EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
May 23, 2005 (the "Commencement Date"), by and between Empire Resorts, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx (the "Executive")
(hereinafter collectively referred to as "the Parties").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to employ the Executive and to enter
into an agreement embodying the terms of such employment (together with its
Exhibit, this "Agreement") and the Executive desires to enter into this
Agreement and to accept such employment, subject to the terms and provisions of
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises of the parties contained herein, the parties, intending
to be legally bound, hereby agree as follows:
1. TERM. The term of employment under this Agreement shall be for
the period beginning on the Commencement Date and ending on the third
anniversary of the Commencement Date (the "Initial Term"); PROVIDED, HOWEVER,
that the Initial Term shall thereafter be automatically extended for additional
one-year periods (together with the Initial Term, the "Term") unless either the
Company or the Executive gives the other written notice at least 180 days prior
to the then-scheduled expiration of the Term that such Party is electing not to
so extend the Term. Notwithstanding the foregoing, the Term shall end on the
date on which the Executive's employment is earlier terminated by either party
in accordance with the provisions of Section 11 of this Agreement.
2. EMPLOYMENT.
(a) POSITION. The Executive shall be employed by the Company as
the Chief Executive Officer and President of the Company as of the Commencement
Date. The Executive shall be responsible for the day-to-day operations of the
Company and exercise the authority customarily performed, undertaken and
exercised by persons employed in a similar executive capacity. The Executive
shall report to the Board of Directors. The Executive's principal place of
employment shall, from time to time, be at such location that is reasonably
convenient for him to exercise day to day supervision over the Company's
operations and development projects.
(b) BOARD MEMBERSHIP. The Executive is currently a member of the
Board of Directors of the Company. The Company shall use its best efforts to
cause the Executive to be nominated for election to the Board during the Term,
subject at all times to the Company's obligations under applicable laws and
regulations.
(c) OBLIGATIONS. The Executive agrees to devote substantially his
full business time and attention to the business and affairs of the Company.
Anything herein to the contrary notwithstanding, nothing shall preclude the
Executive from (i) continuing his activities with respect to projects summarized
in Exhibit A hereto, (ii) serving on the boards of directors of trade
associations and/or charitable organizations, (iii) engaging in charitable
activities and community affairs, and (iv) managing his personal investments and
affairs, provided that the activities described in the preceding clauses (i)
through (iv) do not materially interfere with the proper performance of his
duties and responsibilities hereunder and do not interfere with his devoting
substantially his full business time and attention to the affairs of the
Company.
3. BASE SALARY. The Company agrees to pay or cause to be paid to the
Executive commencing no later than the Commencement Date and during the Term a
base salary at the rate of $500,000 per year or such larger amount as the Board
may from time to time determine (the "Base Salary"). The Executive's Base Salary
shall be reviewed annually by the Compensation Committee of the Board, with the
first review to occur in or around June 2006, and shall be subject to increase
from time to time as determined in the sole discretion of the Compensation
Committee of the Board. Such Base Salary shall be payable in accordance with the
Company's customary practices applicable to its executive officers.
4. BONUS.
(a) The Executive shall be entitled to participate in any annual
bonus plan maintained by the Company for its senior executives on such terms and
conditions as may be determined from time to time by the Compensation Committee
of the Board. The payment of any such bonus shall be in the absolute discretion
of the Board or Compensation Committee.
(b) Any bonus for 2005 will be prorated based on achievement of
targets and actual commencement of employment. The bonus for 2005 will be
payable at the time bonuses are paid to the Company's executive officers in
February 2006.
5. EQUITY COMPENSATION. The Executive shall be entitled to
participate in the Company's equity based incentive programs to the extent such
programs are put into place and maintained for the Company's senior executives
on such terms and conditions as may be determined from time to time by the
Compensation Committee of the Board, consistent with this Agreement, and
commensurate with his position.
6. SIGN-ON ARRANGEMENTS.
(a) SIGN-ON STOCK OPTION GRANTS.
(i) As of the Commencement Date the Company shall grant the
Executive a 10-year non-qualified stock option to purchase 1,044,092
shares of the Company's common stock pursuant to the 2005 Equity
Incentive Plan (the "Plan"), representing 4% of the currently
outstanding shares of common stock of the Company, subject to
shareholder approval, at an exercise price per share as determined
under the Plan, vesting 33% 90 days following the grant date, 33% on
the first anniversary of the grant and 34% on the second anniversary
of the grant, and subject to earlier vesting as provided herein. The
grant will be documented in the form attached hereto as Exhibit B.
(ii) As of the Commencement Date, the Company shall grant the
Executive an additional non-qualified stock option to purchase
720,000 shares, subject to shareholder approval and the closing of
transaction among the Company, Empire Resorts Holdings Inc., Empire
Resorts Sub, Inc., Concord Associates Limited Partnership and
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Xxxxxxxx Resorts (the "Concord Transaction"), so that his total
number of options will still represent 4% of the common stock of the
Company, vesting 33% or the later to occur of (i) closing of the
Concord Transaction and (ii) 90 days following the date of grant,
33% on the first anniversary of the grant and 34% on the second
anniversary. The grant will be documented in the form attached
hereto as Exhibit C. In the event the Concord Transaction does not
close, this grant will be canceled.
(b) SIGN-ON RESTRICTED STOCK GRANTS.
(i) As of the Commencement Date, the Company shall grant the
Executive 261,023 restricted shares, pursuant to the Plan, subject
to shareholder approval, representing 1% of the Company, vesting 33%
on the grant date, 33% on the first anniversary of grant, and 34% on
the second anniversary of the grant, and subject to earlier vesting
as provided herein. The grant will be documented in the form
attached hereto as Exhibit D.
(ii) As of the Commencement Date, the Company shall grant the
Executive an additional grant of 180,000 restricted shares, subject
to shareholder approval and the closing of the Concord transaction,
vesting 33% on grant date, 33% on first anniversary and 34% on
second anniversary, so that his total number of shares will still
represent 1% of the Company. The grant will be documented in the
form attached hereto as Exhibit E. In the event the Concord
transaction does not close, this grant will be canceled.
(iii) The Company will use its best efforts to register the
shares so that the Executive will be able to sell shares to pay his
tax liability.
(iv) The Executive shall have the right to make an Internal
Revenue Code Section 83(b) elections for the restricted share
grants.
(v) The Company will take all necessary action to ensure that
shares are duly authorized, validly paid and registered for sale by
the Executive for so long as such shares may not be freely sold
without such registration.
7. EMPLOYEE BENEFITS. The Executive shall be entitled to participate
in all employee benefit plans, practices and programs maintained by the Company
and made available to senior level executive officers generally and as may be in
effect from time to time. The Executive's participation in such plans, practices
and programs shall be on the same basis and terms as are applicable to senior
level executive officers of the Company generally. Such level of benefits shall
be at a level commensurate with his position.
8. OTHER BENEFITS.
(a) LIFE INSURANCE. The Company shall maintain a term life
insurance policy on the life of the Executive in the amount of $2,000,000 which
shall be payable to Executive's beneficiaries. The Company shall pay the
premiums with respect to such term life insurance policy for the period
commencing on the Commencement Date and ending on the later to occur of the last
day of the Term and the last day of the period during which welfare benefits are
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continued pursuant to Section 12(f) of this Agreement. The Company may also take
out `Key Man" life insurance on the life of Executive in such amounts that the
Company shall determine, and the Executive shall fully cooperate in such
efforts.
(b) VACATION. The Executive shall be entitled to annual paid
vacation of six weeks, in accordance with the policies periodically established
by the Board for similarly situated executive officers of the Company.
(c) PERQUISITES. The Executive shall be entitled to perquisites
on the same basis as provided to other senior level executive officers at the
Company.
9. EXPENSES.
(a) The Executive shall be entitled to receive prompt
reimbursement of all expenses reasonably incurred by him in connection with the
performance of his duties hereunder or for promoting, pursuing or otherwise
furthering the business or interests of the Company, in each case in accordance
with policies established by the Board from time to time and upon receipt of
appropriate documentation.
(b) The Executive shall be entitled to reimbursement for:
(i) Relocation expenses, including any applicable broker's
expenses, incurred by Executive and his family in relocating from
Las Vegas, Nevada to New York, provided that in the event the
Executive voluntarily terminates his employment within 12 months of
moving, he shall be required to reimburse the Company for such
moving expenses; and
(ii) Expenses of temporary housing in New York and periodic
commutation expenses between Nevada and New York prior to his
relocation (which shall not be greater than weekly).
10. AIRCRAFT TRAVEL. The Executive shall endeavor to use business
class air travel, but may use first class when business class is not available
or it is otherwise reasonable under the circumstances and shall exercise
reasonable prudence not to incur unnecessary travel expenses.
11. TERMINATION.
(a) DEATH. The Executive's employment hereunder shall terminate
upon the Executive's death.
(b) DISABILITY. If during the term of this Agreement, Executive
shall become ill, mentally or physically disabled, or otherwise incapacitated so
as to be unable regularly to perform the duties of his position for a period in
excess of 120 days ("Disability"), then the Company shall have the right to
terminate Executive's employment with the Company upon written notice to
Executive.
(c) CAUSE. The Company shall be entitled to terminate the
Executive's employment for "Cause." For purposes of this Agreement, "Cause"
shall mean that the Executive (i) pleads "guilty" or "no contest" to or is
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convicted of an act which is defined as a felony under federal or state law or
as a crime under federal or state law which involves Executive's fraud or
dishonesty, (ii) in carrying out his duties, engages in conduct that constitutes
willful neglect or willful misconduct; provided such plea, conviction, neglect
or misconduct results in material economic harm to the Company, (iii)
Executive's failure to obtain or maintain required licenses in the jurisdiction
where the Company currently operates or has plans to operate, in either case as
of the commencement of Executive's employment or (iv) the Executive's material
breach of this Agreement.
The Executive's employment with the Company shall not be
terminated for Cause unless he has been given written notice by the Board of its
intention to so terminate his employment (but only if susceptible to cure), such
notice (i) to state in detail the particular act or acts or failure or failures
to act that constitute the grounds on which the proposed termination for Cause
is based and (ii) to be given within 6 months after the Board knew of such acts
or failures to act. The Executive shall have 10 days after the date that the
Preliminary Notice of Cause is given in which to cure such conduct, to the
extent such cure is possible.
(d) GOOD REASON. The Executive may terminate his employment
hereunder for "Good Reason" by delivering to the Company written notice of his
intention to terminate his employment which identifies the act or acts
constituting Good Reason in reasonable detail. The Executive may give such
notice with or without conditions, including the right to withdraw such notice
if the Company does not agree there are facts which constitute Good Reason. The
Company shall have 60 days in which to cure.
For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following without the Executive's prior written
consent: (i) the failure to appoint or continue the Executive as Chief Executive
Officer or President of the Company; (ii) a material diminution in the
Executive's duties, or the assignment to the Executive of duties materially
inconsistent with his duties, positions, authority, responsibilities and
reporting requirements as set forth in Section 2 of this Agreement, or the
assignment of duties which materially impair the Executive's ability to function
as the Chief Executive Officer and President of the Company; (iii) the failure
of the Board or a nominating committee thereof to nominate Executive for
election to the Board of Directors; (iv) a reduction in or a material delay in
payment of the Executive's total cash compensation and benefits from those
required to be provided in accordance with the provisions of this Agreement; (v)
a change in the reporting structure so that Executive no longer reports directly
to the Board or a committee thereof; (vi) the Company, the Board or any person
controlling the Company requires the Executive to relocate his principal place
of employment to a location other than New York State or Nevada, other than on
travel reasonably required to carry out the Executive's obligations under this
Agreement; (vii) any termination by Executive of his employment for any reason
other than death or Disability within one year of a Change in Control of the
Company (as defined in Section 12(h) of this Agreement; (viii) a material breach
by the Company of any of the provisions of this Agreement; or (ix) the failure
of the Company to obtain the assumption in writing of its obligation to perform
this Agreement by any successor to all or substantially all of the assets of the
Company not later than the effective date of such transaction.
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(e) WITHOUT CAUSE. The Company may terminate the Executive's
employment hereunder, without Cause, at any time and for any reason (or for no
reason) by giving the Executive a Notice of Termination.
(f) VOLUNTARY. The Executive may terminate his employment
hereunder at any time and for any reason other than Good Reason or Disability
(or for no reason) by giving the Company a Notice of Termination. Such voluntary
termination shall not be deemed a breach of this Agreement
(g) NOTICE OF TERMINATION. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail, if applicable, the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision so
indicated. For purposes of this Agreement, no purported termination of
employment which requires a Notice of Termination shall be effective without
such Notice of Termination. The Termination Date (as defined below) specified in
such Notice of Termination shall be no less than two weeks from the date the
Notice of Termination is given; PROVIDED, HOWEVER, that (i) if the Executive's
employment is terminated by the Company due to Disability, the date specified in
the Notice of Termination shall be at least 30 days from the date the Notice of
Termination is given to the Executive and (ii) if the Executive terminates his
employment in accordance with Section 11(f) of this Agreement, the date
specified in the Notice of Termination shall be at least 30 days from the date
the Notice of Termination is given to the Company.
(h) TERMINATION DATE. "Termination Date" shall mean the date of
the termination of the Executive's employment with the Company and specifically
(i) in the case of the Executive's death, his date of death; (ii) in the case of
a termination of the Executive's employment for Cause, the relevant date
specified in Section 11(c) of this Agreement; (iii) in the case of the
expiration of the Term of this Agreement in accordance with Section 1, the date
of such expiration; and (iv) in all other cases, the date specified in the
Notice of Termination.
12. COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) FOR CAUSE; WITHOUT GOOD REASON. If during the term of this
Agreement, the Executive's employment under this Agreement is terminated by the
Company for Cause or by the Executive without Good Reason (and other than by
reason of the Executive's death or Disability), the Company's sole obligation
hereunder shall be to pay the Executive the following amounts earned hereunder
but not paid as of the Termination Date ((i) through (iv) collectively, "Accrued
Compensation"):
(i) Base Salary through the Termination Date;
(ii) any other compensation which has been earned, accrued or
is owing, under the terms of the applicable plan, program or
practice, to the Executive as of the Termination Date but not paid,
including, without limitation, any incentive awards under the Bonus
Plan;
(iii) reimbursement of any and all reasonable expenses
incurred in connection with the Executive's duties and
responsibilities under this Agreement in accordance with policies
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established by the Board from time to time and upon receipt of
appropriate documentation;
(iv) other or additional benefits and entitlements in
accordance with applicable plans, programs and arrangements of the
Company; and
(v) other than as set forth herein, the vesting of stock
options and restricted stock shall be treated in accordance with the
terms of the relevant plan, provided, however, .that if Executive's
employment hereunder is terminated by Executive without Good Reason,
and the basis of such determination by the Executive is based upon a
good faith conclusion by the Executive and the Board of Directors
that the direction that the Company is going is inconsistent with
the direction that the Executive and the Board of Directors
anticipated that the Company would go as of the commencement of
employment hereunder (i.e. acquisitions and development), then the
stock options granted hereunder may be exercised for a period of one
year following such termination notwithstanding to the contrary set
forth in the Plan.
(b) WITHOUT CAUSE OR FOR GOOD REASON. If the Executive's
employment hereunder is terminated by the Company without Cause or by the
Executive for Good Reason, the Company's sole obligation hereunder shall be as
follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Company shall pay the Executive a Pro-rata Bonus, at
such time as other participants in the Bonus Plan are paid their
respective bonuses in respect of that fiscal year;
(iii) if the Company has obtained "key man" life insurance in
such amounts sufficient to cover this obligation (whether or not the
Company has maintained such insurance), the Company shall continue
to pay the Executive Base Salary and target bonus for the remainder
of the Term (the "Salary Continuation Period"), based on Executive's
annual Base Salary and his target bonus for the year of his
termination, in equal installments, in accordance with the Company's
customary payroll practices to its executive officers;
(iv) the Company shall continue to pay the premiums provided
for in Section 8(a) of this Agreement for the time period set forth
therein;
(v) all stock options as forth on Schedules B and C shall
vest on the Termination Date and remain exercisable for four years,
but not longer than the scheduled term of the option; and
(vi) all restricted shares set forth on Schedules D and E
shall vest on the Termination Date;
(vii) In the event the Executive terminates his employment
for Good Reason following a Change of Control as provided in Section
11(d), the Company shall pay the benefits described in Sections
12(b)(i), (ii) and (iii) in a lump sum.
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(c) DISABILITY. If the Executive's employment hereunder is
terminated by the Company by reason of the Executive's Disability, the Company's
sole obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued
Compensation;
(ii) the Executive shall be entitled to benefits under the
Company's regular and any supplemental long-term disability plan or
plans;
(iii) the Company shall pay the Executive a Pro-rata Bonus,
at such time as other participants in the Bonus Plan are paid their
respective bonuses in respect of that fiscal year;
(iv) the Company shall continue to pay the premiums provided
for in Section 8(a) of this Agreement for the time period set forth
therein;
(v) stock options as set forth on Schedules B and C shall
vest on the Termination Date and remain exercisable for a period of
four years, but not longer than the scheduled term of the option;
and
(vi) restricted stock set forth on Schedules D and E shall
vest on the Termination Date.
(d) DEATH. If the Executive's employment hereunder is terminated
due to his death, the Company's sole obligation hereunder shall be as follows:
(i) the Company shall pay the Executive's estate or his
beneficiaries (as the case may be) the Accrued Compensation;
(ii) the Company shall pay the Executive's estate or
beneficiaries (as the case may be), at such time as other
participants in the Bonus Plan are paid their respective bonuses in
respect of that fiscal year, a Pro-Rata Bonus with respect to the
fiscal year in which the Termination Date occurs;
(iii) the Company shall provide such assistance as is
necessary to facilitate the payment of the life insurance proceeds
provided for in Section 8(a) of this Agreement to the Executive's
beneficiary or beneficiaries;
(iv) stock options shall vest on the Termination Date and
shall remain exercisable for a period of one year, but not longer
than the scheduled term of the option; and
(v) restricted stock and other equity awards shall vest on
the Termination Date.
(e) DETERMINATION OF BASE SALARY. For purposes of this Section
12, Base Salary shall be determined by the Base Salary at the annualized rate in
effect on the Termination Date.
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(f) CONTINUATION OF EMPLOYEE BENEFITS. Notwithstanding anything
to the contrary, in addition to any amounts payable above, the Company shall, at
its expense, during the Salary Continuation Period, provide to the Executive and
his beneficiaries continued participation in all medical, dental, vision,
prescription drug, hospitalization and life insurance coverages and in all other
employee welfare and pension benefit plans, programs and arrangements in which
the Executive was participating immediately prior to the Termination Date. COBRA
benefits will commence after the Salary Continuation Period. Notwithstanding the
foregoing, the Company's obligation to provide welfare benefits under this
Section 12(f) shall be reduced to the extent that equivalent coverages and
benefits are provided under the plans, programs or arrangements of a subsequent
employer.
(g) NO MITIGATION; NO OFFSET. In the event of any termination of
his employment hereunder, the Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation provided to the Executive in any subsequent employment, except as
provided in Section 12(f) of this Agreement.
(h) CHANGE OF CONTROL. For purposes of this Agreement, the term
"Change of Control" shall be deemed to have occurred as of the first day that
any one or more of the following conditions is satisfied:
(i) Any person is or becomes the "beneficial owner" (as that
term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding
securities(other than current shareholders resulting from the
Concord Transaction); or
(ii) Any of the following occur: (A) any merger or
consolidation of the Company, other than a merger or consolidation
in which the voting securities of the Company immediately prior to
the merger or consolidation continue to represent (either by
remaining outstanding or being converted into securities of the
surviving entity) 20% or more of the combined voting power of the
Company or surviving entity immediately after the merger or
consolidation with another entity; (B) any sale, exchange, lease,
mortgage, pledge, transfer, or other disposition (in a single
transaction or a series of related transactions) of all or
substantially all of the assets or earning power of the Company on a
consolidated basis; (C) any complete liquidation or dissolution of
the Company; (D) any reorganization, reverse stock split or
recapitalization of the Company that would result in a Change of
Control as otherwise defined herein; or (E) any transaction or
series of related transactions having, directly or indirectly, the
same effect as any of the foregoing.
The Concord Transaction (as currently contemplated or in any amended form) is
specifically excluded from the events constituting a Change of Control.
(i) RELEASE. In exchange for the payment by the Company of
the amounts contemplated by Section 12(b) of this Agreement, the
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Executive agrees to execute such form of release with respect to
claims for such payment as is mutually and reasonably acceptable to
the Company and the Executive.
13. EMPLOYEE COVENANTS.
(a) UNAUTHORIZED DISCLOSURE. The Executive shall not, during the
term of this Agreement and thereafter, make any Unauthorized Disclosure. For
purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by
the Executive without the prior written consent of the Board to any person,
other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive officer of the Company, of any
confidential information relating to the business or prospects of the Company
including, but not limited to, any confidential information with respect to any
of the Company's customers, products, methods of distribution, strategies,
business and marketing plans and business policies and practices, except (i) to
the extent disclosure is or may be required by law, by a court of law or by any
governmental agency or other person or entity with apparent jurisdiction to
require him to divulge, disclose or make available such information or (ii) in
confidence to an attorney or other advisor for the purpose of securing
professional advice concerning the Executive's personal matters provided such
attorney or other advisor agrees to observe these confidentiality provisions.
Unauthorized Disclosure shall not include the use or disclosure by the
Executive, without consent, of any information known generally to the public or
known within the Company's trade or industry (other than as a result of
disclosure by him in violation of this Section 13(a)). This confidentiality
covenant has no temporal, geographical or territorial restriction.
(b) NON-COMPETITION. During the Non-Competition Period described
below, the Executive shall not, directly or indirectly, without the prior
written consent of the Company, own, manage, operate, join, control, be employed
by, consult with or participate in the ownership, management, operation or
control of, or be connected with (as a stockholder, partner, or otherwise) the
gaming industry in the geographic areas where the Company is operating or has
plans to operate as of the beginning of the Non-Competition Period; PROVIDED,
HOWEVER, that the "beneficial ownership" (as that term is defined in Rule 13d-3
under the Exchange Act) by the Executive after his termination of employment
with the Company, either individually or as a member of a "group" for purposes
of Section 13(d)(3) under the Exchange Act and the regulations promulgated
thereunder, of not more than two percent (2%) of the voting stock of any of
these corporations which are publicly held shall not be a violation of this
Agreement.
(c) NON-SOLICITATION. During the Non-Competition Period described
below, the Executive shall not, either directly or indirectly, alone or in
conjunction with another person, interfere with or harm, or attempt to interfere
with or harm, the relationship of the Company, its subsidiaries and/or
affiliates, with any person who at any time was an employee of the Company.
(d) For purposes of this Agreement, the "Non-Competition Period"
means the period that Executive is employed by the Company, plus the greater of
(i) one year following the voluntary termination of Executive's employment
without Good Reason, (ii) one year following termination of the Executive by the
Company for Cause, or (iii) the balance of the Salary Continuation Period.
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(e) REMEDIES. The Executive agrees that any breach of the terms
of this Section 13 would result in irreparable injury and damage to the Company
for which the Company would have no adequate remedy at law; the Executive
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to seek an immediate injunction and restraining
order to prevent such breach and/or threatened breach and/or continued breach by
the Executive, in addition to any other remedies to which the Company may be
entitled at law or in equity. The Executive and the Company further agree that
the provisions of the covenants not to compete and solicit are reasonable and
that the Company would not have entered into this Agreement but for the
inclusion of such covenants herein. Should a court or arbitrator determine,
however, that any provision of the covenants is unreasonable, either in period
of time, geographical area, or otherwise, the parties hereto agree that the
covenants should be interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable.
14. CERTAIN ADDITIONAL PAYMENTS.
(a) In the event it shall be determined that any payment, benefit
or distribution of any type to or for the benefit of the Executive by the
Company, any of its affiliates, or any person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the regulations thereunder) or any
affiliate of such person, whether paid or payable, received or receivable, or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), is or would be subject to the excise tax
imposed by Section 4999 of the Code or any similar successor provision or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments (not including the Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code),
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
any amounts relevant to the last sentence of Section 14(a), shall be made by an
independent accounting firm selected by the Company from among the largest four
accounting firms in the United States (the "Accounting Firm"). The Accounting
Firm shall provide its determination (the "Determination"), together with
detailed supporting calculations, regarding the amount of any Gross-Up Payment
and any other relevant matter, both to the Company and the Executive, within
fifteen days of the Termination Date, if applicable, or such earlier time as is
requested by the Company or the Executive (if the Executive reasonably believes
that any of the Total Payments may be subject to the Excise Tax). Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it may be determined that the Company should have made Gross-Up Payments
("Underpayment"), or that Gross-Up Payments will have been made by the Company
which should not have been made ("Overpayment"). In either such event, the
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Accounting Firm shall determine the amount of the Underpayment or Overpayment
that has occurred. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and otherwise
reasonably cooperate with the Company to correct such Overpayment. The Executive
and the Company shall each reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.
15. SECTION 409A.
It is the intention of the Parties that this Agreement comply
strictly with the provisions of Section 409A of the Code and Treasury
Regulations and other Internal Revenue Service guidance promulgated thereunder
(the "Section 409A Rules"). Accordingly, this Agreement, including, but not
limited to, any provisions relating to severance payments and the terms of any
grants of restricted stock or options hereunder, may be amended from time to
time as may be necessary or appropriate to comply with the Section 409A Rules.
16. WITHHOLDING OF TAXES.
The Company may take such actions as it may deem appropriate,
consistent with applicable law, in connection with any compensation paid
pursuant to this Agreement with respect to the withholding of any taxes
(including income or employment taxes) or any other tax matters, including, but
not limited to, requiring the Executive to furnish to the Company any applicable
withholding taxes prior to the issuance of stock pursuant to an option grant or
the vesting of restricted stock.
17. INDEMNIFICATION; INSURANCE; LIMITATION OF LIABILITY.
(a) The Company agrees that if the Executive is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that he is or was a director, officer or employee of the Company or is
or was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans, the
Executive shall be indemnified and held harmless by the Company to the fullest
extent legally permitted or authorized by the Company's certificate of
incorporation or bylaws or resolutions of the Company's Board against all cost,
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or other liabilities or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the
Executive in connection therewith, and such indemnification shall continue as to
the Executive even if he has ceased to be a director, member, employee or agent
of the Company or other entity and shall inure to the benefit of the Executive's
heirs, executors and administrators. The Company shall advance to the Executive
all costs and expenses incurred by him in connection with a Proceeding within a
reasonable time. Such request shall include an undertaking by the Executive to
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repay the amount of such advance if it shall ultimately be determined that he is
not entitled by law to be indemnified against such costs and expenses; provided
that the amount of such obligation to repay shall be limited to the after-tax
amount of any such advance except to the extent the Executive is able to offset
such taxes incurred on the advance by the tax benefit, if any, attributable to a
deduction realized by him for the repayment.
(b) Neither the failure of the Company (including its Board,
independent legal counsel or stockholders) to have made a determination prior to
the commencement of any Proceeding concerning payment of amounts claimed by the
Executive under Section 17(a) above that indemnification of the Executive is
proper because he has met the applicable standard of conduct, nor a
determination by the Company (including its Board, independent legal counsel or
stockholders) that the Executive has not met such applicable standard of
conduct, shall create a presumption in any judicial proceeding that the
Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive, until such time as
actions against the Executive are no longer permitted by law, with terms and
conditions no less favorable than the most favorable coverage then applying to
any other senior level executive officer or director of the Company.
18. REPRESENTATIONS.
(a) The Executive represents and warrants that he has the free
and unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement.
(b) The Company represents that (i) the execution of this
agreement and the provision of all benefits and grants provided herein have been
duly authorized by the Company, including, where necessary, by the Board and
Compensation Committee, (ii) the execution, delivery and performance of this
Agreement does not violate any law, regulation, order, decree, agreement, plan
or corporate governance document of the Company, (iii) upon the execution and
delivery of this agreement, it shall be the valid and binding obligation of the
Company enforceable in accordance with its terms, (iv) there are no material
investigations by any governmental authority of the Company or its affiliates
pending, or to the actual knowledge of the Company, threatened, and Company
senior management knows of no facts that would warrant such investigation, (v)
there are no facts or circumstances that may result in a material financial
restatement, and (vi) it will use its commercially reasonable best efforts to
obtain "key man" life insurance on the life of Executive as promptly as
reasonably practicable in order to fund the obligations of the Company under
Section 12(b)(iii) hereof.
19. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall require
any successor or assign to expressly assume and agree to perform this Agreement
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in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. The term "the
Company" as used herein shall include any such successors and assigns. The term
"successors and assigns" as used herein shall mean a corporation or other entity
acquiring or otherwise succeeding to, directly or indirectly, all or
substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
20. ARBITRATION. Except with respect to the remedies set forth in
Section 13(e) hereof, if in the event of any controversy or claim between the
Company or any of its affiliates and the Executive arising out of or relating to
this Agreement, either party delivers to the other party a written demand for
arbitration of a controversy or claim, then such claim or controversy shall be
submitted to binding arbitration. The binding arbitration shall be administered
by the American Arbitration Association under its Commercial Arbitration Rules.
The arbitration shall take place in New York, NY. Each of the Company and the
Executive shall appoint one person to act as an arbitrator, and a third
arbitrator shall be chosen by the first two arbitrators (such three arbitrators,
the "Panel"). The Panel shall have no authority to award punitive damages
against the Company or the Executive. The arbitrator shall have no authority to
add to, alter, amend or refuse to enforce any portion of the disputed
agreements. The Company and the Executive each waive any right to a jury trial
or to petition for stay in any action or proceeding of any kind arising out of
or relating to this Agreement. Pending the resolution of any claim under this
Section 18, the Executive (and his beneficiaries) shall continue to receive all
payments and benefits due under this Agreement, except to the extent that the
arbitrator(s) otherwise provide.
21. FEES AND EXPENSES. The Company shall pay the reasonable legal
fees reasonably incurred by the Executive in connection with the negotiation and
execution of this Agreement. In addition, the Company agrees to pay promptly
upon presentation of an invoice from the Executive, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of (a) any contest by the Company of the validity or enforceability of,
or liability under, any provision of this Agreement, (b) any effort to enforce
the Executive's rights hereunder or (c) any dispute between the Executive and
the Company relating to this Agreement; provided that the claim by the Executive
is made in good faith and upon a reasonable basis.
22. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
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TO THE EXECUTIVE:
Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
with a copy to:
Xxxx Xxxxxxx Champion
Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
TO THE COMPANY:
Empire Resorts, Inc.
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxx 00000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
23. SETTLEMENT OF CLAIMS. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
24. SURVIVORSHIP. Except as otherwise set forth in this Agreement,
the respective rights and obligations of the Executive and the Company hereunder
shall survive any termination of the Executive's employment.
25. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
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26. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without giving
effect to the conflict of law principles thereof.
27. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
28. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof. This Agreement may be executed
in one or more counterparts.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
THE COMPANY:
EMPIRE RESORTS, INC.
By: /s/ Xxxx Xxxxxx
-------------------
Xxxx Xxxxxx
Chairman of the Board
THE EXECUTIVE:
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
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