XXXX X. XXXXXX
EXECUTIVE EMPLOYMENT AGREEMENT
GOLDEN PARACHUTE
AGREEMENT ("Agreement") by and between Casino Resource Corporation, a
Minnesota corporation with its principal offices at 000 Xxxxxxxxx Xxxxxxxxx,
Xxxxx Xxxxxxx, Xxxxxxxxxxx, 00000 (the "Company"), and Xxxx X. Xxxxxx, Chief
Executive Officer, (the "Executive"), dated as of the 9th of March, 1998.
The Board of Directors of the Company (the "Board"), has determined that
it is in the best interest of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined in Section 2) of the Company. The Board believes it is
imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks which may be created by a pending or
threatened Change of Control, and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control. The Board also believes it is imperative to
provide the Executive with compensation and benefit arrangements upon a
Change of Control which ensure the compensation and benefit expectations of
the Executive will be satisfied and are competitive with those of other
corporations. Therefore, in order to accomplish these objectives the Board
has caused the Company to enter into this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Certain Definitions.
a. The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change
of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the
date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control or
(ii) otherwise arose in connection with or anticipation of the
Change of Control, then for all purposes of this Agreement the
"Effective Date" shall mean the date immediately prior to the date
of such termination of employment.
b. The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary date of such
date; provided, however, that commencing on the date one year
after the date hereof and on each annual anniversary of such date,
hereafter referred to as "Renewal Date," the Change of Control
period shall be automatically extended so as to terminate three
years from such Renewal Date, unless at least sixty (60) days
prior to the Renewal Date, the Executive shall give notice of his
determination not to extend the Change of Control Period.
2. Change of Control. For purpose of this Agreement, a "Change of Control"
shall mean:
a. The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended, (a "Person") of beneficial ownership of
20% or more of either (i) the outstanding shares of stock of the
Company or (ii)
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the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors; or
b. As of the date hereof, if any two or more members within a class
of the staggered Board of seven or more Directors are removed
without the expressed approval or consent of the CEO and Chairman
of the Board, or where two or more members of the Board assume
office as a result of either an actual or threatened election
contest or other actual or threatened solicitation of proxies; or
c. A hostile reorganization, merger or consolidation which results
from either an actual or threatened election contest or actual or
threatened solicitation of proxies; or
d. A complete liquidation or dissolution of the Company, or the sale
or other disposition of all or substantially all of the assets of
the Company, other than to a corporation; which liquidation, sale
or dissolution occurs as a result of either actual or threatened
solicitation of proxies or consents by or on behalf of persons
other than the incumbent Board.
3. Employment Period. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with this Agreement and the terms and provision of
this Agreement for a period commencing on the effective date and ending on
the third anniversary of such date, (the "Employment Period".)
4. Terms of Employment.
a. Position and Duties.
(i.) During the Employment Period (a) the Executive's position,
authorities, duties and responsibilities of same shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (b) the
Executive's services shall be performed at the location where the
Executive was employed preceding the Effective Date or at the
headquarters of the Company.
(ii.) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote attention and time during normal
business hours to the business and affairs of the Company and as
defined within his employment contract dated May 20, 1996 and
affixed hereto as Exhibit A and to discharge the responsibilities
assigned to the Executive hereunder. During the Employment Period
it shall not be in violation of this Agreement for the Executive to
(a) serve on corporate, civic, charitable boards or committees (b)
deliver lectures, fulfill speaking engagements and (c) manage
personal investments so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities to this Company in accordance with this Agreement.
b. Compensation
(i.) Base Salary. During the Employment Period the Executive shall
receive an "Annual Base Salary" of two hundred twenty-five thousand
dollars ($225,000), as set out within Executive Employment
Agreement attached here as Exhibit A, which shall be
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paid on a bi-weekly basis in the same manner as the wage payments
of other CRC employees. Additionally, Executive shall be paid by
CRC Tunisia S.A. the sum of one hundred twenty-five thousand
dollars ($125,000), as unanimously resolved by the Board of
Directors August , 1997, annually which sum shall be prepaid
annually on payment anniversary date. During the Employment
Period, the Annual Base Salary shall increase each year as
determined by any increase in the Consumer Price Index between
January first of the prior year and January first of the current
year (see Executive Employment Agreement). Any increase in the
annual base salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement.
(ii). Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded an "Annual Bonus" for each fiscal year ending
during the Employment Period where CRC and its affiliate
subsidiaries generate net income in excess of one million dollars
($1,000,000) as set forth in CRC's audited consolidated financial
statements. Annual Bonus payable shall be twenty five thousand
dollars ($25,000) per one million dollars ($1,000,000) net income,
per fiscal year.
(iii). Special Bonus. In addition to Annual Base Salary and any Annual
Bonus payable as here above provided, if Executive remains employed
with the Company or elects to provide consulting services to
Company through the first anniversary of the Effective Date, the
Company shall pay to the Executive a "Special Bonus" in recognition
of the Executive's services during the crucial one year period
following the Change of Control, in cash, a sum equal to
Executive's Annual Base Salary plus salary from affiliates
and Annual Bonus. The Special Bonus shall be paid no later
than thirty days following the first anniversary of the
Effective Date.
(iv.) Incentive Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of
the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide the
Executive with incentive opportunities less favorable in the
aggregate than the most favorable provided by the Company for
the Executive in effect at any time during the 90 day period
immediately preceding the Effective Date.
(v.) Welfare Benefit Plans. During the Employment Period the
Executive and/or the Executive's family shall be eligible for
participation in and shall receive benefit plans, practices,
policies and programs provided by the Company and its
affiliates including without limitation; medical, prescription,
dental, disability, salary continuation, employee life, group
life and travel accident insurance to the extent applicable
generally to other peer executives of the Company.
(vi.) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
employment expenses incurred by the Executive in accordance
with the most favorable policies, practices and programs of the
Company and its affiliates in effect for the Executive at any
time during the 90-day pay period immediately preceding the
Effective Date.
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(vii.) Office and Support staff. During the Employment Period the
Executive shall be entitled to an office or offices of the size
and with the furnishings and other appointments and to
exclusive personal secretarial and other assistance, at least
equal to the most favorable of the forgoing provided to the
Executive by the Company at any time during the 90-day period
preceding the Effective Date.
(viii.) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company as in
effect for the Executive under his Employment Contract attached
herein as Exhibit A.
5. Termination of Employment.
a. Death or Disability. The Executive's employment shall terminate
automatically upon the death of the Executive during the
Employment Period. For purposes of this Agreement "Disability"
shall mean the absence of the Executive from the Executive's
duties from the Company on a full time basis for 90 consecutive
business days as a result of incapacity due to a mental or
physical illness which is determined to be total and permanent by
a physician selected by Company and acceptable to the Executive or
the Executive's legal representative.
b. Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) Executive had theretofore been
convicted by any federal, state or local authority for, or pleaded
guilty to, an act constituting a felony, or (ii) Executive's
termination was as a result of : a) material acts of fraud,
material dishonesty or gross misconduct by Executive; or b)
repeated and willful failure or refusal by Executive to perform
his material duties as delineated herein in Exhibit I "Employment
Agreement" if termination for Cause by Company is pursued pursuant
to clause (ii)(b) of the preceding sentence it shall be preceded
by written notice to Executive describing the specific reasons for
termination in order to allow Executive the opportunity to cure
and correct problems identified.
c. Without Cause. Executive may terminate his employment hereunder,
without Cause, provided Executive first gives to Company a written
notice of intent to terminate (see (5)(d)).
d. Notice of Termination. Any termination by the Company for Cause,
or by the Executive without any reason shall be communicated by
Notice of Termination to the other party hereto given in
accordance with Section 11(b). For purposes of this Agreement
"Notice of Termination" shall mean a written notice which
indicates the specific termination provision in this Agreement
relied upon.
6. Obligations of the Company.
a. Executive Termination (other than Cause, Death or Disability.) If
during the Employment Period the Executive shall terminate
employment without reason:
i. The Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination, the aggregate
of the following amounts:
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A. The sum of (1) the Executive's Annual Base Salary through
the Date of Termination to the extent not therefore paid,
(2) the product of ("x") the Highest Annual Bonus and
("y") a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3)
the Special Bonus, if due to the Executive pursuant to
section 4(b)(iii) to the extent not theretofore paid and
(4) any compensation previously deferred by the Executive
and any accrued vacation pay, in each case to the extent
not theretofore paid (the sum of the amounts described in
1, 2, 3 and 4 shall refer to "Accrued Obligations"); and
B. The amount (hereafter referred to as "Severance Amount")
which shall equal the product of 2.99 and the sum of the
Executive's Annual Base Salary and the highest Annual
Bonus, which product shall be reduced by the present
value (determined in section 280G(d)(4) of the Internal
Revenue Code as amended); and
C. A separate lump sum supplemental retirement benefit
payable under Retirement Plan and Supplemental Retirement
Plan (SERP) of the Company providing benefits for the
Executive which the Executive would receive if the
Executive's employment continued at the compensation
level provided for in section 4(b)(i) and 4(b)(ii) for
the remainder of the Employment Period, assuming the
accrued benefits are fully vested.
ii. For the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide,
the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would
have been provided to them in accordance with the plans,
programs, practices and policies described in Section
4(b)(v). For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
iii. To the extent not theretofore paid or provided; the Company
shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provide or which
the Executive is eligible to receive pursuant to this
Agreement and under any plan, program, practice or policy or
contract or agreement of the Company and its affiliated
companies.
b. Death. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations, payable to Executive's estate in a lump sum in cash within
30 days of Date of Termination and the timely payment of Welfare Benefit
Continuation and Other Benefits and a lump sum cash payment within 30
days of termination the Severance Amount and Supplemental Retirement
Amount (SERP).
c. Disability. If the Executive's employment is terminated by reason of
Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligation to the Executive other than
(i) payment of Accrued Obligation within 30 days of Termination Date and
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the timely payment of the Welfare Benefit Continuation and Other
Benefits and (ii) payment to the Executive in cash within 30 days
of termination an amount equal to the greater of a lump sum of
Severance Amount and Supplemental Retirement Amount (SERP).
d. Cause. If the Executive's employment is terminated for Cause
during the Employment Period, this Agreement shall terminate
without further obligation to the Executive other than an
obligation to pay to the Executive Annual Base Salary through the
Date of Termination plus any amount of compensation previously
deferred by the Executive to the extent theretofore unpaid.
7. Non-exclusivity of Rights. Except as provided in Sections 6(a)
(ii), 6(b) and 6(c) nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company or any
of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of
or any subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
8. Full Settlement; Resolution of Disputes.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and, except as provided in Section 6(a)(ii), such
amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred,
to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any
contest by the Company or the Executive where the Company is found
at fault.
9. Dispute. In the event of a dispute as to whether a violation of
any provision of the Agreement has occurred, or to enforce any
provision of this Agreement, all such disputes shall be submitted
to binding arbitration before the Arbitration Association in
Mississippi, in accordance with the commercial rules of the body,
and the prevailing party shall be entitled to reasonable costs and
attorneys fees. Judgement on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof.
10. Certain Additional Payments by the Company.
Anything in this Agreement to the contrary not withstanding, in
the event it shall be determined that any payment or distribution
by the Company to or for the benefit of the Executive ("Payment")
would be subject to the Excise Tax (imposed by Section 4999 of the
Code) or any interest or penalties are incurred by the Executive
with respect to such Excise Tax such total amount paid by the
Executive of all taxes including without limitation income taxes
and interest and penalties thereto and any additional Excise Tax
imposed upon the gross up payment, the Executive will be
reimbursed in full by Company an amount of gross up payment equal
to Excise Tax and other taxes imposed.
Any Gross Up Payment as determined pursuant to this section shall
be paid by the Company to the Executive within 5 days of receipt
of an accounting determination. If accounting determines
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no Excise Tax is payable by the Executive it shall furnish the
Executive with a written opinion that failure to report the Excise
Tax on the Executive's applicable federal income tax return would
not result in the imposition of a penalty. Any determination to
the contrary which would require payment of an Excise Tax or other
tax payment will be remitted in full by Company within 10 business
days after Executive has provided Company with written claim,
nature of claim, and date claim is to be paid.
11. Successors.
a. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
b. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
c. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall
mean, the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
12. Miscellaneous.
a. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors
and legal representatives.
b. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Xxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
If to the Company: Casino Resource Corporation
000 Xxxxxxxxx Xxxx.
Xxxxx Xxxxxxx, XX 00000
or to such other address as either party shall have furnished
to the other in writing in accordance herewith. Notice and
communication shall be effective when actually received by
the addressee.
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c. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
b. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
e. The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the
Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, if prior to the Effective
Date, the Executive's employment with the Company terminates,
then the Executive shall have no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization form its Board of Directors, the
Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.
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Xxxx X. Xxxxxx
Casino Resource Corporation
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By
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