THIS EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
------------------------------------------------------------
TO THE UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
-----------------------------------------------------------------
(LAW CO-OP. 1976 AND SUPP. 1996)
--------------------------------
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made as of the 18th day of December,
----
1997, between Darlington Music Co., Inc. (the "Company"), and Xxxxxx X.
Xxxxxxxx, Xx. (the "Employee").
1. Employee Duties. The Company hereby employs the Employee as a
----------------
manager of its video poker and video game operation in South Carolina, with such
responsibilities and duties as the Board of Directors may from time to time
determine; provided, however, the Company agrees that it will not require the
Employee to move his primary residence out of the Darlington, South Carolina
area as a condition of maintaining employment with the Company or as a condition
of complying with this Employment Agreement, and that the Employee's travel
requirements in connection with his responsibilities and duties will not be
unreasonable. The Employee shall devote full time to the Company to accomplish
the assigned responsibilities.
2. Term of Agreement. Employment under this Agreement shall commence
-------------------
on the date first shown above and continue for three (3) years unless earlier
terminated in the manner provided below.
2.1. Termination by Company. This Agreement may be terminated by
------------------------
Company only in the event that:
(a) Employee dies;
(b) Employee becomes physically, mentally or emotionally unable to
perform his duties hereunder (subject to all limitations and restrictions upon
such termination imposed by applicable law);
(c) Employee is convicted of violating any law having a material
adverse affect on any video poker or other gaming activities of the Company, or
is barred temporarily or permanently from any gaming activity in South Carolina;
(d) Employee is convicted of any felony crime;
(e) Employee commits an act of material insubordination;
(f) Employee fails to perform his duties hereunder in a
reasonable, ethical manner for any other reason; or
(g) Employee materially breaches this Agreement.
Provided, however, before terminating the Agreement pursuant to Paragraphs
(e), (f) or (g) above, the Company must first give the Employee notice and a
reasonable opportunity to cure such default, if such default is of a nature that
it can be cured by Employee.
2.2 Termination by Employee. This Agreement may be terminated by
-------------------------
Employee in the event that Company fails to pay any compensation due hereunder
after notice and a reasonable opportunity to cure such default.
2.3 Accrued Compensation. In the event of termination of this
---------------------
Agreement, Employee shall be paid his compensation through the date of
termination; provided that Company may set-off or recoup from such unpaid
compensation any sums owed to Employer by Employee.
3. Compensation. Employee shall be paid a salary of one hundred four
------------
thousand dollars ($104,000) per year, payable in monthly installments throughout
each year.
4. Cash and Stock Bonuses. Any bonuses over and above the compensation
----------------------
described above will be based on the Company's performance, Employee's
performance, and in the absolute discretion of the Board of Directors.
5. Other Fringe Benefits. Employee shall receive the following
-----------------------
benefits during the Term of Employment: comprehensive health, accident, major
medical, dental, disability and life insurance protection in accordance with the
general policies of the Company as in effect from time to time, as well as an
annual contribution on behalf of the Employee to the Darlington Music Co., Inc.
Profit Sharing Plan #1 of not less than 7% of the Employee's annual gross
compensation.
6. Reimbursement of Expenses. The Company shall reimburse Employee for
-------------------------
all 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.
7. Vacation; Holidays. Employee shall be entitled to 15 business days
-------------------
paid vacation each year during the term hereof. Employee shall also be entitled
to nine (9) paid holidays each year during the term hereof as determined by the
Company.
8. Non-Disclosure and Non-Compete.
--------------------------------
8.1 Non-Disclosure. Employee agrees that all information pertaining to
--------------
the prior, current or contemplated business of the Company, its parent, its
subsidiaries, affiliates or its successors in interest (hereafter referred to
collectively in this Article 8 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 and excluding such information which Employee possessed prior to his
employment by the Company, 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.
2
8.2 Non-Competition. As a material part of the consideration for
---------------
Employee's access to Confidential Information, and for the know-how and training
provided to Employee by the Company, except as provided on Schedule A Employee
covenants and agrees that:
(a) Employee shall not, directly or indirectly, within the
Territory during the Restricted Period, promote, operate, manage or conduct any
bingo game or related gaming business permitted under the terms and conditions
of any license issued by the State of South Carolina or under any other state or
federal law or authority, or operate any video game machine or other gaming
machine or device (such games and game machines being referred to herein as
"Games").
(b) Further, Employee shall not, directly or indirectly, within
the Territory during the Restricted Period, solicit or sell for, own, or acquire
any interest in, either directly or indirectly, any corporation, partnership,
limited partnership, or other entity, or become engaged by, act as landlord to,
or as agent or consultant for, do business with, manage, operate, control, be
employed by, participate in, or be connected, in any manner with, or in any
manner assist, any other person, corporation, partnership or other entity
engaged in the business of promoting, operating, managing or conducting Games.
8.3 Restricted Period. For the purpose of this Agreement, the
------------------
"Restricted Period" means the period commencing with the date hereof and
continuing until two years after termination of this Agreement.
8.4 Territory. For purposes of this Agreement the "Territory" shall
---------
mean: (i) with regard to any activities described in Section 1 above which are
conducted under a Class B or Class C bingo license (or equivalent thereof under
any future law) issued by the State of South Carolina or under any other state
or federal law or authority, the area within a fifty (50) mile radius of any
bingo facility then owned by American Bingo & Gaming Corp. ("ABG") or any
subsidiary of ABG; and (ii) with regard to any activities described in Section 1
above which are conducted under any Class A license (or equivalent thereof under
any future law) issued by the State of South Carolina or under any other state
or federal law or authority, the area within a one hundred (100) mile radius of
any bingo game facility then owned by ABG or any subsidiary of ABG; and (iii)
with regard to video game facilities, the area within a twenty-five (25) mile
radius of any bingo, video poker or video game facility then owned by ABG or any
subsidiary of ABG.
8.5 Enforcement. In the event of a breach by Employee of the
-----------
provisions of this Article 8, Company 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
8. Employee agrees that in the event of such breach the amount of damages would
be difficult or impossible to determine, and agrees to a bond in the amount to
be determined by a court of competent jurisdiction.
3
8.6 Severance, Reformation. Should any court of competent jurisdiction
----------------------
hold any portion of this Article 8 to be unenforceable in whole or in part, such
court shall be authorized and requested to sever the offending provision from
this Article 8, 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.
8.7 Survival of Termination. The provisions of this Article 8 shall
-------------------------
survive termination of Employee's employment; provided, however, such provisions
shall not survive if this Agreement is terminated by Employee pursuant to
Section 2.2 of this Agreement.
9. Warranties and Representations of the Employee. Employee warrants
------------------------------------------------
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.
10. Services on Behalf of Subsidiary Companies. The Employee's
-----------------------------------------------
services 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 "Company" shall refer to and include each of the
subsidiaries of the Company.
11. Indemnification. The Company agrees that it will indemnify and
---------------
hold harmless the Employee against any losses, claims, damages or liabilities
(including, but not limited to, all costs of defense and investigation and all
attorneys' fees) to which Employee may become subject, under the federal
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in,
or material omission from any registration statement or other document filed
with the Securities and Exchange Commission or otherwise made public, where such
untrue statement or material omission relates to matters outside of Employee's
direct knowledge and upon which Employee relied upon reasonably and in good
faith.
12. Notices. All notices, requests, consents and other communications,
-------
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:
Xxxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
4
With a copy to:
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
Third Floor, Xxxxxx Building
0000 Xxxx Xxxxxx
X. X. Xxx 00000 (29211)
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to the Company:
Darlington Music Co., Inc.
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
13. Governing Law. This Agreement shall be governed by and construed
--------------
and enforced in accordance with the local laws of the State of South Carolina
applicable to agreements made and to be performed entirely in such state. In
any litigation for enforcement or interpretation of this Agreement, the
prevailing party shall be entitled to recover his or its reasonable attorneys'
fees, costs and expenses, in addition to any other remedies provided at law or
in equity.
14. Headings and Captions. The section headings contained herein are
-----------------------
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
15. Entire Agreement. This Agreement along with the Agreement and Plan
----------------
of Reorganization dated November 12, 1997, and other documents referred to
therein, set forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersede 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/or said Agreement and Plan of
Reorganization, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
16. Assignment. This Agreement, and the Employee's rights and
----------
obligations 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.
5
17. Amendments: No Waiver. This Agreement may be amended, modified,
-----------------------
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.
18. Arbitration. Except to the extent not preempted by the Federal
-----------
Arbitration Act, 9 U.S.C. 1 et seq. (1970), any claim or controversy arising
-- ---
out of, or relating to, any provision of this Employment Agreement, or the
breach thereof, or the Employee's employment in general, shall upon written
demand of any party, be settled by three (3) arbitrators in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association to the extent consistent with the laws of the State of South
Carolina and the Uniform Arbitration Act, S.C. Code 15-48-10, et seq., (Law.
-- ---
Co-Op. 1976, as amended). Judgment rendered by the arbitrators may be entered
in the appropriate Court in Darlington County, South Carolina, having
jurisdiction thereof. Arbitration shall be held in the County of Darlington,
State of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DARLINGTON MUSIC CO., INC.
By: /s/ Xxxx Xxxxxx
-----------------
L. Xxxxxxx Xxxxxx, President
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
6
SCHEDULE A
-----------
Exceptions to Non-compete
1. Xxxxxxxx and Associates, a general partnership consisting of the 3
Shareholders plus their mother, Xxxx X. Xxxxxxxx, which primarily owns real
estate, some of which is leased to third parties who have entered into Coin
Machine Leasing and Service Agreements with the Company.
2. G.B.T. Xxxxxxxx, a general partnership consisting of the 3 Shareholders,
which primarily owns real estate, some of which is leased to third parties who
have entered into Coin Machine Leasing and Service Agreements with the Company.
3. Steve's One Stop, owned by Xxxxxxxx and Associates, is a store location
leased to a third party.
4. J and J Grocery, owned by Xxxxxxxx and Associates, is a store location
leased to a third party.
5. Mike's Place, owned by Xxxxxxxx and Associates, is a store location
leased to a third party.
6. Old Bozos Pizza, owned by G.B.T. Xxxxxxxx, is a store location which is
currently empty.
7. Positive Teen, owned by G.B.T. Xxxxxxxx, is a store location leased to a
third party.
8. X.X. Xx., owned by the Shareholders' mother, Xxxx X. Xxxxxxxx, is a store
location leased to a third party.
9. Old Ebonys, owned by the Shareholders' mother, Xxxx X. Xxxxxxxx, is a
store location leased to a third party.
10. Radio Shack Building, owned by the Shareholders' mother, Xxxx X.
Xxxxxxxx, is a store location leased to a third party.
THIS EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
------------------------------------------------------------
TO THE UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
-----------------------------------------------------------------
(LAW CO-OP. 1976 AND SUPP. 1997)
--------------------------------
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") between
Darlington Music Co., Inc. (the "Company") and Xxxxxx X. Xxxxxxxx, Xx. (the
"Employee") is entered into as of the 25th day of February, 1998.
----
WHEREAS, the Company and the Employee entered into an Employment
Agreement as of December 18, 1997 (the "Employment Agreement"); and
WHEREAS, the parties to the Employment Agreement wish to modify and
amend certain provisions of the Employment Agreement;
NOW, THEREFORE, in consideration of the recitals and mutual covenants,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties DO HEREBY AGREE as follows:
1. Amendment of Section 2.3. The following sentence is hereby added to
------------------------
the end of Section 2.3: "Provided, however, upon termination of the Employee's
employment with the Company by the Company or the Employee for any reason
whatsoever, the balance due, including accrued interest thereon, on the
Promissory Note dated February 24, 1998, by and between the Company and the
Employee shall be forgiven in full and any obligation of the Employee to make
further payments of principal and/or interest to the Company pursuant to the
Promissory Note shall thereby immediately be terminated and forgiven."
2. Amendment of Section 3. Section 3 of the Employment Agreement is
----------------------
hereby amended to read in its entirety as follows: "Employee shall be paid a
salary of one hundred twenty-five thousand dollars ($125,000) per year, payable
in monthly installments throughout each year." Such adjustment to the annual
salary of the Employee shall be retroactive to December 18, 1997.
3. Miscellaneous. This Amendment controls over any contrary or
-------------
inconsistent provision of the Employment Agreement. Every provision of the
Employment Agreement not specifically amended or modified by the terms of this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
DARLINGTON MUSIC CO., INC.
By: /s/ L. Xxxxxxx Xxxxxx
------------------------
L. Xxxxxxx Xxxxxx, President
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
THIS EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
------------------------------------------------------------
TO THE UNIFORM ARBITRATION ACT, S.C. CODE XXX. 15-48-10, ET SEQ.
-----------------------------------------------------------------
(LAW CO-OP. 1976 AND SUPP. 1997)
--------------------------------
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment")
between Darlington Music Co., Inc. (the "Company") and Xxxxxx X. Xxxxxxxx, Xx.
(the "Employee") is entered into as of the 27th day of July, 1998.
---- ----
WHEREAS, the Company and the Employee entered into an Employment
Agreement as of December 18, 1997, as amended February 25, 1998 (the "Employment
Agreement"); and
WHEREAS, the parties to the Employment Agreement wish to modify and
amend certain provisions of the Employment Agreement;
NOW, THEREFORE, in consideration of the recitals and mutual covenants,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties DO HEREBY AGREE as follows:
1. Amendment of Section 2. Section 2 of the Employment Agreement
----------------------
is hereby amended to read in its entirety as follows: "Employment under this
Agreement shall commence on December 18, 1997 and continue for one year unless
earlier terminated in the manner provided below; provided, however, Employee's
employment shall be extended for up to two consecutive one year terms unless the
Company notifies Employee at least thirty days prior to the termination date of
its desire not to extend the terms of this Agreement."
2. Miscellaneous. This Amendment controls over any contrary or
-------------
inconsistent provision of the Employment Agreement. Every provision of the
Employment Agreement not specifically amended or modified by the terms of this
Amendment shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
DARLINGTON MUSIC CO., INC.
By: /s/ Xxxxx Xxxxxxxx, Xx.
--------------------------
Name: Xxxxx Xxxxxxxx, Xx.
---------------------
Its: Vice President
---------------
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------
Xxxxxx X. Xxxxxxxx, Xx.
