Exhibit 10.28
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 2nd day of February, 1999, 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 has previously served as an employee of HARVEYS pursuant
to that certain employment agreement, dated January 13, 1994, as amended (the
"Prior Agreement"); and
WHEREAS, HARVEYS and Harveys Acquisition Corporation, a Nevada corporation
("ACQ CORP"), have entered into an Agreement and Plan of Merger dated as of
February 1, 1998 (the "Merger Agreement"), whereby ACQ CORP will be merged with
and into HARVEYS (the "Merger"); and
WHEREAS, in connection with the Merger Agreement, HARVEYS and EMPLOYEE,
together with other members of HARVEYS management, have entered into a
Memorandum of Understanding, dated February 1, 1998 (the "MOU"), which sets
forth, among other things, certain terms regarding EMPLOYEE'S employment with
HARVEYS following consummation of the Merger, including the execution of a new
employment agreement to replace the Prior Agreement; and
WHEREAS, following consummation of the Merger, HARVEYS desires to continue
to secure the benefits of EMPLOYEE'S background, knowledge, experience, ability,
expertise and industry to promote and maintain HARVEYS' stability, growth,
viability and profitability; and
WHEREAS, subject to consummation of the Merger, HARVEYS desires to continue
to engage the services of EMPLOYEE, who is desirous of continued employment by
HARVEYS, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, together with other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto do hereby agree
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, and any entity to which
all or substantially all of the assets or businesses of HARVEYS is transferred.
II.
NATURE OF EMPLOYMENT AND DUTIES OF EMPLOYEE
2.01 Subject to and effective upon the consummation of the Merger, EMPLOYEE
shall continue to serve HARVEYS as Executive Vice President and Chief Operating
Officer of HARVEYS. 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 and EMPLOYER'S
Chief Executive Officer, EMPLOYEE shall do and perform all services and acts
necessary or advisable to fulfill the duties and responsibilities of his
position and shall render such services on the terms set forth herein. Without
limiting the generality of the foregoing, EMPLOYEE shall be responsible for
directing EMPLOYER'S property operations and implementing EMPLOYER'S policies
and goals at such properties. 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 office of Executive Vice President and
Chief Operating 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.
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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, except as permitted by clause (C) of Section 10.01,
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 except as permitted by clause (C) of Section 10.01, 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 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 Las Vegas, 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 During the Term and until such time as he shall be appointed as a
member of the Board pursuant to the following sentence, EMPLOYEE shall be
entitled to serve as a non-voting observer on the Board, with rights equivalent
to those of an employee director other than voting rights. As soon as reasonably
practicable following the completion of HARVEYS' Initial Public Offering (as
defined below), EMPLOYEE shall be appointed as a member of the Board.
Subsequently during the Term, EMPLOYEE shall be nominated for election to the
Board of Directors 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 of Directors at each
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such meeting. Notwithstanding the foregoing provisions of this Section 2.06,
EMPLOYEE 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. For purposes of this
Agreement, "Initial Public Offering" shall mean the closing of a public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended covering shares of HARVEYS common stock, which shares are
approved for listing or quotation on the New York Stock Exchange, American Stock
Exchange or Nasdaq National Market.
III.
TERM AND GENERAL CONDITIONS OF EMPLOYMENT
3.01 Subject to and effective upon consummation of the Merger, EMPLOYER
hereby employs the EMPLOYEE, and EMPLOYEE hereby agrees to be employed by
HARVEYS for a period of five (5) years commencing on the date of consummation of
the Merger (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 shall be
cancelled and terminated without further obligation of EMPLOYER.
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3.04 If the Merger Agreement shall be terminated prior to consummation of
the Merger, EMPLOYEE shall continue his employment with HARVEYS pursuant to the
terms of the Prior Agreement, which in such case shall remain in full force and
effect.
3.05 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 as
of the date hereof 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. EMPLOYEE further acknowledges that as of the
Effective Date, EMPLOYEE shall no longer be a participant in or have any rights
under the Change of Control Plan (or under any such other severance plan,
policy, agreement or arrangement in effect immediately prior to the Effective
Date), 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 at any time 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, EMPLOYEE
shall be entitled to the following benefits:
(a) Except as provided below, EMPLOYEE shall be entitled to receive on
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).
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(i) "Applicable Multiplier" shall mean the lesser of (A) 1.5 and
(B) a fraction, the denominator of which is 12, and the numerator of which
shall be the number of full plus partial (calculated by the day) months
remaining in the Term following the Termination Date, which numerator shall
be increased by the number of full plus partial (calculated by the day)
months during any 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), EMPLOYEE'S annual
target bonus under the Annual Bonus Plan (as defined in Section 7.02 below)
for each fiscal year during the Term shall be deemed to be 50 percent of
EMPLOYEE'S Base Salary as in effect as of the date the relevant business
plan targets for such fiscal year are established by the Board.
(iii) For purposes of this Agreement, the "Post-Term Restriction
Period" shall mean that period, if any, following expiration of the Term
during which EMPLOYEE would 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) on 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.
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(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 "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 (as defined in
Section 7.03 below), 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 Severance Period.
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 during the term hereof EMPLOYEE'S employment shall terminate by
reason of his death or Disability (as defined below), he or his estate, as
applicable, shall be entitled to (i) all amounts of Base Salary and Benefits
accrued but unpaid through the date of such termination (which shall be the date
of death or the 45th day after the date EMPLOYER provides EMPLOYEE notice of
termination for Disability) and (ii) any death and/or disability benefits that
may be due EMPLOYEE under any benefit plans in effect from time to time.
"Disability" shall mean any physical or mental disability that prevents EMPLOYEE
from performing one or more of the essential functions of his position for a
period of not less than six (6) months in any continuous 12-month period. Except
as set forth in this Section 4.03 and Section 13.08, all other rights of
EMPLOYEE (and, except as provided in this Section 4.03 and Section 3.02 above
and Section 13.08, all obligations of the EMPLOYER) hereunder shall terminate as
of the date of such termination of employment.
V.
TERMINATION OF EMPLOYMENT AT EMPLOYEE'S REQUEST
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5.01 EMPLOYEE may, at EMPLOYEE'S sole option and right, terminate his
employment with EMPLOYER at any time, with or without Good Reason (as defined
below). Any such termination shall be effective only upon thirty (30) days'
prior written notice to HARVEYS.
(a) In the event of such termination of employment without Good
Reason, EMPLOYEE shall be entitled to receive all amounts of Base Salary and
Benefits accrued but unpaid through the date of such termination.
(b) In the event of such termination of employment with Good Reason,
EMPLOYEE shall be entitled to receive the benefits set forth in Sections
4.02(a)-(c) 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.
For purposes of this Section 5.01, EMPLOYEE shall have "Good Reason"
to terminate his employment hereunder if (i) EMPLOYER shall, without EMPLOYEE'S
written consent, willfully and materially breach its obligations under this
Agreement, (ii) 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
(iii) within thirty (30) days following the date of such notice EMPLOYER shall
not have cured such breach. Except as set forth in this Section 5.01 (and, as
incorporated hereinabove by reference, Section 4.02) 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.
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:
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(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
(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.
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VII.
COMPENSATION OF EMPLOYEE
7.01 Base Salary - EMPLOYEE shall receive an annual base salary ("Base
Salary") of Four Hundred Thousand Dollars ($400,000), 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.
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 $240,000. 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 date hereof, EMPLOYER shall pay 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 $73,750 (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
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the Overall 1999 Bonus Entitlement, EMPLOYEE shall have no obligation to repay
any portion of the Advance to EMPLOYER, and no portion of the Advance shall be
offset against amounts otherwise payable to EMPLOYEE under the Annual Bonus Plan
with respect to subsequent fiscal years. However, in the event EMPLOYEE'S
employment is terminated by EMPLOYER without Cause or by EMPLOYEE for 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 shall
receive (i) a restricted Stock Award consisting of 210 shares of the Class A
common stock, par value $.01 per share, of HARVEYS ("Class A Common Stock") and
21,000 shares of the Class B common stock, par value $.01 per share, of HARVEYS
("Class B Common Stock") and (ii) a Stock Option to purchase 280 additional
shares of Class A Common Stock and 28,000 additional shares of Class B Common
Stock, each at a price of $20.06 per share; PROVIDED, that the Stock Award and
Stock Option 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 (the
"Omnibus Plan"), the individual stock option and restricted stock award
agreement to be entered into thereunder evidencing the Stock Award and Stock
Option, a copy of which is attached hereto as Annex B (the "Award Agreement"),
and that certain Stockholders Agreement 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.
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")
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8.01 HARVEYS 401(k) Plan - During the employment 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 four weeks of paid vacation
per year in the first three years of the Term and five weeks of paid vacation
per year in the fourth and fifth years of the Term. EMPLOYEE shall be afforded
the usual holidays as EMPLOYER may from time to time recognize.
8.03 Complimentary Privileges - EMPLOYEE shall be entitled such Level I
complimentary privileges as are afforded generally to senior executives of the
EMPLOYER from time to time pursuant to policies adopted by the Board of
Directors.
8.04 EMPLOYER shall provide EMPLOYEE with an automobile in accordance with
the Class II 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 - 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. Upon
termination of EMPLOYEE's employment under any circumstances, EMPLOYEE shall
have the right to have such policy assigned to him, 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
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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.
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
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,
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prospects, plans for future development and other business affairs and
information about the EMPLOYER and its subsidiaries and affiliates not readily
available to the public (the "Confidential Information"). EMPLOYEE further
acknowledges that the services to be performed under this Agreement are of a
special, unique, unusual, extraordinary and intellectual character. In
recognition of the foregoing, the EMPLOYEE covenants and agrees as follows:
9.01 At no time shall EMPLOYEE ever divulge, disclose, or otherwise use any
Confidential Information, unless and until such information is readily available
in the public domain by reason other than EMPLOYEE's unauthorized disclosure or
use thereof, unless such disclosure or use is made in good faith and solely in
furtherance of EMPLOYEE's duties hereunder or expressly authorized by the Board
in writing in advance of such disclosure or use.
9.02 Upon the termination of EMPLOYEE'S employment at any time and for any
or no reason, or at any other time the Board may so direct, EMPLOYEE shall
promptly deliver to the EMPLOYER's offices in Stateline, Nevada all of the
property and equipment of the EMPLOYER and its subsidiaries (including any
automobiles, cell phones, pagers, credit cards, personal computers, etc.) and
any and all documents, records, and files, including any notes, memoranda,
customer lists, reports or any and all other documents, including any copies
thereof, whether in hard copy form or on a computer disk or hard drive, which
relate to the EMPLOYER, its subsidiaries, affiliates, successors or assigns,
and/or their respective past and present officers, 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 Executive's
employment terminates upon expiration of the Term), EMPLOYEE shall not at any
time in any city, town, county, parish, other municipality in
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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 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,
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, (B) subject to the first sentence of Section 2.04
above and clause (C) below, 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, and (C)
own, serve as a director of and perform limited management services for the
Village Pub and Casino, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (the "Pub"),
PROVIDED that the Pub remains principally a bar/restaurant enterprise and
contains no more than 50 gaming positions, and PROVIDED, FURTHER, that such
investments and activities shall not materially interfere with the performance
of EMPLOYEE'S duties hereunder. If EMPLOYEE'S employment is terminated under any
circumstances and for any or no reason, then to the extent EMPLOYEE remains
governed by Section 10.01 as provided herein, clause (C) of the first paragraph
of section 10.01 shall apply as if the word "limited" and the last clause
beginning "PROVIDED, FURTHER" did not appear.
- 15 -
(a) Notwithstanding the foregoing, if (i) EMPLOYEE'S employment is
terminated by EMPLOYER other than for Cause or by EMPLOYEE for Good Reason and
(ii) the effective date of such termination as determined hereunder occurs
within the one year period prior to the expiration date of the Term, the
restrictions set forth in this Section 10.01 shall expire upon expiration of the
Term unless EMPLOYER provides written notice to EMPLOYEE not later than two days
after such effective date that it wishes the restrictions of this Section 10.01
to apply during the 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
- 16 -
its successors, assigns, subsidiaries or, to the best of EMPLOYEE'S knowledge,
affiliates, to terminate his, her or its relationship with the EMPLOYER or its
successors, assigns, subsidiaries or, to the best of EMPLOYEE'S knowledge,
affiliates, for the purpose of associating with any competitor of the EMPLOYER
or its successors, assigns, subsidiaries or, to the best of EMPLOYEE'S
knowledge, 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.
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
- 17 -
power to reduce the duration or scope of such provision, as the case may be (it
being the intent of the parties that any such reduction be limited to the
minimum extent necessary to render such provision enforceable), and, in its
reduced form, such provision shall then be enforceable.
11.04 EMPLOYEE intends to and hereby confers jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the geographic
scope of such covenants. If the courts of any one or more of such jurisdictions
hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of EMPLOYEE that such determination not
bar or in any way affect the right of the EMPLOYER or its 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 he or it may be entitled.
This arbitration obligation extends to any and all claims that may arise by and
between the parties or their subsidiaries, affiliates, successors or assigns,
and expressly extends to, without limitation, claims or causes of action for
wrongful termination, impairment of ability to compete in the open labor market,
breach of an
- 18 -
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 or
jurisdiction.
13.03 This Agreement, and all of the terms and conditions hereof, shall
bind the EMPLOYER and its successors and assigns and shall bind the EMPLOYEE and
his heirs, executors and administrators. No transfer or assignment of this
Agreement shall release EMPLOYER from any obligation to EMPLOYEE hereunder.
Neither this Agreement, nor any of EMPLOYER'S rights or obligations hereunder,
may be assigned or otherwise subject to hypothecation by EMPLOYEE. EMPLOYER may
assign the rights and obligations of EMPLOYER hereunder, in whole or in part, to
any of EMPLOYER'S subsidiaries, affiliates or parent corporations, or to any
other successor or assign in connection with the sale of all or substantially
all of HARVEYS' assets or stock or in connection with any merger, acquisition
and/or reorganization.
- 19 -
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: ▇▇▇-▇▇▇-▇▇▇▇
EMPLOYER:
HARVEYS CASINO RESORTS
Attn: Corporate Secretary
Highway 50 and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Colony Capital, Inc.
Suite 1200
1999 Avenue of the Stars
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
AND TO:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
Suite 3400
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
- 20 -
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 hereto with respect to the employment of the
EMPLOYEE by the EMPLOYER (including, without limitation, the Prior Agreement,
Harveys Change in Control Plan and, insofar as it relates to the subject matter
hereof, but except as provided in Section 13.08, the MOU) and, together with all
other plans, agreements and other documents specifically referenced herein,
contains all of the covenants, conditions and agreements between the parties
with respect to such employment. Annex F hereto sets forth a list of payments to
EMPLOYEE pursuant to the MOU, and EMPLOYEE hereby acknowledges receipt 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
- 21 -
which such payments may be subject to such excise tax, provided that such
restructuring does not cause EMPLOYEE to suffer additional costs or other
adverse consequences. Notwithstanding anything contained to the contrary
contained herein, the provisions of this Section 13.08 and Annex D hereto shall
survive the expiration or termination of this Agreement for any or no reason.
13.09 If EMPLOYEE'S employment with the Company is terminated by the
Company without Cause either (i) as a result of a Change in Control (as defined
in the Award Agreement) or (ii) within the 12 month period immediately preceding
a Change in Control (or such longer period, not to exceed 18 months prior to
such Change in Control, during which significant discussions or other material
action regarding such Change in Control occurred) at the request, directly or
indirectly, of a third party who has taken steps reasonably calculated to effect
a Change in Control or otherwise in connection with, or in anticipation of a
Change in Control, 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 for 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
- 22 -
Annual Bonus Plan or the fiscal year during which any such material amendments
were made. The provisions of this Section 13.09 shall survive the expiration of
the Term, but only to the extent necessary to determine whether a Change in
Control occurs within the 12 to 18 month period described in clause (ii) of the
first sentence of this Section 13.09.
13.10 The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
13.11 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.
- 23 -
13.12 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 2nd day of February, 1999.
EMPLOYEE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
EMPLOYER:
HARVEYS CASINO RESORTS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
- 24 -
ANNEX A: 1999 OMNIBUS STOCK
INCENTIVE PLAN
See Exhibit 10.33, 1999 Omnibus Stock Incentive Plan.
ANNEX B: STOCK OPTION AND RESTRICTED
STOCK AGREEMENT
See Exhibit 10.44, Stock Option and Restricted Stock Agreement dated as
of February 2, 1999 by and between Harveys Casino Resorts and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇.
ANNEX C: STOCKHOLDERS AGREEMENT
See Exhibit 10.34, Stockholders Agreement entered into as of February 2,
1999 by and among Harveys Casino Resorts, Colony HCR Voteco, LLC, Colony
Investors III, L.P. and the securityholders of the Company as identified from
time to time on Schedule A thereto.
ANNEX D: DETERMINATION OF GROSS-UP PAYMENT
See Exhibit 10.27, Employment Agreement by and between Harveys Casino
Resorts and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Annex D.
Annex E: Example of the Post-Term Restriction Period and Severance Payments
Applicable in Certain Instances in the Event of Termination by EMPLOYER
without Cause or by EMPLOYEE for Good Reason
Suppose that the Term is scheduled expire on February 2, 2004, and
that notice has been provided pursuant to Section 3.01 that there will be no
automatic extension of the Term. Suppose, further, that EMPLOYEE'S employment is
terminated on November 2, 2003, I.E., less than one year prior to the expiration
of the Term. Under Section 4.02(a), on these facts, the amount of EMPLOYEE'S
severance will depend on whether EMPLOYER elects to have the non-competition
restrictions of Section 10.01 apply during the Post-Term Restriction Period.
The length of the Post-Term Restriction Period is measured by
determining the length of time following the scheduled expiration date of the
Term (I.E., February 2, 2004) during which the twelve-month post-termination
non-competition period as set forth in the first paragraph of Section 10.01
would apply if EMPLOYER makes an election so that the provisions of Section
10.01(a), which would otherwise cut off the non-competition period as of the end
of the Term, will not apply. Since EMPLOYEE'S Termination Date, November 2,
2003, is 3 months prior to the scheduled expiration date of the Term, the
Post-Term Restriction Period is (12 minus 3) or 9 months.
SCENARIO A: THE POST-TERM RESTRICTION PERIOD APPLIES
If EMPLOYER elects pursuant to Section 10.01(a) to have the
non-competition period extend through the end of the Post-Term Restriction
Period, EMPLOYEE'S severance is determined under Section 4.02(a), without regard
to Section 4.02(a)(iii). Accordingly, EMPLOYEE'S severance would be equal to the
product of (x) the Applicable Multiplier, which would be (3 + 9) divided by 12,
or 1.0, and (y) the sum of EMPLOYEE'S Base Salary and Annual Bonus as of the
Termination Date. EMPLOYEE would be subject to the restrictions of the first
paragraph of Section 10.01 until November 2, 2004.
SCENARIO B: THE POST-TERM RESTRICTION PERIOD DOES NOT APPLY
If EMPLOYER does not elect to have the non-competition period extend
through the end of the Post-Term Restriction Period, EMPLOYEE'S severance would
be determined under Section 4.02(a)(iii). The first part of EMPLOYEE'S severance
would be equal to the product of (x) the Applicable Multiplier, which would be 3
divided by 12 (or 0.25), and (y) EMPLOYEE'S Base Salary as of the Termination
Date.
The second or bonus portion of EMPLOYEE'S severance would be
determined by the Board following the end of the 2003 fiscal year. The Board
would determine the amount of the Annual Bonus EMPLOYEE would have been entitled
to receive under the Annual Bonus Plan as if EMPLOYEE had remained employed
through the end of the 2003 fiscal year, based on HARVEYS (and, as applicable,
EMPLOYEE'S) actual performance (without proration) during the 2003 fiscal year,
as compared with the bonus targets previously established for such year.
EMPLOYER would then be required to pay such bonus amount to EMPLOYEE at the time
bonuses under the Annual Bonus Plan were paid to participants in the plan
generally. Under this
arrangement, all other things being equal, EMPLOYEE would receive the same bonus
whether his employment was terminated on June 1, 2003, November 2, 2003 or
January 4, 2004.
However, to avoid unjust enrichment, if EMPLOYEE'S employment were to
be terminated following the date on which bonuses were determined and paid for
fiscal 2003 (say that the bonuses were paid on January 10, 2004 and EMPLOYEE'S
employment was terminated on January 15, 2004), EMPLOYEE would not be entitled
to receive any severance amount in respect of bonus, but would receive as
severance only Base Salary for the 18 day period between January 15, 2004 and
February 2, 2004.
Similar determinations would apply if the Term were automatically
extended for one or more years beyond the fifth anniversary of the Effective
Date, assuming that EMPLOYEE'S employment was terminated within the one-year
period prior to the scheduled expiration of the Term, as so extended. It is
agreed for purposes of Scenario B under this Annex E that bonuses for the last
full fiscal year of the Term will be determined no later than January 31 in the
year in which the Term expires.
ANNEX F: SCHEDULE OF PAYMENTS UNDER THE MOU
-------------------------------------------------------------------------------------------------
NATURE OF PAYMENT AMOUNT
-------------------------------------------------------------------------------------------------
Payment in consideration of termination of right to participate in Long $479,270.00
Term Incentive Plan
-------------------------------------------------------------------------------------------------
Prior payment under Management Incentive Plan in respect of fiscal 1998 $263,630.00
-------------------------------------------------------------------------------------------------
Payment in partial consideration of termination of right to participate in $390,939.00
Supplemental Executive Retirement Plan
-------------------------------------------------------------------------------------------------
Advance under Management Incentive Plan in respect of fiscal 1999 $73,750.00
-------------------------------------------------------------------------------------------------
Total: $1,207,589.00