EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made as of the 1 day of August, 1997,
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between American Bingo & Gaming Corp. (the "Company"), and Xxxx Xxxxxxx Xxxxx
(the "Employee").
1. Employee Duties. The Company hereby employs the Employee as General
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Counsel and Chief Administrative Officer, with such responsibilities and duties
as may be directed by the Company's President or Board of Directors from time to
time. The Employee shall devote his full working time to the performance of his
responsibilities and duties hereunder and shall not, directly or indirectly,
render services to any other person or organization for which he receives
compensation without the consent of the Company's Board of Directors or
otherwise engage in any activities which materially interfere with the
performance by the Employee of his duties hereunder or detrimentally affect the
Company or its business.
2. Term of Employment. The term of employment (the "Term") shall commence
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on the date of this Agreement and continue until December 31, 2000, unless
earlier terminated at any time at the will of either Employee or the Company.
3. Compensation.
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Base Salary. Employee shall receive an aggregate annual base salary at
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the rate of $100,000 per annum during the employment term, effective on October
1, 1997. Installments of base salary shall be paid not less frequently than
bi-weekly. Annual salary increases, if any, will be determined by the Company's
President and the Company's Board.
4. Bonuses. Commencing with the Company's 1996 fiscal year and for each
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additional year of employment under this Agreement, an annual cash bonus pool
("Bonus Pool") will be created for the benefit of management personnel of the
Company who earn more than $60,000 per year. The Bonus Pool shall be comprised
of an amount which shall equal 2% of the net operating income of the Company as
reported on the Company's certified financial statements for the year in
question provided that the Company reported net operating income of $2,000,000
or greater in such year. The maximum Bonus Pool in any year shall not exceed
$400,000. The Employee shall be eligible to participate in the Bonus Pool. The
Board by unanimous vote may allow any other employee of the Company to
participate in the Bonus Pool. The Bonus Pool will be distributed 30 days after
the Company's receipt of its certified financial statements for such year in
accordance with the directives of the Board of Directors of the Company. In the
event the Board can not unanimously agree to the distribution of the Bonus Pool,
the Bonus Pool will be distributed as follows:
The Company's Chief Executive Officer shall receive 50% of the Bonus Pool and
the balance distributed among the remaining members of management, including the
Employee, on a pro rata basis relative to the dollar amount of their respective
annual salaries.
The Board may, in its sole discretion, award to the Employee additional
Bonuses beyond the Bonus Pool.
5. Employee Stock Options. The Company agrees to grant to the Employee
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options to purchase 216,667 shares (which number includes 150,000 shares granted
pursuant to Employee's Employment Agreement dated October 25, 1996) of its
common stock as outlined in Attachment 1 hereto. The options will be subject to
all terms and conditions of the Company's 1994, 1995 and 1996 Stock Plans, and
shall be "statutory" options under said plans. The Company will take appropriate
legal steps to propose amendments to the 1996 Stock Option Plan which would
increase the number of authorized options so as to enable Employee to purchase a
total of 216,667 shares to vest to Employee. The options shall vest according to
the schedule shown on Attachment 1.
In addition, all Options shall vest in favor of the Employee in the event
that a significant change in ownership of the Company occurs. A significant
change shall be deemed to occur for purposes of this Agreement only in the event
that shares owned by the Company's Chairman and members of his family change by
greater than 20% of the total amount of shares of the Company's common stock
outstanding. Prior to such event, a significant change in ownership will not be
created in the event the Company conducts a secondary public offering, engages
in a private placement of its securities or enters into an acquisition agreement
pursuant to which the Company is the survivor and the Company controls the
company acquired. Employee may sell the stock represented by his vested and
exercised options in any quarter after vesting subject to Rule 144 restrictions.
The number of shares and pricing thereof for the option shares shall be
proportionally adjusted for any and all stock splits during the term of this
Agreement. Any options not exercised five years after vesting will be cancelled
and will be of no force and effect.
6. Other Fringe Benefits. Employee shall receive the following benefits
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during the Term of Employment.
(a) Comprehensive family health and major medical coverage in
accordance with the general policies of the Company as in effect from time to
time;
(b) Payment on behalf of the Employee of Oklahoma Bar Association
filing fees and continuing education fees;
(c) Use of a company vehicle without assessment;
(d) Disability insurance; and
(e) Term life insurance in the amount of $500,000.
7. Reimbursement of Expenses. The Company shall reimburse Employee for all
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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.
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8. Vacation. Employee shall be entitled to a three week paid vacation each
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year during the term hereof.
9. Effect of Termination of Employment. If Employee's employment hereunder
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shall be unilaterally terminated by the Company without Employee's consent, then
the unvested options will vest proportionally based upon the number of months of
Employee's service to the Company under this Agreement. If Employee's employment
is terminated voluntarily by Employee or with Employee's consent, all options
which have not vested as of the termination date will be cancelled and this
Agreement shall forthwith terminate, provided, that Employee's obligations under
Section 11 shall continue unaffected.
10. Death of Employee. If Employee's employment hereunder shall terminate
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because of his death, this Agreement shall forthwith terminate, except that
Employee's personal representative shall be entitled to receive all cash
compensation accrued in favor of Employee but unpaid as of the date of death, as
well as all of Employee's vested stock options. All rights of Employee's
personal representative to receive any further compensation hereunder or under
any other plan, arrangement or procedure of the Company shall terminate to the
extent not theretofore vested, except for any rights which arise by virtue of
Employee's death under any such plan, arrangement or procedure.
11. Non-Disclosure and Non-Compete.
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11.1 Non-Disclosure. Employee agrees that all information pertaining to the
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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 11 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, 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. Employee
acknowledges that, prior to his employment with the Company, Employee had no
previous experience, as owner, employee, or otherwise in the bingo or gaming
business, and that Employee has gained valuable knowledge and experience in such
business through his employment with Employer.
11.2 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 Company in the business of operation of bingo and gaming
facilities, which Confidential Information, know-how and training Employee would
not have otherwise received, and in consideration for renegotiated employee
stock options being issued to Employee in connection with this Agreement which
are given upon terms more favorable to Employee than options previously issued
or promised to him, Employee covenants and agrees that, during the term of
Employee's employment with the Company, and for a period of two years
thereafter, Employee will not, within the Restricted Territory (defined below),
directly or indirectly, promote, operate, manage, conduct, solicit, sell for,
own, acquire any interest in, act as landlord to, or as employee, director,
agent or consultant for, do business with, participate in, be connected with, or
in any manner assist any other person, partnership, limited partnership or other
entity which is engaged in, the business of operation of bingo games, video
games, slot machines, or other similar games or machines. The Restricted Area is
the geographical area within fifty (50) miles of each and every bingo or gaming
facility owned, leased or operated by Company, except that after termination of
Employee's employment, the Restricted Area shall be limited to the geographical
area within fifty (50) miles of each such facility owned, leased or operated by
Company as of the date of termination of Employee's employment. Employee will
observe and perform the provisions of this Article 11.2 in good faith, and will
use no means or measures to circumvent the intent of this Article 11. 2.
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11.3 Enforcement. In the event of a breach by Employee of the
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provisions of this Article 11.3, Employer 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
11.3. Employee agrees that in the event of such breach the amount of damages
would be difficult or impossible to determine, and agrees that a bond in the
amount of $1,000.00 would be appropriate in connection with a temporary
restraining order or temporary injunction.
11.4 Severance, Reformation. Should any court of competent
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jurisdiction hold any portion of this Article 11 to be unenforceable in whole or
in part, such court shall be authorized and requested to sever the offending
provision from this Article 11, 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.
11.5 Breach of Article 11. Since a breach of the provisions of this
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Article 11 could not be adequately compensated by money damages, the Company
shall be entitled, in addition to any other right and remedy available to it, to
an injunction restraining such breach or threatened breach, and in either case
no bond or other security shall be required in connection therewith, and
Employee hereby consents to the issuance of such injunction. Employee agrees
that the provisions of this Article 11 are necessary and reasonable to protect
the Company in the conduct of its business. If any restriction contained in this
Article 11 shall be deemed to be invalid, illegal or unenforceable by reason of
the extent, duration, or geographical scope thereof, or otherwise, then the
court making such determination shall have the right to reduce such extent,
duration, geographical scope, or other provisions hereof, and in its reduced
form such restrictions shall then be enforceable in the manner contemplated
hereby.
12. Warranties and Representations of the Employee. The Employee warrants
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and represents that 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.
13. Services on Behalf of Subsidiary Companies. The Employee's services
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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 words "Company" and "Employer" shall refer to and include
each of the subsidiaries of the Company.
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14. 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:
Xxxx Xxxxxxx Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
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
15. Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the local laws of the State of Texas applicable to
agreements made and to be performed entirely in such state.
16. Headings and Captions. The section headings contained herein are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17. Replace Prior Agreement; Entire Agreement. This Agreement modifies and
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supersedes the Employment Agreement between Employee and the Company dated
October 25, 1996. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes 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 neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
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18. Assignment. This Agreement, and the Employee's rights and obligations
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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.
19. 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.
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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/s/ Xxxx Xxxxxxx Xxxxx
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Xxxx Xxxxxxx Xxxxx
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ATTACHMENT 1
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Xxxxxxx Xxxxx
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Stock Option Agreement
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XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 0 XXXXX 5 BLOCK 6 BLOCK 7 BLOCK 8
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Shares 33,334 33,333 33,333 33,333 16,667 16,667 16,667 33,333
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Vesting Date 12/31/95 12/31/96 12/31/97 12/31/98 6/30/99 12/31/97 12/31/98 12/31/99
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Pricing $ 2.25 $ 2.50 Lower of $3.00 Lower of $4.00 Same as $ 5.00 $ 5.00 $ 5.00
------------ or 85% of or 85% of Block 4
closing bid closing bid on
on 12/31/96 12/31/97
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