EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed as of this 28th
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day of September, 1998 (the "Effective Date"), by and between AMERICAN BINGO &
GAMING CORP., a Delaware corporation (the "Company"), and XXXXX X. XXXXXXX (the
"Executive").
WHEREAS, the parties wish to enter into an employment agreement to employ
the Executive as its Vice President of Administration and Acquisitions, and to
set forth certain additional agreements between the Executive and the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the parties hereto agree as follows:
1. TERM
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The Company will employ the Executive, and the Executive will serve the
Company, under the terms of this Agreement, for an initial term of three years
commencing on September 28, 1998 (the "Employment Date"). The terms of this
Agreement may be extended for one or more additional twelve-month periods
provided the Company and the Executive agree in writing to such an extension no
later than thirty days prior to the expiration of the term of this Agreement.
Notwithstanding the foregoing, the Executive's employment hereunder may be
earlier terminated as provided in Section 4 hereof. The term of this Agreement,
as in effect from time to time in accordance with the foregoing, shall be
referred to herein as the "Term." The period of time between the Employment
Date and the termination of the Executive's employment hereunder shall be
referred to herein as the "Employment Period."
2. EMPLOYMENT
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(a) POSITIONS AND REPORTING. The Company hereby employs the Executive
for the Employment Period as its Vice President of Administration and
Acquisitions, on the terms and conditions set forth in this Agreement.
(b) AUTHORITY AND DUTIES. The Executive shall exercise such authority,
perform such executive duties and functions and discharge such
responsibilities as the President of the Company may from time to time
determine, consistent with the Executive's position and the By-Laws of the
Company. Without limiting the generality of the foregoing, the Executive
shall report directly and be responsible to the President of the Company.
During the Employment Period, the Executive shall devote her full business
time, skill and efforts to the business of the Company. Notwithstanding the
foregoing, the Executive may (i) make and manage passive personal business
investments of her choice (in the case of publicly held corporations, not
to exceed 2% of the outstanding voting stock) and serve in any capacity
with any civic, educational or charitable organization, or any trade
association, without seeking or obtaining approval from the President of
the Company, provided such activities and service do not materially
interfere or conflict with the performance of her duties hereunder, and
(ii) with the approval of the President, serve on the boards of directors
of other corporations.
(c) PRIOR EMPLOYMENT. The Executive represents and warrants that she
has no individual employment agreement or non-competition agreement with
her current or any prior employer or any other agreement, contract,
judgment, decree or limitation which would prohibit, limit or otherwise
restrict the employment of the Executive by the Company pursuant to the
terms of this Agreement.
3. COMPENSATION AND BENEFITS
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(a) SALARY. During the Employment Period, the Company shall pay to the
Executive, as compensation for the performance of her duties and
obligations under this Agreement, a base salary at the rate of One Hundred
Thousand ($100,000) Dollars per annum, payable in arrears not less
frequently than monthly in accordance with the normal payroll practices of
the Company. Such base salary shall be subject to review each year for a
possible increase, but shall in no event be decreased from its
then-existing level during the Employment Period. The Executive may also be
requested to serve as a director or officer of various subsidiaries and
affiliates of the Company and she hereby agrees to fulfill her duties as
such an officer and a director of such entities without additional
compensation.
(b) ANNUAL BONUS. During the Employment Period, the Executive shall
have the opportunity to earn an annual bonus of up to Forty Thousand
($40,000) Dollars pursuant to the terms of an incentive bonus program. The
Executive and the Company acknowledge that an incentive program which will
serve as the basis for determining the Executive's annual bonus has not yet
been established by the Company. The Company hereby acknowledges that it
intends to establish such bonus program as soon as possible following the
Employment Date.
(c) EQUITY PARTICIPATION. The Executive shall be entitled to receive
awards under any stock option or equity based incentive compensation plan
or arrangement adopted by the Company for which executives at her level are
eligible. The level of the Executive's future participation in any such
plan or arrangement shall be determined by the Board of Directors.
(d) OTHER BENEFITS. During the Employment Period, the Executive shall
be entitled to participate in the Company's group health insurance plan,
dental plan, group life insurance plan, long-term disability insurance
plan, employee stock purchase plan, profit sharing plan, SARSEP and all of
the other employee benefit plans, programs and arrangements of the Company
in effect during the Employment Period which are generally available to
executives of the Company at her level, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans, programs and arrangements. In addition, during the Employment
Period, the Executive shall be entitled to fringe benefits and perquisites
comparable to those of other executives of the Company at her level,
including, but not limited to, three weeks of paid vacation per year and
reasonable professional membership license fees and expenses.
(e) MOVING EXPENSES. The Company shall pay or reimburse the Executive
for all documented direct and reasonable expenses incurred in connection
with relocating the Executive and her immediate family to Columbia, South
Carolina; provided, however, such moving expenses shall not exceed $20,000,
including but not limited to up to six months of temporary housing expenses
for the Executive.
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(f) BUSINESS EXPENSES. During the Employment Period, the Company shall
pay directly or reimburse the Executive for all documented reasonable
business expenses incurred by the Executive in the performance of her
duties under this Agreement, in accordance with the Company's policies.
(g) INDEMNIFICATION. During the Employment Period and thereafter, the
Company shall indemnify the Executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of
insurance policies the Company may elect to maintain generally for the
benefit of its officers, with respect to all costs, charges and expenses
whatsoever incurred or sustained by the Executive in connection with any
action, suit or proceeding to which she may be made a party by reason of
being or having been an officer or employee of the Company or having served
any other enterprise as a director, officer or employee at the request of
the Company. The Company shall maintain director and officer insurance at
reasonable and customary levels.
4. TERMINATION OF EMPLOYMENT
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(a) TERMINATION FOR CAUSE. The Company may immediately terminate the
Executive's employment hereunder for "cause" upon written notice to the
Executive. For purposes of this Agreement, the Company shall have "cause"
to terminate the Executive's employment hereunder if such termination shall
be the result of:
(i) willful, material fraud or material dishonesty in connection
with the Executive's performance hereunder that results in harm to the
Company;
(ii) the failure by the Executive to substantially perform her
material duties hereunder in good faith that results in material harm
to the Company, if the Executive has been provided an opportunity to
cure as provided in Section 4(c) of this Agreement;
(iii) the Executive's material breach of this Agreement, if the
Executive has been provided an opportunity to cure as provided in
Section 4(c) of this Agreement;
(iv) the failure by the Executive to diligently pursue in good
faith and obtain any operating or other licenses required to be
obtained by the Executive individually for the execution of her duties
and responsibilities on behalf of the Company; provided, however, the
Executive shall be entitled to the severance pay and benefits set
forth under Section 5(a) hereof if the Executive's inability to obtain
any operating or other license is due to some factor outside of the
Executive's control;
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(v) the appropriation of a material business opportunity of the
Company, including but not limited to attempting to secure or securing
any personal profit in connection with any transaction entered into on
behalf of the Company;
(vi) the material misappropriation of any of the Company's funds
or property; or
(vii) the conviction of, or the entering of a guilty plea or plea
of no contest with respect to, a felony or the equivalent thereof.
(b) TERMINATION FOR GOOD REASON. The Executive shall have the right to
terminate her employment with the Company at any time for "good reason"
upon thirty days prior written notice to the Company. For purposes of this
Agreement and subject to the Company's opportunity to cure as provided in
Section 4(c) hereof, the Executive shall have "good reason" to terminate
her employment hereunder if such termination shall be the result of:
(i) a significant diminution during the Employment Period in the
Executive's duties or responsibilities as set forth in Section 2
hereof;
(ii) a significant breach by the Company of the compensation and
benefits provisions set forth in Section 3 hereof;
(iii) a notice of termination by the Executive under Section 4(i)
hereof within twelve months following the occurrence of a Change in
Control (as defined in Section 4(h) hereof); or
(iv) a significant breach by the Company of any other term of
this Agreement.
(c) NOTICE OF OPPORTUNITY TO CURE. As noted in Section 4(a) and
Section 4(b), in certain situations it shall be a condition precedent to
the Company's right to terminate the Executive's employment for "cause" and
the Executive's right to terminate her employment for "good reason" that
(1) the party seeking the termination shall first have given the other
party written notice stating with specificity the reason for the
termination ("breach") and (2) if such breach is susceptible of cure or
remedy, a period of 30 days from and after the giving of such notice shall
have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot
be cured or remedied within 30 days, in which case the period for remedy or
cure shall be extended for a reasonable time (not to exceed an additional
30 days), provided the breaching party has made and continues to make a
diligent effort to effect such remedy or cure.
(d) TERMINATION UPON DEATH. Except as provided in this Agreement, the
Employment Period and all benefits and other rights of the Executive under
this Agreement shall be terminated by the death of the Executive. The
Executive's estate shall be entitled to receive all compensation,
reimbursements and benefits, including but not limited to life insurance
benefits, payable to or accruable for the benefit of the Executive under
this Agreement.
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(e) TERMINATION UPON DISABILITY. The Employment Period may be
terminated by the Company if the Executive shall be rendered incapable of
performing her duties to the Company by reason of any medically determined
physical or mental impairment for a period of at least three consecutive
months (a "Disability"). In the event that the Company elects to terminate
the Employment Period due to the Disability of the Executive, the Executive
shall receive all compensation, reimbursements and other benefits payable
to, or accruable for the benefit of, the Executive under this Agreement
through the date of the determination of the Disability and to the date
upon which the Executive first becomes eligible to receive disability
benefits pursuant to the Company's long-term disability insurance policy as
may then be in effect.
(f) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without "cause" at any time upon thirty
days prior written notice to the Executive; provided, however, that in the
event of such termination the Executive shall be entitled to the severance
pay and benefits set forth under Section 5(a) hereof.
(g) TERMINATION WITHOUT GOOD REASON. The Executive may terminate her
employment with the Company at any time without "good reason" upon thirty
days prior written notice to the Company; provided, however, the
Executive's effective date of termination shall be no later than sixty days
after the date of notice to the Company unless otherwise agreed by the
Company. In the event of such a voluntary termination by the Executive, the
Executive shall receive no further payments or benefits due under this
Agreement from and after the effective date of termination. A voluntary
termination under this Section 4(g) shall not be deemed a breach of this
Agreement.
(h) DEFINITION OF CHANGE IN CONTROL. A "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's capital stock
are converted into cash, securities or other property, other than a
consolidation or merger of the Company in which the holders of the
Company's voting stock immediately prior to the consolidation or
merger shall, upon consummation of the consolidation or merger, own at
least 50% of the voting stock of the surviving corporation, or any
sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the Company;
or
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(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall after the date hereof become the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the voting power of all then outstanding securities of the
Company having the right under ordinary circumstances to vote in an
election of the Board (including, without limitation, any securities
of the Company that any such person has the right to acquire pursuant
to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by
such person); or
(iii) individuals who at the date hereof constitute the entire
Board and any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, shall have been
approved by a vote of at least a majority of the directors then in
office who either were directors at the date hereto or whose election
or nomination for election shall have been so approved (the
"Continuing Directors") shall cease for any reason to constitute a
majority of the members of the Board.
(i) NOTICE OF TERMINATION. Any termination of the Executive's
employment hereunder by either the Company or the Executive shall be
communicated to the other party by a "Notice of Termination" to be given in
accordance with Section 10 hereof. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) briefly
summarizes the facts and circumstances deemed to provide a basis for the
termination of the Executive's employment and the applicable provision
hereof, and (iii) if the effective date of termination is other than the
date of receipt of such notice, specifies the effective date of
termination.
5. CONSEQUENCES OF TERMINATION
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(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" pursuant to Section 4(f) hereof, by the Company pursuant to Section
4(a)(iv) due to some factor outside of the Executive's control which caused
the Executive to be unable to obtain any operating or other license, or by
the Executive for "good reason" pursuant to Section 4(b) hereof, the
Executive shall be entitled to the following severance pay and benefits:
(i) SEVERANCE PAY - severance payment consisting of the
Executive's base salary as in effect immediately prior to such
termination for the lesser of nine months or the remaining Term of
this Agreement (the "Severance Period"), which may be paid in the form
of a lump sum single payment or in monthly payments during the
Severance Period; and
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(ii) BENEFITS CONTINUATION - continuation for the Severance
Period of coverage under the group health, dental, disability and life
insurance benefit plans or arrangements in which the Executive is
participating at the time of termination; provided, however, that the
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Company's obligation to provide such coverages shall be terminated if
the Executive is able to obtain substitute effective coverage from
another employer at any time during the Severance Period. The
Executive shall be entitled, at the expiration of the Severance
Period, to elect continued medical coverage in accordance with section
4980B of the Internal Revenue Code of 1986, as amended (or any
successor provision thereto).
(b) OTHER TERMINATIONS. In the event of termination of the Executive's
employment under Sections 4(a) (other than Section 4(a)(iv) as noted),
4(d), 4(e) or 4(g) for any reason other than those specified in Section
5(a) hereof, the Executive shall not be entitled to any severance pay or
benefits continuation contemplated by the foregoing, except as may
otherwise be provided under the applicable benefit plans or award
agreements relating to the Executive.
(c) ACCRUED RIGHTS. Notwithstanding any other provision of this
Agreement, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of her base salary through the effective date of
termination, and payment of any accrued but unpaid rights solely in
accordance with the terms of any incentive bonus, stock option or employee
benefit plan or program of the Company.
6. CONFIDENTIALITY
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The Executive agrees that she will not at any time during the Employment
Period or at any time thereafter for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company, its manner of operation, its plans or other
material data. The provisions of this Section 6 shall not apply to (i)
information that is public knowledge other than as a result of disclosure by the
Executive in breach of this Section 6; (ii) information disseminated by the
Company to third parties in the ordinary course of business; (iii) information
lawfully received by the Executive from a third party who, based upon inquiry by
the Executive, is not bound by a confidential relationship to the Company; or
(iv) information disclosed under a requirement of law or as directed by
applicable legal authority having jurisdiction over the Executive.
The Executive further agrees that she will not remove from the Company's
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except as otherwise
specifically authorized by the Company) Company property which includes, but is
not limited to, any document, record, notebook, plan, model, component, device,
or computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items"). The Executive recognizes that, as
between the Company and the Executive, all of the Proprietary Items, whether or
not developed by the Executive, are the exclusive property of the Company. Upon
termination of this Agreement by either party, or upon the request of the
Company during the Employment Period, the Executive will return to the Company
all of the Proprietary Items in the Executive's possession or subject to the
Executive's control, and the Executive shall not retain any copies, abstracts,
sketches, or other physical embodiments of any of the Proprietary Items.
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7. INVENTIONS
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The Executive is hereby retained in a capacity such that the Executive's
responsibilities may include the making of technical and managerial
contributions of value to the Company. The Executive hereby assigns to the
Company all right, title and interest in such contributions and inventions made
or conceived by the Executive alone or jointly with others during the Employment
Period which directly relate to the business of the Company. This assignment
shall include (a) the right to file and prosecute patent applications on such
inventions in any and all countries, (b) the patent applications filed and
patents issuing thereon, and (c) the right to obtain copyright, trademark or
trade name protection for any such work product. The Executive shall promptly
and fully disclose all such contributions and inventions to the Company and
assist the Company in obtaining and protecting the rights therein (including
patents thereon) in any and all countries; provided, however, that said
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contributions and inventions will be the property of Company, whether or not
patented or registered for copyright, trademark or trade name protection, as the
case may be. Inventions conceived by the Executive which are not related to the
business of the Company will remain the property of the Executive.
8. NON-COMPETITION
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The Executive agrees that she shall not, during the Employment Period
and/or Severance Period and during the "Restricted Period," without the approval
of the Board, directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder (other than as provided below) of any company or business, engage in
any "Competitive Business" within a fifty mile radius of any locality in which
the Company or any of its subsidiaries or affiliates then operates. For
purposes of the foregoing, the term "Restricted Period" shall mean: (i) six
months after the Employment Period or, if applicable, six months after the
Severance Period, whichever is longer, with respect to any "Competitive
Business" outside of South Carolina; and (ii) two years after the Employment
Period or, if applicable, two years after the Severance Period, whichever is
longer, with respect to any "Competitive Business" within South Carolina. For
purposes of the foregoing, the term "Competitive Business" shall mean any
business involved in the ownership, operation or management of a bingo or video
gaming business or such other business as the Company may then be engaged in as
a primary source of business. Notwithstanding the foregoing, the Executive
shall not be prohibited, during the non-competition period applicable above,
from acting as a passive investor where she owns not more than 2% of the issued
and outstanding capital stock of any publicly-held company. During the period
that the above non-competition restriction applies, the Executive shall not,
without the written consent of the Company, solicit any employee of the Company
or any employee of a subsidiary or affiliate of the Company to terminate his or
her employment. The period of time applicable to any covenant in this Section 8
will be extended by the duration of any violation by the Executive of such
covenant.
If any covenant in this Section 8 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against the Executive.
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9. BREACH OF RESTRICTIVE COVENANTS
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The parties agree that a breach or violation of Section 6, 7 or 8 hereof
will result in immediate and irreparable injury and harm to the innocent party,
who shall have, in addition to any and all remedies of law and other
consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the obligation
hereunder.
10. NOTICE
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For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Company, to:
American Bingo & Gaming Corp.
Attn: Andr X. Xxxxxxx
0000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxxxxxx, XX 00000
(b) If to the Executive, to:
Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxx, Xxxxxx 00000
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
11. ARBITRATION; LEGAL FEES
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Except as provided in Section 9 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in South Carolina in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall
reimburse the Executive for all reasonable legal fees and costs and other fees
and expenses which the Executive may incur in respect of any dispute or
controversy arising against the Company under or in connection with this
Agreement; provided, however, that the Company shall only reimburse the
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Executive for such fees, costs and expenses if the Executive prevails in any
such action.
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12. WAIVER OF BREACH
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Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part either of the
Executive or of the Company.
13. NON-ASSIGNMENT; SUCCESSORS
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Neither party hereto may assign her or its rights or delegate her or its
duties under this Agreement without the prior written consent of the other
party; provided, however, that (i) this Agreement shall inure to the benefit of
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and be binding upon the successors and assigns of the Company upon any sale of
all or substantially all of the Company's assets, or upon any merger,
consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company; and (ii) this Agreement
shall inure to the benefit of and be binding upon the heirs, assigns or
designees of the Executive to the extent of any payments due to them hereunder.
As used in this Agreement, the term "Company" shall be deemed to refer to any
such successor or assign of the Company referred to in the preceding sentence.
14. WITHHOLDING OF TAXES
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All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax and other payroll deductions as the Company may reasonably determine it
should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY
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To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this agreement shall be unaffected and shall
continue in full force and effect.
16. COUNTERPARTS
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This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument.
17. GOVERNING LAW
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This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of South Carolina without regard to the
conflicts of law principles thereof.
18. ENTIRE AGREEMENT
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This Agreement constitutes the entire agreement by the Company and the
Executive with respect to the subject matter hereof and supersedes any and all
prior agreements or understandings between the Executive and the Company with
respect to the subject matter hereof, whether written or oral. This Agreement
may be amended or modified only by written instrument executed by the Executive
and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
THE EXECUTIVE AMERICAN BINGO & GAMING CORP.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx By: Andr X. Xxxxxxx
Its: President and Chief Executive Officer
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