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EXHIBIT 10.99-1
EXECUTIVE EMPLOYMENT AGREEMENT
("Agreement")
EXECUTIVE EMPLOYMENT AGREEMENT, effective May 1, 1999 ("Effective
Date"), by and between Black Hawk Gaming & Development Company, Inc., a Colorado
corporation (the "Company") and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Company desires to continue to employ the Executive on a
full-time basis, and the Executive desires to be so employed by the Company,
from and after the date of this Agreement it being specifically acknowledged by
each party hereto that upon execution and delivery of this Agreement the
Employment Agreement dated November 1, 1997 between the parties hereto shall be
terminated and superseded by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
ARTICLE I
EMPLOYMENT DUTIES AND BENEFITS
Section 1.1 Employment. The Company hereby employs the Executive as
President and Chief Financial Officer of the Company. The Executive accepts such
employment and agrees to perform the duties and responsibilities assigned to him
under this Agreement.
Section 1.2 Duties and Responsibilities. The Executive agrees to devote
his full time to the business of the Company. The Executive shall perform such
duties as are assigned to him by the Chief Executive Officer of the Company and
as are reasonably consistent with his position.
Section 1.3 Working Facilities; Location. The Executive shall be
furnished with facilities and services suitable to his position and adequate for
the performance of his duties under this Agreement. The Executive shall be
employed in Denver and/or Black Hawk, Colorado and shall not be required to
re-locate without his consent which may be withheld in his sole discretion.
Section 1.4 Vacations. The Executive shall be entitled each year during
the Term, as defined below, to a vacation with full salary and benefits, for the
number of weeks set forth in the Company's Employee Handbook.
Section 1.5 Expenses. The Executive is authorized to incur reasonable
expenses for promoting the business of the Company in all respects, including
expenses for entertainment, travel and similar items. The Company will promptly
reimburse the Executive for all such expenses upon the presentation by the
Executive, from time-to-time, of an itemized account of such expenditures.
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Section 1.6 Vehicle Allowance. The Executive shall be paid a vehicle
allowance of $500 per month, or at his election, the Company shall lease for not
more than $500 per month a vehicle suitable for travel from Denver to Black
Hawk, Colorado in all weather conditions.
Section 1.7 Benefit Plans. From the effective date of this Agreement,
the Executive shall be entitled to participate in benefit plans provided to
employees of the Company. Such participation shall be based upon the policies
established in the Company's Employee Handbook as applicable to Executive.
ARTICLE II
COMPENSATION
Section 2.1 Base Salary. The Company shall pay to the Executive a Base
Salary of $250,000 per year payable in accordance with the Company's payroll and
withholding policies which Base Salary shall be increased based upon annualized
EBITDA benchmarks as follows; provided however, any such increases shall be
deferred unless and until the Company is In Ratio:
Annualized EBITDA Salary Rate
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$ 50 million $300,000
75 million 350,000
100 million 400,000
For purposes of the foregoing table, these definitions control:
"Annualized" means an average of the two most recently completed
quarterly reporting periods of the Company multiplied by four, commencing with
the quarterly period ended June 30, 1999.
"Company Debt" means on a consolidated basis the Company's long term
and current portion (without duplication) of all bank borrowings and
institutional debt, including capitalized lease obligations, but excluding the
outstanding balance and accrued interest on the Special Improvement District
Bonds.
"EBITDA" means the net income of the Company determined in accordance
with generally accepted accounting principles, consistently applied, for any
quarterly reporting period beginning with the quarterly period ended June 30,
1999, before deductions for interest, taxes, depreciation and amortization
charges.
"In Ratio" means at the end of any calendar quarter, that: (i) the
ratio of EBITDA to interest on Company Debt is at least 2:1; and (ii) the
Company is in full compliance with the financial ratios under the Xxxxx Fargo
Credit Facility (or any substituted facility).
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"Salary Rate" means the Executive's Base Salary as increased on the
first day of the month following the Company meeting Annualized EBITDA
benchmarks.
For Example:
EBITDA for the quarterly reporting period ended December 31, 1999 is
$12 million; EBITDA for the quarterly period ended March 31, 2000 is $14
million. The average of the two periods ($13 million) multiplied by four is $52
million. The Executive's Salary Rate would increase to $300,000 annually as of
April 1, 2000 assuming the Company is In Ratio. The Salary Rate cannot be
decreased.
Section 2.2 Bonus and Bonus Plan Participation. The Executive will be
entitled to share in an annual bonus for the fiscal year ended December 31, 1999
if such ends during the Term in such amount as is determined in the sole
discretion of the Compensation Committee of the Company's Board of Directors
upon the recommendation of the Company's Chief Executive Officer. For fiscal
years ended December 31, 2000 and thereafter, if such ends during the Term, the
Executive will be entitled to share in a quantified bonus plan to be adopted by
the Board of Directors of the Company during the year 2000.
Section 2.3 Stock Options. The Company will grant as of the date of
this Agreement to the Executive, 45,000 stock options under the Company's 1994
or 1996 Incentive Stock Option Plan as follows: All options will have an
exercise price of $6.75, vesting as follows: the first 15,000 options will vest
on October 31, 2000, the second 15,000 options will vest on October 31, 2001 and
the final 15,000 options will vest on October 31, 2002.
ARTICLE III
TERM OF EMPLOYMENT AND TERMINATION
Section 3.1 Term. This Agreement shall be for a period of three and
one-half years commencing on May 1, 1999 and ending on November 1, 2002,
subject, however, to termination during such period as provided in this Article
(the "Term").
Section 3.2 Termination by the Company With Cause. The Company may
terminate the Executive's employment, at any time, for cause upon ten days'
written notice and opportunity for the Executive to remedy any non-compliance
with the terms of this Agreement (if such non-compliance can be remedied).
Grounds for termination "for cause" shall be one or more of the following: (i)
intentional and material breach of his duty of loyalty or care to the Company,
(ii) gross negligence or willful misconduct in performance of his duties during
the course of his employment, (iii) persistent failure to abide by the corporate
policies and procedures set forth in the Company's Employee Handbook; (iv)
persistent failure to execute the reasonable and lawful instructions of the
Company's Chief Executive Officer relating to the operation of the Company's
business, and (v) conviction of any felony crime or loss of his gaming license
in Colorado. Upon the date of termination of the Executive's employment pursuant
to this Section 3.2, the Company's obligation to pay any compensation including
bonuses shall terminate, at which time the Company shall be responsible for
compensating the
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Executive for any unpaid salary and vacation time not taken. Subject to this
exception and the obligation of the Company to compensate the Executive through
the notice period, no other compensation shall be payable to the Executive
should this Agreement be terminated pursuant to this Section 3.2.
Section 3.3 Termination or Cessation of Employment Without Cause. In
the event that Executive's employment is terminated or ceased without cause, all
compensation shall cease, but the Company shall be obligated to compensate the
Executive with lump sum severance pay equal to the present value of his salary
otherwise payable during the Term of this Agreement. In the event Executive's
employment is terminated pursuant to this Section 3.3, the Executive shall be
entitled to participate in the bonus payable pursuant to Section 2.2 with
respect to the year in which his employment is terminated pro rated for the year
based on the number of full months employed during such year compared to 12; and
provided further that the non-competition covenant in Section 4.1(c) below shall
be automatically terminated.
Section 3.4 Termination upon Death of the Executive. In addition to any
other provision relating to termination, this Agreement shall terminate upon the
Executive's death. In such event, all unpaid compensation, compensation for
vacation time not taken by the Executive and all expense reimbursements due to
the Executive shall be paid to the Executive's estate. In the event Executive's
employment is terminated pursuant to this Section 3.4, the Executive's estate
shall be entitled to a death benefit equal to six months salary and to
participate, in the bonus payable pursuant to Section 2.2 with respect to the
year in which his employment is terminated pro rated for the year based on the
number of full months worked during such year compared to 12.
ARTICLE IV
CONFIDENTIALITY AND COMPETITION
Section 4.1 Further Obligations of the Executive During and After
Employment.
(a) The Executive agrees that during the term of his
employment under this Agreement, he will engage in no other business
activities which are or may be competitive with, or which might place
him in a competing position to that of, the Company or any subsidiary
of the Company.
(b) The Executive realizes that during the course of his
employment, the Executive will have produced and/or have access to
confidential business plans, information, business opportunity records,
notebooks, data, specifications, trade secrets, customer lists and
account lists of the Company and its affiliates ("Confidential
Information"). Therefore, during or subsequent to his employment by the
Company, or by an affiliate, the Executive agrees to hold in confidence
and not to directly or indirectly disclose or use or copy or make lists
of any such Confidential Information, except to the extent authorized
by the Company in writing. All records, files, business plans,
documents, equipment and the like, or copies thereof, relating to
Company's business, or the business of an affiliated company, which the
Executive shall prepare, or use, or
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come into contact with, shall remain the sole property of the Company,
or of an affiliated company, and shall not be removed from the
Company's or the affiliated company's premises without its written
consent, and shall be promptly returned to the Company upon termination
or resignation of employment with the Company or its affiliated
companies.
(c) Because of his employment by the Company, the Executive
will have access to trade secrets and confidential information about
the Company, its business plans, its business accounts, its business
opportunities, its expansion plans into other geographic areas and its
methods of doing business. The Executive agrees that for the Term of
this Agreement and an additional period of one year he will not:
(i) engage or participate, directly or indirectly, as
an owner, partner, shareholder, consultant, director, officer,
employee, agent or otherwise in any business which owns,
operates, manages or provides consulting services to a gaming
casino in Black Hawk, Colorado or any other city or town in
which the Company has any significant gaming activities; or
(ii) take any actions which are calculated to
persuade any employee, vendor or supplier of the Company to
terminate or modify in any adverse manner their association
with the Company.
(d) In the event a court of competent jurisdiction finds any
provision of this Section 4.1 to be so overbroad as to be
unenforceable, then such provision shall be reduced in scope by the
court, to the extent deemed necessary by the court to render the
provision reasonable and enforceable. Executive acknowledges and agrees
that any breach of this Agreement by Executive would cause immediate
irreparable harm to the Company. Executive agrees that should he
violate any of the terms and conditions of this Agreement, the Company,
at its sole discretion, shall be entitled to seek and obtain immediate
injunctive relief and enjoin further and future violations of this
Agreement.
ARTICLE V
DISABILITY AND ILLNESS
Section 5.1 Disability and Salary Continuation.
(a) Definition of Total Disability. For purposes of this
Agreement, the terms "totally disabled" and "total disability" shall
mean disability as defined in any total disability insurance policy or
policies, if any, in effect with respect to the Executive. If no
insurance policy is in effect, "total disability" shall mean a
medically determinable physical or mental condition which, in the
opinion of two physicians chosen by the mutual consent of the parties,
renders the Executive unable to perform substantially all of the duties
required pursuant to this Agreement. Total disability shall be deemed
to have occurred on the date of the disabling injury or onset of the
disabling illness, as
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determined by the two independent physicians. In the event that the two
independent physicians are unable to agree as to the date of the
disabling injury or onset of the disabling illness, such date shall be
deemed to be the later of the two dates determined by the physicians
chosen pursuant to this Section 5.1(a).
(b) Salary Continuation. If the Executive becomes totally
disabled during the term of this Agreement, his full salary shall be
continued for 90 days from the date of the disabling injury or onset of
the disabling illness as determined in accordance with the provisions
of Section 5.1(a) above and thereafter the Executive's employment may
be terminated in accordance with the provisions of Section 3.3.
Section 5.2 Illness. If the Executive is unable to perform the services
required under this Agreement by reason of illness or physical injury not
amounting to total disability, also as determined in this Article, the
compensation otherwise payable to the Executive under this Agreement shall be
continued for a period of six months and he shall be entitled to participate in
the bonus payable in Section 2.2 with respect to the year in which the illness
occurred prorated for the year based on the number of months worked during such
year compared to 12 after which the Company shall have no further obligation to
the Executive.
ARTICLE VI
GENERAL MATTERS
Section 6.1 Governing Law. This Agreement shall be governed by the laws
of the State of Colorado and shall be construed in accordance therewith.
Section 6.2 No Waiver. No provision of this Agreement may be waived
except by an agreement in writing signed by the waiving party. A waiver of any
term or provision shall not be construed as a waiver of any other term or
provision.
Section 6.3 Amendment. This Agreement may be amended, altered or
revoked at any time, in whole or in part, by filing with this Agreement a
written instrument setting forth such changes, signed by each of the parties.
Section 6.4 Benefit. This Agreement shall be binding upon the Executive
and the Company, and shall not be assignable by either party without the other
party's written consent.
Section 6.5 Severability. If any provision of this Agreement is
declared by any court of competent jurisdiction to be invalid for any reason,
such invalidity shall not affect the remaining provisions. On the contrary, such
remaining provisions shall be fully severable, and this Agreement shall be
construed and enforced as if such invalid provisions had not been included in
the Agreement.
Section 6.6 Effective Date. The effective date of this Agreement shall
be May 1, 1999.
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Section 6.7 Arbitration. The Company and the Executive expressly agree
that all disputes arising out of this Agreement shall be resolved by arbitration
in accordance with the following provisions. Either party must demand in writing
such arbitration within 10 days after the controversy arises by sending a notice
to arbitrate to both the other party and to the American Arbitration Association
(hereinafter referred to as "AAA"). The controversy shall then be arbitrated
pursuant to the rules promulgated by the AAA at the AAA's offices located in
Denver, Colorado. The parties will select by mutual agreement the arbitrator or
arbitrators (hereinafter collectively referred to as "arbitrator") to hear and
resolve the controversy. The arbitrator shall be governed by the express terms
of this Agreement and the laws of the State of Colorado. The arbitrator's
decision shall be final and binding on the parties and shall bar any suit,
action, or proceeding instituted in any federal, state, or local court or
administrative tribunal. Notwithstanding the preceding sentence, the
arbitrator's judgment may be entered in any court of competent jurisdiction.
These arbitration provisions shall survive the termination of this Agreement.
BLACK HAWK GAMING & DEVELOPMENT
COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman and Chief
Executive Officer
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
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