SOLOMON EMPLOYMENT AGREEMENT
Exhibit 10.2
SOLOMON EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) dated as of July 20, 2004 is by and between
Xxxxxx.xxx, Inc., a Delaware corporation (“the Company”), and Xxxxx X. Xxxxxxx (“Executive”), in
connection with the Company’s engagement of Executive for personal services.
The Company hereby engages Executive, and Executive hereby agrees to serve as General Counsel
of the Company on the terms and conditions of this Agreement. Throughout the Term of this
Agreement, Executive shall, subject to the provisions contained herein, devote substantially all of
his work time to the employment described hereunder. Executive shall report solely to the
President and Chief Executive Officer.
Other than in connection with occasional business travel, the Executive shall render his
services at the Company’s offices at 0000 Xx Xxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx.
Executive shall have the following duties:
(a) Responsible for Corporate compliance program, liaison with gaming regulators,
interpretation, change, and enforcement of new legislature and gaming regulations.
(b) Direct all legal activities of the Company.
(c) Support the Chief Executive Officer in the management of compliance of gaming rules and
regulations both domestically and internationally.
(d) Participate and advise in mergers and acquisition projects and due diligence, and drive
the integration of newly acquired operations.
(e) Manage and ensure SEC compliance and filings.
(f) Manage the legal department budget and staff.
(g) If selected, act as the Secretary of the Company.
(h) Advise the Board as requested from time to time.
(i) Perform such other Executive duties, consistent with the duties of a General Counsel, as
the President and Chief Executive Officer may reasonably require.
The term of Executive’s employment hereunder shall commence as of August 2, 2004 (the
“Effective Time”) and end on July 31, 2006 (the “Term”) unless sooner terminated pursuant to
Section 7 hereof. Unless either party shall have given the other at least 60 days prior notice
that the Term shall not be extended, the term shall be automatically extended for successive
one-year periods until either party
shall have given the other party not less than 60 days notice that any such additional term
shall not be extended.
(a) Salary.
During the first year of the Term, the Executive shall receive a salary (the “Annual Salary”)
at the rate of $225,000 per annum. During the second year of the Term, Executive shall receive an
Annual Salary of $250,000 per annum. All salary shall be less such deductions as shall be required
to be withheld by applicable law and regulations and shall be pro-rated for any period that does
not constitute a full twelve (12) month period. Based on the Executive and the Company’s
performance, the annual salary may be increased at the discretion of the Chief Executive Officer.
(b) Bonuses.
Executive shall be entitled to participate in the Company Bonus Plan at the Executive level,
not less than 35%, subject to offset for the minimum bonus payments made during such period.
Executive shall receive a minimum bonus of 17.5% of his then annual salary, paid quarterly on a pro
rata basis.
(i) For each year of the Term, the Executive level bonus shall be based on mutually agreed
upon business objectives.
(ii) The business objectives for years one and two of the Term shall be determined before the
start of each year of the Term. For purposes of determining profitability, the applicable period
shall be August 1 to July 31 and shall be based on EBITDA, excluding any extraordinary items, as
reflected in the Company’s securities filings.
(c) Stock Options.
Executive is hereby granted 150,000 stock options pursuant to the Company’s 1998 Stock Option
Plan. The 150,000 stock options will have an exercise price equal to the closing price of the
Company’s Common Stock on date of employment. The stock options are five (5) year options and
shall vest ratably over four (4) years.
Any unvested options shall terminate as provided in the Company’s 1998 Stock Option Plan or as
otherwise set forth herein.
All unvested options shall automatically become vested Options upon a “Change of Control”.
In the event the Company is unable to issue stock options, or all of them, to Executive as
described in this Agreement, the Company and Executive agree to restructure this agreement with
respect to those affected stock options with a non-stock option structure that is substantially,
equivalently, and effectively the same to Executive from a financial perspective.
(d) Severance.
Upon “Change of Control” the Company has the option to terminate the Executive’s employment.
If Executive’s employment with the Company is terminated upon or within 18 months after a Change of
Control, (1) Executive shall be entitled to receive through the date of Executive’s termination
Executive’s Annual Salary, any earned and unpaid bonus, accrued and unused vacation, if any, and
Fringe Benefits, and (2) in addition, the Company shall provide the Executive with the following
severance benefits (the
“Severance Benefits”): severance pay, in a lump sum, equal to one (1) year of his then Annual
Salary, minimum bonus and the continuation of his Fringe Benefits for that period of time.
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For purposes of this Agreement, the term “Change of Control” shall mean, a merger, acquisition
or other corporate transaction where (1) substantially all the Company’s assets or thirty-one
percent (31%) or more of the outstanding common stock of the Company is sold or acquired, or (2)
upon the consummation of any transaction involving over thirty-one percent (31%) of the assets or
outstanding stock of the Company, the Company’s existing Board as of the date immediately preceding
the consummation of the transaction no longer constitute a majority of the Board as of any date
within the twelve (12) consecutive months subsequent to consummation of the transaction.
Without in any way limiting or waiving any right or remedy accorded to Company or any
limitation placed upon Executive by law, Executive agrees as follows:
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(g) Company is a publicly traded corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was organized, and has all requisite power
and authority to own, lease or operate its properties and to carry on its business as it is
presently being operated and in the place where such properties are owned, leased or operated and
such business is conducted. Company, to the best of its knowledge, is presently in compliance with
all state and federal securities laws and regulations and there are no pending or threatened
investigations or actions thereunder. Company is, to the best of its knowledge, in compliance with
all local, state and federal laws and regulations, including, but not limited to those pertaining
to pari-mutuel wagering and account wagering and there is no threatened or pending litigation by
any Party or investigations by regulatory bodies other than those suits, actions or other matters
previously disclosed to Executive.
(h) Company represents and warrants that the execution, delivery and performance of this
Agreement and the consummation by it of the transactions contemplated hereby and thereby, have been
duly authorized by all requisite action, including, but not limited to, authorizing resolutions and
consents, and no further action or approval is required to permit Company to consummate the
transactions contemplated hereby and thereby. This Agreement when executed and delivered in
accordance with the terms thereof, will constitute, the legal, valid and binding obligations of
Company, enforceable in accordance with its terms. Company and the officer signing on behalf of
Company, has full power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby. The making and performance of this Agreement and the
consummation of the transactions contemplated hereby in accordance with the terms hereof and
thereof will not (a) conflict with the articles of incorporation or the bylaws of Company, (b)
result in any breach or termination of, or constitute a default under, or constitute an event that
with notice or lapse of time, or both, would become a default under, or create any rights of
termination, cancellation or acceleration in any person under, any contract, or violate any order,
writ, injunction or decree, to which Company is a party, by which any of the business or operations
of Company or rights of Executive may be affected.
(i) the Executive’s theft or embezzlement of the Company’s money, equipment, or securities;
(ii) the Executive’s conviction of a felony (other than a traffic violation) which results in
material injury to the Company;
(iii) the Executive’s willful act of disloyalty that is intended to and/or results in
material injury to the Company;
(iv) the failure of the Executive to be licensable under the California Bar Association in his
capacity as General Counsel of the Company;
(v) the Executive’s chronic alcoholism or addiction to non-medically prescribed drugs; or
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(vi) breach by the Executive of his confidentiality, no solicitation, and non-competition
covenants contained in his employment agreement with the Company.
Any act or omission of the Executive based upon authority given pursuant to the Articles of
Incorporation of the Company or Bylaws of the Company or a resolution duly adopted by the Company’s
Board of Directors or based upon the advice of counsel for the Company shall be conclusively deemed
to be done by Executive in good faith and in the best interests of the Company.
If Executive’s services are terminated for cause as set forth in this subsection, Executive’s
services shall cease as of such effective date of termination and all compensation shall cease as
of such effective date.
As used herein, Good Reason shall mean only:
(i) withdrawal by the Company from Executive of any substantial part of his duties then being
performed, or responsibility or authority then being carried, by Executive, or a material change in
the Executive’s reporting lines;
(ii) assignment by the Company to Executive of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities then being carried by
Executive;
(iii) material reduction in the level of Executive’s responsibility, authority, autonomy,
title, or compensation;
(iv) the Company’s material breach of Executive employment agreement (or any other agreement
between Executive and the Company); and the failure of the Company to cure such breach within
thirty (30) days of notice thereof;
(v) material fraud on the part of the Company; or
(vi) discontinuance of the active operation of business of the Company, or insolvency of the
Company, or the filing by or against the Company of a petition in bankruptcy or for reorganization
or restructuring pursuant to applicable insolvency or bankruptcy law.
The Company will pay Executive (a) his salary and unused vacation pay through the last day of
his employment with the Company, (b) his unpaid reimbursable business expenses incurred by him
through the last day of his employment with the Company and (c) his then Annual Salary and minimum
bonus, in a lump sum, and continue his benefits for a period of one year.
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The Company shall have the right during the Term hereof to use Executive’s name, biography and
approved likenesses in connection with Company’s business, including advertising their products and
services; and the Company may grant such rights to others, but not for use as a direct endorsement.
Any dispute whatsoever arising out of or referable to this Agreement, including, without
limitation, any dispute as to the rights and entitlements and performance of the parties under this
Agreement or concerning the termination of Executive’s employment or of this Agreement or its
construction or its validity or enforcement, or as to the arbitrator’s jurisdiction, or as to the
ability to arbitrate any such dispute, shall be submitted to final and binding arbitration in Los
Angeles, California by and pursuant to the Labor Arbitration Rules of the American Arbitration
Association with discovery proceedings pursuant to Section 1283.05 of the California Code of Civil
Procedure. The arbitrator shall be entitled to award any relief, which might be available at law
or in equity, including that of a provisional, permanent or injunctive nature. The prevailing
party in such arbitration as determined by the arbitrator, or in any proceedings in respect thereof
as determined by the person presiding, shall be entitled to receive its or his reasonable
attorneys’ fees incurred in connection therewith.
If to Executive, to his address at:
00000 Xxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx, XX 00000
If to Company, to its address at:
Xxxxxx.xxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax (000) 000-0000
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Fax (000) 000-0000
(b) Change of Address. Either party may change its address for notice hereunder by
notice to the other party in accordance with this Section 11.
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This Agreement contains a complete statement of all the arrangements between the parties with
respect to the matters covered hereby and, supersedes all existing agreements between the parties
concerning the subject matter hereof. This Agreement may be amended, modified, superseded or
canceled, and the terms and conditions hereof may be waiver, by the party waiving compliance. No
delay on the part of any party in exercising any shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right or remedy, nor any single or partial exercise of
any such right or remedy preclude any other or further exercise thereof or the exercise of any
other right or remedy.
The headings in this Agreement are solely for the convenience of reference and shall not
affect its interpretation.
The Company will indemnify, defend, and hold Executive harmless from and against any and all
demands, actions, claims, suits, liabilities, losses, damages, fees (including reasonable
attorneys’ fees) and expenses relating to any acts or omissions to act in the course or scope of
his duties he performs on behalf of the Company while employed by it and/or while serving as an
Executive and/or director of the Company, and to provide indemnification and Executives and
directors liability insurance to him at least to the same extent that it provides such
indemnification and insurance to the Executives and directors of the Company. Executive will have
the option to select his own counsel or be represented by counsel for the Company. The provisions
herein shall survive the termination of Executive’s employment with the Company for any reason.
If either the Company or the Executive brings an action to enforce the Executive’s employment
agreement, the prevailing party will be entitled to recover its/his reasonable attorneys’ fees.
WHEREFORE, the parties hereto have executed this Agreement as of the day and year first above
written.
/s/ Xxxxx X. Xxxxxxx | ||||
Xxxxx X. Xxxxxxx | ||||
Agreed to and Accepted:
Xxxxxx.xxx, Inc., a
Delaware Corporation
Xxxxxx.xxx, Inc., a
Delaware Corporation
By:
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/s/ Xxxxxxx X. Xxxxxxxx
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Its:
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President and Chief Executive Officer | |||
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FIRST AMENDMENT TO
SOLOMON EMPLOYMENT AGREEMENT
SOLOMON EMPLOYMENT AGREEMENT
This is a FIRST AMENDMENT (“First Amendment”), effective as of this 1st day of August, 2005,
to that certain employment agreement dated the 20th day of July, 2004 (the “Employment Agreement”),
by and between XXXXX X. XXXXXXX (the “Executive”), and XXXXXX.XXX, INC., a Delaware corporation,
(the “Company”) (collectively, the “Parties”).
NOW THEREFORE, in consideration of the covenants and agreements herein contained, the Company
and the Executive hereby agree to amend the Employment Agreement as follows:
1. | Term. |
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The first sentence of Section 2 shall be deemed amended to reflect that the Term
has been extended for an additional year, and shall therefore end on July 31, 2007. |
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2. | |||
The second sentence of Section 3 (a) shall be deemed amended as follows: a) Salary. During the second and third year of the Term, Executive shall receive an Annual Salary of $300,000 per annum. |
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The first paragraph of Section 3 (b) shall be deemed amended to conclude as follows
follows: b) Bonuses. Commencing with the second year of the Term, Executive shall be entitled to participate in the Company Bonus plan at the Executive level, not less than 40%, subject to offset for the minimum bonus payments made during such period. Executive shall receive a minimum bonus of 20% of his then annual salary, during the second and third years of the Term, paid quarterly on a pro rata basis. |
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3. | This First Amendment will be effective as of the date first written above. |
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4. | Except to the extent noted, and as may be necessary to give full force and
effect to the foregoing, the Employment Agreement shall continue unchanged, in full
force and effect. |
XXXXXX.XXX, INC.
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XXXXX X. XXXXXXX | |||
/s/ Xxxxxxx X. Xxxxxxxx
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/s/ Xxxxx X. Xxxxxxx | |||
Name: Xxxxxxx X. Xxxxxxxx
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Date: August 19, 2005 | |||
Title: President and Chief Executive Officer |
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Date: August 19, 2005 |
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XXXXXX.XXX, INC.
SUPPLEMENTAL COMPENSATION AGREEMENT
SUPPLEMENTAL COMPENSATION AGREEMENT
1. Effective Date. This Agreement shall be effective as of January 25, 2006 (the
“Effective Date”).
2. Supplemental Payments. On or before the last day of each of the twelve calendar
months beginning with January 2006 and continuing until December 2006, the Corporation shall pay to
the Employee an amount equal to $38,167.00 per month, provided, however, that such payments shall
cease only in the event that Employee’s employment with the Corporation is terminated for “Cause”,
as defined in the Corporation’s Equity Incentive Plan. In the event the Employee’s employment with
the Corporation shall terminate as a result of his death, any payments which remain unpaid on the
date of his death shall continue to be made to the Employee’s surviving spouse (or if no surviving
spouse, to his estate).
3. Unfunded Promise to Pay. This Agreement constitutes an unfunded promise of the
Corporation to make benefit payments in the future. Neither the Employee nor anyone on behalf of
or through the Employee shall have any right in or claim to any asset of the Corporation under this
Agreement other than as a general, unsecured creditor of the Corporation. The Corporation intends
that the Agreement be unfunded for federal income tax purposes.
4. Termination. This Agreement shall terminate as of December 31, 2006, provided that
all of the payments described in paragraph 2 have been paid.
(a) | Non-Alienation. Except as otherwise expressly set forth herein, no
benefits payable under the provisions of this Agreement shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge shall be void. |
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(b) | Withholding. The Corporation shall withhold from amounts paid under
this Agreement any taxes or other amounts required to be withheld by law. |
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(c) | Amendment or Modification of the Agreement. This Agreement may not be
amended, altered or modified, except by a written instrument signed by the Employee, or
his respective successors or assigns, and the Corporation and any successors thereto.
Any waiver of any provision of this Agreement must be in writing and signed by the
party granting the waiver. |
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(d) | Binding Effect. This Agreement (and all rights, options, privileges
and obligations hereby granted and/or imposed) shall be binding upon and inure to the
benefit of the Employee and the Corporation and their successors and assigns. |
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(e) | Notice. Any notice, consent or demand required or permitted to be
given under the provisions of this Agreement shall be in writing, and shall be signed
by the party giving or making the same. If such notice, consent or demand is mailed to
a party hereto, it shall be sent by United States certified mail, first class postage
prepaid, addressed to such party’s last known address provided to the Corporation. The
date of such mailing shall be deemed the date of notice, consent, or demand. Any
notice, consent, or demand delivered in any other manner shall be deemed to have been
delivered upon actual receipt of the party. |
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(f) | Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the State
of California, without regard to the choice of laws rules thereof. |
XXXXXX.XXX, INC. | ||||
By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
Title: | President and Chief Executive Officer |
ATTEST:
/s/ Xxxxxxx Xxxxxxx
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Title: Vice President, Human Resources and Administration
EMPLOYEE | ||
/s/ Xxxxx Xxxxxxx | ||
Xxxxx Xxxxxxx |