EXHIBIT 3
CALL/PROFIT PARTICIPATION AGREEMENT
This agreement (the "Agreement") is made as of the 12th day
of October, 2000, by and between Xxxxxxx X. Xxxxxxx ("Xxxxxxx")
and Jackpot Enterprises, Inc. ("JEI").
WHEREAS, Xxxxxxx Xxxxx Barney Inc. ("SSB") is a party to a
Loan Agreement, dated October 13, 1999 (the "Loan Agreement),
between SSB and Xxxxxxx, pursuant to which SSB agreed to loan
(the "Loan") Xxxxxxx, on a demand basis, up to U.S. $14 million.
WHEREAS, as of the date hereof $12,445,500, remains
outstanding under the Loan.
WHEREAS, the Loan is presently secured by 4,270,406 shares
of common stock of InterWorld Corporation (the "Stock
Collateral") owned of record and beneficially by Xxxxxxx, which
security interest has been perfected by SSB by virtue of SSB's
physical possession of the Stock Collateral.
WHEREAS, pursuant to a Loan Assumption and Forbearance
Agreement dated as of the date hereof (the "Loan Assumption
Agreement"), JEI and Xxxxxxx have agreed, subject to the terms
thereof that JEI would acquire the Loan from SSB in consideration
for the payment of the full amount outstanding under the Loan as
of the date hereof.
NOW, THEREFORE, for good and valuable consideration and
intending to be legally bound hereby, the parties agree as
follows:
1. The recitals are hereby made part of and incorporated
into this Agreement.
2. Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in the Loan Assumption
Agreement.
3. Prior to the exercise of the Call Option (as defined
below), upon the sale by Xxxxxxx of any of the shares of the
Stock Collateral, Xxxxxxx shall retain such proceeds and use the
proceeds in accordance with the Loan Assumption Agreement. So
long as this applies the proceeds as provided for in the Loan
Assumption Agreement, there shall be no restriction on Xxxxxxx'x
ability to sell shares of the Stock Collateral. Once the Loan is
repaid in full Xxxxxxx shall pay JEI 1/2 of the total amount
received upon the sale, after the payment of any commissions, of
any of the remaining Stock Collateral.
4. Commencing upon the date of the repayment of the Loan
in full and ending on October 11, 2003, JEI may exercise a single
call (the "Call Option") pursuant to which Xxxxxxx shall sell to
JEI and JEI shall acquire from Xxxxxxx one half of the amount of
the then outstanding Stock Collateral for an aggregate
consideration of $1.00 In the event JEI enters into an agreement
to effect a merger with InterWorld Corporation it may at its
option distribute such Call Option to its stockholders prior to
such merger.
5. This Agreement shall for all purposes be governed by
and construed in accordance with the laws of the State of New
York.
6. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held
invalid, the remainder of this Agreement and the application of
such provision to other persons or circumstances shall not be
affected unless the provision held invalid shall substantially
impair the benefits of the remaining portions of this Agreement.
6. In the event that a dispute arises in connection with
this Agreement the parties agree that the reasonable costs,
expenses, and attorneys fees incurred by the prevailing party
shall be paid by the other party to the dispute.
7. The parties agree that the Call Option has nominal
value.
8. All notices, offers, acceptances and consents
(collectively, "Communications") provided for in this Agreement
shall be in writing and shall be given to a party at the address
set forth below or at such other address as such party may
hereafter specify in writing:
If to Xxxxxxx: C/o InterWorld Corporation
000 Xxxxxx, Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: Xxxx & Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxxXxxxxx, Esq.
If to JEI: Jackpot Enterprises, Inc.
c/o J Net Partners LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
with a copy to: Xxxxxxxxx Traurig, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Annex
Such Communication shall be mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, deposited in a United States post office or a depository
for the receipt of mail regularly maintained by the post office
or (ii) sent by Federal Express or other nationally recognized
courier that regularly provides proof of delivery, or (iii)
personally delivered. If mailed by United States mail, then such
Communication shall be deemed to have been received by the
addressee on the third day following the date of such mailing. If
delivered by Federal Express or other courier service, or if
personally delivered, then such Communication shall be deemed to
have been given upon the date of such delivery.
9. This Agreement may be signed in counterparts, all of
which when taken together shall constitute one original
instrument.
IN WITNESS WHEREOF, JEI and Xxxxxxx have executed this
Agreement as of the date first written above.
Xxxxxxx X. Xxxxxxx
Jackpot Enterpises, Inc.
By: ___________________________
Name:
Title:
