EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed as of this 30th
day of April, 1998 (the "Effective Date"), by and between AMERICAN BINGO &
GAMING CORP., a Delaware corporation (the "Company"), and ANDRE XXXX XXXXXXX
(the "Executive").
WHEREAS, the parties wish to enter into an employment agreement to employ
the Executive as its President and Chief Executive Officer and to set forth
certain additional agreements between the Executive and the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the parties hereto agree as follows:
1. TERM
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The Company will employ the Executive, and the Executive will serve the
Company, under the terms of this Agreement, for an initial term of three years
commencing on May 18, 1998 (the "Employment Date"). The terms of this Agreement
may be extended for one or more additional twelve-month periods provided the
Company and the Executive agree in writing to such an extension.
Notwithstanding the foregoing, the Executive's employment hereunder may be
earlier terminated as provided in Section 4 hereof. The term of this Agreement,
as in effect from time to time in accordance with the foregoing, shall be
referred to herein as the "Term." The period of time between the Employment
Date and the termination of the Executive's employment hereunder shall be
referred to herein as the "Employment Period."
2. EMPLOYMENT
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(a) POSITIONS AND REPORTING. The Company hereby employs the Executive
for the Employment Period as its President and Chief Executive Officer on the
terms and conditions set forth in this Agreement.
(b) AUTHORITY AND DUTIES. The Executive shall exercise such authority,
perform such executive duties and functions and discharge such responsibilities
as the Board of Directors may from time to time determine, consistent with the
Executive's position and the By-Laws of the Company. Without limiting the
generality of the foregoing, the Executive shall report directly and be
responsible to the Board of Directors of the Company. During the Employment
Period, the Executive shall devote his full business time, skill and efforts to
the business of the Company. Notwithstanding the foregoing, the Executive may
(i) make and manage passive personal business investments of his choice (in the
case of publicly held corporations, not to exceed 2% of the outstanding voting
stock) and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval
from the Board of Directors of the Company (the "Board"), provided such
activities and service do not materially interfere or conflict with the
performance of his duties hereunder, and (ii) with the approval of the Board,
serve on the boards of directors of other corporations.
(c) PRIOR EMPLOYMENT. The Executive represents and warrants that he
has no individual employment agreement or non-competition agreement with his
current or any prior employer or any other agreement, contract, judgment, decree
or limitation which would prohibit, limit or otherwise restrict the employment
of the Executive by the Company pursuant to the terms of this Agreement.
(d) BOARD PARTICIPATION. The Executive shall serve as a director of
the Company during the Employment Period if he is nominated to do so and elected
by the Company's shareholders. As an employee of the Company, the Executive will
not receive additional compensation for serving as a director. However, the
Executive will be reimbursed for out-of-pocket expenses incurred in attending
meetings of the Board or Board committees and for other expenses incurred in his
capacity as a director of the Company. In the event the Executive is not elected
to, or if he resigns from, the Board for any reason, such event will not
terminate this Agreement or in any way prejudice the rights of the parties
hereunder.
3. COMPENSATION AND BENEFITS
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(a) SALARY. During the Employment Period, the Company shall pay to the
Executive, as compensation for the performance of his duties and obligations
under this Agreement, a base salary at the rate of Two Hundred Twenty-Five
Thousand ($225,000) Dollars per annum, payable in arrears not less frequently
than monthly in accordance with the normal payroll practices of the Company.
Such base salary shall be subject to review each year for a possible increase by
the Board of Directors, but shall in no event be decreased from its
then-existing level during the Employment Period. The Executive may also be
requested to serve as a director or officer of various subsidiaries and
affiliates of the Company and he hereby agrees to fulfill his duties as such an
officer and a director of such entities without additional compensation.
(b) ANNUAL BONUS. During the Employment Period, the Executive shall
have the opportunity to earn an annual performance bonus of up to Fifty Thousand
($50,000) Dollars per annum. The payment of any annual bonus under any such
program shall be contingent upon the achievement of certain corporate and/or
individual performance goals. The Executive and the Company acknowledge that the
performance goals which will serve as the basis for determining the annual bonus
have not yet been established and hereby agree to establish such goals as soon
as possible following the Employment Date.
(c) EQUITY PARTICIPATION. On the Effective Date, the Executive shall
be granted stock options to acquire 300,000 shares of the Common Stock of the
Company, at $3.75 per share, subject to the terms and conditions of the stock
option agreement between the Company and the Executive dated as of the date
hereof. The stock options granted shall vest in increments of 25,000 beginning
on July 31, 1998 and continuing to vest at the rate of 25,000 on each October
31, January 31, April 30 and July 31 through April 30, 2001; provided, however,
except as otherwise provided in this Agreement, the Executive's options shall
vest only if the Executive is employed by the Company on the respective date of
vesting noted above. The Executive shall also be entitled to receive awards
under any other stock option or equity based incentive compensation plan or
arrangement adopted by the Company during the Employment Period for which senior
executives are eligible. The level of the Executive's future participation in
any such plan or arrangement shall be in the sole discretion of the Board.
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(d) OTHER BENEFITS. During the Employment Period, the Executive shall
be entitled to participate in the Company's group health insurance plan, dental
plan, group life insurance plan, long-term disability insurance plan, employee
stock purchase plan, profit sharing plan, SARSEP and all of the other employee
benefit plans, programs and arrangements of the Company in effect during the
Employment Period which are generally available to senior executives of the
Company, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans, programs and arrangements. In addition,
during the Employment Period, the Executive shall be entitled to fringe benefits
and perquisites comparable to those of other senior executives of the Company,
including, but not limited to, three weeks of paid vacation per year.
(e) MOVING EXPENSES. The Company shall pay or reimburse the Executive
for the direct and reasonable expenses incurred in connection with relocating
the Executive and his immediate family to Columbia, South Carolina; provided,
however, such moving expenses shall not exceed $20,000.
(f) BUSINESS EXPENSES. During the Employment Period, the Company shall
reimburse the Executive for all documented reasonable business expenses incurred
by the Executive in the performance of his duties under this Agreement, in
accordance with the Company's policies.
(g) VEHICLE ALLOWANCE. The Company shall provide the Executive a
vehicle allowance in the amount of Three Hundred ($300) Dollars per month.
(h) INDEMNIFICATION. During the Employment Period and thereafter, the
Company shall indemnify the Executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers, with respect to all costs, charges and expenses
whatsoever incurred or sustained by the Executive in connection with any action,
suit or proceeding to which he may be made a party by reason of being or having
been a director, officer or employee of the Company or having served any other
enterprise as a director, officer or employee at the request of the Company.
4. TERMINATION OF EMPLOYMENT
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(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment hereunder for cause. For purposes of this Agreement, the Company
shall have "cause" to terminate the Executive's employment hereunder if such
termination shall be the result of:
(i) willful, material fraud or material dishonesty in connection
with the Executive's performance hereunder that results in harm to the
Company;
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(ii) the failure by the Executive to substantially perform his
material duties hereunder that results in harm to the Company, if the
Executive has been provided an opportunity to cure as provided in
Section 4(c) of this Agreement;
(iii) the Executive's material breach of this Agreement, if the
Executive has been provided an opportunity to cure as provided in
Section 4(c) of this Agreement;
(iv) the appropriation of a material business opportunity of the
Company, including attempting to secure or securing any personal
profit in connection with any transaction entered into on behalf of
the Company;
(v) the material misappropriation of any of the Company's funds
or property; or
(vi) the conviction of, or the entering of a guilty plea or plea
of no contest with respect to, a felony or the equivalent thereof.
(b) TERMINATION FOR GOOD REASON. The Executive shall have the right to
terminate his employment with the Company at any time and for any reason. For
purposes of this Agreement and subject to the Company's opportunity to cure as
provided in Section 4(c) hereof, the Executive shall have "good reason" to
terminate his employment hereunder if such termination shall be the result of:
(i) a material diminution during the Employment Period in the
Executive's duties or responsibilities as set forth in Section 2
hereof;
(ii) a material breach by the Company of the compensation and
benefits provisions set forth in Section 3 hereof;
(iii) a notice of termination by the Executive under Section 4(c)
hereof within twelve months following the occurrence of a Change in
Control (as defined in Section 4(f) hereof); or
(iv) a material breach by the Company of any other term of this
Agreement.
(c) NOTICE OF OPPORTUNITY TO CURE. Notwithstanding the foregoing, it
shall be a condition precedent to the Company's right to terminate the
Executive's employment for "cause" and the Executive's right to terminate his
employment for "good reason" that (1) the party seeking the termination shall
first have given the other party written notice stating with specificity the
reason for the termination ("breach") and (2) if such breach is susceptible of
cure or remedy, a period of 30 days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within 30 days, in which case the period for remedy or cure
shall be extended for a reasonable time (not to exceed an additional 30 days),
provided the breaching party has made and continues to make a diligent effort to
effect such remedy or cure.
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(d) TERMINATION UPON DEATH. Except as provided in this Agreement, the
Employment Period and all benefits and other rights of the Executive under this
Agreement shall be terminated by the death of the Executive. The Executive's
estate shall be entitled to receive all compensation, reimbursements and
benefits, including but not limited to life insurance benefits, payable to or
accruable for the benefit of the Executive under this Agreement.
(e) TERMINATION UPON DISABILITY. The Employment Period may be
terminated by the Company if the Executive shall be rendered incapable of
performing his duties to the Company by reason of any medically determined
physical or mental impairment for a period of at least three consecutive months
(a "Disability"). In the event that the Company elects to terminate the
Employment Period due to the Disability of the Executive, the Executive shall
receive all compensation, reimbursements and other benefits payable to, or
accruable for the benefit of, the Executive under this Agreement through the
date of the determination of the Disability and for the shorter of three months
thereafter or the date upon which the Executive first becomes eligible to
receive disability benefits pursuant to the Company's long-term disability
insurance policy as may then be in effect.
(f) DEFINITION OF CHANGE IN CONTROL. A "Change in Control" shall be
deemed to have taken place if:
(i) there shall be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's capital stock
are converted into cash, securities or other property, other than a
consolidation or merger of the Company in which the holders of the
Company's voting stock immediately prior to the consolidation or
merger shall, upon consummation of the consolidation or merger, own at
least 50% of the voting stock of the surviving corporation, or any
sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a
single plan) of all or substantially all of the assets of the Company;
or
(ii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall after the date hereof become the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the voting power of all then outstanding securities of the
Company having the right under ordinary circumstances to vote in an
election of the Board (including, without limitation, any securities
of the Company that any such person has the right to acquire pursuant
to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by
such person); or
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(iii) individuals who at the date hereof constitute the entire
Board and any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, shall have been
approved by a vote of at least a majority of the directors then in
office who either were directors at the date hereto or whose election
or nomination for election shall have been so approved (the
"Continuing Directors") shall cease for any reason to constitute a
majority of the members of the Board.
5. CONSEQUENCES OF TERMINATION
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(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other than upon death or Disability) or by the Executive for "good
reason" (each as defined in Section 4 hereof), the Executive shall be entitled
to the following severance pay and benefits:
(i) SEVERANCE PAY - severance payment in the form of continuation
of the Executive's base salary as in effect immediately prior to such
termination for a period of twelve months (the "Severance Period");
(ii) VESTING OF OPTIONS - in the event the Executive has stock
options which were granted as part of the 300,000 grant under Section
3(c) above which have not vested, then 50,000 of such options, or such
lesser amount as has not vested, shall immediately vest; and
(iii) BENEFITS CONTINUATION - continuation for the Severance
Period of coverage under the group health, dental, disability and life
insurance benefit plans or arrangements in which the Executive is
participating at the time of termination; provided, however, that the
Company's obligation to provide -------- ------- such coverages shall
be terminated if the Executive is able to obtain substitute coverage
from another employer at any time during the Severance Period. The
Executive shall be entitled, at the expiration of the Severance
Period, to elect continued medical coverage in accordance with section
4980B of the Internal Revenue Code of 1986, as amended (or any
successor provision thereto).
(b) OTHER TERMINATIONS. In the event of termination of the Executive's
employment hereunder for any reason other than those specified in Section
5(a) hereof, the Executive shall not be entitled to any severance pay or
benefits continuation contemplated by the foregoing, except as may
otherwise be provided under the applicable benefit plans or award
agreements relating to the Executive.
(c) ACCRUED RIGHTS. Notwithstanding any other provision of this
Agreement, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of his base salary through the effective date of
termination, and payment of any accrued but unpaid rights solely in
accordance with the terms of any incentive bonus, stock option or employee
benefit plan or program of the Company.
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6. CONFIDENTIALITY
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The Executive agrees that he will not at any time during the Employment
Period or at any time thereafter for any reason, in any fashion, form or manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company, its manner of operation, its plans or other
material data. The provisions of this Section 6 shall not apply to (i)
information that is public knowledge other than as a result of disclosure by the
Executive in breach of this Section 6; (ii) information disseminated by the
Company to third parties in the ordinary course of business; (iii) information
lawfully received by the Executive from a third party who, based upon inquiry by
the Executive, is not bound by a confidential relationship to the Company; or
(iv) information disclosed under a requirement of law or as directed by
applicable legal authority having jurisdiction over the Executive.
The Executive further agrees that he will not remove from the Company's
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except as otherwise
specifically authorized by the Company) Company property which includes, but is
not limited to, any document, record, notebook, plan, model, component, device,
or computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items"). The Executive recognizes that, as
between the Company and the Executive, all of the Proprietary Items, whether or
not developed by the Executive, are the exclusive property of the Company. Upon
termination of this Agreement by either party, or upon the request of the
Company during the Employment Period, the Executive will return to the Company
all of the Proprietary Items in the Executive's possession or subject to the
Executive's control, and the Executive shall not retain any copies, abstracts,
sketches, or other physical embodiments of any of the Proprietary Items.
7. INVENTIONS
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The Executive is hereby retained in a capacity such that the Executive's
responsibilities may include the making of technical and managerial
contributions of value to the Company. The Executive hereby assigns to the
Company all right, title and interest in such contributions and inventions made
or conceived by the Executive alone or jointly with others during the Employment
Period which relate to the business of the Company. This assignment shall
include (a) the right to file and prosecute patent applications on such
inventions in any and all countries, (b) the patent applications filed and
patents issuing thereon, and (c) the right to obtain copyright, trademark or
trade name protection for any such work product. The Executive shall promptly
and fully disclose all such contributions and inventions to the Company and
assist the Company in obtaining and protecting the rights therein (including
patents thereon) in any and all countries; provided, however, that said
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contributions and inventions will be the property of Company, whether or not
patented or registered for copyright, trademark or trade name protection, as the
case may be. Inventions conceived by the Executive which are not related to the
business of the Company will remain the property of the Executive.
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8. NON-COMPETITION
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The Executive agrees that he shall not, during the Employment Period and/or
Severance Period and during the "Restricted Period," without the approval of the
Board, directly or indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor or stockholder
(other than as provided below) of any company or business, engage in any
"Competitive Business" within a fifty mile radius of any locality in which the
Company or any of its subsidiaries or affiliates then operates. For purposes of
the foregoing, the term "Restricted Period" shall mean: (i) six months after
the Employment Period or, if applicable, six months after the Severance Period,
whichever is longer, with respect to any "Competitive Business" outside of South
Carolina; and (ii) two years after the Employment Period or, if applicable, two
years after the Severance Period, whichever is longer, with respect to any
"Competitive Business" within South Carolina. For purposes of the foregoing,
the term "Competitive Business" shall mean any business involved in the
ownership, operation or management of a bingo or video gaming business or such
other business as the Company may then be engaged in. Notwithstanding the
foregoing, the Executive shall not be prohibited, during the non-competition
period applicable above, from acting as a passive investor where he owns not
more than 2% of the issued and outstanding capital stock of any publicly-held
company. During the period that the above non-competition restriction applies,
the Executive shall not, without the written consent of the Company, solicit any
employee of the Company or any employee of a subsidiary or affiliate of the
Company to terminate his or her employment. The period of time applicable to
any covenant in this Section 8 will be extended by the duration of any violation
by the Executive of such covenant.
If any covenant in this Section 8 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against the Executive.
9. BREACH OF RESTRICTIVE COVENANTS
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The parties agree that a breach or violation of Section 6, 7 or 8 hereof
will result in immediate and irreparable injury and harm to the innocent party,
who shall have, in addition to any and all remedies of law and other
consequences under this Agreement, the right to an injunction, specific
performance or other equitable relief to prevent the violation of the obligation
hereunder.
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10. NOTICE
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For purposes of this Agreement, notices, demands 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 (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to the Company, to:
American Bingo & Gaming Corp.
Attn: Xxxxxx X. Xxxxxxxx, Xx.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
(b) If to the Executive, to:
Andre Xxxx Xxxxxxx
Xxxxx 0, Xxx 000
Xxxxxxxxx, XX 00000
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
11. ARBITRATION; LEGAL FEES
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Except as provided in Section 9 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in South Carolina in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. The Company shall
reimburse the Executive for all reasonable legal fees and costs and other fees
and expenses which the Executive may incur in respect of any dispute or
controversy arising against the Company under or in connection with this
Agreement; provided, however, that the Company shall only reimburse the
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Executive for such fees, costs and expenses if the Executive prevails in any
such action.
12. WAIVER OF BREACH
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Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part either of the
Executive or of the Company.
13. NON-ASSIGNMENT; SUCCESSORS
--------------------------
Neither party hereto may assign his or its rights or delegate his or its
duties under this Agreement without the prior written consent of the other
party; provided, however, that (i) this Agreement shall inure to the benefit of
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and be binding upon the successors and assigns of the Company upon any sale of
all or substantially all of the Company's assets, or upon any merger,
consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company; and (ii) this Agreement
shall inure to the benefit of and be binding upon the heirs, assigns or
designees of the Executive to the extent of any payments due to them hereunder.
As used in this Agreement, the term "Company" shall be deemed to refer to any
such successor or assign of the Company referred to in the preceding sentence.
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14. WITHHOLDING OF TAXES
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All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax and other payroll deductions as the Company may reasonably determine it
should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY
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To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this agreement shall be unaffected and shall
continue in full force and effect.
16. COUNTERPARTS
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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 shall constitute one
and the same instrument.
17. GOVERNING LAW
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This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of South Carolina without regard to the
conflicts of law principles thereof.
18. ENTIRE AGREEMENT
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This Agreement constitutes the entire agreement by the Company and the
Executive with respect to the subject matter hereof and supersedes any and all
prior agreements or understandings between the Executive and the Company with
respect to the subject matter hereof, whether written or oral. This Agreement
may be amended or modified only by written instrument executed by the Executive
and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
THE EXECUTIVE AMERICAN BINGO & GAMING CORP.
/s/ Andre Xxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------- -------------------------------
Andre Xxxx Xxxxxxx By: Xxxxxx X. Xxxxxxxx, Xx.
Its: Chief Executive Officer
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