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 contemplate that Empire will be acquired by a public
company (“Pubco”) whose common stock is quoted for trading on the OTCBB or
similar exchange (the “Acquisition”) and the terms and provisions of this
Agreement are intended to be binding on such successor to Empire, as if named
herein, and Executive following closing of the Acquisition;
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. TERM
OF AGREEMENT. Employer will employ Executive as Chief Executive
Officer for a Term commencing as of July 1, 2010 for a three year period (the
“Term”). The Term may be extended or renewed by the mutual written
agreement of the parties.
2. DUTIES. As Chief
Executive Officer, Executive will be solely and exclusively responsible for all
operations of Employer, including but not limited to planning, marketing, and
managing events and staff. Executive will have sole and exclusive
authority to hire employees and consultants for the Employer, consistent with
the agreed upon company budget. Executive will assume the duties of
the position effective July 1, 2010 and will report directly to the board of
directors. Notwithstanding anything herein to the contrary, the terms
and conditions and personnel who are desired by Executive to serve as President,
Chief Operating Officer, Chief Financial Officer, Chief Technology Officer, and
in any other “C-Level” Executive position or function of Pubco, Empire or any of
its subsidiaries and the public company auditor and counsel must be approved by
the Executive and the Board of Directors in advance, and shall be subject to
removal only by the Board of Directors, in its sole
discretion. All staffing decisions shall be within the approved
financial and personnel budget authorized by the Board of Directors not less
frequently than annually.
3. PUBLICATION
DATE. No publication of Executive’s engagement with Employer shall be
made before June 15, 2010, and thereafter shall be made upon mutual
agreement.
4. INITIAL
TERM. If at the end of the Term a new employment contract is not
executed, this Agreement shall continue for an additional three (3) year Term in
the absence of notice of non-renewal by either party not less than sixty (60)
days prior to the expiration of the Term. Executive’s compensation
for any such continuation period shall be an annual salary of six hundred
thousand dollars ($600,000.00), and the additional compensation set forth in
Paragraph 6 herein. All other provisions of this Agreement shall
continue in full force and effect for the subsequent three (3) year
Term.
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5. BASE
COMPENSATION. For duties rendered by Executive, Employer shall pay
Executive a base annual salary (“Base Salary”) for each year of the Term of five
hundred thousand dollars ($500,000.00) payable on a bi-weekly
basis.
6.
ADDITIONAL COMPENSATION. During the Term of this Agreement, Executive
shall receive the following additional compensation and benefits:
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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.
7.
EXPENSES. Employer shall provide Executive with a corporate credit
card for use as required to carry out the duties set forth herein in Paragraph
2. Employer shall reimburse Executive in full for monthly costs of
his cell phone, Blackberry and home phone. Executive shall also be
reimbursed for ordinary and necessary business expenses incurred by Executive on
behalf of Employer, that are in line with Empire’s policies & procedures set
by the Board of Directors.
8. TRAVEL. Executive shall
be entitled to travel and reimbursement for the cost of Business Class air, or
if not available, First Class air, for all flights in excess of two (2) hours,
and all international flights.
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.
10.
TERMINATION OF EMPLOYMENT BY EXECUTIVE. Executive may terminate his
employment hereunder at any time upon sixty (60) days prior written
notice. If Executive terminates his employment with Employer due to a
material breach of the Agreement, the Employer shall:
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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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11.
INSURANCE. Employer will maintain a policy of directors and officers
or equivalent insurance at all times during the Term, or any subsequent term of
employment of Executive, that will provide coverage for Executive, including
attorney fees and costs, for any action arising out of Executive’s performance
of the duties set forth here in Paragraph 2, and Employer will otherwise
indemnify and hold harmless Executive in any such action.
12.
VACATION. During each year of this Agreement, Executive shall be
entitled to four (4) weeks vacation as well as all holidays recognized by
Employer, in addition to religious observances as
appropriate. Vacation days shall accrue and carry over into the
following years if not used.
13.
HEALTH AND WELFARE BENEFITS. In addition to the benefits specifically
provided for herein, Executive and his family shall be entitled to participate
in all health and welfare benefit plans maintained by the Employer for executive
or managerial employees generally according to the terms of such plans.
Executive shall be entitled to participate in any retirement, 401k, or similar
plans established by Employer in which executive or managerial employees of
Employer participate. Employer will make all payments necessary
during the Term or subsequent terms, to maintain Executive’s current disability
policy in full force and effect.
14.
NON-RESTRICTIONS. Nothing shall prohibit Executive from serving during the Term,
or any subsequent term, as an owner, officer, director, or manager of any
company that is not doing business which is competitive with the business of the
Employer in the sports or entertainment industries. Executive shall be permitted
to conduct work on behalf of such companies at any time and in Employer's
facilities using Employer's phones, computers, copying and other office
equipment for such purpose at no cost to the Executive. For purpose
of this paragraph, “Photo Memorabilia” shall not be deemed to be a company which
is competitive with the business of the Employer doing business in the sports or
entertainment industries. It is acknowledged by Employer that
Executive has business interests and activities unrelated to Empire, and will
continue to have such interests and activities in the
future. Executive agrees, however, to use his best efforts to fulfill
his responsibilities as CEO of Empire Sports & Entertainment and agrees that
his outside interests and activities will not impede or interfere with his
fulfillment of those responsibilities.
15.
HIRING OF STAFF. Employer agrees to employ Xxxxxxx Xxxx (“Xxxx”) as
Assistant to Executive for a three (3) year guaranteed Term to coincide with the
Term of Executive. Xxxx shall be paid, in each year of the Term,
salaries of fifty thousand dollars ($50,000.00), fifty-two thousand five hundred
dollars ($52,500.00), and fifty-five thousand dollars ($55,000.00), and shall be
eligible for all benefits as are provided by Employer to similarly
situated employees. Xxxx will assume the duties of the position
effective July 1, 2010.
4.
16.
NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail to his residence in the case of Executive, or to its principal office in
the case of the Employer, and the date of receipt shall be deemed the date which
such notice has been provided.
17.
WAIVER OF BREACH. The waiver by either party of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by the other party.
18.
ASSIGNMENT. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer.
19.
ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and supersedes all other prior agreements, employment contracts and
understandings, both written and oral, express or implied with respect to the
subject matter of this Agreement and may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought. Executive
represents and warrants that employment by Empire does not conflict with and
will not be constrained by any prior business relationship, agreement or
understanding and that Executive does not possess confidential information
arising out of any prior relationship which, in Executive’s judgment, would be
utilized in connection with employment by Empire in contravention of any policy
or agreement relating to such confidential information and that Executive will
use best efforts not to disclose such information to Empire or any customer or
employee.
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.
21.
HEADINGS. The Paragraphs, subjects and headings of this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
22.
COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
23.
SEVERABILITY. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
24.
CHANGE IN CONTROL. Unless and until the shares of stock in the
Employer are publicly traded, and other than the Acquisition, Employer shall not
during the Term, or any successor term, sell or transfer a controlling interest
in Employer without the express, written agreement of Executive.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
written below.
| /s/ Xxxxxx Xxxxxx | Dated: May 19, 2010 | ||
| Xxxxxx Xxxxxx | |||
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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.
