Exhibit 7
SECOND AMENDMENT TO EMPLOYMENT TERMINATION AND OPTION
TERMINATION AGREEMENT
Agreement made this 27th day of September 1996, among Salvatore
Casaccio ("Casaccio"), A. Joseph Melnick ("Melnick"), Richard Bartlett
("Bartlett") and Childrobics, Inc. (the "Corporation").
WHEREAS, the parties hereto have previously entered into an agreement
entitled "Employment Termination and Option Agreement" as amended (the
"Agreement"); and
WHEREAS, the parties have been unable to satisfy certain of their
obligations at the Closing of the Agreement and the parties hereto desire that
the Agreement be amended as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
promises, representations, warranties and covenants herein contained, the
parties hereto do hereby agree as follows:
1. Section 2(b) of the Agreement is hereby amended as follows: (a) The
obligations of the Corporation to transfer to Casaccio, or a corporation of
which Casaccio is the sole shareholder, all the assets of the Corporation which
are used solely in connection with the operations of the Corporation
attributable to the Corporation's playcenter located on Avenue U in Brooklyn,
New York and the
obligations of Casaccio to assume all of the liabilities attributable to the
operations at such location, and each and every obligation of the parties with
respect to such location as more fully set forth in Section 2(b) of the
Agreement shall be performed by the execution and delivery by the parties of (i)
an Assignment and Assumption of Lease, (ii) an Assignment and Assumption
Agreement, (iii) a Guaranty (of the Corporation's obligations under the Lease)
to be executed by Casaccio in favor of the Corporation, and (iv) a Secretary's
Certificate confirming the due authorization and execution of the Assignment and
Assumption of Lease, promptly following the consent of the landlord with respect
to such playcenter to the assignment of the lease.
(b) The Corporation agrees to reimburse Casaccio or a corporation of
which Casaccio is the sole shareholder, to the extent of proceeds, if any,
received from pending insurance claims relating to damage and theft occurring at
such playcenter, for expenses and losses associated with such damage and theft
incurred by Casaccio upon submission of written documentation evidencing such
expenses or losses. The Corporation shall not reimburse Casaccio, or the
corporation of which Casaccio is the sole shareholder, for damage or loss which
was repaired or replaced by the Corporation prior to August 31, 1996, regardless
of whether the funds used to fund such repairs or replacement were derived from
revenues generated by such playcenter.
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However, it being acknowledged by the Corporation that this playcenter has been
operated for the benefit of Casaccio as if the transfer had occurred as of the
close of business on August 30, 1996, and to the extent such repairs or
replacement were paid by the Corporation from revenues derived from the
operation of such playcenter after August 30, 1996, Casaccio shall still be
entitled to reimbursement for such repairs or replacements. Any insurance
proceeds not remitted to Casaccio, or the corporation of which Casaccio is the
sole shareholder, because they are in excess of presented documentation shall be
retained to the Corporation.
(c) In recognition that the Corporation has continued and still
continues to receive revenues from credit card charges accepted at the Bayside,
Queens, Manhattan and Avenue U playcenters subsequent to August 30, 1996, upon
receipt of proceeds from credit card charges accepted at such playcenters
arising out of charges after August 30, 1996 such revenues shall be promptly
remitted to Casaccio upon receipt of documentation indicating such revenues were
derived from charges accepted after August 30, 1996. In addition, upon
presentation by Casaccio to the Corporation of documentation indicating that
revenues from any of such playcenters was used to pay obligations of the
Corporation unrelated to these playcenters, the Corporation shall promptly remit
such amounts to Casaccio. To the extent the
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Corporation paid expenses relating to activities subsequent to August 30, 1996,
Casaccio shall remit such amounts to the Corporation, including, without
limitation, personnel expenses. Casaccio agrees that any revenues he has
received for pre-August 31, 1996 activities shall be promptly remitted to the
Corporation.
2. Section 2(c) of the Agreement is hereby amended as follows:
At the Closing, subject to the terms and conditions set forth herein, the
Corporation shall deliver to Casaccio and Bartlett:
(a) an assignment of all of the outstanding accounts payable of Fun
Station USA of Staten Island, Inc. a/k/a Fun Zones of Staten Island, Inc.
("Fun Station") to the subsidiaries of the Corporation in the form annexed
hereto as Exhibit A,
(b) a limited revocable stock proxy in the form annexed hereto as
Exhibit B,
(c) an executed stock power transferring all of the Corporation's
interest in Fun Station (the "Shares"), 50% to each of Casaccio and Bartlett.
The documents set forth in Sections 2(a) and 2(c) are to be held in
escrow by Manuel Rubeo, Esq. (the "Escrow Agent"). The parties acknowledge that
the transfer of the Shares is restricted by the terms of a right of first
refusal pursuant to a shareholder's agreement with respect to the stock of such
corporation (the "Right of First
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Refusal") and that such shares are pledged to the shareholders of such
corporation as security under a Note (the "Note").
(d) The Escrow Agent shall release the documents set forth in Section
2(a) and (c) to Casaccio and Bartlett in the following events:
(i) the Escrow Agent shall have received written evidence that
the Right of First Refusal has been waived or satisfied by the minority
shareholders of Fun Station; and
(ii) the Escrow Agent shall have received written evidence
that the Note has been waived by the payee, satisfied in whole or in part or
reinstated by the payee; or
(iii) the Escrow Agent shall have received a court order to
release such documents.
In the event that the conditions in Section 2(d) are satisfied and
either Casaccio or Bartlett delivers to the Escrow Agent written instructions to
release the stock power from escrow, the Escrow Agent shall provide written
notice to the individual at the address first above written who did not send
such instruction notifying same that upon the expiration of 15 days from the
date of such notice, the Escrow Agent shall release all of the Corporation's
interest to the individual who sent such notice unless the Escrow Agent receives
written instructions to issue the stock powers to them jointly.
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3. Unless the documents are released to the Corporation as set forth in
Section 4 herein, Casaccio and Bartlett shall at the Closing, assume the
obligations of the Corporation as set forth on the assumption agreement annexed
hereto as Exhibit C. Negotiations are presently pending between Casaccio,
Bartlett and the other shareholders of Fun Station. In the event that any monies
are required to be paid to the Landlord and/or other shareholders of Fun Station
as part of these negotiations or settlement of the disputes, the Corporation
agrees to advance up to $45,000.00 upon written instructions from Casaccio,
Bartlett or either of them and to credit same against the monies due to Casaccio
and Bartlett pursuant to the promissory notes to be delivered at the Closing on
a pro rata basis.
4. The Escrow Agent shall return the documents set
forth in Section 2(a) and (c) hereof to the Corporation in
the following events:
(i) If the Corporation is required to pay, pursuant to a
judgement by the shareholders of Fun Station or a monetary judgement by the
landlord with execution remaining unsatisfied, to either the shareholders of Fun
Station or the landlord with respect to the such playcenter, any sum; or
(ii) If Casaccio or Bartlett violate the terms of
the proxy set forth in Section 2(b); or
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(iii) If Fun Station has not entered into, within a period of
twenty (20) days following the Closing, a duly authorized and executed agreement
with Group Coin Associates, Inc. for a minimum of three years, on substantially
the terms set forth in the Group Coin Associates, Inc. standard agreement so
long as Fun Station continues to pay Group under the current operating
arrangement, during such twenty-day period.
5. In the event that Casaccio or Bartlett commence a lawsuit on behalf
of Fun Station, Casaccio and Bartlett, jointly and severally, agree to advance
all fees, including attorney fees in connection with such lawsuit.
6. All capitalized terms used herein shall have the
same meanings as set forth in the Agreement.
7. The parties hereto agree to take such other actions and to deliver
such other documents as may be necessary to effectuate the purposes and
agreements set forth herein.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.
CHILDROBICS, INC.
By: /s/ Salvatore Casaccio
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Name: Salvatore Casaccio
Title: President
/s/ Salvatore Casaccio
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SALVATORE CASACCIO
/s/ Joseph Melnick
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JOSEPH MELNICK
/s/ Richard Bartlett
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RICHARD BARTLETT
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