EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement ("Agreement") is made effective as of
September 25, 1998, by and between NevStar Gaming & Entertainment Corporation,
a Nevada corporation ("Company"), and Xxxxxxx X. Xxxxxxx ("Executive"), with
reference to the following facts:
A. Executive is employed by Company in the capacity of President and
Chief Operating Officer and is a Director of the Company. Company and Executive
desire to terminate this employment relationship and enter into this Agreement
to set forth the obligations of each party with respect to said termination.
B. Executive and the Company are parties to that certain Employment
Agreement dated January 2, 1996, as amended (the "Employment Agreement"), that
certain Indemnification Agreement dated January 2, 1996 (the "Indemnification
Agreement") and to certain Stock Option Agreements referred to in Section 4
below.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements contained herein the parties hereto covenant and agree as
follows:
1. Termination of Employment. Executive hereby resigns as President,
Chief Operating Officer and any other officer position and as Director of
Company. In addition, Company and Executive agree that the Employment Agreement
is hereby terminated with no further effect, except as set forth in the
Agreement. Said resignation and termination shall be effective September 25,
1998 ("Severance Date"). Company expressly denies that Company has breached,
defaulted in the performance of, or otherwise violated the Employment Agreeme
nt.
Likewise, Executive expressly denies that Executive has breached, defaulted in
the performance of, or otherwise violated the Employment Agreement. Company and
Executive each acknowledge that Executive's employment with Company is
terminated
by mutual agreement. Accordingly, this Agreement does not constitute an
adjudication or finding on the merits and it is not, and shall not be construed
as an admission by Company, Executive or any other person released herein of any
violation of the Employment Agreement. Moreover, neither this Agreement nor
anything in this Agreement shall be construed to be or shall be admissible in
any
proceeding as evidence of or an admission by Company, Executive or any other
person released. This Agreement may be introduced, however, in any proceeding
on account of any breach of any provision of this Agreement to enforce any
provision of this Agreement.
2. Compensation; Benefits. Executive shall be paid his full salary and
shall be entitled to such Company benefits as were normally received by
Executive
through the Severance Date. Company further agrees to pay to Executive
severance pay in the amount of $100,000 (the "Severance Pay"), payable to
Executive during the six (6) month period commencing on the Severance Date (the
"Severance Period") by payments of $7,692.30 on each of the twelve (12), and a
payment of $7,692.40 on the thirteenth, employee payment dates of the Company
immediately following the Severance Date in accordance with the normal payroll
practices of the Company applicable to Executive in his former position. If the
Company fails to pay any portion of the Severance Pay in accordance with the
provisions of the previous sentence, and fails to cure such failure within five
(5) business days of receipt of a written demand notice from Executive, then the
amount due and owing to Executive shall be subject to interest at a simple rate
of ten percent (10%) per annum. Nothing contained in the preceding sentence,
however, shall be construed to prevent, restrict or limit Executive's right to
exercise any remedy available to Executive on account of such failure. The
Company may withhold from any compensation or other benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling. Additionally, during the
Severance Period, Executive shall receive the same Company benefits as Executive
was entitled to on the Severance Date pursuant to Section 1.7 of the Employment
Agreement. Additionally, Executive shall be entitled to his rights under the
Consolidation Omnibus Budget Reconciliation Act (COBRA) of 1985.
3. Consulting. For and in consideration of the mutual covenants set
forth in this Agreement, Company and Executive agree that during the Severance
Period, Executive shall serve as a consultant to the Company, as reasonably
requested by the Company, for up to twenty (20) hours per month; provided that
Executive shall not be required to perform any services at any time, at any
location or in any manner which would materially interfere with or any
obligation
of Executive to provide employment or consulting to any other person. Company
and Executive acknowledge and agree that Executive shall assist Company in the
transition of projects to which he devoted attention on or prior to the
Severance
Date. All out-of-pocket expenses incurred by Executive as a result of
Executive's consulting to the Company shall be paid for by the Company. Company
and Executive acknowledge and agree that in no event shall the Severance Pay or
the extension of Executive's options set forth in Section 4 below be contingent
on performance of Executive's service as a consultant to the Company.
4. Stock Options. Company and Executive agree that stock options
granted by the Company to Executive as part of the Company's 1997 Stock
Incentive
Plan (the "Plan") pursuant to Stock Option Agreements, dated as of July 1, 1997,
July 1, 1997 and January 13, 1998 regarding 220,589, 29,411 and 15,000 shares of
Common Stock, respectively (collectively, the "Options"), shall remain in full
force and effect, except that notwithstanding any provisions contained therein,
the Options shall become fully vested as of the Severance Date and shall be
exercisable until their respective Expiration Dates (June 30, 2007,
June 30, 2007
and January 12, 2008), as defined therein. In addition, as long as the Options
are outstanding, the Options shall be included in any Form S-8 Registration
Statement filed by the Company with the Securities and Exchange Commission
regarding the Plan.
5. Automobile Expenses. During the Severance Period, Executive shall
be entitled to receive from the Company an $850 monthly automobile allowance,
payable monthly in advance, which shall include all costs attendant to the use
of the automobile, including but not
limited to, liability and property insurance
and cost of maintenance and an additional $150 monthly allowance to cover all
fuel and car wash expenses.
6. Acknowledgment of Payment of All Wages and Benefits Due. The Company
has previously given or, contemporaneously with the execution of this Agreement,
shall give Executive negotiable checks for amounts representing (i) Executive's
compensation through the Severance Date, (ii) all accrued or unused vacation
benefits and (iii) any bonuses payable to Executive under the terms of all
written or oral agreements with the Company, less applicable withholding taxes
and other voluntary deductions previously authorized by Executive. Other than
as expressly set forth in this Agreement, Executive acknowledges and agrees that
he has received
all wages, bonuses, commissions, vacation pay, incentives and all
other compensation of any kind earned during his employment with the Company
through the Severance Date.
7. Life Insurance. Company and Executive agree that, effective as of
the Severance Date, Company shall assign to Executive the "key man" life
insurance policy held by the Company on the life of Executive on the Severance
Date. Company and Executive agree that Company shall have no further obligation
with respect to such life insurance policy, except to pay all premiums on the
policy for coverage through March 25, 1999.
8. Confidentiality. Executive acknowledges and agrees that any and all
information acquired by Executive relating to the business of the Company,
including but not limited to business plans, trade secrets, financial data,
product information,
customer lists, member data, marketing plans and strategies,
is confidential information which is the property of the Company (collectively,
"Confidential Information"). Executive agrees to maintain in strict confidence
all Confidential Information and not to divulge such Confidential Information to
others or use such Confidential Information for the benefit of any person or
entity other than the Company without the prior written consent of the Company.
Likewise, Company agrees to maintain in strict confidence all information
concerning Executive's compensation and other private information concerning
Executive which may appear in Executive's personnel file. Nothing contained in
this Section 8 shall be deemed to prevent either party
from making any disclosure
(i) necessary to report income to appropriate taxing authorities; (ii) in
response to an order of a court of competent jurisdiction or a subpoena issued
under the authority thereof; or (iii) in response to a subpoena or other request
lawfully issued by any federal or state regulatory or licensing authority having
jurisdiction over the Company
(specifically including the Securities and Exchange
Commission, and the Nevada Gaming Commission and State Gaming Control Board) or
in conjunction with any filing required to be made with any such regulatory or
licensing authority.
9. Company Property. Executive acknowledges and agrees that all
reports, data, recommendations, advice, records, documents and other materials
prepared or obtained by Executive or coming into Executive's possession during
Executive's employment hereunder which relate to the conduct by the Company
and/or its affiliates of
their respective businesses shall be and remain the sole
and exclusive property of the
Company and Executive shall, on the Severance Date,
or earlier at the request of the Company, promptly deliver all such materials to
the Company.
10. Indemnification; Insurance. Company and Executive agree that the
Company shall indemnify Executive pursuant to Section 2 of the Employment
Agreement and Section 5 of the Indemnification Agreement for so long as any
applicable statue of limitation remains open and unexpired, and that Executive
shall be covered by the Company's
officer and director liability insurance policy
to the extent then in effect and permitted by such policy.
11. Mutual General Release. In consideration of the terms, provisions,
covenants and agreements contained
in this Agreement, Executive, on the one hand,
and the Company, on the other hand, on behalf of themselves and their respective
predecessors, heirs, successors, assigns, owners, attorneys, affiliates,
divisions, officers, directors, employees, agents, representatives, partners,
servants, executors, administrators, accountants, investigators, insurers, and
shareholders, and each of them, in any and all capacities, do hereby mutually
relieve, release and forever discharge the other and their respective
predecessors, successors, heirs, agents, representatives, attorneys, partners,
officers, directors, employees (including former officers, partners, directors
and employees), administrators, shareholders, assigns and all affiliated parent
or subsidiary or related corporations, or divisions or partnerships, and each of
them, of and from any and all past, present and future claims, rights, debts,
liabilities, demands, obligations, liens, promises, acts, agreements, costs and
expenses (including, but not limited to, attorneys' fees and costs), damages,
actions and causes of action, of whatever kind or nature (including without
limitation, any statutory, civil or administrative claim, or any claim, arising
out of acts or omissions occurring before the execution of this Agreement),
whether now known or unknown, suspected or unsuspected, fixed or contingent,
apparent or concealed, in any way based on, arising out of or related to or
connected with the past
actions, omissions, obligations or duties of either party
hereto with respect to the other party hereto, and each of them, including,
without limitation, any acts, omissions, obligations or duties arising out of or
in connection with Executive's employment with the Company, including but not
limited to any breach of fiduciary duty and/or any violation of any or all
applicable federal and state securities and other applicable laws.
12. Press Release. Company and Executive agree that,
soon after execution of
this Agreement, the Company will issue a press release
in the form of Exhibit "A"
attached hereto, and that all xxxxxx xxxxx releases regarding the subject matter
of the Agreement shall be mutually agreed to by the parties. Company and
Executive acknowledge that each may be required to provide additional disclosure
regarding the subject matter of the Agreement in accordance with federal
securities laws, Nevada gaming laws and other applicable laws.
13. Contractual Authority. Executive understands and agrees that
he does not have, nor shall
he hold himself out as having, any right, power or authority create
any contract or obligation, either express or
implied, on behalf of or in the name of the Company.
14. Mutual Non-Disparagement. Company and Executive agree that neither
party shall disparage, defame, libel, slander or otherwise make derogatory
comments or references regarding the other party, including but not limited to
references to a party's character, business practices, competence, products
and/or services.
15. Material Inducement. Company and Executive acknowledge and agree
that its or his covenants relating to confidential information,
non-disparagement
and the general release described above are material
inducements to each and both
of the parties to enter into this Agreement and pay the Severance Pay to
Executive.
16. Representation By Counsel. Executive acknowledges and agrees that
the law firm of Zevnik, Horton, Guibord, McGovern, Xxxxxx & Fognani, L.L.P. is
counsel to the Company and has not represented Executive in the past and is not
acting as counsel to Executive nor advising Executive with respect to this
Agreement, except to advise Executive to engage independent counsel to represent
him. Company agrees to reimburse Executive for up to $2,500 of legal fees
incurred by him with respect to the Agreement.
17. Notices. All notices, requests and other communications hereunder
shall be given in writing to a party and shall be deemed to have been duly given
at the time of personal delivery or on the third business day following the date
deposited in the U.S. Mail, certified or return receipt requested, postage
prepaid, addressed to the party to receive the same at its respective
address set
forth on the signature page to this Agreement, or at such other address as may
from time to time be designated by a party in accordance with this Section.
18. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings. Without
limiting the generality of the foregoing,
the Agreement supersedes and terminates
any existing employment agreement or arrangement between Executive and the
Company. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements have been made by any party, or any one
action on behalf of any party, which are not embodied in this Agreement.
19. Attorneys' Fees and Costs. If any legal action, arbitration or other
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of any alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover from the other party reasonable
attorneys' fees and other costs incurred in that action, arbitration or
proceeding, in addition to any other relief to which such party may be entitled.
20. Waiver. No covenant, term or condition or the breach thereof shall
be deemed waived, unless it is waived in writing and signed by the party against
whom the waiver is claimed. Any waiver of breach of any covenant, term or
condition shall not be deemed to be a waiver of any preceding or succeeding
breach of the same or any other covenant, term or condition. The failure of any
party to insist upon strict performance of any covenant, term or condition
hereunder shall not constitute a waiver of such party's right to demand strict
compliance therewith in the future.
21. Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, then such illegal or unenforceable
provision shall be modified by the proper court or arbitrator to the extent
necessary and possible to make such provision enforceable, and such modified
provision and all other provisions of this Agreement and of each other agreement
entered into
pursuant to this Agreement shall be given effect separately from the
provision or portion thereof determined to be illegal or unenforceable and shall
not be affected thereby.
22. Counterparts. This Agreement may be executed in multiple copies,
each of which shall be deemed an original and all of which shall constitute a
single agreement binding on all parties.
23. Modification. This Agreement may be amended or modified only be a
written instrument duly executed by all parties hereto.
24. Successors and Assigns. This Agreement is for personal services by
Executive and may not be transferred or assigned by Executive without the prior
written consent of Company, except for assignments by the laws of devise and
descent to Executive's heirs, administrators or executives. Subject to the
foregoing, this Agreement shall inure to the benefit of the parties hereto and
their respective successors and assigns.
25. Governing Law. This Agreement shall be governed by and interpreted
and constructed in accordance with the internal laws of the State of Nevada, as
applied to contracts between Nevada residents entered into and to be performed
wholly within Nevada.
[The Remainder of This Page is Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement as of the date first written above.
"Company" NEVSTAR GAMING & ENTERTAINMENT
CORPORATION, a Nevada corporation
By:/s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxx, Chairman of the
Board and Chief Executive Officer
Address for notice: 0000 Xxxx Xxxx
Xxxx
Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
"Executive"
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Address for notice: 000 Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000
[Signature Page to Executive Severance Agreement]
