Exhibit 10
SILVER LEGACY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
--------------------------------------
Effective as of January 1, 2001
CIRCUS AND ELDORADO JOINT VENTURE, a Nevada general partnership (the
"Company") composed of Eldorado Limited Liability Company, a Nevada limited
liability company ("ELLC"), which is owned and controlled by Eldorado Resorts,
LLC, a Nevada limited liability company ("ERL"), and Galleon, Inc., a Nevada
corporation ("Galleon"), which is owned and controlled by Mandalay Resort Group,
a Nevada corporation ("MRG"), hereby adopts the Silver Legacy Supplemental
Executive Retirement Plan (the "Plan") for specified employees of the Company
upon the terms and conditions set forth below. The Plan is effective on January
1, 2001.
This Plan is adopted and is to be administered in connection with a related
Trust to which amounts may be contributed hereunder. The funds of the Trust are
and at all times will be subject to the claims of the general creditors of the
Company in the event of the insolvency or bankruptcy of the Company, as provided
in the Trust Agreement. It is intended that the Plan and Trust shall constitute
an unfunded deferred compensation supplemental retirement arrangement for a
select group of management or highly compensated employees for purposes of the
Federal income tax laws and the Employee Retirement Income Security Act of 1974
("ERISA"), and all documents, agreements or instruments made or given pursuant
to the Plan shall be interpreted so as to effect such intent.
1. PURPOSE OF THE PLAN
The purpose of this Plan is to attract and motivate key employees who
render valuable services to the Company by:
(i) improving the Company's overall compensation program and making it
more competitive in the market;
(ii) rewarding the loyalty of the most productive key employees of the
Company;
(iii) encouraging key employees by providing an attractive retirement
benefit as a reward for continued service;
(iv) providing an incentive for key employees to seek promotion within
the Company;
(v) offering a favorable recruiting tool for the hiring of key
employees in mid-career; and
(vi) providing a retirement incentive for key employees.
2. DEFINITIONS
The capitalized terms defined in this Section 2 shall have the meanings
set forth below:
2.1 Administrative Committee. The Administrative Committee of the Plan,
as appointed from time to time by the Company. Initially, the
Administrative Committee for the Tier II and Tier III participants in the
Plan shall consist of a member of the Executive Committee of the Company
elected by the Executive Committee, a person designated by the managing
Partner of the company, and the General Manager. The Administrative
Committee for Tier I participants shall consist of the Executive
Committee of the Company. The Administrative Committee shall report to
the Executive Committee each quarter.
2.2 Affiliate. Affiliate means with respect to any Person: (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person; or (ii) any other Person that owns beneficially,
directly or indirectly, fifty percent (50%) or more of the outstanding
capital stock, shares or equity interests of such Person; or (iii) any
officer, director, general partner (or in the case of a limited liability
company, manager) of such Person or any Person controlling or controlled
by such Person. For purposes of this definition, the term "controls," "is
controlled by," or "is under common control with" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. For the
purposes of this Agreement, ELLC, ERL, Galleon and MRG are deemed
Affiliates.
2.3 Beneficiary. The Beneficiary designated by the Participant to receive
any Benefits due under the Plan after the Participants death. If no
Beneficiary is designated, the Beneficiary shall be the Participant's
surviving spouse or, if none, the Participant's estate.
2.4 Benefit. The benefits provided under this Plan. Benefit shall refer
to the Normal Retirement Benefit, the Early Retirement Benefit, the
Delayed Retirement Benefit, the Disability Benefit or the Death Benefit,
as applicable.
2.5 Change of Control. A Change in Control of the Company shall mean: (i)
any acquisition, beneficially or otherwise, by any Person (or any group
of related Persons acting in concert) of more than fifty percent (50%) of
the total combined voting power of the Company's then outstanding
securities or more than fifty percent (50%) of partnership interests in
the Company (a series of acquisitions by a Party shall be treated as a
single transaction to the extent the aggregate number of securities
and/or equity interests acquired in such a series exceeds fifty percent
(50%); (ii) a merger, reorganization, divestiture, or consolidation in
which the securities representing more than fifty percent (50%) of the
total combined voting power of the Company's then outstanding securities,
or more than fifty percent (50%) of the partnership interests of the
Company are transferred to a Person or Persons; or (iii) the sale,
transfer, or other disposition of all or substantially all of the
Company's operating assets to any Person or Persons; provided, however, a
"Change In Control" shall exclude customary lending transactions,
transaction(s) between the existing partners of the Company,
transaction(s) between existing partners and affiliates of that partner,
transaction(s) between affiliate(s) of an existing partner with
affiliates of another existing partner and any transaction whereby the
existing parent entity of an existing partner, or an affiliate thereof,
acquires, directly or indirectly, all or a portion of, the Company's then
outstanding securities or partnership interests of another existing
partner or an affiliate thereof.
2.6 Code. The Internal Revenue Code of 1986, as it may be amended from
time to time.
2.7 Company. Circus and Eldorado Joint Venture, a Nevada general
partnership, or any designated subsidiary, affiliate or successor
corporation.
2.8 Compensation. Salary and bonus received by a Participant from the
Company for a calendar year (or for such other period of 12 months as may
be taken into account in determining Final Compensation) for his or her
service as an employee, with bonus being no more than one hundred percent
(100%) of salary for Tier II and III Participants and one hundred fifty
percent (150%) of salary for Tier I Participants. In any year in which a
Change of Control occurs, Compensation shall be annualized and used in
the calculation of Final Compensation.
2.9 Disability. A mental or physical disability due to sickness or injury
that renders a Participant permanently incapable of performing services
as an employee of the Company. Evidence of disability satisfactory to the
Administrative Committee will be required.
2.10 Early Retirement Age. Age 55.
2.11 Early Retirement Benefit. A Participant's Early Retirement Benefit
is the Benefit payable to a Participant who has terminated employment
with the Company and has attained an Early Retirement Date. A
Participant's Early Retirement Benefit shall be determined by reducing
the Participant's Normal Retirement Benefit by five percent (5%) for each
year, and the fraction thereof, the Participant's Early Retirement Date
precedes the Participant's attainment of age 60, up to a maximum
reduction of 25% for any Early Retirement Benefit payable at the Early
Retirement Age.
2.12 Early Retirement Date. A Participant's Early Retirement Date is the
first day of the month immediately following the month in which both of
the following events have occurred: the Participant's attainment of Early
Retirement Age and the Participant's termination of employment with the
Company.
2.13 Effective Date. The Plan is effective January 1, 2001.
2.14 Eligible Employee. An employee of the Company who meets the
eligibility requirements of Section 3.1.
2.15 Executive Committee. The governing board of the Company.
2.16 Final Compensation. Final Compensation for any Participant shall be
the highest total annual Compensation received by the Participant during
any one of the following periods: Each of the Participant's last five (5)
full calendar years with respect to which the Participant is credited
with a Year of Service under the Plan (or such fewer number of full
calendar years if the Participant has not been employed throughout five
(5) full calendar years) and the 12 month period ending on the date of
the Participant's termination of employment with the Company.
2.17 Normal Retirement Age. Age 65
2.18 Normal Retirement Benefit. A Participant's Normal Retirement Benefit
is the annual Benefit payable to a Participant who terminates employment
with the Company and has attained a Normal Retirement Date. A
Participant's Normal Retirement Benefit is determined under Section 4.
2.19 Normal Retirement Date. A Participant's Normal Retirement Date is
the first day of the month immediately following the month in which both
of the following events have occurred: the Participant's attainment of
Normal Retirement Age and the Participant's termination of employment
with the Company.
2.20 Participant. Any Eligible Employee, current or former, who may
receive benefits under the Plan.
2.21 Person. Person shall mean any individual, corporation, partnership,
business trust, joint venture, association, joint stock company, limited
liability company, trust, unincorporated organization or government or
agency or political subdivision thereof.
2.22 Plan. This Silver Legacy Supplemental Executive Retirement Plan, as
amended from time to time.
2.23 Plan Year. For the first Plan Year, the Plan Year will be the period
from the date the Plan is approved by the Executive Committee to December
31, 2001. For subsequent Plan Years, the Plan Year will be the calendar
year.
2.24 Trust. The Trust established in order to hold funds to provide the
Benefits under this Plan.
2.25 Trust Agreement. The Trust Agreement, as amended from time to time,
entered into between the Company and the Trustee with respect to the
Trust.
2.26 Trustee. The trustee(s) of the Trust as designated by the Executive
Committee.
2.27 Years of Service. A Year of Service for Vesting and Benefit accrual
purposes shall mean twelve full months of service with the Company. An
Eligible Employee shall be credited with a Year of Service for every
twelve full months of employment with the Company. In determining Years
of Service for these purposes, all Years of Service shall be taken into
account except, with respect to those participants whose participation in
the Plan commenced as of the date of the adoption of the Plan, Years of
Service attributable to periods prior to January 1, 2001 shall be taken
into account only up to a maximum of ten (10) Years of Service, and, with
respect to those Participants whose participation in the Plan commenced
or commences as of any date later than the date of the adoption of the
Plan, Years of Service attributable to periods prior to such date of
initial participation shall be taken into account only up to a maximum of
ten (10) Years of Service. In determining Years of Service, partial years
may be taken into account and aggregated in such a manner as the
Administrative Committee determines is appropriate. The Administrative
Committee, in its sole and absolute discretion, may include prior service
with predecessor or acquired entities in determining Years of Service
under the Plan and may make such other provisions for determining Years
of Service for Participants on a case by case basis, as it determines, at
its discretion, to be necessary or appropriate.
3. ELGIBILITY AND PARTICIPATION.
3.1 Eligible Employee.
(a) An Eligible Employee is a manager or highly compensated employee
who is selected by the Administrative Committee to participate in
the Plan. Exhibit I summarizes the criteria that may be used by
the Administrative Committee for selecting Eligible Employees for
the initial Plan Year and identifying the Tier into which each
Eligible Employee shall be placed. Such criteria may be changed
by the Administrative Committee at any time and from time to time
in its sole and absolute discretion. Notwithstanding anything
contained herein to the contrary, no employee of the Company
shall qualify as an Eligible Employee unless such employee is
employed by the Company on or after the Effective Date on a
substantially full-time basis. Whether an employee is employed on
a full-time basis shall be determined by the Administrative
Committee at it's discretion.
(b) In all cases, the Administrative Committee's determination of
eligibility and Tier level shall be final and binding on all
persons. The Administrative Committee also may change an Eligible
Employee from one Tier category to another or change an
employee's status from eligible to ineligible; provided, however,
that such a change shall not cause any vested benefits of such
Eligible Employee to be reduced below the level of such Eligible
Employee's Benefits determined immediately prior to the change in
Tier category.
(c) Each Eligible Employee who is an Eligible Employee on the
Effective Date shall become a Participant in the Plan as of the
Effective Date. Each Eligible Employee who becomes an Eligible
Employee subsequent to the Effective Date shall become a
Participant in the Plan of the first day of the month following
the month in which such person becomes an Eligible Employee.
4. BENEFIT FORMULA.
4.1 Eligibility for Benefits. A Participant who is fully vested, as
described in Section 5, shall be eligible to receive a Benefit under this
Plan following his or her termination of employment with the Company. The
amount, form and timing of a vested Participant's Benefit shall be
determined in accordance with the terms of this Plan.
4.2 Amount of Benefit. An Eligible Employee's Normal Retirement Benefit
payable under the Plan is an annual Benefit amount that shall be determined
by multiplying the Eligible Employee's applicable percentage ("Applicable
Percentage"), as determined from the following table based on the Eligible
Employee's final Tier placement, times the Eligible Employee's Final
Compensation.
Applicable Percentage
----------------------------------------------------------
Years of Service Tier I Tier II Tier III
---------------- ------ ------- --------
Less than four (4) 0% 0% 0%
Four (4), but less than six (6) 20% 15% 5%
Six (6), but less than eight (8) 25% 20% 10%
Eight (8), but less than ten (10) 30% 25% 15%
Ten (10), but less than twelve (12) 40% 30% 20%
Twelve (12), but less than fourteen (14) 50% 35% 25%
Fourteen (14) or more 60% 40% 30%
Notwithstanding the foregoing rule that the Applicable Percentage is
determined by an Eligible Employee's final Tier placement, reduction in an
Eligible Employee's Tier level shall not cause a reduction in the Eligible
Employee's Applicable Percentage.
Example (1): A Tier I Eligible Employee who has earned 10 Years of
Service with the Company, who has reached his Normal Retirement Date
and whose Final Compensation is $300,000 shall receive an annual Normal
Retirement Benefit calculated under the following formula:
40% x $300,000 = $120,000 annual Benefit.
Example (2): The Administrative Committee determines to change the
status of an Eligible Employee who has earned 6 Years of Service from a
Tier II to a Tier III Participant. At the time of the change in status,
the Participant's applicable percentage was 20%. Following the change,
the Participant's applicable status remains at 20% until the
Participant earns 12 or more Years of Service, at which time the
applicable percentage will be determined by reference to the schedule
of applicable percentages for Tier III.
4.3 Subject to the provisions of Sections 5.1 and 5.2, or as
otherwise approved by the Administrative Committee, an Eligible
Employee who terminates employment with the Company prior to the
Participant's Normal Retirement Age shall receive either the Early
Retirement Benefit or the Normal Retirement Benefit as elected by the
Participant.
4.4 A Participant who terminates employment with the Company after
having attained the Normal Retirement Age shall receive a Delayed
Retirement Benefit. A Delayed Retirement Benefit is payable upon a
Participant's termination of employment with the Company. The Delayed
Retirement Benefit for Tier II and Tier III Participants shall be equal
to the Normal Retirement Benefit which would have been payable upon the
Participant's Normal Retirement Age. The Delayed Retirement Benefit for
Tier I Participants shall be determined based upon the Participant's
Final Compensation and Years of Service at the Participant's actual
termination of employment with the Company.
5. VESTING; FORFEITURE FOR COMPETITION.
5.1 Vesting. A Participant shall become fully vested in his or her
Benefit under the Plan after the Participant has completed four (4)
Years of Service. A Participant shall have no vested interest in
Benefits under the Plan and shall receive no Benefits under the Plan
prior to the Employee's completion of four (4) Years of Service.
5.2 Forfeiture for Competition.
(a) Notwithstanding any provision of this Plan to the contrary
except as specifically provided for in Sections 5.2(b) and
5.2(c), no Participant shall directly or indirectly engage
in activities (similar or reasonably related to those in
which the Participant engaged as an employee of the Company
during the two years immediately preceding the termination
of the Participant's employment with the Company) or render
services (similar or reasonably related to those the
Participant rendered to the Company during such two years),
in either case with or to any firm or business organization
which directly competes with the Company in any line of
business engaged in (or planned to be engaged in) by the
Company, whether now existing or hereafter established, or
engage in such activities or render such services to any
other person or entity engaged or about to become engaged in
such activities to, for, or on behalf of, any such firm or
business organization, or entice, induce or encourage any of
the Company's other employees to engage in any activity
which, were it done by the Participant, would violate this
Section 5.2(a) or would violate any provision of any
proprietary information agreement entered between the
Participant and the Company. Any Participant who violates
the provisions of this Section 5.2(a) shall forfeit Benefits
under this Plan as follows: (i) a Participant who receives a
lump sum payment under this Plan shall be obligated to
restore such lump sum to the Plan upon engaging in any of
the prohibited activities described above; and, (ii) a
Participant who receives a form of benefit under the Plan
other than a lump sum shall received no further payments of
Benefits from the Plan following the date of the Company
becomes aware that the Participant has engaged in any of the
prohibited activities described above and shall be obligated
to restore to the Plan any Benefits paid to the Participant
prior to the
date the Company became aware that the Participant has
engaged in any of the prohibited activities described
above.
(b) Notwithstanding the foregoing, the Company may grant
to a Participant written approval(s) to engage
personally in any activity or render services referred
to in Section 5.2(a) if it secures written assurances
(satisfactory to the Company and its counsel) from the
Participant and from the prospective employer(s) that
the integrity of any proprietary information agreement
entered into between the Participant and the Company
will not in any way be jeopardized by such activities,
provided the burden of so establishing the foregoing
to the satisfaction of the Company and said counsel
shall be upon the Participant and the Participant's
prospective employer(s).
(c) If, following the occurrence of a Change of Control,
(i) the Company terminates a Participant's employment
without Cause (as hereinafter defined), or (ii) a
Participant terminates his or her employment with the
Company for Good Reason (as hereinafter defined), such
Participant shall not be subject to a forfeiture of
benefits under Section 5.2(a). For purposes of this
Section 5.2(c), the terms "Cause" and "Good Reason"
shall have the following meanings:
"Cause" shall mean fraud, misappropriation,
embezzlement, or other act of material misconduct
against the Company or any of its affiliates;
substantial and willful failure to perform specific
and lawful directives of the Executive Committee or of
a supervisor; willful and knowing violation of any
rules or regulations of any governmental or regulatory
body, which may be materially injurious to the
financial condition of the Company; conviction of or
plea of guilty or nolo contendere to any felony; or
any loss by the Participant of any personal gaming or
related regulatory approval or license required to
perform his or her duties.
"Good Reason" shall mean a demotion of the Participant
such that the Participant's overall annual
compensation is forty percent (40%) less than his or
her overall compensation for the one-year period
ending on the date of the Change of Control; a
reduction in the Participant's annual base salary in
effect immediately prior to the Change of control by
more than fifteen percent (15%); a change in the
Participant's site of principal employment to a
location that is more than 50 miles from the location
at which he or she was principally employed
immediately prior to the date of the Change of Control
(not including required travel on the Company's
business to an extent substantially consistent with
the Participant's business travel obligations
immediately prior to the Change of Control); any
failure by the Company to pay to the Participant any
portion of his or her compensation within fifteen (15)
days of the date such compensation is due; or any
failure of the Company to obtain the unqualified
agreement from any successor to assume or adopt this
Plan. Notwithstanding the foregoing, no event
enumerated above shall constitute Good Reason if the
Participant gives his or her express written consent
to such change in the terms of his or her employment.
In the event there is, following the occurrence
of a Change of Control, any dispute between the
Company and a Participant with respect to the
provisions of this Section 5.2(c), such dispute shall
not be subject to the claims procedures set forth in
the Plan, but shall be settled by binding arbitration
between the Participant and the Company in Reno,
Nevada, before a panel of three (3) arbitrators
pursuant to the rules and procedures of the American
Arbitration Association in effect from time to time,
or as otherwise may be agreed by the Participant and
the Company. The arbitrators shall be as mutually
agreed to by the Employer and the Participant, or as
otherwise determined by the rules and procedures of
the American Arbitration Association absent such
agreement. The arbitrators shall render an opinion in
writing setting forth the basis of their decision
which shall be final and binding upon the parties
hereto. The parties hereto specifically agree that
neither party may appeal or subject the award or
decision of any such arbitrator to appeal or review in
any court of law
or in equity or by any other tribunal, arbitration
system, or otherwise. Judgment upon any award granted
by such an arbitrator may be enforced in any court
having jurisdiction thereof.
(d) Notwithstanding anything set forth to the contrary in
the preceding paragraphs of this Section 5.2, the
Committee has the authority under this paragraph 5.2
(d) and under the general provisions for the
administrative discretion of the Committee, as set
forth in Section 8.3, to require the forfeiture of
benefits otherwise payable under the terms of the Plan
to any Participant who is determined by the Committee
to have been discharged for cause or who may have
engaged in any act or acts of disloyalty to the
Company, which acts include, but are not limited to,
fraud, embezzlement, theft, commission of a felony or
any other act of dishonesty in the course of his or
her employment, and any such act (whether committed
during or following such Participant's employment with
the Company) shall be treated for purposes of the plan
in the same manner as any act that would otherwise
constitute a violation of Section 5.2(a).
6. BENEFIT PAYMENT FORMS.
6.1 Retirement Benefits. A Participant shall elect the form in
which the Participant's Benefit shall be distributed. If the
Participant does not elect a distribution form, the Participant shall
be deemed to have elected the Normal Retirement Benefit or Single Life
Annuity, as defined below:
6.2 (a) Benefit Distribution Forms. A Participant may elect a
distribution form from among the following forms of distribution:
(i) Normal Retirement Benefit/Single Life Annuity. The
Normal Retirement Benefit is the amount of the Participant's annual
Benefit paid in equal quarterly installments for the life of the
Participant, commencing on the first day of the calendar quarter
coincident with or next following the Participant's Normal Retirement
Date. Under the Normal Retirement Benefit, no Benefits shall be paid to
any Beneficiary following the death of the Participant.
(ii) Single Life Annuity. A Participant who retires on or
after attainment of age 60 shall, absent an election to receive an
Optional Form of Benefit, receive a Single Life Annuity determined
using the formula set forth in the Plan (based only upon years of
service, compensation and Tier), with no reduction for commencement
prior to age 65. A Participant who retires before attainment of age 60
(but on or after attainment of age 55), shall, absent an election to
receive an Optional Form of Benefit, receive a Single Life Annuity
first determined under the formula set forth in the Plan and then
reduced by the appropriate percentage described in Section 2.10 (e.g.,
15% reduction if commencement is at age 57).
Example: A Participant retiring with $300,000 Final
Compensation and a 60% benefit level will have a Normal Retirement
Benefit of $180,000 per year for life commencing at age 65. The Single
Life Annuity payable to this Participant on retirement at age 60 would
also be $180,000 per year for life, commencing at age 60. The Single
Life Annuity payable to this Participant as an Early Retirement Benefit
at age 55, would be $135,000 ($180,000 reduced by 5% per year of early
retirement, 5 years, or 25%) per year for life commencing at age 55.
(b) Optional Forms of Benefits. The Optional Forms of
Benefit are described in this Section 6.2(b). Each Optional Form of
Benefit shall be actuarially adjusted as described below:
(i) Joint and Survivor Annuity. This Optional Form of
Benefit is the Actuarial Equivalent of the Participant's Single Life
Annuity as determined under Section 6.2(a)(i) paid in equal quarterly
installments for the life of the Participant and after the
Participant's death, a 50%, 75% or 100% continuation of such Benefit,
as elected by the Participant, payable to the Participant's Beneficiary
for life.
(ii) Life Annuity with ▇▇▇▇ ▇▇▇▇▇▇▇. This Optional Form of
Benefit is the Actuarial Equivalent of the Participant's Single Life
Annuity as determined under Section 6.2 (a)(i) paid in equal quarterly
installments for the life of the Participant with fixed payments over a
period of 5, 10, 15, or 20 years, as elected by the Participant.
(iii) Lump Sum. This Optional Form of Benefit pays a single
Lump Sum to the Participant and is available only at the discretion of
the Administrative Committee. The amount of this benefit payment shall
be the Actuarial Equivalent of the Participant's Normal Retirement
Benefit as determined in accordance with Sections 6.2(b)(vi) and
6.2(c).
Example: Assume a Participant retires and elects a Lump Sum
benefit at age 60, with $300,000 of Final Compensation and a 60%
benefit level. The Normal Retirement Benefit of $180,000 per year
commencing at age 65 would have a present value (determined as of the
date the Participant would attain age 65 and assuming survival until
age 65) of approximately $1,728,000. At age 60, this would have a
present value of approximately $1,291,000 (reflecting a 6% discount
rate over 5 years).
(iv) Estate Preservation Alternative. A Participant may
enter into such agreements or other documents as may be required by the
Company in order to have the Participant's Benefit applied to the
purchase of a life insurance policy or policies. If the Participant
elects such life insurance alternative form of distribution, the
Participant's Benefit payable under the Plan shall be determined by the
terms of such agreements and documents, including, without limitation,
the life insurance policy, and shall not be determined under the
formulas specified in this Section 6. This Estate Preservation
Alternative is available only at the discretion of the Administrative
Committee and shall have a present value that is the Actuarial
Equivalent of the Participant's Normal Retirement Benefit as determined
in accordance with Sections 6.2(b)(vi) and 6.2(c).
(v) Other Forms of Payment. Tier I Participants may request
from the Administrative Committee, pursuant to Section 6.1, prior to
the Participant's termination of employment, approval of a method of
payment different from those listed in Section 6.2(a) or (b), which
method of payment must be the Actuarial Equivalent of the Participant's
Normal Retirement Benefit as determined in accordance with Sections
6.2(b)(vi) and 6.2(c) and must consist of substantially equal annual or
quarterly payments over a period of no less than five (5) years. Such
approval shall be within the full discretion of the Administrative
Committee.
(vi) Lump-Sum, Estate Preservation, Other Forms of Payment.
These benefit forms are to be payable by first determining the amount
of the benefit that would be payable as the Normal Retirement Benefit
using the Participant's years of service, compensation and Tier. Where
the calculation is determined with reference to a payment date prior to
attainment by the Participant of age 65, the future value (using the
Actuarial Equivalence assumptions in effect under the Plan as of the
date of determination) of the Normal Retirement Benefit (determined as
of the first date it would be payable following the attainment of age
65 by the Participant) is determined, and then reduced to a present
value using the discount rate in effect under the Plan as of the date
of determination (initially, 6%). This present value is the amount of
the Lump Sum, the amount that would be payable for the purchase of an
insurance policy (under the Estate Preservation form of benefit), or
the amount used to determine the installment payments payable under
Sections 6.2(b)(v).
Example: Assume a Participant retires and elects an
installment payment of his or her benefit in the form of 10 equal
annual payments commencing at age 55, with $300,000 of Final
Compensation and a 60% benefit level.
Step 1 Calculate the Participant's Normal Retirement Benefit
commencing at age 65. This will be an annual benefit of $180,000.
Step 2 - Determine the value of the Normal Retirement Benefit
at age 65 using the Plan's Actuarial Equivalence assumption then in
effect. This equals approximately $1,728,000.
Step 3 - Discount this amount at 6% per year to reflect the
payment at age 55, 10 years before the assumed commencement date of the
Participant's Normal Retirement Benefit. This yields a present value of
approximately $964,000 at age 55.
Step 4 - Determine the installment payments needed to amortize
this amount over 10 years using a 6% factor. The annual payment equals
approximately $123,000.
(c) Actuarial Equivalence. For the purpose of calculating the
Optional Forms of Benefit in Sections 6.2(b)(i) and (ii), Actuarial
Equivalent shall be determined by using a discount rate and a mortality
assumption adopted from time to time by the Administrative Committee.
The initial factors to be used are a discount rate of 6% and a
mortality assumption based upon the 1984 Uniform Pension Mortality
Table. For the purpose of calculating the Optional Forms of Benefit in
Sections 6.2(b)(iii), (iv) and (v), Actuarial Equivalent shall be
determined by calculating the present value of the Normal Retirement
Benefit as of the date the Participant would attain age 65 and assuming
the survival until age 65, using the discount rate and mortality
assumption identified in this Section 6(c), and then reducing that
amount to a present value by using the discount rate in effect for this
purpose under the Plan (initially, 6%). Where Actuarial Equivalent is
determined with respect to an Optional Form of Benefit that is payable
after the attainment by a Participant of age 65, the determination
shall be made by reference to the Normal Retirement Benefit that would
be payable to such Participant if no Optional Form of Benefit had been
elected.
6.3 Time of Payment of Benefits Following Termination of Employment.
(a) General Rule for Time Payments. A Participant who has a
------------------------------
vested interest in his or her Benefits under the Plan and who
has terminated his or her employment with the Company prior to
attaining age 60 shall, unless an alternative election
concerning commencement of benefits has been validly and timely
made, commence receiving Benefits upon the first day of the
calendar quarter next following the Participant's attainment of
age 60. A Participant who has a vested interest in his or her
Benefits under the Plan and has attained age 60 as of his or her
termination of employment with the Company shall commence
receiving his or her Benefits as of the first day of the
calendar quarter next following his or her termination of
employment. A Participant shall be permitted to elect an
alternate date as of which his or her Benefits are to commence;
provided, however, that any such alternate commencement date
shall not be earlier than the first day of the calendar quarter
next following the Participant's Early Retirement Date, and
provided, further, that any election of an alternate date for
the commencement of benefits may be made by filing a written
election with the Administrative Committee at least one year
before both the date on which Benefit Payments would commence to
be paid but for such written election and at least one year
before the date Benefit Payments would commence pursuant to such
written election.
(b) Examples. If a Participant were to elect in writing upon
--------
first becoming a Participant to have distribution of his or her
Benefits commence as soon as permissible following termination
of employment, and then terminates employment with a vested
benefit having attained age 58, the Benefits payable to such
Participant would commence to be distributed as of the first day
of the calendar quarter following his or her termination of
employment, and would be payable with a reduction to the
periodic payment to take into account the commencement of
payment prior to attaining age 60. If this same Participant
files a new election in writing requesting that distribution of
Benefits not commence until the first calendar quarter following
the later of his or her attainment of age 60 or termination of
employment, but filed this election only one month prior to
terminating employment at age 58, Benefits payable under the
Plan would commence to be distributed to the Participant as of
the first day of the calendar quarter following termination of
employment (i.e., the latter election would be disregarded)
because the election was not filed one year prior to the date
distribution of Benefits would have commenced but for the
election. The original election, therefore, continues in effect
without change. In contrast, if the later election were filed
one year before the date on which the Participant terminates
employment at age 58, distribution of Benefits would be deferred
until the first day of the calendar quarter following the
Participant's attainment of age 60, and would be paid without
reduction to the periodic payments.
(c) Discretion of Administrative Committee.
--------------------------------------
Notwithstanding the foregoing, the Administrative Committee,
in its sole discretion, and in accordance with section 8, may
cause the benefits to be payable to a participant at an
earlier or later date.
6.4 Disability Benefits.
(a) If a Participant terminates employment with the
Company prior to Normal Retirement Age as a result of
the Participant's Disability, the Participant shall
receive a Disability Benefit. The Disability Benefit
payments shall commence on the first day of the
calendar quarter coincident with or next following
the date the Participant terminates or attains the
Early Retirement Date, whichever is later. The
Participant's Disability Benefit shall be calculated
in the same manner as the Participant's Normal
Retirement Benefit and shall be paid in the Normal
Form of Benefit, unless the Participant previously
elected, in accordance with Section 6.2, an alternate
form of distribution.
(b) If a Participant terminates employment with the
Company as a result of the Participant's Disability
coincident with or following the attainment of the
Participant's Normal Retirement Age, the
Participant's Disability Benefit shall be calculated
in the same manner as the Participant Normal
Retirement Benefit and shall be paid in the Normal
Form of Benefit unless the Participant previously
elected, in accordance with Section 6.2, an alternate
form of distribution. The amount of the payments made
to a Participant who has terminated employment as a
result of his or her Disability shall not be subject
to any reduction on account of the commencement of
such payments prior to such Participant's Normal
Retirement Age.
(c) Notwithstanding the foregoing, no Participant shall
be eligible for any Disability Benefit unless such
Participant is fully vested under the Plan as of the
date such Participant's employment terminates as a
result of his or her Disability. In addition, for
purposes of benefits payable as Disability Benefits
under this Section 6.4, the Normal Form of Benefit
payable to a disabled Participant who has made no
election as to any alternative form of Benefit prior
to his or her termination of employment on account of
Disability shall, with respect to an unmarried
Participant, be a Single Life Annuity as described in
Section 6.2(a), and shall, with respect to a married
Participant, be a 100% Joint and Survivor Annuity as
described in Section 6.2(b)(i), with participant's
spouse as the beneficiary.
(d) If a Participant who has terminated employment with
the Company as a result of his or her Disability
ceases to suffer from a Disability on or after
attainment of age 60, his or her Benefit shall
continue to be paid without any adjustment. If a
Participant who has terminated employment with the
Company as a result of his or her Disability ceases
to suffer from a Disability, as determined at the
discretion of the Administrative Committee, prior to
attainment of age 60, the Benefit payable to such
Participant shall be adjusted on a prospective basis
as follows:
(i) If Disability Benefit payments have not
already commenced, the Participant shall be
paid in the same form of benefit as elected
or otherwise paid under the provisions of
this Section 6.4, but shall be adjusted in
amount so as to be equal to the Benefit
payment that would be made if the
Participant had terminated his or her
employment as of the date the Administrative
Committee has determined the Participant's
Disability ceased, with the Applicable
Percentage and Final Compensation determined
as of the date the Participant actually
terminated employment as a result of his or
her Disability. In all other respects, the
Participant's Benefit shall be subject to
all of the terms and conditions of the Plan,
including but not limited to the provisions
of Section 5.2 relating to Forfeiture for
Competition.
(ii) If Disability Benefit payments have already
commenced in the Normal Form of Benefit as
defined for purposes of this Section 6.4,
the Benefit payments made on or after the
date the Administrative Committee has
determined the Participant's Disability
ceased, shall be adjusted so that each such
Benefit payment shall be equal to the amount
that would have been payable under the Plan
if the Participant had terminated employment
as of the date his or her Disability is
determined to have ceased with the
Applicable Percentage and Final Compensation
determined as of the date the Participant
actually terminated employment as a result
of his or her Disability, with commencement
of Benefit payments immediately thereafter.
In all other respects, the Participant's
Benefit shall be subject to all of the terms
and conditions of the Plan, including but
not limited to the provisions of Section 5.2
relating to Forfeiture for Competition.
(iii) If any Participant who has terminated his or
her employment as a result of a Disability
returns to employment, such Participant
shall thereafter have no rights to any
Disability Benefit unless his or her
employment terminates subsequent to such
reemployment under conditions that are
determined to create a right to a Disability
Benefit at that time. Any such re-employed
Participant shall have his or her benefits
determined under the Provisions of the Plan
as generally applicable to Participants who
have not terminated employment as a result
of a Disability. No reduction in benefit
payments shall be made on account of
Disability Benefits, if any, paid to a
Participant prior to his or her
reemployment.
6.5 Death Benefits. If a Participant dies prior to or while
receiving Benefits hereunder, Benefits, if any, shall be paid to the
Participant's Beneficiary as follows:
(a) If a Participant who is Vested in his or her Benefit
under the Plan dies prior to terminating employment
with the Company, a Lump Sum payment which is the
Actuarial Equivalent of the Participant's Normal
Retirement Benefit, shall be paid to the
Participant's Beneficiary.
(b) If a Participant dies after the Participant
terminates employment with the Company, the death
Benefit payable to the Participant's Beneficiary
shall be determined by the distribution form of
Benefit previously elected by the Participant. For
this purpose, the Participant, if not yet in pay
status at the time of his or her death, shall be
deemed to have commenced receiving distributions on
the day prior to the date of his or her death.
6.6 Section 280G Adjustments.
(a) Notwithstanding any other provision of this Plan to
the contrary, if any distribution received or to be
received by a Participant pursuant to the Plan
("Distribution") would (i) constitute a "parachute
payment" within the meaning of Section 280G of the
Code and (ii) but for this subsection (a), be subject
to the excise tax imposed by Section 4999 of the Code
(the "Excise Tax"), then, subject to the provisions
of subsection (b) hereof, such Distribution shall be
reduced to the largest amount which the Participant,
in his or her sole discretion, determines would
result in no portion of the Distribution being
subject to the Excise Tax. The determination by a
Participant of any required reduction pursuant to
this subsection (a) shall be conclusive and binding
upon the Company. The Company shall reduce a
Distribution in accordance with this subsection (a)
only upon written notice by the Participant
indicating the amount of such reduction, if any. If
the Internal Revenue Service (the "IRS") determines
that a Distribution is subject to the Excise Tax,
then subsection (b) hereof shall apply, and the
enforcement of subsection (b) shall be the exclusive
remedy to the Company for a failure by the
Participant to reduce the Distribution so that no
portion thereof is subject to the Excise Tax.
(b) If, notwithstanding any reduction described in subsection (a)
hereof (or in the absence of any such reduction), the IRS
determines that a Participant is liable for the Excise Tax as
a result of the receipt of a Distribution, then the
Participant shall be obligated to pay back to the Company,
within 30 days after final IRS determination, an amount of
the Distribution equal to the "Repayment Amount". The
Repayment Amount with respect to a Distribution shall be the
smallest such amount, if any, as shall be required to be paid
to the Company so that the Participant's net proceeds with
respect to any Distribution (after taking into account the
payment of the Excise Tax imposed on such Distribution) shall
be maximized. Notwithstanding the foregoing, the Repayment
Amount with respect to a Distribution shall be zero if a
Repayment Amount of more than zero would not eliminate the
Excise Tax imposed on such Distribution. If the Excise Tax is
not eliminated pursuant to this subsection (b), the
Participant shall pay the Excise Tax.
7. SOURCE OF BENEFITS.
7.1 Benefits payable under this Plan shall be paid out of the Trust
except to the extent such Benefits are paid by the Company out of
the Company's general assets.
7.2 Notwithstanding any other provisions of this Plan or the Trust
Agreement, the assets of the Trust are subject to the claims of the
general creditors of the Company to the extent provided in the Trust
Agreement. Participants shall have no preferred claim on or
beneficial ownership interest in any Trust assets prior to the time
actual payments of Benefits are received, and all rights of the
Participants to Benefits are mere unsecured contractual rights
against the Company. Except in the event of a Change of Control, as
set forth in Section 10, the Company has no duty or obligation to
fund the Trust. The Company may, however, in its discretion, make
contributions of cash or property to the Trust in such amounts and
from time to time as the Company shall determine.
8. ADMINISTRATION.
8.1 General. This Plan shall be administered by the Administrative
Committee, which shall exercise all administrative powers and duties under the
Plan in accordance with the terms and purposes of the Plan and the Trust
Agreement, including, without limitation, the authority to amend or terminate
the Plan. The Administrative Committee shall determine the amount of the
Benefits due to or on behalf of each Participant of Beneficiary from this Plan
and shall cause them to be paid accordingly. The Administrative Committee shall
have the power to employ agents, attorneys, accountants or other persons (who
also may be employed by the Company) and to allocate or delegate to them such
powers, rights and duties as the Administrative Committee may consider necessary
or advisable to properly carry out administration of the Plan, provided that
such allocation or delegation and the acceptance thereof by such agents,
attorneys, accountants or other person, shall be in writing.
8.2 Procedures. The Administrative Committee may adopt such rules and
regulations not inconsistent with the provisions of the Plan as it deems
necessary or appropriate for the proper administration of the Plan and shall
have the authority, in its sole and absolute discretion, to interpret and
construe any provision of the Plan. All such rules, regulations, interpretations
and constructions shall be final and binding on all Participants and their legal
representatives, beneficiaries, successors, and assigns, subject to review as
provided in Section 8.4.
8.3 Administrative Committee Discretion. Notwithstanding anything set
forth in the Plan to the contrary, the Administrative Committee shall have the
right, at its sole discretion, to impose any conditions it deems appropriate, or
to make any modifications it deems appropriate, with respect to the manner in
which any individual participates in the Plan, which discretion shall include,
but is not limited to, the right to modify the manner in which a Participant's
service for either Vesting or for Benefit accrual is determined, to impose
individual conditions which are required to be met prior to the payment of any
Benefits under the Plan, the establishment of events which, with respect to any
individual or any group of Participants, shall be events of forfeiture, the
occurrence of which shall result in a forfeiture of all or a portion of the
Benefits otherwise payable to a Participant or Participants; provided, however,
that no change in the terms of a Participant's participation in the Plan shall
be applicable to any Benefits that have accrued prior to the date such change is
made by the Administrative Committee.
8.4 Claims. A submission of a written request for Benefits by the
Participant of a Beneficiary (the "Claimant") will constitute a claim. If, after
review, the claim is approved, the Benefits will be distributed as provided in
the Plan. If the claim is denied in whole or in part, the Company will notify
the Claimant in writing within 90 days after receiving the claim. In this event,
the Company will provide the specific reasons for its decision and references to
the Plan provisions on which the decision is based. The Company also will
specify any additional information or material that must be submitted to prove
the claim and explain how to appeal a denied claim.
While the Company ordinarily has 90 days after receipt of a claim to
respond in writing, there may be times when the Company requires more time to
process the claim. Should this situation occur, the Company will notify the
Claimant within the initial 90-day period that the Company requires an extension
of time to make its decision. However, the extension of time will not exceed an
additional 90 days from the end of the initial 90-day period. If the Claimant
has not received a response from the Company within 90 days or any extension of
such period, the Claimant may treat the claim as denied, and the Claimant may
appeal and seek a review of the claim.
Should a claim for Benefits be denied, or deemed denied, in whole or in
part, the Claimant may appeal the denial by submitting a written request for
review to the Company after receiving the denial (or the deemed denial). The
written request should set forth all the grounds on which it is based. The
Claimant, or the Claimant's representative, also may review pertinent Plan
documents and submit issues and comments in writing to the Company. The Company
will review the appeal, and will notify the Claimant of its decision in writing,
ordinarily within 60 days. There may be times when the Company will require more
time to review an appeal. If this happens, the Claimant will be notified within
the initial 60-day period that the Company requires an extension of time to make
its decision. The extension will be no longer than 120 days after receipt of the
appeal. The Company's written response to the appeal will give the reasons for
its decision and references to Plan provisions on which the decision is based.
8.5 Indemnification. To the extent permitted by applicable state law,
the Company shall indemnify and save harmless the Administrative Committee and
each member thereof, the Executive Committee and any delegate of the
Administrative Committee who is an employee of the Company against any and all
expenses, liabilities and claims, including legal fees to defend against such
liabilities and claims arising out of their discharge in good faith of
responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct or gross negligence. This
indemnity shall not preclude such further indemnities as may be available under
insurance purchased by the Company or provided by the Company under any bylaw,
agreement or otherwise, as such indemnities are permitted under state law.
9. AMENDMENT AND TERMINATION.
9.1 Amendment or Termination. While the Company intends and expects
the Plan to continue to fulfill its purposes and serve the best interests of the
Company in its present form, the Company reserves the right to amend or
terminate the Plan at any time, subject o the provisions of Section 9.2 and
Section 10. The Company has delegated to the Administrative Committee the
authority to amend or terminate the Plan.
9.2 Accrued Benefits. No termination of the Plan or Trust Agreement
or any amendments thereto which affect Benefits under the Plan shall, without
the written consent of a Participant, eliminate or reduce any Benefit of the
Participant under the Plan to which, as of the date of such termination or
amendment, such Participant would be entitled under the provisions of the Plan
had he or she terminated employment with the Company immediately prior to such
date.
10. CHANGE OF CONTROL OF THE COMPANY.
In the event of a Change of Control of the Company, the Company shall
make a contribution to the Trust in an amount necessary to fully fund the Trust
in order to pay each Participant his or her Normal Retirement Benefit. For this
full funding calculation, each Participant shall be deemed to have continued
employment with the Company to the Participant's Normal Retirement Age (taking
into account for this full funding calculation the Participant's enhanced
Benefit as described in the next sentence). In addition, each Tier II and Tier
III Participant in the Plan, as of the effective date of the Change of Control,
shall receive enhanced Benefits under the Plan calculated as if the Participant
had earned two additional Years of Service as of the effective date of the
Change of Control. For example, if, upon the effective date of a Change of
Control, a Participant has earned six (6) Years of Service, the Participant's
Benefit shall, for all
purposes under this Plan, effective as of and following the effective date of
the Change of Control, be calculated as if the Participant had earned two (2)
additional Years of Service. Each Tier I Participant in the Plan, as of the
effective date of the Change of Control, shall receive Benefits determined at
the Applicable Rate of sixty percent (60%). For purposes of this Section 10, a
Participant's Tier level shall be determined as of the effective date of the
Change of Control.
In any event, no Change of Control shall, without the written consent
of a Participant, eliminate or reduce any Benefit to which such Participant
otherwise would be entitled under the terms of the Plan. For purposes of this
paragraph, such Benefits shall be calculated as if the Participant had
terminated employment as of the effective date of the Change of Control.
11. MISCELLANEOUS.
11.1 No Right to Continued Employment. Nothing contained in this
Plan or in any agreement or instrument executed pursuant to
the Plan shall be construed as conferring upon any Participant
the right to continued employment with the Company or to
interfere with the right of the Company to discharge any
employee or any other person at any time or for any reason,
which right is hereby reserved.
11.2 Successors and Assigns. This Plan shall be binding upon the
Company and its successors and assigns.
11.3 Assignment or Alienation. Benefits of Participants under this
Plan may not be anticipated, assigned (either by law or in
equity), transferred, alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable
process.
11.4 Headings. The headings herein are for reference only. In the
event of a conflict between a heading and content of a Section
of this Plan, the content of the Section shall control.
11.5 Gender and Number. Whenever used herein, the masculine shall
be interpreted to include the feminine and neuter, the neuter
to include the masculine and feminine, the singular to include
the plural and the plural to include the singular, unless the
context requires otherwise.
11.6 Governing Law. The place of administration of this Plan shall
conclusively be deemed to be within the State of Nevada, and
the Plan shall be governed by and in all respects construed in
accordance with the substantive laws of the State of Nevada,
except where such laws are superseded by applicable federal
laws.
IN WITNESS WHEREOF, the Company has executed this Plan effective as of
January 1, 2001.
CIRCUS AND ELDORADO JOINT VENTURE
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇▇
EXHIBIT I
SILVER LEGACY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Proposed Schedule of Eligibility Criteria for Initial 2001 Plan Year.
The criteria presented in this Exhibit I may be used by the
Administrative Committee for selecting Eligible Employees for the
Plan's initial 2001 year. The Administrative Committee reserves the
right to change the criteria presented in this Exhibit I at any time
and from time to time, in its sole and absolute discretion.
(a) Eligible Employees shall be classified as Tier I Eligible
Employees, Tier II Eligible Employees or Tier III Eligible
Employees.
(i) Tier I Eligible Employees shall consist
generally of employees who are Executive or
Senior Vice Presidents or above, the General
Manager of the Company and certain other key
executives, in any case having total annual
Compensation of not less than $250,000.
(ii) Tier II Eligible Employees shall consist
generally of employees who are major
Department Heads, and other executive
employees who are designated by the
Administrative Committee as eligible to
participate in the Plan at the Tier II
level, in any case having a total annual
Compensation of not less than $100,000.
(iii) Tier III Eligible Employees shall consist
generally of other Department Heads having
total annual Compensation of not less than
$100,000.