EXHIBIT 10.5
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, made and
entered into this 28th day of April, 2000 (the "Agreement"), by and between
HARVEYS CASINO RESORTS, a Nevada corporation, hereinafter referred to as
"Harveys" and/or "Employer," and XXXX X. XXXXXXXXXX, hereinafter referred to
as "Employee," as follows:
W I T N E S S E T H:
WHEREAS, Employee and Employer have previously entered into
an Employment Agreement, dated as of February 2, 1999 (the "Original
Agreement"), setting forth the terms and conditions of Employee's employment
with Employer from and after February 2, 1999, the effective time (the
"Effective Date") of the merger (the "Merger") of Harveys Acquisition
Corporation, a Nevada corporation ("Acq Corp"), with and into Harveys
pursuant to the terms of the Agreement and Plan of Merger, dated as of
February 1, 1998, between Harveys and Acq Corp; and
WHEREAS, in connection with the Merger, Harveys and
Employee, together with other members of Harveys management, entered into a
Memorandum of Understanding, dated February 1, 1998 (the "MOU"), which set
forth, among other things, certain terms regarding Employee's employment with
Harveys following consummation of the Merger, including the execution of the
Original Agreement; and
WHEREAS, PH Casino Resorts, Inc., a wholly owned subsidiary
of Harveys ("PH Casino"), has entered into an Agreement and Plan of Merger,
dated as of April 17, 2000, among Pinnacle Entertainment, Inc. ("Target"), PH
Casino and Pinnacle Acquisition Corporation ("Acquisition") (as the same may
be amended, supplemented, or superceded the "Acquisition Agreement") pursuant
to which Acquisition will merge with and into Target (together with any
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similar transaction as a result of which Target, or an entity that has
acquired substantially all of the assets and business of Target, controls, is
controlled by or is under common control with Harveys, but not including any
transaction as a result of which Target and Harveys are under common control
solely be reason of having as their respective ultimate common parent a
pooled investment entity sponsored by Colony Capital, Inc., the
"Transaction"); and
WHEREAS, Harveys and Employee desire to enter into certain
special retention and employment protection arrangements that will apply to
the terms of Employee's employment prior to the date of consummation of the
Transaction (the "Acquisition Effective Date") and to certain terminations of
Employee's employment with Employer prior to or within one year following the
Acquisition Effective Date; and
WHEREAS, Harveys and Employee desire to amend and restate
the Original Agreement, in its entirety, to incorporate such retention and
employment protection arrangements and intend that the Original Agreement, as
amended and restated herein, shall be superceded in its entirety by this
Agreement; and
WHEREAS, in connection with the Merger, Harveys and
Employee also entered into a Stock Option and Restricted Stock Agreement (the
"Award Agreement" and, as so amended, the "Amended Award Agreement") and a
Deferred Compensation Agreement (the "Deferred Compensation Agreement" and,
as so amended, the "Amended Deferred Compensation Agreement"), each dated as
of the Effective Date, each of which agreements is also being amended and
restated, as of the date hereof, to incorporate the agreements between
Harveys and Employee concerning the retention and employment protection
arrangements.
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements herein contained, together with other good and valuable
consideration the receipt of
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which is hereby acknowledged, the parties hereto do hereby agree that the
Original Agreement is hereby amended and restated in its entirety as follows:
I.
DEFINITIONS
1.01. Employee shall at all times mean Xxxx X. XxXxxxxxxx.
1.02. Employer shall at all times mean Harveys Casino
Resorts, a Nevada corporation, and its Successors in Interest together with
its subsidiaries.
1.03. Harveys shall at all times mean Harveys Casino
Resorts, a Nevada corporation, and its Successor in Interest together with
its subsidiaries.
1.04. Successor in Interest shall mean any entity which is
the successor or assign of Harveys, at law or at equity, and shall include
without limitation, any entity into which Harveys is merged or consolidated,
any entity to which all or substantially all of the assets or businesses of
Harveys is transferred, or following the Transactions, the ultimate parent
company of Harveys and Target.
II.
NATURE OF EMPLOYMENT AND DUTIES OF EMPLOYEE
2.01. In accordance with the terms of the Original
Agreement, on the Effective Date, Employee continued to serve Harveys as
Senior Vice President, Chief Financial Officer and Treasurer of Harveys and,
in accordance with the terms of this Agreement, Employee shall continue to so
serve Harveys in such positions. Employee shall at all times be subject to,
observe and carry out such rules, regulations, policies, directions, and
restrictions as Harveys Board of Directors (the "Board") may from time to
time establish for senior executive officers of the Employer.
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2.02. Subject to the supervision and control of the Board
and Employer's Chief Executive Officer, Employee shall do and perform all
services and acts necessary or advisable to fulfill the duties and
responsibilities of his position and shall render such services on the terms
set forth herein. Without limiting the generality of the foregoing, Employee
shall be responsible for the Employer's financial plans, policies and
relationships with financial institutions as well as managing the Employer's
controller, directing the Employer's treasury, national purchasing,
budgeting, tax and accounting functions and overseeing the Employer's data
processing functions. In addition, Employee shall have such other executive
and managerial powers and duties with respect to Harveys and its subsidiaries
that are consistent with the offices of Senior Vice President, Chief
Financial Officer and Treasurer and as may reasonably be assigned to him by
the Board, including without limitation serving on the Board of Directors of
any subsidiary of Harveys.
2.03. Employee has reviewed and concurs with his
responsibilities and duties as set forth in Section 2.02 above.
2.04. During the Term (as defined below), Employee shall
devote substantially all of his productive time, ability and attention to the
business of Employer. In addition, Employee shall not directly or indirectly
render any service of a business, commercial or professional nature, to any
other person or organization, whether for compensation or otherwise, without
the prior written consent of the Board, PROVIDED, that, subject to the
provisions of Article X hereof, Employee shall not be precluded from
involvement in charitable or civic activities or his personal financial
investments provided the same do not materially interfere with his time or
attention to the business of Employer, and PROVIDED, further, that Employee
shall not serve as a director of any other for-profit business that is not an
affiliate of Employer.
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2.05. Employee agrees that he shall at all times (i) to the
best of his ability and experience conscientiously perform all of the duties
and obligations of his position with the Employer, (ii) use his best efforts
to do and perform all services, acts, or things necessary or advisable to
assist in the management and conduct of the business and otherwise advance
the interests of Employer and (iii) diligently and in the highest good faith
carry out the lawful directives of the Board, PROVIDED, that Employee shall
not be obligated to perform his duties hereunder outside the Stateline,
Nevada area, except for business trips and directors meetings outside said
area which arise and result from the normal conduct of the business of
Harveys.
III.
TERM AND GENERAL CONDITIONS OF EMPLOYMENT
3.01. Employer hereby continues the employment of
Employee, and Employee hereby agrees to such continued employment by Harveys
for the period of five (5) years commencing on the Effective Date and
terminating on the fifth anniversary of the Effective Date (as the same may
be extended as set forth below, the "Term"), unless extended by mutual
written agreement of the parties; PROVIDED, that the period of employment
shall automatically be extended for successive one (1) year periods if
neither party has provided six (6) months prior written notice to the other
of its intention to have this Agreement lapse at the expiration of the Term;
and PROVIDED FURTHER, that the Term shall be subject to earlier termination
in accordance with Articles IV, V and VI below.
3.02. Notwithstanding anything to the contrary herein, in
the event of any termination of Employee's employment for any or no reason,
Employee and Employer shall nevertheless continue to be bound by the terms
and conditions set forth in Articles IX through XII, in Section 13.08 and, to
the extent provided therein, Section 13.09 below.
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3.03. Upon consummation of the Merger, the Prior Agreement
was cancelled and terminated without further obligation of Employer. Upon the
execution of this Agreement by the parties hereto, the Original Agreement
shall be cancelled and terminated without further obligation of Employer or
Employee and shall be superceded in its entirety by this Agreement.
3.04. Employee hereby acknowledges and agrees that his
rights as set forth herein to receive severance and other compensation and
benefits hereunder shall supersede and replace in its entirety any severance
or other benefits that might otherwise be payable pursuant to Harveys' Change
of Control Plan as in effect on the Effective Date or as the same may be
amended from time to time or under any other severance plan, policy,
agreement or arrangement in effect immediately prior to the Effective Date or
at any time during the Term. Employee further acknowledges that as of the
Effective Date, Employee shall no longer be a participant in or have any
rights under the Change of Control Plan (or under any such other severance
plan, policy, agreement or arrangement in effect immediately prior to the
Effective Date or at any time during the Term), regardless of the reasons or
circumstances of his termination of employment. Employee further acknowledges
that as of the Effective Date Employee shall no longer be a participant in or
have any rights under the Company's Long Term Incentive Plan or Supplemental
Executive Retirement Plan.
IV.
TERMINATION OF EMPLOYMENT WITHOUT CAUSE
4.01. Employee's employment may be terminated by Harveys,
with or without "Cause" (as defined in Section 6.01 below), at any time and
for any or no reason. Any such termination without Cause shall be effective
only upon thirty (30) days' prior written notice to Employee (such effective
date, for purposes of this Article IV, the "Termination Date").
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4.02. If Employee's termination by Employer shall be
without Cause and such termination is effective after the earlier of (i) the
first anniversary of the Acquisition Effective Date and (ii) the date, if
any, that an Abandonment Event (as defined below) occurs, Employee shall be
entitled to the following benefits:
(a) Except as provided below, Employee shall be entitled to
receive, as soon as reasonably practicable, but no more than 10
business days, after the Termination Date, a lump sum payment in an
amount equal to the product of (x) the Applicable Multiplier (as
defined below) and (y) the sum of his then Base Salary and then Annual
Target Bonus (each as defined below).
(i) "Applicable Multiplier" shall mean the lesser of (A) 1.5
and (B) a fraction, the denominator of which is 12, and the numerator
of which shall be the number of full plus partial (calculated by the
day) months remaining in the Term following the Termination Date, which
numerator shall be increased by the number of full plus partial
(calculated by the day) months during any PostTerm Restriction Period
(as defined below and further described in Annex E) if an election to
have such PostTerm Restriction Period apply to Employee is made by
Employer pursuant to Section 10.01.
(ii) For purposes of this Section 4.02(a) and Section 4.04(a),
the term "Annual Target Bonus" shall mean Employee's annual target
bonus under the Annual Bonus Plan (as defined in Section 7.02 below)
for each fiscal year during the Term, which shall be deemed to be 50
percent of Employee's Base Salary as in effect as of the date the
relevant business plan targets for such fiscal year are established by
the Board.
(iii) For purposes of this Agreement, the "Post-Term
Restriction Period" shall mean that period, if any, following
expiration of the Term during which Employee would
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be subject to the restrictions of Section 10.01 as determined under
the first paragraph of Section 10.01, without regard to any limitation
of such period by reason of Section 10.01(a). The Post-Term
Restriction Period is further described in Annex E hereto.
(iv) Notwithstanding the foregoing, in the event that
Employee's Termination Date shall be less than one year prior to the
expiration of the Term and the Applicable Multiplier (determined as
above by including any applicable PostTerm Restriction Period) shall be
less than 1.0, Employee shall not be entitled to receive the lump sum
payment determined under the first sentence of this Section 4.02(a),
but shall instead be entitled to receive (A) as soon as reasonably
practicable, but no more than 10 business days, after the Termination
Date, a lump sum payment in an amount equal to the product of (x) the
Applicable Multiplier and (y) his then Base Salary and (B) as
applicable, a bonus as determined under Annex E hereto.
(b) Employee shall be entitled to continuation of his Benefits
(as defined below) for that number of months immediately following the
Termination Date equal to the product of (A) the Applicable Multiplier
and (B) 12 (such number of months, the "Section 4.02 Severance
Period"), PROVIDED, that in the event that during such period, pursuant
to applicable law or the terms of the applicable plan, any Benefits
may not be provided pursuant to the terms of the specific plan
referenced herein, Employer shall provide substantially equivalent
benefits by alternate means.
(c) Subject to the provisions of the Award Agreement, Employee
shall vest as of the Termination Date in that portion of the Stock
Award and Stock Option grants (each as defined below) that would
otherwise have vested had Employee remained in Harveys employ for the
duration of the Section 4.02 Severance Period.
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(d) Employee shall be entitled to payment of all amounts of
Base Salary and Benefits accrued but unpaid through the Termination Date.
Except as set forth in this Section 4.02 and Section 13.08,
all other rights of Employee (and, except as provided in Sections 4.02 and 3.02
above and Section 13.08, all obligations of the Employer) hereunder shall
terminate as of the Termination Date.
4.03. If Employee's employment shall terminate by reason of
his death or Disability and such termination is effective after the earlier
of (i) the first anniversary of the Acquisition Effective Date and (ii) the
date, if any, that an Abandonment Event occurs, he or his estate, as
applicable, shall be entitled to (i) all amounts of Base Salary and Benefits
accrued but unpaid through the date of such termination (which shall be the
date of death or the 45th day after the date Employer provides Employee
notice of termination for Disability) and (ii) any death and/or disability
benefits that may be due Employee under any benefit plans in effect from time
to time. "Disability" shall mean any physical or mental disability that
prevents Employee from performing one or more of the essential functions of
his position for a period of not less than six (6) months in any continuous
12 month period. Except as set forth in this Section 4.03 and Section 13.08,
all other rights of Employee (and, except as provided in this Section 4.03
and Section 3.02 above and Section 13.08, all obligations of the Employer)
hereunder shall terminate as of the date of such termination of employment.
4.04. If the termination of Employee's employment with
Employer is a Special Termination, provided Employee executes and delivers to
Employer a general release of claims in substantially the form attached
hereto as Annex G (the "Release"), Employee shall be entitled to the benefits
described in subparagraphs (a) through (g) of this Section 4.04 and to the
extent applicable, in Sections 7.04 and 7.05. For purposes of this Agreement,
the Amended Award
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Agreement and the Amended Deferred Compensation Agreement, the term "Special
Termination" shall mean the termination of Employee's employment by Employer
without Cause or any such termination due to Employee's death or Disability
(i) as of a Termination Date that is after the date of this Agreement and on
or prior to the Acquisition Effective Date, but only if the Transaction is
actually consummated pursuant to the terms of the Acquisition Agreement (any
such Special Termination under this clause (i), a "Pre-Acquisition Special
Termination") or (ii) as of a Termination Date that is after the Acquisition
Effective Date and on or prior to the first anniversary of the Acquisition
Effective Date (any such Special Termination under this clause (ii), a
"Post-Acquisition Special Termination"). In the event that, following the
Termination Date, the Acquisition Agreement is terminated or expires, in
either case, without consummation of the Transaction or the Board otherwise
resolves to abandon the Transaction (any such event, an "Abandonment Event"),
Employee shall be entitled only to the benefits to which he would have been
entitled under Section 4.02 or 4.03, as the case may be, if the Termination
Date had been after the Abandonment Event and, to the extent provided
therein, to the benefits payable under Section 7.04, and Employee shall not
be entitled to any benefits under this Section 4.04. In the event that the
Termination Date precedes an Abandonment Event, the benefits to which
Employee shall be entitled pursuant to the preceding sentence and Section
4.02 shall be reduced, on a dollar for dollar or benefit by benefit basis, as
applicable, by all payments or benefits received by Employee pursuant to this
Section 4.04 prior to the occurrence of the Abandonment Event.
(a) In the event of a Special Termination, Employee shall
be entitled to receive a lump sum payment, as soon as reasonably practicable,
but in no event more than 10
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business days, following the Termination Date, in an amount equal to the
product of (x) 1.5 and (y) the sum of his then Base Salary and then Annual
Target Bonus.
(b) In the event of a Special Termination, Employee shall
be entitled to continuation of his Benefits for 18 months immediately
following the Termination Date (the "Section 4.04 Severance Period"),
PROVIDED, that in the event that during such period, pursuant to applicable
law or the terms of the applicable plan, any Benefits may not be provided
pursuant to the terms of the specific plan referenced herein, Employer shall
provide substantially equivalent benefits by alternate means.
(c) In the event of (x) a Pre-Acquisition Special
Termination or (y) a termination without Cause (within the meaning of Section
4.02) or due to Employee's death or Disability, in any such case, followed by
an Abandonment Event, (i) as of the Termination Date, Employee shall vest in
that portion of the Stock Award and Stock Option grants made to Employee
pursuant to the Amended Award Agreement that would otherwise have vested had
Employee remained in Harveys employ for the duration of the Section 4.04
Severance Period and (ii) subject to Employer's call right under Section 8 of
the Amended Award Agreement, such Stock Options shall be exercisable for the
90 day period following the Termination Date and, to the extent not so
exercised, shall thereafter terminate automatically.
In addition, in the event of a Pre-Acquisition Special
Termination, on the Acquisition Effective Date, each then outstanding Stock
Award and Stock Option granted pursuant to the Amended Award Agreement shall
be cancelled in exchange for an aggregate cash payment equal to the sum of
the following amounts, to be paid as set forth below:
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(1) an amount equal to the product of (A) the Transaction
Share Price (as defined below) multiplied by (B) the sum
of (I) the number of shares of Class A Common Stock and
Class B Common Stock subject to each such cancelled Stock
Award and (II) the number of shares of Class A Common
Stock and Class B Common Stock that were subject to those
Stock Awards that were forfeited as of the Termination
Date in connection with Employee's termination of
employment;
(2) an amount equal to the product of (A) (I) the excess of
the Transaction Share Price over (II) the exercise price
per share of Common Stock applicable under each such
cancelled Stock Option multiplied by (B) the number of
shares of Common Stock subject to such cancelled Stock
Options immediately prior to the cancellation thereof;
(3) an amount equal to the product of (A) (I) the excess of
the Transaction Share Price over (II) the exercise price
per share of Common Stock applicable under each Stock
Option that was forfeited as of the Termination Date in
connection with Employee's termination of employment
multiplied by (B) the number of shares of Common Stock
subject to each such Stock Option immediately prior to
the forfeiture thereof; and
(4) an amount equal to the product of (A) (I) the excess of
the Transaction Share Price over (II) the exercise price
per share of Common Stock applicable under any Stock
Option that was outstanding immediately following the
Termination Date but terminated by its terms prior to the
Acquisition Effective Date without having been exercised
multiplied by (B) the number of
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shares of Common Stock subject to each such Stock Option
immediately prior to its termination.
For purposes of this Section 4.04, the term "Transaction
Share Price" shall mean (i) for purposes of calculating a payment in respect
of shares of Class A or Class B Common Stock subject to Stock Awards or Stock
Options that are forfeited or terminated prior to the Acquisition Effective
Date, $54.12 and (ii) for purposes of calculating a payment in respect of
shares of Class A or Class B Common Stock subject to Stock Awards, Stock
Options or Incentive Stock Grants that, in any such case, are cancelled
pursuant to this Section 4.04 on or after the Acquisition Effective Date,
$43.42 (i.e., the per share value of the Class A and Class B Common Stock
after the increase in the capitalization of Employer in connection with the
Transaction).
Subject to Section 13.10, such payment shall be made to
Employee in five installments, with the first such installment payable as
soon as reasonably practicable, but no more than 10 business days, after the
Acquisition Effective Date and equal to the greater of (i) 20% of the full
amount of such payment and (ii) the aggregate income taxes payable by
Employee with respect to the accelerated vesting of the Stock Award pursuant
to this Section 4.04(c). Subject to Section 13.10, the balance of the amount
payable to Employee pursuant to this Section 4.04(c) shall be paid in four
equal installments, with interest at an annual rate of 12%, on each of the
first four anniversaries of the Acquisition Effective Date. Annex H hereto
sets forth an example of the calculations under this Section 4.04(c).
(d) In the event of a Post-Acquisition Special Termination,
as of the Termination Date (i) Employee shall vest in 100% of all then
outstanding Stock Awards and Stock
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Options grants made to Employee pursuant to the Award Agreement and (ii) each
such Stock Award and Stock Option shall be cancelled in exchange for an
aggregate payment equal to the sum of the following amounts, to be paid as
set forth below:
(1) an amount equal to the product of (A) the Transaction
Share Price multiplied by (B) the number of shares of
Class A Common Stock and Class B Common Stock subject to
each such cancelled Stock Award; and
(2) an amount equal to the product of (A) (I) the excess of
the Transaction Share Price over (II) the exercise price
per share of Common Stock applicable under each such
cancelled Stock Option multiplied by (B) the number of
shares of Common Stock subject to each such cancelled
Stock Option immediately prior to the cancellation
thereof;
Subject to Section 13.10, such payment shall be made to
Employee in five installments, with the first such installment payable as
soon as reasonably practicable, but no more than 10 business days, after the
Termination Date and equal to the greater of (i) 20% of the full amount of
such payment and (ii) the aggregate income taxes payable by Employee with
respect to the accelerated vesting of the Stock Award pursuant to this
Section 4.04(d). Subject to Section 13.10, the balance of the amount payable
to Employee pursuant to this Section 4.04(d) shall be paid in four equal
installments, with interest at an annual rate of 12%, on each of the first
four anniversaries of the Termination Date.
(e) In the event of a Special Termination, each Incentive
Stock Grant Share that has been awarded to Employee with respect to any New
Project (the Bluffs Run transaction) shall remain outstanding following the
Termination Date until the expiration
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of the performance period governing the release from the risk of forfeiture
of such Incentive Stock Grant Share. If all objectives of such Incentive
Stock Grant Share are achieved so that there is no longer a risk of
forfeiture on or prior to the end of such performance period, Employer shall
cancel such Incentive Stock Grant Share in exchange for a cash payment equal
to the product of the number of Incentive Stock Grant Shares so cancelled and
the Transaction Share Price. Subject to Section 13.10, such payment shall be
made to Employee in installments, with the first such installment payable as
soon as reasonably practicable, but no more than 10 business days, after
delivery to the Board of the financial statements necessary to determine if
the performance objectives have been achieved and equal to the greater of (i)
the Applicable Percentage (as defined below) of the full amount of such
payment and (ii) the aggregate income taxes payable by Employee with respect
to the release from the risk of forfeiture of such Incentive Stock Grant
Shares. Subject to Section 13.10, the balance of the amount payable to
Employee in respect of the cancellation of such Incentive Stock Grant Shares
pursuant to this Section 4.04(e) shall be paid in equal installments, with
interest at an annual rate of 12%, on each anniversary of the Termination
Date thereafter such that the total amount so payable shall be paid in full
as of the fourth anniversary of the Termination Date. If (i) any of the
objectives for accelerated vesting of such Incentive Stock Grant Share are
not achieved as of the end of such performance period or (ii) Employee's
employment shall have been terminated prior to the Acquisition Effective Date
by the Company without Cause, by Employee with Good Reason or due to
Employee's death or Disability and thereafter an Abandonment Event occurs,
all of Employee's rights with respect to such Incentive Stock Grant Shares
shall be forfeited and cancelled immediately without any
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payment or other consideration to Employee. The term "Applicable Percentage"
shall mean the quotient, expressed as a percentage, of (i) the number of days
from the Termination Date to the last day of the applicable performance
period divided by (ii) 1460.
(f) In the event of a Special Termination, Employee shall be
entitled to receive a lump sum cash payment equal to the product of the number
of Deemed SERP Shares (within the meaning of the Amended Deferred Compensation
Agreement) multiplied by the Transaction Share Price. Subject to Section 13.10,
such payment shall be made to Employee as soon as reasonably practicable, but
in no event more than 10 business days, following the Termination Date.
(g) In the event of a Special Termination, Employee shall be
entitled to payment of all amounts of Base Salary and Benefits accrued but
unpaid through the Termination Date. In addition, notwithstanding any
provision of the MIP, Employee shall be entitled (i) to receive, as soon as
reasonably practicable, but in no event more than 10 business days following
the Termination Date any Annual Bonus accrued under the MIP but unpaid for
any fiscal year of Employer ending on or prior to the Termination Date and
(ii) if Employee's Employment with Employer is terminated during Employer's
2000 fiscal year, and all regulatory approvals necessary for the closing of
the Transaction are obtained on or prior to November 30, 2000, a pro-rata
bonus payment (based on the portion of the fiscal year prior to termination)
for the year in which such termination occurs, calculated in accordance with
the terms of the MIP for such year and payable when bonuses are generally
payable to executives for such year.
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Except as set forth in this Section 4.04, Section 13.08 and
Section 13.10, all other rights of Employee (and, except as provided in
Sections 4.04 and 3.02 , Section 13.08 and Section 13.10, all obligations of
the Employer) hereunder shall terminate as of the Termination Date.
V.
TERMINATION OF EMPLOYMENT AT EMPLOYEE'S REQUEST
5.01. Employee may, at Employee's sole option and right,
terminate his employment with Employer at any time, with or without Good
Reason (as defined below). Any such termination shall be effective only upon
thirty (30) days' prior written notice to Harveys.
(a) In the event of such termination of employment without
Good Reason, Employee shall be entitled to receive all amounts of Base Salary
and Benefits accrued but unpaid through the date of such termination.
(b) In the event of any such termination of employment with
Good Reason that is effective on or after the earlier of (i) the first
anniversary of the Acquisition Effective Date or (ii) if applicable, an
Abandonment Event, Employee shall be entitled to receive the benefits set
forth in Sections 4.02(a)(d) as if Employee's employment had been terminated
by Employer without Cause, with the "Termination Date" as used in such
sections being the effective date of termination pursuant to this Section
5.01.
(c) In the event of any such termination of employment with
Good Reason that is effective on or after the date of this Agreement and
prior to the earlier of (i) the first anniversary of the Acquisition
Effective Date and (ii) if applicable, an Abandonment Event, provided
Employee executes and delivers to Employer the Release, Employee shall be
entitled to receive the benefits set forth in the applicable provisions of
Sections 4.04(a)(g), depending upon the effective date of such termination,
as if Employee's
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employment had been terminated in a Special Termination, with the
"Termination Date" as used in such sections being the effective date of
termination pursuant to this Section 5.01. To the extent applicable, Employee
shall also be entitled to receive the benefits described in Sections 7.04
and/or 7.05.
(d) For purposes of this Section 5.01, in the case of any
termination by Employee on or after the earlier of (i) Acquisition Effective
Date or (ii) if applicable, an Abandonment Event, Employee shall have "Good
Reason" to terminate his employment hereunder if (A) Employer shall, without
Employee's written consent, willfully and materially breach its obligations
under this Agreement, (B) Employee provides Employer written notice pursuant
hereto stating with specificity the respects in which Employee believes
Employer to have willfully and materially breached its obligations under this
Agreement and (C) within thirty (30) days following the date of such notice
Employer shall not have cured such breach.
(e) For purposes of this Section 5.01, in the case of any
termination by Employee on or after the date of this Agreement and prior to
the earlier of (i) the Acquisition Effective Date and (ii) if applicable, an
Abandonment Event, Employee shall have "Good Reason" to terminate his
employment hereunder if (A) Employer changes Employee's reporting
responsibilities such that Employee no longer reports directly to the Chief
Executive Officer, or (B) the Board resolves to reduce Employee's duties and
responsibilities for Employer or written notice of any such reduction is
delivered to Employee by the Board or any member thereof (other than
Employee), or (C) Employer reduces Employee's title to a title other than
Senior Vice President, Chief Financial Officer and Treasurer of Harveys, or
(D) Employer reduces the rate of Employee's Base
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Salary, or (E) Employer materially reduces the aggregate level of employee
benefits and perquisites provided to Employee pursuant to Section 8 hereof,
or (F) Employer fails to pay to Employee when due any Base Salary, other
bonus or other material amount payable to Employee pursuant to Section 7
hereof, or (G) Employer requires Employee to relocate his principal place of
business to a location beyond a radius of 30 miles from Stateline, Nevada,
and (H) Employee provides Employer written notice pursuant hereto stating
with specificity the circumstances claimed to constitute the basis for such
termination with Good Reason and (I) within thirty (30) days following the
date of such notice Employer shall not have cured such circumstances.
(f) Except as set forth in this Section 5.01 (and, as
incorporated hereinabove by reference, Section 4.02 or 4.04, as applicable)
and Sections 13.08 and 13.10, all other rights of Employee (and, except as
provided in Section 3.02 above and Section 13.08 and 13.10, all obligations
of the Employer) hereunder shall terminate as of the date of such termination
of employment.
VI.
TERMINATION OF EMPLOYMENT FOR CAUSE
6.01. Employer may at any time, at its election, by written
notice to Employee stating with specificity the reason for the termination,
terminate Employee's employment for "Cause," which shall be defined as
Employee's:
(a) Gross negligence or willful malfeasance in the
performance of his duties under this Agreement;
(b) Failure to obtain or retain any permits, licenses, or
approvals which may be required by any state or local authorities in order to
permit the Employee to continue his employment as contemplated by this
Agreement;
19
(c) Conviction of any felony or conviction of a crime
involving moral turpitude;
(d) Dishonesty with respect to Employer (including, without
limitation, fraud) resulting in a breach of duty to Employer involving
Employee's personal gain or profit;
(e) Engaging in any activity that is in violation of the
provisions of Article X of this Agreement, which shall not be cured
following ten days' written notice and a demand to cure such violation;
or
(f) Use or imparting of any confidential or proprietary
information of Employer or any subsidiary or affiliate in violation of
any confidentiality or proprietary agreement to which Employee is a
party, including without limitation the provisions of Article IX of
this Agreement; PROVIDED, that in the event such notice is provided
pursuant to Section 6.01(b), Employee shall have a period of thirty
(30) days following the date of such notice in which to cure such
failure, and if Employee shall cure such failure within such period,
Employee's employment hereunder shall be reinstated without prejudice.
6.02. Upon the provision of such notice (or, in the case of
such notice pursuant to Section 6.01(b), upon expiration of the applicable
cure period without cure), Employee's employment shall immediately cease and
terminate for Cause. In the event of such termination of employment, Employee
shall be entitled to receive all amounts of Base Salary and benefits accrued
but unpaid through the date of such termination. Except as set forth in this
Section 6.02 and Section 13.08, all other rights of Employee (and, except as
provided in Section 3.02 above and Section 13.08, all obligations of the
Employer) hereunder shall terminate as of the date of such termination of
employment.
20
VII.
COMPENSATION OF EMPLOYEE
7.01. Base Salary - Employee shall receive an annual base
salary ("Base Salary") of Three Hundred Thirty Five Thousand Dollars
($335,000), payable in at least monthly installments, less all applicable
Federal, state and local taxes, Social Security and any other government
mandated deductions. Employee's Base Salary shall be reviewed by the Board no
less frequently than annually relative to specified performancebased criteria
to be determined by the Board.
7.02. Annual Bonus - Following the Effective Time, Employee
shall be eligible to participate in Employer's Management Incentive Plan
("MIP") or, at the election of Employer, in a new or equivalent annual bonus
plan established by Employer having a similar structure to the MIP providing
for payment of an annual bonus (the "Annual Bonus Plan"), but in either case
with thresholds and triggering events for payment based on the achievement of
Harveys annual budget and other business plan targets to be determined by the
Board following the Effective Date. Employee's maximum annual bonus under the
Annual Bonus Plan shall not be less than $165,000. Notwithstanding the
foregoing, the following provisions shall apply with respect to Employee's
participation in the Annual Bonus Plan with respect to fiscal 1999:
(a) On the Effective Date, Employer paid to Employee a lump
sum amount in cash equal to 25% of Employee's maximum bonus under the
Annual Bonus Plan for fiscal 1999, which lump sum amount Employer and
Employee acknowledge and agree to be $55,625 (the "Advance"). Employee
hereby acknowledges receipt of the Advance.
(b) Following the end of fiscal 1999, the Board shall
determine Employee's bonus under the Annual Bonus Plan in the ordinary
course using the financial targets established by the Board prior to
the date hereof, without regard to the Advance (the
21
"Overall 1999 Bonus Entitlement"). On the date bonuses under the
Annual Bonus Plan are paid generally to employees with respect to
fiscal 1999, Employee shall be entitled to receive an annual bonus
payment equal to the excess, if any, of (i) Employee's Overall 1999
Bonus Entitlement over (ii) the amount of the Advance. In the event
the Advance shall be greater than the Overall 1999 Bonus Entitlement,
Employee shall have no obligation to repay any portion of the Advance
to Employer, and no portion of the Advance shall be offset against
amounts otherwise payable to Employee under the Annual Bonus Plan with
respect to subsequent fiscal years. However, in the event Employee's
employment is terminated by Employer without Cause or by Employee with
Good Reason prior to December 31, 1999, the amount of the Advance
shall be offset dollarfordollar against amounts otherwise payable to
Employee under Section 4.02(a).
7.03. Stock Grants and Stock Option - On the Effective Date,
Employee received (i) a restricted stock award (the "Stock Award") consisting
of 180 shares of the Class A common stock, par value $.01 per share, of
Harveys ("Class A Common Stock") and 18,000 shares of the Class B common
stock, par value $.01 per share, of Harveys ("Class B Common Stock") and (ii)
a stock option (the "Stock Option") to purchase 240 additional shares of
Class A Common Stock and 24,000 additional shares of Class B Common Stock,
each at a price of $20.06 per share. The Stock Awards and Stock Options shall
each be subject in all respects to the terms of Harveys 1999 Omnibus
Incentive Plan, a copy of which is attached hereto as Annex A, as the same
may be amended from time to time (the "Omnibus Plan"), the Amended Award
Agreement, as the same may be further amended from time to time, and that
certain Stockholders Agreement, as the same may be amended from time to time,
among Harveys, Colony HCR Voteco, LLC, a Nevada limited liability company,
Colony Investors III, L.P., a Delaware limited
22
partnership, and the security holders of the Company (including Employee) as
identified from time to time on Schedule A thereto, a copy of which is
attached hereto as Annex C.
7.04. Retention Bonus - In addition to any payments to
which Employee may be entitled under Sections 4.02, 4.03, 4.04, or 5.01, as
applicable, and any bonuses to which Employee is entitled under the MIP or
otherwise, Employee shall be entitled to receive a lump sum cash retention
bonus of $500,000 if (i) (A)Employee remains in the continuous employment of
Employer from the date hereof to the Acquisition Effective Date or (B)
Employee's employment with Employer is terminated prior to the Acquisition
Effective Date by Employer without Cause, by Employee with Good Reason (as
defined in Section 5.01(d)) or due to Employee's death or Disability and (ii)
the Transaction is consummated in accordance with the Acquisition Agreement.
In the event that an Abandonment Event occurs, if (i) Employee remains in the
continuous employment of Employer from the date hereof to the date of such
Abandonment Event or (ii) Employee's employment with Employer is terminated
prior to the Abandonment Event by Employer without Cause, by Employee with
Good Reason (as defined in Section 5.01(d)) or due to Employee's death or
Disability, Employee shall be entitled to receive a lump sum cash payment of
$250,000. Any payment to which Employee is entitled pursuant to this Section
7.04 shall be made to Employee as soon as reasonably practicable, but in no
event more than 10 business days, following the Acquisition Effective Date or
the date an Abandonment occurs, as the case may be; provided that in the case
of any termination of Employee's employment prior to the Acquisition
Effective Date by Employer without Cause, by Employee with Good Reason (as
defined in Section 5.01(d)) or due to Employee's death or Disability,
Employer shall pay Employee $250,000 as soon as reasonably practicable, but
in no event more than 10 business days, following the Termination Date and,
in the event the
23
Transaction is thereafter consummated, Employer shall pay Employee an
additional $250,000 as soon as reasonably practicable, but in no event more
than 10 business days, following the Acquisition Effective Date.
7.05. Special Performance Bonus -
(a) In addition to any payments to which Employee may be
entitled under Sections 4.02, 4.03, 4.04, or 5.01, as applicable, and
provided the Transaction is consummated in accordance with the
Acquisition Agreement and Employee remains in the continuous employment
of Employer from the date hereof to the Acquisition Effective Date,
Employee shall be entitled to a special performance bonus in addition
to any bonuses to which Employee is entitled under the MIP or
otherwise. The target amount of the special performance bonus shall be
$250,000 and shall be payable to Employee as soon as reasonably
practicable after Acquisition Effective Date but in no event more than
10 business days following the Acquisition Effective Date if (i)
Employer attains 100% of the performance objectives ("Bonus Targets")
established by the Board for the 2000 fiscal year of the Company, as
set forth on Schedule A attached, and (ii) substantially all of the
current members of Employer's executive committee, Employer's general
managers and certain other key employees of Employer identified in
writing to Employee prior to the date hereof (other than any such
Management Employee whose employment is terminated by Harveys or
terminates due to such Management Employee's retirement, death or
disability) (collectively, the "Management Employees") remain employed
in accordance with the terms of their respective current employment
agreements from the date hereof to the Acquisition Effective Date;
provided that, if substantially all of the Management Employees do not
remain employed by Employer,
24
the Compensation Committee of the Board shall review, in good faith,
the circumstances surrounding each Management Employee's departure,
including the activities of Employee with respect thereto and the
reasons for such Management Employee's departure, and based on such
review, shall determine the portion, if any, of the special
performance bonus that will be paid to Employee. Satisfaction of the
Bonus Targets shall be determined on the basis of Employer's EBITDA as
adjusted to take account of certain non-recurring events,
substantially in accordance with past practices. Following the end of
fiscal year 2000, if the Transaction has not been consummated and an
Abandonment Event has not occurred, Employer may implement a special
bonus program for Employee for fiscal year 2001, based on such bonus
targets and target amounts as Employer shall determine and providing
for the payment of a pro rated special performance bonus based upon
the Acquisition Effective Date.
(b) In addition to any payments to which Employee may be
entitled under Sections 4.02, 4.03, 4.04, or 5.01, as applicable, and
provided the Transaction is consummated in accordance with the
Acquisition Agreement, if Employee's employment with Employer is
terminated prior to the Acquisition Effective Date by Employer without
Cause, by Employee with Good Reason (as defined in Section 5.01(d)) or
due to Employee's death or Disability, Employee shall be entitled to a
special performance bonus of $175,000 payable to Employee as soon as
practicable, but in no event more than 10 business days following the
Acquisition Effective Date.
VIII.
BENEFITS AND PERQUISITES
During the Term, Employee shall be entitled to the benefits
and perquisites as set forth in this Article VIII (collectively, "Benefits").
25
8.01. Harveys 401(k) Plan - During the Term the Employee
shall be allowed to participate in Harveys 401(k) Plan, or shall be provided
with benefits that are substantially identical to the benefits provided under
such plan as of the date hereof.
8.02. Vacation - Employee shall be entitled to five weeks of
paid vacation per year. Employee shall be afforded the usual holidays as
Employer may from time to time recognize.
8.03. Complimentary Privileges - Employee shall be entitled
to such Level I complimentary privileges as are afforded generally to senior
executives of Employer from time to time pursuant to policies adopted by the
Board.
8.04. Employer shall provide Employee with an automobile in
accordance with the Class I category of Employer's Standard Automobile Policy
and Procedures, as from time to time amended.
8.05. Disability - Employee shall also be entitled to short
term disability coverage and long term disability coverage under plans as in
effect from time to time as implemented by Employer.
8.06. Medical, Vision and Dental Insurance - Employer shall
provide medical, vision and dental benefits to Employee, his spouse and
dependents in accordance with Employer's Class One coverage under the
Executive Medical Plan, as amended from time to time.
8.07. Deferred Compensation Program - Employee shall be
allowed to participate in the Deferred Compensation Program as is in effect
from time to time.
26
8.08. Life Insurance - During the Term, Employer shall
furnish Employee with Group Term Life Insurance and Accidental
Death/Dismemberment Insurance, in each case subject to the terms of such
plans as in effect from time to time.
8.09. Additional Employee Benefit Plans - Employee shall be
entitled to participate in all additional employee benefits plans which may,
in the future, be made generally available to Employer's most senior
management employees, PROVIDED, that separate employee benefits plans may be
adopted for lowerranking management employees as to which Employer may
determine Employee ineligible for participation, and PROVIDED, FURTHER, that
Employee shall not be entitled to participate in (i) Employer's Supplemental
Executive Retirement Plan or any other supplemental retirement plan or
arrangement, (ii) Employer's Long Term Incentive Plan or (iii) any severance
plan, policy or arrangement of Employer. This Section 8.09 shall not be
construed to affect Employee's entitlement to severance or bonus amounts as
provided in this Agreement or hereafter.
8.10. Reimbursement of Expenses - Employer shall reimburse
Employee for any expenses reasonably and necessarily incurred by him in
furtherance of his duties hereunder, including, travel, meals, and
accommodations, upon submission by him of vouchers or receipts and in
compliance with such rules and policies relating thereto as Employer may from
time to time adopt.
IX.
PROTECTION OF CONFIDENTIAL INFORMATION
Employee acknowledges that during the course of his
employment with the Employer, its subsidiaries and affiliates, he has been
and will be exposed to documents and other information regarding the
confidential affairs of the Employer, its subsidiaries and affiliates,
including, without limitation, Colony Capital, Inc, its employees, owners and
affiliates, including
27
without limitation such information about their past, present and future
financial condition, the markets for their products, key personnel, past,
present or future actual or threatened litigation, trade secrets, current and
prospective customer lists, operational methods, acquisition plans (including
without limitation potential acquisition targets), financing sources,
prospects, plans for future development and other business affairs and
information about the Employer and its subsidiaries and affiliates,
including, without limitation, Colony Capital, Inc., its employees, owners
and affiliates, not readily available to the public (the "Confidential
Information"). Employee further acknowledges that the services to be
performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing,
the Employee covenants and agrees as follows:
9.01. At no time shall Employee ever divulge, disclose, or
otherwise use any Confidential Information, unless and until such information
is readily available in the public domain by reason other than Employee's
unauthorized disclosure or use thereof, unless such disclosure or use is made
in good faith and solely in furtherance of Employee's duties hereunder or
expressly authorized by the Board in writing in advance of such disclosure or
use.
9.02. Upon the termination of Employee's employment at any
time and for any or no reason, or at any other time the Board may so direct,
Employee shall promptly deliver to the Employer's offices in Stateline,
Nevada all of the property and equipment of the Employer and its subsidiaries
(including any automobiles, cell phones, pagers, credit cards, personal
computers, etc.) and any and all documents, records, and files, including any
notes, memoranda, customer lists, reports or any and all other documents,
including any copies thereof, whether in hard copy form or on a computer disk
or hard drive, which relate to the Employer, its subsidiaries, affiliates,
successors or assigns, and/or their respective past and present officers,
28
directors, employees or consultants (collectively, the "Employer Property,
Records and Files"); it being expressly understood that, upon termination of
Employee's employment, Employee shall not be authorized to retain any of the
Employer Property, Records and Files, except to the extent expressly so
authorized in writing by the Board.
X.
NONCOMPETITION AND OTHER MATTERS
10.01. During the Term and for the one year period
following the date of termination of Employee's employment at any time and
for any or no reason (PROVIDED, that such period shall be six months in the
event Employee's employment terminates upon expiration of the Term), Employee
shall not at any time in any city, town, county, parish, other municipality
in any state of the United States or Native American territory (the names of
each such city, town, county, parish, other municipality or Native American
territory, including, without limitation, the name of each county in the
State of Nevada being expressly incorporated by reference herein), or any
other place in the world, where the Employer, or its subsidiaries,
affiliates, successors, or assigns, engages in owning, operating, managing
and/or developing landbased or riverboat casinos or hotels associated or
materially competitive with casinos, or any other business engaged in from
time to time by the Employer or its subsidiaries, affiliates, successors or
assigns in which Employee has had significant authority and responsibility
(the "Business"), directly or indirectly, (i) engage in a competing business
for Employee's own account; (ii) enter the employ of, or render any
consulting services to, any entity that competes with the Employer, or its
subsidiaries, affiliates, successors, or assigns, in the Business; or (iii)
become interested in any such entity in any capacity, including, without
limitation, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant; PROVIDED, HOWEVER, (x) Employee may
(A) own, directly or indirectly, solely as a passive investment, securities
of any entity traded on
29
any national securities exchange or market if Employee is not a controlling
person of, or a member of a group which controls, such entity and does not,
directly or indirectly, own 5% or more of any class of securities of such
entity and (B) subject to the first sentence of Section 2.04 above, make
passive investments in hospitality enterprises not materially competitive
with gaming and/or enterprises which are principally bar/restaurant
enterprises containing no more than 50 gaming positions, PROVIDED, that such
investments shall not materially interfere with the performance of Employee's
duties hereunder and (y) in the event of a Special Termination or a
Termination by Employee with Good Reason that is effective on or after the
date hereof and prior to the earlier of (I) the first anniversary of the
Acquisition Effective Date and (II) if applicable, an Abandonment Event, the
covenants of Employee in this Section 10.01 shall apply only to activities by
Employee in the Lake Tahoe and Iowa geographic areas or for or in respect of
any entity which, directly or indirectly, including through affiliates, has
operations in the Lake Tahoe or Iowa geographic areas.
(a) Notwithstanding the foregoing, if (i) Employee's
employment is terminated by Employer other than for Cause or by
Employee with Good Reason and (ii) the effective date of such
termination as determined hereunder occurs within the one year
period prior to the expiration date of the Term, the restrictions set
forth in this Section 10.01 shall expire upon expiration of the Term
unless Employer provides written notice to Employee not later than two
days after such effective date that it wishes the restrictions of this
Section 10.01 to apply during the PostTerm Restriction Period (as
defined in Section 4.02 above) and pays Employee the severance
compensation provided for under Section 4.02(a) and provides the
benefits provided for under Section 4.02(b).
30
(b) If Employee's employment is terminated for any other
reason or under any other circumstances, the provisions of this
Section 10.01 shall be effective without regard to Section 10.01(a).
10.02. During the Term and for the two year period
immediately following the date of termination of Employee's employment at any
time and for any or no reason, Employee shall not at any time, directly or
indirectly, solicit or induce any officer, director, employee, agent or
consultant of the Employer or any of its successors, assigns, subsidiaries
or, to the best of Employee's knowledge, affiliates, to terminate his, her or
its employment or other relationship with the Employer or its successors,
assigns, subsidiaries or, to the best of Employee's knowledge, affiliates,
for the purpose of associating with any competitor of the Employer or its
successors, assigns, subsidiaries or, to the best of Employee's knowledge,
affiliates, or otherwise encourage any such person or entity to leave or
sever his, her or its employment or other relationship with the Employer or
its successors, assigns, subsidiaries or, to the best of Employee's
knowledge, affiliates, for any other reason.
10.03. During the Term and for the two year period
immediately following the date of termination of Employee's employment at any
time and for any or no reason, Employee shall not at any time, directly or
indirectly, solicit or induce (i) any customers or clients of Employer or its
successors, assigns, subsidiaries or, to the best of Employee's knowledge,
affiliates, or (ii) any vendors, suppliers or consultants then under contract
to the Employer or its successors, assigns, subsidiaries or, to the best of
Employee's knowledge, affiliates, to terminate his, her or its relationship
with the Employer or its successors, assigns, subsidiaries or, to the best of
Employee's knowledge, affiliates, for the purpose of associating with any
competitor of the Employer or its successors, assigns, subsidiaries or, to
the best of Employee's knowledge,
31
affiliates, or otherwise encourage such customers or clients, or vendors,
suppliers or consultants then under contract, to terminate his, her or its
relationship with the Employer or its successors, assigns, subsidiaries or,
to the best of Employee's knowledge, affiliates, for any other reason.
10.04. During the Term and thereafter following any
termination or other expiration of the Term or other termination of
Employee's employment, Employee shall not, publicly or privately, disparage
or otherwise make any derogatory statement (whether written or oral) in
respect of Employer or any of its subsidiaries or affiliates, including,
without limitation, Colony Capital, Inc., its employees, owners and
affiliates, or the conduct of any of their respective business or
professional activities, except to the extent required (i) by an order of a
court having jurisdiction or under subpoena from an appropriate government
agency, in which event, Executive shall use his best efforts to consult with
the Board prior to responding to any such order or subpoena and (ii) to
litigate any claim against Employer for failure to pay any amount due to
Employee under the terms of this Agreement, the Amended Award Agreement or
the Amended Deferred Compensation Agreement. In the event that, following any
termination of his employment, Employee shall have breached or breaches his
obligations under this Section 10.04, Employee shall thereupon forfeit any
and all rights he otherwise may have to any subsequent payment or benefit
pursuant to Article IV or V hereof.
XI.
RIGHTS AND REMEDIES UPON BREACH
If Employee breaches any of the provisions of Articles IX
or X above (the "Restrictive Covenants"), the Employer and its subsidiaries,
affiliates, successors or assigns shall have the rights and remedies set
forth below in this Article XI, each of which shall be independent of the
others and severally enforceable, and each of which shall be in addition to,
32
and not in lieu of, any other rights or remedies available to the Employer or
its subsidiaries, affiliates, successors or assigns at law or in equity.
11.01. The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent jurisdiction by
injunctive decree or otherwise, it being agreed that any breach of the
Restrictive Covenants would cause irreparable injury to the Employer or its
subsidiaries, affiliates, successors or assigns and that money damages would
not provide an adequate remedy to the Employer or its subsidiaries,
affiliates, successors or assigns.
11.02. Employee acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographic and temporal
scope and in all other respects. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable the
remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full force and effect without regard to the invalid portions.
11.03. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
scope of such provision. such court shall have the power to reduce the
duration or scope of such provision, as the case may be (it being the intent
of the parties that any such reduction be limited to the minimum extent
necessary, to render such provision enforceable), and, in its reduced form,
such provision shall then be enforceable.
11.04. Employee intends to and hereby confers jurisdiction
to enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographic scope of such covenants. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of
Employee that such determination not bar or in any way affect the right of
the Employer or its
33
subsidiaries, affiliates, successors or assigns to the relief provided herein
in the courts of any other jurisdiction within the geographic scope of such
covenants, as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being, for
this purpose, severable into diverse and independent covenants.
XII.
ARBITRATION
Except as necessary for the Employer and its subsidiaries,
affiliates, successors or assigns or Employee to specifically enforce or
enjoin a breach of this Agreement (to the extent such remedies are otherwise
available), the parties agree that any and all disputes that may arise in
connection with, arising out of or relating to this Agreement, or any dispute
that relates in any way, in whole or in part, to Employee's employment with
the Employer or any subsidiary, the termination of that employment or any
other dispute by and between the parties or their subsidiaries, affiliates,
successors or assigns, shall be submitted to binding arbitration in Las
Vegas, Nevada according to the National Employment Dispute Resolution Rules
and procedures of the American Arbitration Association. The parties agree
that the prevailing party in any such dispute shall be entitled to reasonable
attorneys' fees, costs. and necessary disbursements in addition to any other
relief to which be or it may be entitled. This arbitration obligation extends
to any and all claims that may arise by and between the parties or their
subsidiaries, affiliates, successors or assigns, and expressly extends to,
without limitation, claims or causes of action for wrongful termination,
impairment of ability to compete in the open labor market. breach of an
express or implied contract, breach of the covenant of good faith and fair
dealing. breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, infliction of emotional distress, disability, loss of future
earnings, and claims under the Nevada constitution, the United States
Constitution, and applicable state and federal fair employment laws, federal
and state equal
34
employment opportunity laws, and federal and state labor statutes and
regulations, including, but not limited to, the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, the Americans With
Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as
amended, the Employee Retirement Income Security Act of 1974, as amended, the
Age Discrimination in Employment Act of 1967, as amended, and any other state or
federal law.
XIII.
MISCELLANEOUS
13.01. If any action to specifically enforce or enjoin a
breach of this Agreement is necessary, the prevailing party shall be entitled
to reasonable attorneys' fees, costs, and necessary disbursements in addition
to any other relief to which he or it may be entitled.
31.02. This Agreement shall be construed and governed by
the laws of the State of Nevada, without giving effect to conflicts of laws
principles thereof which might refer such interpretations to the laws of a
different state of jurisdiction.
13.03. This Agreement, and all of the terms and conditions
hereof, shall bind the Employer and its successors and assigns and shall bind
the Employee and his heirs, executors and administrators. No transfer or
assignment of this Agreement shall release Employer from any obligation to
Employee hereunder. Neither this Agreement, nor any of Employer's rights or
obligations hereunder, may be assigned or otherwise subject to hypothecation
by Employee. Employer may assign the rights and obligations of Employer
hereunder, in whole or in part, to any of Employer's subsidiaries, affiliates
or parent corporations, or to any other successor or assign in connection
with the sale of all or substantially all of Harveys' assets or stock or in
connection with any merger, acquisition and/or reorganization. In the event
of the death of Employee, any amounts accrued and payable hereunder that, as
of the date of death, have not
35
been paid to Employee shall be paid on behalf of Employee to Employee's
estate at the times specified and otherwise in accordance with the provisions
of this Agreement.
13.04. Notices All notices and other communications under
this Agreement shall be in writing and shall be given by first class mail,
certified or registered with return receipt requested, or by a nationally
recognized overnight delivery service to the respective parties named below:
Employee:
Xxxx X. XxXxxxxxxx
000 Xxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: 000-000-0000
WITH A COPY TO:
Xxxxxxx Xxxxxx
Xxxxx, Harrison, Harvey, Branzburg &
Xxxxxx LLP
000 X. Xxxxx Xx.
Xxxxxxxxxxxx, XX 00000
Facsimile: 215-568-6603
Employer:
HARVEYS CASINO RESORTS
Attn: Corporate Secretary
Highway 50 and Xxxxxxxxx Xxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
WITH A COPY TO:
Xxxx Xxxxxxxx
Colony Capital, Inc.
Suite 1200
1999 Avenue of the Stars
Xxx Xxxxxxx, XX 00000
Facsimile: 000-000-0000
36
AND TO:
Xxxxxxx X. Xxxxxxxxx
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
13.05. Nothing contained in this Agreement shall be
construed to require the commencement of any act contrary to law, and when
there is any conflict between any provision of this Agreement and any
statute, law, ordinance, or regulation, contrary to which the parties have no
legal right to contract, then the latter shall prevail; but in such an event,
the provisions of this Agreement so affected shall be curtailed and limited
only to the extent necessary to bring it within the legal requirements.
13.06. The several rights and remedies provided for in this
Agreement shall be construed as being cumulative, and no one of them shall be
deemed to be exclusive of the others or of any right or remedy allowed by
law. No waiver by Employer or Employee of any failure by Employee or
Employer, respectively, to keep or perform any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of the
same or other provision.
13.07. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties heretowith respect
to the employment of the Employee by the Employer (including, without
limitation, the Original Agreement, the Prior Agreement, Harveys Change in
Control Plan and, insofar as it relates to the subject matter hereof, but
except as provided in Section 13.08, the MOU) and, together with all other
plans, agreements and other documents specifically referenced herein,
contains all of the covenants, conditions and agreements between the parties
with respect to such employment. Annex F hereto sets forth a list of payments
to Employee pursuant to the MOU, and Employee hereby acknowledges receipt
37
of all such payments. Each party to this Agreement acknowledges that no
representations, inducements, promises or other agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any
party, which are not embodied herein, and that no other agreement, statement
or promise not contained in this Agreement shall be valid or binding. Any
addendum to or modification of this Agreement shall be effective only if it
is in writing and signed by the parties to be charged.
13.08. To the extent applicable, Employee shall be entitled
to receive a grossup payment with respect to payments made hereunder
(including under agreements referenced herein) and under the MOU to account
for the payment of Internal Revenue Code Section 4999 excise taxes as well as
taxes imposed on such gross up payments, as determined pursuant to the
procedures set forth in Annex D, PROVIDED, that Employee shall reasonably
cooperate with Employer in structuring such payments and taking such other
actions to limit the extent to which such payments may be subject to such
excise tax, provided that such restructuring does not cause Employee to
suffer additional costs or other adverse consequences. Notwithstanding
anything contained to the contrary contained herein, the provisions of this
Section 13.08 and Annex D hereto shall survive the expiration or termination
of this Agreement for any or no reason.
13.09. If Employee's employment with the Company is
terminated by the Company without Cause either (i) as a result of a Change in
Control (as defined in the Award Agreement) or (ii) within the 12 month
period immediately preceding a Change in Control (or such longer period, not
to exceed 18 months prior to such Change in Control, during which significant
discussions or other material action regarding such Change in Control
occurred) at the request, directly or indirectly, of a third party who has
taken steps reasonably calculated to effect a Change in Control or otherwise
in connection with, or in anticipation of a Change in Control,
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Employee shall be entitled to receive, at the effective date of such
termination (or, if payable in respect of clause (ii), within ten business
days following such Change in Control), a lump sum payout at maximum of the
bonus otherwise payable to Employee with respect to the then current fiscal
year under the Annual Bonus Plan, such amount pro rated through the effective
date of such termination of employment. The amount provided for in the
immediately preceding sentence shall also be paid if Employee's employment
with the Company is terminated with Good Reason if the grounds constituting
Good Reason occur as the result of a Change in Control or within the stated
time frame at the request, directly or indirectly, of such a third party or
otherwise in connection with, or in anticipation of a Change in Control. If
(x) no payment is made pursuant to either of the two immediately preceding
sentences, (y) following a Change in Control and prior to the effective date
of termination of Employee's employment the Annual Bonus Plan is terminated
or amendments are made that materially adversely affect Employee and (z)
Employee's employment is not terminated prior to the end of the fiscal year
in which such termination or amendments occur, then, in lieu of any other
amounts payable to Employee under the Annual Bonus Plan with respect to such
fiscal year, Employee shall receive a lump sum payout at maximum within sixty
(60) days following the termination of the Annual Bonus Plan or the fiscal
year during which any such material amendments were made. The provisions of
this Section 13.09 shall survive the expiration of the Term, but only to the
extent necessary to determine whether a Change in Control occurs within the
12 to 18 month period described in clause (ii) of the first sentence of this
Section 13.09.
13.10. Notwithstanding any other provision of this
Agreement, Employer shall not be obligated or permitted to pay any amount in
respect of the Stock Awards or Stock Options pursuant to Section 4.04(d) or
4.04(e) if (i) the payment of such amount would result in a
39
violation of the terms or provisions of, or result in a default or an event
of default under, any guarantee, financing or security agreement or document
entered into by Employer or any of its subsidiaries, affiliates or successors
(such agreements and documents, as each may be amended, modified or
supplemented from time to time, are referred to herein as the "FINANCING
AGREEMENTS"), in each case as the same may be amended, modified or
supplemented from time to time, or (ii) the payment of such purchase price
would violate any of the terms or provisions of the Certificate of
Incorporation of Employer. In the event that the payment of any such amount
is prevented solely by the terms of this Section 13.10, the payment of such
amount will be postponed and will be made, with interest at an annual rate of
12% for the period of delay, at the first opportunity thereafter when
Employer has funds legally available therefor and when the payment of such
amount will not result in any default or event of default or violation by
Employer or any of its subsidiaries, affiliates or successors under any of
the Financing Agreements or in a violation of any term or provision of the
Certificate of Incorporation of the Employer. Employer shall endeavor in good
faith to negotiate in the Financing Agreements for the Transaction
appropriate baskets (including baskets with respect to payments in respect of
management equity) to the extent negotiation of the overall covenants under
such arrangements permits, provided Employee hereby acknowledges and agrees
that Employer's ability to utilize such baskets is typically subject to
company performance criteria and credit ratio standards set forth under such
Financing Arrangements.
13.11. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
13.12. Unless expressly provided herein or therein, the
expiration of the Term shall not alter or affect any rights or obligations of
Employer or Employee under any other
40
agreement or plan including, without limitation, the Award Agreement, the
Omnibus Plan, the Deferred Compensation Agreement, of even date herewith,
between Employer and Employee, and, to the extent provided under Section 7.02
above, the Annual Bonus Plan.
41
13.13. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall
be an original but all such counterparts together shall constitute one and
the same instrument.
DATED this 28th day of April, 2000.
EMPLOYEE:
/s/ Xxxx X. Xxxxxxxxxx
------------------------
XXXX X. XXXXXXXXXX
EMPLOYER:
HARVEYS CASINO RESORTS
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Its:
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