February 28, 2000
Xx. Xxxxxxx Xxxxxx
[CONFIDENTIAL DATA]
HOUSING SUPPLEMENT AND LOAN ARRANGEMENT
Dear Xxxxxxx:
This letter confirms our agreement to make certain financial
accommodations available to you in connection with your purchase of a new
home in Northern California (the "New Residence"), which will modify the
terms of your employment letter dated November 5, 1999 (the "Employment
Agreement"). We have agreed as follows:
(1) We agree to accelerate the payment of a prorata portion (calculated
through May 31, 2000) of your guaranteed $125,000 target annual
bonus, provided that you agree to repay to Liberate such
accelerated payments if you voluntarily terminate your employment
prior to the first anniversary of your hire date or you are
terminated for "Cause" (as defined in the Employment Agreement)
before such date.
(2) Liberate will pay you a supplemental monthly housing expense
allowance equal to the difference between your monthly mortgage
payment (currently estimated to be roughly $9,000 per month) for
your new residence less the amount of your current monthly mortgage
payment on your residence in Washington (the "Monthly Supplement"),
plus a "grossed up" amount to cover taxes on the Monthly
Supplement based on the maximum applicable federal and state
income tax rates (the "Grossed-up Amount"). Liberate will be
responsible for paying all FICA, SDI, FUTA, SUTA and other
applicable withholding amounts in connection with the foregoing
payments. Liberate will make these payments to you commencing for
the month in which you begin mortgage payments on the New
Residence, and such payments will continue until you notify
Liberate that you no longer need the Monthly Supplement, but in no
event beyond
January 2001. The Grossed-up Amount will be treated as an
interest-free advance to you, which will be repayable by you to
Liberate on or before April 16, 2001.
(3) If you terminate your employment with us, all advanced amounts set
forth above will become immediately due and payable by you to
Liberate, and Liberate will have the option to terminate the
payment of the Monthly Supplement (together with the Grossed-up
Amount) to you.
In all other respects, the terms of the Employment Agreement are
unchanged and remain in full force and effect.
You are a very critical and important member of Liberate's executive
team, and we are pleased to be able to offer the foregoing financial
arrangement to you. Please confirm your understanding of the foregoing
arrangement to Liberate by signing below.
Sincerely,
Xxxxxxxx X. Xxxxxxxx,
President and Chief Executive Officer
Acknowledged and agreed:
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Xxxxxxx Xxxxxx
