EXHIBIT 10.3
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is entered into as of July 30,
2002, by and among JCC Holding Company, a Delaware corporation (the "Company"),
Xxxxxx'x Operating Company, Inc., a Delaware corporation ("Parent") and Xxxx X.
Xxxxxx, an individual (the "Executive").
RECITALS
WHEREAS, the Company, Parent and Satchmo Acquisition, Inc., a Delaware
corporation ("Merger Sub") and a wholly owned subsidiary of Parent, have entered
into an Agreement and Plan of Merger dated as of the date of this Agreement (as
such agreement may hereafter be amended, the "Merger Agreement") whereby, among
other things, the Company will become a wholly-owned subsidiary of Parent;
WHEREAS, pursuant to the Merger Agreement, each share of outstanding common
stock of the Company will be converted into the right to receive a cash amount
equal to $10.54 (the "Merger Consideration");
WHEREAS, the Executive currently serves as President and Chairman of the
Company and President of Jazz Casino Company, LLC, a wholly owned subsidiary of
the Company (collectively, the "Executive's Positions"), pursuant to an
Employment Agreement dated as of March 27, 2002 (the "Employment Agreement");
WHEREAS, the Executive is a party to that certain proceeding pending in the
Court of Chancery of the State of Delaware, Xxxxxx'x Entertainment, Inc., et al.
v. Xxxx Xxxxxx, et al. Case No. 19569 (the "Delaware Litigation");
WHEREAS, the Parent has agreed to use its best efforts to cause the
Delaware Litigation to be dismissed within 5 business days following the
consummation of the transactions contemplated by the Merger Agreement (the
"Closing");
WHEREAS, the Company and the Executive have determined that it is in their
mutual best interest to terminate the Executive's employment relationship with
the Company effective upon Closing; and
WHEREAS the parties desire to resolve fully any existing disputes and to
avoid any future disputes between them;
IT IS HEREBY AGREED as follows:
1. Resignation.
(a) Effective immediately upon the Closing, the Executive hereby
voluntarily agrees to resign from the Executive's Positions, and from all
positions he holds as an employee of the Company or any of its subsidiaries or
affiliates (hereinafter, together with their predecessors, collectively referred
to as the "Company") and from all positions he holds as a member of the Board of
Directors of the Company or any of its subsidiaries and all committees
thereof. Upon the Closing, the Employment Agreement shall terminate and shall be
of no further force or effect and no party thereto shall have any further duty
or obligation.
(b) From the date of this Agreement through the Closing, Executive shall
not take any action which will result in the Company violating Section 5.1 of
the Merger Agreement. In addition, Executive acknowledges and agrees that the
only powers and duties of Executive as an employee of the Company are those
which are specifically delegated to the Executive by the Board of Directors of
the Company after the date of this Agreement, and as may be changed from time to
time, and that Executive shall only take such actions as President of the
Company and President of Jazz Casino Company, LLC which are specifically
permitted and delegated by the Board of Directors of the Company.
(c) From the date of this Agreement through the Closing, and except as set
forth in this Agreement, Executive shall not be entitled to any compensation for
providing services to the Company (and its subsidiaries) as an employee,
including, but not limited to, cash salary payments and stock options. Any
compensation received by Executive in violation of this Section 1(c) shall
reduce the Severance Benefit, set forth in Section 3(b) below, by the amount of
such compensation. Notwithstanding the foregoing, this Section 1(c) shall not
apply in the event the Merger Agreement is terminated prior to Closing.
2. Cancellation and Cashout of Stock Options.
The Executive and the Company agree that the Executive holds an option to
purchase 309,531 shares of the Common Stock of the Company ("Company Common
Stock") at an exercise price of $3.20 per share of Company Common Stock (the
"Option") and that the Option is the only option, security or right held by the
Executive which could require the Company to issue additional shares of capital
stock of the Company. In addition, Executive specifically releases the Company
from any obligation whatsoever under the Employment Agreement or any other
agreement or understanding between the Company and the Executive including,
without limitation, the obligation to provide additional compensation or options
to purchase Company Common Stock. The Executive has not assigned, transferred or
otherwise disposed of, and agrees not to assign, transfer or dispose of, any
portion of the Option. Immediately upon the Closing, the Option shall be
cancelled and, in exchange therefor, the Executive shall be entitled to receive,
in consideration of the cancellation of the Option and in settlement therefore,
a payment in cash, subject to any applicable withholding or other taxes required
by applicable law to be withheld and subject to the Executive's delivering and
not revoking the release provided for in Section 5, below (the "Release"), of an
amount equal to the product of (a) 309,531 and (b) the excess of the Merger
Consideration over $3.20 (such amount payable hereunder being referred to as the
"Option Payment"). The Executive agrees that the Option Payment is adequate
consideration for the cancellation of the Option. The Option Payment shall be
made in cash to the Executive on the eighth day following the Executive's
delivery of the Release to the Company, in either event provided that the
Executive shall not have revoked the Release by such date. Notwithstanding the
foregoing, this Section 2 shall not apply in the event the Merger Agreement is
terminated prior to Closing.
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3. Profit Sharing and Medical Plan Benefits.
(a) Upon the termination of the Executive's employment with the Company,
the Executive shall be entitled to receive his vested and accrued benefits under
the Jazz Casino Co. Savings and Retirement Plan and to elect to continue his
coverage under the Company's medical benefit plans, at his expense, pursuant to
the terms of such plans and the requirements of applicable law.
(b) Provided that the Executive shall not have revoked the Release, and
subject to the provisions of Sections 1(c), 4(d) and 7, the Company shall pay
the Executive a total severance benefit of $200,000, subject to any applicable
withholding or other taxes required by applicable law to be withheld (the
"Severance Benefit") on the date that the Option Payment is made to the
Executive.
4. The Executive's Covenants.
(a) Upon termination of Executive's employment with the Company, the
Executive shall immediately return to the Company all Company property
in his possession, including without limitation, keys, credit cards,
telephone calling cards, manuals, books, notebooks, financial
statements, computers, computer software, printers, cellular and
portable telephone equipment, reports and other documents.
(b) The Executive agrees that after the termination of his employment with
the Company, he shall not seek future employment at the Company.
(c)
(i) The Executive's position with the Company has resulted in his
exposure and access to confidential and proprietary information
which he did not have access to prior to holding the position,
which information is of great value to the Company and the
disclosure of which by him, directly or indirectly, would be
irreparably injurious and detrimental to the Company. The
Executive shall not at any time after the date of this Agreement,
make available, either directly or indirectly, to any competitor
or potential competitor of the Company or any of its
subsidiaries, or their affiliates or divulge, disclose,
communicate to any firm, corporation or other business entity in
any manner whatsoever, any confidential or proprietary
information covered or contemplated by this Agreement, unless
expressly authorized to do so by the Company in writing.
(ii) For the purpose of this Agreement, "Confidential Information"
shall mean all information of the Company, its parent,
subsidiaries and affiliates and the Parent, its subsidiaries and
affiliates relating to or useful in connection with the business
of the Company, its parent, subsidiaries and affiliates, whether
or not a "trade secret" within the meaning of applicable law,
which at the time of the Executive's initial employment was not
generally known to the general public and which has been or is
from time to time
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disclosed to or developed by the Executive as a result of his
employment with the Company. Confidential Information includes,
but is not limited to: the Company's product development and
marketing programs, data, future plans, formula, food and
beverage procedures, recipes, finances, financial management
systems, player identification systems (Total Gold Card), pricing
systems, client and customer lists, organizational charts, salary
and benefit programs, training programs, computer software,
business records, files, drawings, prints, prototyping models,
letters, notes, notebooks (including notebooks containing
customer information), reports, and copies thereof, whether
prepared by him or others, and any other information or documents
which the Executive is or was told or reasonably ought to know
that the Company regards as confidential.
(iii) Upon termination of Executive's employment with the Company, the
Executive shall immediately return to the Company all
Confidential Information, including but not limited to,
documents, customer lists, notebooks (including notebooks
containing customer information) reports, correspondences,
computer printouts, work papers, files, computer lists, telephone
and address books, rolodex cards, computer tapes, disks, and any
and all records in his possession (and all copies thereof)
containing any such confidential information created in whole or
in part by the Executive within the scope of his employment, even
if the items do not contain Confidential Information.
(d) In recognition of the facts that irreparable injury will result to the
Company in the event of a breach by the Executive of his obligations
under subsections (a) through (d) of this Section 4, that monetary
damages for such breach would not be readily calculable, and that the
Company would not have an adequate remedy at law therefor, the
Executive acknowledges, consents and agrees that in the event of such
breach, or the threat thereof, the Company shall be entitled, in
addition to any other legal remedies and damages available, to
specific performance thereof and to temporary and permanent injunctive
relief (without the necessity of posting a bond) to restrain the
violation or threatened violation of such obligations by the
Executive. In addition, in the event of any such breach by the
Executive, the Company shall not be required to pay the Executive any
portion of the Severance Benefit which has not yet been paid to the
Executive and the Executive shall be required to repay to the Company
any portion of the Severance Benefit which has previously been paid to
the Executive.
5. Delaware Litigation.
Parent agrees to use its best efforts cause the claims against the
Executive in the Delaware Litigation to be dismissed within 5 business days
following the Closing.
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6. The Release.
The Executive agrees that immediately after the Closing and the termination
of the Executive's employment with the Company, the Executive shall sign and
deliver to the Company and Parent a general release in the form attached as
Exhibit "A."
7. Nondisparagement.
Executive, Parent and the Company agree not to make any public statement
disparaging each other and Executive agrees not to make any public statement
disparaging the products, services, business practices, business strategies or
other activities of the Parent and its affiliates and subsidiaries or the
Company. Executive understands and agrees that his agreement contained in the
immediately preceding sentence is a material term of this Agreement, and that in
the event of a breach of such agreement by Executive, the Company shall not be
required to pay the Executive any portion of the Severance Benefit which has not
yet been paid to the Executive and the Executive shall be required to repay to
the Company any portion of the Severance Benefit which has previously been paid
to the Executive.
8. Indemnification.
Executive agrees to indemnify, save and hold the Company and Parent and
each of their respective stockholders, officers, directors, employees,
affiliates, subsidiaries and attorneys and any of the foregoing person's agents
or other representatives (the "Indemnities") harmless from and against any and
all actions, causes of actions, suits, claims, losses, costs, fees, liabilities
and damages, and expenses in connection therewith, incurred by the Indemnities
as a result of, or arising out of, or relating or incident to:
(a) any third party allegations related to the provisions of this
Agreement, the Employment Agreement or that the granting by the
Company of the Option or the payment of the Option Payment was
improper; and
(b) any action or inaction taken by Executive after the date of
this Agreement and prior to the Closing, except for actions or
inactions taken or not taken by the Executive at the direction of a
majority of the Board of Directors of the Company.
9. Miscellaneous Provisions.
(a) Nothing contained in this Agreement shall be construed in any way as
an admission by the Company, Parent or by the Executive that either of
them has acted wrongfully with respect to the other or with respect to
any other person, and each party specifically disclaims any liability
to, or wrongful acts against, the other or any other person, on the
part of themselves or their representatives, partners, associates,
employees or agents.
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(b) This Agreement will bind and inure to the benefit of Executive, Parent
and the Company and their respective heirs, executors, administrators,
successors, and assigns.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(d) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive: at the Executive's most recent address on the
records of the Company,
If to the Company:
JCC Holding Company
One Canal Place
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: General Counsel
If to Parent:
Xxxxxx'x Operating Company, Inc.
Xxx Xxxxxx'x Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: General Counsel
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(e) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
(f) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior
agreements with respect thereto.
(g) This Agreement may be executed simultaneously in two counterparts,
each of which shall be deemed an original but which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
/s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
JCC HOLDING COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
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Name:
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Its:
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XXXXXX'X OPERATING COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Its: Senior VP, CFO and Treasurer
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EXHIBIT "A"
GENERAL RELEASE
For a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the undersigned does hereby release and forever discharges JCC
Holding Company and all of its subsidiaries and Xxxxxx'x Operating Company, Inc.
and all of its subsidiaries, and each of their partners, associates, affiliates,
successors, heirs, assigns, agents, directors, officers, employees,
representatives, lawyers, insurers, and all persons acting by, through, under or
in concert with them (collectively, the "Releasees"), or any of them, of and
from any and all manner of action or actions, cause or causes of action, in law
or in equity, suits, debts, liens, contracts, agreements, promises, liability,
claims, demands, damages, losses, costs, attorneys' fees or expenses, of any
nature whatsoever, known or unknown, fixed or contingent (hereinafter called
"Claims"), which the undersigned now has or may hereafter have against the
Releasees, or any of them, by reason of any matter, cause, or thing whatsoever
from the beginning of time to the date hereof. The Claims released herein
include, without limiting the generality of the foregoing, any Claims in any way
arising out of, based upon, or related to the employment or termination from
employment of the undersigned by the Releasees, or any of them; any claim for
benefits under the Employment Agreement between the undersigned and JCC Holding
Company dated as of March 27, 2002 (the "Employment Agreement"); any claims for
options to purchase Company securities, capital stock of the Company, or other
compensation, under the Employment Agreement, or otherwise; any alleged breach
of any express or implied contract of employment; any alleged torts or other
alleged legal restrictions on the Releasees' right to terminate the employment
of the undersigned; and any alleged violation of any federal, state or local
statute or ordinance including, without limitation, Title VII of the Civil
Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With
Disabilities Act, and the California Fair Employment and Housing Act.
THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND
IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT.
IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE
UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:
(A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS
RELEASE;
(B) HE HAS TWENTY-ONE (21) DAYS FROM THE EXECUTION OF THE AGREEMENT TO
CONSIDER THIS RELEASE BEFORE SIGNING IT; AND
(C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS
RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT
REVOCATION PERIOD.
The undersigned represents and warrants that there has been no
assignment or other transfer of any interest in any Claim which he may have,
under the Employment Agreement or otherwise, against the Releasees, or any of
them, and the undersigned agrees to indemnify and hold the Releasees, and each
of them, harmless from any liability, Claims, demands, damages, costs, expenses
and attorneys' fees incurred by the Releasees, or any of them, as the result of
any such assignment or transfer or any rights or Claims under any such
assignment or transfer. It is the intention of the parties that this indemnity
does not require payment as a condition precedent to recovery by the Releasees
against the undersigned under this indemnity.
The undersigned agrees that if he hereafter commences any suit arising
out of, based upon, or relating to any of the Claims released hereunder or in
any manner asserts against the Releasees, or any of them, any of the Claims
released hereunder, then the undersigned agrees to pay to the Releasees, and
each of them, in addition to any other damages caused to the Releasees thereby,
all attorneys' fees incurred by the Releasees in defending or otherwise
responding to said suit or Claim.
IN WITNESS WHEREOF, the undersigned has executed this Release this
____ day of _______ 200_.
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XXXX X. XXXXXX
