, or the imposition of a final order
issued by any regulatory authority against the
Company, which, in any event, prohibits you from
holding a position with the Company.
For purposes of this Agreement, no act, or failure to act,
on your part shall be considered "willful" unless done, or omitted to
be done, by you in bad faith and without a reasonable belief that
such action or omission by you was in the best interests of the
Company.
Any termination pursuant to this provision shall be
accompanied by a written explanation of the event or events
constituting "cause", which writing shall be executed by the
Company's Chairman and/or Board of Directors.
If you are terminated without "cause" (as determined by a
judicial non-appealable decision or a decision the Company chooses
not to appeal), or any other basis for termination not permitted
hereunder, or you terminate this Agreement for "Good Reason" (as
defined below), you shall be entitled to a severance payment equal to
no more than the remainder of your salary for the unexpired portion
of the Term of this Agreement.
10. B. You will be entitled to terminate this Agreement
for Good Reason if:
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(a) You are asked by the Company to take actions
inconsistent with your obligations to the public or
regulatory agencies; or
(b) The Company breaches any term or covenant
contained herein.
11. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt required, postage prepaid, as follows:
If to the Company:
Skyline Multimedia Entertainment, Inc.
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Attn: Chairman, Compensation Committee of the Board of
Directors
If to Executive:
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12. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
without regard to its conflicts of laws provisions.
13. Arbitration. Any and all disputes or controversies
arising out of or relating to this Agreement, other than injunctive relief
pursuant to Paragraph 9, shall be resolved by arbitration at the American
Arbitration Association at its New York City offices before a panel of one
arbitrator under the then existing rules and regulations of the American
Arbitration Association. The parties agree that in any such arbitration, the
arbitrator shall not have the power to reform or modify this Agreement in any
way and to that extent his powers are so limited. The determination of the
arbitrator shall be final and binding on the parties hereto and judgment on it
may be entered in any court of competent jurisdiction. Except as required by
law, neither the Company nor you shall issue any press release or make any
statement which is reasonably foreseeable to become public with respect to any
arbitration or dispute between the parties without receiving the prior written
consent of the other party to the content of such press release or statement.
In the event you prevail in such proceedings, as determined by the arbitrator,
the Company shall reimburse you for all expenses (including, without
limitation, reasonable legal fees and expenses) incurred by you in connection
with such proceeding or any other proceeding in which you prevail in
contesting or defending any claim or controversy arising out of or
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relating to this Agreement. All such amounts shall be paid promptly, but in
any event within ten (10) days after you provide the Company with a statement
of such amounts to be recovered. In the event you do not prevail in such
proceedings, as determined by the arbitrator, each party hereto shall be
responsible for their own expenses (including, without limitation, legal fees
and expenses) incurred in connection with such proceedings.
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14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
Very truly yours,
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:
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Name:
Title:
ACCEPTED AND AGREED TO:
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Schedule A
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Performance-Based Stock Options
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Exercise Price Per
Number of Shares Share (FMV on Vesting Criteria Skyride and
Subject to Option grant date) XS New York EBITDA Targets
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1. 150,000 $.3125 [6/15] for the six month period ending 12/31/98 =
$1,021,000 or for the twelve month period
ending June 30, 1999 = $1,577,000
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2. 150,000 $.3125 [6/15] for the twelve month period ending June 30,
1999 = $1,577,000
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