EMPLOYMENT AGREEMENT
BY AND BETWEEN
XXXXXXX XXXXXXX
AND
OLYMPIC ENTERTAINMENT GROUP, INC
As of January 15, 1997
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made as of January 15, 1997
between Olympic Entertainment Group, Inc., a Nevada corporation (the "Company"),
and Xxxxxxx Xxxxxxx ("Executive"). Capitalized words which are not otherwise
defined herein shall have the meanings assigned to such words in Section 8 of
this Agreement.
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive as Chairman of the Board
and Chief Executive Officer and Executive desires to perform such duties on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Term of Employment Under the Agreement. The term of Executive's
employment under this Agreement (the "Term") shall commence on January 15, 1997
(the "Effective Date") and shall continue until the fifth anniversary of the
Effective Date. For purposes of this Agreement, "Contract Year" means each
12-month period during the term beginning on the Effective Date or anniversary
thereof, and "Fiscal Year" means the Company's fiscal year.
2. Employment During the Term. During the Term, Executive shall be employed
as the Chairman and Chief Executive Officer of the Company and shall report
directly to the Board of Directors of the Company (the "Board"), and Executive's
duties and responsibilities to the Company shall be consistent in all respects
with such positions. During the Term, the Company will take all steps reasonably
necessary to assure that Executive continue to be elected or appointed to the
Board. Executive shall devote substantially all of Executive's business time,
attention, skills and efforts exclusively to the business and affairs of the
Company. Executive's principal place of employment shall be the executive
offices of the Company as established from time to time, although Executive
understands and agrees that he may be required to travel from time to time for
business purposes.
3. Compensation During the Term.
(a) Base Salary. As compensation to Executive for all services
rendered to the Company and its subsidiaries, the Company will pay Executive a
base salary (the "Base Salary") at the rate of $480,000 per annum, a portion of
which Executive may decline until the occurrence of certain events set forth
hereinafter ("Certain Events"). Executive's Base Salary will be paid to
Executive in accordance with the Company's regular payroll practices applicable
to its executive officers. Executive's rate of Base Salary will be reviewed
annually by the Board and may be increased by the Board on the basis of such
review.
(b) Bonus. Executive shall be eligible to earn an annual bonus (the
"Bonus") for each whole or partial Fiscal Year during the Term. The Bonus for
each given Fiscal Year will be paid within 90 days following the end of the
Fiscal Year to which such Bonus relates. The Bonus shall be based upon the
Company achieving one or more performance goals established in good faith and
approved by the Board for such Fiscal Year. The performance goal or goals
applicable to the Bonus for the Fiscal Year of the Company that includes the
Effective Date will be established within 60 days following the Effective Date.
The performance goals for the Bonus for subsequent Fiscal Years will be
established, to the extent practicable, prior to the start of the applicable
Fiscal Year, but in no event later than 90 days following the commencement of
the Fiscal Year. However, should the performance goal for any subsequent year
not be established for any reason, then the Bonus will remain the same as in the
prior year. The Bonus in effect on the day hereof is payment to Executive of
$10,000 per new affiliate signed and in compliance with the license agreement.
(c) Benefits. During the Term, Executive shall be eligible to
participate in all welfare and fringe benefit plans and arrangements that the
Company provides to its executive employees in accordance with the terms of such
plans and arrangements, which shall be no less favorable to Executive, in the
aggregate, than the terms and provisions available to other executive employees
of the Company. Subject to Executive's insurability at standard commercial
rates, in lieu of Executive participating in the Company's regular life
insurance programs, the Company agrees to maintain a whole life insurance policy
for Executive during the Term with a death benefit equal to 10 times Executive's
annual rate of Base Salary.
(d) Expenses. The Company will reimburse Executive in accordance with
its regular policies and practices for business expenses reasonably incurred by
Executive in connection with the performance of Executive's duties under this
Agreement, subject to Executive's presentation of appropriate documentation of
such expenses.
4. Long-Term Incentive Compensation. In order to align Executive's
interests more closely with those of the Company's stockholders, the Company
will offer the following long-term incentive compensation arrangements to
Executive, subject to the terms and conditions set forth below.
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(a) Stock Option. Subject to Section 4(b) below, as soon as
practicable after the Effective Date, the Company will grant to Executive a
stock option (the "Option") covering 800,000 shares of common stock of the
Company (the "Common Stock"). The per share exercise price of the Option shall
be Eighty percent (80%) of the per share Fair Market Value on the Granting Date.
The Option shall become vested and exercisable with respect to 20% (160,000) of
the shares of Common Stock subject thereto on the Initial Vesting Date and on
each of the second through fifth anniversaries of the Effective Date, provided
that Executive has remained in the continuous full-time employ of the Company
through each such vesting date. The Option will be subject to the terms and
provisions of the Option Agreement attached hereto and such other terms as the
Board may specify and set forth in the applicable Option Agreement.
(b) Registration; Reservation of Shares. To the extent practicable,
the Company will undertake to register the Option and the shares of Common Stock
underlying the Option on Form S-8 under the Securities Act. The previous
sentence, however, shall not in any way be construed as (i) prohibiting the
Company from engaging in any transaction (including a transaction that will
result in a Change in Control), (ii) requiring the Company to file any reports
under the Exchange Act or to maintain its registration under the Exchange Act if
such registration is not otherwise required or (iii) requiring the registration
of the Option and the shares of Common Stock underlying the Option on Form S-8
(or any other form) if Form S-8 is not available to the Company. As soon as
practicable following the Effective Date, the Company shall reserve for issuance
800,000 shares of Common Stock for issuance in connection with the grant of the
Option.
5. Effect of Termination of Employment.
(a) Right to Resign Following a Year One Change in Control. In the
event of a Year One Change in Control, Executive shall have the right to resign
for any reason or for no stated reason during the Election Window. In the event
of such a resignation, the Company shall pay Executive the full amount of the
accrued but unpaid Base Salary Executive has earned through the Date of
Termination, plus a cash payment (calculated on the basis of Executive's rate of
Base Salary then in effect) for all unused vacation time which Executive may
have accrued as of the Date of Termination. In addition, the Company shall pay
Executive on the Severance Payment Date an "all in" cash lump sum payment of $5
million and the aggregate amount of any deferred Base Salary. Executive will
relinquish, as of the Date of Termination, the Option, and the right to any
additional payments or benefits from the Company under this Agreement. The
provisions of the Section 5(a) shall not apply if, at the time of Executive's
resignation, the Company is entitled to terminate Executive's employment for
Cause.
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(b) Involuntary Termination Prior to the Initial Vesting Date. In the
event of Executive's Involuntary Termination prior to the Initial Vesting Date,
the Company shall pay Executive the full amount of the accrued but unpaid Base
Salary Executive has earned through the Date of Termination, plus a cash payment
(calculated on the basis of Executive's rate of Base Salary then in effect) for
all unused vacation time which Executive may have accrued as of the Date of
Termination. In addition, the Company shall pay Executive on the Severance
Payment Date an "all in" cash lump sum payment of $5 million and the aggregate
amount of any deferred Base Salary. Executive will relinquish as of the Date of
Termination the Option and the right to any additional payments or benefits from
the Company under this Agreement.
(c) Involuntary Termination On or After the Initial Vesting Date.
(i) In the event of Executive's Involuntary Termination on or
after the Initial Vesting Date, the Company shall pay Executive the
full amount of the accrued but unpaid Base Salary Executive has earned
through the date of such Involuntary Termination, plus a cash payment
(calculated on the basis of Executive's rate of Base Salary then in
effect) for all unused vacation time which Executive may have accrued
as of the date of Involuntary Termination. In addition, the Company
shall pay Executive on the Severance Payment Date a cash lump sum
amount equal to the sum of (i) the Base Salary payable to Executive
for the remaining portion of the Term and (ii) Executive's annual rate
of Base Salary (at the rate then in effect, including deferments)
times the number of whole and partial Contract Years remaining in the
Term. In the event of an Involuntary Termination on or after the
Initial Vesting Date, Executive will retain the portion of the Option
that has vested on or prior to the Date of Termination. In addition,
if Executive's employment is Involuntarily Terminated (i) on or after
the Initial Vesting Date and (ii) on or after a Change in Control
(other than a Year One Change in Control), Executive shall also vest
in an additional portion of the Option on the Date of Termination
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determined by a fraction, the numerator of which is the number of days
in such Fiscal Year up to and including the Date of Termination and
the denominator of which is 365 (the "Change in Control Fraction").
Executive will retain the number of shares of Common Stock in which
the Option was scheduled to vest on the anniversary of the Effective
Date occurring on or immediately following the Date of Termination by
the Change in Control Fraction. The vested portion of the Option will
remain exercisable for 365 days following the Date of Termination. Any
remaining unvested portion of the Option will be forfeited as of the
Date of Termination.
(ii) In the event of Executive's Involuntary Termination on or
after the Initial Vesting Date, Executive and his eligible dependents
shall continue to be eligible to participate during the Benefit
Continuation Period (as hereinafter defined) in the medical, dental,
health and life insurance plans applicable to Executive immediately
prior to Executive's Involuntary Termination on the same terms and
conditions in effect for Executive and Executive's dependents
immediately prior to such Involuntary Termination. For purposes of the
previous sentence, "Benefit Continuation Period" means the period
beginning on the date of Date of Termination and ending on the first
anniversary of the Date of Termination; provided, however, that
Executive's coverage under such plans and arrangements shall end on
the date that Executive and Executive's dependents are eligible and
elect coverage under the plans of a subsequent employer which provide
substantially equivalent or greater benefits to Executive and
Executive's dependents. Following the end of the Benefit Continuation
Period, Executive shall be eligible to elect any applicable
"continuation coverage" under the Code as if the last day of the
Benefit Continuation Period was the date of Executive's "qualifying
event" for such continuation coverage.
(iii) Except as otherwise provided in this Section 5(c), as of
the Date of Termination, Executive will relinquish the right to any
additional payments or benefits from the Company under this Agreement.
(d) Termination for Cause; Resignation Without Good Reason. In the
event Executive resigns without Good Reason or Executive is terminated by the
Company for Cause at any time during the Term, the Company shall pay Executive
the full amount of the accrued but unpaid Base Salary Executive has earned
through the Date of Termination, plus a cash payment (calculated on the basis of
Executive's rate of Base Salary then in effect) for all unused vacation time
which Executive may have accrued as of the Date of Termination. In addition, the
Company shall pay Executive on the Severance Payment Date an "all in" cash lump
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sum payment of $5 million. Executive will immediately forfeit as of the Date of
Termination the then unvested portion of the Option that have not been earned as
of the Date of Termination. Executive will retain the portion of the Option that
has vested on or prior to the Date of Termination which will remain exercisable
for 365 days following the Date of Termination.
(e) Death or Disability. If Executive's employment with the Company
ends as a result of Executive's death or Disability during the Term, the Company
shall pay Executive (or, in the event of Executive's death, Executive's
Beneficiary) the full amount of the accrued but unpaid Base Salary Executive has
earned through the Date of Termination, plus a cash payment (calculated on the
basis of Executive's rate of Base Salary then in effect) for all unused vacation
time which Executive may have accrued as of the Date of Termination. In
addition, the Company shall pay Executive (or, in the event of Executive's
death, Executive's Beneficiary) on the Severance Payment Date an "all in" cash
lump sum payment of $5 million. Executive will retain the portion of the Option
that has vested on or prior to the Date of Termination which will remain
exercisable in accordance with the provisions of the Option Agreement. In
addition, in the event of Executive's death, the Option will continue to vest in
accordance with the provisions of the Option Agreement during the 12-month
period beginning on the date of Executive's death. Any remaining portion of the
Option which has not vested by the end of the period described in the previous
sentence will be forfeited. Except as otherwise provided in this Section 5(e),
as of the Date of Termination, Executive will relinquish the right to any
additional payments or benefits from the Company under this Agreement.
(f) Date and Notice of Termination. Any termination of Executive's
employment by the Company for cause (as defined herein) or by Executive during
the Term shall be communicated by a notice of termination to the other party
hereto (the "Notice of Termination"). The Notice of Termination shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated. The date of Executive's termination of employment with the Company
and its subsidiaries (the "Date of Termination") shall be determined as follows:
(i) if Executive's employment is terminated for Disability,
thirty (30) days after a Notice of Termination is delivered to
Executive by the Company (provided that Executive shall not have
returned to the full-time performance of Executive's duties during
such thirty (30) day period),
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(ii) if Executive's employment is terminated by the Company in an
Involuntary Termination, the date the Notice of Termination is
delivered to Executive by the Company,
(iii) if Executive's employment is terminated by the Company for
Cause, subject to the applicable cure provisions, the date such notice
is delivered to Executive by the Company and
(iv) if Executive resigns during the Election Window, the date
the Notice of Termination is delivered to the Company by Executive. If
the basis for Executive's Involuntary Termination is Executive's
resignation for Good Reason, the Date of Termination shall be, subject
to the applicable cure provisions, ten (10) days after the date
Executive's Notice of Termination is delivered to the Company by
Executive. The Date of Termination for a resignation of employment
other than for Good Reason other than during the Election Window shall
be the date the Notice of Termination is delivered to Executive by the
Company. The Date of Termination in the event of Executive's death
shall be the date of Executive's death. If Executive's employment ends
as a result of the expiration of the Term, the Date of Termination
shall be the last day of the Term.
(g) No Mitigation. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for in
this Agreement be reduced by any compensation earned by Executive as the result
of employment by another employer.
6. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein to the contrary,
if it is determined that any Payment would be subject to the excise tax imposed
by the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any interest or penalties thereon, is herein referred
to as an "Excise Tax"), then Executive shall be entitled to an additional
payment (a "Gross-Up Payment") in an amount that will place Executive in the
same after-tax economic position that Executive would have enjoyed if the Excise
Tax had not applied to the Payment. The amount of the Gross-Up Payment shall be
determined by such formula as the Accounting Firm deems appropriate which is
intended to achieve the same result.
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(b) Determination of Gross-Up Payment. Subject to the provisions of
Section 5, all determinations required under this Section 6, including whether a
Gross-Up Payment is required, the amount of the Payments constituting excess
parachute payments, and the amount of the Gross-Up Payment, shall be made by the
Accounting Firm, which shall provide detailed supporting calculations both to
Executive and the Company within fifteen (15) days of the Change in Control
Date, Executive's Date of Termination after the Change in Control Date or any
other date reasonably requested by Executive or the Company on which a
determination under this Section 6 is necessary or advisable. The Company shall
pay to Executive the initial Gross-Up Payment within 5 days of the receipt by
Executive and the Company of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by Executive, the
Company shall cause the Accounting Firm to provide Executive with an opinion
that the Accounting Firm has substantial authority under the Code and
Regulations not to report an Excise Tax on Executive's federal income tax
return. Any determination by the Accounting Firm shall be binding upon Executive
and the Company. If the initial Gross-Up Payment is insufficient to cover the
amount of the Excise Tax that is ultimately determined to be owing by Executive
with respect to any Payment (hereinafter an "Underpayment"), the Company, after
exhausting its remedies under Section 6(c) below, shall promptly pay to
Executive an additional Gross-Up Payment in respect of the Underpayment.
(c) Procedures. Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notice shall be given as soon
as practicable after Executive knows of such claim and shall apprise the Company
of the nature of the claim and the date on which the claim is requested to be
paid. Executive agrees not to pay the claim until the expiration of the
thirty-day period following the date on which Executive notifies the Company, or
such shorter period ending on the date the Taxes with respect to such claim are
due (the "Notice Period"). If the Company notifies Executive in writing prior to
the expiration of the Notice Period that it desires to contest the claim,
Executive shall: (i) give the Company any information reasonably requested by
the Company relating to the claim; (ii) take such action in connection with the
claim as the Company may reasonably request, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company and reasonably acceptable to Executive; (iii)
cooperate with the Company in good faith in contesting the claim; and (iv)
permit the Company to participate in any proceedings relating to the claim.
Executive shall permit the Company to control all proceedings related to the
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claim and, at its option, permit the Company to pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim. If requested by the Company, Executive
agrees either to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner and to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts as the Company shall determine; provided, however,
that, if the Company directs Executive to pay such claim and pursue a refund,
the Company shall advance the amount of such payment to Executive on an
after-tax and interest-free basis (the "Advance"). The Company's control of the
contest related to the claim shall be limited to the issues related to the
Gross-Up Payment and Executive shall be entitled to settle or contest, as the
case may be, any other issues raised by the Internal Revenue Service or other
taxing authority. If the Company does not notify Executive in writing prior to
the end of the Notice Period of its desire to contest the claim, the Company
shall pay to Executive an additional Gross- Up Payment in respect of the excess
parachute payments that are the subject of the claim, and Executive agrees to
pay the amount of the Excise Tax that is the subject of the claim to the
applicable taxing authority in accordance with applicable law.
(d) Repayments. If, after receipt by Executive of an Advance,
Executive becomes entitled to a refund with respect to the claim to which such
Advance relates, Executive shall pay the Company the amount of the refund
(together with any interest paid or credited thereon after Taxes applicable
thereto). If, after receipt by Executive of an Advance, a determination is made
that Executive shall not be entitled to any refund with respect to the claim and
the Company does not promptly notify Executive of its intent to contest the
denial of refund, then the amount of the Advance shall not be required to be
repaid by Executive and the amount thereof shall offset the amount of the
additional Gross-Up Payment then owing to Executive.
(e) Further Assurances. The Company shall indemnify Executive and hold
Executive harmless, on an after-tax basis, from any costs, expenses, penalties,
fines, interest or other liabilities ("Losses") incurred by Executive with
respect to the exercise by the Company of any of its rights under this Section
6, including, without limitation, any Losses related to the Company's decision
to contest a claim or any imputed income to Executive resulting from any Advance
or action taken on Executive's behalf by the Company hereunder. The Company
shall pay all legal fees and expenses incurred under this Section 6, and shall
promptly reimburse Executive for the reasonable expenses incurred by Executive
in connection with any actions taken by the Company or required to be taken by
Executive hereunder. The Company shall also pay all of the fees and expenses of
the Accounting Firm, including, without limitation, the fees and expenses
related to the opinion referred to in Section 6(b).
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7. Successors; Binding Agreement; Attorneys Fees.
(a) Assumption by Successor. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and to agree in writing, with a copy to Executive, 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; provided, however,
that no such assumption shall relieve the Company of its obligations hereunder.
As used in this Agreement, the "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.
(b) Enforceability; Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of Executive (and Executive's personal
representatives and heirs) and the Company and any organization which succeeds
to substantially all of the business or assets of the Company, whether by means
of merger, consolidation, acquisition of all or substantially all of the assets
of the Company or otherwise, including, without limitation, as a result of a
Change in Control or by operation of law. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees or other Beneficiary. If Executive should die while any amount would
still be payable to Executive hereunder if Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's Beneficiary.
8. Definitions. For purposes of this Agreement, the following capitalized
words shall have the meanings set forth below:
"Accounting Firm" shall mean Xxxxxxxxxxx, Xxxxx & Company or,
if such firm is unable or unwilling to perform such calculations, such other
national accounting firm as shall be designated by agreement between Executive
and the Company.
"Beneficiary" shall mean the person or persons designated by Executive in
writing to receive any benefits payable to Executive hereunder in the event of
Executive's death or, if no such persons are so designated, Executive's estate.
No Beneficiary designation shall be effective unless it is in writing and
received by the Company prior to the date of Executive's death.
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"Cause" shall mean a termination of Executive's employment during the Term
which is a result of (i) Executive's felony conviction or Executive's plea of
"no contest" to a felony, (ii) Executive's willful disclosure of material trade
secrets or other material confidential information related to the business of
the Company and its subsidiaries, or (iii) Executive's willful and continued
failure substantially to perform Executive's duties with the Company (other than
any such failure resulting from Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure resulting from a resignation
by Executive for Good Reason) after a written demand for substantial performance
is delivered to Executive by the Board, which demand specifically identifies the
manner in which the Board believes that Executive has not substantially
performed Executive's duties, and which performance is not substantially
corrected by Executive within 10 days of delivery of such demand to Executive.
For purposes of the previous sentence, no act or failure to act on Executive's
part shall be deemed "willful" unless done, or omitted to be done, by Executive
not in good faith and without reasonable belief that Executive's action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to Executive a copy of a resolution duly adopted
by the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
Executive's counsel, to be heard before the Board), finding that in the good
faith opinion of the Board Executive were guilty of conduct set forth above in
clause (i), (ii) or (iii) of the first sentence of this section and specifying
the particulars thereof in reasonable detail.
"Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; provided,
however, that, anything in this Agreement to the contrary notwithstanding, a
Change in Control shall be deemed to have occurred if: (i) any individual,
partnership, firm, corporation, association, trust, unincorporated organization
or other entity or person, or any syndicate or group deemed to be a person under
Section 14(d)(2) of the Exchange Act, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding securities
entitled to vote in the election of directors of the Company; (ii) during any
period of two (2) consecutive years (not including any period prior to the
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execution of this Agreement) individuals who at the beginning of such period
constituted the Board and any new directors, whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least a majority of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; (iii) there occurs a reorganization, merger, consolidation or
other corporate transaction involving the Company (a "Transaction"), in each
case, with respect to which the stockholders of the Company immediately prior to
such Transaction do not, immediately after the Transaction, own more than 50
percent of the combined voting power of the Company or other corporation
resulting from such Transaction; (iv) all or substantially all of the assets of
the Company are sold, liquidated or distributed.
"Change in Control Date" shall mean the date on which the Change in Control
occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and any
successor provisions thereto.
"Disability" shall mean (i) Executive's incapacity due to physical or
mental illness which causes Executive to be absent from the full-time
performance of Executive's duties with the Company for six (6) consecutive
months, and (ii) Executive's failure to return to full-time performance of
Executive's duties for the Company within thirty (30) days after written Notice
of Termination due to Disability is given to Executive. Any question as to the
existence of Executive's Disability upon which Executive and the Company cannot
agree shall be determined by a qualified independent physician selected by
Executive (or, if Executive is unable to make such selection, such selection
shall be made by any adult member of Executive's immediate family), and approved
by the Company. The determination of such physician made in writing to the
Company and to Executive shall be final and conclusive for all purposes of this
Agreement.
"Election Window" shall mean the thirty-day period beginning 180 days
following the Change in Control Date applicable to the Year One Change in
Control.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and any successor provisions thereto.
"Good Reason" shall mean a resignation of Executive's employment during the
Term as a result of any of the following: (i) a meaningful and detrimental
alteration in Executive's position, titles, responsibilities or reporting
responsibilities from that contemplated under this Agreement; provided, however,
that a change in Executive's position, titles, responsibilities or reporting
responsibilities as a result of or in connection with a Year One Change in
Control shall not constitute an event of Good Reason for purposes of this
Agreement; (ii) the failure of the Company to obtain an agreement reasonably
satisfactory to Executive from any successor to assume and agree to perform this
Agreement, as contemplated in Section 7(a) hereof; or (iii) the reduction by the
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Company in Executive's annual rate of Base Salary or the failure of the Company
to pay Executive in the time and manner contemplated by Section 3(b) above the
Bonus earned by Executive; or (iv) the failure of the Company to grant Executive
the Option, in each case, in the manner contemplated by Section 4 above;
provided, however, that the failure of the stockholders of the Company to
approve the Option grant shall in no event constitute Good Reason hereunder; and
provided further, that an event described in this sentence shall not constitute
Good Reason unless it is communicated by Executive to the Company in writing
within thirty days of the date Executive knows or has reason to know of such
event and is not corrected by the Company in a manner which is reasonably
satisfactory to Executive (including full retroactive correction with respect to
any monetary matter) within 10 days of the date of Executive's delivery of such
written notice to the Company.
"Initial Vesting Date" shall mean the following: 1) In the event a Year One
Change in Control occurs, the earlier to occur of (i) the expiration of the
Election Window and (ii) 18 months after the Effective Date, but in no event
prior to the later to occur of the first anniversary of the Effective Date and
the date of the stockholder approval contemplated by Section 4(b) hereof; and 2)
In the event a Year One Change in Control does not occur, the first anniversary
of the Effective Date.
"Involuntary Termination" shall mean (i) Executive's termination of
employment by the Company and its subsidiaries other than for Cause or
Disability or (ii) Executive's resignation of employment with the Company and
its subsidiaries for Good Reason.
"Payment" means (i) any amount due or paid to Executive under this
Agreement, (ii) any amount that is due or paid to Executive under any plan,
program or arrangement of the Company and its subsidiaries (including, without
limitation, under the equity plans of the Company), and (iii) any amount or
benefit that is due or payable to Executive under this Agreement or under any
plan, program or arrangement of the Company and its subsidiaries not otherwise
covered under clause (i) or (ii) hereof which must reasonably be taken into
account under Section 280G of the Code and the Regulations in determining the
amount of the "parachute payments" received by Executive, including, without
limitation, any amounts which must be taken into account under the Code and
Regulations as a result of (A) the acceleration of the vesting of any option,
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restricted stock or other equity award granted hereunder or under any equity
plan of the Company, (B) the acceleration of the time at which any payment or
benefit is receivable by Executive or (C) any contingent severance or other
amounts that are payable to Executive.
"Regulations" shall mean the proposed, temporary and final regulations
under the Code or any successor provisions thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, and any
successor provisions thereto.
"Severance Payment Date" shall mean five business days following the later
to occur of (i) the Date of Termination applicable under Section 5(a), 5(b) or
5(c), as the case may be, and (ii) the date that all outstanding principal and
interest on the Loan has been repaid in full.
"Taxes" shall mean the federal, state and local income taxes to which
Executive is subject at the time of determination, calculated on the basis of
the highest marginal rates then in effect, plus any additional payroll or
withholding taxes to which Executive is then subject.
"Year One Change in Control" shall mean a Change in Control occurring on or
prior to the first anniversary of the Effective Date.
9. Notice. For the purpose of this Agreement, notices 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 mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Board of Directors, Olympic Entertainment Group, Inc. 0000 Xxxx Xxxxxxxx Xxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxx, 00000 with a copy to legal counsel of the Company,
or to Executive at the address set forth on the last page of this Agreement or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
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10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement and this Agreement
shall supersede all prior agreements, negotiations, correspondence, undertakings
and communications of the parties, oral or written, with respect to the subject
matter hereof.
(b) Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
(c) Representation. Executive hereby represents and warrants to the Company
that the execution and delivery by Executive of this Agreement to the Company
will not breach the terms of any contract, agreement or understanding to which
Executive is a party. Executive further acknowledges and agrees that a breach of
this representation by Executive shall render this Agreement void ab initio and
of no further force and effect.
(d) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
(e) Withholding. Amounts paid to Executive hereunder shall be subject to
all applicable federal, state and local wage withholding.
(f) Source of Payments. All payments provided under this Agreement (other
than payments made pursuant to a plan which provides otherwise or as otherwise
expressly provided hereunder), shall be paid in cash from the general funds of
the Company, and no special or separate fund shall be established, and no other
segregation of assets made, to assure payment. Executive will have no right,
title or interest whatsoever in or to any investments which the Company may make
to aid it in meeting its obligations hereunder. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company.
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(g) Headings. The headings contained in this Agreement are intended solely
for convenience of reference and shall not affect the rights of the parties to
this Agreement.
(h) Arbitration and Expenses. Any controversy or claims arising out of or
relating to this Agreement or the breach of this Agreement that cannot be
resolved by Executive and the Company, including any dispute as to the
calculation of Executive's benefits or any payments hereunder, shall be
submitted to arbitration in Los Angeles under the supervision of the American
Arbitration Association ("AAA") by one arbitrator to be mutually selected by the
Company and Executive, with the AAA to appoint an arbitrator experienced in the
resolution of executive employment disputes in the event that the parties are
unable to agree on the selection of an arbitrator. The proceedings at
arbitration shall be confidential, and all documents and other information
relating to the arbitration shall not be disclosed to any third party except as
required by law. The award of the arbitrator shall be final and conclusive upon
the parties, and the parties shall not contest or seek relief from the award in
any court. Judgment upon the arbitration award may be rendered in any court
having jurisdiction thereof, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. The Company shall pay or reimburse Executive for any and all costs and
expenses reasonably incurred by Executive (including arbitration costs and legal
fees and expenses) in clarifying or enforcing Executive's rights under this
Agreement if Executive prevails on the merits of the claim in respect of which
such legal fees and expenses are incurred, and Executive shall pay or reimburse
the Company for any and all costs and expenses reasonably incurred by the
Company (including arbitration costs and legal fees and expenses) in clarifying
or enforcing its rights under this Agreement if the Company prevails on the
merits of the claim in respect of which such legal fees and expenses are
incurred.
(i) Governing Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of
California applicable to contracts entered into and performed in such State.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
-------------------------------------
Xxxxxxx Xxxxxxx
OLYMPIC ENTERTAINMENT GROUP, INC.
-------------------------------------
By: Xxxxxxx X. Xxxxxxxxx, President
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