AMENDMENT TO MANAGEMENT RETENTION AGREEMENT
Exhibit 10.7
AMENDMENT TO MANAGEMENT RETENTION AGREEMENT
THIS AMENDMENT TO MANAGEMENT RETENTION AGREEMENT is dated as of March 3, 2006 (this
“Amendment”), by and among Xxxxxx.xxx, Inc., a Delaware corporation (“Youbet”), UT
Group, LLC, a Delaware limited liability company (“Seller”), Xxx Xxxxx (“Xxxxx”)
and Xxxxx Xxxxx (“Xxxxx”). Capitalized terms that are not defined elsewhere in this
Amendment shall have the meanings ascribed to such capitalized terms in the Agreement (as defined
below).
RECITALS
A. Youbet, Seller, Xxxxx and Xxxxx are parties to that certain Management Retention Agreement,
dated as of February 10, 2006 (the “Agreement”).
B. Pursuant to Section 11 of the Agreement, Youbet, Seller, Xxxxx and Xxxxx desire to amend
the Agreement upon the terms and conditions set forth in this Amendment.
AGREEMENTS
In consideration of the mutual covenants of the parties as hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto hereby agree as follows:
1. Recitals. Effective as of the date first set forth above, the section entitled
“RECITALS” of the Agreement is amended and restated in its entirety to read as follows:
R E C I T A L S
A. Youbet and Seller are parties to that certain Stock Purchase Agreement, dated as of
November 30, 2005 (as amended, modified or supplemented from time to time, the “Purchase
Agreement”), by and among Youbet, UT Gaming, Inc., a Delaware corporation
(“Purchaser”), Seller and United Tote Company (“United Tote”), pursuant to
which Purchaser, a wholly-owned subsidiary of Youbet, acquired from Seller all of the
capital stock of United Tote.
B. As a material inducement to cause Youbet and Purchaser to enter into the Purchase
Agreement, Xxxxx entered into that certain Restricted Stock Purchase Agreement (the
“Xxxxx Restricted Stock Purchase Agreement”), dated November 30, 2005, by and
between Xxxxx and Youbet and that certain Lock-Up Agreement (the “Xxxxx Lock-Up
Agreement”), dated November 30, 2005, by and between Youbet and Xxxxx, and Xxxxx entered
into that certain Restricted Stock Purchase Agreement (the “Xxxxx Restricted Stock
Purchase Agreement” and, together with the Xxxxx Restricted Stock Purchase Agreement,
the “Restricted Stock Purchase Agreements”), dated November 30, 2005, by and between
Xxxxx and Youbet and that certain Lock-Up Agreement (the “Xxxxx Lock-Up Agreement”
and, together with the Xxxxx Lock-Up
Agreement, the “Lock-Up Agreements”), dated November 30, 2005, by and between
Youbet and Xxxxx.
C. Upon the Closing (as defined in the Purchase Agreement), the Restricted Stock
Purchase Agreements and Lock-Up Agreements were terminated and Youbet, Purchaser, Xxxxx and
Xxxxx replaced the incentives for Xxxxx and Xxxxx to remain in the employ of United Tote
after the Closing (as defined in the Purchase Agreement) provided under such agreements with
the incentives contemplated in the Agreement.
X. Xxxxx serves as the Vice President, Game Development of United Tote pursuant to
the terms of that certain Employment Agreement, dated as of September 5, 2003, by and
between Xxxxx and United Tote, as amended by that certain First Amendment to Employment
Agreement, dated November 30, 2005, and by that certain Second Amendment to Employment
Agreement, dated March 3, 2006 (the “Xxxxx Employment Agreement”).
X. Xxxxx desires to continue to serve as Vice President, Game Development of United
Tote in accordance with the terms of the Xxxxx Employment Agreement.
F. Effective as of the date hereof and in connection herewith, Xxxxx and United Tote
have entered into that certain Settlement and General Release Agreement, dated as of March
3, 2006 (the “Release Agreement”), pursuant to which Xxxxx resigned from his
position as the President and Chief Operating Officer of United Tote and waived any and all
claims against United Tote and certain other released parties, including, but not limited
to, those arising in connection with that certain Employment Agreement, dated as of
September 5, 2003, by and between Xxxxx and United Tote, as amended by that certain First
Amendment to Employment Agreement, dated November 30, 2005 (the “Xxxxx Employment
Agreement”).
X. Xxxxx remains bound by certain provisions of the Xxxxx Employment Agreement.
X. Xxxxx and Purchaser are parties to that certain Non-Compete Agreement, dated as of
November 30, 2005 (the “Non-Compete Agreement”).
2. Termination of Certain Agreements. Effective as of the date first set forth above,
Section 1 of the Agreement is amended and restated in its entirety to read as follows:
1. Termination of Certain Agreements. The parties hereto hereby acknowledge
and agree that, upon the Closing, the Restricted Stock Purchase Agreements and Lock-Up
Agreements terminated and became null and void, without any liability of any party to any
other party thereunder.
3. Payments upon Termination of Employment. Effective as of the date first set forth
above, Section 2 of the Agreement is amended and restated in its entirety to read as follows:
2. Payments upon Termination of Tracy’s Employment.
(a) In the event that Xxxxx ceases to be employed by United Tote, Youbet or any other
direct or indirect subsidiary of Youbet prior to February 9, 2007 for any reason, (i) Youbet
shall have the right to set off $500,000 against any amounts due or outstanding under the
$1.8 Million Note (as defined in the Purchase Agreement), or (ii) if the $1.8 Million Note
has been voluntarily prepaid, Youbet and Seller shall jointly direct the escrow agent in
writing to pay $500,000 to Youbet from the escrow account established pursuant to Section
2(b) of the $1.8 Million Note (the “Retention Escrow Account”), by delivery of
written notice of such termination and Youbet’s exercise of either such right to Seller;
provided, that this Section 2(a) shall not apply in the event (i) United Tote,
Youbet or any other direct or indirect subsidiary of Youbet terminates Tracy’s employment
without “Cause”, as defined in the Xxxxx Employment Agreement, (ii) Tracy’s employment is
terminated as a result of him suffering any mental or physical impairment or disablement
that prevents him from performing his duties as an employee of United Tote, Youbet or any
other direct or indirect subsidiary of Youbet for a period of 90 days (whether or not
consecutive) in any 180 day period or (iii) Tracy’s employment is terminated as a result of
his death, and after such termination described in clause (i) or (ii) Xxxxx ceases to be
employed by United Tote, Youbet or any other direct or indirect subsidiary of Youbet.
(b) In the event that prior to February 9, 2007, Xxxxx breaches Sections 5, 6, 7 or 8
of the Xxxxx Employment Agreement or any provision of the Non-Compete Agreement or the
Release Agreement (collectively, the “Xxxxx Covenants”), Youbet shall have the right
to set off $500,000 against any amounts due or outstanding under the $1.8 Million Note, or
(ii) if the $1.8 Million Note has been voluntarily prepaid, Youbet and Seller shall jointly
direct the escrow agent in writing to pay $500,000 to Youbet from the Retention Escrow
Account, by delivery of written notice of such breach and Youbet’s exercise of either such
right to Seller. Nothing contained in this Agreement shall be deemed to amend the terms and
conditions of the Xxxxx Covenants in any respect.
(c) For the avoidance of doubt, the obligations set forth in Sections 2(a) and (b) are
cumulative, such that if, prior to February 9, 2007, Xxxxx ceases to be employed by United
Tote, Youbet or any other direct or indirect subsidiary of Youbet and Xxxxx breaches any of
the Xxxxx Covenants, an aggregate of $1,000,000 shall be subject to set off by Youbet or
payment from the Retention Escrow Account.
(d) Seller, Xxxxx and Xxxxx hereby agree that (i) with respect to each of Xxxxx and
Xxxxx, if Youbet sets off $500,000 against amounts due and outstanding under the $1.8
Million Note or is paid $500,000 from the Retention Escrow Account as provided in either
Section 2(a) or (b), then such $500,000 shall be deemed to be an advance to
Xxxxx or Xxxxx, as applicable, on distributions to be made pursuant to Section 7.2 of
Seller’s Limited Liability Company Agreement, dated as of September 5, 2003, as amended (the
“Seller LLC Agreement”; and any such advance, a “Deemed Executive
Distribution”), and shall appropriately reduce distributions to be made thereafter by
Seller to Xxxxx or Xxxxx, as applicable, under Section 7.2 of the Seller LLC Agreement, when
and as made by Seller, and (ii) that appropriate adjustments, as determined by Seller’s
board of directors, will be made to the allocations of “Profits” and “Losses”, as
applicable, to take into account any such Deemed Executive Distribution.
4. Management Retention Agreement not a Service Contract. Effective as of the date
first set forth above, Section 3 of the Agreement is amended and restated in its entirety to read
as follows:
3. Management Retention Agreement not a Service Contract. This Agreement is
not an employment or service contract, this Agreement shall not be deemed to create (nor
shall it be interpreted or construed as creating) any service contract or an employment or
service relationship and nothing herein shall be deemed to create in any way whatsoever any
obligation on Tracy’s part to continue in the employ of United Tote or its affiliates, or of
United Tote or its affiliates to continue Tracy’s employment.
5. Full Force and Effect. Except as is expressly stated herein, the Agreement, as
further modified by this Amendment, shall remain in full force and effect and unchanged.
6. Counterparts. This Amendment may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Amendment, to the extent signed and delivered by means of a
facsimile machine, e-mail of a PDF file or other electronic transmission, shall be treated in all
manner and respects as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered in person. At the
reasonable request of any party hereto, each other party hereto shall re-execute original forms
thereof and deliver them to all other parties. No party hereto shall raise the use of a facsimile
machine, e-mail of a PDF file or other electronic transmission to deliver a signature or the fact
that any signature or agreement or instrument was transmitted or communicated through the use of a
facsimile machine, e-mail of a PDF file or other electronic transmission as a defense to the
formation or enforceability of a contract and each such party forever waives any such defense.
7. Governing Law; Consent To Jurisdiction. THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THE INTERPRETATION OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW) APPLICABLE TO CONTRACTS EXECUTED
AND TO BE PERFORMED IN SUCH STATE. EACH PARTY HERETO CONSENTS TO THE PERSONAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN CONNECTION WITH ANY CLAIM OR DISPUTE ARISING IN CONNECTION WITH
THIS AMENDMENT. ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR ANY RIGHT ARISING
OUT OF THIS AMENDMENT MAY BE BROUGHT AGAINST EACH PARTY HERETO IN THE COURTS OF THE STATE OF NEW
YORK.
8. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY,
UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION (WHETHER ARISING IN TORT OR CONTRACT) BASED ON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PERSON OR ANY EXERCISE BY ANY PARTY OF THEIR
RESPECTIVE RIGHTS UNDER THIS
AMENDMENT (INCLUDING WITHOUT LIMITATION ANY ACTION TO RESCIND OR CANCEL THIS AMENDMENT OR ANY
CLAIMS OR DEFENSES ASSERTING THAT THIS AMENDMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE). THIS PROVISION IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AMENDMENT.
9. Headings. The subject headings of this Amendment are included for purposes of
convenience only and shall not affect the construction or interpretation of any of its provisions.
10. No Strict Construction. The language used in this Amendment will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
11. Entire Agreement. All references in the Agreement, or otherwise to the Agreement,
hereafter shall be deemed to include the Agreement as amended by this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment to Management Retention Agreement
as of the date first above written.
| XXXXXX.XXX, INC. |
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| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Chief Financial Officer | |||
| |
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| UT GROUP, LLC |
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| By: | /s/ Xxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
| /s/ Xxx Xxxxx | ||||
| Xxx Xxxxx | ||||
| /s/ Xxxxx Xxxxx | ||||
| Xxxxx Xxxxx | ||||
