SEVERANCE AGREEMENT
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This Severance Agreement ("this Agreement") is between Xxxxxxxxx X. Xxxxx,
Xx. ("Employee") and American Bingo & Gaming Corp. ("the Employer").
WHEREAS, Employer and Employee entered into that certain Employment
Agreement, dated September 10, 1996 ("the Employment Agreement");
WHEREAS, Employer and Employee desire to terminate the employment
relationship and the Employment Agreement effective on the date of the execution
of this Agreement by both parties ("the Effective Date") on the terms provided
herein;
WHEREAS, Employer and Employee desire to modify certain terms of the
Employment Agreement as provided herein;
NOW, THEREFORE, in consideration of the terms hereof and other valuable
consideration, the sufficiency of which is hereby acknowledged by the parties,
the parties hereby agree as follows:
1. Termination of Employment. The Employment Agreement and the employment
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of Employee with Employer, is terminated as of February 6, 1998 ("the Date of
Termination"). Effective the Date of Termination, the Employee ceases to be
Chief Executive Officer, a director, and an officer of the Employer.
2. Compensation. Employer shall pay Employee his base salary earned through
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the Date of Termination. Employee acknowledges that he will not receive any
bonus or other incentive compensation, nor will he receive any payment in lieu
of fringe benefits, including vacation benefits. Employee shall be given title
to the Suburban currently provided to him by Employer as his company car, free
of all encumbrances, and Employer shall transfer to Employee all transferable
warranties. Employee shall be provided all COBRA benefits due to him pursuant to
such act.
3. Options. Employer and Employee agree that the Employment Agreement is
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amended, effective the Date of Termination, by deleting the last sentence of the
first paragraph of Section 3 and inserting in its place and stead the following:
"Said options shall vest at the rate of 9,500 shares per month until February 6,
1998, at which time said options shall become fully vested." Employer also
agrees that Employees other option to purchase 30,000 shares, granted pursuant
to the Employer's 1996 Employee Stock Option Plan, shall fully vest on February
6, 1998. The piggy-back rights set forth in Section 3 of the Employment
Agreement shall be extended to December 31, 2002 and shall also be extended to
the additional 30,000 shares. The shares covered by these options have already
been registered by Employer. Other than the irrevocable proxy granted pursuant
to Section 11 hereof, the shares issued upon exercise of stock options shall be
free of all legends and encumbrances. The Employer and its counsel shall
accommodate Employee's sales by providing "nonaffiliate" letters and other
appropriate documentation upon request. The vesting of these options is in
consideration of the release of all claims, disputes and causes of action which
Employee, Employee's heirs, executors, administrators or assigns have or may
have against Employer (and all of its related entities), as specifically set
forth in Section 6 hereof, as well as the "stand still" agreement set forth in
Section 10 hereof.
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4. Acknowledgement. Employee hereby acknowledges the restrictions of
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Article 8 of the Employment Agreement and acknowledges that said Article 8
remains in full force and effect and is supported by independent valuable
consideration and contains reasonable limitations as to the time, geographical
area, and scope of activity for which he is to be restrained and acknowledges
that the limitations of said Article are necessary to protect the goodwill and
other business interests of Employer. Employer acknowledges that the
prohibitions in Section 8.1 of the Employment Agreement shall not apply to
information that is customarily known within the bingo and gaming industry or
that is now or hereafter available in the public domain through no breach of
confidentiality on the part of Employee.
5. Correction. Employer and Employee agree that the two references to "this
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Article 8.3 "in Section 8.3 of the Employment Agreement were intend to refer to
"this Article 8" and that the two references to "this Article 8.4" in Section
8.4 of the Employment Agreement were intended to refer to "this Article 8".
Employer and Employee agree to hereby amend the Employment Agreement to correct
these errors.
6. Release of Employer. In consideration of receipt by Employee of the
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additional vested option pursuant to Section 3 hereof, Employee (on behalf of
himself, his heirs, estate, successors, assigns, agents, representatives,
attorneys, and any other person or entity claimingby, through, under, or because
of him) unconditionally releases, acquits, forever discharges, and covenants not
to xxx, without limitation, the Employer and its representatives, affiliates,
agents, attorneys, insurers, predecessors, successors, assigns, officers,
directors, shareholders, employees, parents, subsidiaries, divisions and any
person or entity claiming by, through or under any of them (collectively the
"Releasees"), from and on each and every right, claim, complaint, demand, cause
of action, proceedings, and damages of whatsoever kind or nature which Employee
now has, has had, or might have at any time hereafter relating to or arising out
of any act, transaction, or occurrence, arising on or before the execution of
this Agreement, including without limitation each and every claim for any type
of relief or remedy whatsoever based upon any theory whatsoever, whether known
or unknown at this time, and specifically including without limitation claims
and causes of action relating to or arising out of Employee's employment with
the Employer, such as Employee's employment, termination of employment, or the
terms and conditions of his employment, including any claims under the Fair
Labor Standards Act, the Civil Rights Act of 1964 and 1991, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Texas
Unemployment Compensation Act, the Texas Payday Act, the Texas Commission on
Human Rights Act, the Texas Workers Compensation Act, and any other federal or
state statute or regulation, and including any common law, contractual or tort
claims or causes of action.
It is the intention of the parties in executing this Agreement, and in
receiving the full consideration called for herein, that this Agreement shall be
effective as a full and final accord, satisfaction and general release of each
and every released matter and each Releasee. In connection with this waiver and
relinquishment, Employee acknowledges that he is aware that he and/or his
attorneys may hereafter discover claims or facts in addition to or different
from those which they, or the other parties hereto, now know or believe to exist
with respect to the subject matter of this Agreement, but that it is his
intention hereby to fully, finally and forever settle and release all of the
Releasees and the released matters, disputes, and differences, known or unknown,
suspected and unsuspected, which do now exist, may exist, or heretofore have
existed between Employee and each Releasee.
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7. Release of Employee. Employer unconditionally releases, acquits, forever
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discharges, and covenants not to xxx, the Employee from and on each and every
right, claim, complaint, demand, cause of action, proceedings, and damages of
whatsoever kind or nature which Employee now has, has had, or might have at any
time hereafter relating to or arising out of any act, transaction, or
occurrence, arising on or before the execution of this Agreement, including each
and every claim for any type of relief or remedy whatsoever based upon any
theory whatsoever, whether known or unknown at this time. Employer acknowledges
that it is not aware of any circumstance at this time giving rise to any claim,
complaint, demand, cause of action, proceedings, or damages against Employee.
8. Exceptions to Releases. Notwithstanding the provisions of Sections 6 and
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7 hereof, however, the foregoing releases do not extend to, and specifically
exclude:
a. any claims based on conduct, acts, omissions or events occurring
after the Effective Date;
b. the obligations undertaken and covenants made in this Agreement;
c. the obligations contained in the stock option agreements relating
to options referred to in Section 3 hereof;
d. subject to Section 9 hereof, claims against Employee asserted by
Employer at any time for contribution or indemnity on account of third party
claims asserted against Employer to the extent attributable to the conduct of
Employee;
e. claims against Employer or its affiliates asserted by Employee at
any time for contribution or indemnity on account of third party claims asserted
against Employee to the extent attributable to the conduct of Employer or its
affiliates, except to the extent attributable to the conduct of Employee; and
f. claims made by Employee for indemnification with respect to claims
relating to his own conduct to the extent allowed under Section 9 hereof or
under applicable state corporate law.
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9. Indemnification. Employer acknowledges its obligation to provide the
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indemnification set forth in Section II of the Employment Agreement and shall
continue after the Effective Date to provide such indemnification for Employee's
actions prior the Date of Termination. Employer shall continue to provide
Employee with the same indemnification and directors' and officers' liability
insurance coverage provided to Employer's then serving officers and directors,
which indemnification and insurance shall relate to the period during which
Employee served as an officer and director.
10. Stand Still Agreement. In consideration of receipt by Employee of the
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additional vested option pursuant to Section 3 hereof, Employee covenants and
agrees as follows:
a. Employee shall not, directly or indirectly, acquire or otherwise
become the beneficial owner of any securities of the Employer, except pursuant
to the exercise of the options discussed in Section 3 hereof.
b. Employee shall not, directly or indirectly, (i) solicit proxies
with respect to the equity securities of the Employer under any circumstances or
(ii) become a "participant" in any "election contest" (as such terms are used in
Rule 14A- 11 of Regulation 14A under the Securities Exchange Act of 1934 ("xxx
0000 Xxx")) relating to the election of directors of Employer.
c. Employee shall not, directly or indirectly, join a partnership,
limited partnership, syndicate or other "group" (as such term is used in Section
13(d)(1) of the 1934 Act), or otherwise act in concert with any person for the
purpose of acquiring, holding, voting or disposing of securities of the Employer
or rights to acquire such securities or for the purpose of circumventing the
provisions of this Section 10.
d. Employee shall not, directly or indirectly, propose any business
combination with Employer or make or propose a tender or exchange offer or any
other offer for any securities of Employer.
e. Employee shall not agree to be a nominee to the Board of Directors
of the Employer, nor shall he agree to serve as a director of the Employer.
f. Employee acknowledges that for purposes of this Section 10
"indirectly" includes communicating with, advising, facilitating, participating
in, encouraging, soliciting, counseling or otherwise assisting others to take or
attempt to take any of the actions prohibited by this Section 10. Employee and
Employer understand that Employee shall not be in violation of this Section 10
with respect to the actions of others if Employee refuses to assist others with
their actions.
g. The restrictions set forth in this Section 10 shall terminate on
February 6, 2003.
11. Irrevocable Proxy. Employee shall execute an irrevocable proxy, in the
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form attached hereto, granting to management of Employer the right to vote all
shares of Employer's equity securities owned at any time during the term of such
proxy.
12. Return of Employer's Property. Employee will return to Employer all of
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Employer's property in Employee's possession as of the Effective Date,
including, but not limited to, computers and related equipment, software, files,
and disks, keys, credit cards, access cards, and documents of any kind and all
information of the Employer without regard to the media in which such
information is maintained.
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13. Confidentiality. Employee hereby acknowledges, represents and agrees
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that he will keep the fact of this Agreement and all of its terms completely
confidential, and that Employee will not disclose any information concerning
this Agreement to any person, including, but not limited to, any past, present,
or prospective employees of Employer, provided however that Employee may (i)
disclose the fact of the settlement with the Employer represented by this
Agreement, (ii) disclose the restrictions set forth in Section 10 hereof, and
(iii) disclose any information required by law to be disclosed by Employee after
Employee has notified Employer of such requirement and gives Employer the
opportunity to review the information to be disclosed as soon as possible.
14. References. Employer and Employee have agreed on the form of press
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release announcing Employee's termination, which form is attached hereto.
Employer, agrees, in accordance with its policy, to provide a neutral reference
giving position and dates of employment only to any prospective employers of
Employee. Neither Employer nor any of its senior management shall make comments
to any third parties that disparage Employee. Employee shall not make any
comments to any third parties that disparage Employer or the officers,
directors, or employees of Employer.
15. Enforcement. In the event of a breach by Employee of Sections 10, 11,
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12, 13, or 14 of this Agreement, 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 such Sections.
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 would be appropriate in connection with a temporary restraining order or
temporary injunction.
16. No Admission of Liability. This Agreement shall not be construed in any
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way as an admission by the Employer of any unlawful acts whatsoever against
Employee or any other person. The Employer specifically disclaims any unlawful
acts or liability to Employee or any other person on the part of itself, its
employees, or its agents.
17. Acknowledgements. Employee represents and acknowledges that in
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executing this Agreement, he does not rely and has not relied upon any
representation or statement made by Employer, or its agents, representatives, or
attorneys with regarding to the subject matter, basis or effect of this
Agreement or otherwise. Employee further represents that he has relied upon
advice of his personal legal counsel regarding the subject matter of this
Agreement.
18. Governing Law. This Agreement is made and entered into in the County of
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Xxxxxx, State of Texas, and shall in all respects be interpreted, enforced, and
governed under the laws of The State of Texas. The parties agree that Xxxxxx
County, Texas, is the proper venue for any resolution of a dispute arising under
this Agreement and the Employment Agreement. The language of all parts of this
Agreement shall in all cases be construed as a whole according to its fair
meaning, and not strictly for or against any of the parties. The parties further
agree that there will be no presumption that any ambiguity in the Agreement
shall be construed against the drafter of the Agreement.
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19. Attorney's Fees. The prevailing party in any dispute arising out of or
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relating to the subject matter of this Agreement shall be entitled to recover
his or its reasonable attorney's fees and expenses, and any costs associated
with any such dispute.
20. Mediation. Subject to the right of either party to seek injunctive
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relief in a court in the event the circumstances require urgent resort to such
remedy, the parties will first seek to resolve any disputes through mediation
before a mediator agreed to by their respective counsel prior to proceeding with
litigation. Such mediation shall be held within 30 days following the written
request by either party.
21. Savings Clause. Should any provision of this Agreement be declared to
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be or determined by any court to be illegal or invalid, the validity of the
remaining parts, terms, or provisions shall not be affected thereby and said
illegal or invalid part, term, or provision shall be deemed not to be a part of
this Agreement.
22. Authority to Sign. Each person signing in a representative capacity
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below hereby represents that he has authority to sign on behalf of the entity or
person from whom he is signing and that he and the represented entity or person
are empowered to enter into and to perform this Agreement.
23. Further Assurances. The parties hereto shall take all actions that may
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be necessary or appropriate to accomplish the terms of this Agreement.
24. Binding on Successors. This Agreement shall bind and inure to the
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benefit of the parties, their successors, assigns, heirs, and legal
representatives.
25. Entiretyof Agreement. This Agreement sets forth the entire Agreement
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between the parties hereto, and fully supersedes any and all prior agreements or
understandings between the parties hereto pertaining to the subject matter
hereof.
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PLEASE READ CAREFULLY. THIS SEVERANCE AGREEMENT INCLUDES A RELEASE BY
EMPLOYEE OF ALL KNOWN AND UNKNOWN CLAIMS ARISING PRIOR TO ITS EXECUTION. YOU
MAY CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS AGREEMENT.
/s/ Xxxxxxxxx X. Xxxxx, Xx.
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Employee Signature
Date: 2/8/98
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AMERICAN BINGO AND GAMING CORP.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
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Title: CEO
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Date: 2/6/98
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