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==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-20840
PRESIDENT CASINOS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0341200
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or Identification No.)
organization)
802 North First Street, St. Louis, Missouri 63102
----------------------------------------------------
Address of principal executive offices-Zip Code
314-622-3000
----------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.06 par value,
5,032,940 shares outstanding as of October 14, 1998.
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PRESIDENT CASINOS, INC.
INDEX TO FORM 10-Q
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
as of August 31 and February 28, 1998.............................1
Condensed Consolidated Statements of Operations
and Loss Per Share Information (Unaudited)for the
Three and Six Months Ended August 31, 1998 and 1997...............2
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended August 31, 1998 and 1997.................3
Notes to Condensed Consolidated Financial Statements (Unaudited)....4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................7
Part II. Other Information
Item 1. Legal Proceedings...........................................18
Item 2. Changes in Securities.......................................18
Item 3. Defaults Upon Senior Securities.............................18
Item 4. Submission of Matters to a Vote of Security Holders.........19
Item 5. Other Information...........................................19
Item 6. Exhibits and Reports on Form 8-K............................19
Signature..............................................................20
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
PRESIDENT CASINOS, INC. (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands) Aug. 31, Feb. 28,
1998 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................... $ 21,283 $ 19,278
Restricted cash................................ 3,360 4,354
Short-term investments......................... 275 2,622
Accounts receivable, net of allowance for
doubtful accounts of $375 and $369........... 1,394 1,664
Other current assets........................... 5,221 5,908
--------- ---------
Total current assets....................... 31,533 33,826
Property and equipment, net of accumulated
depreciation of $59,874 and $53,495............ 147,578 149,066
Other assets..................................... 3,743 4,364
--------- ---------
$182,854 $187,256
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........... $ 1,889 $ 1,895
Other current liabilities...................... 30,475 29,615
--------- ---------
Total current liabilities.................. 32,364 31,510
Long-term liabilities:
Long-term debt, net of current maturities...... 134,734 134,784
Accrued loan fee............................... 2,413 1,300
--------- ---------
Total long-term liabilities................ 137,147 136,084
--------- ---------
Total liabilities.......................... 169,511 167,594
--------- ---------
Minority interest................................ 11,748 10,978
Commitments and contingencies.................... -- --
Stockholders' equity:
Preferred Stock, none issued and outstanding... -- --
Common Stock, 5,033 shares issued
and outstanding.............................. 302 302
Additional paid-in capital..................... 101,729 101,729
Accumulated deficit............................ (100,436) (93,347)
--------- ---------
Total stockholders' equity................. 1,595 8,684
--------- ---------
$182,854 $187,256
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
PRESIDENT CASINOS, INC. AND LOSS PER SHARE INFORMATION (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands, except share data) Three Months Six Months
Ended Aug. 31, Ended Aug. 31,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Gaming and gaming cruise............ $ 46,594 $ 44,146 $ 89,168 $ 86,608
Food and beverage................... 6,107 5,513 11,588 10,412
Hotel............................... 2,379 1,199 4,602 1,551
Retail and other.................... 2,344 1,603 7,377 3,181
Less promotional allowances......... (3,776) (3,465) (7,064) (6,624)
--------- --------- --------- ---------
Net operating revenues............. 53,648 48,996 105,671 95,128
--------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Gaming and gaming cruise............ 25,985 25,749 51,604 50,389
Food and beverage................... 3,937 3,610 7,735 6,909
Hotel............................... 772 384 1,467 529
Retail and other.................... 740 568 1,447 978
Selling, general and administrative. 13,616 12,355 29,018 24,806
Depreciation and amortization....... 3,508 3,669 7,028 7,423
(Gain)/loss on sale of assets, net.. 39 (481) 72 (470)
Development......................... 1,172 327 3,949 1,197
--------- --------- --------- ---------
Total operating costs and expenses. 49,769 46,181 102,320 91,761
--------- --------- --------- ---------
OPERATING INCOME .................... 3,879 2,815 3,351 3,367
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Interest income..................... 174 228 333 558
Interest expense.................... (5,022) (4,229) (10,004) (7,912)
--------- --------- --------- ---------
Total other income (expense)....... (4,848) (3,941) (9,671) (7,354)
--------- --------- --------- ---------
LOSS BEFORE MINORITY INTEREST........ (969) (1,126) (6,320) (3,987)
Minority interest.................... 400 222 769 240
--------- --------- --------- ---------
NET LOSS............................. $ (1,369) $ (1,348) $ (7,089) $ (4,227)
========= ========= ========= =========
Basic and diluted net loss per share. $ (0.27) $ (0.27) $ (1.41) $ (0.84)
========= ========= ========= =========
Weighted average common and dilutive
potential shares outstanding........ 5,033 5,033 5,033 5,033
======= ======= ======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
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CONDENSED CONSOLIDATED STATEMENTS
PRESIDENT CASINOS, INC. OF CASH FLOWS (UNAUDITED)
______________________________________________________________________________
<TABLE>
<CAPTION>
(in thousands) Six Months Ended Aug. 31,
1998 1997
------ ------
<S> <C> <C>
Net cash provided by operating activities......... $ 4,509 $ 7,012
--------- ---------
Cash flows from investing activities:
Expenditures for property and equipment......... (5,718) (31,648)
Change in restricted cash....................... 994 (5,168)
Proceeds from sales of property and equipment... 84 996
Maturity of short-term investments.............. 2,346 --
Other........................................... -- (59)
--------- ---------
Net cash used in investing activities.......... (2,294) (35,879)
--------- ---------
Cash flows from financing activities:
Proceeds from notes payable..................... -- 30,000
Proceeds from a capital lease refund............ -- 108
Repayment of notes payable...................... (200) (200)
Payments on capital lease obligations........... (10) --
--------- ---------
Net cash provided by (used in)
financing activities...................... (210) 29,908
--------- ---------
Net increase in cash and cash equivalents......... 2,005 1,041
Cash and cash equivalents at beginning of period.. 19,278 25,115
--------- ---------
Cash and cash equivalents at end of period........ $ 21,283 $ 26,156
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest.......................... $ 8,270 $ 6,826
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Issuance of Class B Unit of L.L.C............... $ -- $ 10,000
========= =========
Related party notes and interest thereon applied
against the purchase of Broadwater Property... $ -- $ 2,016
========= =========
Assets acquired under capital leases............ $ -- $ 156
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED
PRESIDENT CASINOS, INC. FINANCIAL STATEMENTS (UNAUDITED)
______________________________________________________________________________
(dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated financial statements include the accounts and
operations of President Casinos, Inc. ("PCI"), its wholly-owned subsidiaries
and a 95% owned limited partnership (collectively, the "Company"). The Company
develops, owns and operates riverboat and/or dockside gaming casinos through
its subsidiaries. The Company conducts gaming operations in Davenport, Iowa,
Biloxi, Mississippi and St. Louis, Missouri. The Davenport operations are
managed by a wholly owned subsidiary which is the general partner of the 95%
Company-owned operating partnership ("TCG"). The Company also operates two
non-gaming dinner cruise, excursion and sightseeing vessels on the Mississippi
River in St. Louis, Missouri. In addition, the Company owns and manages
certain hotel and ancillary facilities associated with its gaming operations.
All material intercompany accounts and transactions have been eliminated.
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only of
normal recurring entries unless otherwise disclosed, necessary to present
fairly the Company's financial information for the interim periods presented
and have been prepared in accordance with generally accepted accounting
principles. The interim results reflected in the condensed consolidated
financial statements are not necessarily indicative of results for the full
year or other periods.
The financial statements contained herein should be read in conjunction with
the audited consolidated financial statements and accompanying notes to the
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the period ending February 28, 1998. Accordingly, footnote
disclosure which would substantially duplicate the disclosure in the audited
consolidated financial statements has been omitted.
Certain amounts for fiscal 1998 have been reclassified to conform with
fiscal 1999 financial statement presentation.
2. DEVELOPMENT
The Company is pursuing a gaming license for a "cruise to nowhere" operation
in New York City utilizing its 308-foot deep-water vessel, "President Casino
New Yorker." In January 1998, the Company submitted a gaming application to
the New York City Gambling Commission and in April 1998 received notification
that the Commission was not prepared to issue a provisional license which
would have allowed the Company to start operations. The Company continues to
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<PAGE> 7
pursue a New York City license but it is not known if the Company will be
successful in receiving such a license.
To utilize "President Casino New Yorker" while the Company pursues this
license, in July 1998, the Company entered into an agreement to charter
"President Casino New Yorker" until February 1999 to an unrelated third party.
The charter may be extended for three additional two-month periods. The
initial charter fee is set at $400 per month with certain escalations to occur
during each of the extension periods.
3. INSURANCE PROCEEDS
On April 4, 1998, several river barges broke free of their towboat and
struck the Company's St. Louis casino, the "Admiral," resulting in the
severing of several of the vessel's mooring lines and boarding ramps. The
vessel sustained no hull or structural damage and minimal damage to its bow
apron. There were no reports of serious injuries to the approximate 2,300
guests and employees aboard.
The "Admiral" was closed to the public for 26 days, reopening on April 30,
1998. The Company spent approximately $2,714 in the six-month period ended
August 31, 1998, to repair the vessel, replace the boarding ramps and prepare
the "Admiral" to reopen. Insurance proceeds from the Company's hull and
business interruption coverages recorded in the six-month period ended August
31, 1998, were $3,900. Income from insurance proceeds in excess of the net
book value of destroyed assets was $3,616 and is reflected in the financial
statements as "Retail and Other" revenue. The insurance deductibles relating
to the hull and business interruption claims total $1,020. The insurance
claims have not been finalized and claims are being made against the owners of
the towboat to recover insurance deductibles and any damages not covered by or
in excess of the insurance. While the Company believes it has meritorious
claims against the owner, there can be no guarantee that the Company will be
successful in recovering such costs.
4. COMMITMENTS AND CONTINGENT LIABILITIES
--Litigation
A shareholder derivative suit captioned Mizel v. John E. Connelly et. al.
was filed on September 11, 1998, in the Court of Chancery of the State of
Delaware alleging that the Board of Directors of the Company failed to
exercise informed business judgment and wasted corporate assets in connection
with the July 1997 acquisition by the Company of certain real estate and
improvements in Biloxi, Mississippi, including the Broadwater Resort and
Broadwater Towers and a related golf course, from an entity wholly-owned by
Mr. Connelly, Chairman of the Board and Chief Executive Officer of the
Company. The suit requests rescission of the transaction, a constructive
trust upon all benefits received by Mr. Connelly in the transaction, the award
of damages to the Company and attorneys fees and costs. The case is in the
preliminary stages and no responsive pleadings have yet been filed. Based on
its preliminary evaluation of the lawsuit, the Company believes that it has
5
<PAGE> 8
meritorious defenses to the allegations set forth in the suit, and intends to
defend this action vigorously.
On April 11, 1997, an action captioned "American Gaming & Entertainment,
Ltd. v. President Mississippi Charter Corporation and President Riverboat
Casino-Mississippi, Inc." was filed in the Chancery Court of Harrison County,
Mississippi by American Gaming & Entertainment, Ltd. ("AGEL"). AGEL is the
subject of bankruptcy proceedings pending in the United States Bankruptcy
Court for the Southern District of Mississippi, (the "Bankruptcy Court") and
is the owner of the "Biloxi Barge" which is utilized in connection with the
Company's Biloxi operations pursuant to the Initial Charter Agreement between
AGEL and Charter Corp. The action filed by AGEL alleges that the President
Riverboat Casino-Mississippi, Inc. and President Mississippi Charter Corp.
("Charter Corp."), a wholly-owned subsidiary of the company, have not complied
with their respective obligations under the Initial Charter Agreement. The
Company believes that AGEL breached its obligations under the Initial Charter
Agreement and, in connection therewith, withheld a portion of the charter
payments due to AGEL under the Initial Charter Agreement. In October of 1997,
Charter Corp. and other entities claiming ownership interest in the "Biloxi
Barge" entered into an agreement in writing (the "Term Sheet") that stated,
among other things, the following: (a) that AGEL and Charter Corp. would
dismiss all litigation between them; (b) that Charter Corp. would make a lump
sum payment of $1,525 in satisfaction of AGEL's claims for unpaid rent under
the Initial Charter Agreement; and (c) that AGEL and Charter Corp. would amend
the Initial Charter Agreement to reduce Charter Corp.'s monthly rental to $215
(the "Revised Charter Agreement"), effective December 1, 1997. The Term Sheet
provides that the foregoing will occur within ten days after the Bankruptcy
Court's approval of the Term Sheet becomes final (the "Closing Date"). Thus,
Charter Corp. and AGEL agreed that Charter Corp.'s payments would begin to
accrue again on December 1, 1997 at a monthly rate of $215 and that Charter
Corp. would not have to make the rental payments until the Closing Date. On
January 9, 1998, the Term Sheet was approved by the Bankruptcy Court and
became final on September 26, 1998, but the Closing Date has not yet occurred.
The Company is accounting for this transaction in accordance with the Term
Sheet. AGEL and other parties have brought a motion to be considered by the
Court on October 15, 1998 to compel the Company to pay all amounts due under
the Term Sheet, even though the other parties to the Term Sheet have not
complied with their obligations thereunder. These parties have demanded that
the Company make an immediate cash payment of $3,900. The Company intends to
vigorously oppose this motion until such time as the Closing Date occurs.
In addition, in the above proceeding, an action captioned "International
Game Technology v. President Casinos, Inc., President Mississippi Charter
Corporation, President Riverboat Casino-Mississippi, Inc and President
Riverboat Casinos, Inc." was filed in the Circuit Court of Harrison County,
Mississippi, Second Judicial District, by International Game Technology
("IGT"). The action was removed to the United States District Court, Southern
District of Mississippi, Biloxi Division, on March 11, 1998, and was
subsequently referred to the United States Bankruptcy Court for the Southern
District of Mississippi where it is captioned "In re AmGam Associates, a
Mississippi General Partnership," Chapter 11 Reorganization Case No.
6
<PAGE> 9
95-07864-SEG, Adversary Proceeding 98-05095. This action alleges that certain
subsidiaries of the Company assumed certain obligations of the owner of the
"Biloxi Barge" to IGT. IGT prays for damages of $3,306, plus late fees and
attorneys' fees under the terms of what is alleged to be the assumption
agreement. The Company vigorously denies that it or any subsidiary has
assumed any obligations to IGT, and the Company has filed a Motion to Dismiss
or in the alternative for Summary Judgment on this action on the basis that
IGT's claim is time-barred and subject to the principles of res judicata. At
this time, however, the outcome of this litigation cannot be determined.
The Company is from time to time a party to litigation, which may or may not
be covered by insurance, arising in the ordinary course of its business. The
Company does not believe that the outcome of any such litigation will have a
material adverse effect on the Company's financial condition or results of
operations, or which would have any material adverse impact upon the gaming
licenses of the Company's subsidiaries.
--Other
The Company has received a notice from the Nasdaq Stock Market, Inc.
("Nasdaq") that it does not meet the applicable listing requirements and that
the Company's Common Stock is therefore subject to delisting because the
Company's net tangible assets no longer meet the applicable requirement for
listing. The Company has contested the delisting of its securities in
accordance with Nasdaq's procedures. Although Nasdaq has the discretion to
grant exceptions to the listing requirements, there is no assurance that it
will do so in the Company's case. The Company anticipates that, if its Common
Stock is delisted from Nasdaq, it will be quoted on the OTC Bulletin Board.
However, delisting of the Company's Common Stock from Nasdaq could have an
adverse effect on the liquidity of the Common Stock and on the Company's
ability to raise future capital. The decision by Nasdaq will have no effect
on the Company's day-to-day business operations.
5. SUBSEQUENT EVENT
The Company temporarily suspended its Biloxi gaming operations on September
25, 1998 due to Hurricane Georges. The casino was reopened on October 1,
1998. The hurricane caused wind and water damage to the Company's Biloxi
casino and hotel. The Company maintains property, liability and business
interruption insurance to minimize the financial impact from the damage of the
hurricane.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and the notes thereto included elsewhere in
this report.
7
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Overview
The Company's operating results are affected by a variety of factors,
including competitive pressures, changes in regulations governing the
Company's activities, the seasonal nature of the Company's business, the
timing of the commencement of its proposed gaming operations, the amount of
development expenses incurred by the Company and general weather conditions.
Consequently, the Company's operating results may fluctuate from period to
period and the results for any period may not be indicative of results for
future periods.
--"Admiral" Accident
On April 4, 1998 several river barges broke free of their towboat and struck
the Company's St. Louis casino, the "Admiral," resulting in the severing of
several of the vessel's mooring lines and boarding ramps. The vessel
sustained no hull or structural damage and minimal damage to its bow apron.
There were no reports of serious injuries to the approximate 2,300 guests and
employees aboard.
The "Admiral" was closed to the public for 26 days, reopening on April 30,
1998. The Company spent approximately $2.7 million during the six-month
period ended August 31, 1998, to repair the vessel, replace the boarding ramps
and prepare the "Admiral" to reopen. Insurance proceeds from the Company's
hull and business interruption coverages recorded in the six-month period
ended August 31, 1998, were $3.9 million. Income from insurance proceeds in
excess of the net book value of destroyed assets was $3.6 million and is
reflected in the financial statements as "Retail and Other" revenue. The
insurance deductibles relating to the hull and business interruption claims
total $1.0 million. The insurance claims have not been finalized and claims
are being made against the owners of the towboat to recover insurance
deductibles and any damages not covered by or in excess of the insurance.
While the Company believes it has meritorious claims against the owner there
can be no guarantee that the Company will be successful in recovering such
costs.
--New Operation
On July 24, 1997, the Company, through a newly created subsidiary, President
Broadwater Hotel, LLC ("PBLLC"), purchased for $40.5 million certain real
estate and improvements located on the Gulf Coast in Biloxi, Mississippi from
an entity which was wholly-owned by John E. Connelly, Chairman, Chief
Executive Officer and principal stockholder of the Company. The property
comprises approximately 260 acres and includes two hotels, a 138-slip marina
and the adjacent 18-hole Sun Golf Course (collectively, the "Broadwater
Property"). The marina is currently the site of the Company's casino
operations in Biloxi and had formerly been leased by the Company under a
long-term lease agreement. The acquisition of the Broadwater Property has
enabled the Company, on a consolidated basis, to eliminate the $2.8 million
annual payments required under the former long-term lease agreement.
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The Company is currently developing a master plan for this real estate. The
master plan includes the development of a full-scale luxury destination resort
complex offering an array of entertainment attractions in addition to gaming
and would include the demolition of the existing hotels. Management believes
with its beachfront location and contiguous golf course, this is the best site
for such a development in the rapidly growing Gulf Coast market. It is also
uniquely qualified to be a multi-casino complex.
--"President Casino New Yorker"
The Company is pursuing a gaming license for a "cruise to nowhere" operation
in New York City utilizing its 308-foot deep-water vessel,"President Casino
New Yorker" (formerly "Majestic Star"). In January 1998, the Company submitted
a gaming application to the New York City Gambling Commission and in April
1998 received notification that the Commission was not prepared to issue a
provisional license which would have allowed the Company to start operations.
The Company continues to pursue a New York City license but there is no
assurance that the Company will be successful in receiving such a license.
To utilize "President Casino New Yorker" while the Company pursues this
license, in July 1998, the Company entered into an agreement to charter
"President Casino New Yorker" until February 1999 to an unrelated third party.
The charter may be extended for three additional two-month periods. The
initial charter fee is set at $0.4 million per month with certain escalations
to occur during each of the extension periods.
--Competition
Intensified competition for patrons continues to occur at each of the
Company's three casino properties.
Since gaming began in Biloxi in August 1992, steadily increasing competition
along the Mississippi Gulf Coast, including New Orleans and elsewhere in
Louisiana and Mississippi, has had an adverse effect on the results of
operations in Biloxi. Several large hotel/casino complexes have been built in
recent years and a new large project is under construction and is scheduled to
open in early 1999. There are currently eleven casinos operating in this
market area and a twelfth is under construction.
Within a 25-mile radius of the Quad Cities, the Company's Davenport
operation competes with three other casino operations. Expansion and
increased marketing by these competitors continues to escalate, resulting in
increased promotional and marketing costs.
Competition is intense in the St. Louis market area. There are presently
five other casino companies operating in the market area. Two of these are
Illinois casino companies operating single casino vessels on the Mississippi
River, one directly across the Mississippi from the "Admiral" and the second
20 miles upriver. There are three other Missouri casino companies, each of
which operates two casino vessels approximately 20 miles west of St. Louis on
the Missouri River.
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--Weather Conditions
The Company's operating results are susceptible to the effects of floods and
adverse weather conditions. On various occasions, the Company has temporarily
suspended operations as a result of such adversities. The Davenport casino
operations were temporarily suspended for thirteen days during April 1997, as
a result of flooding on the Mississippi River and operations at the Company's
Biloxi casino were temporarily suspended from September 25, 1998 to October 1,
1998 due to Hurricane Georges. Although the Company was not forced to suspend
its St. Louis operations during either of the six-month periods ended August
31, 1998 or 1997 as a direct result of flood conditions, high waters caused
reduced parking and a general public perception of diminished access to the
casino which combined to negatively impact revenue during the period.
Results of Operations
The results of operations for fiscal years 1999 and 1998 include the gaming
results for Davenport, Iowa, Biloxi, Mississippi and St. Louis, Missouri, and
of much lesser significance, the non-gaming operations for Davenport (The
Blackhawk Hotel) and St. Louis (Gateway Riverboat Cruises). Beginning in July
1997, the results of operations in Biloxi include the results of the
Broadwater Property.
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The following table highlights the results of the Company's operations.
Three Months Ended Six Months Ended
August 31, August 31,
1998 1997 1998 1997
------ ------ ------ ------
(in millions)
Biloxi, Mississippi Operations
(including hotels)
Operating revenues................. $ 15.6 $ 11.5 $ 30.0 $ 22.3
Income (loss) from operations...... $ 2.0 $ (0.4) $ 2.9 $ (0.3)
EBITDA (a)......................... $ 2.6 $ 0.4 $ 4.2 $ 1.3
EBITDA margin...................... 16.7% 3.5% 14.0% 5.8%
Davenport, Iowa Operations
(including hotel)
Operating revenues................. $ 20.5 $ 19.6 $ 41.9 $ 36.8
Income from operations............. $ 3.9 $ 3.4 $ 7.5 $ 4.8
EBITDA (a)......................... $ 5.1 $ 4.6 $ 9.8 $ 7.0
EBITDA margin...................... 24.9% 23.5% 23.4% 19.0%
St. Louis, Missouri Operations
Operating revenues................. $ 16.8 $ 17.5 $ 33.0 $ 35.2
Income from operations............. $ 0.8 $ 1.0 $ 0.1 $ 2.3
EBITDA (a)......................... $ 2.1 $ 2.3 $ 2.8 $ 4.9
EBITDA margin...................... 12.5% 13.1% 8.5% 13.9%
Corporate Leasing Operations
Operating revenues................. $ 0.7 $ 0.4 $ 0.7 $ 0.8
Income (loss) from operations...... $ (0.2) $ 0.4 $ (0.6) $ (0.1)
EBITDA (a)......................... $ 0.2 $ 0.7 $ 0.1 $ 0.8
EBITDA margin...................... 28.6% n/a* 14.3% n/a*
Corporate Administrative and
Development
Loss from operations............... $ (2.6) $ (1.5) $ (6.5) $ (3.3)
EBITDA (a)......................... $ (2.6) $ (1.5) $ (6.5) $ (3.2)
(a) "EBITDA" consists of earnings from operations before interest, income
taxes, depreciation and amortization. EBITDA should not be construed as an
alternative to operating income as an indicator of the Company's operating
performance, or as an alternative to cash flows from operating activities as a
measure of liquidity. The Company has presented EBITDA solely as a
supplemental disclosure to facilitate a more complete analysis of the
Company's financial position. The Company believes that this disclosure
enhances the understanding of the financial performance of a company with
substantial depreciation and amortization.
*Not meaningful as a result of gains on the sales of property and equipment.
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Three-Month Period Ended August 31, 1998 Compared to the
Three-Month Period Ended August 31, 1997
Operating revenues. The Company generated consolidated operating revenues
of $53.6 million during the three-month period ended August 31, 1998 compared
to $49.0 million during the three-month period ended August 31, 1997, an
increase of $4.5 million or 9.2%.
The Company's Davenport and Biloxi operations each experienced increases in
revenue, partially offset by the Company's St. Louis operation which
experienced a decrease. The increase in Davenport's revenue is primarily the
result of growth in total market revenue over the comparable three-month
period ended August 31, 1997. The $4.1 million increase in Biloxi's revenue
primarily is the result of two factors: i) the growth in both the Gulf Coast
market revenue as a whole and the Company's market share over the comparable
three-month period ended August 31, 1997, resulting in approximately a $2.6
million increase; and ii) the inclusion of a full three months of operating
revenue for the Broadwater Property for the period ended August 31, 1998,
compared to approximately five weeks of revenue for the comparable three-month
period ended August 31, 1997, resulting in approximately a $1.5 million
increase.
Management believes that the primary reason for the decrease in St. Louis's
operating revenue is that the Company has yet to recapture its market share
after the 26-day suspension of operations during the first quarter.
The Company's revenues from food and beverage, hotel, retail, charter and
other non-gaming activities (net of promotional allowances) increased to $7.1
million during the three-month period ended August 31, 1998, from $4.9 million
during the three-month period ended August 31, 1997, an increase of $2.2
million. The increase was primarily attributable to two factors: (i) the
purchase of the Broadwater Property in July 1997, which contributed an
increase of approximately $1.5 million in revenue; and (ii) an increase in
charter revenue as a result of a new charter agreement which contributed $0.4
million to the increase.
Operating costs and expenses. The Company's consolidated gaming and gaming
cruise operating costs and expenses were $26.0 million during the three-month
period ended August 31, 1998, compared to $25.8 million during the three-month
period ended August 31, 1997, an increase of $0.2 million. As a percentage of
gaming revenues, gaming and gaming cruise costs decreased to 55.8% during the
three-month period ended August 31, 1998 from 58.3% during the three-month
period ended August 31, 1997. The decrease as a percent of revenue is
primarily attributable to the operating efficiencies experienced in Biloxi.
The Company's consolidated selling, general and administrative expenses were
$13.6 million during the three-month period ended August 31, 1998, compared to
$12.4 million for the three-month period ended August 31, 1997, an increase of
$1.2 million or 9.7%. The acquisition of the Broadwater Property in July 1997
contributed to $0.9 million of the increase. As a percentage of consolidated
revenues, selling, general and administrative expenses increased to 25.4%
12
<PAGE> 15
during the three-month period ended August 31, 1998 from 25.3% during the
three-month period ended August 31, 1997.
Depreciation and amortization expenses were $3.5 million during the three-
month period ended August 31, 1998, compared to $3.7 million during the three-
month period ended August 31, 1997, a decrease of $0.2 million, or 5.4%.
Development costs during the three-month period ended August 31, 1998 were
$1.2 million compared to $0.3 million during the three-month period ended
August 31, 1997, an increase of $0.9 million. The increase was primarily
related to $0.5 million the Company incurred pursuing a gaming license in New
York City, and an increase of $0.4 million related to the amortization of the
Company's investment in the Philadelphia lease option.
Operating income/loss. As a result of the foregoing items, the Company had
operating income of $3.9 million during the three-month period ended August
31, 1998, compared to $2.8 million during the three-month period ended August
31, 1997.
The improvement in both Biloxi's and Davenport's operating incomes were the
result of improved revenues, while management believes that the decrease in
St. Louis's operating income was the result of decreased revenues attributable
to its not recapturing its market after the April accident. Expenses related
to maintenance of the "President Casino New Yorker" and preparing the vessel
for a new charter, combined with the prior year's $0.5 million gain on the
sale of unutilized barges, account for the decrease in operating income for
Corporate Leasing operations. The Company's Development and Corporate
Administration expenses increased primarily because of the pursuit of a gaming
license in New York, which offset the overall increase in operating income of
the operating subsidiaries.
Interest expense, net. The Company incurred net interest expense of $4.8
million during the three-month period ended August 31, 1998, compared to $3.9
million during the three-month period ended August 31, 1997, an increase of
$0.9 million, or 23.1%. The increase is the result of the incurrence by the
Company of $30.0 million debt in July 1997 in conjunction with the purchase of
the Broadwater Property.
Minority interest expense. The Company incurred $0.4 million minority
interest expense for the three-month period ended August 31, 1998, compared to
$0.2 million for the three-month period ended August 31, 1997. The increase
is attributable to the acquisition of the Broadwater Property in July 1997.
Net loss. The Company incurred a net loss of $1.4 million during the three-
month period ended August 31, 1998, compared to a net loss of $1.3 million
during the three-month period ended August 31, 1997.
Six-Month Period Ended August 31, 1998 Compared to the
Six-Month Period Ended August 31, 1997
Operating revenues. The Company generated consolidated operating revenues
13
<PAGE> 16
of $105.7 million during the six-month period ended August 31, 1998 compared
to $95.2 million during the six-month period ended August 31, 1997, an
increase of $10.5 million or 11.0%.
The Company's Davenport and Biloxi operations each experienced increases in
revenue, offset by the Company's St. Louis operation which experienced a
decrease primarily as a result of being closed for 26 days during April 1998.
The increase in revenues at the Company's Davenport operations resulted from
the combination of the prior year's temporary suspension of operations for
thirteen days during April 1997 due to flood conditions and the current year
being positively impacted by a major convention in the Quad City area.
The $7.7 million increase in revenues over the prior year in Biloxi resulted
from a $3.6 million increase in casino revenues and a $4.1 million increase
from the hotel operations acquired in July 1997. The increase in casino
revenues is primarily the result of both the growth in both the Gulf Coast
market revenue as a whole and the Company's market share over the comparable
six-month period ended August 31, 1997.
The Company's revenues from food and beverage, hotel, retail, charter and
other non-gaming activities (net of promotional allowances) increased to $16.5
million during the six-month period ended August 31, 1998, from $8.6 million
during the six-month period ended August 31, 1997, an increase of $7.9
million. The increase was primarily attributable to two factors: (i) the
purchase of the Broadwater Property in July 1997, which contributed an
increase of $4.1 million in revenue; and (ii) the inclusion of $3.6 million in
insurance proceeds in revenue for the six-month period ended August 31, 1998
compared to $0.5 million of business interruption proceeds related to flooding
in St. Louis during the Summer of 1996, recognized in the six-month period
ended August 31, 1997.
Operating costs and expenses. The Company's consolidated gaming and gaming
cruise operating costs and expenses were $51.6 million during the six-month
period ended August 31, 1998, compared to $50.4 million during the six-month
period ended August 31, 1997, an increase of $1.2 million or 2.4%. Gaming
costs increased $2.9 million at the Davenport and Biloxi operations as a
result of increased gaming revenues while St. Louis gaming costs decreased
$1.7 million as a result of being closed for 26 days. As a percentage of
gaming revenues, gaming and gaming cruise costs decreased to 57.9% during the
six-month period ended August 31, 1998, from 58.2% during the six-month period
ended August 31, 1997. The decrease in gaming and gaming cruise costs as a
percent of revenue is primarily attributable to the fixed components of
Biloxi's and Davenport's gaming and gaming cruise costs during a period of
increased revenue offset by the ongoing fixed components of St. Louis gaming
costs incurred during the 26-day period the casino was closed.
The Company's consolidated selling, general and administrative expenses were
$29.0 million during the six-month period ended August 31, 1998, compared to
$24.8 million for the six-month period ended August 31, 1997, an increase of
$4.2 million or 16.9%. The St. Louis operations increase of $2.5 million was
14
<PAGE> 17
primarily due to the "Admiral" accident. The acquisition of the Broadwater
Property in July 1997 contributed to $2.3 million of the increase. As a
percentage of consolidated revenues, selling, general and administrative
expenses increased to 27.5% during the six-month period ended August 31, 1998
from 26.1% during the six-month period ended August 31, 1997. The increase in
selling, general and administrative expenses as a percent of revenue is
primarily attributable to fixed costs at the St. Louis operations continuing
during the 26-day temporary suspension of operations in April 1998 and a one-
time savings of $0.7 million related to a favorable tax assessment judgment
recorded during the six-month period ended August 31, 1997.
Depreciation and amortization expenses were $7.0 million during the six-
month period ended August 31, 1998, compared to $7.4 million during the six-
month period ended August 31, 1997, a decrease of $0.4 million, or 5.4%. The
decrease is primarily attributable to the removal of a vessel from service
during fiscal 1998.
Development costs during the six-month period ended August 31, 1998 were
$3.9 million compared to $1.2 million during the six-month period ended August
31, 1997, an increase of $2.7 million. The increase was primarily related to
$2.5 million the Company incurred pursuing a gaming license in New York City.
Operating income. As a result of the foregoing items, the Company had
operating income of $3.4 million during both six-month periods ended August
31, 1998 and 1997.
The improvement in both Biloxi's and Davenport's operating incomes were the
result of improved revenues, while decrease in St. Louis's operating income
was the result of decreased revenues attributable to its not recapturing its
market after the April accident. Expenses related to maintenance of
"President Casino New Yorker" and preparing the vessel for charter, combined
with the prior year's $0.5 million gain on the sale of unutilized barges,
account for the decrease in operating income for corporate leasing operations.
The Company's development and corporate administration expenses increased
primarily because of the pursuit of a new gaming license, which offset the
overall increase in operating income of the operating subsidiaries.
Interest expense, net. The Company incurred net interest expense of $9.7
million during the six-month period ended August 31, 1998, compared to $7.4
million during the six-month period ended August 31, 1997, an increase of $2.3
million, or 31.1%. The increase is the result of $30.0 million debt secured
by the Company in July 1997 in conjunction with the purchase of the Broadwater
Property.
Minority interest expense. The Company incurred $0.8 million minority
interest expense for the six-month period ended August 31, 1998, compared to
$0.2 million for the six-month period ended August 31, 1997. The increase is
attributable to the acquisition of the Broadwater Property in July 1997.
Net loss. The Company incurred a net loss of $7.1 million during the six-
month period ended August 31, 1998, compared to a net loss of $4.2 million
15
<PAGE> 18
during the six-month period ended August 31, 1997.
Liquidity and Capital Resources
The Company meets its working capital requirements from a combination of
internally generated sources including cash from operations and the sale or
charter of assets no longer utilized in the Company's operations.
The Company requires approximately $7.0 million of cash in order to fund
daily operations. As of August 31, 1998, the Company had approximately $14.6
million in non-restricted cash and short-term investments in excess of the
required $7.0 million. The Company is heavily dependant on cash generated
from operations to continue to operate as planned in its existing
jurisdictions and fund capital expenditures. To the extent cash generated
from operations is less than anticipated, the Company may be required to
curtail certain planned fiscal 1998 expenditures or seek other sources of
financing. The Company may be limited in its ability to raise cash through
additional financing.
The Company experienced a net cash decrease from investing activities of
$2.3 million during the six-month period ended August 31, 1998 compared to a
decrease of $35.9 million during the six-month period ended August 31, 1997.
The net cash decrease from investing activities during both periods resulted
primarily from expenditures on property and equipment. During the six-month
period ended August 31, 1998, the Company spent approximately $1.5 million,
$1.5 million and $0.9 million at the Company's Biloxi, St. Louis and Davenport
operations, respectively. Additionally, the Company spent $1.0 million on
improvements to the "President Casino New Yorker" and spent $0.7 million in
conjunction with the potential development of the Broadwater Property into a
multi-casino destination resort. The expenditures were partially offset by
the maturity of $2.3 million in short-term investments. During the six-month
period ended August 31, 1997, the Company spent $33.7 million primarily on the
acquisition of the Broadwater Property, offset by the receipt of $1.0 million
of proceeds primarily from the sale of two vessels that the Company did not
intend to use in future operations.
During both six-month periods ended August 31, 1998 and 1997, the Company
made $0.2 million of principal payments.
In the event the Company identifies a potential growth opportunity, project
financing will be required. Capital investments may include all or some of
the following: acquisition and development of land; acquisition of vessels and
lease options on land and other facilities; and construction of vessels and
other facilities in anticipation of the approval of gaming operations in
potential new jurisdictions. In connection with development activities
relating to potential jurisdictions, the Company also makes expenditures for
professional services which are expensed as incurred. The Company's financing
requirements would depend upon actual development costs, the amounts and
timing of such expenditures, the amount of available cash flow from operations
and the availability of other financing arrangements.
16
<PAGE> 19
In such case, the Company could pursue a number of alternatives to avail
itself of additional capital, including borrowing additional funds either
directly or on a stand-alone project basis, financing through lease
agreements, selling equity securities and selling assets which are not
currently generating revenues. The Company may also consider strategic
combinations or alliances. Although there can be no assurance that the
Company can effectuate any of the financing strategies discussed above, the
Company believes that if it determines to seek any additional licenses to
operate gaming in other potential jurisdictions it will be able to raise
sufficient capital to pursue its strategic plan.
--Nasdaq
The Company has received a notice from the Nasdaq Stock Market, Inc.
("Nasdaq") that it does not meet the applicable listing requirements and that
the Company's Common Stock is therefore subject to delisting because the
Company's net tangible assets no longer meet the applicable requirement for
listing. The Company has contested the delisting of its securities in
accordance with Nasdaq's procedures. Although Nasdaq has the discretion to
grant exceptions to the listing requirements, there is no assurance that it
will do so in the Company's case. The Company anticipates that, if its Common
Stock is delisted from Nasdaq, it will be quoted on the OTC Bulletin Board.
However, delisting of the Company's Common Stock from Nasdaq could have an
adverse effect on the liquidity of the Common Stock and on the Company's
ability to raise future capital. The decision by Nasdaq will have no effect
on the Company's day-to-day business operations.
--Year 2000
The Company has determined that it will need to modify or replace various
portions of its software so that its computer systems will function properly
with respect to dates in the Year 2000 and beyond. As the Company is dependent
on third party software for all of its major applications, the Company has
initiated discussions with its significant software vendors to ensure that
those parties have appropriate plans to remediate Year 2000 issues. Through
these discussions, the Company has determined that all of the systems that are
critical to the Company's operations are either 2000 compliant or that 2000
compliant versions exist that can be implemented by the Company.
The next phase in the Company's efforts will be to plan for and implement
the Year 2000 versions of the software into the Company's systems. The Company
has a May 1999 target date to complete its implementation efforts.
As of August 31, 1998, the Company has incurred less than $0.1 million of
costs related to Year 2000 issues. The Company estimates it will incur less
than $0.3 million in future expenses to ensure all systems will function
properly with respect to dates in the Year 2000. These expenses are not
expected to have a material impact on the financial position, cash flow or
operations of the Company.
The costs for accomplishing the Company's plans to complete the Year 2000
17
<PAGE> 20
modifications and testing processes are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of various resources, third-party modification
plans and other factors. However, there can be no guarantee that these
estimates will be achieved, and actual results could differ from those plans.
Forward Looking Statements
The statements contained herein include forward-looking statements based on
management's current expectations of the Company's future performance.
Predictions relating to future performance are inherently uncertain and
subject to a number of risks. Consequently, the Company's actual results
could differ materially from the expectations expressed in the preceding
paragraphs. Factors that could cause the Company's actual results to differ
materially from the expected results include, among other things: the
intensely competitive nature of the riverboat and dockside casino gaming
industry; increases in the number of competitors in the markets in which the
Company operates; the seasonality of the riverboat and dockside casino gaming
industry in certain markets in which the Company operates; the susceptibility
of the Company's operating results to floods, adverse weather conditions and
natural disasters; the risk that jurisdictions in which the Company proposes
to operate do not enact legislation permitting riverboat or dockside casino
gaming or do not enact such legislation in a timely manner; changes in
governmental regulations governing the Company's activities and other risks
detailed in the Company's filings with the Securities and Exchange Commission.
Part II. Other Information
Item 1. Legal Proceedings
Information with respect to legal proceedings to which the Company is a
party is disclosed in Note 4 of Notes to Condensed Consolidated Financial
Statements included in Part I of this report and is incorporated herein by
reference.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
18
<PAGE> 21
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual stockholders' meeting on August 19, 1998. The
following matters were voted upon at the meeting:
1. Election of two Class III Directors:
Votes Cast
-----------------------------
Against or
Name of Director Elected For Withheld
------------------------ ------------- --------------
John E. Connelly 4,556,209 170,580
John S. Aylsworth 2,569,293 157,496
Name of Each Other Director Whose Term of
Office as Director Continues After the Meeting
----------------------------------------------
Karl G. Andren
Royal P. Walker, Jr.
Terrence L. Wirginis
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits filed as part of this report are listed on Index to
Exhibits accompanying this report.
(b) Reports on Form 8-K
Not applicable.
19
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
President Casinos, Inc.
-----------------------------
(Registrant)
Date: October 15, 1998 /s/ James A. Zweifel
-----------------------------
James A. Zweifel
Duly Authorized Officer and
Principal Financial Officer
20
<PAGE> 23
INDEX TO EXHIBITS
-----------------
EXHIBIT NO.
10.1* Amended and Restated Employment Agreement, dated June 26, 1998 by
by and between President Casinos, Inc. and John S. Aylsworth.
10.2* Amended and Restated Employment Agreement, dated June 26, 1998 by
by and between President Casinos, Inc. and John E. Connelly.
10.3* Amended and Restated Employment Agreement, dated June 26, 1998 by
by and between President Casinos, Inc. and Terrence L. Wirginis.
10.4* Amended and Restated Employment Agreement, dated June 26, 1998 by
by and between President Casinos, Inc. and James A. Zweifel.
27 Financial Data Schedule for the six-months ended August 31, 1998,
as required under EDGAR.
- ----------------------
*Management contract or compensatory plan.
21
EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into effective the 13th day of
March, 1995 by and between President Casinos, Inc., a Delaware corporation
("Company"), and John S. Aylsworth, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of the Executive to the
Company as a member of the Company's management and to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company. The Board desires to provide for the continued employment of the
Executive on the terms hereof, and the Executive is willing to commit himself
to continue to serve the Company. Additionally, the Board believes it is
imperative to diminish the inevitable distractions of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention and dedication
to the Company currently and in the event of any threatened or pending Change
in Control, and to provide the Executive with compensation and benefits
arrangements upon the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meanings specified below,
unless the context plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's Annual Base Salary (as
defined in Section 2.4(a)) plus the Incentive Bonus (as defined in Section
2.4(b)) anticipated to be awarded to the Executive in any given year.
1.1(b) "BOARD" means the Board of Directors of the Company.
1.1(c) "CHANGE IN CONTROL" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act; provided
that, for purposes of this Agreement, a Change in Control shall be deemed to
1
<PAGE> 25
have occurred if (i) any Person (other than the Company and other than a
person who is or who controls, or is controlled by or is under common control
with John E. Connelly or any person who is an Exempt Person as that term is
defined in the Rights Agreement of the Company dated as of November 10, 1997)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company which
represent 20% or more of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election, by the Company's stockholders, of each new
director is approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the period, but
excluding any individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such term is used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; (iii) there is 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 Common Stock are
converted into cash, securities, or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is consummated
any consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of the Company's
Common Stock immediately prior to the merger do not own fifty percent (50%) or
more of the stock of the surviving corporation immediately after the merger;
(v) there is consummated any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.1(f) "COMPANY" means President Casinos, Inc., A Delaware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period beginning on the Effective Date
and ending at the end of the TERM of this agreement.
1.1(h) "EFFECTIVE DATE" shall mean March 13, 1995 prior to June 1, 1998 and
thereafter shall mean June 1, 1998 and, if extended pursuant to 1.1(k) each
and every second June 1 thereafter.
1.1(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the meaning of Sections 13(d) and
14(d) of the Exchange Act.
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<PAGE> 26
1.1(k) "TERM" means the period that begins on the Effective Date and ends on
the earlier of: (i) the close of business five years from the Effective Date,
or (ii) the Date of Termination as defined in Section 3.6 provided, however,
the term of this Agreement shall, unless notice shall be given by any party to
the other prior to March 1, 2003, be renewed for a new two year term
commencing June 1, 2003. Its term may be extended thereafter for additional
two (2) year terms unless prior to March 1 of the year in which it expires
notice is given by either party that it is not to be extended.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this Agreement used in
the masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are included solely for ease of
reference and do not bear on the interpretation of the text. Accordingly, as
used in this Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Missouri, without reference to its
conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive shall remain in the employ of the Company in accordance with the
terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with those assigned to, or held and exercised by, the Executive on
the Effective Date of this Agreement.
2.2(b) Throughout the Term of this Agreement (but excluding any period of
vacation and sick leave to which he is entitled), the Executive shall devote
his full business time, attention and best efforts to the business and affairs
of the Company and shall use his reasonable best efforts to perform faithfully
and efficiently such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be a violation of
this paragraph for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures or fulfill speaking
engagements, or (iii) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the Executive
3
<PAGE> 27
was employed on the Effective Date, any office which is the headquarters of
the Company or any new headquarters if the Board of Directors determines to
relocate the headquarters.
2.4 COMPENSATION. The Executive's annual Compensation and other benefits
described in this Section 2.4, shall be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the year beginning March 1, 1997, the
Executive shall receive an annual base salary of four hundred thousand dollars
($400,000) which shall be paid in accordance with the regular payroll practice
of the Company. During the Term of this Agreement, the annual base salary
payable to the Executive shall be reviewed thereafter at least annually but
need not be adjusted upward as a result of such review and shall not be
reduced after any increase thereof. "Annual Base Salary" as used herein shall
mean the annual base salary for a then current year.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base Salary, the Executive
shall be entitled to participate in any incentive bonuses ("Incentive
Bonuses") provided through any incentive compensation plan, which is generally
available to other peer executives of the Company. To the extent an Incentive
Bonus is to be calculated for any year pursuant to Section 4.1(b), the actual
Incentive Bonus paid to the Executive for the prior fiscal year shall be the
bonus amount. To the extent any incentive bonus is paid in shares of
restricted stock, there shall be included in an Incentive Bonus the value of
such shares on their award date without any discount; provided, however, such
restricted shares shall include only those awarded in lieu of compensation
payable, as determined by the Compensation Committee of the Board.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the Term of this
Agreement, the Executive shall be entitled to participate in all incentive,
savings and retirement plans generally available to other peer executives of
the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the Term of this Agreement (and
thereafter, subject to Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company but limited however to medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent generally
available to other peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer executives of the
Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement, the Executive
shall be entitled to such fringe benefits as generally are provided to other
peer executives of the Company.
4
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2.4(g) OFFICE AND SUPPORT STAFF. Throughout the Term of this Agreement, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to those generally provided to other peer
executives of the Company.
2.4(h) VACATION. Throughout the Term of this Agreement, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with respect to other peer
executives of the Company.
SECTION 3. TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention to terminate
the Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean that the Executive has
been unable to perform the material duties of his position for a period of one
hundred eighty (180) days by reason of a physical and/or mental condition
during any twelve (12) month period. "Disability" shall be deemed to exist
when certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The Executive
will submit to such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause," which shall mean
termination based upon: (i) any breach or failure to perform duties or follow
instructions of the Board of Directors if not cured within thirty (30) days
after receipt of written notice of breach of failure, (ii) the Executive's
commission of fraud, misappropriation, embezzlement or other acts of
dishonesty, alcoholism, drug addiction or dependency or conviction of a felony
or gross misdemeanor if the Board of Directors determines such conduct is
materially adverse to the Company, (iii) the Executive's material breach of
any provision of this Agreement, if not cured within thirty (30) days after
written notice to Executive that a breach has occurred, (iv) based upon the
Executive testing positive for a controlled substance on three occasions, (v)
based upon the Executive failing on three occasions to pass a blood alcohol
test at the level set for being intoxicated in the State in which the test is
performed or (vi) any gaming commission with jurisdiction over a facility
owned, operated or managed by the Company which requires Executive's
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licensure, refuses or fails within a reasonable period of time to grant a
license to Executive or suspends or revokes a license granted to Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until he receives a Notice of Termination (as
defined in Section 3.5) from the Chairman of the Compensation Committee of the
Board.
3.4 GOOD REASON. The Executive may terminate his employment with the Company
for "Good Reason," which shall mean termination based upon:
(i) a significant and adverse change in the nature or scope of position,
authority, duties or responsibility;
(ii) (a) the failure by the Company to continue in effect any material (i)
benefit or compensation plan, (ii) stock ownership plan, (iii) life insurance
plan, (iv) health and accident plan or (v) disability plan to which the
Executive is entitled as specified in Section 2.4, (b) the taking of any
action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any
plans described in Section 2.4, or deprive the Executive of any material
fringe benefit enjoyed by the Executive as described in Section 2.4(f), or (c)
the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled as described in Section
2.4(h); provided, however, if the Company discontinues one of the foregoing on
a Company wide or executive level basis, such action shall not constitute Good
Reason.
(iii) a material breach by the Company of any provision of this Agreement
which has not been cured within thirty (30) days after receipt of written
notice of such material breach;
(iv) within a period ending at the close of business on the date one (1) year
after the Change in Control Date, the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing, that he does not
wish to continue his employment with the Company.
3.5 NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party, given in accordance with Section 7.1
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated, and (iii) if
the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
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the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, the Date of Termination
shall be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by him for Good Reason as provided in Section 3.4 hereof, the Date
of Termination shall be the date on which the Company receives notice from the
Executive of termination, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be,
or (iv) if the Executive's employment is terminated by the Company other than
for Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination.
SECTION 4. CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN
CONTROL. If, prior to a Change in Control, during the Employment Period: (i)
the Company shall terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for Good Reason, the
Executive shall be entitled to the benefits provided below:
4.1(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon), (3) any
accrued vacation pay; in each case to the extent not previously paid, and in
the event of a termination pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof
(and excluding any termination pursuant to Section 4.5) part or all of the
Incentive Bonus earned or banked for the year in which the Date of
Termination.
4.1(b) "Annual Base Salary Continuation": For the remainder of the
Employment Period, the Company shall pay on a monthly basis to the Executive,
the Executive's then-current Annual Base Salary and an Executive Incentive
Bonus over a period of twelve (12) months, each as would have been paid to the
Executive had the Executive remained in the Company's employ throughout the
Employment Period, provided, however, such amount shall not exceed (a) two
times the Executive's Annual Base Salary plus (b) two times the Executive's
Incentive Bonus calculated pursuant to Section 2.4(b) nor shall it be less
than (a) one times the Executive's Annual Base Salary plus (b) one times the
Executive's Incentive Bonus calculated pursuant to Section 2.4(b). The
Company at any time may elect to pay the balance of such payments then
remaining in a lump sum, in which case the total of such payments shall be
discounted to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For twenty-four (24) months following
the Date of Termination, the Company shall continue benefits to the Executive
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and/or the Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally at any time after the Effective Date to other peer
executives of the Company and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall cease.
4.1(d) "Other Benefits": To the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any other vested amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company as those provided generally
to other peer executives and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as those provided generally after the Effective Date to other peer
executives of the Company and their families.
4.1(e) The provisions of Section 5 shall apply in the event of any
termination pursuant to this Section 4.1.
4.1(f) Pursuant to this Section 4.1(f), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.1(c).
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL. If a Change in
Control occurs during the Employment Period and within two (2) years after a
Change in Control: (i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate employment with the
Company for Good Reason, then the Executive shall be entitled to the benefits
provided below:
4.2(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and (3) any
accrued vacation pay; in each case to the extent not previously paid. No
amount shall be paid as Annual Base Salary for any period following the Date
of Termination.
4.2(b) "Severance Amount": On the twentieth (20th) business day following
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the Date of Termination, the Company shall pay Executive a lump sum amount, in
cash, equal to 2.99 times the Executive's "base amount." For purposes of this
paragraph, base amount means the annualized includible compensation for the
period consisting of the most recent five taxable years ending before the date
on which the Change in Control occurred (or such portion of such period during
which the Executive performed personal services for the Company), as defined
and interpreted for purposes of Section 280G of the Internal Revenue Code of
1986, as such section may be amended from time to time.
4.2(c) "Welfare Benefit Continuation": For two years after the Executive's
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d) of this Agreement
if the Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
4.2(d) "Other Benefits": To the extent not previously paid or provided, and
for a period ending on the second anniversary of the Date of Termination, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any vested other amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company applicable to the Executive
and for his family as well as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally after the Effective Date to other peer executives of the
Company and their families.
4.2(e) "Certain Additional Payments by the Company":
(i) Anything in this Agreement to the contrary notwithstanding, in the event
(A) it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax imposed by Code Section 4999, or
(B) any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount equal to the Excise Tax imposed on the Payment and on
the Gross-Up Payment as well as any additional income tax, employment tax and
Excise Tax payable with respect to such additional payment (including any
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interest or penalties imposed with respect to such Excise Tax). The Gross-Up
Payment shall not include any amount for the payment of any income or
employment taxes imposed on the Payment, but shall include any income or
employment taxes payable with respect to any Gross-Up Payment (and any
interest and penalties imposed with respect thereto).
(ii) Subject to the provisions of Section 4.2(e)(iii), all determinations
required to be made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
an independent accountant which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
independent accountant shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 4.2(e), shall be paid by the
Company to the Executive within five (5) days of the receipt of the
independent accountant's determination. If the independent accountant
determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable Federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
independent accountant shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Code Section 4999 at the
time of the initial determination by the independent accountant hereunder, it
is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 4.2(e)(iii) and the Executive
thereafter is required to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the Underpayment that has occurred
and any such Underpayment, as well as any interest and penalties imposed
thereon, shall be promptly paid by the Company to or for the benefit of the
Executive.
(iii) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim,
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(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to effectively contest
such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4.2(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4.2(e)(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 4.2(e)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 4.2(e)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
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Gross-Up Payment required to be paid.
4.2(f) The provisions of Section 5.2 shall apply in the event of any
termination pursuant to this Section 4.2.
4.2(g) Pursuant to this Section 4.2(g), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.2(c).
4.3 DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period (either prior or subsequent to
a Change in Control), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations which have vested (as
defined in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within twenty (20) days of
the Date of Termination) and (ii) the timely payment or provision of Other
Benefits which have vested (as defined in Section 4.1(d)), including death
benefits pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4 DISABILITY. If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period (either prior or
subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to the
Executive in a lump sum in cash within twenty (20) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits which
have vested (as defined in Section 4.1(d)) including disability benefits
pursuant to the terms of any plan, policy or arrangement of the Company. The
provisions of Section 5.1 and 5.2 shall apply in the event of termination
hereunder.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period (either
prior or subsequent to a Change in Control), this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive Accrued Obligations (as defined in Section 4.1(a)). If the
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations (as defined in Section 4.1(a)). In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's employment shall
terminate for the reasons stated in this Section, the provisions of Section 5
shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in Sections 4.1(c) nothing
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in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company at or subsequent to
the Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others other than an obligation on the part of the Executive to repay money
borrowed from the Company. The Company agrees to pay to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement) provided, however, in the event the Executive is
unsuccessful in enforcing a contractual right at issue no such reimbursement
shall be made and, further provided, Executive shall reimburse Company for its
reasonable legal fees if any claim by the Executive is found frivolous.
4.8 OTHER TERMINATION. If the Company shall terminate Executive's employment
other than for Cause, Executive's employment shall terminate but all other
terms hereof including payments of Cash Compensation shall continue as
provided herein. If Executive shall terminate prior to a Change in Control
other than for Good Reason, Executive's employment shall terminate but the
provisions of Section 5 shall continue to apply.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during the Term of this Agreement and
for a period ending one (1) year thereafter; or (ii) if the Executive's
employment is terminated during the Term of this Agreement, then until the
date one (1) year after the date of termination, the Executive shall not,
without prior written approval of the Board, become an officer, employee,
agent, partner, consultant or director of any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
Company.
5.1(b) For purposes of Section 5.1, a business enterprise with which the
Executive becomes associated as an officer, employee, agent, partner,
consultant or director shall be considered in substantial direct competition,
if such entity competes with the Company in any business in which the Company
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is engaged and is within the Company's market area (as defined herein) as of
the Date of Termination. The Company's market area is defined for this
purpose, as the area which constitutes the St. Louis, Missouri metropolitan
area the Davenport, Iowa metropolitan area and the Biloxi, Mississippi
metropolitan area, and (a) if the Company becomes the successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) after the
Effective Date, to all or substantially all of the business and/or assets of
another business enterprise, the geographical areas in which such predecessor
business enterprise conducts substantial business activity b) any other
metropolitan area where the Company is conducting gaming operations under an
effective gaming license and (c) any metropolitan area with respect to which
the Company has expended more than five hundred thousand dollars ($500,000) in
development costs. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding. The Executive and the Company agree that neither of them
shall disclose information of a derogatory nature about the other, that the
Executive shall return all Company property in his possession on termination
of employment, and that this Section 5.2 shall remain binding notwithstanding
termination of employment for any reason. The parties agree that damages are
an insufficient remedy if a party has breached the terms of this Section 5.2
and that a request for equitable relief is permitted.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a Change in Control of the
Company shall occur and the Executive shall receive the payment provided in
section 4.2 hereof, then following the Date of Termination, and for a period
of six months thereafter or as long as payments are being made hereunder, the
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Executive shall make himself available for no additional payment other than
his reasonable expenses incurred in the performance of his duties hereunder at
such reasonable times and places as shall be set forth in writing by notice
from the Chief Executive Officer of the Company to him to perform such
reasonable services as may be requested in writing of him. No services
hereunder shall be required on a "full time" basis. The Executive's services
shall not be required for more than two (2) hours on any day and on not more
than three (3) days per month. Any successor employer must consent to each
request for services and Executive shall use his best efforts to obtain such
consent.
5.4 MODIFICATION. If any court of competent jurisdiction determines that,
consistent with the established precedent of the forum of jurisdiction, any
restriction contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its place to the
maximum extent deemed enforceable or reasonable, and the remaining covenants
and restrictions shall be enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the Executive,
and without the prior written consent of the Company, amounts receivable
hereunder shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices 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 mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President of the Company
with a copy to the Secretary of the Company, or to such other address as one
party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
Notice to Executive:
John S. Aylsworth
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232 N. Kingshighway
Park Plaza, Apartment 618
St. Louis, Missouri 63108
Notice to Company:
President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Attn: Chairman of the Board
7.2 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement supersedes and replaces
the Agreement between the undersigned dated March 13, 1995.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written on June 26,
1998.
/s/ John S. Aylsworth
----------------------------------
JOHN S. AYLSWORTH
PRESIDENT CASINOS, INC.
By /s/ John E. Connelly
--------------------------------
Name: JOHN E. CONNELLY
Title: Chairman of the Board
EXHIBIT 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into effective the 15th day of
December, 1994 by and between President Casinos, Inc., a Delaware corporation
("Company"), and John E. Connelly, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of the Executive to the
Company as a member of the Company's management and to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company. The Board desires to provide for the continued employment of the
Executive on the terms hereof, and the Executive is willing to commit himself
to continue to serve the Company. Additionally, the Board believes it is
imperative to diminish the inevitable distractions of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention and dedication
to the Company currently and in the event of any threatened or pending Change
in Control, and to provide the Executive with compensation and benefits
arrangements upon the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meanings specified below,
unless the context plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's Annual Base Salary (as
defined in Section 2.4(a)) plus the Incentive Bonus (as defined in Section
2.4(b)) anticipated to be awarded to the Executive in any given year.
1.1(b) "BOARD" means the Board of Directors of the Company.
1.1(c) "CHANGE IN CONTROL" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act; provided
that, for purposes of this Agreement, a Change in Control shall be deemed to
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have occurred if (i) any Person (other than the Company and other than a
person who is or who controls, or is controlled by or is under common control
with John E. Connelly or any person who is an Exempt Person as that term is
defined in the Rights Agreement of the Company dated as of November 10, 1997)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company which
represent 20% or more of the combined voting power of the Company's then
outstanding securities, other than by virtue of an agreement between John E.
Connelly, enterprises controlled by him and the Company dated as of November
10, 1997; (ii) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election, by the Company's stockholders, of each new director is approved
by a vote of at least two-thirds (2/3) of the directors then still in office
who were directors at the beginning of the period, but excluding any
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person
other than the Board; (iii) there is 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 Common Stock are
converted into cash, securities, or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is consummated
any consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of the Company's
Common Stock immediately prior to the merger do not own fifty percent (50%) or
more of the stock of the surviving corporation immediately after the merger;
(v) there is consummated any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.1(f) "COMPANY" means President Casinos, Inc., A Delaware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period beginning on the Effective Date
and ending at the end of the TERM of this agreement.
1.1(h) "EFFECTIVE DATE" shall mean December 15, 1994 prior to June 1, 1998
and thereafter shall mean June 1, 1998 and, if extended pursuant to 1.1(k)
each and every second June 1 thereafter.
1.1(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the meaning of Sections 13(d) and
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14(d) of the Exchange Act.
1.1(k) "TERM" means the period that begins on the Effective Date and ends on
the earlier of: (i) the close of business five years from the Effective Date,
or (ii) the Date of Termination as defined in Section 3.6 provided, however,
the term of this Agreement shall, unless notice shall be given by any party to
the other prior to March 1, 2003, be renewed for a new two year term
commencing June 1, 2003. Its term may be extended thereafter for additional
two (2) year terms unless prior to March 1 of the year in which it expires
notice is given by either party that it is not to be extended.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this Agreement used in
the masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are included solely for ease of
reference and do not bear on the interpretation of the text. Accordingly, as
used in this Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Missouri, without reference to its
conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive shall remain in the employ of the Company in accordance with the
terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with those assigned to, or held and exercised by, the Executive on
the Effective Date of this Agreement.
2.2(b) Executive is engaged as Chairman and Chief Executive Officer of the
Company and agrees to perform such duties and render such services consistent
therewith as may from time to time be reasonably required of him by the Board
of Directors of the Company (the "Board"); provided, however, that Executive
shall not be required to devote his full business time or affairs to the
Company during the term of this Agreement and shall only serve the Company on
an as needed basis from time to time; and provided, further that Executive may
pursue his other business interests and engage in other activities, such as
activities involving charitable, educational, religious and similar types of
organizations (all of which are deemed to benefit the Company), speaking
engagements, membership on the boards of directors of other organizations, and
similar type activities.
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2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the Executive
was employed on the Effective Date, any office which is the headquarters of
the Company or any new headquarters if the Board of Directors determines to
relocate the headquarters.
2.4 COMPENSATION. The Executive's annual Compensation and other benefits
described in this Section 2.4, shall be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the year beginning December 15, 1994, the
Executive shall receive an annual base salary of two hundred thousand dollars
($200,000) which shall be paid in accordance with the regular payroll practice
of the Company. During the Term of this Agreement, the annual base salary
payable to the Executive shall be reviewed thereafter at least annually but
need not be adjusted upward as a result of such review and shall not be
reduced after any increase thereof. "Annual Base Salary" as used herein shall
mean the annual base salary for a then current year.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base Salary, the Executive
shall be entitled to participate in any incentive bonuses ("Incentive
Bonuses") provided through any incentive compensation plan, which is generally
available to other peer executives of the Company. To the extent an Incentive
Bonus is to be calculated for any year pursuant to Section 4.1(b), the actual
Incentive Bonus paid to the Executive for the prior fiscal year shall be the
bonus amount. To the extent any incentive bonus is paid in shares of
restricted stock, there shall be included in an Incentive Bonus the value of
such shares on their award date without any discount; provided, however, such
restricted shares shall include only those awarded in lieu of compensation
payable, as determined by the Compensation Committee of the Board.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the Term of this
Agreement, the Executive shall be entitled to participate in all incentive,
savings and retirement plans generally available to other peer executives of
the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the Term of this Agreement (and
thereafter, subject to Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (but limited however to medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent generally
available to other peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer executives of the
Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement, the Executive
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shall be entitled to such fringe benefits as generally are provided to other
peer executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout the Term of this Agreement, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to those generally provided to other peer
executives of the Company.
2.4(h) VACATION. Throughout the Term of this Agreement, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with respect to other peer
executives of the Company.
SECTION 3. TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention to terminate
the Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean that the Executive has
been unable to perform the material duties of his position for a period of one
hundred eighty (180) days by reason of a physical and/or mental condition
during any twelve (12) month period. "Disability" shall be deemed to exist
when certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The Executive
will submit to such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause," which shall mean
termination based upon: (i) any breach or failure to perform duties or follow
instructions of the Board of Directors if not cured within thirty (30) days
after receipt of written notice of breach or failure, (ii) the Executive's
commission of fraud, misappropriation, embezzlement or other acts of
dishonesty, alcoholism, drug addiction or dependency or conviction of a felony
or gross misdemeanor if the Board of Directors determines such conduct is
materially adverse to the Company, (iii) the Executive's material breach of
any provision of this Agreement, if not cured within thirty (30) days after
written notice to Executive that a breach has occurred, (iv) based upon the
Executive testing positive for a controlled substance on three occasions, (v)
based upon the Executive failing on three occasions to pass a blood alcohol
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test at the level set for being intoxicated in the State in which the test is
performed or (vi) any gaming commission with jurisdiction over a facility
owned, operated or managed by the Company which requires Executive's
licensure, refuses or fails within a reasonable period of time to grant a
license to Executive or suspends or revokes a license granted to Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until he receives a Notice of Termination (as
defined in Section 3.5) from the Chairman of the Compensation Committee of the
Board.
3.4 GOOD REASON. The Executive may terminate his employment with the Company
for "Good Reason," which shall mean termination based upon:
(i) a significant and adverse change in the nature or scope of position,
authority, duties or responsibility;
(ii) (a) the failure by the Company to continue in effect any material (i)
benefit or compensation plan, (ii) stock ownership plan, (iii) life insurance
plan, (iv) health and accident plan or (v) disability plan to which the
Executive is entitled as specified in Section 2.4, (b) the taking of any
action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any
plans described in Section 2.4, or deprive the Executive of any material
fringe benefit enjoyed by the Executive as described in Section 2.4(f), or (c)
the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled as described in Section
2.4(h); provided, however, if the Company discontinues one of the foregoing on
a Company wide or executive level basis, such action shall not constitute Good
Reason.
(iii) a material breach by the Company of any provision of this Agreement
which has not been cured within thirty (30) days after receipt of written
notice of such material breach;
(iv) within a period ending at the close of business on the date one (1) year
after the Change in Control Date, the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing, that he does not
wish to continue his employment with the Company.
3.5 NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party, given in accordance with Section 7.1
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated, and (iii) if
the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
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circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, the Date of Termination
shall be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by him for Good Reason as provided in Section 3.4 hereof, the Date
of Termination shall be the date on which the Company receives notice from the
Executive of termination, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be,
or (iv) if the Executive's employment is terminated by the Company other than
for Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination.
SECTION 4. CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN
CONTROL. If, prior to a Change in Control, during the Employment Period: (i)
the Company shall terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for Good Reason, the
Executive shall be entitled to the benefits provided below:
4.1(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon), (3) any
accrued vacation pay; in each case to the extent not previously paid, and in
the event of a termination pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof
(and excluding any termination pursuant to Section 4.5) part or all of the
Incentive Bonus earned or banked for the year in which the Date of Termination
occurs.
4.1(b) "Annual Base Salary Continuation": For the remainder of the
Employment Period, the Company shall pay on a monthly basis to the Executive,
the Executive's then-current Annual Base Salary and an Executive Incentive
Bonus over a period of twelve (12) months, each as would have been paid to the
Executive had the Executive remained in the Company's employ throughout the
Employment Period, provided, however, such amount shall not exceed (a) two
times the Executive's Annual Base Salary plus (b) two times the Executive's
Incentive Bonus calculated pursuant to Section 2.4(b) nor shall it be less
than (a) one times the Executive's Annual Base Salary plus (b) one times the
Executive's Incentive Bonus calculated pursuant to Section 2.4(b). The
Company at any time may elect to pay the balance of such payments then
remaining in a lump sum, in which case the total of such payments shall be
discounted to present value as determined according to Code Section
280G(d)(4).
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4.1(c) "Welfare Benefit Continuation": For twenty-four (24) months following
the Date of Termination, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally at any time after the Effective Date to other peer
executives of the Company and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall cease.
4.1(d) "Other Benefits": To the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any other vested amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company as those provided generally
to other peer executives and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as those provided generally after the Effective Date to other peer
executives of the Company and their families.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Section by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.1(e) The provisions of Section 5 shall apply in the event of any
termination pursuant to this Section 4.1.
4.1(f) Pursuant to this Section 4.1(f), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.1(c).
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL. If a Change in
Control occurs during the Employment Period and within two (2) years after a
Change in Control: (i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate employment with the
Company for Good Reason, then the Executive shall be entitled to the benefits
provided below:
4.2(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
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the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and (3) any
accrued vacation pay; in each case to the extent not previously paid. No
amount shall be paid as Annual Base Salary for any period following the Date
of Termination.
4.2(b)"Severance Amount": On the twentieth (20th) business day following the
Date of Termination, the Company shall pay Executive a lump sum amount, in
cash, equal to 2.99 times the Executive's "base amount." For purposes of this
paragraph, base amount means the annualized includible compensation for the
period consisting of the most recent five taxable years ending before the date
on which the Change in Control occurred (or such portion of such period during
which the Executive performed personal services for the Company), as defined
and interpreted for purposes of Section 280G of the Internal Revenue Code of
1986, as such section may be amended from time to time.
4.2(c) "Welfare Benefit Continuation": For two years after the Executive's
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d) of this Agreement
if the Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
4.2(d) "Other Benefits": To the extent not previously paid or provided, and
for a period ending on the second anniversary of the Date of Termination, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any vested other amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company applicable to the Executive
and for his family as well as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally after the Effective Date to other peer executives of the
Company and their families.
4.2(e) "Certain Additional Payments by the Company":
(i) Anything in this Agreement to the contrary notwithstanding, in the event
(A) it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
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"Payment") would be subject to the excise tax imposed by Code Section 4999, or
(B) any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount equal to the Excise Tax imposed on the Payment and on
the Gross-Up Payment as well as any additional income tax, employment tax and
Excise Tax payable with respect to such additional payment (including any
interest or penalties imposed with respect to such Excise Tax). The Gross-Up
Payment shall not include any amount for the payment of any income or
employment taxes imposed on the Payment, but shall include any income or
employment taxes payable with respect to any Gross-Up Payment (and any
interest and penalties imposed with respect thereto).
(ii) Subject to the provisions of Section 4.2(e)(iii), all determinations
required to be made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
an independent accountant which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
independent accountant shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 4.2(e), shall be paid by the
Company to the Executive within five (5) days of the receipt of the
independent accountant's determination. If the independent accountant
determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable Federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
independent accountant shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Code Section 4999 at the
time of the initial determination by the independent accountant hereunder, it
is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 4.2(e)(iii) and the Executive
thereafter is required to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the Underpayment that has occurred
and any such Underpayment, as well as any interest and penalties imposed
thereon, shall be promptly paid by the Company to or for the benefit of the
Executive.
(iii) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which the Executive gives such notice to the
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Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to effectively contest
such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4.2(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4.2(e)(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 4.2(e)(iii))
promptly pay to the Company the amount of such refund (together with any
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interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 4.2(e)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
4.2(f) The provisions of Section 5.2 shall apply in the event of any
termination pursuant to this Section 4.2.
4.2(g) Pursuant to this Section 4.2(g), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.2(c).
4.3 DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period (either prior or subsequent to
a Change in Control), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations which have vested (as
defined in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within twenty (20) days of
the Date of Termination) and (ii) the timely payment or provision of Other
Benefits which have vested (as defined in Section 4.1(d)), including death
benefits pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4 DISABILITY. If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period (either prior or
subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to the
Executive in a lump sum in cash within twenty (20) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits which
have vested (as defined in Section 4.1(d)) including disability benefits
pursuant to the terms of any plan, policy or arrangement of the Company. The
provisions of Section 5.1 and 5.2 shall apply in the event of termination
hereunder.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period (either
prior or subsequent to a Change in Control), this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive Accrued Obligations (as defined in Section 4.1(a)). If the
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
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without further obligations to the Executive, other than for Accrued
Obligations (as defined in Section 4.1(a)). In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's employment shall
terminate for the reasons stated in this Section, the provisions of Section 5
shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in Sections 4.1(c) nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company at or subsequent to
the Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others other than an obligation on the part of the Executive to repay money
borrowed from the Company. The Company agrees to pay to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement) provided, however, in the event the Executive is
unsuccessful in enforcing a contractual right at issue no such reimbursement
shall be made and, further provided, Executive shall reimburse Company for its
reasonable legal fees if any claim by the Executive is found frivolous.
4.8 OTHER TERMINATION. If the Company shall terminate Executive's employment
other than for Cause, Executive's employment shall terminate but all other
terms hereof including payments of Cash Compensation shall continue as
provided herein. If Executive shall terminate prior to a Change in Control
other than for Good Reason, Executive's employment shall terminate but the
provisions of Section 5 shall continue to apply.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during the Term of this Agreement and
for a period ending one (1) year thereafter; or (ii) if the Executive's
employment is terminated during the Term of this Agreement, then until the
date one (1) year after the date of termination, the Executive shall not,
without prior written approval of the Board, become an officer, employee,
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agent, partner, consultant or director of any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
Company.
5.1(b) For purposes of Section 5.1, a business enterprise with which the
Executive becomes associated as an officer, employee, agent, partner,
consultant or director shall be considered in substantial direct competition,
if such entity competes with the Company in any business in which the Company
is engaged and is within the Company's market area (as defined herein) as of
the Date of Termination. The Company's market area is defined for this
purpose, as the area which constitutes the St. Louis, Missouri metropolitan
area the Davenport, Iowa metropolitan area and the Biloxi, Mississippi
metropolitan area, and if the Company becomes the successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) after the Effective
Date, to all or substantially all of the business and/or assets of another
business enterprise, the geographical areas in which such predecessor business
enterprise conducts substantial business activity (b) any other metropolitan
area where the Company is conducting gaming operations under an effective
gaming license and (c) any metropolitan area with respect to which the Company
has expended more than five hundred thousand dollars ($500,000) in development
costs. In no event shall an asserted violation of the provisions of this
Section constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement except that in the event that
prior to a Change in Control the Company, in its reasonable and good faith
judgment, believes that a violation of such provision has occurred and the
Company brings a judicial proceeding to enforce such provision against the
Executive in which event amounts may be deferred pending an outcome of such
proceeding.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding. The Executive and the Company agree that neither of them
shall disclose information of a derogatory nature about the other, that the
Executive shall return all Company property in his possession on termination
of employment, and that this Section 5.2 shall remain binding notwithstanding
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termination of employment for any reason. The parties agree that damages are
an insufficient remedy if a party has breached the terms of this Section 5.2
and that a request for equitable relief is permitted.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a Change in Control of the
Company shall occur and the Executive shall receive the payment provided in
section 4.2 hereof, then following the Date of Termination, and for a period
of six months thereafter or as long as payments are being made hereunder, the
Executive shall make himself available for no additional payment other than
his reasonable expenses incurred in the performance of his duties hereunder at
such reasonable times and places as shall be set forth in writing by notice
from the Chief Executive Officer of the Company to him to perform such
reasonable services as may be requested in writing of him. No services
hereunder shall be required on a "full time" basis. The Executive's services
shall not be required for more than two (2) hours on any day and on not more
than three (3) days per month. Any successor employer must consent to each
request for services and Executive shall use his best efforts to obtain such
consent.
5.4 MODIFICATION. If any court of competent jurisdiction determines that,
consistent with the established precedent of the forum of jurisdiction, any
restriction contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its place to the
maximum extent deemed enforceable or reasonable, and the remaining covenants
and restrictions shall be enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the Executive,
and without the prior written consent of the Company, amounts receivable
hereunder shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices 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 mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
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Company shall be directed to the attention of the President of the Company
with a copy to the Secretary of the Company, or to such other address as one
party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
Notice to Executive:
John E. Connelly
c/o J. Edward Connelly Associates, Inc.
1020 Saw Mill Run Blvd.
Pittsburgh, Pennsylvania 15220
Notice to Company:
President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Attn: Chairman of the Board
7.2 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement supersedes and replaces
the Agreement between the undersigned dated December 15, 1994.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written on June 26,
1998.
/s/ John E. Connelly
-------------------------------
JOHN E. CONNELLY
PRESIDENT CASINOS, INC.
By /s/ John S. Aylsworth
-----------------------------
Name: JOHN S. AYLSWORTH
Title: President
EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into effective the 1st day of
May, 1996 by and between President Casinos, Inc., a Delaware corporation
("Company"), and Terrence L. Wirginis, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of the Executive to the
Company as a member of the Company's management and to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company. The Board desires to provide for the continued employment of the
Executive on the terms hereof, and the Executive is willing to commit himself
to continue to serve the Company. Additionally, the Board believes it is
imperative to diminish the inevitable distractions of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention and dedication
to the Company currently and in the event of any threatened or pending Change
in Control, and to provide the Executive with compensation and benefits
arrangements upon the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meanings specified below,
unless the context plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's Annual Base Salary (as
defined in Section 2.4(a)) plus the Incentive Bonus (as defined in Section
2.4(b)) anticipated to be awarded to the Executive in any given year.
1.1(b) "BOARD" means the Board of Directors of the Company.
1.1(c) "CHANGE IN CONTROL" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act; provided
that, for purposes of this Agreement, a Change in Control shall be deemed to
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have occurred if (i) any Person (other than the Company and other than a
person who is or who controls, or is controlled by or is under common control
with John E. Connelly or any person who is an Exempt Person as that term is
defined in the Rights Agreement of the Company dated as of November 10, 1997)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company which
represent 20% or more of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election, by the Company's stockholders, of each new
director is approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the period, but
excluding any individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such term is used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; (iii) there is 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 Common Stock are
converted into cash, securities, or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is consummated
any consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of the Company's
Common Stock immediately prior to the merger do not own fifty percent (50%) or
more of the stock of the surviving corporation immediately after the merger;
(v) there is consummated any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.1(f) "COMPANY" means President Casinos, Inc., A Delaware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period beginning on the Effective Date
and ending at the end of the TERM of this agreement.
1.1(h) "EFFECTIVE DATE" shall mean May 1, 1996 prior to June 1, 1998 and
thereafter shall mean June 1, 1998 and, if extended pursuant to 1.1(k) each
and every second June 1 thereafter.
1.1(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the meaning of Sections 13(d) and
14(d) of the Exchange Act.
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1.1(k) "TERM" means the period that begins on the Effective Date and ends on
the earlier of: (i) the close of business five years from the Effective Date,
or (ii) the Date of Termination as defined in Section 3.6 provided, however,
the term of this Agreement shall, unless notice shall be given by any party to
the other prior to March 1, 2003, be renewed for a new two year term
commencing June 1, 2003. Its term may be extended thereafter for additional
two (2) year terms unless prior to March 1 of the year in which it expires
notice is given by either party that it is not to be extended.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this Agreement used in
the masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are included solely for ease of
reference and do not bear on the interpretation of the text. Accordingly, as
used in this Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Missouri, without reference to its
conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive shall remain in the employ of the Company in accordance with the
terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with those assigned to, or held and exercised by, the Executive on
the Effective Date of this Agreement.
2.2(b) Throughout the Term of this Agreement (but excluding any period of
vacation and sick leave to which he is entitled), the Executive shall devote
the majority of his full business time, attention and best efforts to the
business and affairs of the Company and shall use his reasonable best efforts
to perform faithfully and efficiently such responsibilities as are assigned to
him under or in accordance with this Agreement; provided that, it shall not be
a violation of this paragraph for the Executive to (i) serve on corporate,
civic or charitable boards or committees, (ii) deliver lectures or fulfill
speaking engagements, or (iii) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. However, the Company acknowledges that Executive is an owner,
shareholder, officer and director of Gateway Clipper, Inc., located in
Pittsburgh, Pennsylvania, and as a result thereof, Executive must devote a
small portion of his business time to his duties as an owner, shareholder,
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officer and director of Gateway Clipper, Inc., which he agrees will not
interfere with or detract from any of his duties under this Agreement.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the Executive
was employed on the Effective Date, any office which is the headquarters of
the Company or any new headquarters if the Board of Directors determines to
relocate the headquarters.
2.4 COMPENSATION. The Executive's annual Compensation and other benefits
described in this Section 2.4, shall be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the year beginning March 1, 1997, the
Executive shall receive an annual base salary of one hundred eighty thousand
dollars ($180,000) which shall be paid in accordance with the regular payroll
practice of the Company. During the Term of this Agreement, the annual base
salary payable to the Executive shall be reviewed thereafter at least annually
but need not be adjusted upward as a result of such review and shall not be
reduced after any increase thereof. "Annual Base Salary" as used herein shall
mean the annual base salary for a then current year.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base Salary, the Executive
shall be entitled to participate in any incentive bonuses ("Incentive
Bonuses") provided through any incentive compensation plan, which is generally
available to other peer executives of the Company. To the extent an Incentive
Bonus is to be calculated for any year pursuant to Section 4.1(b), the actual
Incentive Bonus paid to the Executive for the prior fiscal year shall be the
bonus amount. To the extent any incentive bonus is paid in shares of
restricted stock, there shall be included in an Incentive Bonus the value of
such shares on their award date without any discount; provided, however, such
restricted shares shall include only those awarded in lieu of compensation
payable, as determined by the Compensation Committee of the Board.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the Term of this
Agreement, the Executive shall be entitled to participate in all incentive,
savings and retirement plans generally available to other peer executives of
the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the Term of this Agreement (and
thereafter, subject to Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (but limited however to medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent generally
available to other peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer executives of the
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Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement, the Executive
shall be entitled to such fringe benefits as generally are provided to other
peer executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout the Term of this Agreement, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to those generally provided to other peer
executives of the Company.
2.4(h) VACATION. Throughout the Term of this Agreement, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with respect to other peer
executives of the Company.
SECTION 3. TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention to terminate
the Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean that the Executive has
been unable to perform the material duties of his position for a period of one
hundred eighty (180) days by reason of a physical and/or mental condition
during any (12) month period. "Disability" shall be deemed to exist when
certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The Executive
will submit to such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause," which shall mean
termination based upon: (i) any breach or failure to perform duties or follow
instructions of the Board of Directors if not cured within thirty (30) days
after receipt of written notice of breach or failure, (ii) the Executive's
commission of fraud, misappropriation, embezzlement or other acts of
dishonesty, alcoholism, drug addiction or dependency or conviction of a felony
or gross misdemeanor if the Board of Directors determines such conduct is
materially adverse to the Company, (iii) the Executive's material breach of
any provision of this Agreement, if not cured within thirty (30) days after
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written notice to Executive that a breach has occurred, (iv) based upon the
Executive testing positive for a controlled substance on three occasions, (v)
based upon the Executive failing on three occasions to pass a blood alcohol
test at the level set for being intoxicated in the State in which the test is
performed or (vi) any gaming commission with jurisdiction over a facility
owned, operated or managed by the Company which requires Executive's
licensure, refuses or fails within a reasonable period of time to grant a
license to Executive or suspends or revokes a license granted to Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until he receives a Notice of Termination (as
defined in Section 3.5) from the Chairman of the Compensation Committee of the
Board.
3.4 GOOD REASON. The Executive may terminate his employment with the Company
for "Good Reason," which shall mean termination based upon:
(i) a significant and adverse change in the nature or scope of position,
authority, duties or responsibility;
(ii) (a) the failure by the Company to continue in effect any material (i)
benefit or compensation plan, (ii) stock ownership plan, (iii) life insurance
plan, (iv) health and accident plan or (v) disability plan to which the
Executive is entitled as specified in Section 2.4, (b) the taking of any
action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any
plans described in Section 2.4, or deprive the Executive of any material
fringe benefit enjoyed by the Executive as described in Section 2.4(f), or (c)
the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled as described in Section
2.4(h); provided, however, if the Company discontinues one of the foregoing on
a Company wide or executive level basis, such action shall not constitute
Good Reason.
(iii) a material breach by the Company of any provision of this Agreement
which has not been cured within thirty (30) days after receipt of written
notice of such material breach;
(iv) within a period ending at the close of business on the date one (1) year
after the Change in Control Date, the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing, that he does not
wish to continue his employment with the Company.
3.5 NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party, given in accordance with Section 7.1
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated, and (iii) if
the Date of Termination (as defined below) is other than the date of receipt
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of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, the Date of Termination
shall be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by him for Good Reason as provided in Section 3.4 hereof, the Date
of Termination shall be the date on which the Company receives notice from the
Executive of termination, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be,
or (iv) if the Executive's employment is terminated by the Company other than
for Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination.
SECTION 4. CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN
CONTROL. If, prior to a Change in Control, during the Employment Period: (i)
the Company shall terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for Good Reason, the
Executive shall be entitled to the benefits provided below:
4.1(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon), (3) any
accrued vacation pay; in each case to the extent not previously paid, and in
the event of a termination pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof
(and excluding any termination pursuant to Section 4.5) part or all of the
Incentive Bonus earned or banked for the year in which the Date of
Termination.
4.1(b) "Annual Base Salary Continuation": For the remainder of the
Employment Period, the Company shall pay on a monthly basis to the Executive,
the Executive's then-current Annual Base Salary and an Executive Incentive
Bonus over a period of twelve (12) months, each as would have been paid to the
Executive had the Executive remained in the Company's employ throughout the
Employment Period, provided, however, such amount shall not exceed (a) two
times the Executive's Annual Base Salary plus (b) two times the Executive's
Incentive Bonus calculated pursuant to Section 2.4(b) nor shall it be less
than (a) one times the Executive's Annual Base Salary plus (b) one times the
Executive's Incentive Bonus calculated pursuant to Section 2.4(b). The
Company at any time may elect to pay the balance of such payments then
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remaining in a lump sum, in which case the total of such payments shall be
discounted to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For twenty-four (24) months following
the Date of Termination, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally at any time after the Effective Date to other peer
executives of the Company and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall cease.
4.1(d) "Other Benefits": To the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any other vested amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company as those provided generally
to other peer executives and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as those provided generally after the Effective Date to other peer
executives of the Company and their families.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Section by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.1(e) The provisions of Section 5 shall apply in the event of any
termination pursuant to this Section 4.1.
4.1(f) Pursuant to this Section 4.1(f), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.1(c).
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL. If a change in
Control occurs during the Employment Period and within two (2) years after a
Change in Control: (i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate employment with the
Company for Good Reason, then the Executive shall be entitled to the benefits
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provided below:
4.2(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon) and (3) any
accrued vacation pay; in each case to the extent not previously paid. No
amount shall be paid as Annual Base Salary for any period following the Date
of Termination.
4.2(b) "Severance Amount": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay Executive a lump sum amount, in
cash, equal to 2.99 times the Executive's "base amount." For purposes of this
paragraph, base amount means the annualized includible compensation for the
period consisting of the most recent five taxable years ending before the date
on which the Change in Control occurred (or such portion of such period during
which the Executive performed personal services for the Company), as defined
and interpreted for purposes of Section 280G of the Internal Revenue Code of
1986, as such section may be amended from time to time.
4.2(c) "Welfare Benefit Continuation": For two years after the Executive's
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d) of this Agreement
if the Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
4.2(d) "Other Benefits": To the extent not previously paid or provided, and
for a period ending on the second anniversary of the Date of Termination, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any vested other amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company applicable to the Executive
and for his family as well as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally after the Effective Date to other peer executives of the
Company and their families.
4.2(e) "Certain Additional Payments by the Company":
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(i) Anything in this Agreement to the contrary notwithstanding, in the event
(A) it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax imposed by Code Section 4999, or
(B) any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount equal to the Excise Tax imposed on the Payment and on
the Gross-Up Payment as well as any additional income tax, employment tax and
Excise Tax payable with respect to such additional payment (including any
interest or penalties imposed with respect to such Excise Tax). The Gross-Up
Payment shall not include any amount for the payment of any income or
employment taxes imposed on the Payment, but shall include any income or
employment taxes payable with respect to any Gross-Up Payment (and any
interest and penalties imposed with respect thereto).
(ii) Subject to the provisions of Section 4.2(e)(iii), all determinations
required to be made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
an independent accountant which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
independent accountant shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 4.2(e), shall be paid by the
Company to the Executive within five (5) days of the receipt of the
independent accountant's determination. If the independent accountant
determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable Federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
independent accountant shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Code Section 4999 at the
time of the initial determination by the independent accountant hereunder, it
is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 4.2(e)(iii) and the Executive
thereafter is required to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the Underpayment that has occurred
and any such Underpayment, as well as any interest and penalties imposed
thereon, shall be promptly paid by the Company to or for the benefit of the
Executive.
(iii) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
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informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to effectively contest
such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4.2(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by the
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Company pursuant to Section 4.2(e)(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 4.2(e)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 4.2(e)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
4.2(f) The provisions of Section 5.2 shall apply in the event of any
termination pursuant to this Section 4.2.
4.2(g) Pursuant to this Section 4.2(g), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.2(c).
4.3 DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period (either prior or subsequent to
a Change in Control), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations which have vested (as
defined in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within twenty (20) days of
the Date of Termination) and (ii) the timely payment or provision of Other
Benefits which have vested (as defined in Section 4.1(d)), including death
benefits pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4 DISABILITY. If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period (either prior or
subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to the
Executive in a lump sum in cash within twenty (20) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits which
have vested (as defined in Section 4.1(d)) including disability benefits
pursuant to the terms of any plan, policy or arrangement of the Company. The
provisions of Section 5.1 and 5.2 shall apply in the event of termination
hereunder.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period (either
prior or subsequent to a Change in Control), this Agreement shall terminate
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without further obligations to the Executive other than the obligation to pay
to the Executive Accrued Obligations (as defined in Section 4.1(a)). If the
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations (as defined in Section 4.1(a)). In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's employment shall
terminate for the reasons stated in this Section, the provisions of Section 5
shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in Sections 4.1(c) nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company at or subsequent to
the Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others other than an obligation on the part of the Executive to repay money
borrowed from the Company. The Company agrees to pay to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement) provided, however, in the event the Executive is
unsuccessful in enforcing a contractual right at issue no such reimbursement
shall be made and, further provided, Executive shall reimburse Company for its
reasonable legal fees if any claim by the Executive is found frivolous.
4.8 OTHER TERMINATION. If the Company shall terminate Executive's employment
other than for Cause, Executive's employment shall terminate but all other
terms hereof including payments of Cash Compensation shall continue as
provided herein. If Executive shall terminate prior to a Change in Control
other than for Good Reason, Executive's employment shall terminate but the
provisions of Section 5 shall continue to apply.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during the Term of this Agreement and
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for a period ending one (1) year thereafter; or (ii) if the Executive's
employment is terminated during the Term of this Agreement, then until the
date one (1) year after the date of termination, the Executive shall not,
without prior written approval of the Board, become an officer, employee,
agent, partner, consultant or director of any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
Company.
5.1(b) For purposes of Section 5.1, a business enterprise with which the
Executive becomes associated as an officer, employee, agent, partner,
consultant or director shall be considered in substantial direct competition,
if such entity competes with the Company in any business in which the Company
is engaged and is within the Company's market area (as defined herein) as of
the Date of Termination. The Company's market area is defined for this
purpose, as the area which constitutes the St. Louis, Missouri metropolitan
area the Davenport, Iowa metropolitan area and the Biloxi, Mississippi
metropolitan area, and (a) if the Company becomes the successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) after the
Effective Date, to all or substantially all of the business and/or assets of
another business enterprise, the geographical areas in which such predecessor
business enterprise conducts substantial business activity (b) any other
metropolitan area where the Company is conducting gaming operations under an
effective gaming license and (c) any metropolitan area with respect to which
the Company has expended more than five hundred thousand dollars ($500,000) in
development costs. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
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such proceeding. The Executive and the Company agree that neither of them
shall disclose information of a derogatory nature about the other, that the
Executive shall return all Company property in his possession on termination
of employment, and that this Section 5.2 shall remain binding notwithstanding
termination of employment for any reason. The parties agree that damages are
an insufficient remedy if a party has breached the terms of this Section 5.2
and that a request for equitable relief is permitted.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a Change in Control of the
Company shall occur and the Executive shall receive the payment provided in
section 4.2 hereof, then following the Date of Termination, and for a period
of six months thereafter or as long as payments are being made hereunder, the
Executive shall make himself available for no additional payment other than
his reasonable expenses incurred in the performance of his duties hereunder at
such reasonable times and places as shall be set forth in writing by notice
from the Chief Executive Officer of the Company to him to perform such
reasonable services as may be requested in writing of him. No services
hereunder shall be required on a "full time" basis. The Executive's services
shall not be required for more than two (2) hours on any day and on not more
than three (3) days per month. Any successor employer must consent to each
request for services and Executive shall use his best efforts to obtain such
consent.
5.4 MODIFICATION. If any court of competent jurisdiction determines that,
consistent with the established precedent of the forum of jurisdiction, any
restriction contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its place to the
maximum extent deemed enforceable or reasonable, and the remaining covenants
and restrictions shall be enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the Executive,
and without the prior written consent of the Company, amounts receivable
hereunder shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and all other
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communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President of the Company
with a copy to the Secretary of the Company, or to such other address as one
party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
Notice to Executive:
Terrence L. Wirginis
101 Old Pine Lane
Pittsburgh, Pennsylvania 15238
Notice to Company:
President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Attn: Chairman of the Board
7.2 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement supersedes and replaces
the Agreement between the undersigned dated May 1, 1996.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written on June 26,
1998.
/s/ Terrence L. Wirginis
----------------------------------
TERRENCE L. WIRGINIS
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PRESIDENT CASINOS, INC.
By /s/ John S. Aylsworth
--------------------------------
Name: JOHN S. AYLSWORTH
Title: President
EXHIBIT 10.4
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into effective the 1st day of
November, 1995 by and between President Casinos, Inc., a Delaware corporation
("Company"), and James A. Zweifel, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its stockholders to reinforce and
encourage the continued attention and dedication of the Executive to the
Company as a member of the Company's management and to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company. The Board desires to provide for the continued employment of the
Executive on the terms hereof, and the Executive is willing to commit himself
to continue to serve the Company. Additionally, the Board believes it is
imperative to diminish the inevitable distractions of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention and dedication
to the Company currently and in the event of any threatened or pending Change
in Control, and to provide the Executive with compensation and benefits
arrangements upon the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meanings specified below,
unless the context plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's Annual Base Salary (as
defined in Section 2.4(a)) plus the Incentive Bonus (as defined in Section
2.4(b)) anticipated to be awarded to the Executive in any given year.
1.1(b) "BOARD" means the Board of Directors of the Company.
1.1(c) "CHANGE IN CONTROL" means a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act; provided
that, for purposes of this Agreement, a Change in Control shall be deemed to
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have occurred if (i) any Person (other than the Company and other than a
person who is or who controls, or is controlled by or is under common control
with John E. Connelly or any person who is an Exempt Person as that term is
defined in the Rights Agreement of the Company dated as of November 10, 1997)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company which
represent 20% or more of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election, by the Company's stockholders, of each new
director is approved by a vote of at least two-thirds (2/3) of the directors
then still in office who were directors at the beginning of the period, but
excluding any individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such term is used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board; (iii) there is 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 Common Stock are
converted into cash, securities, or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior
to the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger; (iv) there is consummated
any consolidation or merger of the Company in which the Company is the
continuing or surviving corporation in which the holders of the Company's
Common Stock immediately prior to the merger do not own fifty percent (50%) or
more of the stock of the surviving corporation immediately after the merger;
(v) there is consummated any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (vi) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.1(f) "COMPANY" means President Casinos, Inc., A Delaware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period beginning on the Effective Date
and ending at the end of the TERM of this agreement.
1.1(h) "EFFECTIVE DATE" shall mean November 1, 1995 prior to June 1, 1998 and
thereafter shall mean June 1, 1998 and, if extended pursuant to 1.1(k) each
and every second June 1 thereafter.
1.1(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the meaning of Sections 13(d) and
14(d) of the Exchange Act.
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1.1(k) "TERM" means the period that begins on the Effective Date and ends on
the earlier of: (i) the close of business three years from the Effective Date,
or (ii) the Date of Termination as defined in Section 3.6 provided, however,
the term of this Agreement shall, unless notice shall be given by any party to
the other prior to March 1, 2001, be renewed for a new two year term
commencing June 1, 2001. Its term may be extended thereafter for additional
two (2) year terms unless prior to March 1 of the year in which it expires
notice is given by either party that it is not to be extended.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this Agreement used in
the masculine gender include the feminine gender, words in the singular
include the plural, and words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are included solely for ease of
reference and do not bear on the interpretation of the text. Accordingly, as
used in this Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of Missouri, without reference to its
conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive shall remain in the employ of the Company in accordance with the
terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with those assigned to, or held and exercised by, the Executive on
the Effective Date of this Agreement.
2.2(b) Throughout the Term of this Agreement (but excluding any period of
vacation and sick leave to which he is entitled), the Executive shall devote
his full business time, attention and best efforts to the business and affairs
of the Company and shall use his reasonable best efforts to perform faithfully
and efficiently such responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it shall not be a violation of
this paragraph for the Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver lectures or fulfill speaking
engagements, or (iii) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement, the
Executive's services shall be performed at the location where the Executive
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was employed on the Effective Date, any office which is the headquarters of
the Company or any new headquarters if the Board of Directors determines to
relocate the headquarters.
2.4 COMPENSATION. The Executive's annual Compensation and other benefits
described in this Section 2.4, shall be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the year beginning March 1, 1997, the
Executive shall receive an annual base salary of one hundred eighty thousand
dollars ($180,000) which shall be paid in accordance with the regular payroll
practice of the Company. During the Term of this Agreement, the annual base
salary payable to the Executive shall be reviewed thereafter at least annually
but need not be adjusted upward as a result of such review and shall not be
reduced after any increase thereof. "Annual Base Salary" as used herein shall
mean the annual base salary for a then current year.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base Salary, the Executive
shall be entitled to participate in any incentive bonuses ("Incentive
Bonuses") provided through any incentive compensation plan, which is generally
available to other peer executives of the Company. To the extent an Incentive
Bonus is to be calculated for any year pursuant to Section 4.1(b), the actual
Incentive Bonus paid to the Executive for the prior fiscal year shall be the
bonus amount. To the extent any incentive bonus is paid in shares of
restricted stock, there shall be included in an Incentive Bonus the value of
such shares on their award date without any discount; provided, however, such
restricted shares shall include only those awarded in lieu of compensation
payable, as determined by the Compensation Committee of the Board.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the Term of this
Agreement, the Executive shall be entitled to participate in all incentive,
savings and retirement plans generally available to other peer executives of
the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the Term of this Agreement (and
thereafter, subject to Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company (but limited however to medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent generally
available to other peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures generally applicable to other peer executives of the
Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement, the Executive
shall be entitled to such fringe benefits as generally are provided to other
peer executives of the Company.
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2.4(g) OFFICE AND SUPPORT STAFF. Throughout the Term of this Agreement, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, at least equal to those generally provided to other peer
executives of the Company.
2.4(h) VACATION. Throughout the Term of this Agreement, the Executive shall
be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices generally provided with respect to other peer
executives of the Company.
SECTION 3. TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention to terminate
the Executive's employment. In such event, the Executive's employment with
the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean that the Executive has
been unable to perform the material duties of his position for a period of one
hundred eighty (180) days by reason of a physical and/or mental condition
during any twelve (12) month period. "Disability" shall be deemed to exist
when certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The Executive
will submit to such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment during the Employment Period for "Cause," which shall mean
termination based upon: (i) any breach or failure to perform duties or follow
instructions of the Board of Directors if not cured within thirty (30) days
after receipt of written notice of breach or failure, (ii) the Executive's
commission of fraud, misappropriation, embezzlement or other acts of
dishonesty, alcoholism, drug addiction or dependency or conviction of a felony
or gross misdemeanor if the Board of Directors determines such conduct is
materially adverse to the Company, (iii) the Executive's material breach of
any provision of this Agreement, if not cured within thirty (30) days after
written notice to Executive that a breach has occurred, (iv) based upon the
Executive testing positive for a controlled substance on three occasions, (v)
based upon the Executive failing on three occasions to pass a blood alcohol
test at the level set for being intoxicated in the State in which the test is
performed or (vi) any gaming commission with jurisdiction over a facility
owned, operated or managed by the Company which requires Executive's
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licensure, refuses or fails within a reasonable period of time to grant a
license to Executive or suspends or revokes a license granted to Executive.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until he receives a Notice of Termination (as
defined in Section 3.5) from the Chairman of the Compensation Committee of the
Board.
3.4 GOOD REASON. The Executive may terminate his employment with the Company
for "Good Reason," which shall mean termination based upon:
(i) a significant and adverse change in the nature or scope of position,
authority, duties or responsibility;
(ii) (a) the failure by the Company to continue in effect any material (i)
benefit or compensation plan, (ii) stock ownership plan, (iii) life insurance
plan, (iv) health and accident plan or (v) disability plan to which the
Executive is entitled as specified in Section 2.4, (b) the taking of any
action by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's benefits under, any
plans described in Section 2.4, or deprive the Executive of any material
fringe benefit enjoyed by the Executive as described in Section 2.4(f), or (c)
the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled as described in Section
2.4(h); provided, however, if the Company discontinues one of the foregoing on
a Company wide or executive level basis, such action shall not constitute Good
Reason.
(iii) a material breach by the Company of any provision of this Agreement
which has not been cured within thirty (30) days after receipt of written
notice of such material breach;
(iv) within a period ending at the close of business on the date one (1) year
after the Change in Control Date, the Executive, in his sole and absolute
discretion, determines and notifies the Company in writing, that he does not
wish to continue his employment with the Company.
3.5 NOTICE OF TERMINATION. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party, given in accordance with Section 7.1
For purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated, and (iii) if
the Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not more
than fifteen (15) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
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the Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause, the Date of Termination
shall be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by him for Good Reason as provided in Section 3.4 hereof, the Date
of Termination shall be the date on which the Company receives notice from the
Executive of termination, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be,
or (iv) if the Executive's employment is terminated by the Company other than
for Cause, death, or Disability, the Date of Termination shall be the date of
receipt of the Notice of Termination.
SECTION 4. CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN
CONTROL. If, prior to a Change in Control, during the Employment Period: (i)
the Company shall terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for Good Reason, the
Executive shall be entitled to the benefits provided below:
4.1(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings thereon), (3) any
accrued vacation pay; in each case to the extent not previously paid, and in
the event of a termination pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof
(and excluding any termination pursuant to Section 4.5) part or all of the
Incentive Bonus earned or banked for the year in which the Date of Termination
occurs.
4.1(b) "Annual Base Salary Continuation": For the remainder of the
Employment Period, the Company shall pay on a monthly basis to the Executive,
the Executive's then-current Annual Base Salary and an Executive Incentive
Bonus over a period of twelve (12) months, each as would have been paid to the
Executive had the Executive remained in the Company's employ throughout the
Employment Period, provided, however, such amount shall not exceed (a) one
times the Executive's Annual Base Salary plus (b) one times the Executive's
Incentive Bonus calculated pursuant to Section 2.4(b) nor shall it be less
than (a) one times the Executive's Annual Base Salary plus (b) one times the
Executive's Incentive Bonus calculated pursuant to Section 2.4(b). The
Company at any time may elect to pay the balance of such payments then
remaining in a lump sum, in which case the total of such payments shall be
discounted to present value as determined according to Code Section
280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For twelve (12) months following the
Date of Termination, the Company shall continue benefits to the Executive
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and/or the Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally at any time after the Effective Date to other peer
executives of the Company and their families; provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described herein shall cease.
4.1(d) "Other Benefits": To the extent not previously paid or provided, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any other vested amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company as those provided generally
to other peer executives and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as those provided generally after the Effective Date to other peer
executives of the Company and their families.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Section by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
4.1(e) The provisions of Section 5 shall apply in the event of any
termination pursuant to this Section 4.1.
4.1(f) Pursuant to this Section 4.1(f), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.1(c).
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN CONTROL. If a Change in
Control occurs during the Employment Period and within two (2) years after a
Change in Control: (i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate employment with the
Company for Good Reason, then the Executive shall be entitled to the benefits
provided below:
4.2(a) "Accrued Obligations": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, (2) any compensation previously deferred by the
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Executive (together with any accrued interest or earnings thereon) and (3) any
accrued vacation pay; in each case to the extent not previously paid. No
amount shall be paid as Annual Base Salary for any period following the Date
of Termination.
4.2(b) "Severance Amount": On the twentieth (20th) business day following
the Date of Termination, the Company shall pay Executive a lump sum amount, in
cash, equal to 2.99 times the Executive's "base amount." For purposes of this
paragraph, base amount means the annualized includible compensation for the
period consisting of the most recent five taxable years ending before the date
on which the Change in Control occurred (or such portion of such period during
which the Executive performed personal services for the Company), as defined
and interpreted for purposes of Section 280G of the Internal Revenue Code of
1986, as such section may be amended from time to time.
4.2(c) "Welfare Benefit Continuation": For two years after the Executive's
Date of Termination, or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d) of this Agreement
if the Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.
4.2(d) "Other Benefits": To the extent not previously paid or provided, and
for a period ending on the second anniversary of the Date of Termination, the
Company shall timely pay or provide to the Executive and/or the Executive's
family any vested other amounts or vested benefits required to be paid or
provided for which the Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan, program, policy or
practice or contract or agreement of the Company applicable to the Executive
and for his family as well as those provided generally to other peer
executives and their families during the ninety (90) day period immediately
preceding the Effective Date or, if more favorable to the Executive, as those
provided generally after the Effective Date to other peer executives of the
Company and their families.
4.2(e) "Certain Additional Payments by the Company":
(i) Anything in this Agreement to the contrary notwithstanding, in the event
(A) it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would be subject to the excise tax imposed by Code Section 4999, or
(B) any interest or penalties are incurred by the Executive with respect to
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such excise tax (such excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount equal to the Excise Tax imposed on the Payment and on
the Gross-Up Payment as well as any additional income tax, employment tax and
Excise Tax payable with respect to such additional payment (including any
interest or penalties imposed with respect to such Excise Tax). The Gross-Up
Payment shall not include any amount for the payment of any income or
employment taxes imposed on the Payment, but shall include any income or
employment taxes payable with respect to any Gross-Up Payment (and any
interest and penalties imposed with respect thereto).
(ii) Subject to the provisions of Section 4.2(e)(iii), all determinations
required to be made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
an independent accountant which shall provide detailed supporting calculations
both to the Company and the Executive within fifteen (15) business days of the
receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. All fees and expenses of the
independent accountant shall be borne solely by the Company. Any Gross-Up
Payment, as determined pursuant to this Section 4.2(e), shall be paid by the
Company to the Executive within five (5) days of the receipt of the
independent accountant's determination. If the independent accountant
determines that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that failure to report the Excise Tax on
the Executive's applicable Federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
independent accountant shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Code Section 4999 at the
time of the initial determination by the independent accountant hereunder, it
is possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 4.2(e)(iii) and the Executive
thereafter is required to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the Underpayment that has occurred
and any such Underpayment, as well as any interest and penalties imposed
thereon, shall be promptly paid by the Company to or for the benefit of the
Executive.
(iii) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
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writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim,
(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to effectively contest
such claim, and
(d) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 4.2(e), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the Company's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 4.2(e)(iii), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's compliance with the requirements of Section 4.2(e)(iii))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
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<PAGE> 84
Section 4.2(e)(iii), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial or refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
4.2(f) The provisions of Section 5.2 shall apply in the event of any
termination pursuant to this Section 4.2.
4.2(g) Pursuant to this Section 4.2(g), the Executive shall not be required
to mitigate the amount of any payment provided for in this Section by seeking
other employment or otherwise, nor shall the amount of any payment provided
for in this Section be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise other than pursuant to Section 4.2(c).
4.3 DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period (either prior or subsequent to
a Change in Control), this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations which have vested (as
defined in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within twenty (20) days of
the Date of Termination) and (ii) the timely payment or provision of Other
Benefits which have vested (as defined in Section 4.1(d)), including death
benefits pursuant to the terms of any plan, policy, or arrangement of the
Company.
4.4 DISABILITY. If the Executive's employment is terminated by reason of the
Executive's Disability during the Employment Period (either prior or
subsequent to a Change in Control), this Agreement shall terminate without
further obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to the
Executive in a lump sum in cash within twenty (20) days of the Date of
Termination) and (ii) the timely payment or provision of Other Benefits which
have vested (as defined in Section 4.1(d)) including disability benefits
pursuant to the terms of any plan, policy or arrangement of the Company. The
provisions of Section 5.1 and 5.2 shall apply in the event of termination
hereunder.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period (either
prior or subsequent to a Change in Control), this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay
to the Executive Accrued Obligations (as defined in Section 4.1(a)). If the
Executive terminates employment with the Company during the Employment Period,
(excluding a termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations (as defined in Section 4.1(a)). In such case, all Accrued
12
<PAGE> 85
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's employment shall
terminate for the reasons stated in this Section, the provisions of Section 5
shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided in Sections 4.1(c) nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company. Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of, or any contract or agreement with, the Company at or subsequent to
the Date of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others other than an obligation on the part of the Executive to repay money
borrowed from the Company. The Company agrees to pay to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive regarding the amount of any payment
pursuant to this Agreement) provided, however, in the event the Executive is
unsuccessful in enforcing a contractual right at issue no such reimbursement
shall be made and, further provided, Executive shall reimburse Company for its
reasonable legal fees if any claim by the Executive is found frivolous.
4.8 OTHER TERMINATION. If the Company shall terminate Executive's employment
other than for Cause, Executive's employment shall terminate but all other
terms hereof including payments of Cash Compensation shall continue as
provided herein. If Executive shall terminate prior to a Change in Control
other than for Good Reason, Executive's employment shall terminate but the
provisions of Section 5 shall continue to apply.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during the Term of this Agreement and
for a period ending one (1) year thereafter; or (ii) if the Executive's
employment is terminated during the Term of this Agreement, then until the
date one (1) year after the date of termination, the Executive shall not,
without prior written approval of the Board, become an officer, employee,
agent, partner, consultant or director of any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
13
<PAGE> 86
Company.
5.1(b) For purposes of Section 5.1, a business enterprise with which the
Executive becomes associated as an officer, employee, agent, partner,
consultant or director shall be considered in substantial direct competition,
if such entity competes with the Company in any business in which the Company
is engaged and is within the Company's market area (as defined herein) as of
the Date of Termination. The Company's market area is defined for this
purpose, as the area which constitutes the St. Louis, Missouri metropolitan
area the Davenport, Iowa metropolitan area and the Biloxi, Mississippi
metropolitan area, and (a) if the Company becomes the successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) after the
Effective Date, to all or substantially all of the business and/or assets of
another business enterprise, the geographical areas in which such predecessor
business enterprise conducts substantial business activity (b) any other
metropolitan area where the Company is conducting gaming operations under an
effective gaming license and (c) any metropolitan area with respect to which
the Company has expended more than five hundred thousand dollars ($500,000) in
development costs. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company, or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions
of this Section constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement except that in the
event that prior to a Change in Control the Company, in its reasonable and
good faith judgment, believes that a violation of such provision has occurred
and the Company brings a judicial proceeding to enforce such provision against
the Executive in which event amounts may be deferred pending an outcome of
such proceeding. The Executive and the Company agree that neither of them
shall disclose information of a derogatory nature about the other, that the
Executive shall return all Company property in his possession on termination
of employment, and that this Section 5.2 shall remain binding notwithstanding
termination of employment for any reason. The parties agree that damages are
an insufficient remedy if a party has breached the terms of this Section 5.2
14
<PAGE> 87
and that a request for equitable relief is permitted.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a Change in Control of the
Company shall occur and the Executive shall receive the payment provided in
section 4.2 hereof, then following the Date of Termination, and for a period
of six months thereafter or as long as payments are being made hereunder, the
Executive shall make himself available for no additional payment other than
his reasonable expenses incurred in the performance of his duties hereunder at
such reasonable times and places as shall be set forth in writing by notice
from the Chief Executive Officer of the Company to him to perform such
reasonable services as may be requested in writing of him. No services
hereunder shall be required on a "full time" basis. The Executive's services
shall not be required for more than two (2) hours on any day and on not more
than three (3) days per month. Any successor employer must consent to each
request for services and Executive shall use his best efforts to obtain such
consent.
5.4 MODIFICATION. If any court of competent jurisdiction determines that,
consistent with the established precedent of the forum of jurisdiction, any
restriction contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its place to the
maximum extent deemed enforceable or reasonable, and the remaining covenants
and restrictions shall be enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the Executive,
and without the prior written consent of the Company, amounts receivable
hereunder shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices 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 mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President of the Company
with a copy to the Secretary of the Company, or to such other address as one
15
<PAGE> 88
party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon receipt.
Notice to Executive:
James A. Zweifel
7045 Maryland Avenue
St. Louis, Missouri 63130
Notice to Company:
President Casinos, Inc.
802 North First Street
St. Louis, Missouri 63102
Attn: Chairman of the Board
7.2 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
7.3 WITHHOLDING. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement supersedes and replaces
the Agreement between the undersigned dated November 1, 1995.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written on June 26,
1998.
/s/ James A. Zweifel
----------------------------------
JAMES A. ZWEIFEL
PRESIDENT CASINOS, INC.
By /s/ John S. Aylsworth
----------------------------------
Name: JOHN S. AYLSWORTH
Title: President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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