EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Agreement (this "Agreement"), dated as of February 1,
2003, is by and between American Vantage Companies, a Nevada corporation having
its principal offices at 0000 Xxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000
(the "Company"), and Xxxxxx X. Xxxxxxxxx, an individual with a current mailing
address at X.X. Xxx 00000, Xxx Xxxxx, Xxxxxx 00000 (individually, the
"Executive" and, together with the Company, the "parties").
RECITALS
WHEREAS, the Executive and American Casino
Enterprises, Inc., the former name of the Company, had originally
entered into an Employment Agreement dated March 15, 1995, as amended
as of July 20, 1995 (collectively, the "Prior Agreement");
WHEREAS, the Executive and American Vantage entered
into an employment agreement dated April 1, 2002, and have extended the
terms of such agreement by letter agreements until January 31, 2003;
WHEREAS, the Executive has been employed by the
Company for more than twenty years and is currently the Company's Chief
Executive Officer and President;
WHEREAS, the Executive possesses an intimate
knowledge of the business and affairs of the Company, its policies,
methods, personnel and problems;
WHEREAS, the Board of Directors of the Company (the
"Board") recognizes the Executive's contribution as Chief Executive
Officer and President to the growth and success of the Company has been
substantial and desires to assure the Company of the Executive's
continued employment in an executive capacity and to compensate the
Executive therefor; and
WHEREAS, the Executive is desirous of committing
himself to serve the Company on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. Termination of Prior Agreement. This Agreement supercedes all prior
agreements in all respects and they are terminated in their entirety and hereby
made null and void with no party to the Prior Agreements having any rights,
obligations or liabilities under them.
2. Employment; Term.
(a) The Company hereby agrees to continue to employ the
Executive as Chief Executive Officer and President of the Company, and the
Executive hereby agrees to continue to serve the Company, on the terms and
conditions set forth herein.
(b) The term of this Agreement shall begin on the date hereof
and shall end on January 31, 2006 (the "Term").
3. Position and Duties.
(a) The Executive shall serve as the Chief Executive Officer
and President of the Company, reporting only to the Board, and shall have
supervision and control over, and responsibility for, the general management and
operation of the Company, and shall have such other powers and duties as may
from time to time be prescribed by the Board, provided that such duties are
consistent with his present duties and with the Executive's position as the
senior executive officer in charge of the general management of the Company.
(b) The Company shall use its best efforts to cause Executive
to continue to serve as the Chairman of the Board and as a director of the
Company.
(c) Executive agrees to devote Executive's full time,
attention, efforts, loyalties and energies to the business and affairs of the
Corporation. Notwithstanding the immediately preceding sentence, Executive shall
be permitted to devote a reasonable amount of time, attention and energies to
reasonable community activities and public affairs, provided such engagement
shall not in any way conflict with Executive's duties under this Agreement or
with the business of the Company.
4. Place of Performance. In connection with the Executive's employment by the
Company, the Executive shall be based at the Company's principal executive
offices located in Las Vegas, Nevada ("Principal Office"). The Executive shall
not be required, without the Executive's consent, to permanently relocate to any
other location.
5. Compensation.
(a) Base Salary. The Executive shall receive a minimum annual
base salary ("Base Salary") at the rate of $300,000 per annum, subject to
withholding and other deductions as required by law or otherwise authorized in
writing by Executive. During the Term, the Base Salary shall be increased on an
annual basis, effective as of January 1st of each calendar year, based upon no
less than the greater of: (i) the proportional annual increase provided to any
of the Company's other salaried senior executives and (ii) the proportional
increase in the Annual Average All Items Index of the U.S. City Average Consumer
Price Index for All Urban Consumers ("CPI - U") as published by the U.S. Bureau
of Labor Statistics, during the most recent published twelve month period prior
to the effective date of any such increase.
(b) Discretional Increases in Base Salary. No later than
November 15th of each year during the Term, the Board, through its Compensation
Committee, shall conduct a review (each, a "Salary Review") to determine, in
good faith using its reasonable discretion, whether to increase the Base Salary,
such increase to be effective retroactively as of the first day of the fiscal
year of the Company in which the Salary Review is conducted. In conducting the
salary review, the Compensation Committee shall review (i) the Executive's
performance during the most recently completed fiscal year of the Company, (ii)
the general financial condition of the Company at the end of the most recently
completed fiscal year of the Company, (iii) any increase in shareholders' equity
of the Company during the most recently completed fiscal year of the Company,
(iv) compensation received by similarly situated executives in similarly
situated companies located in the Las Vegas, Nevada metropolitan area and (e)
such other factors as the Compensation Committee may, in its sole discretion,
determine to be applicable. Any such increase in Base Salary or other
compensation granted pursuant to this section 5(b) shall in no way limit or
reduce any other obligation of the Company under this Agreement. Notwithstanding
anything to the contrary contained in this Agreement, once increased, whether
increased pursuant to paragraph 5(a) or this paragraph 5(b), the Base Salary may
not be decreased without the affirmative written consent of Executive.
(c) Incentive Compensation. In addition to Base Salary,
Executive shall be entitled to receive such incentive compensation ("Incentive
Award") as the Board may determine pursuant to the Company's existing employee
stock option plan(s) or any similar plan adopted or to be adopted by the Company
(the "Plan") during the Term of this Agreement, and any other Company incentive
or bonus compensation programs in accordance with the Company's then practice.
The Board, through its Compensation Committee, shall, in good faith, determine
in its reasonable discretion any Incentive Award. For any period less than a
full calendar year during the Term, Executive shall receive an amount equal to
the prorated portion of the incentive compensation payable pursuant to the
Incentive Award. In the event
that an Incentive Award shall be based upon the results of the Company for any
fiscal year, the amount of any Incentive Award payable to Executive pursuant to
this subsection 5(c) will be determined as promptly as practicable after the
determination of the Company's results for such fiscal year, but not later than
30 days after the Company's receipt of consolidated audited financial statements
for such fiscal year. Simultaneously with the payment of such additional
compensation, the Company will deliver to Executive a report of its principal
financial or accounting officer showing in reasonable detail the computation of
such Incentive Award. If, within 30 days of receipt of such additional
compensation and report, Executive shall notify the Company that Executive
disagrees with the computation set forth in such report, the dispute shall be
submitted for resolution in accordance with Article 21 of this Agreement and
such resolution shall be binding upon all parties hereto.
For the purposes of this Agreement, "Total Compensation" for
any given year shall mean the sum of the Base Salary actually due Executive for
such year plus all Incentive Awards granted Executive during such year.
(d) Expenses. During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in performing services hereunder, provided that the
Executive properly accounts therefor in accordance with Company policy.
Except as set forth in P. 8(d) and P. 21, the Executive shall
be reimbursed for his personal legal and financial consulting fees subject to a
maximum of three percent (3%) of the prior calendar year's Base Salary.
(e) Fringe Benefits. The Executive shall be entitled to
continue to participate in or receive benefits under all the Company's employee
benefits plans and arrangements in effect on the date hereof available to senior
executives of the Company or plans or arrangements providing the Executive with
at least equivalent benefits thereunder. The Company shall pay all costs,
expenses and charges for the Executive's health insurance (including dental if
it becomes available to the Company's senior executives), Life Insurance
policies (as hereinafter defined) and D & O (as hereinafter defined). The
Executive shall be entitled to participate in or receive benefits under any
retirement plan, profit-sharing plan, savings plan, stock option plan, life
insurance, Directors and Officer's Liability Indemnification Insurance Policy
covering liabilities which may have accrued or that will be incurred by the
performance of his services on behalf of the Company, currently with limits of
$3,000,000 per occurrence, and $3,000,000 in overall coverage ("D & O"),
health-and-accident plan or an arrangement made available by the Company in the
future to its executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Nothing paid to the Executive under any plan or arrangement in
sections 5(d) - (i) presently in effect or made available in the future (other
than under the Incentive Compensation referred in section 5(c) hereof), shall be
deemed to be in lieu of compensation to the Executive hereunder.
(f) Vacations. The Executive shall be entitled to the number
of paid vacation days in each calendar year determined by the Company from time
to time for its senior executive officers, but not less than four weeks in any
calendar year (prorated in any calendar year during which the Executive is
employed hereunder for less than the entire such year in accordance with the
number of days in such calendar year during which he is so employed). The
Executive shall not take more than three consecutive weeks of vacation during
any calendar year. The Executive shall also be entitled to all paid holidays
given by the Company to its executive officers.
(g) Life Insurance. The Company shall maintain, at its expense
and at no cost to the Executive but subject to Executive being insurable, a term
life insurance policy on the life of the Executive providing for a minimum death
benefit of Two Million Dollars ($2,000,000) ("Life Insurance"). The Executive
shall have the right to designate the beneficiary of the Life Insurance.
(h) Automobile. The Company shall pay all normal expenses
relating to the use of the Executive's personal automobile for Company purposes,
including but not limited to, all repairs,
maintenance, insurance, licensing, gas, oil and taxes associated with the
operation and ownership of such automobile.
(i) Perquisites. The Executive shall be entitled to continue
to receive the fringe benefits appertaining to the offices of director, Chairman
of the Board, Chief Executive Officer and President of the Company in accordance
with present practice, except that, so long as Executive remains an executive or
senior officer of the Company, Executive shall not be entitled to a fee with
respect to the attendance at any meeting of the Board or any committee of the
Board.
6. Termination.
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder upon (i)
the willful failure by the Executive to substantially perform his duties
hereunder, other than any such failure resulting from the Executive's incapacity
due to physical or mental illness, or (ii) the Executive engaging in the
commission of fraud, embezzlement or theft. Prior to any termination pursuant to
this section 6(b), the Company must give Executive reasonable written notice and
adequate opportunity to respond to the reasons for such termination for Cause
or, where applicable, cure.
(c) Termination by the Executive. The Executive may terminate
his employment hereunder (i) for Good Reason (as hereinafter defined) or (ii) if
his health should become impaired to an extent that makes the continued
performance of his duties hereunder hazardous to his physical or mental health
or his life. For purposes of this Agreement, "Good Reason" shall mean (A) a
change in control of the Company (as defined below), (B) any assignment to the
Executive of any duties significantly different from those contemplated by, or
any limitation of the powers of the Executive in any respect not contemplated
by, section 3 hereof, (C) any removal of the Executive from or any failure to
re-elect the Executive to any of the positions indicated in section 3 hereof,
except in connection with termination of the Executive's employment for Cause,
(D) any material failure by the Company to comply with section 5 hereof, (E)
failure by the Company to comply with section 4 hereof in any significant
respect, (F) failure of the Company to obtain the assumption of this Agreement
by any successor as contemplated in Section 13 hereof, (G) the Company's failure
to provide Executive with benefit increases as provided to other salaried
executives of the Company as specified in section 5 hereof, or (H) the Executive
remains in employment with the Company through a change in control of the
Company and then voluntarily resigns or otherwise voluntarily terminates his
employment upon written notice of termination by Executive to the Company at any
time prior to or during the two years following a "change in control" of the
Company. For the purposes of this paragraph 6(c), a "change in control shall be
deemed to occur when and only when any of the following events first occurs:
(w) any person becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting
securities;
(x) two or more directors, whose election or
nomination for election is not approved by a majority of the "incumbent
board," are elected within any single 24-month consecutive period to
serve on the Board;
(y) members of the incumbent board cease to
constitute a majority of the Board without the approval of the
remaining members of the incumbent board; or
(z) any merger (other than a merger where the Company
is the survivor and there is no accompanying change in control under
clauses (i), (ii) or (iii) of this paragraph 6(e), consolidation,
liquidation or dissolution of the Company, or the sale of all or
substantially all of the assets of the Company.
(d) Notice of Termination. Any termination by the Company
pursuant to subsection 6(b) or by the Executive pursuant to subsection 6(c)
shall be communicated by writing a Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which 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 the Executive's employment under
the provision so indicated.
(e) Termination Date. For purposes of this Agreement, the term
"Termination Date" shall mean (i) if the Executive's employment is terminated by
his death, the date of his death, (ii) if the Executive's employment is
terminated pursuant to subsection 6(b), the date specified in the Notice of
Termination.
7. Disability. If as a result of the Executive's incapacity due to physical or
mental illness ("Disability"), the Executive shall have been absent from his
duties hereunder on a full time basis for twelve consecutive months, and within
30 days after the Company notifies the Executive in writing that it intends to
replace him, the Executive shall not have returned to the performance of his
duties hereunder on a full time basis, the Company may replace the Executive
without breaching this Agreement. Such disability will not act to terminate the
Executive's employment under this Agreement, unless the Company provides notice
to replace the Executive as provided herein.
If disabled within the meaning of this paragraph, the Company
shall maintain in full force and effect, for the continued benefit of the
Executive for the Term, including any extension thereof, all employee benefit
plans and programs in which the Executive was entitled to participate
immediately prior to the replacement date provided that the Executive's
continued participation is possible under the general terms and provisions of
such plans and programs. In the event that the Executive's participation in any
such plan or program is barred as a result of the Disability, the Executive
shall be entitled to receive an amount equal to the annual contributions,
payment, credits or allocations which would have been made by the Company to
him, to his account or on his behalf under such plans and programs from which
his continued participation is barred.
If the parties hereto disagree as to the determination of the
Executive's Disability, the term Disability (or Disabled) shall mean the
Executive's inability, either mentally or physically, to perform the necessary
functions of the Executive's position of employment with the Company, and such
Disability shall be deemed to exist if it persists for a period of twelve
consecutive months unless the parties hereto agree otherwise. If the Company
shall find on the basis of medical evidence reasonably satisfactory to it that
the Executive is so totally mentally or physically disabled as to be unable to
engage in further employment by the Company and that Disability shall be
determined to be such that it will cause, or actually does cause or has caused,
the Executive to be absent from work for a period in excess of twelve
consecutive months, the Company shall have a right to terminate Executive.
8. Compensation Upon Termination, Death or During Disability.
(a) If the Executive's employment shall be terminated by
reason of his death, the Company shall pay to such person as the Executive shall
designate in a notice filed with the Company, or, if no such person shall be
designated, to the Executive's estate as a lump sum death benefit, an amount
equal to the sum of (i) the annualized average of the Base Salary paid to
Executive for the five calendar years immediately preceding Executive's death
plus (ii) the annualized average of the Incentive Awards paid to the Executive
for the five calendar years immediately preceding the Executive's death pursuant
to subsection 5(b) hereof. Such amount shall be exclusive of and in addition to
any payments the Executive's widow, beneficiaries or estate may be entitled to
receive pursuant to any pension or employee benefit plan or any Life Insurance
policy.
(b) During any period that the Executive fails to perform his
duties hereunder as a result of a Disability, the Executive shall continue to
receive his Total Compensation during the initial waiting period as provided by
the Company's existing or thereafter adopted (during the term of this Agreement)
disability insurance plan. Upon the Executive becoming Disabled, the Executive
shall be paid 100% of the five calendar year average of his Total Compensation
for one year, less payments made by Social Security and less payments made by
the Company's insurance carrier in accordance with the Company's existing
long-term disability plan or, if a long-term disability plan does not exist as
of the execution date hereof, then in accordance with any long-term disability
plan hereinafter adopted by the Company during the Term of this Agreement.
(c) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive his full Base Salary through the
Termination Date at the rate in effect at the time Notice of Termination is
given and the Company shall have no further obligations to the Executive under
this Agreement.
(d) If, during the Term, the Company terminates the
Executive's employment other than for Cause, death or Disability, or the
Executive terminates employment for Good Reason: (i) within 90 days following
the Termination Date, the Company shall pay the Executive an amount equal to (A)
the sum of the annualized total average of the Base Salary and Incentive Awards
granted during the five calendar year period ended immediately prior to the
Termination Date, (B) multiplied by two and ninety-nine one hundredths (2.99);
(ii) within 30 days following the Termination Date, the Company shall pay the
Executive his Total Compensation through the Termination Date to the extent not
yet paid; (iii) within 30 days following the presentment of any legal bills
(including retainer fees) relating to the Executive's enforcement of his rights
under this Agreement, including bills relating to the interpretation of
Executive's rights under this Agreement, the Company shall pay up to $100,000 of
such bills; and (iv) all outstanding unexercised stock options granted to the
Executive under the Company's stock option plans and/or other Incentive Awards
held or contingently payable to the Executive as of the Termination Date shall
become fully vested and exercisable as of the Termination Date and shall
continue to be exercisable for the life of such option or Incentive Award, as
the case may be.
(e) Unless the Executive is terminated for Cause or the
Executive terminates his employment for other than Good Reason or Disability,
the Company at its sole cost shall maintain in force and effect, for the
continued benefit of the Executive and his family for the Term of this Agreement
including any extension thereof, all employee benefit plans and programs in
which the Executive was entitled to participate immediately prior to the
Termination Date (including specifically but without limitation the benefits
which the Executive would have been entitled to receive pursuant to the
Company's pension plan had his employment continued for the Term provided in
Section 1 hereof at the rate of compensation specified herein), provided that
the Executive's continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Executive's
participation in any such plan or program is barred as a result of such
termination, the Executive shall be entitled to receive an amount equal to the
annual contributions, payments, credits or allocations which would have been
made by the Company to him, to his account or an his behalf under such plans and
programs from which his continued participation is barred.
(f) Unless the Executive is terminated for Cause or the
Executive terminates his employment for other than Good Reason or Disability,
the Company agrees that: (i) following the Termination Date, the Company shall
pay, at its sole cost and expense, to or on behalf of the Executive all the
premiums toward the provision of health insurance for the Executive and his
family for a period of twelve months commencing on the Termination Date; (ii)
through the end of the Term, the Company shall use its best efforts to continue
the Executive's same coverage under its group health plan(s) after his
Termination Date as he had prior to his Termination Date; if, despite those
efforts, the Company is not permitted to continue the Executive's coverage under
such plan(s), the Company shall pay the amounts described in subsection 8(f)(i),
directly to the Executive annually in advance of the period of coverage; (iii)
subject to subsection 8(f)(ii), upon the Executive's death, through the end of
the Term, his spouse and family (intended to include spouse and any minor
children living within the household) shall be entitled to health insurance
coverage and payments as described in subsection 8(f)(i); (iv) payments provided
pursuant to this Section 8 shall not be construed to be in lieu of, or to
interfere with, the Executive or his spouse's right to conversion privileges
under the Company's group health plan; however, the Company's obligation to
provide continuation coverage (COBRA) to the Executive or his spouse under its
group health plan shall be satisfied to the extent payments are made to the
Executive and his spouse in accordance with this Section 8 for the otherwise
applicable continuation coverage period; (v) if the Executive's termination is
the result of his death or Disability, through the end of the Term, the benefits
provided pursuant to this Section 8 shall be provided to the Executive's spouse
or to the Executive, as appropriate; and (vi) the Company shall maintain for
twelve months commencing on the Termination Date, each individual Life Insurance
policy, by paying its share of the premium on, and preventing a lapse of
coverage (due to actions solely within the control of the Company) under, such
Life Insurance policies.
(g) If the Executive is terminated for any reason except for
Cause, on the Termination Date the Company shall transfer to the Executive any
and all Life Insurance policies together with the cash value of the policies on
the Termination Date, plus prepaid premiums accrued thereon. If the Executive's
Termination occurs as a result of the Executive's death or Disability, the
benefits provided pursuant to this section 8(g) shall be provided to the
Executive's spouse or to the Executive's estate, as appropriate.
(h) The Executive shall not be required to mitigate the amount
of any payment provided for in this Section 8 by seeking other employment or
otherwise, nor will the amount of damages or severance benefits payable to the
Executive under this Section 8 be reduced by reason of his securing other
employment or for any other reason, unless otherwise provided in this Agreement.
(i) Notwithstanding anything to the contrary contained in this
Agreement, the maximum amount payable to Executive under this Section 8,
together with all other amounts that may be due or payable to Executive under
this Agreement as result of the termination of employment of Executive by the
Corporation, shall be equal to the amount which would otherwise result in an
"excess parachute payment" under section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), or to any successor to said section or the Code,
minus $1.00, in each case giving effect to the present value of any future
payment required under this Section 8 or otherwise in this Agreement.
9. Restrictive Covenants.
(a) Restrictions. Executive covenants that, except in
furtherance of Executive's duties hereunder and as approved by the Board:
(i) Competitive Activity. During the Restricted
Period (as hereinafter defined), Executive shall not, directly or
indirectly, own any interest in, participate or engage in, assist,
render any services (including advisory services) to, become associated
with, work for, serve (in any capacity whatsoever, including, without
limitation, as an employee, consultant, advisor, agent, independent
contractor, officer or director) or otherwise become in any way or
manner connected with the ownership, management, operation, or control
of, any business, firm, corporation, partnership, trust or other
business or governmental entity (collectively, together with any
individual, a "Person") that engages in, or assists others in engaging
in or conducting, any business that deals, directly or indirectly, in
products or services similar to or competitive with the Company's
product line or services anywhere in the world that the Company does
business through Executive's last day of employment; provided, however,
that the restrictions set forth in this paragraph 9(a)(i) shall not be
deemed to exclude Executive from acting as director of a corporation
for the benefit of the Company with the consent of the Board; and
provided, further, that the restrictions set forth in this paragraph
9(a)(i) shall not be deemed to prohibit Executive from owning or
acquiring securities issued by any corporation whose securities are
listed on a national securities exchange or are quoted on Nasdaq or the
OTC Bulletin Board, provided that Executive at no time owns, directly
or indirectly, beneficially or otherwise, one (1%) percent or more of
any class of any such corporation's outstanding capital stock.
(ii) Non-Solicitation of Customers. During the
Restricted Period, Executive shall not knowingly provide or solicit to
provide to any Person any goods or services that are competitive with
those provided by the Company or that would be competitive with the
goods or services that the Company has planned to provide. The term
"customer" shall mean any Person to whom the Company has provided goods
and services during the last five years of Executive's employment by
the Company.
(iii) Non-Solicitation of Company Personnel. During
the Restricted Period, Executive will not solicit for employment, or
attempt to solicit, directly or by assisting others, any employee of
the Company with whom Executive had contact during Executive's
employment with the Company. For the purposes of this paragraph
9(a)(iii), "contact" means any interaction whatsoever between Executive
and the other employee.
(iv) Protected Information. Executive shall not
divulge to others, nor shall Executive use at any time during the
Restricted Period or thereafter, any confidential or trade secret
information obtained by Executive during the course of Executive's
employment with the Company, including information relating to sales,
salespersons, sales volume or strategy, customers, formulas, processes,
methods, machines, manufactures, compositions, ideas, improvements or
inventions belonging to or relating to the business of the Company, or
its subsidiary or affiliated companies.
(v) Non-Disparagement. Executive covenants and agrees
that during the Restricted Period or at any time thereafter, Executive
shall not, directly or indirectly, in public or private, deprecate,
impugn, disparage, or make any remarks that would tend to or be
construed to tend to defame the Company or any of its employees,
members of its board of directors or agents, nor shall Executive assist
any other person, firm or company in so doing.
(b) Definition of "Restricted Period." For purposes of this
Agreement, the term "Restricted Period" shall mean the Term and the period of
five years commencing immediately upon the termination of Executive's employment
with the Company.
(c) Enforcement of Covenants. Executive acknowledges that
Executive's breach of any of the restrictive covenants contained in this Section
9 may cause irreparable damage to the Company for which remedies at law would be
inadequate. Accordingly, if Executive breaches or threatens to breach any of the
provisions of this Section 9, the Company shall be entitled to appropriate
injunctive relief, including, without limitation, preliminary and permanent
injunctions, in any court of competent jurisdiction, restraining Executive from
taking any action prohibited under this Section 9. This remedy shall be in
addition to all other remedies available to the Company at law or in equity. If
any portion of this Section 9 is adjudicated to be invalid or unenforceable,
this Section 9 shall be deemed amended to delete therefrom the portion so
adjudicated, such deletion to apply only with respect to the operation of this
Section 9 in the jurisdiction in which such adjudication is made.
10. Proprietary Property.
(a) Ownership of Proprietary Property. Executive agrees that
any and all inventions, discoveries, investigations, know-how, trade secrets and
developments or improvements in technology (collectively "Inventions") as well
as any and all Proprietary Information (as defined in Section 10(b) below)
created, developed, conceived of or discovered during the Term or any prior
period of Executive's employment with the Company (i) by Executive (solely or
jointly with others) either (A) in the course of Executive's employment or
engagement, on the Company's time or with the Company's materials or facilities,
or (B) relating to any subject matter with which Executive's work for the
Company is or may be concerned or to any business in which the Company or any of
its subsidiaries or affiliated companies is involved, regardless of how or when
Executive shall have created, developed, conceived, or discovered such
Inventions or Proprietary Information (collectively, "Proprietary Property"), or
(ii) by or for the Company, or (iii) by any independent Person and thereafter
acquired by the Company, and which are within Executive's knowledge or
possession in the case of clause (i) of this Section 10(a) or that come into
Executive's knowledge or possession during the Term the Term or any prior period
of Executive's employment with the Company in the case of clauses (ii) or (iii)
of this Section 10(a), shall be, if created, developed, conceived of or
discovered by Executive, promptly disclosed to the Company, or shall be, if
otherwise developed or acquired by the Company, received by Executive as an
employee, consultant or retiree of the Company and not in any way for
Executive's own benefit. Executive shall neither have nor obtain any right,
title or interest in or to such Proprietary Property unless and until the
Company shall expressly and in writing waive the rights that it has therein and
thereto under the provisions of this Section 10.
With respect to any and all Proprietary Property that is invented, created,
written, developed, furnished or produced by Executive, or suggested by
Executive to the Company, during the Term or any prior period of Executive's
employment with the Company, Executive does hereby agree that all such
Proprietary Property shall be the exclusive property of the Company, and that
Executive shall neither have nor retain any right, title or interest, of any
kind therein and thereto or in and to any results or proceeds therefrom. At any
time, whether during or after the Term, Executive will, upon the request and at
the expense of the Company, (x) obtain patents or copyrights on, or (y) permit
the Company to patent or copyright, any such Proprietary Property, whichever (x)
or (y) is appropriate, and/or (z) execute, acknowledge and deliver any and all
assignments, instruments of transfer, or other documents, that the Company deems
necessary or appropriate to transfer to and vest in the Company all right, title
and interest in and to such Proprietary Property and to evidence the Company's
ownership of such Proprietary Property, including, without limitation, taking
all steps necessary to enable the Company to publish or protect said Proprietary
Property by patents or otherwise in any and all countries and to render all such
assistance as the Company may require in any patent office proceeding or
litigation involving said Proprietary Property. Executive shall not, without
limitation as to time or place, use any Proprietary Property except on Company
business, during or after the Term, nor disclose the same to any other Person or
individual except for disclosure on Company business or as may be required by
law.
(b) Definition of Proprietary Information. As used in this
Agreement, "Proprietary Information" means any information about the affairs of
the Company or any of its subsidiaries or affiliates, including, without
limitation, trade secrets, trade "know-how," inventions, customer lists, client
lists, business plans, operational methods, pricing policies, marketing plans,
sales plans, identity of suppliers, trading positions, sales, profits or other
financial information, which is confidential to the Company or any of its
subsidiaries or affiliates or is not generally known in the relevant trade,
regardless of whether Executive developed such information.
(c) Disclosure of Proprietary Property. During the Term and
thereafter, Executive will not, directly or indirectly, lecture upon, publish
articles concerning, use, disseminate, disclose, sell or offer for sale any
Proprietary Property without the Company's prior written permission.
11. Indemnification.
(a) (i) Except as otherwise provided in subsection 11(b), and
to the fullest extent allowable by law and the Company's Articles of
Incorporation, as may be amended from time to time, the Company shall indemnify
the Executive for the Executive's reasonable attorneys' fees and disbursements
incurred in any litigation for the purpose of interpreting any provision of this
Agreement.
(ii) Except as otherwise provided in subsection
11(b), and to the fullest extent allowed by law, the Company shall
indemnify and hold Executive free and harmless from any liability for
injury or death to persons or damage or destruction of property due to
any cause whatsoever, either in or about the Company, any properties
managed, owned or operated by the Company or elsewhere, as a result of
the performance by the Executive of his duties under this Agreement
irrespective of whether alleged to be caused, wholly or partially, by
the Executive;
(iii) Except as otherwise provided in subsection
11(b), the Company shall reimburse the Executive upon written demand
for any money or other property which the Executive is required to pay
out for any reason whatsoever in performing his duties hereunder,
whether the payment is for charges or debts incurred or assumed by the
Executive or any other party, or judgments, settlements, or expenses in
defense claim, civil or criminal action, proceeding, charge, or
prosecution made, instituted or maintained against the Executive or the
Company, jointly or severally, because of the condition or use of any
properties managed, owned or operated, or acts or failures to act of
the Executive, or arising out of or based upon any law, regulation,
requirement, contract or award; and
(iv) Except as otherwise provided in subsection
11(b), the Company shall defend any claim, action, suit or proceeding
brought against the Executive, arising out of or connected with any of
the foregoing, and to hold harmless and fully indemnify the Executive
from any judgment, loss or settlement on account thereof, regardless of
the jurisdiction in which any such claim, actions, suits or proceedings
may be brought.
(b) Notwithstanding the foregoing, Company shall not be liable
to indemnify and hold the Executive harmless from any liability described above
which results from the gross negligence or willful misconduct of the Executive.
(c) If (i) the Company shall be obligated to indemnify the
Executive hereunder, or (ii) a suit, action, investigation, claim or proceeding
is begun, made or instituted as a result of which the Company may become
obligated to the Executive hereunder, the Executive shall give prompt written
notice to the Company of the occurrence of such event. The Company agrees to
defend, contest or otherwise protect against any such suit action,
investigation, claim or proceeding at the Company's own cost and expense. The
Executive shall have the right but not the obligation to participate at his own
expense in the defense thereof by counsel of his own choice. In the event that
the Company fails timely to defend, contest or otherwise protect against any
such suit, action, investigation, claim or proceeding, the Executive shall have
the right to defend, contest or otherwise protect against the same and may make
any compromise or settlement thereof and recover the entire cost thereof from
the Company including, without limitations, reasonable attorneys' fees,
disbursements and all amounts paid or payable as a result of such suit, action,
investigation, claim, or proceeding or compromise or settlement thereof.
12. Definitions. For the purposes of this Agreement,
(a) Company shall mean (i) American Vantage Companies, Inc.,
if the Executive is employed by the Company on his Termination Date, and (ii) a
Successor Organization, if Executive is employed by a Successor Organization on
his Termination Date;
(b) Company shall include all of the Company's subsidiaries;
and
(c) Successor Organization shall mean any one or more
individuals, organizations or entities (except, in any event, the Company or any
of its affiliates) that, as a result of a direct or indirect sale, merger,
consolidation of such events, owns or controls (i) twenty percent (20%) or more
of the combined voting power of the Company of the then outstanding securities,
or (ii) substantially all of the Company's assets.
13. Successors: Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms its he would be entitled to hereunder if he terminated his employment for
Good Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.
(c) Neither this Agreement nor any rights arising hereunder
may be assigned or pledged by the Executive.
14. Notice. For the purposes 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
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive, to: Xxxxxx X. Xxxxxxxxx
X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
If to the Company, to: American Vantage Companies, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxxxxx - Xxxxx 000
X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Accounting Officer
with a copy to: Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxx Xxxxxx, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is approved by the
Board and agreed to in writing signed by the Executive and such officer as may
be specifically authorized by the Board. 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 set forth expressly in this
Agreement. For purposes of this Agreement, it is understood that any references
to duties, practices, procedures, places, arrangements, or policies of the
Company in effect on or prior to the date of this Agreement shall be deemed to
be those of American Vantage Companies.
16. Payment Obligations Absolute. The Company's obligation to pay the
Executive's Total Compensation and all other sums due pursuant to this Agreement
and to make the appropriate arrangements as provided for herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment defense or
other right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand
except as provided herein. Each and every payment made hereunder by the Company
shall be final and the Company will not seek to recover all or any part of such
payment from the Executive or from whosoever may be entitled thereto, for any
reason whatsoever. The Executive shall not be obligated to seek other employment
in mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligation to make the payments and
arrangements required to be made under this Agreement.
17. Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Nevada without
giving effect to any conflict of law provisions, and the parties irrevocably
submit to the jurisdiction of any state or federal court of the State of Nevada,
located in the city of Las Vegas, Xxxxx County, for the purpose of any suit,
action or other proceeding arising out of this Agreement.
18. Validity. The invalidity or unenforceability of any provision or provisions
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.
19. Counterparts. 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 will
constitute one and the same instrument.
20. Currency. All sums of money referred to herein shall be payable in U.S.
currency.
21. Arbitration.
(a) Any dispute arising between the parties to this Agreement,
including, but not limited to, those pertaining to the formation, validity,
interpretation, effect or alleged breach of this Agreement ("Arbitrable
Dispute") will be submitted to arbitration in Las Vegas, Nevada, before an
experienced employment arbitrator and selected in accordance with the rules of
the American Arbitration Association labor tribunal. Each party shall pay the
fees of their respective attorneys, the expenses of their witnesses and any
other expenses connected with presenting their claim. Other costs of the
arbitration, including the fees of the arbitrator, cost of any record or
transcript of the arbitration, administrative fees, and other fees and costs
shall be borne equally by the parties to this Agreement.
(b) Should any party to this Agreement hereafter institute any
legal action or administrative proceedings against another party with respect to
any claim waived by this Agreement or pursue any other Arbitrable Dispute by any
method other than said arbitration, the responding party shall be entitled to
recover from the initiating party all damages, costs, expenses and attorney's
fees incurred as a result of such action.
IN WITNESS WHEREOF, the parties have executed. this Agreement
as of the date and year first above
written.
American Vantage Companies
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx,
Chairman of the Compensation Committee
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
