EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement") is entered into this 31st day of August,
2005, by and between XXX X. XXXXXXX (“Employee”) and NEVADA GOLD & CASINOS,
INC., a Nevada corporation with headquarters in Houston, Texas
(“Employer”).
WHEREAS,
Employer is in the business of developing, owning, and operating various
gaming
facilities and lodging and entertainment facilities in different parts of
the
United States; and
WHEREAS,
Employer desires to enter into an employment relationship with Employee and
Employee desires to enter into an employment relationship with Employer;
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties agree as follows:
1. EMPLOYMENT.
Employer hereby agrees to hire and employ Employee, and Employee hereby agrees
to accept such employment, to work for and on behalf of Employer (or any
of its
affiliates, subsidiaries, co-venturers or other business entities as Employer
shall from time to time determine), pursuant to the terms and conditions
of this
Agreement. The date Employee shall report for full-time duty with Employer
(the
"Employment Date") shall be on or before November 30, 2005.
2. TERM.
This
Agreement is effective immediately and shall continue until August 31, 2010,
unless terminated earlier as provided herein (the "Initial Term"). Unless
Employer gives written notice to Employee (on or before August 31, 2009)
of its
decision not
to renew
this Agreement for an additional five (5) year term, then this Agreement
shall
automatically renew for an additional five (5) year term (the "Second Term")
under the same terms and conditions as set forth herein except that the salary
at the beginning of the Second Term shall be the same as the ending salary
at
the conclusion of the Initial Term.
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3. DUTIES
AND TITLE.
Employee’s title shall be that of President and Chief Operating Officer.
Employee shall perform such duties as directed by the Chief Executive Officer
of
Employer. Such duties shall include, but not be limited to, overall
responsibility for and authority over: casino, lodging, entertainment and
other
operations; finance and accounting; marketing and sales; human resources;
supporting property acquisition and management; and implementation of Employer’s
long range and strategic goals. Employee shall perform his duties to the
best of
his abilities and shall devote substantially all of his working time to such
duties.
4. COMPENSATION.
Employer hereby agrees to provide Employee with the following compensation
package (the “Compensation Package”), which shall be reviewed annually by
Employer’s Compensation Committee:
(a) Salary.
Commencing on the Employment Date, Employer shall pay Employee an annual
salary
in the amount of Three Hundred Twenty-five Thousand Dollars ($325,000.00),
payable in the same manner as Employer pays its other executive employees,
less
required state and federal withholdings.
(b) Auto
Allowance.
Commencing on the Employment Date, Employer shall provide Employee with a
monthly auto allowance of Seven Hundred Fifty Dollars ($750.00).
(c) Vacation
and Fringe Benefits.
Commencing on the Employment Date, Employee shall be entitled to one (1)
month
paid vacation each year. In addition, and subject to the terms of any plans
or
policies governing such matters, Employee shall be entitled to receive (i)
contributions to Employer’s 401(k) and other retirement plans at a rate at least
as great as Employer contributes for its other senior executive employees;
(ii)
major medical and health insurance; (iii) customary reimbursement for travel
and
entertainment; and (iv) actual reimbursement for Employee’s moving and
relocation expenses, to include temporary housing in Employer's corporate
apartment in Houston and furniture storage.
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(d) Performance
Bonuses.
Each
year Employee and Employer shall develop and create a Target Plan for Employer’s
upcoming fiscal year. The Target Plan shall include both financial and strategic
components. Once the proposed Target Plan has been approved and accepted
by
Employer’s Board of Directors, Employee shall oversee its implementation,
subject to Employer’s general oversight by its Board of Directors. Following the
end of each fiscal year, the Board of Directors shall determine whether and
to
what extent the Target Plan has been achieved. Employee shall be entitled
to
receive an annual Performance Bonus in an amount equal to:
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40%
of Employee’s then current annual salary if 95% of Target Plan
achieved;
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50%
of Employee’s then current annual salary if 100% of Target Plan
achieved;
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75%
of Employee’s then current annual salary if 115% of Target Plan
achieved;
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100%
of Employee’s then current annual salary if 125% of Target Plan
achieved.
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(e) Stock
Options.
Simultaneously with the execution of this Agreement, Employee shall be awarded,
and immediately vested in, an option to purchase twenty thousand (20,000)
shares
of stock in Employer with an exercise price equal to the fair market value
of
the stock determined as of the date of this Agreement, adjusted for future
stock
splits, stock dividends, etc. in accordance with the terms of any applicable
plan. In addition, Employee is also hereby granted an option to purchase
an
additional eighty thousand (80,000) shares of stock in Employer also with
an
exercise price equal to the fair market value of the stock determined as
of the
date of this Agreement, adjusted if appropriate. The option on these eighty
thousand (80,000) shares shall vest in Employee at the rate of twenty thousand
shares (20,000) on each annual anniversary of this Agreement through the
Initial
Term, provided Employee is still employed by Employer on such date. On the
first
day of the Second Term, if any, Employee shall be granted an option to purchase
an additional one hundred thousand (100,000) shares of stock (adjusted for
stock
splits, stock dividends, etc. occurring after the date of this Agreement)
with
an exercise price equal to the fair market value of the stock determined
as of
the date of the grant. The option on these shares granted at the beginning
of
the Second Term shall vest in Employee at the rate of twenty percent (20%)
on
the date of grant and twenty percent (20%) on each annual anniversary of
the
Second Term, provided Employee is still employed by Employer on such date.
All
options granted pursuant to this Agreement are subject to the terms and
conditions of Employer's stock option plan and stock option
agreement.
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5. TERMINATION
AND COMPENSATION UPON TERMINATION.
(a) Employer
may terminate Employee's employment at any time without Cause (as defined
in
Section 5(c) below) by giving prior, written notice to Employee. In such
case,
Employer shall pay to Employee in a lump sum an amount equal to the unpaid
balance of Employee's salary, Performance Bonus, accrued vacation and fringe
benefits remaining during the Initial Term of the Agreement if the termination
takes place during the Initial Term or during the Second Term if the termination
takes place during the Second Term. For purposes of calculating the Performance
Bonus, if any due to Employee in the event of such a termination, Employer
shall
apply the Target Plan achievement as of the end of the fiscal year preceding
the
fiscal year during which the termination becomes effective. All stock options
granted but not vested at such time shall immediately become fully vested
in
Employee. Otherwise, the stock options will be treated as prescribed under
Employer's Stock Option Plan and the Stock Option Agreement.
(b) Employee
may terminate Employee's employment in the event of a "Change of Control"
defined as its sale, acquisition, merger or buyout to an unaffiliated person
that has significant effect or a reduction in the responsibilities, position
or
compensation of Employee or that requires Employee to move the location of
his
principal residence a distance of more than 35 miles prior to or during the
initial 12 months of the Change of Control. In the event of such a termination,
Employer shall pay to Employee in a lump sum an amount equal to the unpaid
balance of Employee's salary, Performance Bonus, accrued vacation, and fringe
benefits remaining during the Initial Term of the Agreement if the Change
of
Control takes place during the Initial Term or during the Second Term if
the
Change of Control takes place during the Second Term. For purposes of
calculating the Performance Bonus, if any due to Employee in the event of
such a
termination, Employer shall apply the Target Plan achievement as of the end
of
the fiscal year preceding the fiscal year during which the termination becomes
effective. All stock options granted but not vested at such time shall
immediately become fully vested in Employee. Otherwise, the stock options
will
be treated as prescribed under Employer's Stock Option Plan and the Stock
Option
Agreement. Employee must give notice of any termination under this subsection
within thirty (30) days of the occurrence of the event he believes gives
rise to
a Change of Control.
(c) Employer
may terminate Employee's employment for "Cause" at any time. Such a termination
shall be effective as specified by Employer. In the event of a termination
by
Employer for "Cause," Employee shall be entitled only to his salary, accrued
vacation, and fringe benefits through the effective date of termination.
Any
unvested stock options shall be forfeited. All stock options granted which
have
vested will be treated as prescribed under Employer’s Stock Option Plan and the
Stock Option Agreement. "Cause" means: (a) the Employee's conviction of,
or
entry of a plea agreement or consent decree or similar arrangement with respect
to, a felony, other serious criminal offense or offense involving moral
turpitude, or any violation of federal or state securities laws, (b) Employee's
material violation of Employer's written policies; (c) Employee's material
breach of this Agreement, (d) the final revocation, suspension, or impairment
(after all applicable appeals) of Employee's gaming license in any jurisdiction
in which Employer is required to have a gaming license, or a finding (after
all
applicable appeals) by any authority in any such jurisdiction that Employee
is
unsuitable to hold a gaming license; or (e) Employee's gross misconduct
in
the performance of Employee's duties hereunder. Any termination of the
Employee's employment by Employer pursuant to this Section 5(c) shall be
communicated by a notice of termination which shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of
the Employee's employment under the provision invoked. To exercise its right
to
terminate the Employee pursuant to provisions (b), (c) or (e) of the definition
of Cause, Employer must first provide the Employee with 30 days' time to
correct
the circumstances or events that Employer contends give rise to the existence
of
Cause under those provisions. The 30-day time period shall not begin to run
until the Board of Directors of Employer has given the Employee the opportunity
to meet with the Board (at which meeting at least a quorum of the Board is
present either personally or telephonically) to hear a specific explanation
from
the Board of the circumstances or events the Board believes may fall within
provisions (b), (c) or (e) of the definition of Cause.
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(d)
Employer may terminate Employee's employment if Employee becomes unable to
perform the essential functions of his position despite any reasonable
accommodation required by law. In the event of a termination under this
subsection, Employee shall be entitled only to his salary, accrued vacation,
and
fringe benefits for a period of one (1) year following the effective date
of
termination. In the case of granted but unvested stock options, those unvested
stock options which would become vested within such one (1) year period shall
become vested and the remaining granted but unvested stock options shall
be
forfeited. Otherwise, the stock options will be treated as prescribed under
Employer's Stock Option Plan and the Stock Option Agreement.
6. CONFIDENTIALITY,
PROPERTY, COMPETITION, SOLICITATION.
(a) Ownership.
Employee agrees that all inventions, copyrightable material, business and/or
technical information, marketing plans, customer lists and trade secrets
which
arise out of the performance of this Agreement are the property of
Employer.
(b) Confidentiality.
Except
as is consistent with Employee's duties and responsibilities within the scope
of
his employment with Employer, Employee agrees to keep confidential indefinitely,
and not to use or disclose to any unauthorized person, information which
is not
generally known and which is proprietary to Employer, including all information
that Employer treats as confidential, ("Confidential Information"). Upon
termination of Employee's employment, Employee will promptly turn over to
Employer all software, records, manuals, books, forms, documents, notes,
letters, memoranda, reports, data, tables, compositions, articles, devices,
apparatus, marketing plans, customer lists and other items that disclose,
describe or embody Confidential Information including all copies of the
Confidential Information in his possession, regardless of who prepared them.
In
exchange for Employee's agreement set out in this subsection, Employer hereby
promises to provide Employee with Confidential Information.
(c) Non-competition.
If
Employee’s employment hereunder is terminated as a result of the application of
paragraph 5(c), then for a period of one (1) year after the effective date
of
termination (or if Employee's employment is terminated as a result of the
application of paragraph 5(a) or 5(b), then for a period of the shorter of
(i)
one (1) year after the effective date of termination or (ii) the remainder
of
the 5-year term of the Agreement) Employee agrees not to compete, directly
or
indirectly (including as an officer, director, partner, employee, consultant,
independent contractor, or more than 5% equity holder of any equity) with
Employer in any way concerning the ownership, development or management of
any
gaming operation or facility within a 75-mile radius of any gaming operation
or
facility with respect to which Employer (or any of its affiliates) owns or
renders consulting or management services at the time of
termination.
(d) Non-solicitation.
Employee agrees not to solicit or recruit, directly or indirectly, any
management employee of Employer for employment during the one (1) year period
after termination of his employment relationship with Employer.
7. NOTICES. All
notices and communications shall be sent by certified mail, return receipt
requested, or by hand delivery, to the following parties
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If
to Employee:
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Xxx
X. Xxxxxxx
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________________________
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________________________
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With
a copy to:
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R.
Xxxxxxxx Xxxxxxx, Esq.
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000
- 0xx
Xxxxxx X.X., Xxxxx 000
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Xx.
Xxxxxxxxxx, XX 00000
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If
to Employer:
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Nevada
Gold & Casinos, Inc.
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C/o
H. Xxxxxx Xxxx
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Chief
Executive Officer
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0000
Xxxx Xxx Xxxxxxxxx
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Xxxxx
000
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Xxxxxxx,
Xxxxx 00000
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With
a copy to:
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Nevada
Gold & Casinos, Inc.
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C/o
Xxxxx Xxxxxx
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General
Counsel
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0000
Xxxx Xxx Xxxxxxxxx
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Xxxxx
000
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Xxxxxxx,
Xxxxx 00000
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8. COMPLIANCE
WITH CODE SECTION 409A.
Any
provision of this Agreement to the contrary notwithstanding, all compensation
payable pursuant to this Agreement that is determined by Employer in its
sole
but reasonable judgment to be subject to Section 409A of the Code shall be
paid
in a manner that Employer in its sole but reasonable judgment determines
meets
the requirements of Section 409A of the Code and any related rules, regulations
or other guidance, even if meeting such requirements would result in a delay
in
the time of payment of such compensation. Any payments pursuant to Section
4 and
Section 5(a) and (b) of this Agreement shall be made no later than two and
one-half months after the year in which the right to receive such amounts
vest.
9. GOVERNING
LAW AND VENUE.
This
Agreement herein shall be construed, regulated and administered under the
laws
of the State of Texas and of the United States of America. Any lawsuit or
other
civil action brought arising from or related to Employee's employment with
Employer or this Agreement shall be brought and maintained in a state or
federal
court in Xxxxxx County, Texas, except that this provision does not preclude
Employer from removing to federal court any action filed by Employee and,
to the
extent permissible, Employee hereby consents to such removal.
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10. BINDING
EFFECT AND ASSIGNMENT.
This
Agreement shall be binding on and inure to the benefit of the respective
parties
hereto, their heirs, successors and assigns. Subject to the provisions of
Section 5(b), Employer may assign this Agreement in connection with a merger,
consolidation, assignment, sale or other disposition of substantially all
of its
assets or business. This Agreement may not be assigned by Employee.
11. REPRESENTATION.
Employee represents, and understands that Employer is relying on his
representation, that Employee's entering into or performance of this Agreement
is not in breach or violation of any other Agreement or obligation of
Employee.
12. MODIFICATION. This
Agreement may not be amended in any manner without the express, written consent
of the parties hereto.
13. ENTIRE
AGREEMENT.
This
Agreement supersedes all previous and contemporaneous oral negotiations,
commitments, writings and understandings between the parties concerning the
matters herein or therein.
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IN
WITNESS WHEREOF, the parties hereto have signed, sealed and delivered this
Agreement on this 31st day of August, 2005.
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Signed,
sealed and delivered in the presence of:
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EMPLOYEE
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_________________________
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_________________________
Xxx
X. Xxxxxxx
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_________________________
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EMPLOYER
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_________________________
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NEVADA
GOLD & CASINOS, INC
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_________________________
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By:_________________________
H.
Xxxxxx Xxxx, CEO
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