THIS EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
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TO THE UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
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(LAW CO-OP. 1976 AND SUPP. 1993)
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made as of the 24th day of September,
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1997, between American Bingo & Gaming Corp. (the "Company"), and Xxxxxxx X. Xxxx
(the "Employee").
1. Employee Duties. The Company hereby employs the Employee as manager
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of its video poker and video game operation in South Carolina, with such
responsibilities and duties as the Board of Directors may from time to time
determine. The Employee shall devote full time to the Company to accomplish the
assigned responsibilities.
2. Term of Agreement. Employment under this Agreement shall commence
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on the date first shown above and continue for three (3) years unless earlier
terminated in the manner provided below.
2.1. Termination by Company. This Agreement may be terminated by
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Company only in the event that:
(a) Employee dies;
(b) Employee becomes physically, mentally or emotionally unable to
perform his duties hereunder (subject to all limitations and restrictions upon
such termination imposed by applicable law);
(c) Employee is convicted of violating any law having a material
adverse affect on any video poker or other gaming activities of the Company, or
is barred temporarily or permanently from any gaming activity in South Carolina;
(d) Employee is convicted of any felony crime;
(e) Employee commits an act of material insubordination;
(f) Employee fails to perform his duties hereunder in a
reasonable, ethical manner for any other reason; or
(g) Employee materially breaches this Agreement.
Provided, however, before terminating the Agreement pursuant to Paragraphs
(e), (f) or (g) above, the Company must first give the Employee notice and a
reasonable opportunity to cure such default, if such default is of a nature that
it can be cured by Employee.
2.2 Termination by Employee. This Agreement may be terminated by
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Employee in the event that Company fails to pay any compensation due hereunder
after notice and a reasonable opportunity to cure such default.
2.3 Accrued Compensation. In the event of termination of this
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Agreement, Employee shall be paid his compensation through the date of
termination; provided that Company may set-off or recoup from such unpaid
compensation any sums owed to Employer by Employee.
3. Compensation. Employee shall be paid a salary of two hundred fifty
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thousand dollars ($250,000) per year, payable in monthly installments throughout
each year, subject to reduction as provided below. Upon the first anniversary
of this Agreement, Company shall compute the Gross Machine Income ("GMI") from
the video poker operations for each of the Company's and its subsidiaries'
locations listed on Exhibit "A". "GMI" means the gross receipts less payouts
for the video poker machines. GMI shall include both the GMI allocated to the
Company or its subsidiary and the GMI allocated to the location operator, if the
location operator is not the Company or a subsidiary of the Company, except as
otherwise noted on Exhibit "A". If for the twelve month period after the date
of this Agreement such GMI is less than $4,000,000, Employee's annual salary
thereafter shall be reduced so that such salary is the same percentage of
$250,000 as such GMI for the twelve month period after the date hereof is of
$4,000,000. Employee's annual salary shall be reviewed at each anniversary of
the date hereof, and shall upon each such anniversary be adjusted so that it is
the same percentage of $250,000 that such GMI for the preceding twelve month
period is of $4,000,000; provided, however, that Employee's salary shall never
exceed $250,000 per year.
4. Cash and Stock Bonuses. Any bonuses over and above the compensation
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described above will be based on the Company's performance, Employee's
performance, and in the absolute discretion of the Board of Directors.
5. Other Fringe Benefits. Employee shall receive the following
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benefits during the Term of Employment: comprehensive health, accident, major
medical, dental, disability and life insurance protection in accordance with the
general policies of the Company as in effect from time to time.
6. Reimbursement of Expenses. The Company shall reimburse Employee for
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all reasonable, ordinary and necessary expenses incurred by him in the
performance of his duties hereunder, provided that Employee accounts to the
Company therefore in the manner prescribed by the Company for reimbursement of
Employee's expenses.
7. Vacation; Holidays. Employee shall be entitled to 15 business days
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paid vacation each year during the term hereof. Employee shall also be entitled
to nine (9) paid holidays each year during the term hereof as determined by the
Company.
8. Non-Disclosure and Non-Compete.
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8.1 Non-Disclosure. Employee agrees that all information pertaining to
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the prior, current or contemplated business of the Company, its parent, its
subsidiaries, affiliates or its successors in interest (hereafter referred to
collectively in this Section 8 as the Company), excluding publicly available
information (in substantially the form in which it is publicly available) unless
such information is publicly available by reason of unauthorized disclosure by
Employee and excluding such information which Employee possessed prior to his
employment by the Company, constitutes valuable and confidential assets of the
Company. Such information includes, without limitation, information related to
trade secrets, customer and client lists, contract terms, legal and accounting
advice and opinions, supplier lists, methods of doing business, financing
techniques and sources and financial statements of the Company. Such
Information is sometimes hereinafter referred to as "Confidential Information."
Employee shall hold all such Confidential Information in trust and confidence
for the Company and shall not use or disclose any such Confidential Information
other than for the business of the Company or as required by law, either during
the Term of Employment or after his employment terminates for whatever reason.
8.2 Non-Competition. As a material part of the consideration for
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Employee's access to Confidential Information, and for the know-how and training
provided to Employee by the Company, Employee covenants and agrees that:
(a) Employee shall not, directly or indirectly, within the
Territory during the Restricted Period, promote, operate, manage or conduct any
bingo game or related gaming business permitted under the terms and conditions
of any license issued by the State of South Carolina or under any other state or
federal law or authority, or operate any video game machine or other gaming
machine or device (such games and game machines being referred to herein as
"Games").
(b) Further, Employee shall not, directly or indirectly, within
the Territory during the Restricted Period, solicit or sell for, own, or acquire
any interest in, either directly or indirectly, any corporation, partnership,
limited partnership, or other entity, or become engaged by, act as landlord to,
or as agent or consultant for, do business with, manage, operate, control, be
employed by, participate in, or be connected, in any manner with, or in any
manner assist, any other person, corporation, partnership or other entity
engaged in the business of promoting, operating, managing or conducting Games.
8.3 Restricted Period. For the purpose of this Agreement, the
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"Restricted Period" means the period commencing with the date hereof and
continuing until two years after termination of this Agreement.
8.4 Territory. For purposes of this Agreement the "Territory" shall
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mean: (i) with regard to any activities described in Section 1 above which are
conducted under a Class B or Class C bingo license (or equivalent thereof under
any future law) issued by the State of South Carolina or under any other state
or federal law or authority, the area within a fifty (50) mile radius of any
bingo facility then owned by Company or any subsidiary of the Company; and (ii)
with regard to any activities described in Section 1 above which are conducted
under any Class A license (or equivalent thereof under any future law) issued by
the State of South Carolina or under any other state or federal law or
authority, the area within a three hundred (300) mile radius of any bingo game
facility then owned by Company or any subsidiary of the Company; and (iii) with
regard to video game facilities, the area within a twenty-five (25) mile radius
of any bingo, video poker or video game facility then owned by the Company or
any subsidiary of the Company.
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8.5 Exemptions. The provisions of this Article 8 shall not apply to
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businesses operated by Xxxx Amusement Company Partnership, Xxxx Amusement
Operating Co., Palmetto State Distributing Company, Inc., or Universal Mortgage
and Loan Co., provided that within the twelve (12) month period immediately
preceding the date of this Agreement Employee has had, and during the Restricted
Period Employee shall have, no role, directly or indirectly, in management or
operations of any such exempted business, nor shall Employee during the
Restricted Period receive any payment or distribution of any kind, as
compensation or otherwise, from any such business other than dividends upon
corporate stock which are strictly proportional to the percentage of stock owned
by him, or distributions with respect to his capital accounts in partnerships
which are strictly proportional to the percentage of his capital account
ownership in any such partnership.
8.6 Enforcement. In the event of a breach by Employee of the
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provisions of this Article 8, Company shall have, in addition to any other
remedies it may have at law or under this Agreement, the right to a temporary
restraining order, temporary injunction and permanent injunction restraining
Employee from violating or continuing a violation of the terms of this Article
8. Employee agrees that in the event of such breach the amount of damages would
be difficult or impossible to determine, and agrees to a bond in the amount to
be determined by a court of competent jurisdiction.
8.7 Severance, Reformation. Should any court of competent jurisdiction
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hold any portion of this Article 8 to be unenforceable in whole or in part, such
court shall be authorized and requested to sever the offending provision from
this Article 8, and to reform this Article so as to comply as closely as
possible with the intentions of the parties as stated herein, so that it will be
enforceable by injunction.
8.8 Survival of Termination. The provisions of this Section 8 shall
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survive termination of Employee's employment; provided, however, such provisions
shall not survive if this Agreement is terminated by Employee pursuant to
Section 2.2 of this Agreement.
9. Warranties and Representations of the Employee. Employee warrants
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and represents that:
(a) The Employee is not subject to any agreement, contract,
judgment, decree, or limitation the effect of which would prohibit, limit or
otherwise restrict the employment of the Employee by the Company pursuant to the
terms of this Agreement, and
(b) Attached as Exhibit "B" hereto is a complete and accurate
description of the following information with respect to the businesses exempted
from Employee's non-competition agreement pursuant to Section 8.5: (i) a
complete description of the identities and ownership interests of each equity
owner in each such entity (as shareholder, partner, or otherwise), to the best
of Employee's knowledge; (ii) the identity of each officer, director or other
person participating in management, to the best of Employee's knowledge; and
(iii) a complete description of the Employee's current and past management
activities with respect to each such business. The Company will keep and
maintain the confidentiality of the information disclosed on Exhibit "B" and
will not disclose such information to any third party except: (a) if ordered to
do so by any court or regulatory authority; or (b) as necessary in litigation
for the enforcement or defense of its rights under this Agreement and the other
related agreements referred to herein.
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10. Services on Behalf of Subsidiary Companies. The Employee's
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services hereunder shall be performed on behalf of the Company and on behalf of
each subsidiary of the Company whether now existing or hereafter formed. For
purposes of this Agreement, the "Company" shall refer to and include each of the
subsidiaries of the Company.
11. Indemnification. The Company agrees that it will indemnify and
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hold harmless the Employee against any losses, claims, damages or liabilities
(including, but not limited to, all costs of defense and investigation and all
attorneys' fees) to which Employee may become subject, under the federal
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in,
or material omission from any registration statement or other document filed
with the Securities and Exchange Commission or otherwise made public, where such
untrue statement or material omission relates to matters outside of Employee's
direct knowledge and upon which Employee relied upon reasonably and in good
faith.
12. Notices. All notices, requests, consents and other communications,
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required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by prepaid
telegram, or mailed first-class, postage prepaid, by registered mail (notices
sent by telegram or mailed shall be deemed to have been given on the date sent),
as follows (or to such other address as either party shall designate by notice
in writing to the other in accordance herewith):
If to the Employee:
Xxxxxxx X. Xxxx
0000X Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
Third Floor, Xxxxxx Building
0000 Xxxx Xxxxxx
X. X. Xxx 00000 (29211)
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
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If to the Company:
American Bingo & Gaming Corp.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Mr. Xxxx Xxxxxx
With a copy to:
Xxxxxx Xxxxxx
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
13. Governing Law. This Agreement shall be governed by and construed
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and enforced in accordance with the local laws of the State of South Carolina
applicable to agreements made and to be performed entirely in such state. In
any litigation for enforcement or interpretation of this Agreement, the
prevailing party shall be entitled to recover his or its reasonable attorneys'
fees, costs and expenses, in addition to any other remedies provided at law or
in equity.
14. Headings and Captions. The section headings contained herein are
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for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
15. Entire Agreement. This Agreement along with the Agreement and Plan
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of Reorganization dated August 13, 1997, and other documents referred to
therein, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersede all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made by either party
that is not embodied in this Agreement and/or said Agreement and Plan of
Reorganization, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
16. Assignment. This Agreement, and the Employee's rights and
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obligations hereunder, may not be assigned by the Employee. The Company may
freely assign its rights, together with its obligations, hereunder without
consent of the Employee. In such event the obligations of the Company hereunder
shall be binding on its successors or assigns, whether by merger, consolidation,
or acquisition of all or substantially all of its business or assets, or
otherwise.
17. Amendments: No Waiver. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the same. No
waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.
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18. Arbitration. Except to the extent not preempted by the Federal
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Arbitration Act, 9 U.S.C. 1 et seq. (1970), any claim or controversy arising
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out of, or relating to, any provision of this Employment Agreement, or the
breach thereof, or the Employee's employment in general, shall upon written
demand of any party, be settled by three (3) arbitrators in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association to the extent consistent with the laws of the State of South
Carolina and the Uniform Arbitration Act, S.C. Code 15-48-10, et seq., (Law.
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Co-Op. 1976, as amended). Judgment rendered by the arbitrators may be entered
in the appropriate Court in Richland County, South Carolina, having jurisdiction
thereof. Arbitration shall be held in the County of Richland, State of South
Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
AMERICAN BINGO & GAMING CORP.
By: /s/ Xxxx Xxxxxx
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L. Xxxxxxx Xxxxxx, President
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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EXHIBIT A
Aiken County
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Wild Cherry
Double 7
Golden Palace
Double Diamonds
Southern Sport
Country Convenience(1)
Beaufort County
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Low Country Players
Riptides(1)
Edgefield County
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Lucky 4
Danny's Games
Kershaw County
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Xx Xxxxxxx Bingo(1)
Lexington County
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Xx Xxxxxxx Highway 378(1)
Richland County
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Mr. Lucky(1)
Double Diamonds(1)
Xx Xxxxxxx Bingo(1)
(1) For purposes of calculating GMI pursuant to Section 3 of the Employment
Agreement, GMI shall not include the GMI allocated to the location operators for
these locations.
EXHIBIT B
The parties to the Employment Agreement agree that the information required to
be disclosed on this Exhibit B will only disclose the information as to Xxxxxxx
X. Xxxx, and not any other shareholder, officer or director of any such entity.
Xxxx Amusement Company Partnership:
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Xxxxxxx X. Xxxx, 11.11% partner.
Xxxx Amusement Operating Co.:
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Xxxxxxx X. Xxxx, 13.33% shareholder.
Palmetto State Distributing Company, Inc.:
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Xxxxxxx X. Xxxx, 20% shareholder and Secretary.
Universal Mortgage and Loan Co.:
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Xxxxxxx X. Xxxx, 16% shareholder.
Except as otherwise noted above, Xxxxxxx X. Xxxx has not served as an officer,
director or in any other management role for any of the four entities listed
above during the last three years.
THIS EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
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TO THE UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
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(LAW CO-OP. 1976 AND SUPP. 1997)
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") between
American Bingo & Gaming Corp. (the "Company") and Xxxxxxx X. Xxxx (the
"Employee") is entered into as of the 27th day of July, 1998.
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WHEREAS, the Company and the Employee entered into an Employment
Agreement as of September 24, 1997 (the "Employment Agreement"); and
WHEREAS, the parties to the Employment Agreement wish to modify and
amend certain provisions of the Employment Agreement;
NOW, THEREFORE, in consideration of the recitals and mutual covenants,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties DO HEREBY AGREE as follows:
1. Amendment of Section 2. Section 2 of the Employment Agreement is
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hereby amended to read in its entirety as follows: "Employment under this
Agreement shall commence on September 24, 1997 and continue for one year unless
earlier terminated in the manner provided below; provided, however, Employee's
employment shall be extended for up to two consecutive one year terms unless the
Company notifies Employee at least thirty days prior to the termination date of
its desire not to extend the terms of this Agreement."
2. Amendment of Section 3. Section 3 of the Employment Agreement is
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hereby amended to read in its entirety as follows: "Employee shall be paid a
salary of one hundred twenty-five thousand dollars ($125,000) per year, payable
in monthly installments throughout the year." Such adjustment to the annual
salary of the Employee shall be effective beginning June 1, 1998.
3. Miscellaneous. This Amendment controls over any contrary or
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inconsistent provision of the Employment Agreement. Every provision of the
Employment Agreement not specifically amended or modified by the terms of this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
AMERICAN BINGO & GAMING CORP.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
EMPLOYEE
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
