EXHIBIT 10.1
[Xxxxx Entertainment Resorts, Inc. logo]
0000 Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Ph: 000-000-0000
Fx: 000-000-0000
November 14, 2005
Xxxx Xxxxx
Dear Xxxx:
This letter agreement (the "Agreement") will confirm your employment
with Xxxxx Entertainment Resorts Holdings, L.P. ("TERH") and/or its affiliates
(collectively "Xxxxx").
Your official starting date of employment will be on or about
November 17, 2005.
Position: Executive Vice President, Chief Financial Officer (or such
other position at any TERH affiliate owned casino hotel as
TERH may reasonably request and which you are qualified
for by training and experience)
Base Salary: Annual Salary of $350,000.
(reviewed annually and adjusted in accordance with current
TERH policy)
Travel / Relocation You will be allowed up to 52 round trip airline tickets
from Atlantic City or Expenses: Philadelphia to St. Louis
or an equivalent destination during the first two years of
employment. Additionally, you may obtain a total
relocation reimbursement of $50,000.00 for the sale of
your present primary residence, purchase of a new home in
New Jersey and associated moving expenses.
Annual Incentive
Bonus: 60-100% of base salary upon achievement of financial
parameters and approval by the Compensation Committee of
TERH.
Long Term Incentive: Initial grant to be awarded in January
2006 of 32,000 restricted shares with all restrictions
lapsing in one third increments on January 30, 2007, 2008
and 2009. Will be eligible, following approval by the
Compensation Committee of TERH, for grants of equity
compensation awards or options under any long term
incentive program adopted by TERH. In the event of a
Change in Control all vesting restrictions will lapse.
COBRA
Reimbursement: Up to six (6) months of your actual cost.
Benefits: Benefits and perquisites which Xxxxx provides to its
employees generally as determined by Xxxxx for similarly
situated executives.
Vacation: Three (3) weeks upon commencement of employment and three
(3) weeks each anniversary year until the established
vacation policy vesting schedule is attained.
Terms of Employment/
Severance: Your continued employment and severance rights shall be
subject to the terms and conditions set forth in Annex A
hereto.
Change of Control: You may terminate your employment on your own initiative
upon a Change of Control (as defined in Annex A ) and in
such event you shall be entitled to the severance and
other rights and obligations set forth in Annex A.
Non-compete: a. You agree that if you terminate your employment
on your own initiative or if it is terminated
for Cause within the first year of employment,
you will not accept employment, either as an
employee, consultant or independent contractor,
with or on behalf of any casino licensee or
casino license applicant in any market where we
operate a casino facility or within 200 miles
of such casino facility for the remaining
months of the first year of employment;
b. You agree that for a period of twelve (12)
months after the termination of your employment
with Xxxxx you shall not solicit or contact,
directly or through any other company, any
customers whom you have met, serviced,
developed or continued to develop during your
tenure with Xxxxx;
c. You agree that a period of twelve (12) months
after the termination of your employment with
Xxxxx you shall not solicit or otherwise
discuss employment, directly or through any
other company, any employees of Xxxxx, or any
of its related or affiliated companies.
d. You acknowledge and agree that the restrictive
covenants set forth herein are reasonable as to
duration, terms and geographical area and that
the same are necessary to protect the
legitimate interests of Xxxxx, impose no undue
hardship on you and are not injurious to the
public.
You acknowledge that upon your breach of this Agreement,
Xxxxx would sustain irreparable harm from such breach,
and, therefore, you agree that in addition to any other
remedies which Xxxxx may have under this Agreement or
otherwise, Xxxxx'x obligations to provide severance
benefits to you shall immediately terminate, you shall
have no claim to receive such benefits from Xxxxx, the
release document referred to above shall remain in all
respects valid and binding, and Xxxxx shall be entitled to
obtain equitable relief, including specific performance
and injunctions, restraining you from committing or
continuing any such violation of this section.
Indemnification: Xxxxx shall cover you under directors and officers
liability insurance both during, and while potential
liability exists, after your employment with Xxxxx in
commercially reasonable amounts. Xxxxx shall during and
after your employment indemnify and hold you harmless to
the fullest extent permitted by applicable law with regard
to your actions or inactions in the performance of your
duties as an officer, director and/or employee of Xxxxx
and its affiliates or as a fiduciary of any benefit plan
of Xxxxx and its affiliates.
Attorney's Fees: TERH shall promptly reimburse you for the reasonable
legal fees and expenses incurred in negotiating this
Agreement.
Representation: You acknowledge that your entering into this Agreement
does not violate any other agreement to which you or
anyone on your behalf is a party.
Entire Agreement: This Agreement constitutes the entire
understanding of the parties with respect to the subject
matter hereof and supersedes and voids any and all prior
agreements or understandings, written or oral, regarding
the subject matter hereof.
GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey.
Your employment is contingent upon the following:
o Obtaining or possessing a New Jersey Key license or such
equivalent qualification required by New Jersey law,
o Satisfactory completion of a background and reference check,
o Your signing this Agreement, the Xxxxx Code of Business Conduct
and the Xxxxx Employee Handbook,
o Compliance with all employment policies including the successful
completion of a drug test; and
o Your submission of appropriate documentation of employment
eligibility in the United States.
Very truly yours,
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Executive Vice President
Human Resources
LIP/ams
I agree and accept the terms of this Agreement.
/s/ Xxxx Xxxxx
----------------------------------------------- ---------------------
Xxxx Xxxxx Date
ANNEX A
TO XXXX XXXXX
LETTER AGREEMENT
1. Separation of Employment.
------------------------
(a) Death. The death of Xxxx Xxxxx ("Executive") shall automatically
terminate Xxxxx Entertainment Resorts, Inc. ("TER") and Xxxxx Entertainment
Resorts Holdings, LP (hereinafter, together with TER, collectively, referred to
as the "Company") obligations hereunder, except as set forth in 2(a) below.
(b) Total Disability. If Executive is disabled so that in the
Company's opinion he would qualify for disability under the Company's Long Term
Disability Plan if he applied for it or, if there is no plan, Executive is
unable to perform the services required of him due to physical or mental injury
or illness for six consecutive months or for six months in any period of twelve
months, (a "Total Disability"), the Company shall be entitled to separate
Executive's employment with Executive reserving his rights to apply for
disability benefits based on becoming disabled during active employment. This
separation will terminate the Employer's obligations to Executive, except as set
forth in Section 2(b).
(c) Separation for Cause. At any time during the term of this
Agreement, the Company may separate Executive's employment for cause, in which
event Executive's employment will immediately terminate. For the purpose of this
Agreement, the Company shall have "Cause" to separate Executive's employment for
any of the following reasons: (1) dishonesty or fraud, (2) disclosure of
confidential information regarding the Company, (3) aiding a competitor (as
defined in the Non-compete provisions of the Letter Agreement) of the Company or
other material breach of the Non-compete provisions of the Letter Agreement, (4)
the use by Executive of controlled substances (not legally prescribed by a
physician) or the use of alcohol that interferes, in the sole discretion of the
Company, with the performance of Executive duties, (5) willful misconduct, acts
of moral turpitude, malfeasance or gross negligence in the performance of his
duties hereunder, or (6) the failure to obtain and maintain all licenses,
qualifications and credentials required by any state or Federal agency or
authority having jurisdiction over the Company, or its employees or properties,
in any case under clauses (1) through (6) that are materially injurious to the
business or reputation of the Company or any of it affiliates, as determined in
good faith by the Board or the CEO. Separation for Cause must be approved by the
CEO or the Board but only after reasonable notice to Executive and a reasonable
opportunity to explain and cure the conduct, unless under the circumstances
there is no cure or the time required for a cure would materially harm the
Company or any of its affiliates. The failure of Executive to meet financial
projections, budgets or target performance objectives shall not be deemed
willful misconduct or gross negligence for the purposes of this Agreement.
(d) Separation Without Cause, or For Good Reason. Notwithstanding
anything to the contrary contained in this Agreement, the Company may in its
sole discretion, at any time, separate Executive from employment with the
Company Without Cause upon sixty (60) days' prior written notice, and Executive
may initiate a separation for Good Reason upon thirty (30) days' prior written
notice (hereinafter, any such separation by the Company or Executive shall be
called a "Separation Without Cause").
(e) Separation by Executive Without Good Reason. Executive may
terminate his employment at any time Without Good Reason upon thirty (30) days
prior written notice.
(f) Notice of Separation. Any purported separation of Executive's
employment hereunder by the Company or Executive (other than separation by
reason of the death of Executive) shall be effective when communicated to the
other party by a Notice of Separation. For the purposes of this Agreement, a
"Notice of Separation" shall be a written notice indicating the specific
separation provision in this Agreement relied upon and the Separation Date. If
Executive vacates or abandons his job and does not give Notice of Separation,
the Separation Date will be the last day worked or such other date as the
Company may reasonably select.
2. Payments Upon Separation.
------------------------
(a) Payments Upon Death. If Executive's employment hereunder is
separated by reason of Death during his active employment, the Company shall pay
to Executive's estate his Base Salary and accrued PTO through the Separation
Date at the rate in effect on the Separation Date and a pro rata bonus for
current year based on performance of the Company, paid in the following year
when bonuses are normally distributed. His estate and beneficiary(ies) will
receive the benefits to which they are entitled under the terms of the
applicable benefit plans and programs by reason of a participant's death during
active employment. If Executive dies during the Salary Continuation Period, as
defined below, the remaining Salary Continuation will be paid in a lump sum to
Executive's estate and his estate and/or beneficiary(ies) will receive the
benefits applicable to an employee who dies during employment.
(b) Payments Upon Total Disability. If Executive incurs a Separation
for Total Disability, then the terms and provisions of the Company benefit plans
and the programs (including the Company's Long Term Compensation Plan) that are
applicable in the event of such disability of an employee shall apply in lieu of
the salary and benefits under this Agreement except that Executive shall receive
a pro rata bonus for current year based on performance of the Company, paid in
the following year when bonuses are normally distributed. If Executive becomes
disabled during the Salary Continuation Period, he will not be eligible for
benefits under the Company's Long Term Disability Plan and will be entitled only
to the salary and benefits described in Paragraph 2(c) below for the periods set
forth in those respective paragraphs.
(c) Payments Upon Separation for Cause or Without Good Reason. If
Executive's employment hereunder is separated by the Company for Cause pursuant
to Section 1(c) or by Executive Without Good Reason pursuant to Section 1(e),
then the Company shall pay Executive his Base Salary and accrued PTO through the
Separation Date at the rate in effect at the time notice of separation is given
and the Company shall have no further obligation to Executive other than COBRA
rights, if any, and other normal rights offered to terminated employees under
benefit programs, if any.
(d) Payments Upon Separation By the Company Without Cause or by
Executive With Good Reason. If Executive's employment is separated by the
Company Without Cause or by Executive with Good Reason pursuant to Section 1(d),
then the Company shall, as severance pay, provide to Executive the payment and
benefits set forth in this Section; provided, however, that Executive's
entitlement to any such payments or benefits shall be expressly subject to the
Company receiving a release prepared by the Company and executed by Executive,
in the form then used by the Company for employees generally, waiving and
releasing the Company, its subsidiaries and their officers, directors, agents,
benefit plan trustees and employees from any and all claims (except stockholder
rights, rights under this Agreement, rights to indemnification and rights to
employee benefits then accrued and vested), whether known or unknown, and
regardless of type, cause or nature, including but not limited to claims arising
under all salary, bonus, stock, vacation (PTO), insurance and other benefit
plans and all state and federal anti-discrimination, civil rights and human
rights laws, ordinances and statutes, including Title VII of the Civil Rights
Act of 1964 and 1991, the Age Discrimination in Employment Act as amended by the
Older Worker's Benefit Protection Act of 1990, and the American's with
Disabilities Act covering Executive's employment with the Company, its
subsidiaries and affiliates, and the cessation of that employment (the
"Release"). Pursuant to this Section 2(d), Executive will receive the following:
(i) The Company shall pay Executive over the next fifty-two (52)
weeks, Salary Continuation, plus PTO earned and unused through the
Separation Date (PTO paid in a lump sum) and Executive shall receive a pro
rata bonus for current year based on performance of the Company, paid in
the following year when bonuses are normally distributed. Executive shall
also be entitled to health and dental participation, but not eligibility
for the Company's Long Term Disability Plan, if any, and no further PTO
will accrue with the Company beginning the day following the Separation
Date (the "Salary Continuation Period"). Salary Continuation will be paid
on a weekly basis. If Executive dies during the Salary Continuation Period,
the Company, within ten (10) days of becoming aware of such event, will
pay, by check, to his estate the lump sum amount equal to the salary and
bonus he would have been paid during the remainder of the Salary
Continuation Period (The date of the check for the lump sum is herein
referred to as the "Termination Date"). During the Salary Continuation
Period, Executive shall remain an employee of the Company and, solely for
stock option exerciseability, group health and life insurance purposes,
shall receive service credit during that period. Executive will be
responsible for the employee portion of the cost of such insurance during
the Salary Continuation Period similar to other employees. COBRA rights
will commence at the end of the Salary Continuation Period.
(ii) Executive will be entitled, at the Company's expense, to
Executive outplacement services being provided at that time to terminated
executives at his grade level.
(iii) All vested option grants (and those that become vested) may be
exercised during the Salary Continuation Period and may be exercisable
thereafter for a period of one year.
(iv) Executive shall receive a release from the Company except for
matters violative of law or outside the scope of his employment. If the
Company does not provide the release required pursuant to this subsection
(iv), Executive's Release shall be null, void and without effect, and
Executive shall still receive all of the payments and benefits described in
subsections (i) through (iii) above in any event.
(v) To the extent that any payment under this Agreement is deemed to
be deferred compensation subject to the requirements of Section 409A of the
Internal Revenue Code, the Company and Executive shall amend this Agreement
so that such payments will be made in accordance with the requirements of
Section 409A of the Code; provided, however, that, if any payment due to
Executive is delayed as a result of Section 409A of the Code, Executive
shall be entitled to be paid interest on such amount at an annual rate
equal to the prime rate, as published in the Wall Street Journal, plus 2%,
in effect as of Executive's Date of Termination. Amendment of the Agreement
to comply with Section 409A of the Code will not result in Executive being
entitled to receive any reduced or enhanced benefit under this Agreement.
Notwithstanding the foregoing, in the event Executive is subjected to
income or excise taxes or other penalties under Section 409A of the Code by
virtue of any amount due to him, the Company will pay an additional amount
to Executive to make Executive whole for such taxes. Such additional amount
will be paid to Executive not later than the due date of Executive's tax
return for the year in which the tax or penalty is imposed.
(e) For the purposes of this agreement, "Good Reason" means the
occurrence, without Executive's express prior written consent (which may be
withheld for any reason or no reason), of any of the events or conditions
described in the following subsections (i) through (v), provided that Executive
shall have given notice of Good Reason to the Company and the Company shall not
have fully corrected the situation within twenty (20) days after such notice of
Good Reason.
(i) failure by the Company to pay or provide to Executive any
compensation or benefits to which Executive is entitled;
(ii) A change in Executive's status, reporting relationships,
positions, titles, offices or responsibilities that constitutes a material
change (any change following a Change in Control, as defined below) from
Executive's status, reporting relationships, positions, titles, offices or
responsibilities as in effect immediately before such change; or the
assignment to Executive of any duties or responsibilities that are
substantially inconsistent with Executive's status, positions, titles,
offices or responsibilities as in effect immediately before such
assignment;
(iii) changing the location of Executive's principal duties to a
location outside of Atlantic City, NJ; provided that the Company may
require Executive to travel on business as long as such travel is
reasonable;
(iv) Any material uncured breach by the Company of this Agreement or
any other agreement between the Company and Executive following notice and
the cure period set forth above; or
(v) The failure by the Company to obtain, before completion of a
Change in Control, an agreement in writing from any successors and assigns,
to assume and agree to perform this Agreement.
(f) Notwithstanding the foregoing, in the event payment is due to
Executive under subsection (d) following a Change of Control, then conditioned
upon Executive's execution, and non-revocation, of the Release, Executive, and
in lieu of the Salary Continuation in subsection (d)(i) above, Executive shall
receive, in a lump sum in cash within 30 days after the Separation Date, an
amount equal to twelve (12) months of Executive's Base Salary (or the Base
Salary in effect prior to the Change in Control, if higher) and Target Bonus. In
such case, the COBRA reimbursement rights provided in the Letter Agreement shall
be extended to twelve (12) months following the Separation Date. In addition,
all equity awards (stock, stock options or otherwise) shall immediately be fully
vested.
3. Change of Control Definition and Payments.
-----------------------------------------
(a) For the purpose of this Employment Agreement, a "Change of
Control" shall mean:
(i) The acquisition by any person, entity or group, within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), (excluding, for this purpose, (A) the Company or its
subsidiaries, or any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of
the Company), of beneficial ownership, (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the then
outstanding shares of common stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in
the election of directors;
(ii) Individuals who, as of the date hereof, constitute the Board (as
of the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) Consummation of (A) a reorganization, merger or consolidation,
in each case, with respect to which persons who were the stockholders of
the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or (B) a liquidation or dissolution of the
Company or (C) the sale of all or substantially all of the assets of the
Company.
(b) Anything in this Agreement to the contrary notwithstanding, in
the event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Payment"), would constitute an "excess parachute payment" within
the meaning of Section 280G of the Code, Executive shall be paid an additional
amount (the "Gross-Up Payment") such that the net amount retained by Executive
after deduction of any excise tax imposed under Section 4999 of the Code, and
any federal, state and local income and employment tax and excise tax imposed
upon the Gross-Up Payment shall be equal to the Payment. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income tax and employment taxes at the highest marginal rate of federal
income and employment taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's residence on the
Termination Date, net of the maximum reduction in federal income taxes that may
be obtained from the deduction of such state and local taxes.
(c) All determinations to be made under this Section 3 shall be made,
upon the request of either party, by an independent public accountant
immediately prior to the Change of Control (the "Accounting Firm"), which firm
shall provide its determinations and any supporting calculations both to the
Company and Executive within 10 days of the Termination Date. Any such
determination by the Accounting Firm shall be binding upon the Company and
Executive. Within five days after the Accounting Firm's determination, the
Company shall pay (or cause to be paid) or distribute (or cause to be
distributed) to or for the benefit of Executive such amounts as are then due to
Executive under this Employment Agreement.
(d) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the thirty day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting claim as the
Company shall reasonably request in from time to time, including, without
limitation, accepting legal representation with to such claim by an
attorney reasonably selected by the company,
(iii) cooperate with the Company in good faith in order to effectively
contest such claim, and
(iv) permit the Company to participate in any relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax, income tax or
employment tax, including interest and penalties, with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 3,
the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearing and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a termination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided further, however, that if the Company
directs Executive to pay such claim and sue for a refund the Company shall
advance the amount of such payment to Executive, on an interest-free basis
and shall indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax, income tax or employment tax, including interest or
penalties with respect thereto, imposed with respect to income with respect
to such advance; and provided further that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(e) If, after the receipt by Executive of an amount advanced by the
Company pursuant to this Section, Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to the Company's
complying with the requirements of subsection (c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to this Section, a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(f) All of the fees and expenses of the Accounting Firm in performing
the determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company. The Company agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and expenses resulting
from or relating to its determinations pursuant to subsections (b) and (c)
above, except for claims, damages or expenses resulting from the gross
negligence or wilful misconduct of the Accounting Firm.
