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                              EMPLOYMENT AGREEMENT

         AGREEMENT made as of August 16, 1999, by and between
DigitalConvergence.com Inc., a corporation incorporated under the laws of the
state of Delaware, with its principal place of business at 4264 Kellway Circle,
Addison, Texas 75001 (the "Company"), and GREGORY LERMAN residing at the address
set forth at the end of this Agreement (the "Executive").

                             W I T N E S S E T H:

         WHEREAS, the Company and the Executive desire to set forth the terms
and conditions of the Executive's employment by the Company;

         NOW, THEREFORE, the parties hereto agree as follows:

         1. TERM OF EMPLOYMENT. The Executive's employment under this Agreement
shall be for a term commencing on October 18, 1999 and terminating on October
17, 2002, subject to earlier termination as provided in section 5 hereof (the
"Term of Employment"). Each year of the Term of Employment is referred to herein
as a "Contract Year."

         2.       EMPLOYMENT

                  2.1 During the Term of Employment, the Company shall employ
the Executive as its President - Interactive Group, and the Executive shall
serve in such position, perform such services and have such authority,
functions, duties, powers and responsibilities as ordinarily are associated
with such title. The Executive shall faithfully and diligently serve the
Company and shall devote all of his business time, attention, skill and efforts
thereto; provided, that the Executive may manage his passive investments and be
involved in charitable interests so long as they do not interfere or conflict
with the performance of the Executive's duties hereunder.  The Executive shall
be based in Dallas, Texas.



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         3.       COMPENSATION AND OTHER REMUNERATION.

                  3.1 BASE SALARY. The Company shall pay to the Executive during
the Term of Employment base salary at the annual rate of Two Hundred Fifty
Thousand Dollars ($250,000); provided that Executive's base salary may be
increased at such time as the Company completes an initial public offering, to a
level to be negotiated in good faith at that time. Base salary will be paid in
accordance with the customary payroll practices of the Company and shall be
subject to required payroll deductions and withholdings. The compensation due to
Executive hereunder shall be due and payable notwithstanding any compensation
which Executive may earn from any other entity or outside source.

                  3.2 BONUS. The Executive shall be eligible to receive a bonus
in respect of each Contract Year in such amount, if any, as may be determined by
the Company's board of directors.

                  3.3 VACATION. The Executive shall be entitled to a reasonable
number of days of vacation during each Contract Year, scheduled in advance with
the Company to avoid excessive disruption of the Company's operations.

                  3.4      STOCK OPTIONS.

                           3.4.1.   Pursuant to one or more stock option
agreements (hereafter referred to as the "Stock Option Agreement") dated the
date hereof, the Company shall grant to Executive stock options, under and
pursuant to the Company's 1999 Stock Option Plan, to purchase one thousand five
hundred (1,500) shares of the Company's common stock, $.01 par value ("Common
Stock"), at the price of Two Thousand Eighty-Five Dollars ($2,085) per share.
Twenty five percent (25%) of these options will vest immediately upon grant,
and the balance will vest in thirds on the last day of the first, second and
third Contract Year, provided Executive is employed on such dates, except as
otherwise provided in the last sentence hereof. The Stock Option Agreement will
provide that the maximum number of options which may be issued in the form of
incentive stock options pursuant to Section 422 of the Internal Revenue Code
will be so


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issued, with the balance of the options granted pursuant hereto to be issued as
non-qualified options. The Stock Option Agreement will further provide that if
the Executive dies during the Term of Employment or if the Company terminates
this Agreement due to his disability (as described below) or without "Cause"
(as defined below), or the Executive terminates this Agreement for "Good
Reason" (as defined below), all unvested options shall immediately become
exercisable.

                  3.4.2 Pursuant to a second Stock Option Agreement dated the
date hereof, the Company shall grant to Executive stock options, under and
pursuant to the Company's 1999 Stock Option Plan, to purchase two hundred fifty
(250) shares of Common Stock at the price of Two Thousand Eighty-Five Dollars
($2,085) per share. The Stock Option Agreement will provide that the maximum
number of options which may be issued in the form of incentive stock options
pursuant to Section 422 of the Internal Revenue Code will be so issued, with the
balance of the options granted pursuant hereto to be issued as non-qualified
options. Such options shall become fully vested (i) upon satisfaction of the
performance criteria described in EXHIBIT A, annexed hereto, or (ii) if the
Executive dies or if the Company terminates this Agreement due to his disability
(as described below) or without "Cause" (as defined below) or the Executive
terminates this Agreement for "Good Reason" (as defined below), if such event
occurs prior to the fulfillment of such performance criteria.

                  3.4.3. All vested options will be exercisable for a period of
ten (10) years from the date of grant, regardless of whether this Agreement has
terminated. Any options granted in the form of incentive stock options which are
not exercised within three (3) months of the termination of employment (other
than due to death or disability) or twelve (12) month in the event of
termination due to disability automatically shall be converted into
non-qualified options.


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         4.       BENEFITS; REIMBURSEMENT OF BUSINESS EXPENSES.

                  4.1 BENEFITS. The Executive shall participate in all benefit
plans of the Company generally available to its employees and/or to any senior
executive of the Company, whether now existing or hereafter established
(collectively, the "Benefit Plans"). The extent of Executive's participation in
the Benefit Plans shall be at the same level as the most senior executives of
the Company.

                  4.2 REIMBURSEMENT OF BUSINESS EXPENSES. Business expenses
incurred by the Executive in accordance with the Company's policies will be
reimbursed upon the presentation of receipts. Business-related air travel shall
be such class as is determined by Executive in his reasonable discretion.

                  4.3 MOVING EXPENSES. The Company will pay or reimburse the
Executive for the expenses of his moving from Safety Harbor, Florida, to Dallas,
Texas, up to Fifteen Thousand Dollars ($15,000).

                  4.4 INSURANCE. During any period that the Executive is
rendering any services hereunder, the Company agrees to cause Executive to be
named as an insured under a director and officer liability insurance policy
which the Company shall obtain.

         5.       TERMINATION.

                  5.1      TERMINATION FOR CAUSE.

                           5.1.1    The Company may terminate this Agreement
and all of the Company's obligations hereunder, other than its obligations set
forth below in this section 5.1, for "Cause." "Cause" shall mean that the
Executive (i) is convicted of a felony, or any misdemeanor involving fraud or
theft, (ii) engages in dishonest behavior which materially adversely affects
the Company, (iii) commits a willful and intentional act having the effect of
materially injuring the reputation or business of the Company, including,
without limitation, habitual use of illegal drugs or alcohol or (iv) materially
breaches this Agreement and, after


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having been given written notice thereof by the Company, fails to correct such
breach within ten (10) days after receipt of such notice.

                  5.1.2 In the event of termination by the Company for Cause,
the Company shall have no further obligations to the Executive other than to pay
(i) base salary accrued through the effective date of termination; and (ii) all
other benefits and amounts which may be then due the Executive under the general
provisions then in effect of any Benefit Plan ((i) and (ii) collectively, the
"Termination Entitlements").

                  5.2 TERMINATION DUE TO DEATH. This Agreement shall terminate
upon the Executive's death, and in such event the Company shall have no further
obligations hereunder, other than to pay to the Executive's estate the
Termination Entitlements.

                  5.3 TERMINATION DUE TO DISABILITY. If, during the Term of
Employment, the Executive shall become physically or mentally disabled, whether
totally or partially, so that he is unable to perform the material functions of
his position for periods aggregating one hundred thirty five (135) days in any
twelve (12) month period, the Company shall be entitled to terminate this
Agreement upon written notice to the Executive given at any time thereafter
during which the Executive is still so disabled. Upon such termination, the Term
of Employment shall end, and the Company shall have no further obligations
hereunder other than to pay to the Executive the Termination Entitlements.

                  5.4 TERMINATION FOR GOOD REASON. "Good Reason" shall mean any
of the following: (i) a material breach by the Company of this Agreement, (ii) a
material diminution of Executive's authority, duties or responsibilities with
the Company or (iii) the assignment to Executive of duties materially
inconsistent with Executive's position with the Company, unless otherwise
approved by the Executive. If there exists an event or condition that
constitutes Good Reason, and such event or condition is not cured within ten
(10) days following Executive's giving the Company notice thereof, Executive at
any time thereafter shall have the right to terminate this Agreement by giving
the Company written notice of such termination, and upon


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his doing so, the provisions of sections 3.4.1, 3.4.2, and 5.5 and all other
relevant provisions hereof shall apply.

                  5.5 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the
Company terminates this Agreement without Cause (as defined in section 5.1
hereof), or if the Executive terminates this Agreement for Good Reason (as
defined in section 5.4 hereof), in addition to the Termination Entitlements,
the Executive shall be entitled to receive all base salary due for the balance
of the Term of Employment in a lump sum within thirty (30) days of the date of
termination.

                  5.6 STOCK OPTION VESTING. The impact of the termination of
this Agreement on the stock options referred to in section 3 hereof, shall be
as described in section 3 and in the Stock Option Agreements under which such
options shall be issued.

         6. PROTECTION OF CONFIDENTIAL INFORMATION. The Executive acknowledges
that employment by the Company will bring the Executive into close contact with
the confidential affairs of the Company and its affiliates. In recognition of
the foregoing, the Executive covenants and agrees that the Executive will keep
secret all confidential matters of the Company and its affiliates, including,
without limitation, the terms and provisions of this Agreement, and will not use
for his own benefit or intentionally disclose such matters to anyone outside of
the Company, either during or after the Term of Employment, except with the
Company's consent, provided that (i) the Executive shall have no such obligation
to the extent such matters are or become publicly known other than as a result
of the Executive's breach of his obligations hereunder; (ii) the Executive may
disclose such matters to the extent required by applicable laws or governmental
regulations or judicial or regulatory process; and (iii) the Executive may
disclose the terms of this Agreement to his attorney(s), accountant(s) and/or
financial advisor(s).

         7. OWNERSHIP OF WORK PRODUCT. The Executive acknowledges that in the
course of employment hereunder, he may conceive of, discover, or create
inventions or new contributions relating to the subject matter of his employment
(all of the foregoing being collectively referred


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to herein as "Work Product"). The Executive acknowledges that, unless the
Company otherwise agrees, all of such Work Product shall be owned by and belong
exclusively to the Company. The Executive shall further, unless the Company
otherwise agrees in writing, (i) promptly disclose any such Work Product to the
Company; (ii) assign to the Company, upon request, the entire rights to such
Work Product to the extent not otherwise owned at law by the Company; and (iii)
sign all papers reasonably necessary to carry out the foregoing.

         8. REPRESENTATIONS. Both Executive and Company represent and warrant
that each is not a party to any agreements or understandings which would prevent
the fulfillment by such party of the terms of this Agreement or which would be
violated by entering into this Agreement and performing such party's obligations
hereunder.

         9. NOTICES. All notices, requests, consents and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally or three days after being
mailed first-class, postage prepaid, by registered or certified mail, to the
address of the recipient given herein (or such other address of which notice is
given or, in the case of notice to the Executive, to the most recent address set
forth on the records of the Company).

         10. INDEMNIFICATION. The Company shall indemnify Executive against any
and all judgments, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees, incurred in connection with any action or proceeding,
whether civil, criminal, judicial, legislative, administrative or investigative,
or in connection with an appeal therein, by reason of the fact that Executive is
or was a director, officer, employee, representative or agent of the Company;
provided, however, that no such indemnification shall be made to Executive if an
adverse judgment or other final adjudication establishes that the acts of
Executive were committed in bad faith or were the result of active and
deliberate dishonesty and, in either case, were material to the cause of action
so adjudicated. Without limiting the foregoing, Executive shall also be entitled
to indemnification by the Company against any liability or damage,


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including attorney's fees and liabilities under federal and state securities
laws, arising from any act or omission by Executive provided such act or
omission was reasonably believed to be within the scope of Executive's
authority or was taken upon advice of the accountants or legal counsel for the
Company. The indemnification of Executive provided by this section 10 shall
continue after Executive has ceased to be a director, officer, employee,
representative or agent of the Company and shall inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.

         11.      GENERAL.

                  11.1 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of the State of
Texas applicable to agreements made and to be wholly performed therein.

                  11.2 CAPTIONS. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

                  11.3 ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. The parties
expressly acknowledge, represent and agree that this Agreement is fully
integrated and contains and constitutes the complete and entire agreement and
understanding of the parties with respect to the subject matters hereof and
supersedes any and all agreements, understandings and discussions, whether
written or oral, between the parties with respect to the subject matters hereof,
other than the Proprietary Rights and Information Agreement being entered into
simultaneously herewith. The parties further acknowledge, represent, and agree
that neither has made any representations, promises or statements to induce the
other party to enter into this Agreement, and each party specifically disclaims
reliance, and represents that there has been no reliance, on any such
representations, promises or statements.

                  11.4 ASSIGNABILITY. This Agreement and the parties' rights and
obligations hereunder may not be assigned by Executive or the Company without
the other's prior written consent.


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                  11.5 AMENDMENTS; WAIVERS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and covenants
hereof may be waived, only by written instrument executed by both of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of either party at any time or times to require performance of any provisions
hereof shall in no manner affect such party's right at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.

                  11.6 CONSTRUCTION. No presumption will be made or inference
drawn because the attorneys for one of the parties drafted this Agreement or
because of its drafting history.




         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.


                                   DigitalConvergence.com Inc.




                                   By:  /s/ J. Jovan Philyaw
                                       ------------------------------------
                                   Its: C.E.O.
                                       ------------------------------------

                                   GREGORY LERMAN

                                   Signature: /s/ Gregory D. Lerman
                                             ------------------------------
                                   Address:   2410 Country Trails Dr.
                                             ------------------------------
                                              Safety Harbor, FL 34695
                                             ------------------------------



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