EXHIBIT 10.40
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the 30th
day of September, 1997, by and among Patriot American Hospitality Operating
Company, a Delaware corporation ("PAHOC"), Xxxxxxxx Hospitality Group Inc.
(formerly known as Xxxxxxxx Management Hospitality Corporation), a Delaware
corporation (the "Company") and Xxxxx X. Xxxxxxxx ("Executive").
WHEREAS, WHG Resorts & Casinos Inc. ("WHG"), a Delaware corporation, has
entered into an Agreement and Plan of Merger with, among others, PAHOC, which
provides, upon the terms and subject to the conditions thereof, for the merger
(the "Merger") of a subsidiary of PAHOC with and into WHG;
WHEREAS, the Company is a majority-owned subsidiary of WHG;
WHEREAS, the Company is desirous of engaging Executive to serve as the
Chairman of its Board of Directors (the "Board") and its Chief Executive Officer
effective at the time of the Merger; and
WHEREAS, Executive is desirous of serving the Company on the terms herein
provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The term of this Agreement shall extend from the closing date
of the Merger Agreement (the "Commencement Date") until April 30, 1999. The
term of this Agreement shall be subject to termination as provided in Paragraph
6 and may be referred to herein as the "Period of Employment." Except with the
consent of Executive, the principal place from which he shall perform his duties
shall not be located elsewhere than in New York City, New York, Palm Beach,
Florida or their environs.
2. Position and Duties. During the Period of Employment, Executive shall
serve as Chairman of the Board of Directors and Chief Executive Officer of the
Company, reporting to the Board and to the Chairman of the Board of Directors of
PAHOC (the "Chairman"), shall regularly exercise the functions of Chief
Executive Officer of the Company and shall have such other powers and duties as
may from time to time be prescribed by the Board or the Chairman, provided that
such duties are consistent with Executive's position or other positions that he
may hold from time to time. Notwithstanding the foregoing, Executive may serve
on (i) other boards of directors or be otherwise engaged as long as such
services and activities and do not interfere with Executive's performance of his
duties to the Company as provided in this Agreement, and (ii) the boards of
directors of WMS Industries Inc. and Midway Games Inc. Executive shall at all
times conduct himself in a manner so as to remain eligible to perform his
duties under the laws of the Commonwealth of Puerto Rico, including laws, rules
and regulations relating to gambling.
3. Compensation and Related Matters.
(a) Salary. Executive shall receive an annual salary ("Salary") of One
Dollar ($1.00). The Salary shall be payable on the first day of the Period of
Employment.
(b) Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him (in accordance with the policies and
procedures then in effect and established by PAHOC for its senior executive
officers and provided that they are previously approved by the Chairman) in
performing services hereunder during the Period of Employment, provided that
Executive properly accounts therefor in accordance with Company policy.
4. Unauthorized Disclosure.
(a) Confidential Information. Executive acknowledges that in the course of
his employment with the Company, WHG or PAHOC (and, if applicable, the
predecessors of either of them), he has been allowed to become, and will or may
continue to be allowed to become, acquainted with the Company's, WHG's, PAHOC's
and Patriot American Hospitality, Inc.'s ("Affiliated Company's") business
affairs, information, trade secrets, and other matters which are of a
proprietary or confidential nature, including but not limited to the Company's,
WHG's, PAHOC's and Affiliated Company's and their respective predecessors'
operations, business opportunities, price and cost information, finance,
customer information, business plans, various sales techniques, manuals,
letters, notebooks, procedures, reports, products, processes, services, and
other confidential information and knowledge (collectively the "Confidential
Information") concerning the Company's, WHG's, PAHOC'S, Affiliated Company's and
their respective predecessors' and affiliates' business. Executive understands
and acknowledges that such Confidential Information is confidential, and he
agrees not to disclose such Confidential Information to anyone outside the
Company, WHG, PAHOC or the Affiliated Company except to the extent that
Executive deems such disclosure or use reasonably necessary or appropriate in
connection with performing his duties on behalf of the Company. Executive
further agrees that he will not during employment and/or at any time thereafter
use such Confidential Information (to the extent that it has not become public)
in competing, directly or indirectly, with the Company, WHG, PAHOC or the
Affiliated Company. At such time as Executive shall cease to be employed by the
Company, he will immediately turn over to the Company all Confidential
Information, including papers, documents, writings, electronically stored
information, other property, and all copies of them provided to or created by
him during the course of his employment with the Company, WHG or PAHOC.
(b) Heirs, successors, and legal representatives. The foregoing provisions
of this Paragraph 4 shall be binding upon Executive's heirs, successors, and
legal representatives. The provisions of this Paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Covenant Not to Compete. The provisions of this Paragraph 5 shall apply
during Executive's employment with the Company. In consideration for
Executive's employment by the Company under the terms provided in this Agreement
and as a means to aid in the performance and enforcement of the terms of the
Unauthorized Disclosure provisions of Paragraph 4, Executive agrees that
Executive will not, directly or indirectly, as an owner, director, principal,
agent, officer, employee, partner, consultant, servant, or otherwise, carry on,
operate, manage, control, or become involved in any manner with any business,
operation, corporation, partnership, association, agency, or other person or
entity which is in the business of owning, operating, managing or granting
franchise rights with respect to hotels, motels or other lodging facilities in
Puerto Rico or elsewhere in the Caribbean; provided, however, that the foregoing
does not prohibit Executive from owning up to one percent (1%) of the
outstanding stock of a publicly held corporation engaged in the hospitality
business. Executive also agrees that Executive will not, directly or
indirectly, either for himself or for any other business, operation,
corporation, partnership, association, agency, or other person or entity, call
upon, compete for, solicit, divert, or take away, or attempt to divert or take
away any of the customers of the Company or Affiliated Company in Puerto Rico or
elsewhere in the Caribbean. Further, Executive will not directly or indirectly
solicit or induce any present or future employee of the Company or Affiliated
Company to accept employment with Executive or with any business, operation,
corporation, partnership, association, agency, or other person or entity with
which Executive may be associated, and Executive will not employ or cause any
business, operation, corporation, partnership, association, agency, or other
person or entity with which Executive may be associated to employ any present or
future employee of the Company or Affiliated Company. Should Executive violate
the provisions of this Paragraph, then in addition to all other rights and
remedies available to the Company, PAHOC or Affiliated Company at law or in
equity, the duration of this covenant shall automatically be extended for the
period of time from which Executive began such violation until he permanently
ceases such violation. Notwithstanding the foregoing, Executive shall be
permitted to continue to engage in activities that would otherwise be prohibited
by this Paragraph 5 with respect to the interests he currently owns and which
are described in Schedule I attached hereto and made a part hereof by this
reference.
6. Termination. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Termination by Company. At any time during the Period of Employment by
the Company.
(c) Notice of Termination. Termination of Executive's employment by the
Company shall be communicated by written notice to Executive. Thereafter, the
Company shall have no further obligations to Executive except as otherwise
expressly provided under this Agreement.
(d) Effect of Termination. If Executive's employment under this Agreement
is
terminated for any reason, Executive shall be deemed to have resigned from all
positions, offices and directorships held with the Company and any affiliate of
the Company. Executive from time and time after the termination of his
employment hereunder and without further consideration shall cooperate with all
reasonable requests to execute and deliver documents, including confirmation of
his resignation, of either the Company or the Company's counsel in connection
with such termination.
7. Notices. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Patriot American Hospitality Operating Company
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn.: General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive, PAHOC and such officer of the Company as may be
specifically designated by the Board. No waiver by any party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
any other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
any party which are not set forth expressly in this Agreement. Notwithstanding
the preceding sentence, this Agreement shall not be deemed to supercede or void
any of the terms of that certain Indemnity Agreement dated April 11, 1997
between Executive and WHG and Executive shall continue to be entitled to the
benefits of the indemnification provisions thereof during the term hereof. The
validity, interpretation, construction, and performance of this Agreement shall
be governed by the laws of the State of New York (without regard to principles
of conflicts of laws).
9. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. The invalid portion of this Agreement, if any, shall be modified by any
court having jurisdiction to the extent necessary to render such portion
enforceable.
10. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. Arbitration; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the Commercial Mediation Rules of the American Arbitration Association
before resorting to arbitration. In the event such dispute or controversy
remains unresolved in whole or in part for a period of thirty (30) days after it
arises, the parties will settle any remaining dispute or controversy exclusively
by arbitration in Dallas, Texas, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any violation or any continuation of
any violation of Paragraph 4 or 5 hereof.
12. Third-Party Agreements and Rights. Executive represents to the Company
that Executive's execution of this Agreement, Executive's employment with the
Company and the performance of Executive's proposed duties for the Company will
not violate any obligations Executive may have to any employer or other party,
and Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.
13. Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. Executive's cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Company.
14. Assignment. At the sole election of PAHOC, it may assign its rights and
obligations under this Agreement to the Affiliated Company.
15. Effective Date of this Agreement. This Agreement shall become effective
only when and if the Merger becomes effective.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
XXXXXXXX HOSPITALITY GROUP INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Its: Chairman & Chief Executive Officer
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PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
By: /s/ Xxxxxx Xx
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Its: Senior Vice President
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/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
