EXECUTIVE EMPLOYMENT AGREEMENT BETWEEN
CAPITAL GAMING INTERNATIONAL, INC.
AND XXXXXXX X. XXXXXX
THIS AGREEMENT is effective as of the 11th day of February, 1998,
between Capital Gaming International, Inc., its successors or subsidiaries, a
New Jersey corporation, presently located at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx 00000 (the "Corporation"), and Xxxxxxx X. Xxxxxx, with a
mailing address of 00000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000
("Employee").
WHEREAS, the Corporation and the Employee desire to set forth the terms
and conditions applicable to the Employee's employment with the Corporation as
its Vice President and Chief Financial Officer;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, the parties agree as follows:
1. Employment and Duties
a. The Corporation hereby employs Employee and Employee hereby
accepts the position of the Corporation's Vice President and Chief Financial
Officer. As Vice President and Chief Financial Officer of the Corporation, the
Employee shall report to the Chairman and Chief Executive Officer and Board of
Directors of the Corporation.
b. As Vice President and Chief Financial Officer of the
Corporation, Employee shall perform such duties and services, consistent with
his position, as may be assigned to him from time to time by the Chairman and
Chief Executive Officer and Board of Directors of the Corporation.
c. Employee warrants and agrees to use his best efforts to
perform well and faithfully such duties and other reasonable Employee duties and
responsibilities as are properly assigned to him.
2. Duration of Agreement Unless earlier terminated as herein provided,
the term of Employee's employment with the Corporation shall be in effect until
May 28, 2000. Various provisions of this Agreement are intended to survive the
expiration or termination of this Agreement as expressly stated herein.
3. Time to be Devoted to Employment The Employee agrees to devote his
full business time, attention, and energies to the best interests of the
Corporation.
4. Restrictions on Other Employment During the term of employment, the
Employee agrees that, unless he has the express prior written approval of the
Chairman and Chief Executive Officer of the Corporation, he shall not accept a
membership on the Board of Directors, act as an officer, employee or consultant,
or engage in any other business activity that would in any way conflict with the
business of the Corporation or the time needed by Employee to perform his duties
for the Corporation.
5. Compensation; Benefits; Reimbursements
a. Salary; Bonuses During the term of this Agreement, the
Employee's salary shall be Eighty Thousand ($80,000) Dollars per year, which
shall be payable in equal monthly installments (or at such other intervals as
the parties may mutually agree). Employee's salary may be increased, from time
to time, at the election of the Board, or any committee of the Board to which
such power has been delegated by the Board. Employee shall be entitled to annual
salary reviews in February of each year of this Agreement. Employee shall also
be eligible for bonuses or other
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additional cash compensation in such other amounts and at such times as shall be
determined before the end of each fiscal year by the Executive Compensation
Committee of the Board of Directors.
b. Benefits During his employment, Employee shall be entitled
to such benefits, including, but not limited to, standard medical, health and
other insurance coverage and benefits, as are made available from time to time
to other employees of the Corporation. Additionally, Employee shall, to the
extent deemed appropriate by the Board of Directors (or any applicable committee
of the Board of Directors) in its or their sole discretion, participate at a
level consistent with his rank as a Vice President of the Corporation in profit
sharing, stock appreciation rights, stock bonus, stock option, deferred
compensation and other similar plans or benefits which are made available to
other executives of similar rank employed by the Corporation. In the event that
the Corporation establishes an individual or group retirement plan, or continues
with the existing plan, Employee shall be entitled to participate, to the extent
deemed appropriate by the Board of Directors (or any applicable committee of the
Board of Directors), in such retirement plan consistent with his rank in the
Corporation. Further, the Corporation will provide, at its expense, life,
disability (in an amount sufficient to fund not more than Employee's salary),
medical, dental and hospitalization insurance for the Employee and his
dependents in amounts and on terms as favorable as those provided for any other
executive officer of the Corporation. Employee shall be entitled to full
indemnity against personal liability for acts done in good faith on behalf of
Corporation in accordance with paragraph 11.
c. Reimbursement of Business Expenses The Corporation shall
reimburse the Employee, in accordance with standard business practices of
accounting and receipts, for all reasonable and necessary business and traveling
expenses, and other disbursements incurred by him
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for or on behalf of the Corporation in the performance of his duties.
d. Reimbursement for Professional Memberships The Corporation
shall reimburse Employee, in accordance with standard business practices of
accounting and receipts, for the cost of all customary professional memberships
and applicable continuing accounting education and gaming conference expenses.
e. Withholding All compensation paid to Employee shall be
subject to normal required tax withholdings.
f. Vacation Employee shall be entitled to two (2) weeks
vacation time for each year during the term of this Agreement. Employee shall
receive one (1) additional week's vacation on the 1st and 2nd anniversary date
of his employment, to a maximum of four (4) weeks. At Employee's option,
vacation may be taken, either in whole or in part, consecutively or not, in the
year that Employee's entitlement to that vacation accrues or, if unused during
such year, such vacation time shall be carried over (subject to no limitation on
maximum accrual), and may be used in any subsequent year during the term of the
Agreement, provided that no more than thirty (30) days of vacation may be taken
in any one calendar year. Upon termination of Employee's employment with the
Corporation for any reason whatsoever, Employee shall be paid his salary for all
unused and accrued vacation (except for vacation days for which employee shall
have received payment pursuant to the immediately following sentence), at the
salary rate then existing at the date of termination of Employee's employment
with the Corporation, with no limitation on the maximum accrual of such vacation
days for which the Employee shall receive such payment. Employee shall be fully
eligible for coverage by the Corporation's policies and procedures for payment
in lieu of vacation.
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6. Termination
a. Probation Employee and the Corporation agree that Employee
shall have a six (6) month probationary period ("Probationary Period") which
will end on July 31, 1998. The parties agree that at any time prior to the
expiration of such Probationary Period Employee will be considered an "at will"
employee of the Corporation and may be terminated with or without cause without
further liability to the Corporation.
b. Without Cause Following the Probationary Period, the
Corporation may terminate this Agreement at any time upon five (5) days' notice;
however, in the event this provision is exercised by Corporation, Employee shall
receive as severance in six (6) equal monthly installments his monthly salary at
his then current rate, and shall continue to receive his benefits during such
period. Employee shall not be required to seek or accept other employment in
order to mitigate his damages hereunder and the Corporation's obligation to pay
him following such termination shall not be reduced by the amount of any
compensation actually received by the Employee for employment with any other
person during such six (6) month period. It shall be a condition to receipt of
severance that Employee sign a general release in favor of the Corporation and
its affiliates. Such general release shall, among other things, reaffirm
Employee's obligations pursuant to Paragraph 7 hereof relating to
confidentiality, non-competition and non-disparagement. For purposes of this
Agreement, Employee may elect to notify the Corporation that he has been
terminated without cause if, during the term of this Agreement, Employee is not
re-elected to, or is removed from, the position of Vice President and Chief
Financial Officer (other than pursuant to Paragraph 6.c below), or if the
Corporation otherwise materially breaches this Agreement and fails to complete
the cure of such breach within thirty (30) days after written notice from
Employee. In
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such event, the provisions of this Paragraph 6.a shall apply.
c. With Cause The Corporation may terminate this Agreement for
cause, and the Corporation shall be obligated to pay the Employee his salary and
any vested benefits only through the date of any such termination. Before
termination for cause, the Corporation must give Employee reasonable written
notice and adequate opportunity to respond to the reasons for his termination.
For purposes of this paragraph, "cause" shall mean that the Employee has (1)
acted fraudulently in his relations with the Corporation or on behalf of the
Corporation, (2) misappropriated or done material, intentional damage to the
property of the Corporation, (3) been convicted of a felony, (4) intentionally
or unintentionally acted in a manner that results in a serious omission of the
Corporation's interest, (5) failed to obtain or retain for any reason, any
permit, license or approval which shall be required by any regulatory agency or
entity with jurisdiction over any portion of the Corporation's business or any
business of a subsidiary of the Corporation, (6) breached any of the material
terms of this Agreement, or (7) willfully and materially failed to follow a
legal and reasonable order or directive by the Chairman and Chief Executive
Officer or willfully and materially failed to perform duties as directed, which
a majority of the Board of Directors in good faith finds to be in the best
interest of the Corporation. At any time during the period covered by this
Agreement, including during the Probationary Period as previously described
under Paragraph 6.a., in the event that there is a termination of this Agreement
for cause under this Paragraph 6.c, and the cause is solely the cause described
under Paragraph 6.c(5) above, and not within any other sub-paragraph of
Paragraph 6.c, Employee shall receive as severance in six (6) equal monthly
installments his monthly salary at his then current rate, and shall continue to
receive his benefits during such period. In such event, Employee shall not be
required to seek or accept
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other employment and the Corporation's obligation to pay him following such
termination shall not be reduced by the amount of any compensation actually
received by the Employee for employment with any other person during such six
(6) month period. It shall be a condition to receipt of severance that Employee
sign a general release in favor of the Corporation and its affiliates. Such
general release shall, among other things, reaffirm Employee's obligations
pursuant to Paragraph 7 hereof relating to confidentiality, non-competition and
non-disparagement.
d. Termination by Death or Disability If the Employee shall
die during the term of this Agreement or if, during the term of this Agreement,
the Employee becomes disabled so that he is unable substantially to perform his
services hereunder (i) for a period of three (3) consecutive months or for an
aggregate of three (3) months during the term of this Agreement, this Agreement
and the Corporation's obligations hereunder shall terminate and the Employee
shall continue to receive compensation and benefits at his then current rate for
six (6) months following the date of death or disability. This amount shall be
in addition to any life insurance or disability policy then in effect.
e. Voluntary Resignation The Employee may voluntarily resign
and terminate this Agreement at any time upon thirty (30) days' notice. The
Corporation shall then only be obligated to pay Employee any compensation due up
to his last day of employment. The provisions of Paragraph 7 relating to
confidentiality, non-competition and non-disparagement shall remain in effect
notwithstanding such voluntary resignation and/or termination.
f. Change of Control
(i) Definitions For purposes of this Agreement, a
"Change of Control" shall be deemed to have taken place only if: (a) any person
or entity becomes the owner or
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beneficial owner of the Corporation's securities, after the date of execution of
this Agreement, having 50% or more of the combined voting power of the then
outstanding securities of the Corporation that may be cast for the election of
directors of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation, or open market purchases), or (b) the
persons who were directors of the Corporation before such transaction shall
cease to constitute a majority of the Board of the Corporation, or any successor
to the Corporation, as the direct or indirect result of, or in connection with,
any tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions.
(ii) Agreement Regarding Provision of Services by
Employee The Corporation and Employee hereby agree that, if Employee is
performing services pursuant to this Agreement with the Corporation on the date
on which a Change of Control occurs (the "Change of Control Date") the
Corporation, and any successors, will continue to honor and be bound by the
terms of this Agreement.
(iii) Compensation and Benefits During the duration
of this Agreement, the Corporation (or its successors) will (a) continue to pay
a level of compensation not less than the level applicable to Employee on the
Change of Control Date, (b) fully perform and otherwise discharge Corporation's
obligations under the terms of this Agreement as in effect on the Change of
Control Date, and (c) continue benefit programs as to Employee at levels in
effect on the Change of Control Date.
(iv) Effective Termination of the Employment
Agreement by Change in Control If during the term of this Agreement as a result
of the Change in Control as defined in Paragraph 6.f.(i): (a) Employee's
Agreement is terminated by the Corporation or the successor, or
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(b) there is a material reduction in Employee's method of compensation or
related benefits, or (c) a material change in Employee's office, place of
employment, working conditions or duties and responsibilities, Employee may
voluntarily terminate this Agreement for a period of ninety (90) days following
the occurrence of such conditions. If Employee voluntarily terminates this
Agreement as provided in this Paragraph 6.f., Employee shall be entitled to
treat his Employment Contract as having been terminated without cause and shall
be entitled to the payments set forth in Paragraph 6.b. above.
7. Non-Disclosure of Confidential Business Information
a. Non-Disclosure "Confidential Business Information" is
defined as unique and extraordinary information obtained by the Employee solely
as a result of his position with the Corporation. It is not intended to include
business information that is available in the public domain or information that
was possessed by Employee prior to his employment with the Corporation. Employee
agrees that he will not, at any time during or after the term of employment,
disclose, reproduce, assign or transfer to any person, firm, corporation or
other business entity, except as required by law, any Confidential Business
Information concerning the business, finances, clients, affairs, business plans,
strategies, compounds, formulations, methods, devices, apparatus, preparations,
results from ongoing investigations by others, and present and future plans of
the Corporation, any subsidiary, parent company or affiliate thereof or any
company formed or funded by the Corporation at any time for any reason or
purpose whatsoever, without the Corporation's express written consent; nor shall
the Employee make use of any such Confidential Business Information for his own
purposes or for the benefit of any person, firm, corporation or other business
entity, except the Corporation or any parent company, subsidiary or affiliate
thereof. Upon
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termination of employment for any reason, Employee will immediately return all
books, files, papers, records and documents of any kind (including those
contained in computer disks), whether deemed Confidential Business Information
or not, relating to the business of the Corporation.
b. Covenant Not to Compete Employee recognizes that in
connection with his duties as Vice President and Chief Financial Officer, he
occupies a position of trust with the Corporation and, among other things, is
responsible for ensuring that the Corporation's interests in maintaining its
relationships with the various Tribes for whom the Corporation manages or
proposes to manage or develop casinos are protected. Employee acknowledges that
an important responsibility of his position is to assist the Corporation in
maintaining, at all times, the best possible business and professional
relationship with such Tribes. Additionally, Employee recognizes that the
Corporation must necessarily furnish him with Confidential Business Information
in order for Employee to perform his duties. Employee further recognizes and
acknowledges that the furnishing of such Confidential Business Information by
Corporation and the position of trust which he occupies gives Employee an
advantage over competitors of the Corporation in securing business with (i)
Native American Tribes who are or were parties to contracts with the Corporation
or any affiliate, (ii) have been contacted by or otherwise received proposals
from the Corporation or any affiliate in the past twelve (12) months, or (iii)
Native American or non-Native American entities which have entered into
discussions with the Corporation or any affiliate or otherwise received
proposals from the Corporation or any affiliate (collectively, "Applicable
Corporate Opportunity"). In recognition of the foregoing, Employee hereby agrees
that:
(i) During the term of this Agreement and for a
period of three (3) years following the termination of his employment for any
reason, Employee shall not compete with the
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business of Corporation with respect to an Applicable Corporate Opportunity or
associate himself directly or indirectly, whether or not for compensation, as an
employee, consultant, advisor, proprietor, manager, stockholder, director,
partner, agent, officer or in any capacity with any Applicable Corporate
Opportunity or with the operations of any business competitive to the
Corporation. This restriction shall only apply to competitive activities
directly or indirectly related to the Applicable Corporate Opportunity. The term
"associate indirectly" shall mean that for the applicable period, Employee shall
not cause, assist or in any way influence any other individual, company or
entity to solicit an Applicable Corporate Opportunity.
(ii) Employee shall not, at any time, directly,
indirectly or otherwise induce or solicit any general manager placed by the
Corporation or employee of the Corporation to leave the Corporation and
terminate his or her employment relationship with the Corporation.
c. Non-Disparagement Employee agrees that he shall not
communicate to the news media, shareholders, holders of any indebtedness of the
Corporation and its affiliated entities (including their representatives or
attorneys), or to any other person, any written or oral uncomplimentary or
disparaging statements concerning, or other statements which tend to reflect
negatively on, the Corporation, its affiliated entities, or any of their
respective officers, directors, employees, agents or results of or methods of
operation. Employee shall further refrain from disclosing to any third party any
information concerning any officer, director, employee or agent of the
Corporation or its affiliated entities. Employee acknowledges that the provision
of this non-disparagement clause are an essential element of this Agreement.
d. Survival of Restrictions It is expressly acknowledged and
agreed that the provisions of this Agreement pertaining to confidentiality,
non-competition and non-disparagement
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are reasonable and shall survive the termination of this Agreement and remain in
full force and effect until released by the Corporation. Other than the
execution of this Employment Agreement, no further act by Employee or the
Corporation shall be necessary in order to specifically enforce this Paragraph
7.
8. Representations, Warranties and Covenants of the Employee The
Employee represents that he has the capacity and desire to enter into this
Agreement, and the voluntary execution, delivery and performance of this
Agreement and compliance with its provisions will not conflict with or result in
any breach of any of the terms, conditions, obligations, covenants or provisions
of, or constitute a default under, any note, mortgage, agreement, contract or
instrument to which the Employee is a party or by which he may be bound or
affected, including specifically any preexisting or existing consulting,
employment or independent contractor arrangements, understandings or agreements
whether oral or written. Furthermore, Employee agrees to indemnify Corporation
against any claims brought by any predecessor employer alleging breach of
employment contract or fiduciary responsibilities.
9. Enforcement This Agreement shall be enforced to the fullest extent
permissible under the laws and public policies of the State of Arizona.
Accordingly, to the extent a restriction contained in this Agreement is more
restrictive than permitted by the laws of any jurisdiction where this Agreement
may be subject to review and interpretation, the terms of such restriction, for
the purpose only of the operation of such restriction in such jurisdiction,
shall be the maximum restriction allowed by the laws of such jurisdiction and
such restriction shall be deemed to have been revised accordingly herein.
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10. Remedies for Breach; Injunctive Relief; Arbitration
a. Remedy for Breach of Paragraph 7 It is acknowledged by the
Employee that he will be devoting his work efforts towards representing the
legal interests of the Corporation; that Employee will be knowledgeable in all
aspects of the business of the Corporation, including the type of transactions
the Corporation is involved with, thus, the Employee would be enabled to enter
the same business as the Corporation and unfairly compete against the
Corporation to its detriment. Accordingly, the restrictions contained in
paragraph 7 of this Agreement and the injunctive relief provided for in this
paragraph are reasonable and justified. The Employee recognizes that irreparable
injury to the Corporation will inevitably occur in the event of any breach of
the terms and conditions of this Agreement and, specifically, if paragraph 7 is
breached by the Employee. The Employee agrees in such event that the Corporation
shall be entitled, in addition to any other remedies available to it, without
proof of monetary or immediate damage or the necessity to post bond, to obtain
an injunction against the Employee and all persons acting for or with the
Employee.
b. Resolution of All Other Disputes Concerning Agreement
Except as provided for in paragraph 10.a, all disputes regarding the
interpretation and enforcement of this Agreement shall be resolved using binding
arbitration. Such dispute shall be resolved pursuant to the procedural rules of
the American Arbitration Association ("AAA") using a panel of three (3)
arbitrators in Arizona. The determination and award of the panel shall be
binding on both parties and may be enforced in any court of competent
jurisdiction.
11. Indemnification The Corporation agrees to indemnify Employee and
hold him harmless against any and all losses, claims, damages, liabilities and
costs (and all actions in respect thereof and any legal or other expenses in
giving testimony or furnishing documents in response to
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a subpoena or otherwise), including without limitation, the costs of
investigating, preparing or defending any such action or claim, whether or not
in connection with litigation in which Employee is a party, as and when
incurred, directly or indirectly caused by, relating to, based upon or arising
out of any work performed by Employee in connection with this Agreement to the
fullest extent permitted by the General Corporation Law of New Jersey and by the
bylaws of the Corporation. The indemnification provisions shall be in addition
to any liability which the Corporation may otherwise have to Employee.
If any action, proceeding or investigation is commenced as to which
Employee proposes to demand such indemnification, he shall notify the
Corporation with reasonable promptness. Employee shall have the right to retain
counsel of his own choice to represent him and the Corporation shall pay all
reasonable fees and expenses of such counsel; and such counsel shall, to the
fullest extent consistent with its professional responsibilities, cooperate with
the Corporation and any counsel designated by it. The Corporation shall be
liable for any settlement of any claim against Employee made with its written
consent, which consent shall not be unreasonably withheld, to the fullest extent
permitted by the General Corporation Law of New Jersey and the bylaws of the
Corporation.
12. Attorney's Fees In the event of any litigation or arbitral
procedures between the parties to this Agreement, or any of them, concerning
this Agreement, each party shall be responsible for its own attorney's fees.
13. Binding Agreement; Benefit The provisions of this Agreement will be
binding upon, and will inure to the benefit of, the respective heirs, legal
representatives and successors of the parties hereto.
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14. Governing Law This Agreement will be governed by, and construed and
enforced in accordance with the laws of the State of Arizona which shall be the
venue for any disputes hereunder.
15. Waiver or Breach The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
16. Entire Agreement; Amendments This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings among the parties with respect
thereto. This Agreement may be amended only by an agreement in writing signed by
the parties hereto.
17. Headings The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. Severability Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
19. Assignment This Agreement is personal in its nature and the parties
hereto shall not, without the written consent of the other, assign and transfer
this Agreement or any rights or obligations hereunder; provided, however, that
the provisions hereof shall inure to the benefit of, and be binding upon each
successor of the Corporation whether by merger, consolidation, transfer of all
or substantially all assets, or otherwise.
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20. Notices All notices and other communications which are required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by air courier (e.g., Federal Express) or first class certified or
registered mail, postage prepaid, return receipt requested:
If to Employee:
Xx. Xxxxxxx X. Xxxxxx
00000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to Corporation:
Capital Gaming International, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Chairman and CEO
With a copy to:
Xxxxxxx X. Xxxxxxxx, Senior Vice President and General Counsel
Capital Gaming International, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of delivery if personally delivered; on the business day after
the date when sent if sent by air courier; and on the third business day after
the date when sent if sent by mail, in each case addressed to such party as
provided in this Section or in accordance with the latest unrevoked direction
from such party.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
EMPLOYEE: FOR CORPORATION:
XXXXXXX X. XXXXXX CAPITAL GAMING INTERNATIONAL, INC.
_____________________________ By:___________________________________
Xxxxxx X. Xxxxx
Title: Chairman and CEO
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