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EXHIBIT 10.54
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into
as of December 1, 2000, between AMERICAN COIN MERCHANDISING, INC., d/b/a
SUGARLOAF CREATIONS, INC. (hereinafter called "Employer") and Xxxxxxx X. Xxxxxxx
(hereinafter called "Employee").
1. Introduction. Employer desires to retain the services and employment
of Employee, and Employee desires to secure or retain employment from Employer,
upon the terms and conditions set forth herein. Therefore, in consideration of
the mutual covenants and agreements contained herein, the parties to this
Agreement do hereby agree as follows.
2. Term. Employer hereby employs Employee to render services to
Employer as President and Chief Executive Officer from January 1, 2001 through
and including December 31, 2003.
3. Services. Employee hereby accepts employment under this Agreement
and agrees to devote one hundred percent (100%) of his full time and attention
to the business and affairs of Employer, as such business and affairs now exist
and as they may be hereafter changed or added to, under and pursuant to the
general direction of the Board of Directors of Employer. Employer shall retain
full direction and control of the means and methods by which Employee performs
the services for which he is employed.
4. Compensation. Commencing January 1, 2001, Employee will receive a
base salary of $250,000 per year, payable at the intervals regularly established
for payment of salaries by Employer. Such base salary will be increased to
$275,000 on January 1, 2002, and to $300,000 on January 1, 2003. The Employee
shall also be entitled to participate in the Employer's executive Bonus Plan.
Employee shall also receive stock options for 125,000 shares of Employer's
common stock pursuant to Employer's Amended and Restated Stock Option Plan,
effective as of November 21, 2000. Such options shall be granted at the market
price as of the date of grant and shall be evidenced by the Employer's standard
Option Agreement with the following modifications: such options shall be
exercisable annually over a two-year period, based on Employee's continued
employment with the Employer. The option agreement shall provide for immediate
acceleration upon a sale, merger or change of control transaction.
5. Benefits.
(a) During the period of employment under this Agreement,
Employee shall be entitled to receive all other benefits of employment generally
available to other employees in executive positions with Employer when and as
said Employee becomes eligible for those benefits, in accordance with the
general policy of Employer, including but not limited to, sick leave, paid
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holidays, life insurance, health insurance, 401k plan, 125 cafeteria package and
participation in any employee stock option or stock purchase plans.
(b) Employee shall be entitled to the same number of weeks
vacation during each calendar year of employment as generally available to other
employees in similar positions with Employer. Employee shall accrue days of paid
vacation in accordance with Employer's policy on vacation, as that policy is
applied to other employees who hold similar positions and who have been employed
by Employer as long as Employee. Employee shall take all such accrued vacation
days at times which shall not interfere with the normal business operations of
Employer.
(c) Employer will provide Employee with an automobile
allowance for leasing a motor vehicle. If Employee should leave employment of
Employer for any reason prior to the expiration of such lease, Employee shall
have the option to assume all obligations under the lease or to return the
vehicle to Employer.
(d) Employee shall be reimbursed by Employer for reasonable
travel and other business expenses incurred by Employee in the performance of
his duties under this Agreement, in accordance with the general policy of
Employer.
6. Employer's Authority. Employee agrees to observe and comply with the
rules and regulations of Employer as adopted by Employer's Board of Directors
either orally or in writing, respecting performance of Employee's duties and to
carry out and perform orders, directions, and policies stated by Employer to
Employee, from time to time, either orally or in writing; provided, however,
that Employee shall only be obligated to comply with legal and ethical rules,
regulations, orders, directions and policies of Employer.
7. Confidential Information and Noncompetition.
(a) Employee realizes that during this Agreement, Employee
will produce and/or will have access to confidential memoranda, notes,
information, records, maps, research results, business projections, business and
research notebooks, data, formulae, specifications, trade secrets, customer
lists, inventions and processes of Employer, and other information of a
confidential nature (collectively, "Confidential Information").
(b) Both during the term of this Agreement and subsequent to
its termination, Employee agrees to hold all Confidential Information in
confidence and not to disclose, and not directly or indirectly to use, copy,
digest or summarize, any Confidential Information, except to the extent
necessary to carry out Employee's responsibilities as directed or authorized by
Employer and, after termination of Employee's employment hereunder, as
specifically authorized in writing by Employer.
(c) All records in whatsoever form and in whatsoever medium
recorded, and any and all copies thereof (including volatile electronic or
magnetic signals), relating to Employer's business that Employee shall prepare,
or use, or come into contact with in the course of his executing his duties
under this Agreement, shall be and remain the sole property of Employer and
shall not be removed from Employer's premises except as necessary to carry out
Employee's
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responsibilities as directed and authorized by Employer; and the same shall be
returned promptly to Employer upon termination of Employee's employment
relationship with Employer or upon Employer's request.
(d) Employee agrees that he possesses or will possess
knowledge, skills and reputation in the industry in which Employer operates
which are of material importance to Employer, and which are special, unique and
extraordinary. Employee acknowledges that the loss of his services, or the use
of his services by a competitor, may cause irreparable harm to Employer.
Therefore, for the period of any severance following termination of employment
for any reason, with or without cause, Employee, individually and personally,
shall not do any of the following unless specifically authorized by the
Employer's Board of Directors:
(i) Canvass, solicit, or accept any business in the
Industry from any present or past customer of Employer or any related
company, if the customer is located in the United States (the
"Territory").
(ii) Aid or assist any other person, entity,
partnership, or corporation in any effort to canvass, solicit, or
accept any business in the amusement vending machine business or
industry (the "Industry") from any past or present customers of
Employer or of any related company, if the customer is located within
the Territory.
(iii) Directly or indirectly request or advise any
past or present customer of Employer, or any past, present, or possible
future customer of any related companies to withdraw, curtail, cancel,
or not undertake business in the Industry with any related company, if
the customer is located within the Territory.
(iv) Directly or indirectly disclose to any other
person, entity, partnership, or corporation the names of past or
present customers of Employer, or of any related company. The parties
agree that the names of these customers are confidential and
proprietary and constitute trade secrets of Employer, and are
confidential and proprietary and constitute trade secrets of Employer
within the meaning of C.R.S. Section 8-2-113(2)(b) and C.R.S. Section
7-74-102(4).
(v) Suggest, solicit, or encourage any employee of
Employer or any related company to leave employment; or disparage
Employer or any related company or their conditions of employment; or
disclose to any other person, entity, partnership, or corporation the
names of employees of Employer.
(vi) Directly or indirectly establish, as manager,
employee or owner of greater than 1% of the outstanding ownership
interest, or participate in an enterprise competitive with any business
which is conducted at any time during the term of this Agreement by
Employer or any related company, and which business is in the Industry
and in the Territory.
(vii) Provide any product, service, financing, aid,
or assistance of any kind for any person, entity, partnership,
association, or corporation which is competitive with any
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business which is conducted at any time during the term of this
Agreement by Employer or any related company, and which business is in
the Industry and in the Territory.
(viii) Compete in any manner with any business which
is conducted at any time during the term of this Agreement by Employer
or any related company, and which business is in the Industry and in
the Territory.
(e) The rights and obligations of this Section 7 shall survive
any expiration or termination of this Agreement.
8. Termination.
(a) Death, Disability or Retirement. This Agreement shall
terminate automatically upon the Employee's death or termination due to
"Disability." For purposes of this Agreement, Disability shall mean the
Employee's inability to perform the duties of this position, as determined in
accordance with the policies and procedures applicable with respect to the
Employer's term disability plan, then in effect.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, the Employee may, upon not less than 30 days' written
notice to the Employer, voluntarily terminate employment for any reason;
provided, however that any termination by the Employee pursuant to Section 8(d)
on account of Good Reason (as defined therein) shall not be treated as a
voluntary termination under this Section 8(b).
(c) Cause. The Employer may terminate the Employee's
employment for Cause. For purposes of this Agreement, "Cause" means (i) the
Employee's conviction of a felony or the entering by the Employee of a plea of
nolo contendere to a felony charge, (ii) the Employee's gross neglect, willful
malfeasance or willful gross misconduct in connection with his employment
hereunder which has had a significant adverse effect on the business of the
Employer and its subsidiaries, unless the Employee reasonably believed in good
faith that such act or nonact was in or not opposed to the best interests of the
Employer, or (iii) use of illegal drugs or persistent excessive use of alcohol.
(d) Good Reason.
(i) (A) the assignment to the Employee of any duties
inconsistent in any material adverse respect with the Employee's
position, authority or responsibilities, or (B) any other material
adverse change in such position, (not including changes in title),
authority or responsibilities;
(ii) any failure by the Employer to comply with any
of the provisions of this Agreement, other than an insubstantial or
inadvertent failure remedied by the Employer promptly after receipt of
notice thereof given by the Employee.
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(iii) The Employer requiring the Employee to be based
at any office or location more than 10 miles from that location at
which he performed his services immediately prior to the Change of
Control;
(iv) any other material breach of this Agreement by
the Employer.
(e) Notice of Termination. Any termination by the Employer for
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 16. For
purposes of this Agreement, a "Notice of Termination" means a written notice
given within a reasonable time after the event or action believed to constitute
the reason for giving notice.
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) in the case of termination for which a
Notice Termination is required, the date of receipt of such Notice of
Termination or, if later, the date specified therein up to 90 days after
receipt, as the case may be, and (ii) in all other cases, actual date on which
the Employee's employment terminated during the Employment Period.
(g) Advisory Services. Subsequent to the Date of Termination,
Employee agrees to be available to Employer for reasonable advisory services and
background information for the period covered by any Severance Amount, as
described below.
9. Obligations of the Employer upon Termination.
(a) Death or Disability. If the Employee's employment is
terminated during the term of this Agreement by reason of the Employee's death
or Disability, this Agreement shall terminate without further obligations to the
Employee or the Employee's legal representatives under this Agreement other than
those obligations accrued hereunder through the Date of Termination and the
Employer shall pay to the Employee (or his beneficiary of estate) (i) the
Employee's full base salary through the Date of Termination (the "Xxxxxxx
Salary"), (ii) any vested amounts or vested benefits owed to the Employee under
the Employer's otherwise applicable employee benefit plans and programs, and not
yet paid by the Employer (the "Accrued Obligations"), and (iii) any other
benefits payable due to the Employee's death or Disability under the Employer's
plans; policies or programs (the "Additional Benefits").
(b) Cause and Voluntary Termination. If the Employee's
employment shall be terminated for Cause or voluntarily terminated by the
Employee, the Employer shall pay the Employee (A) the Earned Salary in cash in a
single lump sum as soon as practicable, but in no event more than 10 days,
following the Date of Termination, and (B) the Accrued Obligations in accordance
with the terms of the applicable plan, program or arrangement.
(c) Termination by the Employer other than for Cause and
Termination by the Employee for Good Reason.
(i) Generally. If the Employer terminates the
Employee's employment other than for Cause, the Employer shall pay to
the Employee the following amounts: (A)
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the Employer's Earned Salary; (B) a cash amount (the "Severance
Amount") equal to the Employee's then-current annual base salary and
(C) the Accrued Obligations.
The Earned Salary shall be paid in accordance wit the Employer's
regular payroll practices. The Severance Amount shall be paid in equal
payments over the year following termination at dates concurrent with
the Employer's regular payroll cycle commencing with the next payroll
cycle following the Date of Termination.
(ii) After Change of Control. If, after a Change of
Control (as defined below), Employer terminates Employee's employment
other than for Cause, or the Employee terminates his employment for
Good Reason, the Employer shall pay to the Employee the following
amounts: (A) the Employee's Earned Salary; (B) a cash amount (the
"Severance Amount") equal to three times the Employee's then-current
annual base salary; and (C) the Accrued Obligations.
The Earned Salary shall be paid in accordance with
the Employer's regular payroll practices. The Severance Amount shall be
paid in equal payments over the three years following termination at
dates concurrent with the Employer's regular payroll cycle, commencing
with the next payroll cycle following the Date of Termination. As
security for payment of the Severance Amount, however, the Employer
shall deposit an amount equal to the Severance Amount into an escrow
account on the date of termination of employment. Such escrow account
shall not be subject to the general liabilities of the Employer, shall
solely be for the Employee's benefit, and shall be used solely for
payment of the Severance Amount to Employee.
(iii) Benefits. For any termination of employment
under this paragraph 9(c), the Employee (and, to the extent applicable,
his dependents) shall be entitled, until payment in full of the
Severance Amount, to continue participation in all Benefit Plans of the
Employer. To the extent any such benefits cannot be provided under the
terms of the applicable plan, policy or program, the Employer shall
provide a comparable benefit under another plan or from the Employer's
general assets. The Employee's participation in such benefit plans will
be on the same terms and conditions that would have applied had the
Employee continued to be employed by the Employer through such period.
(d) Discharges of the Employer's Obligations. Except as
expressly provided in the last sentence of this Section 9(d), the amounts
payable to the Employee pursuant to this Section 9 (whether or not reduced
pursuant to Section 9(e)) following termination of his employment shall be in
full and complete satisfaction of the Employee's rights under this Agreement and
any other claims he may have in respect of his employment by the Employer. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon the Employee's receipt of such amounts, the Employer
shall be released and discharged from any and all liability to the Employee in
connection with this Agreement or otherwise in connection with the Employee's
employment with the Employer. Nothing in this Section 9(d) shall be construed to
release the Employer from its commitment to indemnify the Employee and hold the
Employee harmless from and against any claim, loss or cause of action arising
from or out of the Employee's performance as an officer, director or employee of
the Employer or any of its Subsidiaries or in any other capacity,
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including any fiduciary capacity, in which the Employee served at the request of
the Employer to the maximum extent permitted by applicable law and the governing
documents of the Employer.
(e) Limit on Payments by the Employer.
(i) Application of Section 9(e). In the event that
any amount or benefit paid or distributed to the Employee pursuant to
this Agreement, taken together with any amounts or benefits otherwise
paid or distributed to the Employee by the Employer or any affiliated
company (collectively, the "Covered Payments"), would be an "excess
parachute payment" as defined in Section 280G of the Code and would
thereby subject the Employee to the tax (the "Excise Tax") imposed
under Section 4999 of the Code (or any similar tax that may hereafter
be imposed), the provisions of this Section 9(e) shall apply to
determine the amounts payable to Employee pursuant to this Agreement.
(ii) Calculation of Payment Cap. Immediately
following delivery of any Notice of Termination, the Employer shall
notify the Employee of the aggregate present value of all termination
benefits to which he would be entitled under this Agreement and any
other plan, program or arrangement as of the projected Date of
Termination, together with the projected maximum payments (determined
as of such projected Date of Termination) that could be paid without
the Employee being subject to the Excise Tax. Such amount shall be
referred to as the "Payment Cap."
(iii) Imposition of Payment Cap. If the Covered
Payments exceed the Payment Cap, the parties agree that the Covered
Payments shall automatically be reduced to the Payment Cap to eliminate
any Excise Tax.
(iv) Application of Section 280G. For purposes of
determining whether any of the Covered Payments will be subject to the
Excise Tax and the amount of such Excise Tax,
(A) (x) whether Covered Payments are
"parachute payments" within the meaning of Section 280G of the
Code, and (y) whether there are "parachute payments" in excess
of the "base amount" (as defined under Section 280G(b)(3) of
the Code) shall be determined in good faith by the Employer's
independent certified public accountants appointed prior to
the Effective Date (the "Accountants") or tax counsel selected
by such Accountants, and
(B) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G
of the Code.
(v) Adjustments in Respect of the Payment Cap. If the
Employee receives reduced payments and benefits under this Section 9(e)
(or this Section 9(e) is determined not to be applicable to the
Employee because the Accountants conclude that Employee is not subject
to any Excise Tax) and it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding (a
"Final Determination") that, notwithstanding the good faith of the
Employee and the Employer in
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applying the terms of this Agreement, the aggregate "parachute
payments" within the meaning of Section 280G of the Code paid to the
Employee or for his benefit are in an amount that would result in the
Employee's being subject to an Excise Tax, then any amounts actually
paid to or on behalf of the Employee which are treated as excess
parachute payments shall be deemed for all purposes to be a loan to the
Employee made on the date of receipt of such excess payments, which the
Employee shall have an obligation to repay to the Employer on demand,
together with interest on such amount at the applicable Federal rate
(as defined in Section 1274(d) of the Code) from the date of the
payment hereunder to the date of repayment by the Employee. If the
Employee receives reduced payments and benefits by reason of this
Section 9(e) and it is established pursuant to a Final Determination
that the Employee could have received a greater amount without
exceeding the Payment Cap, then the Employer shall promptly thereafter
pay the Employee the aggregate additional amount which could have been
paid without exceeding the Payment Cap, together with interest on such
amount at the applicable Federal rate (as defined in Section 1274(d) of
the Code) from the original payment due date to the date of actual
payment by the Employer.
(vi) Expenses. In the event of any dispute with the
Internal Revenue Service concerning the imposition of any Excise Tax or
any other matters subject to this Section 8(e), Employer shall
reimburse Employee for his reasonable attorney's and accountant's fees
incurred in connection with the negotiation, litigation or settlement
of such dispute.
10. Change of Control.
(a) Change of Control Defined. For the purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) has acquired,
"beneficial ownership" (within the meaning of Rule 13d-3, as
promulgated under Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of securities of the Employer
representing 50% of more of the combines Voting Power (as defined
below) of the Employer's securities; or
(ii) within any 24-month period, the persons who were
directors of the Employer immediately before the beginning of such
period (the "Incumbent Directors") shall cease (for any reason other
than death) to constitute at least a majority of the Board or the board
of directors of any successor to the Employer, provided that any
director who was not a director at the beginning of such period shall
be deemed to be an Incumbent Director if such director (A) as elected
to the Board by, or on the recommendation of or with the approval of,
at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this Section
2(a)(ii) and (B) was not designated by a person who has entered into an
agreement with the Employer to effect a Corporate Event, as described
in Section 2(a)(iii); or
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(iii) the stockholders of the Employer approve a
merger, consolidation, share exchange, division, sale or other
disposition of all or substantially all of the assets of the Employer
(a "Corporate Event"), as a result of which the shareholders of the
Employer immediately prior to such Corporate Event shall not hold,
directly or indirectly, immediately following such Corporate Event a
majority of the Voting Power of (x) in the case of a merger or
consolidation, the surviving or resulting corporation, (y) in the case
of a share exchange, the acquiring corporation, or (z) in the case of a
division or a sale or other disposition of assets, each surviving,
resulting or acquiring corporation which, immediately following the
relevant Corporate Event, holds more than 10% of the consolidated
assets of the Employer immediately prior to such Event.
(b) Person Defined. For purposes of this Section 10
"Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act, as supplemented by Section 13(d)(3) of the
Exchange Act; provided, however, that Person shall not include (i) the
Employer or any subsidiary of the Employer or (ii) any employee benefit
plan sponsored by the Employer or any subsidiary of the Employer.
11. Assignment. Employee's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, nor shall Employee's
rights hereunder be subject to any encumbrance or claim of Employee's creditors.
Nothing in this Agreement shall prevent the consolidation of Employer with, or
its merger into, any other corporation, or the sale by Employer of all or
substantially all of its properties or assets, or the assignment by Employer of
this Agreement and the performance of its obligations hereunder to any
affiliated company; provided, however, that any such transaction, in whatever
form, whether accomplished directly, indirectly, and as one or a series of
transactions, shall not affect in any way the rights of Employee under this
Agreement. This Agreement shall inure to the benefit of, and be enforceable by,
Employee and any successor to or assignee of Employer.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto in respect of the employment of Employee by Employer
and the provisions herein shall be regarded as divisible and so far as they are
covenants not to compete shall be operative to the extent both as to time and
area covered that they may be made so applicable, and if any of said provisions
or any part thereof are declared invalid or unenforceable, the validity and
enforceability of the remainder of such provisions or parts thereof and the
applicability thereof shall not be affected thereby.
13. Governing Law and Enforcement. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Colorado. This Agreement may be enforced in any court of
competent jurisdiction in Colorado and the prevailing party, if any, shall be
entitled to recover its reasonable attorneys' fees and expenses in addition to
any other damages.
14. Non-Waiver. The failure of either party at any time to require
performance by the other party of any provision of this Agreement required to be
performed by such other party, will in no way affect the right of the such party
to require such performance at any time thereafter. The
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waiver by either party of a breach by the other party of any provision of this
Agreement shall in no way be construed as a waiver of any succeeding breach of
such provision or a waiver of the provision itself.
15. Remedy for Breach. The parties hereto agree that, in the event of
breach or threatened breach of any of the noncompetition covenants of this
Agreement or of any of the covenants respecting Confidential Information, or of
any of the provisions concerning restrictions on the rights and interest in the
Employer, the damage or imminent damage to the value and the goodwill of
Employer's business shall be inestimable, and that therefore any remedy at law
or in damages shall be inadequate. Accordingly, the parties hereto agree that
Employer shall be entitled to injunctive relief against Employee in the event of
any breach or threatened breach of any of such provisions by Employee, in
addition to any other relief (including damages) available to Employer under
this Agreement or under law.
16. Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand-delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee: at the home address of the Employee noted on
the records of the Employer
If to the Employer: AMERICAN COIN MERCHANDISING, INC.
` 0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Chairman
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EMPLOYER: AMERICAN COIN MERCHANDISING, INC.,
d/b/a SUGARLOAF CREATIONS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx
Its: Chairman
EMPLOYEE: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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