CONSULTING, ADVISORY AND NONCOMPETITION AGREEMENT
This Consulting, Advisory and Noncompetition Agreement (this
"Agreement") is made as of October 5, 1999, by and between Isle of Capri
Casinos, Inc., a Delaware corporation ("Buyer"), and Xxxxxx X. Xxxxxxxx, a
Nevada resident ("Xxxxxxxx").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer is entering into an agreement and plan of merger with Lady
Luck Gaming Corporation, a Delaware corporation (the "Merger Agreement");
WHEREAS, Xxxxxxxx founded Lady Luck and is its Chairman;
WHEREAS, Xxxxxxxx owns all the shares of Gemini, Inc. ("Gemini") and
International Xxxxx Xxxx'x Services, Inc. ("IMPS") and owns the Lady Luck Las
Vegas Hotel & Casino (the "Hotel"). Buyer will have the right to acquire
Gemini, IMPS and the Hotel from Xxxxxxxx after the consummation of the Merger;
WHEREAS, Buyer desires to retain Xxxxxxxx' services as a
consultant and advisor to Buyer, and Xxxxxxxx desires to perform such
services for Buyer;
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and agreements set forth below, the parties,
intending to be legally bound, agree as follows:
Section 1. Effectiveness and Interpretation. This Agreement shall
become effective upon the Effective Time of the Merger (as defined in the
Merger Agreement). Upon the earlier termination of the Merger Agreement,
this Agreement shall terminate automatically and be of no further force and
effect. Until such date as the Buyer has acquired the Hotel from Xxxxxxxx,
this Agreement shall be interpreted as not restricting Xxxxxxxx' operation
of the Hotel or ownership and use of Confidential Information (as defined
below) as it relates to the Hotel and the terms of this Agreement as it
relates to the Hotel shall be effective only upon Buyer's closing of the
acquisition of the Hotel.
Section 2. Acknowledgments by Xxxxxxxx. Xxxxxxxx acknowledges that
(a) Xxxxxxxx has occupied a position of trust and confidence with Lady Luck
Gaming Corporation, its subsidiaries and its affiliates including, without
limitation, Gemini and IMPS (collectively, "Lady Luck") prior to the date
hereof and has become familiar with the following, any and all of which
constitute confidential information of Lady Luck and the Hotel
(collectively the "Confidential Information," which in all instances does
not include information to the extent such information is reflected in
publicly available filings with the Securities and Exchange Commission and
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which is otherwise generally known by management in the gaming industry in
the jurisdictions in which Lady Luck and the Gemini have casino
properties): (i) any and all trade secrets concerning the business and
affairs of Lady Luck, data, know-how, processes, photographs, inventions
and ideas, customer lists, business and technical information, current and
anticipated customer requirements, price lists, market studies and plans,
business plans, systems, methods and information of Lady Luck and the Hotel
and any other information, however documented, of Lady Luck and the Hotel
that is a trade secret under Nevada, Iowa or Mississippi law; (ii) any and
all information concerning the business and affairs of Lady Luck and the
Hotel (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented); and (iii) any
and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for Lady Luck and the Hotel containing or based, in
whole or in part, on any information included in the foregoing, (b)
although the businesses of Buyer, Lady Luck and the Hotel have regional
customer bases, the expansion and development opportunities are national
and international in scope, (c) Buyer has required that Xxxxxxxx make the
covenants set forth in Sections 3 and 4 of this Agreement in consideration
of the Buyer entering into the Merger Agreement with Lady Luck; (d) the
provisions of Sections 3 and 4 of this Agreement are reasonable and
necessary to protect and preserve Lady Luck's and the Hotel's business, and
(e) Buyer and Lady Luck and the Hotel would be irreparably damaged if
Xxxxxxxx were to breach the covenants set forth in Sections 3 and 4 of this
Agreement.
Section 3. Confidential Information. Xxxxxxxx acknowledges and
agrees that all Confidential Information known or obtained by Xxxxxxxx,
whether before or after the date hereof, is the property of Lady Luck or
the Hotel, as applicable. Therefore, Xxxxxxxx agrees that Xxxxxxxx will
not, at any time, disclose to any unauthorized persons or use for his own
account (except as contemplated in Section 1 with respect to the Hotel) or
for the benefit of any third party any Confidential Information, whether
Xxxxxxxx has such information in Xxxxxxxx' memory or embodied in writing or
other physical form, without Buyer's written consent, unless and to the
extent that the Confidential Information is or becomes generally known to
and available for use by the public other than as a result of Xxxxxxxx'
fault or the fault of any other person bound by a duty of confidentiality
to Buyer or Lady Luck. Except with respect to the Hotel in the event that
Buyer does not acquire the Hotel at the Effective Time, Xxxxxxxx agrees to
deliver to Buyer at the Effective Time, and at any other time Buyer may
request, all documents, memoranda, notes, plans, records, reports, and
other documentation, models, components, devices, or computer software,
whether embodied in a disk or in other form (and all copies of all of the
foregoing), relating to the businesses, operations, or affairs of Lady Luck
and the Hotel and any other Confidential Information that Xxxxxxxx may then
possess or have under Xxxxxxxx' control.
Section 4. Noncompetition. In connection with Buyer entering into
the Merger Agreement and for the consideration to be paid under this Agreement,
Xxxxxxxx agrees that:
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(a) For a period of four years after the Effective Time of
the Merger:
(i) Xxxxxxxx agrees not to compete, directly or
indirectly (including as an officer, director, partner,
employee, consultant, independent contractor, or equity
holder of any entity) with Buyer or any of its
subsidiaries in any way concerning (including by
permitting his name to be used in connection with) the
ownership, development or management of any gaming
operation or facility within a 75-mile radius of any
gaming operation or facility with respect to which Buyer
or any of its subsidiaries has an ownership interest or
renders or is actively negotiating to render management
services; provided, however, that Xxxxxxxx may purchase
or otherwise acquire up to (but not more than) 5% of any
class of securities of any gaming enterprise which owns a
facility within such radius (but without otherwise
participating in the activities of such enterprise) if
such securities are listed on any national or regional
securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934.
Notwithstanding the preceding sentence, with regard to
any gaming operation or facility owned or managed by
Buyer: (i) located in Las Vegas, Nevada, such radius
shall be a 25-mile radius; or (ii) with respect to which
Buyer has not filed regulatory applications or publicly
indicated an intention to conduct business in such
location prior to Xxxxxxxx entering into a written
agreement for gaming activities within a 75-mile radius
of such location, Xxxxxxxx shall not be deemed to be in
breach of the provisions hereof. Xxxxxxxx agrees that
this covenant is reasonable with respect to its duration,
geographical area, and scope.
(ii) Xxxxxxxx will not, directly or indirectly,
either for himself or any other person or entity, (A)
induce or attempt to induce any employee of Lady Luck or
Buyer or any of their subsidiaries or the Hotel to leave
the employ of Lady Luck or Buyer or any of their
subsidiaries or the Hotel, (B) in any way interfere with
the relationship between Lady Luck or Buyer and any
employee of Lady Luck or Buyer or their subsidiaries or
the Hotel, (C) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any then
current employee of Lady Luck, Buyer or any of their
subsidiaries or the Hotel, or (D) induce or attempt to
induce any customer, supplier, licensee, or business
relation to cease doing business with, or in any way
interfere with the relationship between any customer,
supplier, licensee, or business relation of Lady Luck or
Buyer or their subsidiaries or the Hotel.
(iii) Xxxxxxxx will not, directly or indirectly,
either for himself or any other person or entity, solicit
the business of any person known to Xxxxxxxx to be a
customer of Lady Luck or Buyer or any of their
subsidiaries or the Hotel, whether or not Xxxxxxxx had
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personal contact with such person, with respect to activities
which compete in whole or in part with the Buyer;
(b) In the event of a breach by Xxxxxxxx of any covenant
set forth in subsection 4(a) of this Agreement, the term of such
covenant will be extended by the period of the duration of such
breach; and
(c) Xxxxxxxx and Buyer hereby agree not to make any
statements, in writing or otherwise, that may disparage the
reputation or character of the other (and Gemini if Xxxxxxxx shall
retain ownership) or any of Buyer's or Gemini's subsidiaries,
affiliates, officers, directors, employees, agents, stockholders,
partners, members, successors and assigns both individually and in
their official capacities with such party at any time for any
reason whatsoever, except as required by law or as required in
connection with any litigation or administrative proceeding by or
between Buyer and Xxxxxxxx in which the party making such
statement has been subpoenaed and is required by law to give
testimony and in any litigation or administrative proceeding by
and between Buyer and Xxxxxxxx.
Section 5. Consulting Duties. Xxxxxxxx will have such consulting
and advisory duties as are assigned or delegated to him by the Chairman of
Buyer and as agreed to by Xxxxxxxx in his sole and absolute discretion.
Xxxxxxxx will devote such time, attention, skill, and energy to the
business of Buyer as is appropriate, and will cooperate fully with the
Chairman of Buyer as reasonably requested in the advancement of the best
interests of Buyer. Nothing in this Section 5, however, will (i) require
Xxxxxxxx to travel outside of the Las Vegas area at Buyer's request, or
(ii) prevent Xxxxxxxx from engaging in additional activities in connection
with employment, consulting, personal investments and community affairs
that are not inconsistent with Xxxxxxxx' duties under this Agreement.
Section 6. Compensation. As consideration for the covenants in
Section 3 and Section 4 of this Agreement and the duties to be performed by
Xxxxxxxx pursuant to Section 5 of this Agreement, Buyer will pay Xxxxxxxx
the sum of Two Million Dollars ($2,000,000) (the "Total Consideration")
payable as follows:
(a) The sum of One Hundred Twenty-Five Thousand Dollars
($125,000) upon the Effective Time of the Merger; and
(b) The sum of One Hundred Twenty-Five Thousand Dollars
($125,000) on the last day of each calendar quarter beginning with
the full calendar quarter immediately following the quarter in
which the Effective Time occurs, until the Total Consideration has
been paid in full.
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In addition, Buyer will permit Xxxxxxxx and his immediate family
to enroll in any welfare benefit plans available to management of Buyer and
its subsidiaries at Xxxxxxxx' expense and subject to the enrollment and
eligibility requirements of such plans.
Section 7. Remedies. If Xxxxxxxx breaches the covenants set forth in
Sections 3 or 4 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from Xxxxxxxx;
(b) To offset against any and all amounts owing to
Xxxxxxxx under Subsection 6(b) of this Agreement any and all
amounts which Buyer claim under Subsection 7(a) of this Agreement;
(c) In addition to its right to damages and any other
rights it may have, to obtain injunctive or other equitable relief
to restrain any breach or threatened breach or otherwise to
specifically enforce the provisions of Sections 3 and 4 of this
Agreement; it being agreed that money damages alone would be
inadequate to compensate the Buyer and would be an inadequate
remedy for such breach; and
(d) The rights and remedies of the parties to this
Agreement are cumulative and not alternative.
Section 8. Successors and Assigns. This Agreement will be binding
upon Buyer and Xxxxxxxx and will inure to the benefit of Buyer and its
affiliates, successors and assigns and Xxxxxxxx and Xxxxxxxx' assigns,
heirs and legal representatives.
Section 9. Waiver. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any
other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
Section 10. Governing Law and Jurisdiction. This Agreement will be
governed by the laws of the State of Mississippi without regard to conflicts of
laws principles.
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Section 11. Severability. Whenever possible each provision and
term of this Agreement will be interpreted in a manner to be effective and
valid but if any provision or term of this Agreement is held to be
prohibited by law or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
If any of the covenants set forth in Section 4 of this Agreement are held
to be unreasonable, arbitrary, or against public policy, such covenants
will be considered divisible with respect to scope, time, and geographic
area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against Xxxxxxxx.
Section 12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
Section 13. Section Headings; Construction. The headings of
Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit
the preceding words or terms.
Section 14. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed
to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by facsimile (with written confirmation
of receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth
below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
` Xxxxxxxx: Xxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
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Buyer: Isle of Capri Casinos, Inc.
711 Xx. Xxxxxx Xxxxxx Xxxx, Xx. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Section 15. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior written and oral agreements and
understandings between Buyer and Xxxxxxxx with respect to the subject
matter of this Agreement. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
Section 16. Indemnification. Buyer agrees to indemnify Xxxxxxxx to
the fullest extent provided to any member of management of Buyer consistent
with the provisions of its Certificate of Incorporation and Bylaws against
any liability arising out of his performance of any obligations under
Section 5 hereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ISLE OF CAPRI CASINOS, INC. XXXXXX X. XXXXXXXX
By: /s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- ------------------------------
Its: Executive Vice President,
General Counsel and Secretary
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