Exhibit 10.7
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (this "Agreement") is dated June
17, 2002, and is between SPECTRUM NUMISMATICS INTERNATIONAL, INC., a
California corporation ("Spectrum"), XXXX XXXXXXX AUCTIONS, INC, a Delaware
corporation ("GMAI"), and XXXXXXX X. XXXXXXX, an individual ("Xx. Xxxxxxx").
GMAI, Spectrum and Xx. Xxxxxxx are parties to an Employment Agreement,
dated February 18, 2000 (the "Original Agreement"), pursuant to which Xx.
Xxxxxxx has been employed by Spectrum as its President. In addition, GMAI,
Spectrum and Xx. Xxxxxxx are parties to a Noncompetition Agreement, dated
February 18, 2000 (the "Noncompetition Agreement").
In connection with certain transactions known collectively as the "LENAPE
Project", the parties desire to amend the Original Agreement and the
Noncompetition Agreement in certain respects.
Spectrum and Xx. Xxxxxxx therefore agree as follows:
1. The Term as set forth is Section 1 of the Original Agreement is hereby
extended to February 18, 2008, that date being the eighth anniversary of the
date of the Original Agreement.
2. A new paragraph (c) is hereby added to Section 2 of the Original
Agreement, reading as follows:
"In the event that pursuant to Section 5.1 of the Merger Agreement,
dated December 8, 1999, among Spectrum, GMAI and Xx. Xxxxxxx, among
others, the "Stockholders" (as defined therein) no longer have the
right to nominate two members of the board of directors of GMAI,
then, so long as Xx. Xxxxxxx is employed by Spectrum, Xx. Xxxxxxx
will be entitled to nominate two members of the board of directors
of GMAI, provided that such persons are reasonably acceptable to
GMAI."
3. Section 3 of the Original Agreement is hereby amended to read as
follows:
"Compensation. Spectrum shall pay Xx. Xxxxxxx a salary of $300,000
per annum, which will increase to $400,000 per annum on the fourth
anniversary of the date of this Agreement; to $500,000 on the fifth
anniversary of the date of this Agreement; to $550,000 on the sixth
anniversary of the date of this Agreement; and to $600,000 on the
seventh anniversary of the date of this Agreement (that salary, the
"Base Salary"). Payment of the Base Salary will be in accordance
with Spectrum's standard payroll practices and subject to all
legally required or customary withholdings."
"Concurrently with the execution and delivery of this Agreement,
Spectrum shall make available to Xx. Xxxxxxx (from its own financing
sources), a loan in the amount of $600,000, which loan shall be
non-interest bearing except as required by law (the "Loan"). The
outstanding amount of the Loan shall be repaid on an annual basis in
three equal installments of $166,666 each, commencing on February
18, 2006; provided that (a) if Xx. Xxxxxxx is employed by Spectrum
on a full-time basis on the date that each annual payment is due,
the payment due as of that date shall be forgiven, and (b) if Xx.
Xxxxxxx' employment hereunder is terminated pursuant to Sections
6(a) death; 6(b) Totally Disabled; 6(d) without Cause; or 6(e) with
Good Reason, the entire outstanding amount of the Loan will be
forgiven as of the effective date of such termination."
"In the event Xx. Xxxxxxx' employment hereunder terminates pursuant
to Section 6(c) for Cause or without Good Reason, the outstanding
amount of the Loan (less any amount previously forgiven but without
any pro rata forgiveness through the date of termination) will be
accelerated and be due and payable within 30 days of such
termination of employment."
"Xx. Xxxxxxx understands and agrees that (i) Spectrum will be
required to impute interest income at the applicable Federal Rate on
his W-2 for each year any or all of the Loan is outstanding, except
in the event Xx. Xxxxxxx is no longer employed by Spectrum, and (ii)
the amount of the Loan will be added to Xx. Xxxxxxx' W-2 for the
years in which it is forgiven."
"Xx. Xxxxxxx hereby waives demand for payment, notice of dishonor
and any and all other notices and demands in connection with the
enforcement of the Loan. Xx. Xxxxxxx promises to pay and
indemnify Spectrum and GMAI for all expenses incurred, including
attorney's fees, in connection with the collection of any amount
due with respect to the Loan."
"Spectrum shall, as promptly as practicable, obtain and maintain in
force at all time during the Term, "key man" insurance policies in
the outstanding amount of the Loan from time to time, payable in the
event of Xx. Xxxxxxx' death or Total Disability (as defined in
Section 6(b), naming Spectrum as the sole beneficiary."
4. Section 4 of the Original Agreement is hereby amended by adding a new
paragraph at the end thereof, reading as follows:
"In the event the Board of Directors of GMAI elects to engage in a
tender offer for the exchange of stock options (or a transaction
having a substantially equivalent effect) and makes such offer
available to its employees generally, Xx. Xxxxxxx shall be entitled
to participate therein to the same extent as such other employees."
5. Section 9 of the Original Agreement is hereby amended to read in its
entirety as follows:
"9. Surrender of Records; Non-Solicitation."
"(a) All proprietary information is and will remain the sole
property of Spectrum (or GMAI as the case may be) during the Term
and thereafter. Following termination of his employment hereunder
for any reason Xx. Xxxxxxx may not retain any proprietary
information, and shall promptly return to Spectrum (or GMAI as the
case may be) any proprietary information in his possession."
"(b) During the Non-Solicitation Term, Xx. Xxxxxxx shall not solicit
or encourage any employee of Spectrum or GMAI to leave Spectrum or
GMAI for any reason, nor assist a Competing Business or any other
business in doing so."
"(c) Xx. Xxxxxxx shall not, during the Non-Solicitation Term, except
as required by Spectrum in the performance of Xx. Xxxxxxx' duties
hereunder, directly or indirectly
2
contact or solicit with a view to purchasing or selling rare coins
any Customer with whom Xx. Xxxxxxx had come into contact, or whose
account Xx. Xxxxxxx serviced or worked on, in connection with Xx.
Xxxxxxx' employment with Spectrum prior to the date of this
Agreement (those Customers collectively, "Company Contacts")."
"(d) For purposes of this Agreement, the following terms have the
following meanings:"
"`Affiliate' means, with respect to any given Person, (1) any other
Person at the time directly or indirectly controlling, controlled by
or under common control with that Person, (2) any other Person of
which that Person at the time owns or has the right to acquire,
directly or indirectly, 10% or more on a consolidated basis of any
class of the capital stock or other ownership interest, or (3) any
other Person which at the time owns or has the right to acquire,
directly or indirectly, 10% or more of any class of the capital
stock or other ownership interest of that Person. For purposes of
this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise."
"`Competing Business' includes (1) any business or venture that is
engaged in the wholesale or retail purchase or sale of rare coins,
and (2) any other business that is substantially similar in whole or
any significant part to the business conducted by Spectrum up to and
including the date of this Agreement."
"`Customer' means any Person that has purchased or offered to
purchase rare coins from GMAI or Spectrum, sold or offered to sell
rare coins to GMAI or Spectrum, or has been solicited by GMAI or
Spectrum with regard to the purchase or sale of rare coins."
"`Non-Solicitation Term' means the period commencing on the date
hereof and terminating on the sooner of (i) February 18, 2008 and
(ii) the date that none of GMAI or its affiliates is any longer
engaged in the wholesale or retail purchase or sale of rare coins."
"`Person' means any individual, corporation, association,
partnership (general or limited) joint venture, trust, estate,
limited liability company or other legal entity or organization."
5. Concurrently with the execution and delivery of this Agreement, GMAI
shall, pursuant to a Stock Option Agreement between GMAI and Xx. Xxxxxxx in the
customary form used by GMAI, grant to Xx. Xxxxxxx options to purchase 500,000
shares of common stock of GMAI, which options shall vest over a four-year period
in substantially equal installments and shall be exercisable at a price equal to
$2.00 per share, which is not less than the fair market value of the common
stock of GMAI as of the date of the Stock Option Agreement.
6. A new paragraph (c) is hereby added to Section 1 of the Noncompetition
Agreement, reading as follows:
"(c) In the event Spectrum breaches its obligations under Section
7(c) of the Employment Agreement and such breach continues for a
period of 30 days following delivery of written notice of such
breach from Xx. Xxxxxxx to Spectrum, then the provisions of
paragraph (a) of this Section 1 shall terminate and be of no force
and effect."
3
7. Sections 2 and 3 of the Noncompetition Agreement are hereby amended to
read in their entirety as follows:
"2. [Intentionally Omitted]"
"3. [Intentionally Omitted]"
8. This Agreement is governed by the laws of the State of California,
without giving effect to principles of conflict of laws.
9. Except as specifically amended hereby, the Original Agreement and the
Noncompetition Agreement shall remain in full force and effect in accordance
with their respective terms. This Agreement shall not constitute an amendment to
or modification of any other agreement between the parties hereto. Capitalized
terms used herein and not otherwise defined will have their meanings as set
forth in the Original Agreement.
SPECTRUM NUMISMATICS
INTERNATIONAL, INC.
By:
--------------------------------------
Name:
Title:
XXXX XXXXXXX AUCTIONS, INC.
By:
--------------------------------------
Xxxx Xxxxxxx
Chairman of the Board, Chief Executive
Officer and President
_____________________________________
XXXXXXX X. XXXXXXX
4
