EXHIBIT 10.173
AMENDMENT
TO THE EMPLOYMENT AGREEMENT BETWEEN
CAPITAL GAMING INTERNATIONAL, INC. AND EDWARD M. TRACY
Amendment No. 1
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This Amendment No. 1 is made as of this 28th day of May,
1997, to the Employment Agreement between Capital Gaming International, Inc.
(the "Company") and Edward M. Tracy (the "Employee") dated May 30, 1995.
W I T N E S S E T H
WHEREAS, the Company and the Employee desire to amend the
Employment Agreement as follows, as permitted under Section 16(f) of the
Employment Agreement:
1. The first sentence of Section 1 of the Employment
Agreement is hereby amended, to read in its entirety as follows:
Unless terminated earlier as herein provided, the Term of
the Employee's employment with the Company hereunder shall
commence on the date hereof and shall end on the third
anniversary of the effective date of the Company's Plan of
Reorganization in the Company's chapter 11 case, Case Number
96-19829 ("Plan of Reorganization"); provided, however, that
this Agreement and the Term of the Employee's employment
with the Company hereunder shall automatically be extended
for one year commencing on the third anniversary of the
effective date of the Plan of Reorganization and on each
successive one year anniversary after the third anniversary
unless the Employee or the Company shall have given written
notice to the other at least ninety (90) days prior to such
anniversary that the Term shall expire at the end of the
current three year or one year Term, as applicable.
2. The third sentence of Section 8 is hereby deleted. The
fourth and fifth sentences of Section 8 are hereby amended, to read in their
entirety as follows:
The Employee shall also be entitled to the continued use of
the Company apartment in Philadelphia, Pennsylvania or
comparable accommodations in a location in or about
Philadelphia of his choosing during the Term hereof,
provided, however, if the Company relocates to an area other
than Philadelphia, Pennsylvania, the Employee shall be
entitled to comparable accommodations in such location
during the Term at a rent that is no greater than the rent
charged for his accommodations at the Company apartment in
Philadelphia as of the effective date of the Plan of
Reorganization. The value of the apartment, if taxable to
the Employee, and any other taxable benefits under the
Employment Agreement will not be grossed-up for tax-purposes
unless the Advisory Committee1 approves the gross-up for tax
purposes; and, upon such approval, taxes with respect to
such benefits will be paid by the Company for non-cash
benefits so that the Employee shall not be responsible for
the payment of income taxes except with respect to his
Salary, Incentive Compensation, stock options, stock
appreciation rights, stock bonuses and other similar
benefits.
3. Section 9(d)(iii) of the Employment Agreement is hereby
amended, to read in its entirety as follows:
In the event of any Termination Without Cause, the Employee
shall be entitled to and the Company shall be obligated to
pay the Employee a lump sum severance payment of $1.6
million.
4. The second sentence of Section 9(f) of the Employment
Agreement is hereby amended, to read in its entirety as follows:
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1 The term "Advisory Committee" as used herein shall have the same
meaning as such term has in the Company's plan of reorganization, as
confirmed by order of the United States Bankruptcy Court for the
District of New Jersey on or about March 19, 1997.
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In the event of Voluntary Termination, the Employee is
entitled to payment equal to one year Salary, payable in
twelve (12) equal monthly installments and in consideration
of such payments, the Employee consents and covenants to use
his good faith best efforts: (i) to effectuate a transition
of new management in a manner which maintains the then
existing Indian gaming management agreements, or at the
option of the Company, effectuate a run-off of the then
existing Indian gaming management agreements and tribal
loans for as long as necessary after such resignation, but
in no event more than twelve (12) months; and (ii) to be
bound by the provisions of Section 10 of this Employment
Agreement for the period of transition or run-off set forth
in Subsection (i) above rather than the period set forth in
Section 10. As used herein, the term "best efforts" shall
not require the Employee to incur nonreimbursable business
expenses and shall not require that the Employee be employed
exclusively by the Company provided that the Employee comply
in all material respects with the provisions of Section 10
hereof as modified by this Section 9(f).
5. Section 13(c) of the Employment Agreement is hereby
amended, to read in its entirety
as follows:
To the extent that the Company is not able to or elects not
to obtain Insurance Policies, the Company, in lieu of
coverage under such Insurance Polices, shall pay $100,000
per year, payable in quarterly installments, to an escrow
account held by a third party designated by the Employee and
subject to the approval of the Advisory Committee, such
approval not to be unreasonably withheld. The amounts held
in such escrow account shall serve as collateral to secure
the indemnification obligations of the Company to the
Employee under Section 14 hereof or under other applicable
law. The Escrow Agent shall be authorized to release funds
from such escrow account to the Employee upon receiving a
written certification from the Employee stating that an
event has occurred giving rise to a claim by the Employee of
indemnification against the Company and setting forth the
amount of such indemnification claim for which the Employee
seeks payment. All funds in the escrow account shall be held
by the Escrow Agent in the escrow account for the same
period the Company is required to maintain Insurance
Policies under Section 13(a). At the end of such period, the
Escrow Agent shall be required to return all unused funds to
the Company.
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6. Section 16(e) of the Employment Agreement is hereby
amended, to read in its entirety as follows:
Advisory Committee: Notwithstanding anything in this
Employment Agreement to the contrary, until the Advisory
Committee is disbanded, such committee shall be required to
approve any compensation to the Employee not provided for in
this Employment Agreement and all bonuses and Incentive
Compensation paid under this Employment Agreement.
7. A new Section 18 shall be added to the Employment
Agreement to read in its entirety as follows:
Plan of Reorganization Distributions. Notwithstanding
anything to the contrary in the Plan of Reorganization, all
distributions of cash and New Secured Notes to be made to
the Employee under Section 6.4 of the Plan of Reorganization
prior to the Compliance Date shall be deferred until and
shall become payable on the Compliance Date; provided,
however, that in the event the Compliance Date occurs after
June 1, 1997, the Employee shall be deemed to have
irrevocably waived his entitlement to his share of New
Secured Notes under Section 6.4 of the Plan of
Reorganization; provided, further, however, that in the
event the Compliance Date does not occur prior to the one
year anniversary of the effective date of the Plan of
Reorganization, Employee shall be deemed to have waived
irrevocably his entitlement to his share of the $250,000
cash payment provided for in Section 6.4 of the Plan of
Reorganization. Notwithstanding the occurrence of the
Compliance Date, such distributions under the Plan of
Reorganization shall not be made if, on or before the
Compliance Date, the Bankruptcy Court shall have entered an
order, at the request of the Advisory Committee, staying
such distributions for cause; in the event the Bankruptcy
Court stays any such distributions, the distributions shall
be delayed only during the existence of such stay. The term
"Compliance Date," as used herein, shall mean the later to
occur of (i) the 20th day after the Debtor complies in all
material respects with the information requests contained in
Paul Silverstein's letter to William S. Papazian dated March
11, 1997, and (ii) the appointment of a suitable Chief
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Financial Officer (recognizing the Reorganized Debtor's
financial condition and prospects), with the approval of the
Advisory Committee, which approval shall not be unreasonably
withheld.
8. A new Section 19 shall be added to the Employment
Agreement to read in its entirety as follows:
Employee Loans. So long as Employee is not in default of the
provisions of this Employment Agreement, as soon as
practicable but in no event later than thirty (30) days
after receipt of a written request by Employee, the Company
shall be obligated to make a loan to Employee in an amount
not to exceed the Employee's then unpaid share of the
$250,000 cash payment referred to in Section 6.4 of the Plan
of Reorganization (the "Employee Loan"). Any such Employee
Loan shall be unsecured, accrue interest at the rate of six
(6%) percent per annum and mature on the earlier to occur
of: (i) the date the Employee is entitled to receive his
share of the $250,000 cash payment provided for in Section
6.4 of the Plan of Reorganization; and (ii) the one year
anniversary of the effective date of the Plan of
Reorganization. The Company's obligations to make cash
payments to Employee under section 6.4 of the Plan of
Reorganization shall be offset against any amounts payable
as interest or principal under any then outstanding Employee
Loan.
The Employment Agreement, except as herein amended, is
hereby ratified, conformed and approved in all respects.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 1 to the Employment Agreement as of 28th day of May, 1997.
CAPITAL GAMING INTERNATIONAL, INC.
By:
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Name:
Title:
EMPLOYEE
By:
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Edward M. Tracy