EXHIBIT 10.4
CONSULTING, ADVISORY AND NONCOMPETITION AGREEMENT
This Consulting, Advisory and Noncompetition Agreement (this
"Agreement") is made as of October 5, 1999, by and between Isle of Capri
Casinos, Inc., a Delaware corporation ("Buyer"), and Xxxxxx X. Xxxxxxxx, a
Nevada resident ("Xxxxxxxx").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer is entering into an agreement and plan of merger with Lady Luck
Gaming Corporation, a Delaware corporation (the "Merger Agreement");
WHEREAS, Xxxxxxxx founded Lady Luck and is its Chairman;
WHEREAS, Xxxxxxxx owns all the shares of Gemini, Inc. ("Gemini") and
International Xxxxx Xxxx'x Services, Inc. ("IMPS") and owns the Lady Luck Las
Vegas Hotel & Casino (the "Hotel"). Buyer will have the right to acquire Gemini,
IMPS and the Hotel from Xxxxxxxx after the consummation of the Merger;
WHEREAS, Buyer desires to retain Xxxxxxxx' services as a consultant and
advisor to Buyer, and Xxxxxxxx desires to perform such services for Buyer;
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and agreements set forth below, the parties,
intending to be legally bound, agree as follows:
Section 1. Effectiveness and Interpretation. This Agreement shall
become effective upon the Effective Time of the Merger (as defined in the Merger
Agreement). Upon the earlier termination of the Merger Agreement, this Agreement
shall terminate automatically and be of no further force and effect. Until such
date as the Buyer has acquired the Hotel from Xxxxxxxx, this Agreement shall be
interpreted as not restricting Xxxxxxxx' operation of the Hotel or ownership and
use of Confidential Information (as defined below) as it relates to the Hotel
and the terms of this Agreement as it relates to the Hotel shall be effective
only upon Buyer's closing of the acquisition of the Hotel.
Section 2. Acknowledgments by Xxxxxxxx. Xxxxxxxx acknowledges that (a)
Xxxxxxxx has occupied a position of trust and confidence with Lady Luck Gaming
Corporation, its subsidiaries and its affiliates including, without limitation,
Gemini and IMPS (collectively, "Lady Luck") prior to the date hereof and has
become familiar with the following, any and all of which constitute confidential
information of Lady Luck and the Hotel (collectively the "Confidential
Information," which in all instances does not include information to the extent
such information is reflected in publicly available filings with the Securities
and Exchange
Commission and which is otherwise generally known by management in the gaming
industry in the jurisdictions in which Lady Luck and the Gemini have casino
properties): (i) any and all trade secrets concerning the business and affairs
of Lady Luck, data, know-how, processes, photographs, inventions and ideas,
customer lists, business and technical information, current and anticipated
customer requirements, price lists, market studies and plans, business plans,
systems, methods and information of Lady Luck and the Hotel and any other
information, however documented, of Lady Luck and the Hotel that is a trade
secret under Nevada, Iowa or Mississippi law; (ii) any and all information
concerning the business and affairs of Lady Luck and the Hotel (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials,
however documented); and (iii) any and all notes, analysis, compilations,
studies, summaries, and other material prepared by or for Lady Luck and the
Hotel containing or based, in whole or in part, on any information included in
the foregoing, (b) although the businesses of Buyer, Lady Luck and the Hotel
have regional customer bases, the expansion and development opportunities are
national and international in scope, (c) Buyer has required that Xxxxxxxx make
the covenants set forth in Sections 3 and 4 of this Agreement in consideration
of the Buyer entering into the Merger Agreement with Lady Luck; (d) the
provisions of Sections 3 and 4 of this Agreement are reasonable and necessary to
protect and preserve Lady Luck's and the Hotel's business, and (e) Buyer and
Lady Luck and the Hotel would be irreparably damaged if Xxxxxxxx were to breach
the covenants set forth in Sections 3 and 4 of this Agreement.
Section 3. Confidential Information. Xxxxxxxx acknowledges and agrees
that all Confidential Information known or obtained by Xxxxxxxx, whether before
or after the date hereof, is the property of Lady Luck or the Hotel, as
applicable. Therefore, Xxxxxxxx agrees that Xxxxxxxx will not, at any time,
disclose to any unauthorized persons or use for his own account (except as
contemplated in Section 1 with respect to the Hotel) or for the benefit of any
third party any Confidential Information, whether Xxxxxxxx has such information
in Xxxxxxxx' memory or embodied in writing or other physical form, without
Buyer's written consent, unless and to the extent that the Confidential
Information is or becomes generally known to and available for use by the public
other than as a result of Xxxxxxxx' fault or the fault of any other person bound
by a duty of confidentiality to Buyer or Lady Luck. Except with respect to the
Hotel in the event that Buyer does not acquire the Hotel at the Effective Time,
Xxxxxxxx agrees to deliver to Buyer at the Effective Time, and at any other time
Buyer may request, all documents, memoranda, notes, plans, records, reports, and
other documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of Lady Luck and the Hotel
and any other Confidential Information that Xxxxxxxx may then possess or have
under Xxxxxxxx' control.
Section 4. Noncompetition. In connection with Buyer entering into the
Merger Agreement and for the consideration to be paid under this Agreement,
Xxxxxxxx agrees that:
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(a) For a period of four years after the Effective Time of the
Merger:
(i) Xxxxxxxx agrees not to compete, directly or indirectly
(including as an officer, director, partner, employee, consultant,
independent contractor, or equity holder of any entity) with Buyer
or any of its subsidiaries in any way concerning (including by
permitting his name to be used in connection with) the ownership,
development or management of any gaming operation or facility
within a 75-mile radius of any gaming operation or facility with
respect to which Buyer or any of its subsidiaries has an ownership
interest or renders or is actively negotiating to render
management services; provided, however, that Xxxxxxxx may purchase
or otherwise acquire up to (but not more than) 5% of any class of
securities of any gaming enterprise which owns a facility within
such radius (but without otherwise participating in the activities
of such enterprise) if such securities are listed on any national
or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934.
Notwithstanding the preceding sentence, with regard to any gaming
operation or facility owned or managed by Buyer: (i) located in
Las Vegas, Nevada, such radius shall be a 25-mile radius; or (ii)
with respect to which Buyer has not filed regulatory applications
or publicly indicated an intention to conduct business in such
location prior to Xxxxxxxx entering into a written agreement for
gaming activities within a 75-mile radius of such location,
Xxxxxxxx shall not be deemed to be in breach of the provisions
hereof. Xxxxxxxx agrees that this covenant is reasonable with
respect to its duration, geographical area, and scope.
(ii) Xxxxxxxx will not, directly or indirectly, either for
himself or any other person or entity, (A) induce or attempt to
induce any employee of Lady Luck or Buyer or any of their
subsidiaries or the Hotel to leave the employ of Lady Luck or
Buyer or any of their subsidiaries or the Hotel, (B) in any way
interfere with the relationship between Lady Luck or Buyer and any
employee of Lady Luck or Buyer or their subsidiaries or the Hotel,
(C) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any then current employee of Lady Luck,
Buyer or any of their subsidiaries or the Hotel, or (D) induce or
attempt to induce any customer, supplier, licensee, or business
relation to cease doing business with, or in any way interfere
with the relationship between any customer, supplier, licensee, or
business relation of Lady Luck or Buyer or their subsidiaries or
the Hotel.
(iii) Xxxxxxxx will not, directly or indirectly, either for
himself or any other person or entity, solicit the business of any
person known to Xxxxxxxx to be a customer of Lady Luck or Buyer or
any of their subsidiaries or the Hotel,
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whether or not Xxxxxxxx had personal contact with such
person, with respect to activities which compete in whole or in
part with the Buyer;
(b) In the event of a breach by Xxxxxxxx of any covenant set forth
in subsection 4(a) of this Agreement, the term of such covenant will be
extended by the period of the duration of such breach; and
(c) Xxxxxxxx and Buyer hereby agree not to make any statements, in
writing or otherwise, that may disparage the reputation or character of
the other (and Gemini if Xxxxxxxx shall retain ownership) or any of
Buyer's or Gemini's subsidiaries, affiliates, officers, directors,
employees, agents, stockholders, partners, members, successors and
assigns both individually and in their official capacities with such
party at any time for any reason whatsoever, except as required by law
or as required in connection with any litigation or administrative
proceeding by or between Buyer and Xxxxxxxx in which the party making
such statement has been subpoenaed and is required by law to give
testimony and in any litigation or administrative proceeding by and
between Buyer and Xxxxxxxx.
Section 5. Consulting Duties. Xxxxxxxx will have such consulting and
advisory duties as are assigned or delegated to him by the Chairman of Buyer and
as agreed to by Xxxxxxxx in his sole and absolute discretion. Xxxxxxxx will
devote such time, attention, skill, and energy to the business of Buyer as is
appropriate, and will cooperate fully with the Chairman of Buyer as reasonably
requested in the advancement of the best interests of Buyer. Nothing in this
Section 5, however, will (i) require Xxxxxxxx to travel outside of the Las Vegas
area at Buyer's request, or (ii) prevent Xxxxxxxx from engaging in additional
activities in connection with employment, consulting, personal investments and
community affairs that are not inconsistent with Xxxxxxxx' duties under this
Agreement.
Section 6. Compensation. As consideration for the covenants in Section
3 and Section 4 of this Agreement and the duties to be performed by Xxxxxxxx
pursuant to Section 5 of this Agreement, Buyer will pay Xxxxxxxx the sum of Two
Million Dollars ($2,000,000) (the "Total Consideration") payable as follows:
(a) The sum of One Hundred Twenty-Five Thousand Dollars ($125,000)
upon the Effective Time of the Merger; and
(b) The sum of One Hundred Twenty-Five Thousand Dollars ($125,000)
on the last day of each calendar quarter beginning with the full
calendar quarter immediately following the quarter in which the
Effective Time occurs, until the Total Consideration has been paid in
full.
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In addition, Buyer will permit Xxxxxxxx and his immediate family to
enroll in any welfare benefit plans available to management of Buyer and its
subsidiaries at Xxxxxxxx' expense and subject to the enrollment and eligibility
requirements of such plans.
Section 7. Remedies. If Xxxxxxxx breaches the covenants set forth in
Sections 3 or 4 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from Xxxxxxxx;
(b) To offset against any and all amounts owing to Xxxxxxxx under
Subsection 6(b) of this Agreement any and all amounts which Buyer claim
under Subsection 7(a) of this Agreement;
(c) In addition to its right to damages and any other rights it
may have, to obtain injunctive or other equitable relief to restrain
any breach or threatened breach or otherwise to specifically enforce
the provisions of Sections 3 and 4 of this Agreement; it being agreed
that money damages alone would be inadequate to compensate the Buyer
and would be an inadequate remedy for such breach; and
(d) The rights and remedies of the parties to this Agreement are
cumulative and not alternative.
Section 8. Successors and Assigns. This Agreement will be binding upon
Buyer and Xxxxxxxx and will inure to the benefit of Buyer and its affiliates,
successors and assigns and Xxxxxxxx and Xxxxxxxx' assigns, heirs and legal
representatives.
Section 9. Waiver. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole or
in part, by a waiver or renunciation of the claim or right unless in writing
signed by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
Section 10. Governing Law and Jurisdiction. This Agreement will be
governed by the laws of the State of Mississippi without regard to conflicts of
laws principles.
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Section 11. Severability. Whenever possible each provision and term of
this Agreement will be interpreted in a manner to be effective and valid but if
any provision or term of this Agreement is held to be prohibited by law or
invalid, then such provision or term will be ineffective only to the extent of
such prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement. If any of the covenants set forth in Section 4 of
this Agreement are held to be unreasonable, arbitrary, or against public policy,
such covenants will be considered divisible with respect to scope, time, and
geographic area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against Xxxxxxxx.
Section 12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
Section 13. Section Headings; Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
Section 14. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
Xxxxxxxx: Xxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
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Buyer: Isle of Capri Casinos, Inc.
711 Xx. Xxxxxx Xxxxxx Xxxx, Xx. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Section 15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior written and oral agreements and
understandings between Buyer and Xxxxxxxx with respect to the subject matter of
this Agreement. This Agreement may not be amended except by a written agreement
executed by the party to be charged with the amendment.
Section 16. Indemnification. Buyer agrees to indemnify Xxxxxxxx to the
fullest extent provided to any member of management of Buyer consistent with the
provisions of its Certificate of Incorporation and Bylaws against any liability
arising out of his performance of any obligations under Section 5 hereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ISLE OF CAPRI CASINOS, INC. XXXXXX X. XXXXXXXX
By: /s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
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Its: Executive Vice President,
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General Counsel and Secretary
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