EXHIBIT 10.4
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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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supplemented, or superceded the "Acquisition Agreement") pursuant to which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
1
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
2
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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
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 President and Chief
Executive Officer 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.
2.02. Subject to the supervision and control of the Board, Employee
shall do and perform all services and acts necessary or advisable to fulfill the
duties and responsibilities
3
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 developing, directing and implementing the operation of the business and the
Company's policies and plans and assisting the Company in consummating the
Transaction, in each case, as determined by the Board. 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 President
and Chief Executive Officer 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.
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
4
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.
2.06. Employee shall continue to serve as a member of the Board
(though not as Chairman) following the Effective Date. In addition, during the
Term, Employee shall be nominated for election to the Board at each meeting of
stockholders at which directors are to be elected, and Employer shall use its
best efforts to provide for Employee's election to the Board at each such
meeting. Notwithstanding the foregoing provisions of this Section 2.06, Employee
agrees to promptly resign his position on the Board and become a non-voting
observer on the Board (with rights equivalent to those of an employee director
other than voting rights) if, and for so long as (absent such resignation)
members of the Board who are also employees of Colony Capital, Inc. or its
affiliates (other than Employer or any of its subsidiaries) would not otherwise
constitute at least a majority of the members of the Board. During such period
as Employee shall by reason of such circumstances be a non-voting observer on
the Board, Employer shall diligently use commercially reasonable, good faith
efforts (subject to applicable gaming approvals, licensing requirements and
other regulatory determinations) to attempt to cause one or more additional
employees of Colony Capital, Inc. or its affiliates (other than Employer or any
of its subsidiaries) to be appointed to the Board, such that Employee may resume
his position as a voting member of the Board consistent with the provisions of
the immediately preceding sentence. Employee also agrees that effective upon
notice being provided of his termination of employment with Employer, he shall
immediately resign from his position as a non-voting observer or member of the
Board, as applicable.
5
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.
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
6
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").
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).
7
(i) "Applicable Multiplier" shall mean the lesser of (A) 2.0 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 Post-Term Restriction Period (as defined below and further
described in Annex E) if an election to have such Post-Term 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 70 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 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 Post-Term 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
8
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.
(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
9
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
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
10
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 business days, following the Termination Date, in an
amount equal to the product of (x) 2.0 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 24 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
11
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:
(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
12
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
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
13
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 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
14
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 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
15
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 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
16
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.
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.
17
(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 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
18
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
Board, 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
President and Chief Executive Officer of Harveys, or (D) Employer reduces
the rate of Employee's Base 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
19
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;
(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
20
(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.
VII.
COMPENSATION OF EMPLOYEE
7.01. Base Salary - Employee shall receive an annual base salary
("Base Salary") of Five Hundred Seventy Thousand Dollars ($570,000), 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 performance-based criteria to be determined by the Board.
21
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 $360,000. 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 $130,000 (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 "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
22
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 dollar-for-dollar 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 270
shares of the Class A common stock, par value $.01 per share, of Harveys ("Class
A Common Stock") and 27,000 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 360 additional shares of Class A Common Stock and
36,000 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
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 $1 million if (i)
(A)Employee remains in the continuous employment of Employer from the date
hereof to the Acquisition Effective Date or (B)
23
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 $500,000. 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
$500,000 as soon as reasonably practicable, but in no event more than 10
business days, following the Termination Date and, in the event the Transaction
is thereafter consummated, Employer shall pay Employee an additional $500,000 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
24
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 $350,000 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, 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
25
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 $245,000
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").
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.
26
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.
8.08. Life Insurance - (a) 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.
(b) Convertible Term Life Insurance - During the Term, Employer shall
furnish Employee with a Convertible Term Life Insurance Policy in the face
amount of FIVE HUNDRED THOUSAND DOLLARS ($500,000), PROVIDED, that Employee
continues to be an insurable risk. Upon termination of Employee's
employment under any circumstances, Employee shall have the right to have
such policy assigned to him,
27
PROVIDED, that Employee agrees to bear all costs and expenses of such
assignment and of maintaining such policy following the date of such
termination of employment (and that he shall not have the benefit of
Employer's group life insurance rates with respect thereto), and to hold
harmless and indemnify the Company with respect thereto. If such policy is
not so assigned to Employee, Employee's rights thereunder shall expire as
of the effective date of his termination of employment with Employer.
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
lower-ranking 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.
28
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 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
29
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, 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 land-based 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
30
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 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
31
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 Post-Term
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).
(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
32
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, 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.
33
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, 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.
34
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
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
35
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 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.
13.02. 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
36
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 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:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, Harrison, Harvey, Branzburg & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: 215-568-6603
Employer:
HARVEYS CASINO RESORTS
Attn: Corporate Secretary
Highway 50 and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
37
WITH A COPY TO:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Colony Capital, Inc.
Suite 1200
1999 Avenue of the Stars
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
AND TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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
38
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 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 gross-up 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
39
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, 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
40
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 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
41
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 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.
42
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EMPLOYER:
HARVEYS CASINO RESORTS
By: /s/ ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇. JR.
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
Its:
43