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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
by and among Avalon Entertainment Group, Inc., a Tennessee corporation ("AEG"),
Nashville Country Club, Inc., a Tennessee corporation ("NCCI"), and Xxxx X.
Xxxxxx (the "Executive"), effective as of the 21st day of April, 1997. NCCI,
together with its subsidiaries and affiliates, including AEG, are hereinafter
referred to collectively as the "NCCI Group."
R E C I T A L S:
WHEREAS, pursuant to that certain Merger Agreement (the "Merger
Agreement"), dated as of April 21, 1997, by and among NCCI, Avalon Acquisition
Corp., Inc., a Tennessee corporation and a wholly-owned subsidiary of NCCI
("AAC"), AEG and Messrs. Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxxxxx, Xxxx X. Xxxxxx,
Xxxx X. Xxxxxx and Xxxxx X. Xxxxxx (collectively, the "Avalon Group"), AAC has,
concurrently herewith, acquired by merger all of the assets and liabilities of
AEG. Immediately subsequent to the merger, AAC shall change its name to Avalon
Entertainment Group, Inc. and such entity, as it shall exist subsequent to said
merger, shall hereinafter be defined as "Avalon."
WHEREAS, the Executive has heretofore served as an executive officer
of AEG, and, through such service, has acquired special and unique knowledge,
abilities and expertise.
WHEREAS, the parties hereto acknowledge that the Executive will
receive significant benefits if the transactions contemplated by the Merger
Agreement are consummated. It is further acknowledged that the execution and
delivery of this Agreement are conditions to the obligations of NCCI and AAC to
consummate the transactions contemplated by the Merger Agreement.
WHEREAS, Avalon desires to employ the Executive in an executive
capacity, and the Executive desires to accept such employment, on the terms and
conditions set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Avalon and the Executive agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions set forth in
this Agreement, Avalon agrees to employ and does hereby employ the Executive,
and the Executive agrees to accept such employment and does hereby accept such
employment.
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2. TERM. Subject to earlier termination as hereinafter provided,
the Executive's employment hereunder shall be for a term commencing on the
effective date hereof and shall continue through December 31, 2002.
3. CAPACITY AND PERFORMANCE.
(a) During the term hereof, the Executive shall serve in
an executive capacity with Avalon and shall have the responsibilities,
duties and authorities reasonably assigned to him by Avalon. In
addition, and without further compensation, the Executive shall serve
as an officer and/or director of one or more members of the NCCI Group
if so elected or appointed from time to time.
(b) During the term hereof, the Executive shall devote
substantially his full business time and his best efforts, business
judgment, skill and knowledge to the advancement of the business and
interests of the NCCI Group and to the discharge of his duties and
responsibilities hereunder. NCCI encourages reasonable participation
by the Executive in community, industry, trade, professional,
governmental, academic and charitable activities generally considered
to be in NCCI's and/or the public interest, but NCCI shall have the
right to approve or disapprove the Executive's participation in such
activities if, in the reasonable judgment of NCCI, such participation
may conflict with NCCI's interests or with the Executive's duties or
responsibilities or the time required for the discharge of those
duties and responsibilities. The Executive shall use his best efforts
and skills to preserve the business of the NCCI Group and the goodwill
of its employees and persons having business relations with the NCCI
Group.
4. COMPENSATION AND BENEFITS. As compensation for all services
performed by the Executive under and during the term hereof:
(a) Base salary. Avalon shall pay the Executive a base
salary at the rate of One Hundred Fifty Thousand Dollars ($150,000)
per annum, with cost of living adjustments as reasonably determined by
the Board of Directors of NCCI (the "NCCI Board") for 1999, 2000, 2001
and 2002, payable in accordance with the payroll practices of Avalon
for its executives, but not less frequently than monthly in arrears
and subject to federal, state and other tax withholdings.
(b) Incentive compensation. In addition to the base
salary, the Executive will, at his option exercisable separately with
respect to each calendar year ended after December 31, 1996, be
entitled to incentive compensation as follows:
(i) an Incentive Bonus (herein so called) of
$50,000 for such calendar year in which the Pre-Tax Net Income
of Avalon (as hereinafter defined) equals or exceeds
$1,000,000, and, if the applicable income level is achieved,
either:
(ii) a Partial Participating Bonus (herein so
called) of five percent (5%) of the amount by which the
Pre-Tax Net Income of Avalon for such calendar year
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exceeds seventy-five percent (75%) of the Projected Pre-Tax
Net Income of Avalon (as hereinafter defined) for such year, or
(iii) a Full Participating Bonus (herein so called)
of five percent (5%) of the Pre-Tax Net Income of Avalon for
such calendar year if the Projected Pre-Tax Net Income for
such year is realized.
For purposes of this subparagraph (b), "Pre-Tax Net Income of
Avalon" shall mean, for a calendar year, the annual net income before
taxes realized by Avalon as calculated in accordance with generally
accepted accounting principles, calculated without the allocation of
(i) any costs and expenses incurred by AEG, Avalon or NCCI in
connection with the transactions contemplated by the Merger Agreement,
or (ii) any general overhead or management fees of NCCI or any
affiliate, but deducting the executive compensation and consulting
fees payable to Messrs. Geddes, Miserendino, Xxxxxx and Xxxxxx
pursuant to this Agreement and employment agreements or consulting
agreements of even date herewith among Avalon, NCCI and such other
applicable members of the Avalon Group, and the projected Incentive
Bonus and Partial Participating Bonus or Full Participating Bonus
payable with respect to such calendar year pursuant to this Agreement
and the employment agreement of even date herewith between Avalon,
NCCI and Xx. Xxxxxx.
For purposes of this subparagraph (b), the "Projected Pre-Tax
Net Income of Avalon" shall be as follows:
1997 $1,200,000
1998 $1,500,000
1999 $1,700,000
2000 $2,000,000
2001 $2,000,000
2002 $2,000,000
The incentive compensation payable pursuant to this
subparagraph (b) shall be paid as soon as practicable after the
Pre-Tax Net Income of Avalon shall have been determined, but in no
event later than March 30 of the subsequent year. The Partial
Participating Bonus shall not be paid for any year for which the Full
Participating Bonus is paid. The parties hereto acknowledge that the
"Projected Pre-Tax Net Income of Avalon" amounts were derived by the
parties hereto based on the assumption that Avalon would be operated
during the term hereof substantially as AEG was operated during the
three (3) years prior to the merger contemplated by the Merger
Agreement. Should the operations of Avalon during the term hereof
change materially, the parties hereto shall negotiate in good faith to
determine whether the "Projected Pre-Tax Net Income of Avalon" amounts
should be revised, and if so, such revised amounts.
(c) Options. The Executive shall be entitled to receive
such stock options as NCCI shall approve, including, without
limitation, options contingent upon the
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achievement of specified operating objectives or to reward
extraordinary effort. Such stock options are to be granted to provide
long-term incentives for high levels of performance, for unusual
efforts designed to improve the financial performance of Avalon and
NCCI, and to provide the Executive the opportunity to benefit from the
appreciation in the value of NCCI's stock subject to such options.
Such stock options shall contain terms and conditions comparable to
the terms and conditions made available to other executives of the
NCCI Group having similar responsibilities.
(d) Other benefits. During the term hereof and subject to
any contribution therefor generally required of executives of the NCCI
Group, the Executive shall be entitled to participate in any and all
benefit plans from time to time in effect for executives of the NCCI
Group generally. Such participation shall be subject to (i) the terms
of the applicable plan documents, (ii) generally applicable NCCI Group
policies, and (iii) the discretion of the Boards of Directors of
Avalon (the "Avalon Board") and NCCI or any administrative or other
committee provided for in or contemplated by such plan. Avalon or NCCI
may alter, modify, add to or delete its benefit plans at any time as
it determines to be appropriate, without recourse by the Executive.
(e) Vacations. During the term hereof, the Executive
shall be entitled to three (3) weeks of vacation per annum, to be
taken at such times and intervals as shall be determined by the
Executive, with the approval of Avalon.
(f) Business expenses. Avalon shall pay or reimburse the
Executive for all reasonable and customary expenses incurred or paid
by the Executive in the performance of his duties and responsibilities
hereunder, subject to periodic review of the amount of such expenses
from time to time by Avalon, and subject to such reasonable
substantiation and documentation as may be specified by Avalon from
time to time.
(g) Guarantee of payment. NCCI hereby guarantees payment
of the amounts to be paid to the Executive under Paragraphs 4(a) and
4(b) hereof.
5. TERMINATION.
(a) Death or Disability. This Agreement shall terminate
upon the death or Disability (as hereinafter defined) of the
Executive. The term "Disability" shall mean the Executive is unable to
perform his duties under this Agreement on a full-time basis for 90
consecutive days or for 120 days out of 150 consecutive days due to
the Executive's physical or mental illness as determined (after
expiration of either such periods) by a qualified physician selected
by Avalon in its sole discretion.
(b) Termination by Avalon for Cause. Avalon may terminate
the Executive's employment hereunder for Cause upon notice to the
Executive setting forth in reasonable detail the nature of such cause.
The following, as determined by the Avalon Board in its reasonable
judgment, shall constitute Cause for termination:
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(i) The Executive's failure to perform (other
than by reason of disability), or gross negligence or willful
misconduct in the performance of, his duties and
responsibilities to the NCCI Group, such duties and
responsibilities not to be unreasonably imposed;
(ii) Breach by the Executive of any provision of
this Agreement;
(iii) Fraud, embezzlement or other dishonesty with
respect to the NCCI Group;
(iv) Conviction of, or a plea of nolo contendere
to, a felony or other crime involving moral turpitude;
(v) Other conduct by the Executive that would
generally be considered seriously harmful to the business,
interests or reputation of the NCCI Group;
(vi) The Executive's intentional failure to comply
with any instructions of Avalon, such instructions not to be
unreasonably imposed; or
(vii) Failure of Avalon to materially achieve
financial and operational performance objectives established
by the Board of Directors of Avalon, unless such failure
results from an act of God or catastrophic event beyond the
control of the Executive;
provided, however, in the case of subparagraphs (i), (ii), (v) and (vi), the
Executive shall have been informed in writing of the act, or failure to act,
constituting Cause for termination, and shall have been provided with a
reasonable opportunity, but in no event greater than thirty (30) days, to cure
such act or failure to act. Notwithstanding the foregoing sentence, the
Executive shall be entitled to written notification and opportunity to cure an
act, or failure to act, constituting Cause for termination no more than two
times. Subsequent to such second notification, the Executive shall have no
right to cure any subsequent act, or failure to act, and Avalon may proceed
with termination for Cause as defined herein without further notice to the
Executive.
(c) Termination by Executive for Good Reason. The
Executive may terminate his employment with Avalon for "Good Reason"
or without "Good Reason" at any time. For purposes of this Agreement,
"Good Reason" shall mean (i) a material breach by NCCI of any material
provision of the Merger Agreement and related agreements executed in
conjunction with the Merger Agreement, and failure of NCCI to cure
such breach within thirty (30) days of receipt of written notification
thereof from the Executive, and (ii) any breach by Avalon of any
material provision of this Agreement or any failure by Avalon to carry
out any of its material obligations hereunder, and the failure to cure
such breach or failure within thirty (30) days' written notice thereof
from the Executive. Notwithstanding the foregoing sentence, Avalon
shall be entitled to written notification and opportunity to cure an
act, or failure to act, providing the Executive Good Reason for
termination no more than two times. Subsequent to such second
notification, Avalon
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shall have no right to cure any subsequent act, or failure to act, and
the Executive may proceed with termination for Good Reason as defined
herein without further notice to Avalon.
(d) Other termination. Any termination of employment,
other than as a result of the Executive's death, shall be communicated
by a "Notice of Termination" to the other parties to this Agreement.
For purposes of this Agreement, a "Notice of Termination" shall mean a
notice in writing which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provisions so indicated.
(e) Date of termination. The Date of Termination (herein
so called) shall mean (a) if the Executive's employment is terminated
under this Agreement as a result of death, the date of the Executive's
death, (b) if the Executive's employment is terminated as a result of
the Executive's Disability, the date Notice of Termination is
delivered to the Executive, (c) if the Executive terminates his
employment, the earlier of ten (10) days following the date on which a
Notice of Termination is delivered pursuant to Paragraph 11 or the
date specified in the Notice of Termination, and (d) if the
Executive's employment is terminated for any other reason, then ten
(10) days following the date on which a Notice of Termination is
delivered pursuant to Paragraph 11.
6. EFFECTS ON COMPENSATION UPON DISABILITY OR TERMINATION OF
EMPLOYMENT.
(a) Disability. During any period that the Executive
fails to perform his duties under this Agreement as a result of a
Disability, Avalon shall continue to pay him his base salary pursuant
to Paragraph 4(a) until the Date of Termination.
(b) Death. If the employment of the Executive terminates
because of his death, then Avalon shall pay the Executive's estate his
base salary pursuant to Paragraph 4(a) through the date of his death.
(c) Termination for Cause or without Good Reason. If the
Executive voluntarily ceases employment with Avalon without Good
Reason or if his employment is terminated by Avalon for Cause, Avalon
shall pay the Executive his base salary pursuant to Paragraph 4(a)
through the Date of Termination.
(d) Termination for Good Reason or without Cause. If the
Executive ceases employment for Good Reason or if his employment is
terminated without Cause by Avalon, then the Executive shall be
entitled to receive one payment in an amount equal to the highest
total compensation paid the Executive in a prior calendar year
pursuant to Paragraphs 4(a) and (b) for the lesser of (i) the
remaining portion of the term, or (ii) two years. Such payment shall
be paid to the Executive within fifteen (15) days of the Date of
Termination.
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(e) Incentive Compensation. Should the employment of the
Executive terminate as a result of Disability or death, or should the
Executive cease employment for Good Reason, or if his employment is
terminated without Cause, in addition to the compensation set forth in
subparagraphs (a), (b) and (d) of this Paragraph 6, the Executive (or
his estate, if applicable) shall also be entitled to incentive
compensation under Paragraph 4(b) hereof calculated on the Partial
Period Amount (hereinafter defined) of the calendar year in which the
Date of Termination occurs. For purposes of this Agreement, the
"Partial Period Amount" shall be equal to the total amount of the
bonuses payable pursuant to Paragraph 4(b) for the year in which the
Date of Termination occurs, divided by the number of days in such
calendar year, times the number of days from the first day of such
calendar year to and including the Date of Termination. The
Executive's incentive compensation calculated on the Partial Period
Amount shall be paid in accordance with Paragraph 4(b) hereof.
7. NONDISCLOSURE COVENANTS. During the term of this Agreement,
the Executive will have access to and become familiar with various trade
secrets and other sensitive information belonging to the NCCI Group consisting
of, but not limited to, processes, computer programs, compilations of
information, records, sales procedures, customer requirements, pricing
techniques, customer lists, technical data, know-how, market reports, consumer
investigations, methods of doing business and other confidential information
(collectively, the "Confidential Information"), which are acquired, developed
and used by the NCCI Group and regularly used in the operation of its business.
The Executive acknowledges and agrees that all Confidential Information is and
shall remain the property of the NCCI Group. The Executive further agrees that
he shall not use in any way or disclose any of the Confidential Information,
directly or indirectly, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment under this
Agreement or to the extent such Confidential Information is publicly known. All
files, records, documents, information, data, and similar items relating to the
business of the NCCI Group, whether prepared by the Executive or otherwise
coming into his possession, shall remain the exclusive property of NCCI and
shall not be removed from the premises of the NCCI Group under any
circumstances without the prior written consent of the NCCI Board (except in
the ordinary course of business during the Executive's period of active
employment under this Agreement), and in any event shall be promptly delivered
to NCCI (without the Executive retaining any copies) upon termination of this
Agreement.
8. NONCOMPETITION COVENANT. Except in the case of the Executive's
termination other than (i) for Cause, or (ii) for Good Reason, without the
prior written consent of NCCI, the Executive shall not, prior to January 1,
2003, directly or indirectly, as a director, officer, agent, employee,
consultant or independent contractor, or in any other individual or
representative capacity, (i) invest (other than investments in publicly-owned
companies which constitute not more than one percent (1%) of the outstanding
securities of any such company) or engage in any business or activity that is
competitive with the business of the NCCI Group in the same geographic areas in
which the NCCI Group primarily operates, or (ii) accept employment with or
render services to a direct competitor of the NCCI Group.
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9. COVENANT NOT TO HIRE. For a period of one (1) year after the
termination of this Agreement for any reason, the Executive shall not, on his
own behalf or on behalf of any other person, partnership, association,
corporation or other entity, hire, or solicit for employment any employee of
the NCCI Group, or in any manner attempt to influence or induce any employee of
the NCCI Group, to leave the employment of the NCCI Group, nor shall the
Executive use or disclose to any person, partnership, association, corporation
or other entity any information obtained while an employee of Avalon concerning
the names and addresses of the NCCI Group employees; provided, however, if the
Executive ceases employment for Good Reason or if his employment is terminated
without Cause, the Executive may hire or solicit for employment any employee of
Avalon who was an employee of AEG on the effective date of the merger
contemplated by the Merger Agreement.
10. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part of this Agreement; and the remaining
provisions of this Agreement shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
11. NOTICE. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram or facsimile transmission
addressed as set forth on the signature pages hereof. Each party may designate
by notice in writing a new address to which any notice, demand, request or
communication may thereafter be so given, served or sent. Each notice, demand,
request or communication that is mailed, delivered or transmitted in the manner
described above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile transmission) the answer back being deemed conclusive
evidence of such delivery, or at such time as delivery is refused by the
addressee upon presentation.
12. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or amended unless such waiver, modification or amendment is
agreed to in writing and signed by the Executive and such officers as may be
specifically designated by the Avalon Board and the NCCI Board, respectively,
and such provisions shall be modified, waived or amended only to the extent set
forth in such writing.
13. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
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14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. ARBITRATION. Any dispute arising from this Agreement shall be
settled by arbitration in accordance with the commercial rules then in effect
of the American Arbitration Association, except as modified in this Paragraph
15 and, except that the arbitrator(s) shall be selected in accordance with the
following procedure: such dispute shall be referred to and decided by a single
arbitrator if the parties can agree upon one within thirty (30) days after
either of the parties shall notify the other that it wishes to avail itself of
the provisions of this Paragraph 15; otherwise, such dispute shall be referred
to and decided by three arbitrators, one to be appointed by Avalon and one to
be appointed by the Executive, each such appointment to be made within twenty
(20) days after the expiration of the thirty (30) day period referred to above,
and the third arbitrator to be appointed by the first two arbitrators within
thirty (30) days after the expiration of such twenty (20) day period. If the
first two arbitrators cannot reach agreement on the third arbitrator within
said thirty (30) day period, the third arbitrator shall be an impartial
arbitrator appointed by the President of the American Arbitration Association
within twenty (20) days after the expiration of said thirty (30) day period.
Hearings of the arbitrator(s) shall be held in Nashville, Tennessee, unless the
parties agree otherwise. The presentations of the parties in the arbitration
proceeding shall be commenced and completed within sixty (60) days after
selection of the arbitration panel, and the arbitration panel shall render its
decision in writing within thirty (30) days after completion of such
presentations. Any decision concurred in by any two (2) of the arbitrators
shall constitute the decision of the arbitration panel, and unanimity shall not
be required. Judgment upon an award rendered by the arbitrator(s) may be
entered in any court of competent jurisdiction. Any award so rendered shall be
final and binding upon the parties hereto. All costs and expenses of the
arbitrator(s) shall be paid as determined by such arbitrator(s), and all costs
and expenses of experts, witnesses and other persons retained by the parties
shall be borne by them respectively.
16. GENERAL CREDITOR. Nothing contained in this Agreement and no
action taken pursuant to the provisions of this Agreement shall create or be
construed to create a trust relationship between Avalon and the Executive or
any other person, nor shall any money or property of Avalon or NCCI be
segregated for the benefit of the Executive to satisfy the obligations of
Avalon or NCCI hereunder.
17. NO ASSIGNMENT. The right of the Executive or any other person
to the payment of amounts or other benefits under this Agreement shall not be
assigned, alienated, hypothecated, placed in trust, disposed of, transferred,
pledged or encumbered (except by will or by the laws of descent and
distribution), and, to the extent permitted by law, no such amount or payment
shall in any way be subject to any legal process to subject the same to the
payments of any claim against the Executive or any other person.
18. INJUNCTIVE RELIEF. Notwithstanding the provisions of Paragraph
15, if there is a breach or threatened breach by a party to this Agreement of
the provisions of this Agreement,
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any other party to this Agreement shall be entitled to seek an injunction to
prevent irreparable injury to said party.
19. INTEGRATION. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter of this Agreement, and all other written or oral agreements relating to
the subject matter hereof are hereby superseded.
20. GOVERNING LAW. The terms and provisions of this Agreement,
including without limitation the provisions for arbitration under Xxxxxxxxx 00,
xxxxx xx construed in accordance with, and governed by, the laws of the State
of Tennessee.
21. SURVIVAL. Notwithstanding the termination of this Agreement or
the Executive's termination of employment, the provisions of Paragraphs 7
through 13 and Paragraphs 15 through 17 shall survive and continue in full
force and effect in accordance with their terms.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the 21st day of April, 1997.
AEG:
AVALON ENTERTAINMENT GROUP, INC.,
a Tennessee corporation
By: /s/ Xxxxxx Xxxxxxx Xxxxxx III
-------------------------------------
Xxxxxx Xxxxxxx Xxxxxx III, President
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
NCCI:
NASHVILLE COUNTRY CLUB, INC.,
a Tennessee corporation
By: /s/ Xxxxxx Xxxxxxx Xxxxxx III
-------------------------------------
Xxxxxx Xxxxxxx Xxxxxx III, President
000 Xxxxxxxx Xxxxxxxxxx Xxx
Xxxxxxx Xxxxxx, Xxxxxxxxx 00000
EXECUTIVE:
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
c/o Avalon Entertainment Group, Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
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