FORM OF
EMPLOYMENT AGREEMENT
This Agreement is made as of __________, 1996 by and between
Stephen J. Szapor, Jr. (the "Executive") and Colorado Gaming &
Entertainment Co., a Delaware corporation (the "Company").
Recitals
The Company desires to retain the services of Executive as
its President and Chief Executive Officer, and as a Director of
the Company, and the Executive is willing to serve in such
capacity on the terms and subject to the conditions herein set
forth.
NOW THEREFORE, in consideration of the promises, mutual
covenants and agreements contained herein, the Company and the
Executive agree as follows:
1. Employment and Duties. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to
employ the Executive during the Employment Period (as hereinafter
defined), as its President and Chief Executive Officer to perform
such duties and responsibilities as are customarily assigned to
such positions and such other duties and responsibilities not
inconsistent therewith as may be assigned to the Executive from
time to time by the Board of Directors of the Company. The
Executive shall be a member of the Board of Directors of the
Company on the Commencement Date (as hereinafter defined) and the
Board of Directors shall propose the Executive for reelection at
the conclusion of each term of the Executive as a director
occurring during the Employment Period.
2. Performance.
(a) General. The Executive accepts the employment
described in Section 1 of this Agreement and agrees to devote all
of his working time and efforts to the faithful and diligent
performance of the services described therein; provided, however,
that the Executive may participate in charitable activities and
may, subject to Section 15 hereof, participate in holding
investments and in businesses owned by members of the Executive's
family, provided that such participation does not have an adverse
impact on the Executive's performance of his duties for the
Company.
(b) Conduct. The Executive agrees that he will
conduct his activities, and will cause any activities conducted
on his behalf to be conducted in a lawful manner and specifically
will not engage in the following transactions:
(1) make payment or offers of payment, directly
or indirectly, to any domestic or foreign government
official or employee in order to obtain business, retain
business or direct business to others, or for the purpose of
inducing such government official or employee to fail to
perform or to perform improperly his official functions;
(2) receive, pay or offer anything of value,
directly or indirectly, from or to any private party in the
form of a commercial bribe, influence payment or kickback
for any such purpose; or
(3) use, directly or indirectly, any funds or
other assets of the Company for any unlawful purpose,
including, without limitation, political contributions in
violation of applicable law.
3. Term. The term of employment under this Agreement
shall commence on __________ (the "Commencement Date") and shall
remain in effect for a period of three (3) years, ending on
__________ (such date and the last day of any extended term of
employment pursuant to this Section 3 being referred to as the
"Termination Date"), unless sooner terminated hereunder (the
"Employment Period"). The Employment Period shall be
automatically renewed on the then current Termination Date for
successive one (1) year periods unless terminated by either the
Executive or the Company by giving written notice of termination
ninety (90) days in advance of the then current Termination Date.
4. Compensation.
(a) Base Salary. As base salary hereunder ("Base
Salary"), the Company agrees to pay, during the Employment
Period, a salary at an initial rate of Three Hundred Thousand
Dollars ($300,000) per annum payable in the manner and frequency
in which the Company's payroll for senior executives is
customarily paid. The Company and the Executive agree that the
Salary shall be subject to review at least annually, but may not
be reduced without the Executive's prior written consent.
(b) Incentive Compensation. In addition to the
Executive's Base Salary, the Executive shall be entitled, during
the Employment Period, to the following additional compensation
and benefits calculated as follows:
(1) Effective Date Bonus. The Executive shall be
entitled to a cash bonus of $100,000 which shall be fully earned
on the first day of the Employment Period and shall be payable
within five days of the Commencement Date.
(2) Stock Grant. On the Commencement Date, the
Executive shall be entitled to receive 138,888 shares of common
stock of the Company, which number of shares equals 2-1/2% of the
total number issued and outstanding shares of Company common
stock determined assuming that the maximum number of shares of
common stock of the Company available for grant under the
Management Incentive and Non-Employee Director Stock Bonus Plan
have been awarded and are issued and outstanding. It shall be a
condition precedent to the issuance of such shares that the
Executive make arrangements satisfactory to the Company to pay
any withholding taxes in respect of such shares.
(3) The Executive shall be a participant in the
Management Cash Bonus Plan of the Company at a level such that
the Executive will be entitled to 30% of the bonus pool created
by such plan and in the Management Incentive and Non-Employee
Director Stock Plan of the Company at a level such that the
Executive will be entitled to an award of 33 1/3% of the shares
of stock of the Company subject to award under such plan.
(c) Vacation and Sick Leave. The Executive shall be
entitled to vacation and sick leave in accordance with the
Company's policies for senior executive employees.
(d) Disability. If at any time during the Employment
Period the Executive is substantially unable to perform his
duties hereunder by reason or illness, accident, or other
disability and such disabilities is expected to last for a period
of six months or less (as confirmed by competent medical
evidence) ("Temporary Disability"), the Executive shall continue
to be treated as an employee hereunder for all purposes and be
entitled to receive periodic payments of Base Salary to which he
would otherwise be entitled pursuant to Section 4(a) of this
Agreement for at least the lesser of the balance of the
Employment Period or the period of such Temporary Disability. If
such disability is expected to last for a period of more than six
months (as confirmed by complete medical evidence) ("Permanent
Disability"), the Executive shall be treated as an employee
hereunder for all purposes and be entitled to receive periodic
payments of Base Salary to which he would otherwise be entitled
to pursuant to Section 4(a) of the Agreement for at least the
lesser of the remaining balance of the Employment Period or six
(6) months. Any payments under any long term disability plan
maintained by the Company shall be an offset against any payments
to the Executive hereunder.
(e) Death. In the event of the death of the Executive
during the Employment Period, his designated successors shall be
entitled to receive, as a survivor's benefit, the periodic
payments of Base Salary that would otherwise be payable to the
Executive pursuant to Section 4(a) of this Agreement by reason of
his employment for the lesser of the balance of the Employment
Period or six (6) weeks. In the event of the Executive's death,
the Company will use its best efforts to advance up to three (3)
months Base Salary to the Executive's beneficiaries of any life
insurance provided pursuant to Section 4(f) hereof, provided that
such advances are to be repaid by such beneficiaries upon
receiving such insurance proceeds.
(f) Other Benefits.
(1) General. Except as otherwise specifically
provided herein, during the Employment Period, the Employee shall
be eligible for all non-wage benefits that the Company provides
generally for its senior executives, including retirement,
medical, life insurance and long term disability benefits. The
Company reserves the right to alter, amend or terminate its
standard benefit programs for senior executives and to alter or
amend coverages thereunder.
(2) Legal Counsel. During the term of the
Agreement, the Company agrees to pay for the reasonable costs of
the Executive's legal counsel in circumstances where legal
representation for the Executive is necessary or appropriate with
regard to actions taken by the Executive in his capacity as an
officer of the Company.
5. Business Expenses - Reimbursement. The Company shall
reimburse the Executive for the reasonable, ordinary, and
necessary business expenses incurred by him in connection with
the performance of his duties hereunder, including, but not
limited to, ordinary and necessary travel expenses and
entertainment expenses and car phone expenses. In addition, the
Company shall reimburse the Executive the full cost of obtaining
and continuing any licenses which must be obtained or continued
by the Executive due to his employment by the Company. The
Executive shall provide the Company with an accounting of his
expenses, which accounting shall clearly reflect which expenses
are reimbursable by the Company. The Executive shall provide the
Company with such other supporting documentation and other
substantiation of reimbursable expenses as will conform to
Internal Revenue Service or other requirements. All such
reimbursements shall be payable by the Company to the Executive
within a reasonable time after receipt by the Company of
appropriate documentation therefore provided, however, the
Company shall have no obligation to reimburse any expense for
which appropriate and customary back-up documentation is not
provided within sixty (60) days following accrual of the
obligation in question.
6. Termination By Company.
(a) Termination for Just Cause. The Company shall
have the option to terminate the employment of the Executive
hereunder, effective upon the effective date set forth in written
notice of such termination to the Executive, for Just Cause. For
purposes of this Agreement, the term "Just Cause" shall mean the
occurrence of any one or more of the following events: (i) the
material breach by the Executive of his covenants under this
Agreement, and the failure by the Executive to promptly cure the
breach or failure of performance upon written notice thereof from
the Company; (ii) the Executive's willful refusal to perform, or
his substantial neglect of, the duties assigned to the Executive
pursuant to Section 1 hereof, and the failure by the Executive to
promptly cure the breach or failure of performance upon written
notice thereof from the Company; (iii) the commission by the
Executive of theft or embezzlement of Company property or other
acts of dishonesty relating to his employment; (iv) the
commission by the Executive of a crime resulting in injury to the
business, property or reputation of the Company or any affiliate
of the Company or commission of other significant activities
harmful to the business or reputation of the Company or any
affiliate of the Company; (v) any significant violation of any
statutory or common law duty of loyalty to the Company; (vi)
failure of the Executive to comply with any provision of the
gaming or liquor laws of Colorado or any other jurisdiction in
which the Company or any affiliate conducts operations or is
applying for a gaming or liquor license or failure of the
Executive to comply with any rule or regulation of any
administrative body having jurisdiction, which may materially and
negatively affect the gaming or liquor license of the Executive
or the Company or any affiliate of the Company; or (vii) the
failure of the Executive to obtain or retain any permit, license
or approval required by any governmental authority and such
failure is not the result of any negligence or omission by the
Company. A termination of employment of the Executive for Just
Cause shall be effectuated by giving the Executive written notice
of the termination setting forth in reasonable detail the
specific conduct of the Executive that constitutes Just Cause and
the specific provision(s) of this Agreement on which the Company
relies, and shall be given within 90 days of the date on which
the Company first acquires knowledge of occurrence of the conduct
giving rise to Just Cause. Upon termination of the Executive for
Just Cause, the Company shall pay the Executive the unpaid
portion of Base Salary attributable to periods up to and
including the effective date of such termination and any other
amounts to which the Executive may be entitled under any benefit
plan maintained by the Company or as may otherwise be provided by
law, and the Executive shall not be entitled to any severance
benefits pursuant to Section 10 hereof and all obligations of the
Company hereunder shall cease.
(b) Termination Upon Death. This Agreement shall
automatically terminate upon the death of the Executive and,
other than as may be provided in Section 4 hereof or under any
benefit plan maintained by the Company or as may otherwise be
provided by law, the Company shall have no obligation to make,
and the Executive's estate or successors shall have no right to
receive, any further compensation or payments of any kind.
(c) Termination Upon Disability. The Company may
terminate this Agreement upon the Permanent Disability of the
Executive at the end of the period for which the Executive is
entitled to receive Base Salary pursuant to Section 4(d) hereof.
Thereafter, the Company shall be obligated to pay only the
amounts set forth in Section 4 of this Agreement or as to which
the Executive may be entitled under any benefit plan maintained
by the Company or as may otherwise be provided by law.
(d) Termination Without Just Cause. The Company shall
have the option to terminate the Employment Period at any time by
30 days written notice to the Executive. If none of the
circumstances allowing termination pursuant to Section 6(a), (b)
and (c) exist on the date such notice is given, such termination
shall be deemed to have been a termination without Just Cause and
the Executive shall be entitled to the unpaid portion of his Base
Salary attributable to periods up to and including the effective
date of such termination, to any other amounts to which the
Executive may be entitled under any benefit plan maintained by
the Company or as may otherwise be provided by law, and the
Executive shall be entitled to receive the severance benefits
described in Section 10 hereof.
7. Termination By Executive.
(a) Termination for Good Reason. The Executive shall
have the option to terminate his employment with the Company,
effective upon the effective date set forth in written notice of
such termination to the Company, for "Good Reason". For purposes
of this Agreement, Good Reason shall mean the occurrence of any
one or more of the following events: (i) the assignment to the
Executive of any duties inconsistent in any material respect with
the duties described in Section 1 hereof, or any other action by
the Company that results in an intentional diminution of the
Executive's position, authority, duties or responsibilities, and
(ii) any material breach of this Agreement by the Company that
either is not taken in good faith or is not remedied by the
Company promptly after receipt of notice thereof from the
Executive. A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written notice
of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason and
the specific provision(s) of this Agreement on which the
Executive relies, and shall be given within 60 days of the event
giving rise to the Good Reason. A termination of employment by
the Executive for Good Reason shall be effective on the fifth
business day following the date when such notice is given, unless
the notice sets forth alternate date (which date shall in no
event be later than 30 days after the notice is given). Upon
termination by the Executive for Good Reason, the Executive shall
be entitled to the unpaid portion of Base Salary attributable to
periods up to and including the effective date of such
termination, to any other amounts to which the Executive may be
entitled under any benefit plan maintained by the Company or as
otherwise may be provided by law, and the Executive shall be
entitled to receive the severance benefits described in Section
10 hereof.
(b) Termination Without Good Reason. The Executive
shall have the option to terminate his employment with the
Company at any time after the first anniversary of this
Agreement, upon six months prior written notice to the Company
delivered to the Company on or after such first anniversary date
of this Agreement. If none of the circumstances constituting
Good Reason exists on the date such notice is given, the
Executive shall be entitled to the unpaid portion of Base Salary
attributable to periods up to and including the effective date of
such termination and any other amounts to which the Executive may
be entitled under any benefit plan maintained by the Company or
as may otherwise be provided by law, and the Executive shall not
be entitled to any severance benefits pursuant to Section 10
hereof.
8. Surrender of Properties. Upon termination of the
Executive's employment with the Company, the Executive shall
promptly surrender to the Company all property provided him by
the Company for use in relation to his employment, and, in
addition, the employee shall surrender to the Company any and all
sales materials, lists of customers and prospective customers,
price lists, files, records, models, or other materials and
information of or pertaining to the Company or its customers or
prospective customers or the products, business, and operations
of the Company.
9. Continuation of Insurance. If, following notice of
termination given by the Company pursuant to Section 6(d) of this
Agreement, the Executive is unable to arrange alternate
employment before the stated effective date of such termination,
the Company shall, at the Company's expense, continue the
Executive's medical, disability, and life insurance coverage for
a period extending one hundred and twenty (120) days following
the effective date of termination or until the Executive secures
alternate employment, whichever date occurs first, and such
period shall be credited against any period for which the Company
is otherwise obligated to make such benefits available to the
Executive under Section 480-B of the Internal Revenue Code of
1986, as amended, or any similar provision of law.
10. Severance Pay. Notwithstanding any other provision of
this Agreement, if the Employment Period is terminated by the
Company or any successor of the Company pursuant to Section 6(d)
hereof, or by the Executive pursuant to Section 7(a) hereof, the
Company shall pay the Executive a severance benefit equal to the
greater of Five Hundred Thousand Dollars ($500,000.00) or the
Executive's Base Salary for the remaining Employment Period at
the annual rate in effect immediately prior to such termination.
Any payment required pursuant to this Section 10 shall be made
within thirty (30) days following the termination date.
11. Indemnification. The Executive shall indemnify the
Company and hold it harmless from and against any and all loss,
damage, and expense (including reasonable attorneys' fees and
disbursements) arising out of any claim or threat of claim
against the Executive or the Company resulting from or in any way
related to the Executive's relationship with any previous
employer, including any claim of breach of contract, interference
with contract or breach or impairment of a real or claimed
legally protected right of such previous employer.
12. Confidentiality of Information; Duty of Non-Disclosure.
The Executive acknowledges and agrees that his employment by the
Company under this Agreement necessarily involves his
understanding of, and access to, certain trade secrets and
confidential information pertaining to the business of the
Company. Accordingly, the Executive agrees that except as may be
required in the reasonable performance of his duties hereunder,
he will not, directly or indirectly, without the express consent
of the Company, disclose to or use for the benefit of any person,
corporation or other entity, or for himself, any and all files,
trade secrets or other confidential information concerning the
internal affairs of the Company, including, but not limited to,
information pertaining to its clients, services, products,
earnings, finances, operations, methods or other activities;
provided, however, that the foregoing shall not apply to
information which is of public record or is generally known,
disclosed or available to the general public or the industry
generally or was known by the Executive prior to his employment
under this Agreement. Further, the Executive agrees that he
shall not, directly or indirectly, remove or retain, without the
express prior written consent of the Company, and upon
termination of this Agreement for any reason shall return to the
Company, any figures, calculations, letters, papers, records,
computer disks, computer print-outs, lists, documents,
instruments, drawings, designs, programs, brochures, sales
literature, or any copies thereof, or any information or
instruments derived therefrom, or any other similar information
of any type or description, however such information might be
obtained or recorded, arising out of or in any way relating to
the business of the Company or obtained as a result of his
employment by the Company. The Executive acknowledges that all
of the foregoing are proprietary information, and are the
exclusive property of the Company. The covenants contained in
this Section 12 shall survive the termination of this Agreement.
13. Enforcement.
(a) Upon presentation of a claim or claims
(collectively, "Claims") arising out of or relating to this
Agreement, or the breach hereof, by an aggrieved party, the other
party shall have thirty (30) days in which to make such inquiries
of the aggrieved party and conduct such investigations as it
believes reasonably necessary to determine validity of the
Claims. At the end of such period of investigation, the
complained of party shall either pay the amount of the claims or
the arbitration proceeding described immediately below shall be
invoked.
(b) In the event that the Claims are not settled by
the procedure set forth immediately above, the Claims shall be
submitted to arbitration conducted in accordance with the
Commercial Arbitration Rules ("Rules") of the American
Arbitration Association ("AAA") except as amplified or otherwise
varied hereby.
(c) The parties shall submit the dispute to the Denver
regional office of the AAA and the situs of the arbitration shall
be Denver County, Colorado.
(d) The arbitration shall be conducted by a single
arbitrator. The parties shall appoint the single arbitrator to
arbitrate the dispute within ten (10) business days of the
submission of the dispute. In the absence of agreement as to the
identity of the single arbitrator to arbitrate the dispute within
such time, the AAA is authorized to appoint an arbitrator in
accordance with the Rules, except that the arbitrator shall have
as his principal place of business the Denver metropolitan area.
(e) The single arbitrator selected by the AAA shall be
an attorney or accountant licensed to practice by the State of
Colorado.
(f) Notwithstanding anything in the Rules to the
contrary, the arbitration award shall be made in accordance with
the following procedure: Each party shall, at the commencement of
the arbitration hearing, submit an initial statement of the
amount each party proposes be selected by the arbitrator as the
arbitration award ("Settlement Amount"). During the course of
the arbitration, each party may vary its proposed Settlement
Amount. At the and of the arbitration hearing, each party shall
submit to the arbitrator its final Settlement Amount ("Final
Settlement Amount"), and the arbitrator shall be required to
select either one or the other Final Settlement Amounts as the
arbitration award without discretion to select any other amount
as the award. The arbitration award shall be paid within ten
(10) business days after the award has been made, together with
interest from the date of award at the rate of eight percent
(8%). Judgment upon the award may be entered in any federal or
state court having jurisdiction over the parties.
14. Costs of Enforcement. In the event of any suit or
proceeding seeking to enforce the terms, covenants, or conditions
of this Agreement, the prevailing party shall, in addition to all
other remedies and relief that may be available under this
Agreement or applicable law, recover his or its reasonable
attorneys' fees and costs as shall be determined and awarded by
the arbitrator or court, as the case may be.
15. Competing Interest. During the Employment Period, the
Executive shall not, without the prior written consent of the
Company, engage in any other business activity that competes with
or is of a nature similar to that of the Company for gain,
profit, or other pecuniary advantage or engage in or in any
manner be connected or concerned, directly or indirectly, whether
as an officer, director, stockholder, partner, owner, executive,
consultant, creditor, or otherwise, with the operation,
management, or conduct of any business that competes with or is
of a nature similar to that of the Company, provided, however,
that this Section 15 shall not prohibit the Executive from owning
up to one (1) percent of the publicly traded shares of any
entity.
16. Noncompete Clause. If the Employment Period is
terminated by the Company for Just Cause pursuant to Section 6(a)
hereof, or voluntarily by the Executive pursuant to Section 7(b)
hereof, the Executive will be prohibited from accepting
employment with, and shall not in any manner be connected or
concerned, whether directly or indirectly, whether as an officer,
director, stockholder, partner, owner, executive, consultant,
creditor or otherwise, with the operation, management or conduct
of, any business having gaming operations in any state or other
jurisdiction in which the Company has gaming operations
immediately prior to the date of the Executive's termination of
employment, for a period beginning on the date of the Executive's
termination of employment and ending on the then current
Termination Date.
17. General Provisions.
(a) Goodwill. The Company has invested substantial
time and money in the development of its products, services,
territories, advertising and marketing thereof, soliciting
clients and creating goodwill. By accepting employment with the
Company, the Executive acknowledges that the customers are the
customers of the Company, and that any goodwill created by the
Executive belongs to and shall inure to the benefit of the
Company.
(b) Notices. Any notice required or permitted
hereunder shall be made in writing (i) either by actual delivery
of the notice into the hands of the party thereunder entitled, or
(ii) by the mailing of the notice in the United States mail,
certified or registered mail, return receipt requested, all
postage prepaid and addressed to the party to whom the notice is
to be given at the party's respective address set forth below, or
such other address as the parties may from time to time designate
by written notice as herein provided.
As addressed to the Company:
Colorado Gaming & Entertainment Co.
One Norwest Center
1700 Lincoln, 49th Floor
Denver, Colorado 80203-4549
With a copy to:
Leboeuf, Lamb, Greene & MacRae L.L.P.
633 Seventeenth Street, Suite 2800
Denver, Colorado 80202
Attention: Thomas J. Moore
As addressed to the Executive:
Stephen J. Szapor, Jr.
2026 Glenhaven Drive
Highlands Ranch, Colorado 80126
The notice shall be deemed to be received in case (i) on the date
of its actual receipt by the party entitled thereto, and in case
(ii) on the third (3rd) business day following the date of its
mailing.
(c) Amendment and Waiver. No amendment or
modification of this Agreement shall be valid or binding upon the
Company unless made in writing and signed by an officer of the
Company duly authorized by, the Board of Directors or upon the
Executive unless made in writing and signed by him. The Waiver
by the Company of the breach of any provision of this Agreement
by the Executive shall not operate or be construed as a waiver of
any subsequent breach by him.
(d) Entire Agreement. This Agreement constitutes the
entire Agreement between the parties with respect to the
Executive's duties and compensation as an executive of the
Company, and there are no representations, warranties, agreements
or commitments between the parties hereto with respect to his
employment except as set forth herein.
(e) Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws (and not
the law of conflicts) of the State of Colorado.
(f) Severability. If any provision of this Agreement
shall, for any reason, be held unenforceable, such provision
shall be severed from this Agreement unless, as a result of such
severance, the Agreement fails to reflect the basic intent of the
severance, the Agreement fails to reflect the basic intent of the
parties. If the Agreement continues to reflect the basic intent
of the parties, then the invalidity of such specific provision
shall not affect the enforceability of any other provision
herein, and the remaining provisions shall remain in full force
and effect.
(g) Assignment. The Executive may not under any
circumstances delegate any of his rights and obligations
hereunder without first obtaining the prior written consent of
the Company. This Agreement and all of the Company's rights and
obligations hereunder may be assigned or transferred by it, in
whole or in part, to be binding upon and inure to the benefit of
any subsidiary or successor of the Company, but any such transfer
or assignment shall not relieve the Company of its obligations
under this Agreement to the extent that an assignee does not
fulfill such obligations.
IN WITNESS WHEREOF, this Agreement is entered into on the
day and year first above written.
COMPANY:
COLORADO GAMING & ENTERTAINMENT CO.
By:_______________________________
Its:
EXECUTIVE:
STEPHEN J. SZAPOR, Jr.