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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of September 12, 1996 between American Gaming
& Entertainment, Ltd., a Delaware corporation (the "Company"), and J. Xxxxxxx
Xxxxxxxxxx, a resident of New Jersey ("Executive").
A. Executive desires to be employed as President and Chief Executive
Officer of the Company.
B. The Company desires to retain the benefit of Executive's experience and
loyalty, and to employ Executive as President and Chief Executive Officer of the
Company.
C. The Company intends to negotiate with Shamrock Holdings Group, Inc.,
formerly known as Xxxxxxx Holdings, Inc., ("Xxxxxxx"), the Company's largest
creditor and stockholder, to restructure all obligations due from the Company to
Xxxxxxx. The Company understands that Shamrock is owned by Xxxxxxx X. Xxxxxxx,
the Trustee (the "Trustee") under Chapter 11 of the U.S. Bankruptcy Code for
certain entities related to Xxxxxxx. Executive has advised that the Company that
he would execute this Employment Agreement and agree to participate in the
negotiation and restructuring efforts and be responsible for the day-to-day
operations of the Company only if the Company pays to Executive the signing
bonus set forth in Section 4(b) and causes to have issued to Executive the
letter of credit set forth in Section 4(g).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Definitions.
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The terms used in this Agreement shall be defined as follows:
(a) "Agreement" shall mean this Employment Agreement as amended from
time to time.
(b) "Base Salary" shall mean the annual base salary payable to
Executive pursuant to Section 4(a) hereof.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean termination of the Executive's employment with
the Company by the Board because of (i) Executive's willful misconduct or gross
negligence in the performance of, or the willful failure or refusal by Executive
to perform substantially, Executive's duties and obligations under this
Agreement, as an officer of the Company or the lawful duties which are otherwise
assigned to Executive by the Board, (ii) the inexcusable repeated or prolonged
absence from work by Executive (other than pursuant to a Permanent Disability
(as defined below) of Executive), (iii) any breach by Executive of Executive's
material obligations under this Agreement, (iv) the habitual abuse of illegal or
intoxicating substances by Executive, (v) conviction or entry of a plea of
guilty to any felony by Executive, (vi) Executive's engagement in fraud,
misappropriation, embezzlement, or other act or acts of dishonesty resulting in,
or intended to result in, substantial personal enrichment of Executive at the
expense of the Company or (vii) the entry of any final civil judgment in
connection with any allegation of fraud, misrepresentation, misappropriation or
any other intentional tort or intentional statute violation related to
Executive's employment with the Company. A Cause pursuant to clauses (i) - (iv)
of this Section 1(d) shall be deemed to exist only if such Cause has not been
cured by Executive within two weeks after written notice thereof from the
Company to Executive.
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(e) A "Change in Control" shall be deemed to have occurred if, at any
time during the two-year period after the date of this Agreement (1) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
(other than an "Affiliate" (as defined in the Exchange Act) of Xxxxxxx) becomes
the "Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing greater than
50% of the combined voting power (with respect to the election of directors, or
a merger, consolidation or liquidation of the Company or a sale of all or
substantially all of the business or assets of the Company) of the Company's
then outstanding securities who was not as of the date of this Agreement the
Beneficial Owner of securities of the Company representing greater than 50% of
such combined voting power of the Company's securities outstanding as of the
date of this Agreement; (2) the consummation of a merger or consolidation of the
Company with or into any other corporation, other than (A) a merger or
consolidation which would result in all or substantially all of the Beneficial
Owners of voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) greater than 50% of the combined
voting power (with respect to the election of directors, or a merger,
consolidation or liquidation of the Company or a sale of all or substantially
all of the business or assets of the Company) of the securities of the Company
or of such surviving entity outstanding immediately after such merger or
consolidation or (B) a merger, consolidation or distribution effected to
implement a recapitalization or reorganization of the Company (or similar
transaction) which results in no person (other than Xxxxxxx or any of its
Affiliates) after such transaction, directly or indirectly, owning more than 40%
of the combined voting power (with respect to the election of directors, or a
merger, consolidation or liquidation of the Company or a sale of all or
substantially all of the business or assets of the Company) of the Company's
then outstanding securities; (3) the consummation of a plan of complete
liquidation of the Company or of an agreement for the sale or disposition by the
Company of all or substantially all of the Company's business or assets to any
person or (4) Xxxxxxx or the Trustee exercises control over the Company,
including without limitation (A) causing the election of any person not
currently a director of the Company to the Board or (B) causing the appointment
of any person as an officer of the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" shall mean the Compensation Committee of the Board, if
one exists and, if not, shall mean the Board.
(h) "Confidential Information" shall have the meaning ascribed to it in
Section 7 below.
(i) "Effective Date" shall mean the date of this Agreement.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(k) "Executive Benefit Plans" shall mean any plans within the meaning
of Sections 4(c) and (d) of this Agreement.
(l) "Period" shall mean the two-year period commencing on the date of
this Agreement. If the parties hereto agree to any extension of the Period, the
term "Period" shall include all such extensions thereof; provided, that the
Company shall not be obligated to grant any such extension.
(m) "Permanently Disabled" shall mean prevented from performing his
obligations hereunder for a period of 120 consecutive days as a result of his
physical or mental health, as evaluated by sufficient documentation including
doctors' statements.
(n) "Stock Options" shall mean any options held by Executive granting
him the right to acquire shares of common stock of the Company.
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(o) "Substantial Breach" shall mean (1) a substantial reduction in the
nature or status of Executive's responsibilities hereunder; provided, that it
shall not be deemed to be a Substantial Breach if Executive's duties are revised
so that he remains an officer but is removed or not reelected as President or as
Chief Operating Officer or as a director of the Company; (2) a reduction by the
Company in the Base Salary of Executive; (3) the failure by the Company to allow
Executive to participate to the full extent in all plans, programs or benefits
in accordance with Sections 4(b) to (d), inclusive, hereof; (4) the failure by
the Company to pay, distribute or grant any amounts of cash, stock or other
compensation to Executive to which he is contractually entitled; or (5) the
failure of the Company to maintain its principal offices during the Period in
Atlantic, Bergen, Passaic, Xxxxxx or Essex counties in New Jersey or Rockland
county in New York, provided, however, that the Company move and maintain its
principal offices through the end of the Period in Bergen, Passaic, Xxxxxx or
Essex counties in New Jersey or Rockland county in New York upon the merger or
consolidation with or into another entity. A Substantial Breach shall be deemed
to occur only if such Substantial Breach has not been corrected by the Company
within two weeks of receipt of notice from Executive of the occurrence of such
Substantial Breach, which notice shall specifically set forth the nature of the
Substantial Breach.
2. Employment and Duties.
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(a) General. From the date of this Agreement through the end of the
Period, the Company hereby employs Executive, and Executive agrees upon the
terms and conditions herein set forth, to serve as an officer of the Company and
Executive, in such capacity, shall perform duties substantially the same as
normally performed by persons in like positions in similar companies and
substantially the same as those performed by Executive immediately prior to the
date of this Agreement. So long as the principal offices of the Company are not
located in Bergen, Passaic, Xxxxxx or Essex counties in New Jersey or Rockland
county in New York, Executive may work one day per week from his home and the
Company shall pay for a fax machine and fax line for Executive to work at such
location.
(b) No Other Employment. Throughout the time that Executive is employed
by the Company during the Period, Executive shall, except as may from time to
time be otherwise agreed in writing by the Company and unless prevented for less
than 120 consecutive days by ill health, devote his full-time working hours to
his duties hereunder and Executive shall not, directly or indirectly, render
services to any other person or organization for which he receives compensation
(excluding outside board activities for a public charity, which involve modest
time commitments) without the consent of the Board or otherwise engage in
activities which would interfere with the performance of his duties hereunder;
provided, however, that the Executive may render volunteer services for which he
is not compensated so long as such services do not interfere with the
performance of his duties hereunder.
3. Term of Employment. Subject to earlier termination of employment
hereunder pursuant to Sections 5 or 6 of this Agreement, the Company shall
retain Executive during the Period and Executive shall serve in the employ of
the Company for the Period.
4. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following compensation and
other benefits to Executive during the Period as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to Executive an annual base
salary in the amount of one hundred and twenty-five thousand dollars ($125,000)
(the "Base Salary") payable in accordance with the Company's standard payroll
policies. The Company shall be entitled to deduct or withhold all taxes and
charges which the Company may be required to deduct or withhold therefrom. The
Base Salary will be reviewed not less than annually by the Committee and may be
increased at any time but may not be decreased without the consent of Executive.
(b) Signing Bonus. Upon the execution by the Company and Executive of
this Agreement, the Company shall promptly pay to Executive a signing bonus in
the amount of sixty-two thousand five hundred dollars ($62,500).
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(c) Incentive Compensation. At all times during the Period, Executive
shall be entitled to participate in all incentive compensation plans and
programs of the Company in which other Company executives participate, existing
from time to time. Subject to this Section 4, the Company shall at all times
maintain incentive compensation plans and programs that provide Executive with
substantially the same opportunities for incentive compensation as those in
effect immediately prior to the date of this Agreement.
(d) Stock Options. Executive shall be entitled to participate in all
stock option plans and programs of the Company existing from time to time other
than plans that exclude executive employees generally; provided, that the
Company shall have no obligation to grant any options under such plans or
programs; and provided, further, that upon exercise of the Company's rights set
forth in Section 17 of the Company's Stock Option Plan the Company may terminate
such plan. Notwithstanding the terms of the plans or agreements pursuant to
which Executive's Stock Options were granted, in the event that Executive's
employment hereunder is terminated by the Company pursuant to clause (v), (vi)
or (vii) of Section 1(d), all of Executive's Stock Options shall immediately
terminate and Executive shall have no right to exercise such Stock Options or
receive any payment for them. Upon the execution by the Company and Executive of
this Agreement, the Company shall promptly grant to Executive options to
purchase at the market price in effect on the date of this Agreement 350,000
shares of common stock of the Company pursuant to a stock option agreement
having terms substantially similar to the existing stock option agreement
covering Executive's existing options.
(e) Other Executive Benefit Plans. Executive shall be eligible to
participate in all pension and welfare plans and programs of the Company for
executive employees, existing from time to time, including, without limitation,
the following:
(i) All qualified benefit plans and programs (e.g., defined
contribution, supplemental retirement and Section 401(k) plans, long-term
disability and life insurance plans and programs);
(ii) All hospitalization and medical plans and programs; and
(iii) All retirement plans and programs.
Such other executive benefit plans shall be substantially similar to those plans
in effect at the Company immediately prior to the Effective Date.
(f) Severance Compensation. The Company shall pay to Executive a
severance payment equal to two (2) years' Base Salary (i) in the event that
Executive is terminated without Cause, (ii) upon the occurrence of a Substantial
Breach or (iii) Executive resigns from his employment hereunder after a Change
in Control.
(g) Letter of Credit. Upon execution of this Agreement by the Company
and Executive, the Company shall cause to have issued an irrevocable letter of
credit (the "L/C") in the amount of sixty-two thousand five hundred dollars
($62,500) to be paid to Executive in the event that (i) Executive's employment
is terminated by the Company without Cause, (ii) the Company files for
bankruptcy protection or an involuntary case is commenced against the Company,
(iii) Executive remains employed by the Company for a period of one (1) year
after the date of this Agreement, (iv) a Substantial Breach has occurred or (v)
Executive resigns from his employment hereunder after a Change of Control.
(h) Car Allowance. The Company shall pay to Executive a car allowance
of $500 per month, payable on the first of each month, with the payment for
September 1996 being made upon execution of this Agreement.
(i) Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company, nor shall anything
herein limit or reduce such rights as Executive may have under any other
agreements with the Company (except as provided in Section 6(c)).
Notwithstanding any provision hereof, amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or program of the
Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement. Executive's entitlement to any other
compensation or benefits shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices
then in effect.
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5. Termination of Employment for Cause.
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(a) Compensation and Benefits. If, prior to the expiration of the
Period, (i) Executive's employment hereunder is terminated by the Company for
Cause, or (ii) Executive resigns from his employment hereunder other than under
circumstances covered by Section 6 below, Executive shall not be eligible to
receive any compensation or benefits or to participate in any plans or programs
under Section 4 hereof with respect to the Period after the date of such
termination except for the right to receive benefits under any plan or program,
to the extent vested, in accordance with the terms of such plan or program and
except for benefits provided in accordance with customary practices of the
Company at Executive's expense (e.g., hospitalization and medical insurance);
provided, however, that Executive's Stock Options shall be governed by the
provisions of Section 4(d) above.
(b) Date of Termination. The date of termination of Executive's
employment hereunder by the Company under this Section 5 shall be (i)
immediately upon receipt by Executive of written notice of termination for
Cause; provided, that the Cause specified in such notice shall not have been
corrected by Executive within two (2) weeks after Executive received notice of
such Cause if Executive had the right pursuant to Section 1(d) to cure such
Cause or (ii) immediately upon receipt by the Company of written notice of
Executive's resignation, except if such resignation is due to a Substantial
Breach.
6. Termination of Employment Other Than For Cause.
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(a) Compensation and Benefits. If, prior to the expiration of the
Period, Executive's employment hereunder is terminated by the Company without
Cause or for any reason within one year after a Change in Control, or if, prior
to the expiration of the Period, Executive resigns from his employment hereunder
following a Substantial Breach or for any reason within one year after a Change
in Control, or if, prior to the expiration of the Period, Executive dies or
becomes Permanently Disabled while employed hereunder, notwithstanding such
termination or resignation, through the end of the Period:
(i) Executive shall be entitled to continue to receive payments
through the expiration of the Period under Section 4(a) above at the rate of his
Base Salary as in effect on the date of termination or resignation;
(ii) Executive shall be entitled to receive bonuses under any
incentive compensation plans described in Section 4(b) as in effect on the date
of termination or resignation determined as though Executive had remained
employed pursuant to this Agreement;
(iii) All of Executive's Stock Options shall immediately vest and
remain exercisable through the option term of each respective Stock Option as
set forth in the respective Stock Option grant letter;
(iv) Executive shall remain eligible to participate in all
Executive Benefit plans and for purposes of determining Executive's
participation and benefits thereunder, Executive's employment with the Company
shall be deemed to continue and his compensation shall include the payments
under Section 6(a)(i) and (ii) above; and
(v) Executive shall be entitled to receive the severance
compensation described in Section 4(f).
(b) Date of Termination. The date of termination's of Executive's
employment by the Company under this Section 6 shall be the date specified in
the written notice of termination to Executive, or if no such date is specified
therein, the date on which such notice is given to Executive. The date of
resignation by Executive under this Section 6 as a result of a Substantial
Breach shall be immediately upon receipt by the Company of written notice of
resignation; provided, that the Substantial Breach shall not have been corrected
by the Company during the two (2) week period after such notice of such
Substantial Breach was provided to the Company pursuant to Section 1(p)
hereunder. The date of termination of Executive's employment in the event of his
death shall be the date of Executive's death or in the event Executive becomes
Permanently Disabled, 120 days after the date such disability commenced.
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(c) Reduction in Payments. The amount of any payments of compensation
and benefits to Executive under this Section 6 shall be reduced by the amount,
if any, necessary to prevent any part of such payments from being treated as an
"excess parachute payment" (as that term is defined for purposes of Section
280G(b)(1) of the Code and the related federal tax regulations); provided,
however, that such reduction shall apply only if the reduction will result in
payments to Executive under this Section 6 which have, after consideration of
all applicable taxes, a greater after-tax benefit to Executive than the amount
of such payments to Executive under this Section 6 computed without such
reduction. The determination of relative benefits shall be made by the Company
on the basis of information supplied by Executive.
7. Nondisclosure of Confidential Information.
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(a) Definition. For purposes of this Agreement "Confidential
Information" means any information or compilation of information, not generally
known, which is proprietary to the Company and relates to the Company's existing
or reasonably foreseeable business. All information which the Company identifies
as being "confidential" or "trade secret" shall be presumed to be Confidential
Information. Confidential Information shall also include any confidential
information of a parent, subsidiary or sister corporation of the Company and any
information disclosed by a third party under contract with the Company which
contract requires such disclosed information be kept confidential. Confidential
Information shall not include information that is in or enters the public domain
other than through a breach of confidentiality owed to the Company.
(b) Nondisclosure. During the Period and at all times thereafter,
Executive shall hold in strictest of confidence and will never disclose,
furnish, transfer, communicate, make assessable to any person or use in any way
Confidential Information for Executive's own or another's benefit or permit the
same to be used in competition with the Company, nor will Executive accept any
employment which would, by the nature of the position, inherently involve the
use or disclosure by Executive of Confidential Information.
8. Specific Performance and Injunctive Relief. In addition to any other
relief afforded by law, the Company shall have the right to enforce the
covenants contained in Section 7 hereof by specific performance and by
preliminary, temporary and permanent injunctive relief against Executive and any
other person concerned thereby, it being understood that damages, specific
performance or injunctive relief shall be proper modes of relief and are not to
be considered as alternative remedies. If the Company is successful in any
action for specific performance or injunctive relief, the costs incurred by the
Company related thereto, including reasonable attorneys' fees and expenses,
shall be paid by Executive.
9. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any and all oral or written
understanding between the parties hereto.
10. Headings of No Effect. The Section headings contained in this Agreement
are included solely for convenience of reference and shall not in any way affect
the meaning or interpretation of any of the provisions of this Agreement.
11. Binding Agreement. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto, any successor to or assigns of the Company,
and Executive's heirs and the personal representative of Executive's estate.
12. Severability. If the final determination of a court of competent
jurisdiction declares, after the expiration of the time within which judicial
review (if permitted) of such determination may be perfected, that any term or
provision hereof is invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired and (b) the invalid or unenforceable term
or provision shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
13. Amendment; Waiver. This Agreement may not be modified, amended or
waived in any manner except by an instrument in writing signed by both parties
hereto. The waiver by either party hereto of compliance with any provision of
this Agreement by the other party hereto shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent breach by
such party of a provision of this Agreement.
14. Renewal. The Company shall be under no obligation to renew this
Agreement.
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15. Governing Law. All matters affecting this Agreement, including the
validity hereof, are to be governed by, interpreted and construed in accordance
with the laws of the State of New Jersey.
16. Notices. Any notice hereunder by either party hereto to the other shall
be given in writing by personal delivery or certified mail, return receipt
requested. If addressed to Executive, the notice shall be delivered or mailed to
Executive at the address specified under Executive's signature hereto or such
other address which Executive has advised the Company to send notice to, or if
addressed to the Company, the notice shall be delivered or mailed to the Company
at its executive offices and to the attention of each member of the Board of
Directors of the Company at their respective business addresses. A notice shall
be deemed given, if by personal delivery, on the date of such delivery or, if by
certified mail, on the date shown on the applicable return receipt.
17. Consideration. The parties acknowledge that the restrictions contained
in Section 7 hereof are a reasonable and necessary protection of the immediate
interests of the Company and any violation of these restrictions would cause
substantial injury to the Company and that the Company would not have entered
into this Employment Agreement without receiving the additional consideration
offered by Executive in binding himself to these restrictions.
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IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by
its officer pursuant to the authority of its Board, and Executive has executed
this Agreement, as of the day and year first written above.
AMERICAN GAMING & ENTERTAINMENT, LTD.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Chairman
/s/ J. Xxxxxxx Xxxxxxxxxx
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J. Xxxxxxx Xxxxxxxxxx
Address: 00 Xxxxx Xxxx
Xxxx Xxxx, XX 00000
