Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 19th day of July,
2005, by and between Xxxxx Entertainment Resorts, Inc. ("TER") and Xxxxx
Entertainment Resorts Holdings, LP (hereinafter, together with TER,
collectively, referred to as the "Company") and XXXX XXXXXXX, (hereinafter
referred to as the "Executive").
I. RECITALS
The Company desires to employ Executive, and Executive desires to serve
as an employee of the Company, on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Employment of Executive. The Company agrees to employ Executive, and
Executive accepts such employment and agrees to serve as an employee of the
Company on the terms and conditions set forth herein.
2. Employment Term. Executive's employment hereunder shall commence on
August 8, 2005 ("the Effective Date") and shall continue until terminated under
Section 6.
3. Position and Duties. During the Employment Term, Executive shall
serve the Company (unless promoted) in the capacity of Chief Operating Officer
reporting to the Chief Executive Officer and performing such services as may be
reasonably assigned or required by the Chief Executive Officer or the Company's
Board of Directors (the "Board"). Executive shall devote his best efforts and
his full business time and attention to the performance of the services
customarily incident to such office or position, and such other services and
duties and responsibilities as may be reasonably requested by the Company, which
may include services for one or more subsidiaries of the Company. Subject to
approval rights for the Chief Executive Officer, Executive shall have the power
to hire and replace the senior management team of the operating subsidiaries of
the Company. Executive's services shall be performed exclusively for the Company
and its subsidiaries, except for (i) service on civic, charitable or for profit
boards or committees involving no conflict of interest with the interests of the
Company and not unreasonably interfering with the regular performance of his
duties hereunder; and (ii) sick leave, leave of absences, and periods of paid
time off (PTO), all in accordance with the Company's policies.
4. Place of Performance. The services to be provided by Executive
hereunder shall be performed at the Company's headquarters in Atlantic County,
New Jersey.
5. Compensation and Related Matters. During employment, Executive shall
be entitled to receive the following compensation and benefits:
(a) Base Salary. Executive shall receive a Base Salary ("Base
Salary") at an annual rate of at least $775,000. Executive's Base Salary shall
be subject to review and possible increase on each anniversary of the Effective
Date in accordance with Company's regular administrative practices of salary
review applicable for executives of the Company. Base Salary increases shall be
in the discretion of the Company but salary shall not be decreased. Base Salary
shall be paid in substantially equal periodic installments, but not less
frequently than monthly, in accordance with the Company's customary salary
payment policies applicable to employees of the Company.
(b) Performance Bonus. Beginning in 2006, Executive shall be
eligible for participation in an annual Bonus Plan, subject to the terms and
conditions of the Bonus Plan as are established by the Compensation Committee of
the Board or the Chief Executive Officer of the Company (the "CEO"), as may be
amended from time to time, with a target bonus of a minimum of 60% of Base
Salary if the minimum targets established by the Compensation Committee are met
("Target Bonus"), and a maximum bonus opportunity of 100% of Base Salary for
exceptional performance. Executive will receive a bonus for the year 2005 of
$300,000 paid within 15 days of the Effective Date.
(c) Long Term Compensation Plan(s). Executive shall be
eligible to participate in the Company's Long Term Compensation Plan(s), as
established by the Board or its Compensation Committee, and as modified from
time to time. In addition, immediately upon establishment of an equity
compensation plan, Executive shall receive (i) an initial grant of 90,000
restricted shares of the Company's common stock, with all restrictions lapsing
in one-third increments on each of July 31, 2006, 2007, 2008, and (ii) an
initial stock option grant of 300,000 shares, with a price equal to the fair
market value of the shares on the date of grant, vesting as to 100,000 of such
shares on each of July 31, 2008, 2009 and 2010. All awards are subject to the
terms of the Company's Plans, and their administrative regulations as these may
be amended from time to time, including a requirement that Executive be employed
by the Company on each vesting date except as otherwise provided below. If such
a plan is not established by any vesting date specified above, or as otherwise
set forth in this Agreement, Executive shall be entitled to receive an
alternative cash award within 15 days of any such vesting date in an amount
equal to the then value of each share that would have then vested, plus the
intrinsic value of each option (i.,e. the then fair market value of a share less
the fair market value of a share on the date of execution of this Agreement, the
result then multiplied by the number of options that would have then vested).
(d) Other Benefits - During Employment. Executive shall be
entitled to participate in any life, health, and long-term disability insurance
plans, retirement programs, deferred compensation, financial counseling, other
incentive compensation programs, PTO, and other fringe benefits made available
to any other executive of the Company other than the CEO, subject to the
benefits provisions and eligibility rules thereof. Consistent with the
foregoing, the Company has the exclusive right to modify, add and eliminate any
of these benefits.
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(e) Moving Expenses. Executive shall be entitled to moving
expenses in connection with seeking a new home and moving to the vicinity of the
Company's principal office. The moving expense policy is attached hereto as
Exhibit A and incorporated herein.
6. Separation of Employment.
(a) Death. The death of Executive shall automatically
terminate the Company's obligations hereunder, except as set forth in 7(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 7(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 (Section 8) regarding the Company or other material
breach of Section 8, (3) aiding a competitor (as defined in Section 8) of the
Company or other material breach of Section 8, (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) which 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. All
the provisions and obligations of Executive under Section 8 will survive his
Separation for Cause.
(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)
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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. All the provisions and obligations of Executive under
Section 8 will survive his Separation Without Good Reason.
(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 select.
7. 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 7(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 6(c) or by Executive Without Good Reason pursuant to Section
6(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
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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 6(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 7(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.
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(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; or
(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
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(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 2 multiplied by the sum 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 "Salary Continuation Period" for purposes of
subsection (d)(i), other than for purposes of the Salary Continuation, shall be
the 24 months following the Separation Date. In addition, all equity awards
(stock, stock options or otherwise) shall immediately be fully vested.
8. Confidentiality.
(a) Executive shall hold in a fiduciary capacity for the
benefit of the Company and its affiliates, all secret or confidential
information, knowledge or data relating thereto and their businesses (including,
without limitation, any proprietary and not publicly available information
concerning any processes, methods, trade secrets, research or secret data,
costs, names of users or purchasers of their respective products or services,
business methods, operating procedures or programs or methods of promotion and
sale marketing strategies, customer lists) that Executive obtains during
Executive's employment by the Company that is not public knowledge (other than
as a result of Executive's violation of this Section 8(a)) ("Confidential
Information"). Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after Executive's employment with
the Company, except with the prior written consent of the Company, or as
otherwise required by law or legal process or as such disclosure or use may be
required in the course of Executive performing his duties and responsibilities
as the Chief Operating Officer. Notwithstanding the foregoing provisions, if
Executive is required to disclose any such confidential or proprietary
information pursuant to applicable law or a subpoena or court order, Executive
shall promptly notify the Company in writing of any such requirement so that the
Company may seek an appropriate protective order or other appropriate remedy or
waive compliance with the provisions hereof. Executive shall reasonably
cooperate with the Company to obtain such a protective order or other remedy. If
such order or other remedy is not obtained prior to the time Executive is
required to make the disclosure, or the Company waives compliance with the
provisions hereof, Executive shall disclose only that portion of the
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confidential or proprietary information which he is advised by counsel in
writing (either his or the Company's) that he is legally required to so
disclose. Upon his termination of employment with the Company for any reason,
Executive shall promptly return to the Company all records, files, memoranda,
correspondence, notebooks, notes, reports, customer lists, drawings, plans,
documents, and other documents and the like relating to the business of the
Company and its affiliates or that Executive uses, prepares, or comes into
contact with during the course of Executive's employment with the Company, and
all keys, credit cards and passes, and such materials shall remain the sole
property of the Company. Executive agrees to represent in writing to the Company
upon termination of employment that he has complied with the foregoing
provisions of this Section 8(a).
(b) Work Product and Inventions. The Company and/or its
nominees or assigns shall own all right, title and interest in and to any and
all inventions, ideas, trade secrets, technology, devices, discoveries,
improvements, processes, developments, designs, know how, show-how, data,
computer programs, algorithms, formulae, works of authorship, works
modifications, trademarks, trade names, documentation, techniques, designs,
methods, trade secrets, technical specifications, technical data, concepts,
expressions, patents, patent rights, copyrights, moral rights, and all other
intellectual property rights or other developments whatsoever (collectively,
"Developments"), whether or not patentable, reduced to practice or registrable
under patent, copyright, trademark or other intellectual property law anywhere
in the world, made, authored, discovered, reduced to practice, conceived,
created, developed or otherwise obtained by Executive (alone or jointly with
others) during Executive's employment with the Company, and arising from or
relating to such employment or the business of the Company or its affiliates
(whether during business hours or otherwise, and whether on the premises of
using the facilities or materials of the Company or otherwise). Executive shall
promptly and fully disclose to the Company and to no one else all Developments,
and hereby assigns to the Company without further compensation all right, title
and interest Executive has or may have in any Developments, and all patents,
copyrights, or other intellectual property rights relating thereto, and agrees
that Executive has not acquired and shall not acquire any rights during the
course of his employment with the Company or thereafter with respect to any
Developments.
(c) Non-Recruitment of Employees. Executive shall not, at any
time during the Restricted Period (as defined in this subsection (c)), other
than in the ordinary exercise of his duties while serving as Chief Operating
Officer, without the prior written consent of the Company, directly or
indirectly, solicit or recruit, (whether as an employee, officer, agent,
consultant or independent contractor) any person who is or was at any time
during the previous 12 months, an employee, representative, officer or director
of the Company or of any of its affiliates. Further, during the Restricted
Period, Executive shall not take any action that could reasonably be expected to
have the effect of directly encouraging or inducing any person to cease his/her
relationship with the Company or any of its affiliates for any reason. This
subsection (c) shall not apply to (i) recruitment of employees of the Company or
its affiliates, or (ii) Executive's personal administrative staff who perform
secretarial-type functions. Additionally, a general employment advertisement by
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an entity of which Executive is a part will not constitute solicitation or
recruitment. The "Restricted Period" shall mean the period from the Effective
Date through the first anniversary of Executive's termination of employment with
the Company.
(d) No Competition or Solicitation of Business. During the
Restricted Period, Executive shall not, anywhere the Company operates or is in
active negotiations to operate at the time of termination, either directly or
indirectly, compete with the business of the Company by (i) becoming an officer,
agent, employee, partner or director of any other corporation, partnership or
other entity, or otherwise render services to or assist or hold an interest
(except as a less than one percent (1%) shareholder of a publicly-traded
corporation or as a less than three percent (3%) shareholder of a corporation
that is not publicly traded) in any Competitive Business (as defined below), or
(ii) soliciting or servicing the business of (a) any active customer of the
Company or its affiliates, or (B) any person or entity who is or was at any time
during the previous twelve (12) months a customer of the Company or of any of
its affiliates, provided that such business is competitive with any significant
business of the Company. "Competitive Business" shall mean any person or entity
(including any joint venture, partnership, firm, corporation, or limited
liability company) that engages in any principal or significant business of the
Company or any of its subsidiaries as of the date executive's employment
terminates (or any material or significant business being actively pursued as of
the date of termination that the Company or any of its subsidiaries enter during
the Restricted Period).
(e) Assistance. Executive agrees that during and after his
employment by the Company, upon request by the Company, Executive will assist
the Company and its affiliates in the defense of any claims, or potential claims
that may be made or threatened to be made against any of them in any action,
suit or proceeding, whether civil, criminal, administrative, investigative or
otherwise (a "Proceeding"), and will assist the Company and its affiliates in
the prosecution of any claims that may be made by any of them in any Proceeding,
to the extent that such claims may relate to Executive's employment or the
period of Executive's employment by the Company. Executive agrees, unless
precluded by law, to promptly inform the Company if Executive is asked to
participate (or otherwise become involved) in any Proceeding involving such
claims or potential claims. Executive also agrees, unless precluded by law, to
promptly inform the Company if Executive is asked to assist in any investigation
(whether governmental or otherwise) of the Company or any if its affiliates (or
their actions), regardless of whether a lawsuit has been filed against any of
them with respect to such investigation. The Company agrees to reimburse
Executive for all of Executive's reasonable out-of-pocket expenses associated
with such assistance, including travel expenses and any attorneys' fees and
shall pay a reasonable per diem fee for Executive's service. In addition,
Executive agrees to provide such services as are reasonably requested by the
Company to assist any successor to Executive in the transition of duties and
responsibilities to such successor. Any services or assistance contemplated in
this Section 8(e) shall be at mutually agreed upon and convenient times and
compensated.
(f) No Publicity Rights; Non-Disparagement.
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(i) During the period of employment with the Company
and thereafter, except as authorized by the Company or as Executive in good
faith determines is appropriate in the performance of his duties hereunder,
Executive shall not (i) give any interviews or speeches, or (ii) prepare or
assist any third party in the preparation of any books, articles, television or
motion picture productions or any other creations, in either case, concerning
the Company or any of its affiliates or any of their officers, directors,
agents, employees, suppliers, customers or owners.
(ii) During the period of employment with the Company
and thereafter, each party agrees not to make any public statement that is
intended to or could reasonably be expected to disparage the other or any of the
Company's affiliates or any of its or their officers, directors, agents,
employees, suppliers, customers or owners.
(g) Remedies. Executive acknowledges and agrees that the terms
of this Section 8: (i) are reasonable in geographic and temporal scope, (ii) are
necessary to protect legitimate proprietary and business interests of the
Company in, inter alia, customer relationships and confidential information.
Executive further acknowledges and agrees that (x) Executive's breach of the
provisions of Section 8 will cause the Company irreparable harm, which cannot be
adequately compensated by money damages, and (y) if the Company elects to
prevent Executive from breaching such provisions by obtaining an injunction
against Executive, there is a reasonable probability of the Company's eventual
success on the merits. Executive consents and agrees that if Executive commits
any such breach or threatens to commit any breach, the Company shall be entitled
to temporary and permanent injunctive relief from a court of competent
jurisdiction, in addition to, and not in lieu of, such other remedies as may be
available to the Company for such breach, including the recovery of money
damages. The Parties further acknowledge and agree that the provisions of this
Section 8 are accurate and necessary. If any of the provisions of Section 8 is
determined to be wholly or partially unenforceable, Executive hereby agrees that
this Agreement or any provision hereof may be reformed so that it is enforceable
to the maximum extent permitted by law. If any of the provisions of this Section
8 is determined to be wholly or partially unenforceable in any jurisdiction,
such determination shall not be a bar to or in any diminish the Company's right
to enforce any such covenant in any other jurisdiction.
9. 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
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common stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of directors; or
(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 9 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
11
distributed) to or for the benefit of Executive such amounts as are then due to
Executive under this Employment Agreement.
(c) 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
such claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect 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
proceedings 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 9, 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 xxx 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 xxx 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 such advance or with respect to any imputed
12
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.
10. Waiver of Breaches. The failure, delay or forbearance of any of the
parties to insist on strict performance of any term, provision or condition of
this Agreement or, in the case of the Company, of any comparable agreement with
any other company, or to exercise any right or remedy, shall not be construed as
a waiver. Express waiver by any party in one or more instances shall not waive
subsequent strict performance of such term, provision or condition by any other
party.
11. Notices. Any notice to be given hereunder by either party to the
other pay may be effected by personal delivery, in writing, or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to parties at the addresses set forth below, but each
party may change his or its address by written notice. Notices shall be deemed
communicated as the actual receipt or refusal of receipt by Executive.
If to Executive: Xxxx Xxxxxxx
-------------------------------
-------------------------------
13
with a copy to: Xxxxxx X. Xxxxxxxxxxxx, Esquire
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Company: Xxxxx X. Xxxxx, CEO
Xxxxx Entertainment Resorts, Inc.
0000 Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
with a copy to: Xxxxxx X. Xxxxxx, Esquire
Executive Vice President, General Counsel
and Secretary
Xxxxx Entertainment Resorts, Inc.
0000 Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
12. Assignment. This Agreement and the rights, interests and benefits
hereunder are personal to Executive and shall not be assigned, transferred or
pledged in any manner by Executive or any personal representatives, heirs,
administrators, distributees or any other person claiming under Executive by
virtue of this Agreement. This Agreement and all of the Company's rights and
obligations hereunder may be assigned, without Executive's consent, to any
entity which acquires substantially all of the assets of the Company or which
merges with the Company and which agrees to be bound hereby.
13. Attorneys Fees. The Company shall promptly reimburse Executive for
the reasonable legal fees and expenses incurred in negotiating this Agreement.
If any legal action or other proceeding is brought for the enforcement of this
Agreement of an alleged dispute, breach or default in connection with any
provision of this Agreement, Executive shall be entitled to recover reasonable
attorney fees and other costs incurred in such action or proceeding in addition
to any other relief to which he may be entitled if he prevails on any material
issue.
14. Partial Invalidity. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall, nevertheless, continue in full force and without
being impaired or invalidated in any way, except as indicated otherwise.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to
principles of conflict law applicable to contracts made and to be performed with
such state. The Agreement shall be liberally construed to maximize protection of
the Company's rights in confidential information and customer relations. If any
14
provision of this Agreement is held to be overly broad, invalid or otherwise
unenforceable under the applicable law and circumstances by the reviewing court,
Executive agrees to reduction of the scope (including time and geographic area)
of such provision as such court deems necessary and appropriate to permits its
enforcement as modified. The invalidity or unenforceability in whole or part, of
any provision of this Agreement shall not affect the validity or enforceability
of any provision unless otherwise indicated in this Agreement.
16. No Conflicting Agreement. By signing this Agreement, Executive
warrants that he is not a party to any restrictive covenant, agreement, or
contract which limits the performance of his duties and responsibilities under
this Agreement or under which such performance would constitute a breach.
17. Jurisdiction. Any judicial proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement or any
agreement identified herein may be brought only in state or federal courts of
the State of New Jersey, and by the execution and delivery of this Agreement,
each of the parties hereto accepts for itself the exclusive jurisdiction of the
aforesaid courts and irrevocably consents to the jurisdiction of such courts
(and the appropriate appellate courts) in any such proceedings, waives any
objection to venue laid therein and agrees to be bound by the judgment rendered
thereby in connection with this Agreement or any agreement identified herein.
18. Survival of Provisions. The provisions of this Agreement shall
survive any separation of Executive if so provided herein and if necessary or
desirable fully to accomplish the purpose of such provisions, including without
limitation the rights and obligations of Executive under Paragraphs 6, 8 and 14
hereof.
19. Indemnification rights. During his employment and for a period of
not less than six years after Executive's termination for any reason, Executive
will be entitled to indemnification and insurance coverage therefor, with
respect to any liabilities to the fullest extent as to which directors and
officers of the Company may be indemnified pursuant to the Company's bylaws or
the laws of the State of New Jersey.
20 Miscellaneous. The Section headings herein are for convenience only
and shall not affect the meaning or interpretation of the contents hereof. This
Agreement contains the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof. No
supplement or modification of this Agreement shall be binding unless in writing
and signed by both parties. This Agreement may be executed in multiple
counterparts; each of which shall be deemed an original and all of which
together shall constitute one instrument. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representative, successors and permitted assigns.
15
IN WITNESS WHEREOF, the parties hereto have knowingly and voluntarily
executed the Agreement as of the day and year first written above.
XXXX XXXXXXX XXXXXX X. XXXXXX
/s/ Xxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxx
------------------------------ --------------------------------------------
EXECUTIVE VICE PRESIDENT
Xxxxx Entertainment Resorts, Inc.
on its own behalf and as General Partner
of Xxxxx Entertainments Resorts Holdings, LP
16
