EMPLOYMENT AGREEMENT
This
Employment Agreement (“Agreement”) is entered into as of the 19th day of May,
2010, by and between Xxxxxx Xxxxxx (“Executive”) and The Empire Sports &
Entertainment, Co. (“Empire” or “Employer”).
WHEREAS, Executive desires to
be employed by Employer, and Employer desires to employ Executive;
and
WHEREAS, Executive and
Employer desire to set forth in a written agreement the terms and conditions of
such employment;
NOW, THEREFORE, in
consideration of the premises hereof and of the mutual promises and agreements
contained herein, the parties agree as follows:
1
a.
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INCENTIVE
COMPENSATION: Executive shall participate in an incentive
compensation plan to be established by Employer for an annual bonus
(“Bonus”). Executive will be entitled to a Bonus amount equal
to ten percent (10%) of Employer’s audited annual Net Income of Pubco
(prior to the Acquisition, of Empire), determined in accordance with US
Generally Accepted Accounting Principles, consistently applied
(“GAAP”). Net Income shall be as reported for each fiscal year
of Pubco as filed on the Annual Report on Form 10-K filed with the
Securities and Exchange Commission, or if no such report is required to be
filed, by mutual agreement of Pubco/Empire and Executive on or prior to
February 28 of each year, and if not agreed then by an accounting firm
mutually agreed to by the parties (whose fees and expenses shall be paid
by the Empire), and prepared in accordance with GAAP. Each
Bonus payment shall be made to Executive no later than 95 days following
the last day of the fiscal year for which Net Income has been
determined.
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b.
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STOCK
ENTITLEMENT. Executive shall be provided with an opportunity
contemporaneous with the execution of this Agreement to subscribe for ten
percent (10%) fully diluted voting common stock interest in Pubco on the
same basis (founder’s) shares as Xxxx Xxxxx and Xxxxx
Xxxxx. The Executive will receive shares of common stock that
will be subject to repurchase (vest) in equal installments over the Term
of this Agreement, at the purchase price per share sold to Executive, if
Executive shall not be employed by Empire or Pubco on the date of the
Acquisition (100% vesting condition) or on each such anniversary of the
date of commencement of the employment Term (1/3 vesting
condition). Executive shall be eligible for such grants of
stock options (“Options”) or
awards of restricted stock (“Restricted
Stock”) under Pubco’s equity compensation plans as approved and
adopted by the Board of Directors shall determine. The Board of
Directors shall make an initial grant (the “Initial Grant”)
of Restricted Stock to the Executive on the date (the “Grant Date”)
that is the earlier of: (i) the date on which Pubco’s common stock shall
be quoted on the OTCBB, the OTCQB or any national securities exchange or
acquired by any such company; or (ii) the date on which Pubco shall become
obligated to file reports with the SEC. The Initial Grant shall
be equal to ten (10%) percent of the fully-diluted common stock of Pubco
issued and outstanding on the Grant Date, without giving effect to any
securities issued in any financing transaction(s) or issuances
or offerings for cash which close following the date
hereof. For the absence of doubt, if any shares are issued to
Xxxxxxx Xxxxx or Xxxxx Xxxxx for no or nominal value through the Grant
Date, an equitable adjustment to the Initial Grant will be made so that as
of the Grant Date, Executive shall own ten (10%) of the issued and
outstanding common stock of Pubco on the Grant Date, with each of Xxxxxxx
Xxxxx, Xxxxx Xxxxx and Executive subject to dilution proportionately as a
result of any private offering or similar financing transaction securities
issued. No adjustment will be required if Xxxxxxx Xxxxx or
Xxxxx Xxxxx purchase securities in the offering at the same price, and
subject to the same terms, as investors in the offering. In the event that
the Acquisition does not occur prior to July 1, 2010 the foregoing shall
apply to provide Executive with a ten (10%) percent interest in Empire as
of July 1, 2010.
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2.
9. LETTER
OF CREDIT. Employer shall secure and post an irrevocable Letter of
Credit, satisfactory in form and substance, and issued by a financial
institution satisfactory, to Executive by May 31, 2010, proof of which will be
provided to Executive the day of posting, which will be in the amount of one
million five hundred thousand dollars ($1,500,000.00). This Letter of
Credit may be reduced by Employer after six (6) months, and after each six (6)
month period thereafter, in increments of two hundred and fifty thousand dollars
($250,000.00). At any time base compensation or additional
compensation under this Agreement is not timely made by Employer, or if the
Employer otherwise is in material breach of the Agreement, Executive shall be
entitled to draw the full remaining amount of the Letter of
Credit. If such irrevocable letter of credit is not posted by May 31,
2010, the Executive shall have the right to terminate this Agreement upon giving
written notice to Employer. In the event Empire fails to make any
payment of Base Salary or Bonus to Executive or there exists a breach under
which a letter of credit draw is permitted due to a material breach of this
Agreement, Executive shall notify Empire of its right to cure such breach and if
not cured within five (5) business days of such notice Executive shall be
entitled to notify the bank that it shall pay the amount then due and owing to
Executive substantially as follows: “The corporation is in breach of
its payment obligation in the amount of $___________ or is in material breach of
paragraph ___ and at least five (5) business days have elapsed since the date I
notified Empire. In accordance with the terms of that certain
Employment Agreement dated as of ____, 2010 (the “Agreement”) you are
hereby authorized and instructed to pay $_____ to the undersigned as follows
_________. ”
3.
a.
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Pay
the Executive his Base Salary due through the last day of the then
existing Term of this Agreement at the rate in effect at the time of
notice of termination; and
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b.
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Pay
the Executive the Bonus Compensation set forth here in Paragraph 6 through
the last day of the then existing Term of this
Agreement.
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4.
20.
APPLICABLE LAW. This Agreement is governed by, and is to be construed
and enforced in accordance with, the laws of the State of New York, without
regard to principles of conflicts of laws. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement, and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion
hereof. Each party expressly agrees, consents and submits to the
personal jurisdiction and venue of the American Arbitration Association (“AAA”)
in New York County, New York for adjudication of any and all disputes arising
from or related to this Agreement pursuant to the rules for expedited
proceeding. Such arbitration shall be conducted in a confidential
manner and shall be identified to the AAA as a confidential
proceeding. Each party waives any and all rights, under law or in
equity, to object or contest the jurisdiction and venue of said
tribunal.
5.
/s/ Xxxxxx Xxxxxx | Dated: May 19, 2010 | ||
Xxxxxx Xxxxxx | |||
THE
EMPIRE SPORTS & ENTERTAINMENT, CO.
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By:
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/s/Xxxxx Xxxxx
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Dated:
May 19,
2010
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Xxxxx
Xxxxx
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Chairman
of the Board
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6.