EXHIBIT 10.3
VALENZANO SEVERANCE AGREEMENT
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement") is made as of July 12, 1999,
by and between Trans World Gaming Corp. (the "Company"), TWG Finance Corp.
("TFC"), TWG International U.S. Corporation ("TWGI"), Trans World Gaming of
Louisiana, Inc. ("TWGLa") (the Company, TFC, TWGI and TWGLa are collectively
referred to herein as the "Employers") and Dominick J. Valenzano (the
"Executive").
WITNESSETH
WHEREAS, the Executive previously was employed as Chief Financial
Officer of the Company pursuant to the provisions of an employment agreement
dated September 27, 1994 between the Company and the Executive (the "Employment
Agreement") (which Employment Agreement expired prior to the date hereof);
WHEREAS, the Executive has continued to serve as Chief Financial
Officer of the Company on an at-will basis following the expiration of the
Employment Agreement;
WHEREAS, the Executive served as a Director and was employed as Vice
President, Chief Financial Officer and Treasurer of each of the Company, TFC,
TWGI and TWGLa pursuant to a Board Resolution of each of such Company since
September 2, 1994, March 1, 1998, March 1, 1998 and September 2, 1994,
respectively (the "Start Dates");
WHEREAS, the Boards of Directors of the Employers and the Executive
have agreed to terminate the services of the Executive (the "Termination");
WHEREAS, the Employers and the Executive have agreed that all of the
Executive's employment services to each of the Company, TFC, TWGI and TWGLa
shall be terminated as of July 31, 1999; and
WHEREAS, the Employers and the Executive wish to enter into this
Agreement in order to set forth and memorialize the obligations of the Employers
and the Executive in connection with the Termination.
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:
1. TERMINATION. The Employers and the Executive agree to the
Termination. The Executive shall be deemed to have been terminated upon the
first to occur of (i) the date upon which the Executive commences employment
with another employer or (ii) the employment by the Employers of a new Chief
Financial Officer, Chief Executive Officer, or an equivalent position (the
"Termination Date"). On and after the Termination Date, all of the rights and
responsibilities of each of the Employers and the Executive resulting from and
with respect to the Termination shall be solely as set forth in this Agreement.
2. PAYMENTS AND BENEFITS TO THE EXECUTIVE. In consideration of the
covenants and the other terms and conditions of this Agreement for the benefit
of the Employers, the Employers agree and covenant to provide the following to
the Executive:
A. The Employers agree to pay to the Executive an aggregate of
sixty thousand dollars and no cents ($60,000.00) in severance
payments (which amount is equal to six months of the
Executive's salary as such salary existed at and as of
January 1, 1999) (the "Severance Payments"), such amount to
be paid in twelve equal semi-monthly payments in such manner
as Executive's salary would have been paid to him had he
continued to be employed through January 31, 2000 [DATE THAT
IS SIX MONTHS AFTER THE TERMINATION DATE]. During the period
that commences on the Termination Date and ends on the date
that is six months thereafter, the Executive shall not be
entitled to receive any fees for services he might render to
the Employers in connection with his obligations set forth in
Section 3.A hereof.
B. The Executive will continue to participate, on the same basis
as he had participated prior to the Termination Date in all
life, health, disability and accident plans in which he
participated on the date immediately prior to the Termination
Date through January 31, 2000 [DATE THAT IS SIX MONTHS AFTER
THE TERMINATION DATE]. After such date, the Executive shall
be entitled to receive any health insurance benefits as
provided under applicable federal and/or state law (e.g.,
COBRA).
C. No later than fifteen days after the Termination Date, the
Employers agree to pay to the Executive, in a lump-sum
payment, all accrued and unpaid vacation time as of the
Termination Date.
D. The Executive currently owns the following options to
purchase common stock of the Company:
EXERCISE EXPIRATION
NUMBER PRICE DATE
------ ------- -----
20,000 $ 3.13 May 21, 2000
50,000 $ 1.00 December 31, 2001
50,000 $ 0.30 December 30, 2002
25,000 $ 0.24 December 30, 2003
Pursuant to Section 13 of the Option Agreements by and
between the Company and the Executive dated May 22, 1995,
December 31, 1996, December 31, 1997 and December 31, 1998,
and in accordance with Section
7(g) of the 1993 Incentive Stock Option Plan pursuant to
which said options were granted, the Executive shall have the
right to exercise all such options at any time or from time
to time, until October 31, 1999 [DATE WHICH IS 3 MONTHS AFTER
THE TERMINATION DATE] (the "Option Exercise Deadline"). After
the Option Exercise Deadline, all unexercised options shall
expire and shall not be exercisable by the Executive.
E. If the Executive has not commenced employment with another
employer during the six-month period following the
Termination Date, the Employers shall reimburse the Executive
for the fees and expenses of one or more providers of
outplacement counseling services, selected by the Executive,
up to an aggregate amount of $5,000 for services provided to
the Executive in connection with his Termination. Such
reimbursement shall be made within 10 business days after the
receipt by the Employers of an itemized invoice from such
provider(s).
F. Nothing in this Agreement shall affect the Executive's rights
to indemnification as provided in the Articles of
Incorporation or Certificate of Incorporation (as the case
may be) or Bylaws of the respective Employers or as provided
under the applicable corporate law for the state of
incorporation for each of the Employers.
3. OBLIGATIONS OF THE EXECUTIVE.
A. During the period that is six months following the
Termination Date, the Executive shall use his best efforts to
assist the Employers in the efficient and effective
transition to new management. Executive shall use his best
efforts to respond to questions asked of him by Julio E.
Heurtematte, or Mr. Huertematte's designated representative
or by the new Chief Executive Officer (or a similarly titled
individual), in as timely and professional manner and at a
level of proficiency that is no less than the level at which
he performed prior to the Termination Date , PROVIDED
HOWEVER, that any such requests may not interfere with or
otherwise hinder the Executive's responsibilities and duties
to any other employer. A portion of this Agreement may be
terminated by the Employers for cause and, if so terminated,
all obligations of the Employers to make further payments or
provide additional benefits under Section 2 shall immediately
cease and the consideration received by the Executive prior
to such termination shall be valid and adequate consideration
with respect to the remainder of this Agreement. For purposes
of this Agreement, termination "for cause" shall mean
termination because of willful misconduct, breach of
fiduciary duty owed to the Employers which results in
improper personal profit to the Executive, intentional
failure to respond to any reasonable requests for information
made and mutually agreed to by both parties pursuant to this
Agreement, which failure is not reasonably cured within 20
days after receipt
of written notice from the Employers, willful violation of
any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material
breach of any provision of this Agreement.
B. Upon request by the Company, the Executive shall, within 5
days after such request, return to the Company the 1998
Infinity QX4 automobile currently provided to the Executive
by the Employers, together with all keys, the certificate of
title, insurance documents and other written material
relating to the use of such automobile that the Executive may
have in his possession. The Executive shall relinquish
possession of the vehicle to an authorized representative of
the Company at a mutually acceptable location. Upon return of
the automobile to the Employers, the Employer's agree to
release the Executive from any and all personal obligations
included in the lease of said automobile.
4. MUTUAL RELEASE.
A. In consideration of the covenants and the other terms and
conditions of this Agreement, the Executive agrees and
covenants, on behalf of himself, his heirs and personal
representatives, to release completely and forever discharge
the Employers from any and all charges, claims and actions
relating to or otherwise arising out of the Executive's
employment by, or the termination of his employment with, the
Employers for all periods of time up to and including July
31, 1999 [THE TERMINATION DATE]. The Executive has not
brought any such charges, claims or actions to the attention
of or against the Employers before signing this Agreement,
and the Executive covenants not bring any such charges,
claims or actions against the Employers in the future, other
than charges, claims or actions relating to the Employers'
express obligations under this Agreement. If the Executive
violates the provisions of this Section 4.A by filing or
bringing any such charges, claims or actions (other than
charges, claims or actions relating to the Employers'
obligations under this Agreement, for which the Employers
agree to pay all actual and direct costs including reasonable
attorney's fees and expenses incurred by the Executive in
bringing such charge, claim or action if the Executive is
successful on the merits of such charge, claim or action) in
a court of competent jurisdiction contrary to this Section
4.A, then, in addition to any other rights and remedies that
the Employers may have, the Executive agrees to promptly
return all Severance Payments received from the Employers and
to pay all actual and direct costs of the Employers in
defending against such charges, claims or actions brought by
the Executive or on his behalf, including reasonable
attorney's fees and expenses. As referred to in this Section
4.A (as well as for purposes of Sections 4.B and 4.C below),
the term "Employers" includes any of their current or future
subsidiaries and affiliates, their respective successors and
assigns, and all of their respective past, present and future
controlling persons, directors,
officers, representatives, shareholders, agents, employees,
noteholders, and their respective heirs, personal
representatives, successors and assigns, or any of them.
B. In consideration of the covenants and the other terms and
conditions of this Agreement, the Employers agree and
covenant to release completely and forever discharge the
Executive from any and all charges, claims and actions
(except for fraud and criminal acts committed in his official
capacity as a director and/or officer) relating to or
otherwise arising out of the Executive's employment with the
Employers for all periods of time commencing upon the Start
Dates up to and including July 31, 1999 [THE TERMINATION
DATE]. None of the Employers has brought any such charges,
claims or actions to the attention of or against the
Executive before signing this Agreement, and the Employers
covenant not bring any such charges, claims or actions
against the Executive in the future, other than charges,
claims or actions relating to the Executive's express
obligations under this Agreement. If the Employers violate
the provisions of this Section 4.B by filing or bringing any
such charges, claims or actions (other than charges, claims
or actions relating to the Executive's obligations under this
Agreement, for which the Executive agrees to pay all actual
and direct costs including reasonable attorney's fees and
expenses incurred by the Employers in bringing such charge,
claim or action if the Employers succeed on the merits of
such charge, claim or action) in a court of competent
jurisdiction contrary to this Section 4.B, then, in addition
to any other rights and remedies that the Executive may have,
the Employers agree to pay all actual and direct costs of the
Executive in defending against such charges, claims or
actions brought by the Employer, including reasonable
attorney's fees and expenses.
C. The Executive hereby specifically and unconditionally
releases the Employers from any and all claims that the
Executive may have against any of them and that arose on or
before the date of this Agreement under any federal or state
law, regulation or policy, including but not limited to, the
Federal Age Discrimination in Employment Act (the "ADEA"), as
well as any claim attributable to the Employers' solicitation
of the Executive's consent to the terms of this Agreement,
and further acknowledges and represents that:
i. the Executive waives his claims under ADEA knowingly and
voluntarily in exchange for the commitments made herein
by the Employers, and that certain of the benefits
provided thereby constitute consideration of value to
which the Executive would not otherwise have been
entitled;
ii. the Executive consulted an attorney in connection with
this Agreement;
iii. the Executive has been given a period of 21 days within
which to consider the terms hereof;
iv. the Executive may revoke the waiver of ADEA claims set
forth in this Section 4.B for a period of 7 days
following the execution of this Agreement and the
Executive's waiver of ADEA claims hereunder shall not
become effective until the revocation period has
expired;
v. if the Executive revokes the waiver of ADEA claims in
accordance with subsection (iv) above, then the
Executive shall cease to receive any and all of the
payments and benefits specified in Section 2 hereof, but
such revocation shall not be effective with respect to
the remainder of this Agreement and the consideration
received by the Executive prior to the revocation shall
be valid and adequate consideration with respect to the
remainder of this Agreement; and
vi. this Agreement complies in all respects with Section
7(f) of ADEA and the waiver provisions of the Federal
Older Worker Benefit Protection Act.
5. CONFIDENTIALITY. The Executive and the Employers agree that they
will keep the terms and conditions of this Agreement confidential (except as
disclosure may otherwise be required by the Company in connection with its
obligations under federal and state securities laws as a publicly owned
company), and that all discussions and announcements that the Executive and the
Employers have with employees, shareholders, noteholders and bondholders of the
Company and any and all other persons or parties shall be wholly consistent with
the terms of the mutually agreed upon press release or Form 8-K, which is
attached hereto as EXHIBIT A. The Executive shall reasonably support the current
and new management of the Employers and will use his best efforts to efficiently
and effectively transition the Company to its new management. The Executive
shall refrain, to the extent permitted by law, from taking or assisting others
in taking any actions that reasonably could be expected to diminish the
perceived market value of the Company or undermine the efforts of the Employers'
management to manage the Employers' operations. The Employers agree that they
will not intentionally take any actions that would prevent the Executive from
seeking or securing new employment and that any and all announcements or
responses to requests for information regarding the Executive's employment and
Termination shall be wholly consistent with the terms of the mutually agreed
upon press release or Form 8-K.
6. NONCOMPETITION. For so long as the Executive receives Severance
Payments, the Executive hereby covenants and agrees that the Executive (and any
person or entity controlled by, under common control with or controlling the
Executive) will not, without the prior written consent of the Employers (which
consent shall not unreasonably be withheld, conditioned or delayed) directly or
indirectly be associated as an officer, director or greater than 5% shareholder,
employee, consultant, agent or representative to or with any person or entity
engaged in the casino or gaming
business in an area within a 100-mile radius of any existing casino owned on the
Termination Date by the Employers. The Executive agrees that if he commits or
threatens to commit a breach of any of the provisions of this Section 6, the
Employers have the right and remedy to have the provisions of this Section 6
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach will cause immediate
irreparable injury to the Employers and that money damages will not provide an
adequate remedy at law for any such breach or threatened breach, PROVIDED
HOWEVER, that the Employers shall first submit written notice to the Executive
that they intend to invoke the rights set forth in this Section 6 and the
Executive shall have 20 days in which to cure his breach or threatened breach.
Such right and remedy of the Employers shall be in addition to, and not in lieu
of, any other rights and remedies available to the Employers at law or in
equity. If any of the provisions of or covenants contained in this Section 6 are
hereafter construed to be invalid or unenforceable in any jurisdiction, the same
shall not affect the remainder of the provisions or the enforceability thereof
in any other jurisdiction, which shall be given full effect, without regard to
the invalid portions or the unenforceability in such other jurisdiction, and the
parties agree that the court making such determination shall have the power to
reduce the duration and/or geographic scope of such provision or covenants and,
in its reduced form, said provision or covenant shall be enforceable; provided,
however, that the determination of such court shall not affect the
enforceability of this Section 6 in any other jurisdiction.
7. NONINTERFERENCE. For a period of 1 year following the Termination
Date, without the written consent of the Employers whose consent will not
unreasonably be withheld, conditioned or delayed, the Executive shall not,
directly or indirectly, for whatever reason, whether for his own account or for
the account of any other person or entity: (i) solicit, employ or otherwise
interfere with any of the Employer's existing contracts or relationships with
any investor, customer, affiliate, employee, officer, director, supplier or any
independent contractor performing services or providing goods to the Employers
and reasonably known to the Executive on and as of the Termination Date, whether
the such person or entity is employed by or associated with the Employers on the
Termination Date; (ii) solicit or otherwise interfere with any existing or
proposed contract reasonably known to the Executive on the Termination Date
between the Employers and any other party whatsoever; (iii) other than in his
role of providing post-Termination services under Section 3A hereof and then
only as directed by Company management, contact employees of the Company
regarding the business or operations of the Company, provided, however, that
nothing in this Agreement shall affect the Executive's ability to (x) contact
employees of the Company with respect to affairs of a personal or social nature
or (y) other than in his role of providing post-Termination services under
Section 3A hereof and then only as directed by Company management, converse with
any of Messrs. Tottenham, Kohlenberg, Baker, Sterrett, or Heurtematte regarding
the status of the Executive's severance benefits as set forth in Section 2 of
this Agreement; or (iv) other than in his role of providing post-Termination
services and then only as directed by Company management, contact Value
Partners, Ltd. or U.S. Bancorp Libra Investments (or any of their investors who
are holders of debt or equity instruments issued by the Company as of the date
hereof).
8. COVENANT NOT TO DISCLOSE. The Executive hereby agrees that he
possesses certain data and knowledge of operations of the business of the
Employers which are proprietary in nature and confidential. The Executive hereby
covenants and agrees that he will not, at any time after the
Termination Date, reveal, divulge or make known to any person or use for his own
account or for the account of any other person or entity, any confidential or
proprietary record, data, trade secret, financial information, intellectual
property, business know-how, personnel policy, customer list of the Employers as
of the Termination Date, or any other confidential or proprietary information
whatsoever relating to the Employers, whether or not obtained with the knowledge
and permission of the Employers (exclusive of any information which at the time
of disclosure generally is available to and known by the public, other than as a
result of any unauthorized disclosure by the Executive). The Executive further
covenants and agrees that he shall not divulge any such confidential or
proprietary information that he may acquire during any transition period in
which he assists the Employers to facilitate the transition to new management
and the continued success of the business of the Employers.
9. CERTAIN ACTIONS. The Executive hereby agrees and covenants that
from the date of this Agreement until January 31, 2000 [DATE THAT IS SIX MONTHS
AFTER THE TERMINATION DATE]:
A. The Executive shall not directly or indirectly solicit or
encourage any person who is an associate or affiliate of the
Executive to solicit proxies or consents in opposition to any
proposal submitted by the Company's Board of Directors to a
vote of the Company's shareholders.
B. The Executive shall not, nor shall he encourage any person
who is an associate or affiliate of the Executive to (i) join
with or assist any person or entity, directly or indirectly,
in opposing, or make any statement in opposition to, any
proposal submitted by the Company's management to a vote of
the Company's shareholders, or (ii) join with or assist any
person or entity, directory or indirectly, in supporting or
endorsing, or make any statement in favor of, any proposal
submitted to a vote of the Company's shareholders that is
opposed by Company's Board of Directors.
10. BINDING AGREEMENT; TERMINATION. This Agreement shall be binding
upon and inure to the benefit of any successor to the Employers (whether direct
or indirect, by purchase, merger or consolidation, by operation of law, or
otherwise) or any person which acquires all or substantially all of the assets
of the Employers or any assignee of the Employers (collectively "Successor"),
and the Employers will require any Successor to expressly assume and agree to
perform and carry out the obligations of this Agreement and any instrument
executed by the Employers hereunder in the same manner and to the same extent as
the Employers. This Agreement shall also be binding on and inure to the benefit
of Executive and is not assignable by the Executive. This Agreement shall
terminate upon the death of Executive and his heirs and beneficiaries shall have
no right to compensation or other benefits hereunder for any period after the
date of Executive's death except as to any payments or benefits earned
(including the payments set forth in Section 2 of this Agreement) pursuant to
the terms hereof prior to such date but not received as of the date of death.
11. WITHHOLDING. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other
payroll deductions as the Employers may reasonably determine should be withheld
pursuant to any applicable law and regulation.
12. MITIGATION. The Executive shall not be required to mitigate the
amount of any payments or other benefits hereunder by seeking other employment
or otherwise, nor shall the amount of any such benefits be reduced by any
compensation earned by the Executive as a result of employment by another
employer.
13. REPRESENTATION. The Employers and the Executive represent that
they have reviewed this Agreement, and that each of them is fully aware of the
content of this Agreement and of its legal effect, and acknowledge that this is
a legally valid and binding obligation of the parties.
14. AMENDMENT AND WAIVER. The terms of this Agreement may not be
modified other than in a writing signed by both parties. No term or condition of
this Agreement shall be deemed to have been waived, nor shall there be any
estoppel against enforcement of any provision of this Agreement, except by
written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
condition for the future or as to any act other than that specifically waived.
15. NOTICES. All notices, demands, consents or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given when: (i) personally delivered, or (ii) sent postage prepaid by
registered or certified mail, return receipt requested, such receipt showing
delivery to have been made, or (iii) sent overnight by prepaid receipt courier
addressed as follows:
If to Executive: Dominick J. Valenzano
2140 Seward Drive
Scotch Plains, New Jersey 07076
If to Employers: Trans World Gaming Corp.
One Penn Plaza
Suite 1503
New York, New York 10119
Attention: Maureen Weppler
Secretary
16. ENTIRE AGREEMENT. This Agreement incorporates the entire
understanding among the parties relating to the subject matter hereof, recites
the sole consideration for the promises exchanged and supercedes any prior
agreements, written or oral, between the Employers and the Executive with
respect to the subject matter hereof. In reaching this Agreement, no party has
relied upon any representation or promise except those set forth herein.
17. INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York except to the extent that
applicable federal laws preempt the laws of the State of New York.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Release
as of the day and year first above written.
WITNESS: TRANS WORLD GAMING CORP.
/s/ Maureen Weppler By: /s/ Julio E. Heurtematte, Jr.
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Julio E. Heurtematte, Jr.
Director
WITNESS: TWG FINANCE CORP.
/s/ Maureen Weppler By: /s/ Julio E. Heurtematte, Jr.
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Julio E. Heurtematte, Jr.
Director
WITNESS: TWG INTERNATIONAL U.S. CORPORATION
/s/ Maureen Weppler By: /s/ Julio E. Heurtematte, Jr.
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Julio E. Heurtematte, Jr.
Director
WITNESS: TRANS WORLD GAMING OF LOUISIANA, INC.
/s/ Maureen Weppler By: /s/ Julio E. Heurtematte, Jr.
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Julio E. Heurtematte, Jr.
Director
WITNESS: DOMINICK J. VALENZANO
/s/ Maureen Weppler By: /s/ Dominick J. Valenzano
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