-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QE+J9rzktDil5bFysgxnYjOt6uq7GJZ+kfnQSyjtnMrVhU//19wGBI7ocy6QUEUg +xmF98grq2osEEuGl4b4Ow== 0000796912-98-000011.txt : 19980817 0000796912-98-000011.hdr.sgml : 19980817 ACCESSION NUMBER: 0000796912-98-000011 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAYERS INTERNATIONAL INC /NV/ CENTRAL INDEX KEY: 0000796912 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 954175832 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-14897 FILM NUMBER: 98687808 BUSINESS ADDRESS: STREET 1: 1300 ATLANTIC AVENUE STREET 2: SUITE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 609-449-7777 MAIL ADDRESS: STREET 1: 1300 ATLANTIC AVE STREET 2: STE 800 CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 FORMER COMPANY: FORMER CONFORMED NAME: PLAYERS CLUB INTERNATIONAL INC DATE OF NAME CHANGE: 19861020 10-K/A 1 11 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ FORM 10-K/A-2 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 0-14897 PLAYERS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Nevada 95-4175832 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Suite 800, 1300 Atlantic Avenue, Atlantic City, New Jersey (Address of principal executive offices) 08401 (Zip Code) (609) 449-7777 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.005 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of August 11, 1998, the aggregate market value of the registrant's Common Stock held by non-affiliates of the registrants was not less than $120,000,000. As of August 11, 1998, there were 31,941,737 shares of the registrant's Common Stock outstanding, net of treasury stock. GENERAL Players International, Inc. (the "Company") hereby amends its Annual Report on Form 10-K for the fiscal year ended March 31, 1998, by deleting its responses to Item 14 contained in its original filing and replacing such section with the following: PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) Financial Statements Players International, Inc.: CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1998 AND 1997 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED MARCH 31, 1998: CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (a)(2) Financial Statement Schedules Page Riverside Joint Venture: INDEPENDENT AUDITORS' REPORT............................ 7 BALANCE SHEETS AS OF DECEMBER 31, 1997 AND 1996......... 8 STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996........................................... 9 STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996....................................... 10 NOTES TO FINANCIAL STATEMENTS........................... 12 All other schedules have been omitted because they are not applicable or not required or the required information is included in the Consolidated Financial Statements or Notes thereto. (a)(3) Listing of Exhibits: Exhibit Number Description 3.1(1) Articles of Incorporation, as amended, of Players International, Inc. (the "Company"). 3.2(12) By-laws of the Company, as amended. 4.1(12) Indenture among certain subsidiaries of the Company and First Fidelity Bank, National Association, as Trustee, including form of Note (the "Senior Note Indenture"). 4.2(1) Form of First Supplemental Indenture to the Senior Note Indenture. 4.3(1) Form of Second Supplemental Indenture to the Senior Note Indenture. 4.4(11) Form of Third Supplemental Indenture to the Senior Note Indenture. 4.5(17) Form of Fourth Supplemental Indenture to the Senior Note Indenture. 4.6(17) Form of Fifth Supplemental Indenture to the Senior Note Indenture. 4.7(17) Form of Sixth Supplemental Indenture to the Senior Note Indenture. 10.1(3) The Company's 1985 Incentive Stock Option Plan. 10.2(4) Amendment No. 1 to the Company's 1985 Incentive Stock Option Plan. 10.3(5) The Company's 1990 Incentive Stock Option and Non- Qualified Stock Option Plan, as amended. 10.4(2) The Company's 1993 Stock Incentive Plan. 10.5(2) Form of Registration Rights Agreement dated as of June 23, 1992 by and among the Company, Southern Illinois Riverboat/Casino Cruises, Inc., and the purchasers named therein. 10.6(2) Agreement dated February 12, 1993 by and between Jebaco, Inc. and the Company with respect to the assignment of an option agreement relating to the Downtowner Hotel (now known as the Players Hotel). 10.7(2) Option Agreement dated December 24, 1991 by and among The Beeber Corporation and Elisabeth S. Woodward and Jebaco, Inc. with respect to the Downtowner Hotel (now known as the Players Hotel). 10.8(2) Amendment to Option Agreement dated March 9, 1993 by and among The Beeber Corporation and Elisabeth S. Woodward and Players Lake Charles, Inc., a subsidiary of the Company, with respect to the Downtowner Hotel (now known as the Players Hotel). 10.9(2) License and Services Agreement dated December 8, 1992 by and among The Griffin Group, Inc., the Company and Southern Illinois Riverboat/Casino Cruises, Inc., as amended. 10.10(2)Joint Venture Agreement dated May 1993 between Amerihost and a subsidiary of the Company with respect to a hotel in Metropolis, Illinois adjacent to the Company's Metropolis riverboat. 10.11(6)Lease dated March 19, 1993 by and among the Beeber Corporation and Players Lake Charles, Inc., a subsidiary of the Company. 10.12(7)Agreement of Purchase and Sale dated June 16, 1994, between Gem Mesquite, Ltd. And Players Nevada, Inc., a subsidiary of the Company (including form of letter Agreement from the Company to Gem Mesquite, Ltd. relating to registration rights). 10.13(7)Transfer of Data Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada, Inc. (including form of Promissory Note). 10.14(7)Development Consulting Agreement dated June 16, 1994, between Gem Gaming, Inc. and Players Nevada, Inc. (including form of 1994 Series G Warrant). 10.15(7)Option Transfer Agreement dated June 16, 1994, between Gem Gaming, Inc., Gem Mesquite, Ltd. and Players Nevada, Inc. 10.16(8)The Company's 1994 Directors Stock Incentive Plan, as adopted April 14, 1994, and as amended July 14, 1994. 10.17(9)Agreement for Sale of Partnership Interests among the Company and certain of its subsidiaries and Showboat, Inc. and certain of its subsidiaries. 10.18(1)Asset Purchase Agreement dated August 16, 1995 among the Company, Players Lake Charles, Inc. and the Beeber Corporation. 10.19(1)Form of Credit Agreement ("Credit Agreement") among the Company, First Interstate Bank of Nevada, N.A., Bankers Trust Company, BT Securities Corporation, and certain other Lenders party thereto. 10.20(1)Form of Revolving Promissory Notes made by the Company in favor of the Lenders party to the Credit Agreement. 10.21(1)Form of Swing Line Promissory Note made by the Company in favor of First Interstate Bank of Nevada, N.A. 10.22(1)Form of Guaranty made by Players Lake Charles, Inc., Players Nevada, Inc., Southern Illinois Riverboat/Casino Cruises, Inc., Players Bluegrass Downs, Inc., Players Riverboat Management, Inc., Players Riverboat, Inc., Players Mesquite Golf Club, Inc., Players Indiana, Inc., Players Riverboat, LLC, Players Mesquite Land, Inc., Players Maryland Heights, Inc., River Bottom Inc. and Showboat Star Partnership in favor of First Interstate Bank of Nevada, N.A. 10.23(1)Form of Company Pledge Agreement between the Company and First Interstate Bank of Nevada, N.A. 10.24(1)Form of Company Pledge Agreement (Nevada) between the Company and First Interstate Bank of Nevada, N.A. 10.25(1)Form of First Amendment to Company Pledge Agreement (Nevada) between the Company and First Interstate Bank of Nevada, N.A. 10.26(1)Form of LLC Membership Interest Security Agreement between the Company and First Interstate Bank of Nevada, N.A. 10.27(1)Form of Company Security Agreement between the Company and First Interstate Bank of Nevada, N.A. 10.28(1)Form of Subsidiary Security Agreement (Nevada) among Players Nevada, Inc., Players Mesquite Golf Club, Inc., Players Mesquite Land, Inc. and First Interstate Bank of Nevada, N.A. 10.29(1)Form of Subsidiary Security Agreement (Louisiana) among Players Lake Charles, Inc., Showboat Star Partnership, Players Riverboat LLC and First Interstate Bank of Nevada, N.A. 10.30(1)Form of Subsidiary Security Agreement (Illinois) between Southern Illinois Riverboat/Casino Cruises, Inc. and First Interstate Bank of Nevada, N.A. 10.31(1)Form of Partnership Interest Security Agreement between Players Riverboat Management, Inc. and First Interstate Bank of Nevada, N.A. 10.32(1)Form of Collateral Account Agreement between the Company and First Interstate Bank of Nevada, N.A. 10.33(1)Form of Nevada Deed of Trust, Fixture Filing and Security Agreement with Assignment of Rents relating to the Credit Agreement. 10.34(1)Form of Louisiana Act of Mortgage, Fixture Filing and Security Agreement between Players Lake Charles, Inc. and First Interstate Bank of Nevada, N.A. 10.35(1)Form of Illinois Mortgage Fixture Filing and Security Agreement with Assignment of Rents relating to the Credit Agreement. 10.36(1)Form of First Preferred Ship Mortgage made by Showboat Star Partnership (an entity owned, directly or indirectly, by the Company and its subsidiaries) to First Interstate Bank of Nevada, N.A. 10.37(1)Form of Environmental Indemnity made by the Company to First Interstate Bank of Nevada, N.A. 10.38(1)Form of Master Vessel and Collateral Trust Agreement between First Interstate Bank of Nevada, N.A. as Administrative Agent and First Interstate Bank of Nevada, N.A. as Trustee and acknowledged and accepted by the Company. 10.39(10)Partnership Agreement dated November 2, 1995, by and between Harrah's Maryland Heights Corporation and Players MH, L.P. 10.40(10)Guaranty of Players International, Inc. dated November 2, 1995. 10.41(10)Management Agreement dated November 2, 1995 by and between Riverside Joint Venture and Harrah's Maryland Heights Operating Company. 10.42(10)License Agreement dated November 2, 1995 by and among Players International, Inc., Riverside Joint Venture and Harrah's Maryland Heights Operating Company. 10.43(10)Ground Lease dated November 3, 1995 by and between Harrah's Maryland Heights LLC and Riverside Joint Venture. 10.44(10)Lease Agreement dated as of November 3, 1995 by and between Riverside Joint Venture and Players MH, L.P. 10.45(10)Parent Guaranty of Players International, Inc. dated November 3, 1995. 10.46(10)Right of First Refusal to Purchase dated November 3, 1995 by and between Harrah's Maryland Heights LLC and Players MH, L.P. 10.47(10)Option Agreement dated November 3, 1995 by and between Riverside Joint Venture and Harrah's Maryland Heights, L.L.C. 10.48(10)Development of Agreement (Earth City Expressway Extension) by and between the City of Maryland Heights and Riverside Joint Venture. 10.49(11)Form of Agreement between the Company and Lake Charles Construction Corporation dated November 15, 1995 for the Players Island-Entertainment Barge. 10.50(11)Agreement between the Company and Lake Charles Construction Corporation dated February 16, 1996 for the Players Island-Entertainment Barge. 10.51(13)Retirement Agreement and General Release dated September 9, 1996 between the Company and Edward Fishman. 10.52(13)Retirement Agreement and General Release dated September 9, 1996 between the Company and David Fishman. 10.53(14)Amended and Restated Credit Agreement, dated as of December 16, 1996, among the Company and the Lenders party thereto, Wells Fargo Bank, N.A., Bankers Trust Company and BT Securities Corporation. 10.54(15)Purchase Agreement by and among Players Nevada, Inc., Players Mesquite Land, Inc., Players Mesquite Golf Club, Inc. and RBG, LLC. 10.55(16)March 17, 1997 Letter Agreement to the Asset Purchase Agreement Extending Closing Date. 10.56(16)March 18, 1997 Letter Agreement to the Asset Purchase Agreement Regarding Application of Due of Due Diligence Fee. 10.57(16)March 18, 1997 Letter Agreement to the Asset Purchase Agreement Regarding Certain Matters Incident to Closing. 10.58(18)Asset Purchase Agreement dated as of September 30, 1997 by and between Lakeshore Hotels, Ltd. and Players International, Inc. 10.59(18)November 13, 1997 Amendment No. 1 to Asset Purchase Agreement 10.60(18)December 17, 1997 Amendment No. 2 to Asset Purchase Agreement 10.61(17)January 9, 1998 Letter Agreement with Wells Fargo Bank regarding terms of Reducing Revolving Credit Agreement. 10.62(18)Second Amended and Restated Credit Agreement, dated as of March 11, 1998, among the Company and the Lenders party thereto and Wells Fargo Bank, N.A. 10.63(18)March 24, 1998 Letter Agreement regarding execution of the Settlement and Admission Fee Agreement. 10.64(18)Settlement and Admission Fee Agreement dated May 15, 1998 among Players Lake Charles, L.L.C., Showboat Star Partnership and the City of Lake Charles. 10.65 Howard A. Goldberg Employment Agreement dated October 1, 1996. 10.66 Peter J. Aranow Employment Agreement dated October 1, 1996. 10.67 Patrick Madamba Employment Agreement dated March 31, 1997. 10.68 John Groom Change of Control Agreement dated August 1, 1997. 21(18) Subsidiaries of Players International, Inc. 27(18) Financial Data Schedule ___________ (1)Filed as an exhibit to the Company's Registration Statement on Form S-4, File No. 33-60085, and incorporated herein by reference. (2)Filed as an exhibit to the Company's Registration Statement on Form S-3, File No. 33-61026, and incorporated herein by reference. (3)Filed as an exhibit to the Company's Registration Statement on Form 10 filed on August 13, 1986, File No. 0-14897, as amended on Form 8 filed October 17, 1987, and incorporated herein by reference. (4)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1988, and incorporated herein by reference. (5)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1991, and incorporated herein by reference. (6)Filed as an exhibit to the Company's Registration Statement on Form S-3, as amended by Form S-3, File No. 33-75006, and incorporated herein by reference. (7)Filed as an exhibit to the Company's Current Report on Form 8-K filed on June 24, 1994, and incorporated herein by reference. (8)Filed as an exhibit to the Company's Registration Statement on Form S-3 filed on July 24, 1994, and incorporated herein by reference. (9)Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995, and incorporated herein by reference. (10) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995, and incorporated herein by reference. (11) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, and incorporated herein by reference. (12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, and incorporated herein by reference. (13) Filed as an exhibit to the Company's Form 8-K dated September 17, 1996, and incorporated herein by reference. (14) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, and incorporated herein by reference. (15) Filed as an exhibit to the Company's Form 8-K/A. Filing dated March 18, 1997, and incorporated herein by reference. (16) Filed as an exhibit to the Company's Form 8-K. Filing dated March 18, 1997, and incorporated herein by reference. (17) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, and incorporated herein by reference. (18) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998, and incorporated herein by reference. _____________ (b) Reports on form 8-K filed during the last quarter of the period covered by this report: None (c) Exhibits required by Item 601 of Regulation S-K: The exhibits incorporated by reference herein are set forth in Item 14(a)(3) above. (d) Included below are separate financial statements of subsidiaries not consolidated and 50% or less owned. Independent Auditors' Report The Partners Riverside Joint Venture: We have audited the accompanying balance sheets of Riverside Joint Venture, a Missouri general partnership, as of December 31, 1997 and 1996 and the related statements of operations, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the General Partners of the Partnership, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Riverside Joint Venture as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP February 27, 1998 RIVERSIDE JOINT VENTURE Balance Sheets December 31, 1997 and 1996 Assets 1997 1996 Current assets: Cash and cash equivalents $ 10,244,249 $ 20,289,463 Receivables 3,151,091 89,174 Inventories 473,409 - Prepaid expenses and other 69,565 72,399 ------------- ------------- Total current assets 13,938,314 20,451,036 ------------- ------------- Fixed assets, at cost: Land 10,996,224 10,996,224 Land improvements 28,549,609 - Buildings 98,939,095 - Boats 40,104,483 - Furniture, fixtures and equipment 12,074,190 - Construction-in-process - 140,296,893 ------------- ------------- 190,663,601 151,293,117 Less: accumulated depreciation and amortization (7,297,726) - ------------- ------------- Total fixed assets 183,365,875 151,293,117 ------------- ------------- Pre-opening costs - 1,366,429 Other assets,net of accumulated amortization of $269,463 8,910,778 6,750,159 ------------- ------------- Total assets $ 206,214,967 $ 179,860,741 ============= ============= Liabilities and Partners' Capital Liabilities: Accounts payable $ 1,415,920 $ 22,738,357 Accrued expenses 2,294,655 - Due to partner 3,330,555 635,499 ------------- ------------- Total liabilities 7,041,130 23,373,856 Partners' capital 199,173,837 156,486,885 Commitments and contingencies (notes 5 and 7) ------------- ------------- Total liabilities and partners' capital$206,214,967 $ 179,860,741 ============= ============= See accompanying notes to financial statements. RIVERSIDE JOINT VENTURE Statements of Operations Years ended December 31, 1997 and 1996 1997 1996 Revenues: Property rental to partners $ 11,830,054 $ - Food and beverage 8,283,773 - Lodging 3,818,375 - Other 2,316,231 - Interest income 800,001 1,241,954 Less: casino promotional allowances (342,907) - ------------- ------------- Total revenues 26,705,527 1,241,954 ------------- ------------- Direct operating expenses: Food and beverage 8,257,157 - Lodging 2,112,214 - Other 1,715,204 - ------------- ------------- Total operating expenses 12,084,575 - ------------- ------------- Operating profit before undistributed expenses and pre-opening costs 14,620,952 1,241,954 ------------- ------------- Undistributed expenses: General and administrative 5,772,585 - Depreciation and amortization 7,567,189 - Property taxes and insurance 4,195,900 - Facility operations 3,939,158 - Management fees 119,487 - Entertainment 518,948 - Interest 51,866 - ------------- ------------- Total undistributed expenses 22,165,133 - ------------- ------------- Preopening costs 3,774,139 - ------------- ------------- Net income (loss) $(11,318,320) $ 1,241,954 ============= ============= See accompanying notes to financial statements. RIVERSIDE JOINT VENTURE Statements of Partners' Capital Years ended December 31, 1997 and 1996 Harrah's Maryland Players Heights Corp. MH, LP Total Balance at December 31, 1995 $ 21,022,058 $ 21,422,873 $ 42,444,931 Capital contributions 55,000,000 57,800,000 112,800,000 Net income 620,977 620,977 1,241,954 ------------ ------------ ------------ Balance at December 31, 1996 76,643,035 79,843,850 156,486,885 Capital contributions 29,415,689 24,589,583 54,005,272 Net loss (5,659,160) (5,659,160) (11,318,320) ------------ ------------ ------------ Balance at December 31, 1997 $100,399,564 $ 98,774,273 $199,173,837 ============ ============ ============ Ownership percentages 50% 50% 100% ============ ============ ============ See accompanying notes to financial statements. RIVERSIDE JOINT VENTURE Statements of Cash Flows Years ended December 31, 1997 and 1996 1997 1996 Cash flows from operating activities: Net income (loss) $(11,318,320) $ 1,241,954 Depreciation and amortization 7,567,189 - Changes in assets and liabilities: Receivables (3,061,917) 8,286 Inventories (473,409) - Prepayments and other 2,834 (72,399) Preopening costs 1,366,429 - Accounts payable and accrued expenses 2,414,112 (53,403) Due to partner 2,695,056 - ------------- ------------ Net cash (used in) provided by operating activities (808,026) 1,124,438 ------------- ------------ Cash flows from investing activities Fixed asset expenditures (60,812,378) (102,218,122) Increase in other assets (2,430,082) (1,030,159) Expenditures for other assets - (681,751) ------------- ------------- Net cash used in investing activities (63,242,460) (103,930,032) ------------- ------------- Cash flows from financing activities: Capital contributions 54,005,272 112,800,000 Payment of note payable - ( 3,700,000) ------------- ------------- Net cash provided by financing activities 54,005,272 109,100,000 ------------- ------------- Net increase (decrease) in cash and cash equivalents (10,045,214) 6,294,406 Cash and cash equivalents, beginning of year 20,289,463 13,995,057 ------------- ------------- Cash and cash equivalents, end of year $ 10,244,249 $ 20,289,463 ============= ============= See accompanying notes to financial statements. RIVERSIDE JOINT VENTURE Notes to Financial Statements December 31, 1997 and 1996 (1) Organization Riverside Joint Venture, a Missouri general partnership (the Partnership), was formed on November 2, 1995 for the purpose of constructing, developing and owning Riverport Casino Center which includes a hotel, four riverboat casinos, restaurants and other entertainment offerings. The Partnership was considered a development stage enterprise prior to the commencement of operations in March 1997. The Partnership acquired certain rights, title and interest under all agreements, plans, drawings and studies relating to the development from its general partners, Harrah's Maryland Heights Corporation (HMHC) and Players MH, LP (PMHLP). Leasing Arrangements and Operation of the Riverboat Casinos HMHC is a wholly-owned indirect subsidiary of Harrah's Entertainment Inc. (Harrah's). PMHLP is a wholly-owned subsidiary of Players International, Inc. (Players). Each parent has guaranteed certain obligations of each partner. Harrah's, through a subsidiary, owns the land upon which the facility known as Riverport Casino Center is located, and has leased the land to the Partnership under a Ground Lease. Harrah's subsidiary and PMHLP sublease space from the Partnership for casino, specialty restaurant and office purposes. Each sub-tenant pays the Partnership 50% of the Partnership's monthly operating losses in rent for its subleased premises. PMHLP is additionally obligated to pay the Partnership a percentage of gaming revenues as percentage rent. The Partnership in turn pays this percentage rent to Harrah's under the Ground Lease. The Partnership is not responsible for and does not assume any liability in connection with the activities and operations of the subleased premises. A subsidiary of Harrah's manages the operations of the hotel, restaurants and parking operations for the Partnership at Riverport Casino Center pursuant to a management contract. PMHLP manages the operation of retail shops for the Partnership at Riverport Casino Center pursuant to a management contract. (2) Summary of Significant Accounting Policies (a) Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting. During 1996, the Partnership financial statements were prepared as a development stage enterprise. (b) Cash and Cash Equivalents For purposes of the statement of cash flows, the Partnership considers all highly liquid investments purchased with an original term to maturity of three months or less to be cash equivalents. (c) Preopening Costs Preopening costs, representing primarily salaries and wages, advertising, training and other costs which were incurred prior to the opening of the Riverport Casino Center, were deferred as incurred and expensed upon the opening of the facility. (d) Fixed Assets Fixed assets are stated at cost and are depreciated using the straight-line method over their estimated useful lives. (e) Income Taxes No provision for state or federal income taxes has been made as the liability for such taxes is that of the individual partners rather than the Partnership. (f) Inventories Inventories are stated at the lower of cost or market and consist primarily of food, beverage and operating supplies. (g) Revenue Recognition Food and beverage and lodging revenues include aggregate amounts generated by each department. (h) Promotional Allowances Promotional allowances consist principally of the retail value of complimentary food and beverage, lodging and entertainment provided to patrons of Riverport Casino Center. The estimated costs of providing such complimentary services are classified as direct operating expenses. (i) Management Estimates In preparing the financial statements, management is required to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the statements of financial position and income and expenses for the period. Actual results could differ significantly from these estimates. (j) Reclassifications Certain 1996 amounts have been reclassified to conform to the 1997 presentation. (3) Partnership Agreement The ownership percentage of each partner is 50%. In accordance with the partnership agreement and the first amendment to it dated June 28, 1996, each partner made an initial cash contribution of $20,000,000 and have made additional cash contributions pursuant to a Cost Budget. Each partner also contributed an agreed upon amount of pre- development costs consisting of land, lock-up costs for negative easements, land covenant payments and design and construction fees. These contributed assets were written- down to their estimated fair value and the resulting losses were allocated to the contributing partner based upon the terms of the agreement. The agreement gives each partner a right of first refusal to purchase the other partner's property subject to special rules regarding foreclosure sales and bankruptcy. Players has the additional right to buy out the Management Agreement at its fair value if Players elects not to purchase all of Harrah's property. Harrah's has an additional right for seven years (expiring November 3, 2002) to acquire Players' property upon changes in control of Players and also the right to buy out Partnership land upon termination of the Ground Lease. There are several remedies for defaults which include enforcement against each partner, enforcement against parental guaranties and appraisal buy- outs of the other partner's interest. (4) Other Assets Included in other assets at December 31, 1997 is approximately $5,673,951 for restrictive covenants which were assigned to the Partnership from HMHC as part of the Partnership Agreement. These covenants are to be amortized over a 30-year period commencing with the opening date of the Riverport Casino Center. The Partnership is required to pay $650,000 a year through July 1998 as part of assuming the covenants from HMHC. These future payments are included in other assets and accrued expenses at December 31, 1997 at their present value. The Partnership has pledged a $1,300,000 certificate of deposit to Riverport Farm Partners as collateral for future payments. (5) Commitments and Contingencies In order to develop and construct Riverport Casino Center the Partnership has entered into agreements with several contractors, engineering and architectural firms which are provided for in the Cost Budget. The Partnership has also entered into an agreement with the Howard Bend Levee District to fund levee improvements and with the City of Maryland Heights to fund certain improvements to the Earth City Expressway. Obligations incurred during the construction period are included in the Cost Budget and funded via each Partner's capital contribution. The specific commitments under these two agreements, which are not currently funded through partner's capital contributions consist of: Beneficiary Commitment City of Maryland Heights The Partnership conditionally agreed to loan $2,250,000, purchase bonds, and guarantee for five years after issuance, gaming tax revenues to the City which would be used to fund the City's debt service for bonds issued for certain improvements to the Earth City Expressway. However, the City did not satisfy the conditions prior to an established deadline. The City has not officially released Riverside Joint Venture from these obligations. Howard Bend Levee District The Partnership has agreed to pay the Howard Bend Levee District (the District): (i) following the opening of the riverboat casinos, up to $1,750,000 to fund off-site levee improvements; and (ii) following the issuance of bonds to fund design of a second phase of levee improvements ("Phase II") and if the District determines to proceed with such improvements without bonds, beginning December 31, 1997 between $600,000 and $700,000 per year to fund debt service or bonds or costs of Phase II improvements, as the case may be. (6) Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 107 (SFAS 107), Disclosures about Fair Value of Financial Instruments, requires entities to disclose the fair value of all financial assets and liabilities for which it is practicable to estimate. Value is defined in SFAS 107 as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes the carrying amount of such financial assets and liabilities approximate their fair value at December 31, 1997 and 1996. (7) Pending Litigation As permitted by current state law and approved in advance by the Missouri Gaming Commission, the casinos at Riverport Casino Center are located in a basin within 1,000 feet of the Missouri River. A lawsuit was filed in 1996, after construction of the Riverport Casino Center was commenced, seeking to invalidate the provision of the law that permitted casinos to be located in such basins. On November 25, 1997, the Missouri Supreme Court ruled that casinos could be located in basins only if such casinos are located directly upon the waters of the Missouri River. Following this decision, the Missouri Gaming Commission initiated disciplinary proceedings against the Riverport Casino Center casinos and all other casinos in Missouri similarly situated. These proceedings will result in hearings to determine whether or not the casinos at Riverport Casino Center are in compliance with the law as interpreted by the Missouri Supreme Court. In the meantime, Players and Harrah's have filed suit seeking declaratory judgment that their gaming facilities do in fact meet the state constitutional and statutory mandates as interpreted by the Missouri Supreme Court. In addition, Players, Harrah's and other casino companies, have initiated a petition referendum that will appear on the ballot in Missouri at the general election in November, 1998, at which time the voters of Missouri will determine whether to amend the state's constitution so as to expressly permit the location of the casinos in basins as currently designed. Management is unable to predict at this time the final outcome of the matter, or whether that outcome could materially affect the Partnership's results of operations, cash flows or financial position. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Players International, Inc. Date: August 12, 1998 By /s/ Peter J. Aranow Peter J. Aranow Executive Vice President Finance, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer) EX-10 2 24 PH02/243518.1 Exhibit 10.66 EMPLOYMENT AGREEMENT AGREEMENT, dated as of October 1, 1996 between Players International, Inc. (together with its successors or assigns as permitted under this Agreement, the "Company"), and Peter J. Aranow ("Executive"). W I T N E S S E T H: The Company and Executive entered into an Employment Agreement as of May 26, 1993 (the "Agreement"). The parties now desire to amend and restate the Agreement to reflect Executive's current position, compensation and other arrangements with the Company. Therefore, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company and Executive (individually a "Party" and together the "Parties") agree that the Agreement is amended and restated as of October 1, 1996, to read as follows: 1. Definitions (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Compensation" shall mean the compensation provided for in Paragraph 4, subject to such increases as may be approved by the Board from time to time. (c) "Beneficial Owner" of any securities shall mean: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of any security under this subparagraph (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) where voting securities are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Paragraph 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the Board of Directors of the Company. (e) "Business Day" shall mean any day other than a weekend, a federal or state holiday or a vacation day for Executive. (f) "Cause" shall mean (i) Executive is convicted of a felony involving moral turpitude; (ii) Executive uses alcohol or any unlawful controlled substance to an extent that it interferes on a continuing and material basis with the performance of his duties under the Agreement; (iii) Executive engages in the willful, unauthorized disclosure of Confidential Information, as defined in Paragraph 10(c), concerning the Company or any Subsidiary, unless such disclosure was (A) believed in good faith by Executive to be appropriate in the course of properly carrying out his duties under the Agreement, or (B) required by an order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency; (iv) Executive, other than in the course of properly carrying out his duties under the Agreement, performs services for any other corporation or person that competes with the Company or any Subsidiary; or (v) Executive, in carrying out his duties under the Agreement, engages in willful neglect or willful misconduct resulting, or reasonably likely to result, in either case, in material economic harm to the Company, unless such act, or failure to act, resulted from Executive's reasonable belief that such act or failure to act was in the best interests of the Company. (g) "Change in Control" shall mean the occurrence of any one of the following events: (i) any Person (except the Griffin Group or its Affiliates and Associates, Company management as of the Effective Date and their Affiliates and Associates or the Company or any employee benefit plan of the Company or of any Affiliate, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 30% or more of the Voting Stock then outstanding; provided, however, that no "Change of Control" shall be deemed to occur during any period in which any such Person, and its Affiliates and Associates, are bound by the terms of a standstill agreement under which such parties have agreed not to acquire more than 30% of the Voting Stock then outstanding or to solicit proxies; (ii) consummation by the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Voting Stock outstanding immediately prior to such Business Combination do not, following such Business Combination, Beneficially Own, directly or indirectly, more than 50% of the then outstanding shares of voting stock of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the outstanding Voting Stock; (iii) consummation of a complete liquidation or dissolution of the Company; (iv) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 50% of the then outstanding shares of voting stock is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Voting Stock immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Voting Stock immediately prior to such sale or disposition; (v) individuals who, as of the beginning of any twenty- four month period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (vi) a "change of control" as defined in the form of indenture governing any indebtedness of the Company shall have occurred. (h) "Constructive Termination Without Cause" shall mean that: (i) without Executive's prior written consent, one or more of the following events occurs: (A) Executive is removed from the position of Executive Vice President - Finance and Treasurer of the Company for any reason other than the termination of his employment; (B) Executive suffers a material diminution in the authorities, duties, reporting relationships or responsibilities as specified in Paragraph 3(a) or the assignment to him of duties and responsibilities materially inconsistent with those specified in Paragraph 3(a); (C) Executive's Base Compensation as provided for in Paragraph 4 is decreased by the Company, or his benefits under any material employee benefit plan or program of the Company or his incentive or equity opportunity under any material incentive or equity program of the Company is or are reduced, after taking into account the discretion of the Board to determine the level at which Executive participates in any performance compensation program as provided in Paragraph 4, on a basis not shared in common with other senior executives of the Company as a group; (D) the Company fails to obtain a written agreement from any successor of the Company to assume and perform the Agreement; or (E) following a Change of Control, the Company moves its principal executive offices more than 50 miles from Atlantic City, New Jersey, or such other place where the Company's principal executive offices are located immediately prior to the Change of Control; and (ii) within 90 days of learning of the occurrence of such event, Executive terminates his employment with the Company. (i) "Disability" shall mean Executive's inability, for a period of six consecutive months, to render substantially the services provided for in Paragraph 3(a) by reason of permanent mental or physical disability, whether resulting from illness, accident or otherwise. In the case of a dispute as to whether Executive has incurred a Disability, Executive agrees to submit to a physical examination by two physicians, one selected by Executive and the other by the Company and, in the event they do not agree, to a physical examination by an additional physician selected by the first two physicians whose decision shall be final and binding on both parties. (j) "Person" shall mean any individual, firm, corporation, partnership or other entity. (k) "Subsidiary" shall mean any corporation in which the Company owns 50% or more of the Voting Stock or any other venture in which it owns 50% or more of the equity. (l) "Term of Employment" shall mean the two-year period specified in Paragraph 2. (m) "Termination by the Company Due to Loss of License" shall mean a termination of Executive's employment by the Company following a termination of Executive's license to take part in the casino and gaming business in any state in which the Company conducts business (other than a termination of such license (i) due to Executive's death or Disability or (ii) based upon facts that constitute Cause within the meaning of this Agreement). (n) "Termination Upon a Change in Control" shall mean that following a Change in Control (i) the Company terminates Executive's employment without Cause or (ii) there is a Constructive Termination Without Cause. (o) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 2. Term of Employment. (a) The Company hereby continues to employ Executive, and Executive hereby accepts such continuation of employment, in the position and with the duties and responsibilities as set forth in Paragraph 3 for the Term of Employment, subject to the terms and conditions of the Agreement. (b) The Term of Employment shall commence on the date hereof and shall, unless sooner terminated as provided in Paragraph 9, terminate upon the close of business on September 30, 1998. 3. Position, Duties and Authorities. (a) During the Term of Employment, Executive shall be employed as Executive Vice President - Finance and Treasurer of the Company and his duties, responsibilities and authorities shall be as set forth on Exhibit A. Executive shall report directly to and be subject to supervision by the Board and the Company's Chief Executive Officer. (b) Anything herein to the contrary notwithstanding, nothing shall preclude Executive from engaging in charitable, community and business affairs, managing his personal investments and serving as a member of boards of directors so long as such activities do not materially interfere with his carrying out his duties and responsibilities under the Agreement. (c) During the term of Employment, Executive shall perform his services from an office in Atlantic City, New Jersey and at such other offices of the Company as may be required by his duties; provided, however, that Executive shall not be required to move his home from Hastings on Hudson, New York. 4. Base Compensation. During the Term of Employment, Executive shall be paid by the Company Base Compensation payable no less frequently than in equal semi-monthly installments at an annualized rate of no less than $300,000 per annum for the period through March 31, 1997, and $250,000 for the balance of the Term of Employment. The Company shall be entitled to make proper withholdings from Executive's Base Compensation (and all other payments of compensation under this Agreement) as required by law. 5. Performance Bonus. The Company may, but is not required, to adopt a bonus or short term performance compensation program for senior level executives. In the event that such a program is adopted, Executive shall participate in such program but the Board shall determine Executive's level of participation for each year of the Term of Employment in its sole discretion; provided, however, that the Board shall have the discretion to grant additional individual bonus compensation in excess of the foregoing general performance bonus program to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. 6. Stock Options and Stock Grant. The Company may, but is not required, to grant to Executive shares of Voting Stock as well as stock options to purchase shares of Voting Stock subject to restrictions determined by the Board, in either event in the sole discretion of the Board, for any year during the Term of Employment, which shall be made pursuant to an equity compensation plan approved by the Board generally for senior level executives of the Company; provided, however, that the Board shall have the discretion to grant additional options or restricted shares to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. The Company shall use its best effort to maintain any and all registration statements for any shares subject to option to permit such shares to be freely tradeable upon exercise. 7. Employee Benefit Programs. During the Term of Employment, Executive and his spouse and dependents shall be entitled, at the Company's expense, to the employee welfare benefit and retirement benefit coverages provided to Executive and his spouse and dependents on the date of this Agreement as listed on Exhibit B hereto and incorporated herein (the "Employee Benefit Programs") which shall be subject to review by the Compensation Committee of the Board; provided, however, that the foregoing shall not prohibit the Company from amending or terminating any such Employee Benefit Program so long as Executive and his spouse and dependents otherwise receive the required levels of coverage in the aggregate. 8. Business Expenses Reimbursement. During the Term of Employment, Executive shall be entitled to receive reimbursement by the Company, upon submission of adequate documentation, for all reasonable, out-of-pocket ordinary and necessary business expenses incurred by him in performing services under the Agreement. In addition, any reasonable legal fees and expenses incurred in connection with the preparation and negotiation of the Agreement or qualification as a licensee in any jurisdiction shall be paid by the Company. 9. Termination of Employment. (a) Termination Due to Death or Disability. In the event of the termination of Executive's employment under the Agreement due to his death or Disability, Executive or his legal representatives as the case may be, shall be entitled to: (i) (A) in the case of death, continued Base Compensation at the rate in effect at the time of his death for a period of 3 months following the month in which such termination of employment due to death occurs, or (B) in the case of Disability, the disability benefit available under and only to the extent of the insurance maintained as provided in Paragraph 7; (ii) any performance or special incentive bonus earned but not yet paid; (iii) a pro rata portion of any applicable performance bonus for the year in which his employment terminates due to death or Disability based on performance of the Company for the year during which such termination occurs or, if performance results are not available, based on the performance bonus, if any, paid to Executive for the prior year; and (iv) any other compensation and benefits to which he or his legal representatives or beneficiaries may be entitled under applicable plans, programs and agreements of the Company, including, without limitation, life insurance benefits as provided in Paragraph 7. (b) Termination by the Company for Cause. Within 60 days of knowing, or having reasonable basis for knowing, of an event constituting Cause the Company may give Executive written notice of its intention to terminate him for Cause, specifying in such notice the event forming the basis for Cause. The preceding sentence notwithstanding, Executive's employment shall not be deemed to have been terminated for Cause unless the Company has given or delivered to Executive (1) reasonable notice setting forth the reasons for the Company's intention to terminate Executive's employment for Cause; (2) if the written notice is of an event constituting Cause under clause (ii) or (iv) of Paragraph l(f) and if the event is capable of being cured, Executive shall have 10 Business Days following actual receipt of such notice in which to cure; (3) a reasonable opportunity at any time during the 30-day period after Executive's receipt of such notice, for Executive, together with his counsel, to be heard before the Board, and (4) a second written notice from the Company stating that, in the good faith opinion of not less than a majority of the entire membership of the Board, Executive was guilty of the conduct giving rise to termination for Cause; provided, however, that the Company may, in its sole discretion, suspend Executive from performance of his duties on the date of delivery of such notice and such date shall be the effective date of any termination under this Paragraph. In the event Executive's employment is terminated by the Company for Cause, Executive shall be entitled to: (i) unpaid Base Compensation earned or accrued at the rate in effect at the time of his termination through the date of termination of his employment; (ii) any performance or special incentive bonus earned but not yet paid; (iii) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iv) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. Executive's entitlement to the foregoing shall be without prejudice to the right of the Company for any damages to which it may be entitled as a result of such Cause. (c) Termination Without Cause; Constructive Termination Without Cause; Expiration of the Agreement. In the event Executive's employment is terminated by the Company without Cause (which shall not include a termination pursuant to Paragraph 9(a) or 9(d)) or in the event of a Constructive Termination Without Cause, or in the event this Agreement expires by its terms on the second anniversary of the date hereof or the expiration date of any renewal and the Company has not, at least six months prior to such date, given Executive written notice of its intention not to renew the Agreement ("Non-Renewal Notice"), Executive, upon executing and not revoking a release of the Company as to all matters arising in the course of his employment by the Company and the termination thereof, in the form attached hereto as Exhibit C, shall be entitled to receive: (i) unpaid Base Compensation earned or accrued through his date of termination and continued Base Compensation payments, at the rate in effect at the time of his termination, for (A) solely in the case of expiration of this Agreement by its terms on the second anniversary, a number of months equal to six months minus the number of months of notice of Non-Renewal actually provided to Executive or (B) in all other cases to which this Paragraph 9(c) is applicable, a period of 12 months following termination of his employment or through the end of the Term of Employment, whichever is longer, payable, at Executive's option, either (1) over such 12 months or the remaining Term of Employment, as the case may be, or (2) in a lump-sum payment promptly following termination of Executive's employment equal to the then present value using a discount rate per annum determined by reference to the discount rate then published by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities (the "Present Value") of the remaining Base Compensation due Executive through the end of such 12 months or the remaining Term of Employment; (ii) except in a case of a termination of employment by reason of expiration of this Agreement on the second anniversary of the date hereof, continued performance bonuses for a period of 12 months following termination of his employment or through the end of the Term of Employment, whichever is longer, in amounts determined under the then applicable program of the Company to the extent then applicable to Executive, or, to the extent such amounts are not reasonably determinable, in amounts based on performance bonuses paid to Executive for the last complete fiscal year of the Company ended prior to the completion of such 12-month period; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; (v) the immediate vesting of all stock options previously granted to Executive, notwithstanding the terms of any such grant to the contrary, with and the ability to exercise any such options for 12 months following the date of termination but in no event after the expiration of the stated option term and provided that this clause shall not apply to the Non-Qualified Stock Option and Stock Appreciation Right granted to Executive on September 19, 1996; and (vi) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company and the continuation of all Employee Benefit Programs provided under Paragraph 7 during the period for which Executive is to receive payments under clause (i) above (irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. (d) Termination Upon a Change in Control. In the event a Termination Upon a Change in Control occurs, or in the event Executive is terminated under subparagraph (c) within six months prior to the occurrence of a Change in Control, Executive shall be entitled to receive (taking into account any benefits provided under subparagraph (c)), promptly following his termination of employment: (i) unpaid Base Compensation earned or accrued through his date of termination and a lump-sum payment equal to the Present Value of Executive's Base Compensation that would be due him for a period of 36 months following termination of his employment, determined on the basis of the average of the Base Compensation paid to Executive for the 36 months preceding his termination; (ii) a lump-sum payment equal to the Present Value of the aggregate performance bonus amounts he received, if any, for the period of 36 months preceding his termination; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; (v) the immediate vesting of all stock options previously granted to Executive, notwithstanding the terms of any such grant to the contrary, with the ability to exercise any such options for 12 months following the date of termination but in no event after the expiration of the stated option term; and (vi) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company provided under Paragraph 7 during the period for which Executive is to receive payments under clause (i) above (irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. Notwithstanding the foregoing, in the event that it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the limitation of the Company's federal income tax deduction under Section 280G of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code. For purposes of this subparagraph (d), "present value" shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations to be made under this Paragraph 9(d) shall be made by the Company's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to the Company and Executive within 10 days of the termination date. Any such determination by the Accounting Firm shall be binding upon the Company and Executive. Executive shall in his sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Paragraph 9(d). Within five days after Executive's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of Executive such amounts as are then due to Executive under this Agreement. All of the fees and expenses of the Accounting Firm in performing the determinations referred to above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to this Paragraph, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. (e) Termination of the Company Due to Loss of License. In the event of a Termination by the Company Due to Loss of License, Executive shall be entitled to: (i) unpaid Base Compensation earned or accrued through the date of termination and continued Base Compensation payments at the rate in effect at the time of termination, for six months; (ii) any performance bonus earned but not yet paid; (iii) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iv) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. Notwithstanding the above, if Executive's Loss of License was not the result of any activity that Executive knew, or should have known, would result in his Loss of License, then the Base Compensation continuation provided for in subparagraph (i) above shall be for 12 months rather than six months. (f) No Mitigation; No Offset. In the event of any termination of Executive's employment under the Agreement, he shall be under no obligation to seek other employment, and there shall be no offset against amounts due him under the Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. (g) Nature of Payments. Any amounts due Executive under the Agreement in the event of any termination of his employment with the Company are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that be may suffer as a result of the termination of his employment, or both, and are not in the nature of a penalty. 10. Covenant Not to Compete; Covenants to Protect Confidential Information. (a) If Executive voluntarily terminates his employment with the Company, or if the Company terminates the employment of Executive for Cause, Executive shall not for a one-year period engage in competition with the Company within the meaning of Paragraph 10(b). If Executive is terminated on any other basis resulting in payments to Executive (irrespective of the fact that such payments are paid in a lump sum) with respect to a period after such termination (the "Post Termination Payment Period"), Executive shall not engage in such competition for a period equal to the Post Termination Payment Period. If Executive is in breach of this Paragraph 10(a), since a remedy at law will not suffice to remedy the damage suffered thereby, the Company shall be entitled to specific performance. (b) Executive shall be engaging in competition with the Company if he is engaged in the gaming business within the primary geographic market area of any location in which the Company is engaging in the gaming business at the time of the termination of Executive's employment, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other corporate or representative capacity, so long as the Company is engaged in the gaming business in the location in question. The Company agrees that it is not engaged in the gaming business in Atlantic City, New Jersey on the date of this Agreement. The foregoing restrictions shall not be construed to prohibit the ownership by Executive of less than five percent (5 %) of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Exchange Act, provided that such ownership represents a passive investment and that neither Executive nor any group of persons including Executive in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing. (c) Executive shall not, during the Term of Employment or thereafter, without the prior written consent of the Company, divulge, publish or otherwise disclose to any other person any Confidential Information regarding the Company or any Subsidiary except in the course of carrying out his responsibilities on behalf of the Company (e.g., providing information to the Company's attorneys, accountants, bankers, etc.) or if required to do so pursuant to the order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency. For this purpose, Confidential Information shall include, but not be limited to, the Company's financial, real estate, marketing and promotional plans and strategies. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. (d) Executive shall not during the term of Employment or thereafter, without the prior written consent of a Subject Party, as hereafter defined, divulge, publish, or otherwise disclose to any other person any Confidential Information regarding a Subject Party except in the course of carrying out responsibilities on behalf of Subject Party (e.g., providing information to advisors) or if required to do so under circumstances as described in Paragraph 10(c) in connection with disclosure of Confidential Information about the Company. For this purpose, Confidential Information about a Subject Party shall include non-public financial information about a Subject Party including non-public information regarding his business and investment activities. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. Executive further agrees he will not during the Term of Employment or thereafter publish any book or article about, or disclose in any public forum, his personal experiences with, or other personal information about, a Subject Party. Affiliates of a Subject Party or their respective heirs, successors and assigns are expressly intended as third party beneficiaries of the provisions of this Paragraph 10(d) and shall be entitled to enforce the provisions hereof independent of the Company by injunction or otherwise and to any damages suffered by reason of any breach of this Paragraph 10(d). For purposes hereof, Subject Party shall be Mr. Merv Griffin. 11. Equitable Relief. (a) Executive acknowledges and agrees that the restrictions contained in Paragraph 10 are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and business of the Company, that the Company would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by the Company should Executive breach any of the provisions of that Paragraph. Executive represents and acknowledges that (i) he has been advised by the Company to consult his own legal counsel in respect of this Agreement, and (ii) that he has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with his counsel. (b) Executive further acknowledges and agrees that a breach of any of the restrictions in Paragraph 10 cannot be adequately compensated by monetary damages. Executive agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of Paragraph 10, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. In the event that any of the provisions of this Paragraph should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum time, geographic, service, or other limitations permitted by applicable law, that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise be enforced to the maximum extent permitted by law. (c) Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of Paragraph 10, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief and other equitable relief, may be brought in the United States District Court for the District of New Jersey, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Atlantic City, New Jersey, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Executive may have to the laying of venue of any such suit, action or proceeding in any such court. Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Paragraph 21. 12. Indemnification. (a) The Company shall indemnify Executive to the fullest extent permitted by Delaware law in effect as of the date hereof against all costs, expenses, liabilities and losses (including, without limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement) reasonably incurred by Executive in connection with a Proceeding and this obligation shall survive the termination of this Agreement with respect to matters arising during the Term of Employment. For the purposes of this Paragraph 12, "Term of Employment" shall mean the period commencing May 26, 1993, and ending on the date specified in Paragraph 2 and a "Proceeding" shall mean any action, suit or proceeding, whether civil, criminal, administrative or investigative, in which Executive is made, or is threatened to be made, a party to, or a witness in, such action, suit or proceeding by reason of the fact that he is or was an officer, director or employee of the Company or is or was serving as an officer, director, member, employee, trustee or agent of any other entity at the request of the Company. (b) The Company shall advance to Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include an itemized list of the costs and expenses and an undertaking by Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (c) Executive shall not be entitled to indemnification under this Paragraph 12 unless he meets the standard of conduct specified in the Delaware General Corporation Law. Notwithstanding the foregoing, to the extent permitted by law neither Section 145(d) of the Delaware General Corporation Law nor any similar provision shall apply to indemnification under this Paragraph 12, so that if Executive in fact meets the applicable standard of conduct, he shall be entitled to such indemnification whether or not the Company (whether by the board of directors, the shareholders, independent legal counsel or other party) determines that indemnification is proper because he has met such applicable standard of conduct. Neither the failure of the Company to have made such a determination prior to the commencement by Executive of any suit or arbitration proceeding seeking indemnification, nor a determination by the Company that he has not met such applicable standard of conduct, shall create a presumption that he has not met the applicable standard of conduct. (d) The Company shall not settle any Proceeding or claim in any manner which would impose on Executive any penalty or limitation without his prior written consent. Neither the Company nor Executive will unreasonably withhold its or his consent to any proposed settlement. 13. Assignability; Binding Nature. This Agreement shall be binding upon and inure to the benefit of the Parties (and in the case of Paragraph 10(d), to the benefit of the Subject Party) and their respective successors, heirs and assigns. No rights or obligations of the Company under the Agreement may be assigned or transferred by Executive or the Company except that (a) such rights or obligations of the Company may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in the Agreement, either contractually or as a matter of law, and (b) such obligations of the Company may be transferred by Executive by will or pursuant to the laws of descent or distribution or pursuant to any express transfer provisions in an instrument granting Executive a stock option. The Company shall take all reasonable legal action necessary to effect such assignment and assumption of the Company's liabilities, obligations and duties under the Agreement in circumstances clause (a) of the preceding sentence. 14. Representation. The Company and Executive respectively represent and warrant to each other that, subject to any approval that may be necessary from any pertinent regulatory authority, each respectively is fully authorized and empowered to enter into the Agreement and that its or his entering into the Agreement and the performance of its or his respective obligations under the Agreement will not violate any agreement between the Company or Executive respectively and any other person, firm or organization or any law or governmental regulation. 15. Entire Agreement. The Agreement contains the entire agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 16. Amendment or Waiver. The Agreement cannot be changed, modified or amended without the consent in writing of both Executive and the Company. No waiver by either Party at any time of any breach by the other Party of any condition or provision of the Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be. 17. Severability. In the event that any provision or portion of the Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of the Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 18. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Agreement to the extent necessary to the intended preservation of such rights and obligations. 19. Governing Law. The Agreement shall be governed by and construed and interpreted in accordance with the laws of New Jersey without reference to principles of conflict of laws. 20. Settlement of Disputes. In the event of any dispute under the provisions of this Agreement other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the City of New York, New York in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. If Employee prevails on any material issue which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration and the Employee's reasonable legal fees and expenses. Otherwise, each party shall bear his or its own expenses relating to the conduct of the arbitration (including attorneys' fees and expenses) and shall share the fees of the American Arbitration Association. 21. Notices. Any notice given to either Party shall be in writing and, except as provided in the second sentence of Paragraph 9(b), shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give notice of: If to the Company or the Board: Players International, Inc. 1300 Atlantic Avenue Suite 800 Atlantic City, NJ 08401 Attention: General Counsel With a copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993 Attention: Robert J. Lichtenstein, Esquire If to Executive: Peter J. Aranow 665 N. Broadway Hastings on Hudson, NY 10706 With a copy to: Willkie Farr & Gallagher One Citicorp Center 153 East 53rd Street New York, NY 10022-4677 Attention: Stephen T. Lindo, Esquire 22. Headings. The headings of the paragraphs contained in the Agreement are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 23. Counterparts. The Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date first written above. Players International, Inc. By: Howard A. Goldberg Its: Chief Executive Officer Peter J. Aranow EXHIBIT A Peter Aranow, EVP Finance & Treasurer - Duties Organizational Development Examination of Systems, Structures, Communications Investor Relations Bank Relations Cash Management Board of Directors Management Records Information and Communication Committee Administration Supervision of Management of Corporate Office Supervision of Internal Financial Analysis Supervision of Industry/Other Financial Analysis Examination of Particular Market(s) Overall Economic Environment Member - Compliance Committee Member - Executive Committee EX-10 3 -14- PH03/223440.1 Exhibit 10.68 AGREEMENT THIS AGREEMENT, dated as of August 1 , 1997 between Players International, Inc. (together with its successors or assigns as permitted under this Agreement, the "Company"), and John Groom ("Executive"). W I T N E S S E T H: WHEREAS, the Company considers it essential to the best interest of its stockholders to foster the continuous employment of key management personnel; WHEREAS, the Board (as hereinafter defined) of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of certain members of the Company's management, including Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a "Change in Control" (as hereinafter defined) of the Company, although no such change is now contemplated; and WHEREAS, in order to induce Executive to remain in the employ of the Company and in consideration of Executive's undertakings set forth herein, the Company agrees that Executive shall receive the severance benefits set forth in this Agreement under the circumstances as described below. NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company and Executive (individually a "Party" and together the "Parties") agree as follows: 1. Definitions. (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Compensation" shall mean the Executive's annual base compensation payable by the Company. (c) "Beneficial Owner" of any securities shall mean: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of any security under this subparagraph (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) where voting securities are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Paragraph 1(b) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the Board of Directors of the Company. (e) "Cause" shall mean (i) Executive is convicted of a felony involving moral turpitude; (ii) Executive uses alcohol or any unlawful controlled substance to an extent that it interferes on a continuing and material basis with the performance of his duties under the Agreement; (iii) Executive engages in the willful, unauthorized disclosure of Confidential Information, as defined in Paragraph l(g), concerning the Company or any Subsidiary, unless such disclosure was (A) believed in good faith by Executive to be appropriate in the course of properly carrying out his duties, or (B) required by an order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency; (iv) Executive, other than in the course of properly carrying out his duties as assigned by the Company, performs services for any other corporation or person that competes with the Company or any Subsidiary; (v) Executive, in carrying out his duties as assigned by the Company, engages in willful neglect or willful misconduct resulting, or reasonably likely to result, in either case, in material economic harm to the Company, unless such act, or failure to act, resulted from Executive's reasonable belief that such act or failure to act was in the best interests of the Company; or (vi) Executive is found disqualified or not suitable to hold a casino key employee license or other such license by a gaming authority in any jurisdiction where the Company operates a casino and Executive is required to be found qualified, suitable or licensed, as the case may be. (f) "Change in Control" shall mean the occurrence of any one of the following events, unless the Board determines, before the event or transaction occurs, that the event or transaction will not be a Change of Control for purposes of this Agreement. The Board shall determine whether a Change of Control shall be deemed to occur for purposes of this Agreement in its sole discretion, taking into account such facts and circumstances as it deems appropriate, including, without limitation, whether the event or transaction is likely to result in a change in the Company's management that will affect Executive's position. The Board's determination shall be binding on all persons for all purposes. An event or transaction may be considered a Change of Control under another plan or agreement of the Company without being considered a Change of Control for purposes of this Agreement. The events or transactions that may be considered a Change of Control are the following: (i) any Person (except the Griffin Group or its Affiliates and Associates, Company management as of the Effective Date and their Affiliates and Associates or the Company or any employee benefit plan of the Company or of any Affiliate, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 30% or more of the Voting Stock then outstanding; provided, however, that no "Change of Control" shall be deemed to occur during any period in which any such Person, and its Affiliates and Associates, are bound by the terms of a standstill agreement under which such parties have agreed not to acquire more than 30% of the Voting Stock then outstanding or to solicit proxies; (ii) consummation by the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Voting Stock outstanding immediately prior to such Business Combination do not, following such Business Combination, Beneficially Own, directly or indirectly, more than 50% of the then outstanding shares of voting stock of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the outstanding Voting Stock; (iii) consummation of a complete liquidation or dissolution of the Company; (iv) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 50% of the then outstanding shares of voting stock is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Voting Stock immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Voting Stock immediately prior to such sale or disposition; (v) individuals who, as of the beginning of any twenty-four month period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (vi) a "change of control" as defined in the form of indenture governing any indebtedness of the Company shall have occurred. (g) "Confidential Information" shall include, but not be limited to, the Company's financial, real estate, marketing and promotional plans and strategies. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. (h) "Disability" shall mean if, as a result of Executive's incapacity due to physical or mental illness, Executive shall have been absent from the full-time performance of Executive's duties with the Company for six consecutive months and within thirty days after written notice of termination is given Executive shall not have returned to the full-time performance of Executive's duties. (i) "Good Reason" shall mean, without Executive's express written consent and without Cause, the occurrence after a Change in Control of the Company, or within six months before a Change of Control, of any of the following: (i) The assignment to Executive of any duties inconsistent with Executive's status as an executive officer of the Company or a substantial adverse alteration in the nature or status of Executive's responsibilities from those in effect immediately prior to the date that is six months before the Change in Control of the Company; (ii) Executive's Base Compensation is decreased by the Company in other than an across-the-board salary adjustment of similarly situated executives, or his benefits under any material employee benefit plan or program of the Company or his incentive or equity opportunity under any material incentive or equity program of the Company is or are reduced, after taking into account the discretion of the Board to determine the level at which Executive participates in any performance compensation program, on a basis not shared in common with other senior executives of the Company as a group; or (iii) The failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Paragraph 6 hereof; provided that (iv) Executive's termination of employment for Good Reason must occur within 90 days after Executive learns of the occurrence of the event constituting Good Reason and during the term of the Agreement. (j) "Person" shall mean any individual, firm, corporation, partnership or other entity. (k) "Subsidiary" shall mean any corporation in which the Company owns 50% or more of the Voting Stock or any other venture in which it owns 50% or more of the equity. (l) "Termination Upon a Change in Control" shall mean that following a Change in Control, or within six months prior to a Change in Control, and during the term of the Agreement, (i) the Company terminates Executive's employment without Cause or (ii) Executive terminates his employment for Good Reason, as described in Subparagraph 3(a). (m) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 2. Term of Agreement. This Agreement shall commence on March 1, 1997 and shall continue in effect through December 31, 1998; provided that if a Change in Control of the Company occurs during the term of this Agreement, this Agreement shall automatically continue in effect for a period of twenty-four months beyond the month in which such Change in Control occurs. 3. Termination Upon a Change in Control. (a) If a Change in Control (as defined in Subparagraph 1(f)) of the Company shall have occurred, Executive shall be entitled to the benefits provided in Paragraph 4 hereof upon the subsequent termination of Executive's employment, or upon the termination of Executive's employment within six months prior to the Change of Control, if such termination occurs during the term of the Agreement and is (y) by the Company other than for Cause or (z) by Executive for Good Reason. Notwithstanding anything in this Agreement to the contrary, if Executive's employment terminates on account of Disability, Executive shall be entitled to receive disability benefits under any disability program maintained by the Company that covers Executive, and Executive shall not be considered to have terminated employment under this Agreement and shall not receive benefits pursuant to Paragraph 4 hereof. (b) Notice of Termination. Any purported termination of Executive's employment by the Company or by Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with Paragraph 14 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated. 4. Compensation Payable in the Event of Termination. (a) In the event a Termination Upon a Change in Control occurs, Executive shall be entitled to receive promptly following the later of his termination of employment or the Change of Control: (i) unpaid Base Compensation earned or accrued through his date of termination and a lump-sum payment equal to the present value (computed by using a discount rate per annum determined by reference to the discount rate then published by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities ("Present Value")) of Executive's Base Compensation that would be due him for a period of 36 months following termination of his employment, determined on the basis of the average of the Base Compensation paid to Executive for the 36 months preceding his termination; (ii) a lump-sum payment equal to the Present Value of the aggregate performance bonus amounts he received, if any, for the period of 36 months preceding his termination; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for reasonable out-of-pocket business expenses properly incurred but not yet reimbursed by the Company; and (v) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company and the continuation of Executive's participation in all Employee Benefit Programs (as defined below) during the period for which Executive is to receive payments under clause (i) above (irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation, it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. "Employee Benefit Programs" shall mean those employee welfare benefit and retirement benefit plans and programs of the Company in which Executive participates immediately before Executive's termination of employment; provided, however, that the Company shall not be prohibited from amending or terminating any Employee Benefit Program as long as Executive continues to receive comparable levels of coverage in the aggregate during the payment period. (b) Notwithstanding the foregoing, in the event that it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the payment to avoid or reduce the limitation of the Company's federal income tax deduction under Section 280G of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code. For purposes of this subparagraph (b), "present value" shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations to be made under this Paragraph 4(b) shall be made by the Company's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and. any supporting calculations both to the Company and Executive within ten days of the termination date. Any such determination by the Accounting Firm shall be binding upon the Company and Executive. Executive shall in his sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Paragraph 4(b). Within five days after Executive's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of Executive such amounts as are then due to Executive under this Agreement. All of the fees and expenses of the Accounting Firm in performing the determinations referred to above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to this Paragraph, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. (c) No Mitigation; No Offset. In the event of any termination of Executive's employment under the Agreement, he shall be under no obligation to seek other employment, and there shall be no offset against amounts due him under the Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. (d) Nature of Payments. Any amounts due Executive under the Agreement in the event of any termination of his employment with the Company are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of the termination of his employment, or both, and are not in the nature of a penalty. 5. Termination by the Company. Executive hereby acknowledges that, prior to the date that is six months before a Change of Control, Executive is an "at will" employee of the Company. Prior to the date that is six months before a Change of Control, Executive hereby acknowledges that the Company may terminate Executive's employment with the Company with or without Cause. If the Company terminates Executive's employment without Cause after the date that is six months before a Change in Control and prior to the expiration of this Agreement, Executive will be entitled to payments pursuant to Paragraphs 3 and 4 hereof. 6. Successors, Binding Agreement. (a) 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 expressly assume 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. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Executive to compensation from the Company in the same amount and on the same terms as Executive would be entitled to hereunder if Executive terminates his employment voluntarily for Good Reason following a Change in Control of the Company, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date of termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. (b) This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees. If Executive should die after Executive's termination of employment under circumstances entitling Executive to benefits hereunder and while any amount would still be payable to Executive hereunder if Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Executive's devises, legates or other designee or, if there is no such designee, to Executive's estate. 7. Representation. The Company and Executive respectively represent and warrant to each other that, subject to any approval that may be necessary from any pertinent regulatory authority, each respectively is fully authorized and empowered to enter into the Agreement and that its or his entering into this Agreement and the performance of its or his respective obligations under the Agreement will not violate any agreement between the Company or Executive respectively and any other person, firm or organization or any law or governmental regulation. 8. Entire Agreement. The Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect thereto. 9. Amendment or Waiver. The Agreement cannot be changed, modified or amended without the consent in writing of both Executive and the Company. No waiver by either Party at any time of any breach by the other Party of any condition or provision of the Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be. 10. Severability. In the event that any provision or portion of the Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of the Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 11. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Agreement to the extent necessary to the intended preservation of such rights and obligations. 12. Governing Law. The Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New Jersey without reference to principles of conflict of laws. 13. Settlement of Disputes. In the event of any dispute under the provisions of this Agreement other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the Las Vegas, Nevada in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Executive, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. If Executive prevails on any material issue which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration and the Executive's reasonable legal fees and expenses. Otherwise, each party shall bear his or its own expenses relating to the conduct of the arbitration (including attorneys' fees and expenses) and shall share the fees of the American Arbitration Association. 14. Notices. Any notice given to either Party shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give notice of: If to the Company: Players International, Inc. 1300 Atlantic Avenue Suite 800 Atlantic City, NJ 08401 Attention: Chief Executive Officer If to Executive: John Groom The heading of the paragraphs contained in the Agreement are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 16. Counterparts. The Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date first above. Players International, Inc. _________________________ By: Howard A. Goldberg Its: Chief Executive Officer _________________________ John Groom EX-10 4 23 PH02/243474.1 Exhibit 10.65 EMPLOYMENT AGREEMENT AGREEMENT, dated as of October 1, 1996 between Players International, Inc. (together with its successors or assigns as permitted under this agreement, the "Company"), and Howard A. Goldberg ("Executive"). W I T N E S S E T H: The Company and Executive entered into an Employment Agreement as of May 19, 1993 (the "Agreement"). The parties now desire to amend and restate the Agreement to reflect Executive's current position, compensation and other arrangements with the Company. Therefore, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company and Executive (individually a "Party" and together the "Parties") agree that the Agreement is amended and restated as of October 1, 1996, to read as follows: 1. Definitions (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Compensation" shall mean the compensation provided for in Paragraph 4, subject to such increases as may be approved by the Board from time to time. (c) "Beneficial Owner" of any securities shall mean: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of any security under this subparagraph (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) where voting securities are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Paragraph l(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the Board of Directors of the Company. (e) "Business Day" shall mean any day other than a weekend, a federal or state holiday or a vacation day for Executive. (f) "Cause" shall mean (i) Executive is convicted of a felony involving moral turpitude; (ii) Executive uses alcohol or any unlawful controlled substance to an extent that it interferes on a continuing and material basis with the performance of his duties under the Agreement; (iii) Executive engages in the willful, unauthorized disclosure of Confidential Information, as defined in Paragraph 10(c), concerning the Company or any Subsidiary, unless such disclosure was (A) believed in good faith by Executive to be appropriate in the course of properly carrying out his duties under the Agreement, or (B) required by an order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency; (iv) Executive, other than in the course of properly carrying out his duties under the Agreement, performs services for any other corporation or person that competes with the Company or any Subsidiary; or (v) Executive, in carrying out his duties under the Agreement, engages in willful neglect or willful misconduct resulting, or reasonably likely to result, in either case, in material economic harm to the Company, unless such act, or failure to act, resulted from Executive's reasonable belief that such act or failure to act was in the best interests of the Company. (g) "Change in Control" shall mean the occurrence of any one of the following events: (i) any Person (except the Griffin Group or its Affiliates and Associates, Company management as of the Effective Date and their Affiliates and Associates or the Company or any employee benefit plan of the Company or of any Affiliate, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 30% or more of the Voting Stock then outstanding; provided, however, that no "Change of Control" shall be deemed to occur during any period in which any such Person, and its Affiliates and Associates, are bound by the terms of a standstill agreement under which such parties have agreed not to acquire more than 30% of the Voting Stock then outstanding or to solicit proxies; (ii) consummation by the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Voting Stock outstanding immediately prior to such Business Combination do not, following such Business Combination, Beneficially Own, directly or indirectly, more than 50% of the then outstanding shares of voting stock of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the outstanding Voting Stock; (iii) consummation of a complete liquidation or dissolution of the Company; (iv) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 50% of the then outstanding shares of voting stock is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Voting Stock immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Voting Stock immediately prior to such sale or disposition; (v) individuals who, as of the beginning of any twenty- four month period, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (vi) a "change of control" as defined in the form of indenture governing any indebtedness of the Company shall have occurred. (h) "Constructive Termination Without Cause" shall mean that: (i) without Executive's prior written consent, one or more of the following events occurs: (A) Executive is removed from the position of Chief Executive Officer of the Company for any reason other than the termination of his employment; (B) Executive suffers a material diminution in the authorities, duties, reporting relationships or responsibilities normally associated with the foregoing position or there are assigned to him duties and responsibilities materially inconsistent with those normally associated with such position; (C) Executive's Base Compensation as provided for in Paragraph 4 is decreased by the Company, or his benefits under any material employee benefit plan or program of the Company or his incentive or equity opportunity under any material incentive or equity program of the Company is or are reduced, after taking into account the discretion of the Board to determine the level at which Executive participates in any performance compensation program as provided in Paragraph 4, on a basis not shared in common with other senior executives of the Company as a group; (D) the Company fails to obtain a written agreement from any successor of the Company to assume and perform the Agreement; or (E) following a Change of Control, the Company moves its principal executive offices more than 50 miles from Atlantic City, New Jersey, or such other place where the Company's principal executive offices are located immediately prior to the Change of Control) or Executive is removed from membership on, or fails to be reelected to, the Board, if Executive is a member of the Board immediately prior to the Change of Control; and (ii) within 90 days of learning of the occurrence of such event, Executive terminates his employment with the Company. (i) "Disability" shall mean Executive's inability, for a period of six consecutive months, to render substantially the services provided for in Paragraph 3(a) by reason of permanent mental or physical disability, whether resulting from illness, accident or otherwise. In the case of a dispute as to whether Executive has incurred a Disability, Executive agrees to submit to a physical examination by two physicians, one selected by Executive and the other by the Company and, in the event they do not agree, to a physical examination by an additional physician selected by the first two physicians whose decision shall be final and binding on both parties. (j) "Person" shall mean any individual, firm, corporation, partnership or other entity. (k) "Subsidiary" shall mean any corporation in which the Company owns 50% or more of the Voting Stock or any other venture in which it owns 50 % or more of the equity. (l) "Term of Employment" shall mean the three-year period specified in Paragraph 2. (m) "Termination by the Company Due to Loss of License" shall mean a termination of Executive's employment by the Company following a termination of Executive's license to take part in the casino and gaming business in any state in which the Company conducts business (other than a termination of such license (i) due to Executive's death or Disability or (ii) based upon facts that constitute Cause within the meaning of this Agreement). (n) "Termination Upon a Change in Control" shall mean that following a Change in Control (i) the Company terminates Executive's employment without Cause, (ii) there is a Constructive Termination Without Cause, or (iii) Executive terminates employment from the Company within 180 days of the Change of Control because, in the good faith determination of Executive, there has been a change in circumstances with the Company that directly or indirectly affects Executive's position, duties or responsibilities or status as in effect immediately preceding the Change of Control and he is no longer able effectively to discharge his duties and responsibilities and the Board concurs in such determination, by a majority vote of the members who were members prior to the Change of Control, made in a reasonable fashion, excluding for this purpose any such members who would not have been treated as members of the Incumbent Board. (o) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 2. Term of Employment. (a) The Company hereby continues to employ Executive, and Executive hereby accepts such continuation of employment, in the position and with the duties and responsibilities as set forth in Paragraph 3 for the Term of Employment, subject to the terms and conditions of the Agreement. (b) The Term of Employment shall commence on the date hereof and shall, unless sooner terminated as provided in Paragraph 9, terminate upon the close of business on September 30, 1999 unless it has sooner terminated as provided in Paragraph 9. 3. Position, Duties and Authorities. (a) During the Term of Employment, Executive shall be employed as Chief Executive Officer of the Company and, subject to supervision by the Board, he shall have overall charge of the business operations of the Company, with the duties responsibilities and authorities normally associated with such position. It is also the intention of the Parties that Executive shall serve as a director of the Company throughout the Term of Employment but, except as provided in Paragraph 1(h)(i)(E), it shall not be a breach of the terms of this Agreement if Executive is not elected or reelected to the Board. Executive shall be entitled to no additional remuneration for serving on the Board or as an officer or director of a Subsidiary. (b) Anything herein to the contrary notwithstanding, nothing shall preclude Executive from (i) engaging in charitable, community and business affairs, managing his personal investments and serving as a member of boards of directors so long as such activities do not materially interfere with his carrying out his duties and responsibilities under the Agreement or (ii) having his name appear in the name of the law firm in which he was a member immediately prior to his employment by the Company and receiving nominal compensation therefor so long as Executive renders no services to such firm. (c) During the term of Employment, Executive shall perform his services from an office in Atlantic City, New Jersey and at such other offices of the Company as may be required by his duties; provided, however, that Executive shall not be required to move his home from Linwood, New Jersey. 4. Base Compensation. During the Term of Employment, Executive shall be paid by the Company Base Compensation payable no less frequently than in equal semi-monthly installments at an annualized rate of no less than $450,000 per annum, subject to annual review by the Board for possible increase in accordance with its normal review procedure for senior level executives. The Company shall be entitled to make proper withholdings from Executive's Base Compensation (and all other payments of compensation under this Agreement) as required by law. 5. Performance Bonus. The Company may, but is not required, to adopt a bonus or short term performance compensation program for senior level executives. In the event that such a program is adopted, Executive shall participate in such program but the Board shall determine Executive's level of participation for each year of the Term of Employment in its sole discretion; provided, however, that the Board shall have the discretion to grant additional individual bonus compensation in excess of the foregoing general performance bonus program to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. 6. Stock Options and Stock Grant. The Company may, but is not required, to grant to Executive shares of Voting Stock as well as stock options to purchase shares of Voting Stock subject to restrictions determined by the Board, in either event in the sole discretion of the Board, for any year during the Term of Employment, which shall be made pursuant to an equity compensation plan approved by the Board generally for senior level executives of the Company; provided, however, that the Board shall have the discretion to grant additional options or restricted shares to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. The Company shall use its best effort to maintain any and all registration statements for any shares subject to option to permit such shares to be freely tradeable upon exercise. 7. Employee Benefit Programs. During the Tern of Employment, Executive and his spouse and dependents shall be entitled, at the Company's expense, to the employee welfare benefit and retirement benefit coverages provided to Executive and his spouse and dependents on the date of this Agreement as listed on Exhibit A hereto and incorporated herein (the "Employee Benefit Programs"); provided, however, that the foregoing shall not prohibit the Company from amending or terminating any such Employee Benefit Program so long as Executive and his spouse an dependents otherwise receive the required levels of coverage in the aggregate; and provided, further, that Executive may request the Compensation Committee of the Board, which shall decide in its sole discretion, to permit the Company to change any of the coverages provided hereunder. To the extent possible, the amount of any life insurance shall be provided by an individual policy (or policies) that gives Executive, his legal representatives or beneficiaries, and trusts of which Executive was the settlor, as applicable, the right to assume the policy, upon payment to the Company of the cash surrender value, in the event of his termination of employment. 8. Business Expense Reimbursement. During the Term of Employment, Executive shall be entitled to receive reimbursement by the Company, upon submission of adequate documentation, for all reasonable, out-of-pocket ordinary and necessary business expenses incurred by him in performing services under the Agreement. In addition, any reasonable legal fees and expenses incurred in connection with the preparation and negotiation of the Agreement or qualification as a licensee in any jurisdiction shall be paid by the Company. 9. Termination of Employment. (a) Termination Due to Death or Disability. In the event of the termination of Executive's employment under the Agreement due to his death or Disability, Executive or his legal representatives as the case may be, shall be entitled to: (i) (A) in the case of death, continued Base Compensation at the rate in effect at the time of his death for a period of 3 months following the month in which such termination of employment due to death occurs, or (B) in the case of Disability, the disability benefit available under and only to the extent of the insurance maintained as provided in Paragraph 7; (ii) any performance or special incentive bonus earned but not yet paid; (iii) a pro rata portion of any applicable performance bonus for the year in which his employment terminates due to death or Disability based on performance of the Company for the year during which such termination occurs or, if performance results are not available, based on the performance bonus, if any, paid to Executive for the prior year; and (iv) any other compensation and benefits to which he or his legal representatives or beneficiaries may be entitled under applicable plans, programs and agreements of the Company, including, without limitation, life insurance benefits and the right to acquire any life insurance policy which has not then matured for the cash surrender value pursuant to Paragraph 7. (b) Termination by the Company for Cause. Within 60 days of knowing, or having reasonable basis for knowing, of an event constituting Cause the Company may give Executive written notice of its intention to terminate him for Cause, specifying in such notice the event forming the basis for Cause. The preceding sentence notwithstanding, Executive's employment shall not be deemed to have been terminated for Cause unless the Company has given or delivered to Executive (1) reasonable notice setting forth the reasons for the Company's intention to terminate Executive's employment for Cause; (2) if the written notice is of an event constituting Cause under clause (ii) or (iv) of Paragraph l(f) and if the event is capable of being cured, Executive shall have 10 Business Days following actual receipt of such notice in which to cure; (3) a reasonable opportunity at any time during the 30-day period after Executive's receipt of such notice, for Executive, together with his counsel, to be heard before the Board, and (4) a second written notice from the Company stating that, in the good faith opinion of not less than a majority of the entire membership of the Board, Executive was guilty of the conduct giving rise to termination for Cause; provided, however, that the Company may, in its sole discretion, suspend Executive from performance of his duties on the date of delivery of such notice and such date shall be the effective date of any termination under this Paragraph. In the event Executive's employment is terminated by the Company for Cause, Executive shall be entitled to: (i) unpaid Base Compensation earned or accrued at the rate in effect at the time of his termination through the date of termination of his employment; (ii) any performance or special incentive bonus earned but not yet paid; (iii) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iv) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. Executive's entitlement to the foregoing shall be without prejudice to the right of the Company for any damages to which it may be entitled as a result of such Cause. (c) Termination Without Cause; Constructive Termination Without Cause; Expiration of the Agreement. In the event Executive's employment is terminated by the Company without Cause (which shall not include a termination pursuant to Paragraph 9(a) or 9(d)) or in the event of a Constructive Termination Without Cause, or in the event this Agreement expires by its terms on the third anniversary of the date hereof or the expiration date of any renewal and the Company has not, at least six months prior to such date, given Executive written notice of its intention not to renew the Agreement ("Non-Renewal Notice"), Executive, upon executing and not revoking a release of the Company as to all matters arising in the course of his employment by the Company and the termination thereof, in the form attached hereto as Exhibit B, shall be entitled to receive: (i) unpaid Base Compensation earned or accrued through his date of termination and continued Base Compensation payments, at the rate in effect at the time of his termination, for (A) solely in the case of expiration of this Agreement by its terms on the third anniversary, a number of months equal to six months minus the number of months of notice of Non-Renewal actually provided to Executive or (B) in all other cases to which this Paragraph 9(c) is applicable, a period of 12 months following termination of his employment or through the end of the Term of Employment, whichever is longer, payable, at Executive's option, either (1) over such 12 months or the remaining Term of Employment, as the case may be, or (2) in a lump-sum payment promptly following termination of Executive's employment equal to the then present value using a discount rate per annum determined by reference to the discount rate then published by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities (the "Present Value") of the remaining Base Compensation due Executive through the end of such 12 months or the remaining Term of Employment; (ii) except in a case of a termination of employment by reason of expiration of this Agreement on the third anniversary of the date hereof, continued performance bonuses for a period of 12 months following termination of his employment or through the end of the Term of Employment, whichever is longer, in amounts determined under the then applicable program of the Company, or, to the extent such amounts are not reasonably determinable, in amounts based on performance bonuses paid to Executive for the last complete fiscal year of the Company ended prior to the completion of such 12-month period; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; (v) the immediate vesting of all stock options previously granted to Executive, notwithstanding the terms of any such grant to the contrary, with and the ability to exercise any such options for 12 months following the date of termination but in no event after the expiration of the option term; and (vi) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company, including, without limitation, life insurance benefits, and the right to acquire any life insurance policy which has not then matured for the cash surrender value pursuant to Paragraph 7, and the continuation of all Employee Benefit Programs provided under Paragraph 7 during the period for which Executive is to receive payments under clause (i) above (irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. (d) Termination Upon a Change in Control. In the event a Termination Upon a Change in Control occurs, or in the event Executive is terminated under subparagraph (c) within six months prior to the occurrence of a Change in Control, Executive shall be entitled to receive (taking into account any benefits provided under subparagraph (c)), promptly following his termination of employment: (i) unpaid Base Compensation earned or accrued through his date of termination and a lump-sum payment equal to the Present Value of Executive's Base Compensation that would be due him for a period of 36 months following termination of his employment, determined on the basis of the average of the Base Compensation paid to Executive for the 36 months preceding his termination; (ii) a lump-sum payment equal to the Present Value of the aggregate performance bonus amounts he received, if any, for the period of 36 months preceding his termination or, if greater, a lump-sum payment equal to 150% of the largest performance bonus paid to Executive during the 36 months preceding his termination; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; (v) the immediate vesting of all stock options previously granted to Executive, notwithstanding the terms of any such grant to the contrary, with the ability to exercise any such options for 12 months following the date of termination but in no event after the expiration of the option term; and (vi) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company and the right to acquire any life insurance policy which has riot then matured for the cash surrender value pursuant to Paragraph 7, and the continuation of all Employee Benefit Programs provided under Paragraph 7 during the period for which Executive is to receive payments under clause (i) above irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. Notwithstanding the foregoing, in the event that it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the limitation of the Company's federal income tax deduction under Section 280G of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code. For purposes of this subparagraph (d), "present value" shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations to be made under this Paragraph 9(d) shall be made by the Company's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both to the Company and Executive within 10 days of the termination date. Any such determination by the Accounting Firm shall be binding upon the Company and Executive. Executive shall in his sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Paragraph 9(d). Within five days after Executive's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of Executive such amounts as are then due to Executive under this Agreement. All of the fees and expenses of the Accounting Firm in performing the determinations referred to above shall be borne solely by the Company. The Company agrees to indemnify. and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to this Paragraph, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. (e) Termination of the Company Due to Loss of License. In the event of a Termination by the Company Due to Loss of License, Executive shall be entitled to: (i) unpaid Base Compensation earned or accrued through the date of termination and continued Base Compensation payments at the rate in effect at the time of termination, for six months; (ii) any performance bonus earned but not yet paid; (iii) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iv) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. Notwithstanding the above, if Executive's Loss of License was not the result of any activity that Executive knew, or should have known, would result in his Loss of License, then the Base Compensation continuation provided for in subparagraph (i) above shall be for 12 months rather than six months. (f) No Mitigation; No Offset. In the event of any termination of Executive's employment under the Agreement, he shall be under no obligation to seek other employment, and there shall be no offset against amounts due him under the Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. (g) Nature of Payments. Any amounts due Executive under the Agreement in the event of any termination of his employment with the Company are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that be may suffer as a result of the termination of his employment, or both, and are not in the nature of a penalty. 10. Covenant Not to Compete; Covenants to Protect Confidential Information. (a) If Executive voluntarily terminates his employment with the Company, or if the Company terminates the Employment of Executive for Cause, Executive shall not for a one-year period engage in competition with the Company within the meaning of Paragraph 10(b). If Executive is terminated on any other basis resulting in payments to Executive (irrespective of the fact that such payments are paid in a lump sum) with respect to a period after such termination (the "Post Termination Payment Period"), Executive shall not engage in such competition for a period equal to the Post Termination Payment Period. If Executive is in breach of this Paragraph 10(a), since a remedy at law will not suffice to remedy the damage suffered thereby, the Company shall be entitled to specific performance. (b) Executive shall be engaging in competition with the Company if he is engaged in the gaming business within the primary geographic market area of any location in which the Company is engaging in the gaming business at the time of the termination of Executive's employment, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other corporate or representative capacity, so long as the Company is engaged in the gaming business in the location in question. The Company agrees that it is not engaged in the gaming business in Atlantic City, New Jersey, on the date of this Agreement. The foregoing restrictions shall not be construed to prohibit the ownership by Executive of less than five percent (5 %) of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Exchange Act, provided that such ownership represents a passive investment and that neither Executive nor any group of persons including Executive in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing. (c) Executive shall not, during the Term of Employment or thereafter, without the prior written consent of the Company, divulge, publish or otherwise disclose to any other person any Confidential Information regarding the Company or any Subsidiary except in the course of carrying out his responsibilities on behalf of the Company (e.g., providing information to the Company's attorneys, accountants, bankers, etc.) or if required to do so pursuant to the order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency. For this purpose, Confidential Information shall include, but not be limited to, the Company's financial , real estate, marketing and promotional plans and strategies. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. (d) Executive shall not during the term of Employment or thereafter, without the prior written consent of a Subject Party, as hereafter defined, divulge, publish, or otherwise disclose to any other person any Confidential Information regarding a Subject Party except in the course of carrying out responsibilities on behalf of Subject Party (e.g., providing information to advisors) or if required to do so under circumstances as described in Paragraph 10(c) in connection with disclosure of Confidential Information about the Company. For this purpose, Confidential Information about a Subject Party shall include non-public financial information about a Subject Party including non-public information regarding his business and investment activities. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. Executive further agrees he will not during the Term of Employment or thereafter publish any book or article about, or disclose in any public forum, his personal experiences with, or other personal information about, a Subject Party. Affiliates of a Subject Party or their respective heirs, successors and assigns are expressly intended as third party beneficiaries of the provisions of this Paragraph 10(d) and shall be entitled to enforce the provisions hereof independent of the Company by injunction or otherwise and to any damages suffered by reason of any breach of this Paragraph 10(d). For purposes hereof, Subject Party shall be Mr. Merv Griffin. 11. Equitable Relief. (a) Executive acknowledges and agrees that the restrictions contained in Paragraph 10 are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and business of the Company, that the Company would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by the Company should Executive breach any of the provisions of that Paragraph. Executive represents and acknowledges that (i) he has been advised by the Company to consult his own legal counsel in respect of this Agreement, and (ii) that he has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with his counsel. (b) Executive further acknowledges and agrees that a breach of any of the restrictions in Paragraph 10 cannot be adequately compensated by monetary damages. Executive agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of Paragraph 10, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. In the event that any of the provisions of this Paragraph should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum time, geographic, service, or other limitations permitted by applicable law, that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise be enforced to the maximum extent permitted by law. (c) Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of Paragraph 10, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief and other equitable relief, may be brought in the United States District Court for the District of New Jersey, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Atlantic City, New Jersey, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Executive may have to the laying of venue of any such suit, action or proceeding in any such court. Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Paragraph 21. 12. Indemnification. (a) The Company shall indemnify Executive to the fullest extent permitted by Delaware law in effect as of the date hereof against all costs, expenses, liabilities and losses (including, without limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes and amounts paid in settlement) reasonably incurred by Executive in connection with a Proceeding and this obligation shall survive the termination of this Agreement with respect to matters arising during the Term of Employment. For the purposes of this Paragraph 12, "Term of Employment" shall mean the period commencing May 19, 1993, and ending on the date specified in Paragraph 2 and a "Proceeding" shall mean any action, suit or proceeding, whether civil, criminal, administrative or investigative, in which Executive is made, or is threatened to be made, a party to, or a witness in, such action, suit or proceeding by reason of the fact that he is or was an officer, director or employee of the Company or is or was serving as an officer, director, member, employee, trustee or agent of any other entity at the request of the Company. (b) The Company shall advance to Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include an itemized list of the costs and expenses and an understanding by Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. (c) Executive shall not be entitled to indemnification under this Paragraph 12 unless he meets the standard of conduct specified in the Delaware General Corporation Law. Notwithstanding the foregoing, to the extent permitted by law neither Section 145(d) of the Delaware General Corporation Law nor any similar provision shall apply to indemnification under this Paragraph 12, so that if Executive in fact meets the applicable standard of conduct, he shall be entitled to such indemnification whether or not the Company (whether by the board of directors, the shareholders, independent legal counsel or other party) determines that indemnification is proper because he has met such applicable standard of conduct. Neither the failure of the Company to have made such a determination prior to the commencement by Executive of any suit or arbitration proceeding seeking indemnification, nor a determination by the Company that he has not met such applicable standard of conduct, shall create a presumption that he has not met the applicable standard of conduct. (d) The Company shall not settle any Proceeding or claim in any manner which would impose on Executive any penalty or limitation without his prior written consent. Neither the Company nor Executive will unreasonably withhold its or his consent to any proposed settlement. 13. Assignability; Binding Nature. This Agreement shall be binding upon and inure to the benefit of the Parties (and in the case of Paragraph 10(d), to the benefit of the Subject Party) and their respective successors, heirs and assigns. No rights or obligations of the Company under the Agreement may be assigned or transferred by Executive or the Company except that (a) such rights or obligations of the Company may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in the Agreement, either contractually or as a matter of law, and (b) such obligations of the Company may be transferred by Executive by will or pursuant to the laws of descent or distribution or pursuant to any express transfer provisions in an instrument granting Executive a stock option. The Company shall take all reasonable legal action necessary to effect such assignment and assumption of the Company's liabilities, obligations and duties under the Agreement in circumstances clause (a) of the preceding sentence. 14. Representation. The Company and Executive respectively represent and warrant to each other that, subject to any approval that may be necessary from any pertinent regulatory authority, each respectively is fully authorized and empowered to enter into the Agreement and that its or his entering into the Agreement and the performance of its or his respective obligations under the Agreement will not violate any agreement between the Company or Executive respectively and any other person, firm or organization or any law or governmental regulation. 15. Entire Agreement The Agreement contains the entire agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the Parties with respect thereto. 16. Amendment or Waiver. The Agreement cannot be changed, modified or amended without the consent in writing of both Executive and the Company. No waiver by either Party at any time of any breach by the other Party of any condition or provision of the Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be. 17. Severability. In the event that any provision or portion of the Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of the Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 18. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Agreement to the extent necessary to the intended preservation of such rights and obligations. 19. Governing Law. The Agreement shall be governed by and construed and interpreted in accordance with the laws of New Jersey without reference to principles of conflict of laws. 20. Settlement of Disputes. In the event of any dispute under the provisions of this Agreement other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the City of New York, New York in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement. If Employee prevails on any material issue which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration and the Employee's reasonable legal fees and expenses. Otherwise, each party shall bear his or its own expenses relating to the conduct of the arbitration (including attorneys' fees and expenses) and shall share the fees of the American Arbitration Association. 21. Notice. Any notice given to either Party shall be in writing and, except as provided in the second sentence of Paragraph 9(b), shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to de Party concerned at the address indicated below or to such changed address as such Party may subsequently give notice of: If to the Company or the Board: Players International, Inc. 1300 Atlantic Avenue Suite 800 Atlantic City, NJ 08401 Attention: General Counsel With a copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993 Attention: Robert J. Lichtenstein, Esquire If to Executive: Howard Goldberg 117 Cheltenham Avenue Linwood, NJ 08221 With a copy to: Willkie, Farr & Gallagher One Citicorp Center 153 East 53rd Street New York, NY 10022-4677 Attention: Stephen T. Lindo, Esquire 22. Headings. The headings of the paragraphs contained in the Agreement are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 23. Counterparts. The Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date first written above. Players International Inc. By: _________________________________ Edward Fishman Its: Chairman _____________________________________ Howard Goldberg EX-10 5 21 PH06/154834.1 Exhibit 10.67 EMPLOYMENT AGREEMENT THIS AGREEMENT, dated as of March 31, 1997 between Players International, Inc. (together with its successors or assigns as permitted under this Agreement, the "Company"), and Patrick Madamba, Jr. ("Executive"). W I T N E S S E T H: The Company and Executive entered into an Employment Agreement as of January 9, 1995 (the "Agreement"). The Agreement was amended as of November 16, 1995, and was assigned from the Company to Players Services, Inc. as of April 1, 1996. The parties now desire to amend and restate the Agreement to reflect Executive's current position, compensation and other arrangements with the Company. Therefore, in consideration and other arrangements with the Company. Therefore, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company and Executive (individually a "Party" and together the "Parties") agree that the Agreement is amended and restated as of March 31, 1997, to read as follows: 1. Definitions (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Compensation" shall mean the compensation provided for in Paragraph 4, subject to such increases as may be approved by the Board from time to time. (c) "Beneficial Owner" of any securities shall mean: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, pursuant or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the "Beneficial Owner" of any security under this subparagraph (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person or Scheduled 13D under the Exchange Act (or any comparable or successor report); or (iii) where voting securities are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Paragraph 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the Board of Directors of the Company. (e) "Cause" shall mean (i) Executive is convicted of a felony involving moral turpitude; (ii) Executive uses alcohol or any unlawful controlled substance to an extent that it interferes on a continuing and material basis with the performance of his duties under the Agreement; (iii) Executive engages in the willful, unauthorized disclosure of Confidential Information, as defined in Paragraph 10(c), concerning the Company or any Subsidiary, unless such disclosure was (A) believed in good faith by Executive to be appropriate in the course of properly carrying out his duties under the Agreement, or (B) required by an order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency; (iv) Executive, other than in the course of properly carrying out duties under the Agreement, perform services for any other corporation or person that competes with the Company or any Subsidiary; (v) Executive, in carrying out his duties under the Agreement, engages in willful neglect or willful neglect or willful misconduct resulting, or reasonably likely to result, in either case, in material economic harm to the Company, unless such act, or failure to act, resulted from Executive's reasonable belief that such act or failure to act was in the best interests of the Company; (vi) Executive breaches a material term of this Agreement; or (vii) Executive is found disqualified or not suitable to hold a casino key employee license or other such license by a gaming authority in any jurisdiction where the Company operates a casino and Executive is required to be found qualified, suitable or licensed, as the case may be. (f) "Change in Control" shall mean the occurrence of any one of the following events: (i) any Person (except the Griffin Group or its Affiliates and Associates, Company management as of the Effective Date and their Affiliates and Associates or the Company or any employee benefit plan of the Company or of any Affiliate, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, shall become the Beneficial Owner in the aggregate of 30% or more of the Voting Stock then outstanding; provided, however, that no "Change of Control" shall be deemed to occur during any period in which any such Person, and its Affiliates and Associates, are bound by the terms of a standstill agreement under which such parties have agreed not to acquire more than 30% of the Voting Stock then outstanding or to solicit proxies; (ii) consummation by the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Voting Stock outstanding immediately prior to such Business Combination do not, following such Business Combination, Beneficially own, directly or indirectly, more than 50% of the then outstanding shares of voting stock of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the outstanding Voting Stock; (iii) Consummation of a complete liquidation or dissolution of the Company; (iv) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 50% of the then outstanding shares of voting stock is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Voting Stock immediately prior to such sale or disposition in substantially the same proportion as their ownership of the outstanding Voting Stock immediately prior to such sale or disposition; (v) individuals who, as of the beginning of any twenty-four month period, consitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majortiy of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or (vi) a "change of control" as defined in the form of indenture governing any indebtedness of the Company shall have occurred. (g) "Constructive Termination Without Cause" shall mean that: (i) without Executive's prior written consent, one or more of the following events occurs without Cause: (A) following a Change of Control or within six (6) months prior to any such Change of Control, Executive is assigned any duties inconsistent with Executive's status as an executive officer of the Company or a substantial adverse alteration occurs in the nature and status of Executive's responsibilities, authorities, duties or reporting relationships from those in effect within six (6) months of a Change in Control of the Company; (B) following a Change of Control or within six (6) months prior to any such Change of Control, Executive's Base Compensation as provided for in Paragraph 4 is decreased by the Company, or his benefits under any material employee benefit plan or program of the Company or his incentive or equity opportunity under any material incentive or equity program of the Company is or are reduced, after taking into account the discretion of the Board to determine the level at which Executive participates in any performance compensation program as provided in Paragraph 4, on a basis not shared in common with other senior executives of the Company as a group; (C) the Company fails to obtain a written agreement from any successor of the Company to assume and perform the Agreement; or (D) following the Change of Control, the Company moves its principal executive offices more than 50 miles from Atlantic City, New Jersey, or such other place where the Company's principal executive offices are located immediately prior to the Change of Control; and (ii) within 90 days of learning of the occurrence of such event, Executive terminates his employment with the Company. (h) "Disability" shall mean Executive's inability, for a period of six consecutive months, to render substantially the services provided for in Paragraph 3(a) by reason of permanent mental or physical disability, whether resulting from illness, accident or otherwise. In the case of a dispute as to whether Executive has incurred a Disability. Executive agrees to submit to a physical examination by two physicians, one selected by Executive and the other by the Company and, in the event they do not agree, to a physical examination by an additional physician selected by the first two physicians whose decision shall be final and binding on both parties. (i) "Person" shall mean any individual, firm, corporation, partnership or other entity. (j) "Subsidiary" shall mean any corporation in which the Company owns 50% or more of the Voting Stock or any other venture in which if owns 50% or more of the equity. (k) "Term of Employment" shall mean the period specified in Paragraph 2. (l) "Termination Upon a Change of Control" shall mean that following a Change in Control (i) the Company terminates Executive's employment without Cause or (ii) there is a Constructive Termination Without Cause. (m) "Voting Stock" shall mean capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation. 2. Term of Employment. (a) The Company hereby agrees to continue to employ Executive, and Executive hereby accepts such continuation of employment, in the position and with the duties and responsibilities as set forth in Paragraph 3 for the Term of Employment, subject to the terms and conditions of the Agreement. (b) The Term of Employment shall commence on the date hereof and shall, unless sooner terminated or extended as provided in Paragraph 9, terminate upon the close of business on January 22, 1999. 3. Position, Duties and Authorities. (a) During the Term of Employment, Executive shall be employed as Vice President - Compliance and Legal Affairs of the Company or such other more senior position as the Company may determine in its sole discretion. Executive's duties, responsibilities and authorities shall consist of those regularly rendered by a Vice President - Compliance and Legal Affairs or such other duties appropriate to any senior position within the Company in which Executive may serve during the Term of Employment, as the case may be. (b) Anything herein to the contrary notwithstanding, nothing shall preclude Executive from engaging in charitable, community and business affairs, managing his personal investments and serving as a member of boards of directors so long as such activities do not materially interfere with his carrying out his duties and responsibilities under the Agreement. (c) During the term of Employment, Executive shall perform his services from an office in Atlantic City, New Jersey and at such other offices of the Company as may be required by his duties; provided, however, that Executive shall not be required to move his home from Atlantic County, New Jersey. 4. Base Compensation. During the Term of Employment, Executive shall be paid by the Company or any of its Affiliates Base Compensation payable no less frequently than in equal semi- monthly installments at an annualized rate of no less than $150,000 per annum for the period commencing January 23, 1997 through January 22, 1999. The Company shall be entitled to make proper withholdings from Executive's Base Compensation (and all other payments of compensation under this Agreement) as required by law. 5. Performance Bonus. The Company may, but is not required, to adopt a bonus or short term performance compensation program for senior executives. In the event that such a program is adopted, Executive shall participate in such program but the Board shall determine Executive's level of participation for each year of the Term of Employment in its sole discretion; provided, however, that the Board shall have the discretion to grant additional individual bonus compensation in excess of the foregoing general performance bonus program to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. 6. Stock Options and Stock Grant. (a) The Company may, but is not required, to grant to Executive shares of Voting Stock as well as stock options to purchase of Voting Stock subject to restrictions determined by the Board, in either event in the sole discretion of the Board, for any year during the Term of Employment, which shall be made pursuant to an equity compensation plan approved by the Board generally for senior level executives of the Company; provided, however, that the Board shall have the discretion to grant additional options or restricted shares to Executive or any other executive or the Company in recognition of performance achievements particular to any of them. The Company shall use its best effort to maintain any and all registration statements of any shares subject to option or issued pursuant to the exercise of a stock appreciation right to permit such shares to be freely tradeable upon exercise. (b) The Company has granted to Executive options to purchase shares of the Company as set forth on Exhibit "A." 7. Employment Benefit Program. Executive shall be entitled to receive such benefits as are generally available to all other executive employees of the Company. Executive shall also be entitled to receive all perquisites available to other executive employees of the Company. Executive, his spouse and all minor children shall be entitled, at the Company's sole cost and expense, to medical, surgical, hospitalization, dental and visual coverage (which may include any such coverage furnished Executive under any insured program provided by the Company to its employees) providing Executive, his spouse and minor children with such coverage for such expenses as is provided to other executive employees of Employer. Without limiting foregoing, in the event that during the Term of Employment, the Company terminates the long term care and disability coverage that is provided by the Company terminates the long term care and disability coverage that is provided by the Company to executive employees of the Company as of the effective date of this Agreement, the Company shall pay directly to an insurer designated by Executive a maximum amount of $175.00 per month for comparable long term care and disability coverage. 8. Business Expenses Reimbursement. During the Term of Employment, Executive shall be entitled to receive from the Company, upon submission of adequate documentation, reimbursement for all reasonable, out-of-pocket ordinary and necessary business expenses incurred by him in performing services under the Agreement. Such expenses may include reasonable continuing education, travel expenses, entertainment and promotional expenses, dues and expenses of membership of civic groups, professional societies and fraternal organizations including, but not limited to, all costs to Executive to maintain Executive's license in good standing to practice law in the State of New Jersey. In addition, any expenses incurred in connection with the qualification as a licensee in any jurisdiction shall be paid by the Company. 9. Termination of Employment. (a) Termination Due to Death or Disability. In the event of the termination of Executive's employment under the Agreement due to his death or Disability, Executive or his legal representatives as the case may be, shall be entitled to: (i) in the case of Disability, the disability benefit available under the only to the extent of the insurance maintained as provided in Paragraph 7; and (ii) any other compensation and benefits to which he or his legal representatives or beneficiaries may be entitled under applicable plans, program and agreements of the Company, including, without limitation, life insurance benefits as may be provided in Paragraph 7. (b) Termination by the Company for Cause. The Company may terminate Executive for Cause. The preceding sentence notwithstanding, Executive's employment shall not be deemed to have been terminated for Cause unless the Company has given or delivered to Executive at or prior to any such for Cause termination reasonable notice setting forth the reasons for the Company's termination of Executive's employment for Cause. In the event Executive's employment is terminated by the Company for Cause, Executive shall be entitled to: (i) unpaid Base Compensation earned or accrued at the rate in effect at the time of his termination through the date of termination of his employment; (ii) reimbursement for expense incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iii) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. Executive's entitlement to the foregoing shall be without prejudice to the right of the Company for any damages to which it may be entitled as a result of such Cause. (c) Termination without Cause: Constructive Termination Without Cause; Expiration of the Agreement. In the event Executive's employment is terminated by the Company without Cause (which shall not include a termination pursuant to Paragraph 9(a) or 9(d)), or in the event of a Constructive Termination Without Cause, Executive shall be entitled to receive; (i) unpaid Base Compensation earned or accrued through his date of termination and continued Base Compensation payments, at the rate in effect at the time of his termination, through the end of the Term of Employment in a lump-sum payment promptly following termination of Executive's employment; (ii) any performance or special incentive bonus earned but not yet paid; (iii) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; and (iv) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company. (d) Termination Upon a Change in Control. In the event a Termination Upon a Change in Control occurs within two (2) years following any Change of Control, or in the event Executive is terminated under subparagraph (c) within six months prior to the occurrence of a Change in Control, Executive shall be entitled to receive (taking into account any benefits provided under subparagraph (c)), promptly following the later of his termination of employment or the Change of Control: (i) unpaid Base Compensation earned or accrued through his date of termination and a lump-sum payment equal to the then present value (using a discount rate per annum determined by reference to the discount rate then published by the Pension Benefit Guaranty Corporation for determining the value of immediate annuities (the "Present Value")) of Executive's Base Compensation that would be due him for a period of 36 months following termination of his employment, determined on the basis of the average of the Base Compensation paid to Executive for the 36 months preceding his termination; (ii) a lump-sum payment equal to the Present Value of the aggregate performance bonus amounts he received, if any, for the period of 36 months preceding his termination; (iii) any performance or special incentive bonus earned but not yet paid; (iv) reimbursement for expenses incurred but not yet reimbursed by the Company pursuant to Paragraph 8; (v) the immediate vesting of all stock options previously granted to Executive, notwithstanding the terms of any such grant to the contrary, with the ability to exercise any such options for 12 months following the date of termination but in no event after the expiration of the stated option term; and (vi) any other compensation and benefits to which he may be entitled under applicable plans, programs and agreements of the Company and the continuation of Executive's participation in all Employee Benefit Programs (as defined below) during the period for which Executive is to receive payments under clause (i) above (irrespective of the fact that such payments are paid in a lump sum); provided, however, that in the event the Company is precluded from providing coverage under any such program by applicable law or regulation it may choose to provide Executive with a payment equal to the cost of such coverage without regard to tax effect. "Employee Benefit Programs" shall mean those employee welfare and retirement benefit plans and programs of the Company in which Executive participates immediately before Executive's termination of employment; provided, however, that the Company shall not be prohibited from amending or terminating any Employee Benefit Program as long as Executive continues to receive comparable levels of coverage in the aggregate during the payment period. Notwithstanding the foregoing, in the event that it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the payment to avoid or reduce the limitation of the Company's federal income tax deduction under Section 280G of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of deduction under Section 280G of the Code. For purposes of this subparagraph (d), "present value" shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations to be made under this Paragraph 9(d) shall be made by the Company's independent public accountant immediately prior to the Change of Control (the "Accounting Firm"), which firm shall provide its determinations and any supporting calculations both the Company and Executive within ten days of the termination date. Any such determination by the Accounting Firm shall be binding upon the Company and Executive. Executive shall in his sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Paragraph 9(d). Within five days after Executive's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of Executive such amounts as are then due to Executive under this Agreement. All of the fees and expenses of the Accounting Firm in performing the determinations referred to above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to this Paragraph, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. The Paragraph 9(d) shall survive any termination of this Agreement other than a termination of this Agreement by reason of Executive's termination of employment for Cause. (e) No Mitigation; No Offset. In the event of any termination of Executive's employment under the Agreement, he shall be under no obligation to seek other employment, and there shall be no offset against amounts due him under the Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. (f) Nature of Payments. Any amounts due Executive under the Agreement in the event of any termination of his employment with the Company are in the nature of severance payments, or liquidated damages which contemplate both direct damages and consequential damages that may be suffered as a result of the termination of his employment, or both, and are not in the nature of a penalty. 10. Covenant Not to Compete; Covenants to Project Confidential Information and Not Solicit Employees; Return of Records; Inventions and Improvements. (a) If Executive voluntarily terminates his employments with the Company (except in cases where Executive voluntarily terminates his employment with the Company after the nature expiration of the Term of Employment because of the Company's failure to renew this Agreement on at least as favorable terms to Executive as provided to Executive under this Agreement), or if the Company terminates the employment of Executive for Cause, Executive shall not for a one-year period engage in competition with the Company within the meaning of Paragraph 10(b). If Executive is in breach of this Paragraph 10(a), since a remedy at law will not suffice to remedy the damage suffered thereby, the Company shall be entitled to specific performance. (b) Executive shall be engaging in competition with the Company if he is engaged in the gaming business within 100 miles of any location in which the Company is engaging in the gaming business at the time of the termination of Executive's employment, whether as an employee, consultant, partner, principal, agent, representative or stockholder or in any other corporate or representative capacity, so long as the Company is engaged in the gaming business in the location in question. The Company agrees that it is not engaged in the gaming business in either Atlantic City, New Jersey or Las Vegas, Nevada on the date of this Agreement. The foregoing restrictions shall not be construed to prohibit the ownership by Executive of less than one percent (1%) of any class of securities of any corporation which is engaged in any of the foregoing business having a class of securities registered pursuant to the Exchange Act, provided that such ownership represents a passive investment and that neither Executive nor any group of persons including Executive in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing. (c) Executive shall not, during the Term of Employment or thereafter, without the prior written consent of the Company, divulge, publish or otherwise disclose to any other person any Confidential Information regarding the Company or any Subsidiary except in the course of carrying out his responsibilities on behalf of the Company (e.g., providing information to the Company's attorneys, accountants, bankers, etc.) or if required to do so pursuant to the order of a court having jurisdiction over the subject matter or a summons, subpoena or order in the nature thereof of any legislative body (including any committee thereof) or any governmental or administrative agency. For this purpose, Confidential Information shall include, but not be limited to, the Company's financial, real estate, marketing and promotional plans and strategies, and non-public personal financial information about the Company's executives. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the part of Executive. (d) Executive shall not during the Term of Employment or thereafter, without the prior written consent of a Subject Party, as hereafter defined, divulge, publish, or otherwise disclose to any person any Confidential Information regarding a Subject Party except in the course of carrying out responsibilities on behalf of Subject Party (e.g., providing information to advisors) or if required to do so under circumstances as described in Paragraph 10(c) in connection with disclosure of Confidential Information about the Company. For this purpose, Confidential Information about a Subject Party shall include non-public financial information about a Subject Party shall include non-public financial information about a Subject Party including non-party information regarding his business and investment activities. Confidential Information does not include information that becomes available to the public other than through a breach of the Agreement on the party of Executive. Executive further agrees he will not during the Term of Employment or thereafter publish any book or article about, or disclose in any public forum, his personal experiences with, or other personal information about, a Subject Party. Affiliates of a Subject Party or their respective heirs, successors and assigns are expressly intended as third party beneficiaries of the provisions of this Paragraph 10(d) and shall be entitled to enforce the provision hereof independent of the Company by injunction or otherwise and to any damages suffered by reason of any breach of this Paragraph 10(d). For purposes hereof, Subject Party shall be Mr. Merv Griffin. (e) For a period of one (1) year after the termination of Executive's employment for any reason whatsoever, Executive will not solicit or endeavor to entice away from the Company (whether for his own business or on behalf of another person or entity) any of the Company's employees who have had access to Confidential Information to work for a person or business engaging in competition with the Company within the meaning of Paragraph 10(b). This Paragraph shall not prohibit any employer of Executive from employing any employee of Players, so long as Employee did not, directly or indirectly, solicit or endeavor to entice away from the Company any employee of the Company. (f) Upon the termination of Executive's employment (or at any other time so requested), Executive agrees to promptly deliver to the Company all of the Company's assets, files, documents, business records, notes, designs, data, manuals, equipment, keys, credit cards, lists of customers, and any other materials of any nature which are in Executive's possession or control, including materials which contain Confidential Information, and any copies of the foregoing. (g) Executive shall treat as and for the Company's sole benefit, and shall fully and promptly disclose and assign to the Company without additional compensation, all ideas, writings, discoveries, techniques, methods, developments, inventions and improvements which may be made, conceived or reduced to practice by Executive during the Term of Employment and every other item of knowledge relating to any of the business affairs of the Company. Executive, without cost or expense to Executive, shall execute all documents and cooperate in all other acts reasonably required of Executive to protect the rights to the ideas, discoveries, inventions and improvements referred to herein and shall surrender to the Company upon termination of Executive's employment all documents, agreements and other writings produced by or coming into Executive's possession. This Paragraph 10 and Paragraph 11 below shall survive any termination of this Agreement. 11. Equitable Relief. (a) Executive acknowledges and agrees that the restrictions contained in Paragraph 10 are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and business of the Company, that the Company would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by the Company should Executive breach any of the provisions of that Paragraph. Executive represents and acknowledges that (i) he has been advised by the Company to consult his own legal counsel in respect of this Agreement, and (ii) that he has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with his counsel. (b) Executive further acknowledges and agrees that a breach of any of the restrictions in Paragraph 10 cannot be adequately compensated by monetary damages. Executive agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of Paragraph 10, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. In the event that any of the provisions of this Paragraph should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum time, geographic, service, or other limitations permitted by applicable law, that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise be enforced to the maximum extend permitted by law. (c) Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of Paragraph 10, including without limitation, any action commenced by the Company for preliminary and permanent injunctive relief and other equitable relief, may be brought in the United States District Court for the District of New Jersey, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Atlantic City, New Jersey, (ii) consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection which Executive may have to the laying of venue of any such suit, action or proceeding in any such court. Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Paragraph 20. 12. Assignability: Binding Nature. This Agreement shall be binding upon and inure to the benefit of the Parties (and in the case of Paragraph 10(d), to the benefit of the Subject party) and their respective successors, heirs and assigns. No rights or obligations of the Company under the Agreement may be assigned or transferred by Executive or the Company except that (a) such rights or obligations of the Company may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in the Agreement, either contractually or as a matter of law, and (b) such obligations of the Company may be transferred by Executive by will or pursuant to the law of descent or distribution or pursuant to any express transfer provisions in an instrument granting Executive stock option. The Company shall take all reasonable legal action necessary to effect such assignment and assumption of the Company's liabilities, obligations and duties under the Agreement in circumstances clause (a) of the preceding sentence. 13. Representation. The Company and Executive respectively represent and warrant to each other that, subject to any approval that may be necessary from any pertinent regulatory authority, each respectively is fully authorized and empowered to enter into the Agreement and that its or his entering into this Agreement and the performance of its or his respective obligations under the Agreement will not violate any agreement between the Company or Executive respectively and any other person, firm or organization or any law or governmental regulation. 14. Entire Agreement. The Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussion, negotiations and undertakings, whether written or oral, between the parties with respect thereto. 15. Amendment or Waiver. The Agreement cannot be changed, modified or amended without the consent in writing of both Executive and the Company. No waiver by either Party at any time of any breach by the other Party of any condition or provision of the Agreement shall be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time. Any waiver must be in writing and signed by Executive or an authorized officer of the Company, as the case may be. 16. Severability. In the event that any provision or portion of the Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of the Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 17. Survivorship. The respective rights and obligations of the Parties hereunder shall survive any termination of the Agreement to the extent necessary to the intended preservation of such rights and obligations. 18. Governing Law. The Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New Jersey without reference to principles of conflict of laws. 19. Settlement of Disputes. In the event of any dispute under the provisions of this Agreement other than a dispute in which the primary relief sought is an equitable remedy such as an injunction, the parties shall be required to have the dispute, controversy or claim settled by arbitration in the Atlantic City, New Jersey in accordance with the National Rules of the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit on any material issue which is the subject of such arbitration or lawsuit, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration and the Employee's reasonable legal fees and expenses. Otherwise, each party shall bear his or its own expenses relating to the conduct of the arbitration (including attorneys' fees and expenses) and shall share the fees of the American Arbitration Association. 20. Notices. Any notice given to either Party shall be in writing and, except as provided in the second sentence of Paragraph 9(b), shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerning at the address indicated below or to such changed address as such Party may subsequently give notice of: If to the Company: Players International, Inc. 1300 Atlantic Avenue Suite 800 Atlantic City, NJ 08401 Attention: Chief Executive Officer If to Executive: Patrick Madamba, Jr. 1011B East Shore Drive Brigantine, NJ 08203 21. Heading. The heading of the paragraphs contained in the Agreement are for convenience of reference only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 22. Counterparts. The Agreement may be executed in two or more counterparts. IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date first above. ATTEST: Players International, Inc. ____________________ By: Howard A. Goldberg Its: Chief Executive Officer Patrick Madamba, Jr. -----END PRIVACY-ENHANCED MESSAGE-----