EMPLOYMENT AGREEMENT
This
Employment Agreement (this “Agreement”)
is entered into
effective as of October 31,
2005
and is between Goodtime Action Amusement Partners, LP, a Texas limited
partnership (“Employer”), and Xxxxxxxxxxx Xxxxxxx (“Xxxxxxx").
1.
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DEFINITIONS.
|
As
used
in this Agreement, the following terms have the following meanings:
(a) “Affiliate”means,
with respect to any entity, any other corporation, organization, association,
partnership, sole proprietorship or other type of entity, whether incorporated
or
unincorporated, directly or indirectly controlling or controlled by or under
direct or indirect
common control with such entity.
(b) “Board”means
the
Board of Directors of Employer, or other governing body of Employer, and, in
addition, upon the occurrence of the events described in Paragraph 2, the Board
of Directors of the Successor Company.
(c) “Business”means
the
Bingo distribution in Texas and the operation of Amusement centers with
Amusement With Prize machines.
(d) “Cause”means
(1)
any material violation by Xxxxxxx of this Agreement, (2) any act
or
omission by Xxxxxxx involving fraud, willful misconduct or materially injurious
actions on the part of Xxxxxxx in respect of the Business, (3) Xxxxxxx’x conviction,
of
any felony crime or any crime that involves theft, fraud, moral turpitude or
violation of federal
or state securities law, (4) Xxxxxxx’x negligence in the performance of his
duties under
this Agreement, or (5) the continued failure by Xxxxxxx to substantially perform
his duties hereunder, after demand for substantial performance has been
delivered by Employer that specifically identifies the manner in which Employer
believes Xxxxxxx has not substantially performed his duties.
(e) “Change
of Control”means
a
change resulting in any Person or a group of related
Person, other than Employer and the shareholders of Employer immediately prior
to
the
Change of Control, (1) acquiring directly or indirectly, more man 50% of the
total voting power of all classes then outstanding voting stock (or other
rights, if Employer is not
a
corporation) of Employer, or (2) electing a majority of the members of the
Board
of Directors of Employer. For the purposes of this Agreement, a Change of
Control shall not include
the actions or activities contemplated in Paragraph 2, and the assignment of
this Agreement to the Successor Company.
(f) “Code”means
the
Internal Revenue Code of 1986, as amended.
(g) “Employment
Termination Date”means
the
effective date of termination of Xxxxxxx’x
employment as established under Paragraph 7(f).
(h) “Good
Reason”means
any
of the following actions if taken without Xxxxxxx’x prior
written consent: (1) any material failure by Employer to comply with its
obligations under
Paragraph 5 (Compensation and Related Matters) after giving Employer written
notice and Employer’s failure to rectify such material failure within thirty
days of the notice; (2) a Change of Control, except as permitted in Paragraph
l(e) or as contemplated in Paragraph 2; (3) any demotion of Xxxxxxx as evidenced
by a substantial reduction in Xxxxxxx’x
responsibilities, duties, compensation or benefits such that Xxxxxxx no longer
is occupying an executive position; or (4) except as provided in Paragraph
6,
the relocation
of Xxxxxxx’x place of employment to a location 50 miles or more from the
location
where he performs his duties.
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1
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(i) “Inability
to Perform”means
and
shall be deemed to have occurred if Xxxxxxx has
been
determined under Employer’s long-term disability plan, if any, to be eligible
for long-term disability benefits. In the absence of such a plan or
determination, regardless of the
reason, “Inability to Perform” means Xxxxxxx’x inability, despite any reasonable
accommodation
required by law, to perform the essential functions of his position because
of
an illness, disability, or injury for more than 90 days during any 12-month
period.
(j) “Person”means
an
individual, corporation, partnership, limited liability company,
association, trust, trustee in bankruptcy or other entity or
organization.
2.
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SUCCESSOR
COMPANY.
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Employer
is a limited partnership, organized under the laws of Texas; however,
Employer
contemplates, during calendar year 2006, forming a new corporation or entity,
which
new
corporation or entity (“Successor Company”), will acquire, by merger, transfer
or otherwise, all of the assets, rights, titles, obligations and duties of
Employer, including,
without limitation, the rights, titles, obligations and duties of Employer
under
and
pursuant to this Agreement. Upon the formation of the Successor Company, unless
this
Agreement has been otherwise terminated, Successor Company shall, immediately
assume all the rights, titles, obligations and duties of Employer hereunder,
and
all references to Employer shall, mutatis
mutandis, be
deemed
to be references to Successor Company,
except and to the extent necessarily modified by the provisions of this
Agreement. The formation of the Successor Company shall occur upon the filing
of
the Articles
of Incorporation or like instrument or instruments with the governmental entity
with
which such instruments are required to be filed in the jurisdiction of Successor
Company’s formation, and shall be a permissible Change of Control which shall
not constitute
“Good Reason,” as defined in Paragraph l(h).
3.
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EMPLOYMENT
AND TERM.
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Employer
agrees to employ Xxxxxxx and Xxxxxxx agrees to be employed, in the position
and
with the duties and responsibilities set forth in Paragraph 4, and upon the
other terms and
conditions set out in this Agreement.
Xxxxxxx’x
employment shall commence on the effective date of this Agreement and shall
be
for a term commencing upon the Effective Date and ending at the close of
business on May
1,
2007 (the “Employment Term”), unless sooner terminated as provided in this
Agreement Upon the expiration of the Employment Term, Xxxxxxx’x employment shall
nevertheless
continue, on a month to month basis, until terminated as provided in this
Agreement
or until an extension, amendment or novation of this Agreement occurs and is
executed by both Xxxxxxx and Employer.
4.
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POSITION
AND DUTIES.
|
During
his employment by Employer, Domijan shall serve as the Chief Financial Officer
of
Employer, and shall also have the title of Executive Vice President of Employer;
provided, however, that if Employer, as a limited partnership, does not have
offices or titles
equivalent thereto, then Xxxxxxx shall, nevertheless, have such office and
title
as is commensurate
with the title and position of Chief Financial Officer and Executive Vice
President, and upon the formation of the Successor Company, shall serve in
such
capacities;
provided, however, that such titles and offices shall be confirmed in the
organizational meeting of the Board of the Successor Company in which the
election of officers is first held and confirmed. In such capacity, Xxxxxxx,
subject to the ultimate control
and direction of the Board, shall generally be responsible for financial records
of the Employer, including the planning and review of capital funding, working
capital funding and other financial arrangements of Employer (and, to the extent
necessary, those funding requirements which will be necessary or desirable
for
the formation of the Successor
Company), risk management and insurance for the Employer and, if necessary,
before,
and thereafter, upon, the formation of the Successor Company, investor relations
for
the
Successor Company. In addition, Xxxxxxx shall have such other duties, functions,
responsibilities
and authority as are from time to time delegated to Xxxxxxx by the Board;
provided, however, that such duties, functions, responsibilities, and authority
are reasonable and customary for a person serving in the same or similar
capacity of an enterprise
comparable to Employer.
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During
his employment by Employer, Xxxxxxx shall devote his full time, skill and
attention to the business and affairs of Employer to the extent necessary to
discharge the duties
and responsibilities delegated and assigned to Xxxxxxx in or pursuant to this
Agreement,
except for usual, ordinary and customary periods of holiday or vacation and
absence
due to illness or disability.
In
connection with Xxxxxxx’x employment by Employer under this Agreement, Xxxxxxx
shall
be
based at the offices of Employer in Houston, Texas, but may be relocated to
Employer’s offices in the Dallas, Texas metropolitan area (“Dallas”), as
provided in Paragraph 6. Xxxxxxx also will engage in such travel as the
performance of Xxxxxxx’x duties in the business of Employer may
require.
All
services that Xxxxxxx may render to Employer in any capacity during his
employment by Employer shall be deemed to be services required by this Agreement
and the
consideration for such services is that provided for in this
Agreement.
5.
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COMPENSATION
AND RELATED MATTERS.
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(a) Base
Salary. Employer
shall pay to Xxxxxxx for his services under this Agreement an annual base salary
(“Base Salary”). The Base Salary on the effective date of this Agreement shall
be at least $150,000.00. The Base Salary is subject to annual adjustment at
the
discretion of the Board, but in no event shall Employer pay Xxxxxxx a Base
Salary less than that set forth above without the written consent of Xxxxxxx.
The Base
Salary shall be payable bi-monthly, in accordance with the general payroll
practices of
Employer, and shall be subject to such withholding for taxes as may be required
by applicable law, rule or regulation. Payment of any or all installments of
the
Base Salary shall
be
effected by check of Employer or by direct deposit into one or more accounts,
as
directed by Xxxxxxx, which may be modified or changed, from time to time, as
Xxxxxxx may
elect.
(b) Stock
or Equity. Commencing
on January 31, 2006, and upon the last day of each three
month period thereafter until April 30, 2007, Xxxxxxx shall become vested in
a
limited partnership interest equal to .5% of the total interests of the Company.
Upon the formation of the Successor Company, Xxxxxxx’x limited partnership
interests shall immediately
become converted to .5% of the total issued and outstanding shares of the
Successor Company (or such other, like equity interests if the Successor Company
is not a corporation) multiplied by the number of three month periods in which
he was entitled to receive a limited partnership interest. By way of example,
if
the Successor Company is formed
on
July 15, 2006, Xxxxxxx would be entitled to receive 1.5% of the issued and
outstanding
shares of the Successor Company (three quarterly periods) and on July 31, 2006,
would be entitled to an additional .5%of
the
issued and outstanding shares of the Successor Company. After five quarterly
periods, Xxxxxxx’x right to equity interests, whether
limited partnership, shares or otherwise, shall terminate, but on the quarter
ended on
April
30, 2007 if still employed by Employer or Successor Company, Xxxxxxx shall
be
entitled to an additional 2.5% equity interest, whether limited partnership,
shares or otherwise, so that on April 30, 2007, unless this Agreement is earlier
terminated, Xxxxxxx shall have received a total of 5% of the equity interests
in
Employer, whether limited partnership, shares or otherwise. If Employer, or
the
Successor Company, performs
a reverse merger, the amount of stock ownership in Successor Company would
be
diluted pro rata the same as the other shareholders of Employer, i.e. the
percentage ownership of the Successor Company will be less than 5% because
of
the percentage of ownership by a third party or parties of some portion of
the
total issued and outstanding shares.
Any stock or shares issued to Xxxxxxx shall, to the extent possible, be free
of
any restrictions;
provided, however, that if the Successor Company, upon advice of counsel, deems
it advisable to restrict the sale of any stock or shares, then Xxxxxxx’x stock
shall be restricted, but only and to the extent that stock or shares of other
officers or members of the Board of the Successor Company are restricted. If
Employer remains a private company, then no registration of Xxxxxxx’x stock
shall be required. In any event, upon the
final
vesting of any equity interests, whether limited partnership, shares or
otherwise, the
same
shall be distributed to Xxxxxxx upon his written request for the
same.
PAGE
3
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(c) Incentive
Bonus. During
his employment by Employer, Xxxxxxx will be eligible for an incentive bonus
(the
“Incentive Bonus”) at the discretion of the Board, but which shall
be
in accordance with bonuses paid by Employer to other employees holding positions
with Employer or its affiliates that are similar to Xxxxxxx’x
position.
(d) Employee
Benefits. During
his employment by Employer, Xxxxxxx shall be entitled to participate in all
employee benefit plans, programs, and arrangements that are generally made
available by Employer to its similarly situated employees, including
without
limitation, Employer’s life insurance, disability and health plans. Xxxxxxx
agrees to
cooperate and participate in any medical or physical examinations as may be
required by any insurance company in connection with the applications for any
life or disability insurance policies. Employer agrees that Employer will
maintain life insurance for Xxxxxxx,
at Employer’s cost, the amount of which shall be $500,000, and the beneficiary
of
which
shall be such Person as Xxxxxxx may select, and which beneficiary may be changed
by Domijan, from time to time and at any time, subject only to any conditions
set forth in the policy or policies. Employer shall also provide that, after
the
Employer Termination
Date, Xxxxxxx may continue any life insurance or disability plans policies
at
Xxxxxxx’x
sole cost.
(e) Expenses.
Xxxxxxx
shall be entitled to receive reimbursement for all reasonable business
expenses incurred by Xxxxxxx in performing his duties and responsibilities
under
this Agreement, consistent with Employer’s policies or practices for
reimbursement
of expenses incurred by other Employer senior executives.
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(f) Vacations.
During
Xxxxxxx’x employment by Employer, Domijan shall be eligible
for vacation, sick pay, and other paid and unpaid time off in accordance with
the policies
and practices of Employer; provided, however, that the amounts of paid vacation
time
to
which Xxxxxxx shall be entitled shall not be less than four weeks per calendar
year.
The
vacation time shall accrue during any calendar year during the Employment Term,
and any unused vacation time shall be carried forward in the next and succeeding
calendar
years, until actually used for vacation by Xxxxxxx or compensation in lieu
of
vacation
time is accepted by Xxxxxxx. Xxxxxxx agrees to use his vacation and other paid
time
off
at times that are (1) consistent with the orderly performance of his duties
and
responsibilities
and (2) mutually convenient for Employer and Xxxxxxx.
6. |
RELOCATION.
|
(a) Relocation
to Dallas, Texas. At
any
time before the termination of this Agreement, Employer may request that Xxxxxxx
relocate to Dallas.
(b) Relocation
Expenses. If
Employer requests that Xxxxxxx relocate to Dallas, then Employer
shall pay all reasonable relocation expenses, including, but not limited
to:
(1) The
actual costs and expenses incurred by Xxxxxxx in packing, transporting
and relocating all household goods and furnishings from Houston, Texas
to
Dallas, including the costs and expenses of any cartage, moving or
transportation company hired to perform those services, and any insurance
thereon;
(2) The
costs
and expenses of any interim housing or hotel required during the time
that
Xxxxxxx’x household goods and furnishings are being packed, transported or
unpacked; and
(3) Any
damage or injury to Xxxxxxx’x household goods and furnishings which are not
covered by any insurance provided by the cartage, moving or transportation
company, or which claims are disallowed by the cartage, moving or transportation
company, conditioned however, on Xxxxxxx obtaining damage insurance
coverage.
(c) Sale
Expenses For House. If
Xxxxxxx should elect to sell his home in Houston and
purchase a home in Dallas, then Employer shall reimburse Xxxxxxx for the
following expenses,
to the extent allocated to Xxxxxxx upon a sale or purchase:
(1) All
sales
or brokerage commissions (on a sale only);
(2) All
ordinary and customary closing costs (other than ad valorem taxes and
insurance
costs prorated at the time of closing), including, without limitation, all
recording
costs, attorney’s fees, courier costs and other fees or costs required by
the
title
company or companies; and
(3) All
title
insurance costs, and any additional insurance costs for flood insurance, if
necessary, but in the latter case, only for the period of one year.
Employee
shall not be responsible for any buyer allowances, lender related fees, or
non-routine
closing costs.
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(d) Interim
Housing Costs. If,
for
the convenience of Employer, Xxxxxxx should be requested
to relocate to Dallas before the sale of Xxxxxxx’x residence in Houston, Domijan
may elect to postpone the sale of the residence until a time convenient for
Xxxxxxx.
Xxxxxxx shall, nevertheless, relocate to Dallas, Texas, but Employer shall
provide, or reimburse Xxxxxxx for, the costs of an apartment or other residence
in Dallas not to exceed $1,500.00 per month, as well as any long distance
telephone calls made by Xxxxxxx to Houston, Texas. Employer shall also provide,
or reimburse Xxxxxxx for, weekly travel between Dallas, Texas and Houston,
Texas, on weekends or holidays not to exceed
$250.00 per trip. Employer shall not be required to provide, or reimburse
Xxxxxxx
for, any payments or allowances permitted under this Paragraph 6(d) in excess
of
four
months.
(e) Gross
Up for Tax Purposes. If
any
expenses or reimbursements to Xxxxxxx are included, or upon advice of Xxxxxxx’x
accountants, should be included, as part of Xxxxxxx’x
income, and federal income taxes are due in respect of the additional amount
attributable to those expenses or reimbursements, then Employer shall, for
the
year in which
such taxes are due, increase the Base Salary by an amount equal to the taxes
which are
attributable to those expenses or reimbursements, as reasonably demonstrated
by
Xxxxxxx’x
accountant. The provisions of this Paragraph 6(e) shall survive the termination
of
this
Agreement, howsoever it may occur.
7.
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TERMINATION
OF EMPLOYMENT.
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(a) Death.
Xxxxxxx’x
employment shall terminate automatically upon his death; provided,
however, that this Paragraph 7(a) shall not release or otherwise modify
Employer’s
obligations following Xxxxxxx’x death as provided for elsewhere in this
Agreement.
(b) Inability
to Perform. Employer
may terminate Xxxxxxx’x employment for Inability to Perform; provided, however,
that this Paragraph 7(b) shall not release or otherwise
modify Employer’s obligations following Xxxxxxx’x Inability to Perform as
provided for in Paragraph 8(a) of this Agreement.
(c) Termination
by Employer for Cause. Employer
may terminate Xxxxxxx’x employment
for Cause by providing Xxxxxxx with a Notice of Termination as set out in
Paragraph
7(e). To exercise its right to terminate Xxxxxxx for Cause as defined in
Paragraph l(d)(4), however, Employer must first provide Xxxxxxx with a
reasonable opportunity to cure the conduct or circumstances that Employer
contends constitutes Cause under that subsection, unless no amount of time
could
cure the conduct.
(d) Termination
by Xxxxxxx for Good Reason. Xxxxxxx
may terminate his employment
for Good Reason. To exercise his right to terminate for Good Reason,
Xxxxxxx
must first provide written notice to Employer of his belief that Good Reason
exists,
and that notice shall describe the circumstances believed to constitute Good
Reason. Employer shall have thirty days in which to attempt to satisfy Xxxxxxx
that Good
Reason does not exist or no longer exists, or that Employer is making a diligent
effort
to
cure the conduct relating to Xxxxxxx’x concerns. Employer shall have a
reasonable time to cure any asserted Good Reason submitted by
Xxxxxxx.
(e) Notice
of Termination. Any
termination of Xxxxxxx’x employment by Employer or by Xxxxxxx (other than a
termination pursuant to Paragraph 7(a)) shall be communicated
by a Notice of Termination. A “Notice of Termination” is a written notice
stating
that Xxxxxxx’x employment is terminated and that must (1) indicate the specific
termination provision in this Agreement relied upon; (2) in the case of a
termination for Inability
to Perform, Cause, or Good Reason, set forth in reasonable detail the facts
and
circumstances claimed to provide a basis for termination of Xxxxxxx’x employment
under the
provision invoked; and (3) if the termination is by Xxxxxxx under Paragraph
7(e), or by
Employer for any reason, specify the Employment Termination Date.
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(f) Employment
Termination Date. The
Employment Termination Date, whether occurring
before or after a Change of Control (except for a Change of Control in respect
of
a
Successor Company), shall be as follows: (1) if Xxxxxxx’x employment is
terminated by
his
death, the date of his death; (2) if Xxxxxxx’x employment is terminated by
Employer because of his Inability to Perform or for Cause, the date specified
in
the Notice of Termination, which date shall be no earlier than the date such
notice is given; (3) if Xxxxxxx’x employment is terminated by Xxxxxxx for Good
Reason, the date thirty days after the Notice of Termination is given and
Employer has not cured the Good Reason or has not diligently taken steps to
do
so; or (4) if the termination is under Paragraph 7(e), the date specified in
the
Notice of Termination, which date shall be no earlier than 30 days after the
date such notice is given.
(g) GoodFaith.
In
making
determinations regarding the existence of appropriate grounds
for the termination of the employment relationship and the proper compensation
in the event of such a termination, both Xxxxxxx and Employer shall exercise
good faith toward
one another.
8.
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COMPENSATION
UPON TERMINATION OF EMPLOYMENT.
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(a) Payments
Upon Termination for Any Reason. If
Xxxxxxx’x employment is terminated by Domijan or Employer for any reason,
Employer shall pay to Xxxxxxx (or in the case of termination of employment
upon
Xxxxxxx’x death, to such person as Xxxxxxx shall designate in a written notice
to Employer or, if no such person is designated, to his estate) any unpaid
portion of Xxxxxxx’x Base Salary through the Employment Termination Date (the
“Compensation Payment”), any earned but unused vacation (the “Vacation
Payment”), any unreimbursed business expenses (the “Unreimbursed
Business Expense Payment”) and any unpaid premiums for life insurance
until
May
1, 2007 as well as the health plan or insurance payments provided for in
Paragraph 8(d) (“Additional Payments”). Xxxxxxx shall not be entitled to any
payments from Employer other than the Compensation Payment, the Vacation Payment
and the Unreimbursed Business Expense Payment if employment is terminated by
Employer for Cause or by Xxxxxxx without Good Reason.
(b) Severance
Payment. In
addition to the payments set forth in Paragraph 8(a), if Xxxxxxx’x
employment is terminated, by Employer without Cause or by Xxxxxxx with
Good
Reason, Employer shall pay to Xxxxxxx a xxxxxxxxx payment, equal to the lesser
of (1)
the
number of months remaining in the term of his employment or (2) six monthly
payments
equating to the monthly salary being paid to Xxxxxxx at the time, less, in
either instance,
the appropriate withholding amounts normally taken out of each check. To the
extent that Xxxxxxx has not been issued the equity interests which would have
otherwise been due to him, Employer shall issue to Xxxxxxx (or in the case
of
termination of employment upon Xxxxxxx’x death, to such person as Xxxxxxx shall
designate in a written
notice to Employer or, if no such person is designated, to his estate) any
and
all equity
interests which are then due, computed as set forth in Paragraph
5(b).
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(c) Change
of Control Gross-Up Payment. In
the
event that it is determined that any payment
(other than the Gross-Up Payment provided for in this Paragraph 8(c)) or
distribution
by Employer or any of its Affiliates to or for the benefit of Xxxxxxx, whether
paid
or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option or similar
right, or the lapse or
termination of any restriction on or the vesting or exercisability of any of
the
foregoing (a
“Payment”), would be subject to the excise tax imposed by Section 4999 of the
Code (or
any
successor provision thereto) by reason of being considered “contingent on a
change
in
ownership or control” of Employer, within the meaning of Section 280G of the
Code
or
any successor provision thereto (such tax being hereafter referred to as the
“Excise Tax”), then Xxxxxxx will be entitled to receive an additional payment or
payments (a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such
that, after payment by Xxxxxxx of all taxes, including any Excise Tax imposed
upon the Gross-Up
Payment, Xxxxxxx retains an amount of the Gross-Up Payment equal to the
Excise
Tax imposed upon the Payment. For purposes of determining the amount of the
Gross-Up
Payment, Xxxxxxx’x estimated federal income for tax rate shall be used for the
year
in
which the Gross-up Payment will be made. The determination of whether an
Excise
Tax would be imposed, the amount of such Excise Tax, and the calculation of
the
amounts
referred to in this Paragraph 8(c) will be made at the expense of Employer
by
Employer’s regular independent accounting firm (the “Accounting Firm”), which
shall provide
detailed supporting calculations. Any determination by the Accounting Firm
will
be
binding upon Employer and Xxxxxxx.
(d) Health
Insurance. If
Xxxxxxx’x employment with Employer or any Affiliate of Employer
ends on account of (1) a termination by Employer for any reason other than
Cause, or (2) a termination by Xxxxxxx for Good Reason, Xxxxxxx will receive,
in
addition
to any other payments due under this Agreement, the following benefit: if,
at
the time
his
employment ends, Xxxxxxx participates in one or more health plans offered by
Employer and Xxxxxxx is eligible for and elects to receive continued coverage
under such plans in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) or any successor law, Employer will
reimburse Xxxxxxx during the remainder of the Employment Term following the
Employment Termination Date or, if shorter,
the period of such actual COBRA continuation coverage, the difference between
the
total
amount of the monthly COBRA premiums actually paid by Xxxxxxx for such
continued
health plan benefits and the total monthly amount of the premiums charged to
active
senior executives of Employer for the same health insurance coverage. Provided,
however, that Employer’s reimbursement obligation under this Paragraph 8(d)
shall terminate
upon the earlier of (a) the expiration of the time period(s) described above,
(b) the
date
Xxxxxxx becomes eligible for health insurance coverage under a subsequent
employer’s
plan which occurrence Xxxxxxx shall promptly report to Employer, or (c) the
date
of
death of Xxxxxxx.
(e) Preservation
of Benefits. Nothing
in this Agreement is intended to limit any earned,
vested benefits (other than any entitlement to severance or separation pay,
if
any) that
Xxxxxxx may have under the applicable provisions of any benefit plan of Employer
in
which
Xxxxxxx is participating at the time of the termination of
employment.
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8
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(f) Timing
of Payments. The
Compensation Payment, the Vacation Payment, and the Unreimbursed Business
Expense Payment will be paid within seven calendar days of the termination
of Xxxxxxx’x employment. The Severance Payment will be paid as set forth
in
8(b)
above, subject to Paragraph 8(g). The payment of life insurance premiums, if
any, shall
be
paid by the due date. Subject to Paragraph 8(g), the reimbursement related
to
health insurance provided in Paragraph 8(d), if any, will be paid within seven
calendar days
of
the date Xxxxxxx pays any applicable COBRA premium, provided that Employer
may,
at
its option, pay all or part of the reimbursement for multiple months in advance
of such dates.
(g) Compliance
with Code Section 409A. Any
provision of this Agreement to the contrary notwithstanding, all compensation
payable pursuant to this Agreement that is subject to Section 409A of the Code
shall be paid on the earliest possible date on or after the time otherwise
specified for payment that meets the requirements of Section 409A of
the
Code
and any related rules, regulations or other guidance.
9.
|
NONCOMPETITION.
|
From
and
after the effective date of this Agreement and for a period ending on May 1,
2008 or one year after termination, whichever is later in time, except in
connection with the performance of services pursuant to this Agreement and
except for the equity interests which have been acquired by Xxxxxxx pursuant
to
Paragraph 5(b), Xxxxxxx will not, directly or indirectly, (1) own, manage,
operate, construct, finance, join, control or participate in the ownership,
management, operation or control of, or be employed or engaged as an agent
or
consultant by, any Person, which is the same as, substantially the same as,
or
substantially similar to the Business or (2) solicit any customers or employees
of Employer as of the date of the
termination of this Agreement, whether by the expiration of the Employment
Term
or earlier as permitted herein, for any business related to the Business. For
the purposes of this Agreement, a Person shall be deemed to be in competition
with Employer and its Affiliates if the products or services
of such Person, company or business entity are substantially similar in function
or capability to the products or services being offered, developed, manufactured
or sold in connection with the Business. The mere passive ownership, direct
or
indirect, of not more than 2% of the outstanding stock of any publicly traded
company shall not be a violation of this Paragraph. Notwithstanding anything
herein to the contrary, the restrictions in this Paragraph shall
apply only to the reasonable and limited geographic area consisting of the
State
of Texas or any other state in which Employer or Successor Company is doing
business. Xxxxxxx recognizes and
agrees that any violation of the covenants contained in this Paragraph will
result in irreparable harm to Employer and its Affiliates for which money
damages will not alone be an adequate remedy and that Employer shall be entitled
to equitable relief without the necessity of posting
any bond therefor. Xxxxxxx acknowledges and agrees that:(a) the scope of this
Paragraph in
time,
geography and types and limits of activities is reasonable and no greater than
required for the protection of the legitimate business interests of Employer
and
its Affiliates in the Business;
(b) it imposes no undue hardship on Xxxxxxx; and (c) if this Paragraph is found
by any court
having jurisdiction to be too broad in scope, whether as to activities, time
period, geographic area or otherwise, this Paragraph will nevertheless remain
effective but will be considered amended to the extent considered by such court
to be reasonable, and will be fully enforceable
as so amended.
EMPLOYMENT
AGREEMENT
|
PAGE
9
|
10.
|
PROTECTION
OF CONFIDENTIAL INFORMATION.
|
Xxxxxxx
acknowledges that, in the course of performing his duties under this Agreement,
he
will
obtain information about the business of the Employer, including but not limited
to, customer
and prospective customer lists and information, business contact or vendor
information, price structures, price lists, sales and other market information,
market studies, financial statements, sales or profitability reports, documents
pertaining to corporate organization of the Employer, software programs,
writings, files, documents, literature, data, information,
invoices, correspondence, records, notes, and memoranda regardless of the form
in which such information is preserved or maintained, whether by document,
computer disc, videotape, audiotape, or otherwise. Any information described
in
the preceding sentence shall be hereinafter called the “Confidential
Information”; provided, however, that any such information possessed
by Xxxxxxx prior to the date of his employment hereunder shall not constitute
“Confidential Information” hereunder.
Xxxxxxx
shall treat any Confidential Information as trade secrets and shall hold such
information in
trust
and confidence for the sole use and benefit of the Employer. Xxxxxxx shall
not,
during the term of this Agreement or any time thereafter, directly or through
any third party, disclose the Confidential Information in whole or in part
to
any person, firm, corporation or other entity, for any reason or purpose
whatsoever, or use such information, other than solely in furtherance
of
the
Employer’s interests.
Upon
the
termination of this Agreement, or sooner if requested by the Employer, Xxxxxxx
will immediately
deliver to the Employer any and all originals and copies of any Confidential
Information,
and any other papers, materials, or tangible items of any nature, acquired,
compiled or
coming
into her knowledge, possession, custody or control, in connection with his
activities on
behalf
of the Employer, and Xxxxxxx shall retain no copies of any of the foregoing
described items
thereafter. Moreover, simultaneous therewith, Xxxxxxx shall delete from computer
memory
used by him any such information in machine-readable form, after making sure
Employer
has access to such information.
11.
|
EXPENSES
OF ENFORCEMENT.
|
In
the
event that either parry seeks a judicial adjudication of such party’s rights
under, or to recover damages for breach of, this Agreement, the prevailing
party
shall be entitled to recover from the non-prevailing party, and shall be
indemnified by the non-prevailing party against,
any and all expenses, including attorney’s fees, incurred by the prevailing
party in such judicial
adjudication.
12.
|
WITHHOLDING
TAXES.
|
Employer
shall withhold from any payments to be made to Xxxxxxx pursuant to this
Agreement such amounts (including Social Security and Medicare contributions
and
federal income
taxes) as shall be required by federal, state, and local withholding tax
laws.
13.
|
NOTICES.
|
All
notices, requests, demands, and other communications required or permitted
to be
given
or
made by either party shall be in writing and shall be deemed to have been duly
given or made
when
delivered personally, or when deposited in the United States mail, first class
registered or certified mail, postage prepaid, return receipt requested, to
the
party for which intended
at the following addresses (or at such other addresses as shall be specified
by
the parties by
like
notice, except that notices of change of address shall be effective only upon
receipt):
EMPLOYMENT
AGREEMENT
|
PAGE
10
|
If
to
Employer, at:
00000
Xxxx Xxxxx
Xxxxxx,
Xxxxx 00000
If
to
Xxxxxxx, at Xxxxxxx’x then-current home address on file with
Employer.
14.
|
MITIGATION.
|
Xxxxxxx
shall be required to mitigate the amount of any payment provided for in this
Agreement
by seeking other employment, and the amount of any payment provided for in
this
Agreement
shall be reduced by 50% of any compensation earned by Xxxxxxx as the result
of
employment
by another employer after the date of termination of Xxxxxxx’x employment with
Employer, or otherwise.
15.
|
BINDING
EFFECT; NO
ASSIGNMENT
BY XXXXXXX; NO
THIRD
PARTY BENEFIT.
|
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective
heirs, legal representatives, successors, and assigns; provided, however, that
Xxxxxxx shall not assign or otherwise transfer this Agreement or any of his
rights or obligations under this Agreement.
Employer is authorized to assign or otherwise transfer this Agreement or any
of
its rights or obligations under this Agreement to an Affiliate of Employer
with
the prior consent of Xxxxxxx,
which consent shall not be unreasonably withheld. Nothing in this Agreement,
express or
implied, is intended to or shall confer upon any person other than the parties,
and their respective heirs, legal representatives, successors, and permitted
assigns, any rights, benefits, or remedies of any nature whatsoever under or
by
reason of this Agreement.
16.
|
ASSUMPTION
BY SUCCESSOR.
|
Employer
shall ensure that any successor or assignee (whether direct or indirect, by
purchase, merger, consolidation or otherwise), including Successor Company,
to
all or substantially all the business and/of assets of Employer, either by
operation of law or written agreement, assumes the obligations of this Agreement
(the “Assumption Obligation”). If Employer fails to fulfill the Assumption
Obligation, then Employer and Successor Company shall jointly remain liable
for
all obligations to Xxxxxxx contained herein. As used in this Agreement,
“Employer” shall include any successor or assignee (whether direct or indirect,
by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of
Employer that executes and delivers the agreement provided for in this Paragraph
16 or that otherwise becomes obligated under this Agreement by operation of
law.
17.
|
GOVERNING
LAW; VENUE.
|
(a) Governing
Law. This
Agreement and the other documents and instruments delivered
hereunder (except as otherwise provided therein or herein) shall be governed
by
and construed in accordance with the laws of the State of Texas applicable
to
agreements executed
and performable wholly within such state, excluding any conflicts-of-law rule
or
law
which might refer such construction and interpretation to the laws of another
state.
(b) Venue.
Each party, solely for the benefit of the other party and not for the
benefit of any third Person hereby irrevocably submits to the jurisdiction
of
any Texas court sitting in Dallas County, Texas or any Federal court sitting
in
the Northern District of Texas, having subject matter jurisdiction over any
action or proceeding arising out of or relating to this Agreement, and each
party hereby irrevocably agrees that all claims in respect of such actions
or
proceedings shall be heard and determined in such Texas court or Federal court;
provided, however, that nothing in the foregoing provisions of this Article
shall be construed to permit the initiation of an action or proceeding by either
party in a manner other than as prescribed or permitted by law.
EMPLOYMENT
AGREEMENT
|
PAGE
11
|
18.
|
ENURE
AGREEMENT.
|
This
Agreement contains the entire agreement between the parties concerning the
subject matter
hereof and supersedes all prior agreements and understandings, written and
oral,
between the parties with respect to the subject matter of this
Agreement.
19. |
MODIFICATION;
WAIVER.
|
No
person, other than pursuant to a resolution duly adopted by the members of
the
Board, shall
have authority on behalf of Employer to agree to modify, amend, or waive any
provision of this Agreement. Further, this Agreement may not be changed orally,
but only by a written agreement signed by the party against whom any waiver,
change, amendment, modification or discharge
is sought to be enforced. The parties hereto acknowledge and agree that no
breach by the
other
party of this Agreement or failure to enforce or insist on its rights under
this
Agreement shall constitute a waiver or abandonment of any such rights or defense
to enforcement of such rights.
20. |
CONSTRUCTION.
|
This
Agreement is to be construed as a whole, according to its fair meaning, and
not
strictly for or against any of the parties. All references in this Agreement
to
Paragraphs refer to corresponding Paragraphs of this Agreement unless expressly
provided otherwise. Titles appearing at the beginning of any of such Paragraphs
are for convenience only and shall not constitute part of such Paragraphs or
subdivisions and shall be disregarded in construing the language contained
in
such Paragraphs. Words or terms such as “this Agreement,” “this instrument,”
“herein,” “hereof,” “hereby,” “hereunder” or words of similar import refer to
this Agreement
as a whole and not to any particular Paragraph unless expressly so limited.
The
word “includes”
and its syntactical variants mean “includes, but is not limited to” and
corresponding syntactical
variants. The rule ejusdem
generis may
not
be invoked to restrict or limit the scope of the
general term or phrase followed or preceded by an enumeration of particular
examples.
21.
|
SEVERABILITY
|
If
any
provision of this Agreement shall be determined by a court to be invalid or
unenforceable,
the remaining provisions of this Agreement shall not be affected thereby, shall
remain
in
full force and effect, and shall be enforceable to the fullest extent permitted
by applicable
law.
22.
|
MANNER
OF EXECUTION
|
The
parties specifically intend that this Agreement may be executed by facsimile
or
by the exchange of documents in electronic format in accordance with the Uniform
Electronic Transactions Act (Tex. Bus. & Com. Code § 43.001 et seq.),
and that this Agreement shall be deemed to be executed by the parties
when
a party has executed this Agreement, has then forwarded the Agreement by
facsimile or electronic mail, and the other party has executed the counterpart
of the Agreement received by it and has returned a fully executed counterpart
to
the originating party. Upon the receipt by the originating party of a fully
executed counterpart, whether the same be in facsimile or electronic form,
the
Agreement shall then be deemed to be executed and effective. The parties may,
but shall not be required to, exchange counterparts bearing original signatures,
but the date of execution shall be deemed to be the date upon which the
originating party received the folly executed counterpart.
EMPLOYMENT
AGREEMENT
|
PAGE
12
|
23. |
COUNTERPARTS.
|
This
Agreement may be executed in multiple counterparts each of which shall be deemed
an
original and all of which taken together shall constitute one instrument;
provided, however, that this Agreement shall be effective as to each party
upon
its execution hereof whether all counterparts are executed by a party or not.
In
making proof of this Agreement it shall not be necessary to produce nor to
account for all counterparts hereof, and it shall be sufficient to produce
but
one counterpart original hereof executed by the party sought to be charged
thereby.
24. |
ARBITRATION.
|
Any
controversy between the parties to this Agreement involving the construction
or
application of any of the terms, covenants or conditions of this Agreement,
shall on the written request of one party served on the other, be submitted
to
arbitration, and such arbitration shall comply
with and be governed by the provisions of Chapter 171 of the Texas Civil
Practices And Remedies
Code. To the extent not inconsistent with the foregoing, any arbitration shall
be conducted with a single arbitrator, utilizing the Commercial Rules of the
American Arbitration Association, and shall be conducted in Dallas.
IN
WITNESS WHEREOF, Employer
has caused this Agreement to be executed on its behalf by
its
duly authorized officer, and Xxxxxxx has executed this Agreement, effective
as
of the date first
set
forth above.
EMPLOYER
|
XXXXXXXXXXX
XXXXXXX
|
||||
GOODTIME
ACTION AMUSEMENT PARTNERS, LP
|
|||||
By:
|
Amusement
Innovation Partners, LLC,
|
||||
General
Partner
|
|||||
By:
|
/s/
Xxxxxxx Xxxxxxxx
|
/s/Xxxxxxxxxxx
Xxxxxxx
|
|||
Xxx
Xxxxxxxx, President
|
Xxxxxxxxxxx
Xxxxxxx
|
EMPLOYMENT
AGREEMENT
|
PAGE
13
|
FIRST
AMENDMENT TO
EMPLOYMENT
AGREEMENT
THIS
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”)
is entered into to be effective as of the 16th day
of
July, 2006 (the ‘Effective
Date”), by and between Goodtime Action Amusement Partners, LP, a Texas
limited
partnership (“Employer”), and Xxxxxxxxxxx Xxxxxxx (“Xxxxxxx”).
WITNESSETH:
WHEREAS,
Employer and Xxxxxxx have entered into an employment agreement (the
“Agreement”) effective as of the 31st
day of
October, 2005; and
WHEREAS,
Employer and Xxxxxxx now desire to amend the Agreement to modify the
vesting of stock or equity held by Domijan in Employer and to reflect the
current base salary
paid to Xxxxxxx by Employer.
NOW,
THEREFORE, for and consideration of the premises and the mutual promises,
covenants, and agreements contained herein, and other good and valuable
consideration,
the receipt and adequacy of which are now and forever confessed, Employer
and
Xxxxxxx agree as follows:
1. All
capitalized terms used herein but not identified herein shall have the
meanings
assigned to them in the Agreement.
2. Section
5(a) is amended to reflect that the base salary to be paid to Xxxxxxx
is increased from $150,000 to $230,000. The remaining terms of Section 5(a)
not
specifically modified hereby shall remain in full force and effect, enforceable
against the parties
pursuant to their terms.
3. Section
5(b) of the Agreement is amended to read in its entirety as
follows:
“(b)
Stock
or Equity. Xxxxxxx
shall become vested in a limited partnership
interest equal to 0.5% of the total interests of the Company as of December
31, 2005. Xxxxxxx’x remaining partnership interest shall vest as follows:
2.0% vests in equal quarterly installments of .5% on the last day of each
fiscal
quarter commencing with the quarter beginning January 31, 2006 and ending
March 13, 2006, and continuing for the succeeding three quarters. The
remaining
2.2333% vests on March 31, 2007 so that, unless this Agreement is earlier
terminated, Xxxxxxx shall have received a total of 4.7333% of the equity
interests in Employer, whether limited partnership, shares or otherwise. Xxxxxxx
must
be a
employed by or on behalf of the Company or Successor Company on each
vesting date for each vesting increment to occur, Xxxxxxx may vote his
entire
interest pending vesting, until such time as it becomes apparent that vesting
will
not
occur as to such interest, or any portion thereof. Interests may be diluted
as
the result of the issuance of additional interests by the Company or Successor
Company.
If Employer, or the Successor Company, performs a reverse merger, the
amount of stock ownership in Successor Company would be diluted pro rata the
same as the other shareholders of Employer, i.e. the percentage ownership of
the
Successor Company will be less than 4.7333% because of the percentage of
ownership
by a third party or parties of some portion of the total issued and outstanding
shares. Any stock or shares issued to Xxxxxxx shall, to the extent possible,
be
free of any restrictions; provided, however, that if the Successor Company,
upon
advice of counsel, deems it advisable to restrict the sale of any stock
or
shares, the Xxxxxxx'x stock shall be restricted, but only and to the extent
that
stock or shares of other officers or members of the Board of the Successor
Company
are restricted. If Employer remains a private company, then no registration
of Xxxxxxx’x stock shall be required. In any event, upon the final vesting
of any equity interests, whether limited partnership, shares or otherwise,
the
same
shall be distributed to Xxxxxxx upon his written request for the
same.”
4. Other
than as expressly amended as set forth in Section 2 hereof, the Agreement
is in all respects ratified and reaffirmed as the agreement of the parties,
and
all provisions
thereof not specifically modified hereby shall remain in full force and effect,
enforceable
against the parties pursuant to their terms.
5. This
Amendment shall not be or become effective until executed by the Employer
and the Xxxxxxx, constituting all parties under the Agreement.
6. This
Amendment may be executed in counterparts, each of which shall be an
original
but all of which shall constitute but one document.
2
IN
WITNESS WHEREOF, the parties have executed this Amendment to be effective
as of the Effective Date set forth above.
EMPLOYER:
|
|||||||
GOODTIME
ACTION AMUSEMENT PARTNERS, LP
|
|||||||
By:
|
Amusement
Innovation Partners, LLC
|
||||||
its
general partner
|
|||||||
By:
|
/s/ Xxxxxxx Xxxxxxxx | ||||||
Name:
|
Xxxxxxx
Xxxxxxxx
|
||||||
Title:
|
President
|
||||||
XXXXXXX:
|
|||||||
/s/ Xxxxxxxxxxx Xxxxxxx | |||||||
Xxxxxxxxxxx
Xxxxxxx
|
3