Exhibit 10(23)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of January, 1999, between
▇▇▇▇▇▇'▇ Entertainment, Inc., a Delaware corporation with its executive offices
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(the "Executive").
The Company and the Executive agree as follows:
1. Introductory Statement
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The Company desires to secure the services of the Executive as Chairman
of Company's Board of Directors, Chief Executive Officer and President, and the
Executive is willing to execute this Agreement with respect to his employment.
This Agreement is effective on January 1, 1999, and shall expire December 31,
2002, subject to the terms and conditions herein.
2. Agreement of Employment
-----------------------
The Company agrees to, and hereby does, employ the Executive, and the
Executive agrees to, and hereby does accept, employment by the Company, in a
full-time capacity as Chairman of the Board, Chief Executive Officer, and
President, pursuant to the provisions of this Agreement and of the bylaws of the
Company, and subject to the control of the Board of Directors ("Board"). It is
understood that the Executive's positions as Chairman of the Board, Chief
Executive Officer, and President is subject to his yearly re-election to these
positions by the Board. (See paragraph 6 herein for Executive's rights if such
re-election does not occur during the term of this Agreement.)
The Company acknowledges that although Executive shall be employed in
the capacity of President, in addition to his positions as Chairman of the Board
and Chief Executive Officer, the Board and Executive have created the Office of
the President, which shall consist of Executive and other Company employees
recommended by the Executive and approved by the Board. The
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Company also acknowledges that a person in the Office of the President (other
than Executive) may be appointed to the position of President during the term of
this Agreement. Based upon the foregoing, the Company and the Executive agree
that, notwithstanding anything in this Agreement to the contrary, Company's
obligations to Executive pursuant to this Agreement are based upon Executive's
employment as Chairman of the Board and Chief Executive Officer. The reduction
of Executive's role as President or the appointment or election of another
person to the position of President shall have no effect upon this Agreement.
3. Executive's Obligations
-----------------------
During the period of his service under this Agreement, the Executive
shall devote substantially all of his time and energies during business hours to
the supervision and conduct, faithfully and to the best of his ability, of the
business and affairs of the Company and to the furtherance of its interests, and
to such other duties as directed by the Board.
4. Compensation
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The Company shall pay to Executive a salary at the rate of $900,000 per
year, in equal bi-weekly installments, provided, however, that the Human
Resources Committee of the Board (the "HRC") shall in good faith review the
salary of the Executive, on an annual basis, with a view to consideration of
appropriate merit increases in such salary. In addition, except as otherwise
provided herein, during the term of this Agreement the Executive shall be
entitled to participate in incentive compensation programs and to receive
employee benefits and perquisites at least as favorable to the Executive as
those presently provided to Executive by the Company, and as may be enhanced for
all senior officers. Such benefits include, but are not limited to, the rabbi
trust (provided pursuant to the Escrow Agreement dated February 6, 1990, as
amended (the "Escrow Agreement"), and his Severance Agreement dated November 5,
1992, as amended by Amendments dated February 25, 1994, October 25, 1996 and
April
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25, 1997, attached hereto as Exhibit A (the "Severance Agreement"), each of
which will continue in force subject to their respective terms and conditions,
including the termination and amendment provisions thereof. There will be no
diminution of the above compensation, perquisites, or benefits except as
provided in this Agreement.
The Company acknowledges that it will be relocating its headquarters to
Las Vegas, Nevada, in August, 1999. The Company also acknowledges and approves
the Executive's intention to relocate his primary residence under the Group
Relocation Plan to Reno, Nevada, and to maintain a secondary residence (not
covered under the Group Relocation Plan) in Las Vegas, Nevada.
The Executive will use the Company's aircraft or charter aircraft for
security purposes for himself and his family for business and personal travel
(with standard charges for family members and for non-Company business usage),
including travel between Reno and Las Vegas, Nevada. The Executive also will be
entitled to be reimbursed for first class travel or charter aircraft travel
expenses between Reno and Las Vegas, Nevada. The Company also will provide
Executive with appropriate security arrangements at his residences.
If the Executive dies or resigns pursuant to this Agreement or pursuant
to any other Agreement between the Company and the Executive providing for such
resignation during the period of this Agreement, service for any part of the
month in which any such event occurs shall be considered service for the entire
month.
5. Termination From Employment on December 31, 2002
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5.1 Except as otherwise provided in this Agreement, the date of
Executive's termination from employment shall be December 31, 2002.
5.2 After the date of Executive's termination from employment at any
time (including termination or resignation prior to December 31, 2002, if that
should occur), he will be
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entitled to participate for his lifetime in the Company's group health insurance
plans applicable to corporate executives, including family coverage as
applicable (medical, dental and vision coverage). His group health insurance
benefits after any termination of employment will not be less than those offered
to corporate officers of the Company, and he will be entitled to any later
enhancements in such benefits. His benefits will be the same as normally
provided to other retired management directors pursuant to the policy adopted by
the HRC on October 23, 1990 (except to the extent he voluntarily elects not to
participate in any plan).
5.3 After the date of Executive's termination from employment, the
Executive will become vested at the retirement rate under the Executive Deferred
Compensation Plan ("EDCP"), and his EDCP account and any other deferred
compensation balances will continue to be protected by the Escrow Agreement if
it is then in force, subject to the terms and conditions of that Agreement,
including its termination and amendment provisions.
6. Termination Without Cause or Resignation for Good Reason
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6.1 The Board reserves the right to terminate Executive from his then
current position without cause at any time upon at least three months prior
written notice. The failure of the Board to elect Executive as Chairman of the
Board and Chief Executive Officer during the annual election of officers shall
also be deemed termination without cause for purposes of this Agreement unless,
before the election, the Board has sent the written notice initiating
termination for Cause as provided in paragraph 11.1, and Executive is thereafter
terminated for Cause. Executive reserves the right to resign his position for
Good Reason (as defined in paragraph 11.2 herein) by giving the Company 30 days
written notice which states the reason for his resignation. For purposes of this
Agreement, Good Reason does not include changes that are expressly permitted by
this Agreement.
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6.2 Upon Executive's termination without cause or resignation from his
position for Good Reason as described in paragraph 6.1 above:
(a) Executive will continue in employee status as a consultant-employee
for two years beginning on the date of such termination without cause
or resignation for Good Reason (the "Transition Period"). His stock
options and any restricted stock will continue in force for vesting
purposes during the Transition Period. Any unvested stock options and
unvested shares of restricted stock that do not vest before the
expiration of the Transition Period will be forfeited. If a Change in
Control as defined in the Executive's Severance Agreement occurs during
the Transition Period, all unvested stock options and TARSAP will vest.
Executive also shall be entitled: (i) to the bonus Executive has earned
but for which he has not been paid for the year prior to the year in
which he is terminated without cause or in which he resigns his
position for Good Reason; and (ii) to a prorated bonus for the year in
which he is terminated without cause or in which he resigns for Good
Reason.
(b) Executive will become vested at the retirement rate under
the EDCP on the date of such termination without cause or resignation
for Good Reason.
(c) Executive will continue to receive his then-current salary rate and
the right to participate in the Company's benefit plans during the
Transition Period, but, except as otherwise provided in subsection (a)
above, he no longer will be eligible for bonus, stock option or
restricted stock grants or any other long-term incentive awards then in
effect.
(d) After the expiration of the Transition period, Executive will be
entitled to the lifetime group insurance benefits described in
paragraph 5.2.
7. Termination For Cause or Resignation Without Good Reason
--------------------------------------------------------
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7.1 The Board will have the right to terminate Executive at any time
from his then-current positions for Cause (as defined in paragraph 11.1 herein).
7.2 If Executive is terminated for Cause, or if he resigns his position
without Good Reason, then: (a) all his rights and benefits under this Agreement
shall thereupon terminate and his employment shall be deemed terminated on the
date of such termination or resignation; (b) he shall be entitled to all accrued
rights, bonuses, payments and benefits vested or paid on or before such date
under the Company's plans and programs, but unvested stock options and unvested
shares of restricted stock, if any, will be forfeited; (c) his right to exercise
vested stock options will expire at 12:00 p.m. midnight on the date of such
termination or resignation, and all stock options not so exercised will be
forfeited; (d) his Indemnification Agreement will continue in force; (e) the
Escrow Agreement, if then in force, will continue in force, unless such
agreement is thereafter amended or terminated pursuant to its terms; (f) he will
be entitled to the lifetime group insurance benefits described in paragraph 5.2
above, except that any future amendments to such benefits shall apply to him in
the same manner as such amendments apply to other employees; and, (g) his
Severance Agreement and all rights thereunder will terminate as of such
termination or resignation date, unless a Change in Control or Potential Change
in Control (as such terms are defined in the Severance Agreement) has occurred
prior to such termination or resignation or resignation date.
If Executive's Severance Agreement is in force upon a Change in Control
(as defined in the Severance Agreement), the provisions of this paragraph 7.2
will not be applicable if he resigns (for or without Good Reason) within two (2)
years after the Change Control. In the event of such resignation after a Change
in Control, he will be entitled to the payments, rights and benefits as provided
in paragraph 10 below.
8. Death
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In the event of Executive's death prior to December 31, 2002, during
his employment under this Agreement, his salary and all rights and benefits
under this Agreement will terminate, and his estate and beneficiary(ies) will
receive the benefits they are entitled to under the terms of the Company's
benefit plans and programs by reason of a participant's death during active
employment, including the death benefits provided by the EDCP and applicable
rights and benefits under the Company's stock plans, including any accrued but
unpaid bonus. The Escrow Agreement, if then in force, will continue in force
(subject to its amendment or termination in accordance with its terms) for the
benefit of Executive's beneficiaries until his deferred compensation accounts
are paid in full, and Executive's Indemnification Agreement will continue in
force for the benefit of his estate. If the Executive dies during the Transition
Period, all of the provisions of the previous sentences apply, except that the
remaining salary will be paid in a lump sum to his estate.
9. Disability
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In the event of Executive's disability prior to December 31, 2002,
during his employment, he will be entitled to apply at his option for the
Company's long-term disability benefits. If he is accepted for such benefits,
then the terms and provisions of the Company's benefit plans and programs
(including EDCP, Stock Option, Restricted Stock and TARSAP Plans) that are
applicable in the event of such disability of an employee shall apply in lieu of
the salary and benefits under this Agreement, except that: (a) the Escrow
Agreement (if then in force) and his Indemnification Agreement will continue in
force (subject to amendment or termination in accordance with their terms); and
(b) he will be entitled to the lifetime group insurance benefits described in
paragraph 5.2. If Executive is disabled so that he cannot perform his duties (as
determined by the HRC), and if he does not apply for long-term disability
benefits or is not accepted for such benefits, then the Board may terminate his
duties under this Agreement. In such event, he will receive two years salary
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continuation together with all other benefits, and during such period of salary
continuation, any stock options and restricted stock grants then in existence
will continue in force for vesting purposes. However, during such period of
salary continuation for disability, Executive will not be eligible to
participate in the annual bonus plan, nor will he be eligible to receive stock
option or restricted stock grants or any other long-term incentive awards except
to the extent approved by the HRC.
10. Change in Control
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Except as provided in paragraph 6.2, if a Change in Control as defined
in Executive's Severance Agreement occurs prior to Executive's termination of
employment, and if the Severance Agreement is in force when the Change in
Control occurs, then, upon his termination or voluntary or involuntary
resignation within two years after the Change in Control (including termination
on December 31, 2002, due to expiration of this Agreement), except if his
termination of employment is for "Cause," "Disability" or "Retirement" as set
forth in the Severance Agreement, he will be entitled to all the rights,
payments and benefits provided under his Severance Agreement, including the
benefits that the Severance Agreement provides with respect to the benefit plans
and programs of the Company resulting from his termination or voluntary
resignation, in lieu of the rights and benefits that would otherwise apply under
this Agreement by virtue of his termination or resignation; provided that: (a)
the Escrow Agreement (if then in force and subject to amendment or termination
in accordance with its terms) and his Indemnification Agreement will continue in
force; and (b) he will be entitled to the lifetime group insurance benefits
described in paragraph 5.2.
11. Definitions of Cause and Good Reason
------------------------------------
11.1 Cause. Termination by Company of this Agreement for "Cause" shall
mean termination upon the Executive's engaging in willful and continued
misconduct, or the Executive's willful and
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continued failure to substantially perform his duties with the Company (other
than due to physical or mental illness), if such failure or misconduct is
materially damaging or materially detrimental to the business and operations of
the Company; provided that Executive shall have received written notice of such
failure or misconduct and shall have continued to engage in such failure or
misconduct after 30 days following receipt of such notice from the Board, which
notice specifically identifies the manner in which the Board believes that
Executive has engaged in such failure or misconduct. For purposes of this
paragraph 11.1, no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for such
purposes (after reasonable notice to the Executive and an opportunity for him,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Executive was guilty of failure to
substantially perform his duties or of misconduct in accordance with the first
sentence of this paragraph, and of continuing such failure to substantially
perform his duties or misconduct as aforesaid after notice from the Board, and
specifying the particular thereof in detail.
11.2 Good Reason. "Good Reason" shall mean, without Executive's express
written consent, the occurrence of any of the following circumstances unless, in
the case of paragraphs (a), (e), (f) or (g), such circumstances are fully
corrected prior to the date of termination specified in the written notice given
by Executive notifying the Company of his resignation for Good Reason:
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(a) The assignment to Executive of any duties inconsistent
with his status as Chairman of the Board, Chief Executive Officer of
the Company or a substantial adverse alteration in the nature or
status of his responsibilities;
(b) A reduction by the Company in his annual base salary of
$900,000 or as the same may be increased from time to time pursuant to
paragraph 4 hereof;
(c) The relocation of the Company's principal executive
offices from Las Vegas, Nevada, to a location more than 50 miles from
such offices, or the Company's requiring Executive either: (i) to be
based anywhere other than the location of the Company's principal
offices in Las Vegas (except for required travel on the Company's
business to an extent substantially consistent with Executive's present
business travel obligations); or (ii) to relocate his primary residence
from Reno to Las Vegas;
(d) The failure by the Company, without Executive's consent,
to pay him any portion of his current compensation, except pursuant to
a compensation deferral elected by the Executive, or to pay to
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company within thirty days of
the date such compensation is due;
(e) Except as permitted by this Agreement, the failure by the
Company to continue in effect any compensation plan in which Executive
is participating on the date of this Agreement which is material to
Executive's total compensation, including, but not limited to, the
Company's annual bonus plan, the EDCP, the Restricted Stock Plan, the
TARSAP Plan, or the Stock Option Plan or any substitute plans, unless
an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by the Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis not materially
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less favorable, both in terms of the amount of benefits provided and
the level of Executive's participation relative to other participants
at Executive's grade level;
(f) The failure by the Company to continue to provide Executive
with benefits substantially similar to those enjoyed by him under the
S&RP and the life insurance, medical, health and accident, and
disability plans in which Executive is participating on the date of this
Agreement, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits or deprive
Executive of any material fringe benefit enjoyed by Executive on the
date of this Agreement, except as permitted by this Agreement, or the
failure by the Company to provide Executive with the number of paid
vacation days to which Executive is entitled; or
(g) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in paragraph 14 hereof.
Executive's right to terminate his employment pursuant to this
Agreement for Good Reason shall not be affected by Executive's incapacity due to
physical or mental illness. Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
Notwithstanding any provision in this Agreement to the contrary, in the
event the Executive's active employment as an executive officer with the
Company, or its direct or indirect subsidiaries, terminates for any reason, any
TARSAP shares granted to Executive which are unvested on the date of such
termination of active employment will be forfeited as of 12:00 p.m. on such
date; provided that it is understood that the HRC could approve an exception, in
its discretion, based on its review of the circumstances at that time.
12. Non-Competition Agreement
-------------------------
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12.1 For a period of two years after Executive's full-time, active
employment (which, for purposes of this paragraph 12.1, shall not include
employee status as a consultant-employee under paragraph 6.2 (a)) with the
Company or a direct or indirect subsidiary ends, he will not, directly or
indirectly, solicit or recruit any employee of the Company or of any of its
direct or indirect subsidiaries, and he will not engage (as employee,
consultant, director, investor, contractor, or otherwise) directly or indirectly
in any business, including the development of such business, in the United
States, Canada or Mexico that is competitive with any business that the Company
or its direct or indirect subsidiaries are engaged (as owner, manager,
consultant, licensor, partner, or otherwise) in at the time such employment
ends, except with the prior specific approval of the Board.
12.2 If the Executive breaches any of the covenants in paragraph 12.1,
then the Board may terminate any of his rights under this Agreement upon thirty
days written notice, whereupon all of the Company's obligations under this
Agreement shall terminate (including, without limitation, the right to lifetime
group insurance) without further obligation to him except for obligations that
have been paid, accrued or are vested as of or prior to such termination date.
In addition the Company shall be entitled to enforce any such convenants,
including obtaining monetary damages, specific performance and injunctive
relief.
13. Binding Arbitration
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Any and all claims, disputes or controversies arising out of or related
to this Agreement or the breach thereof shall be resolved by arbitration in
accordance with the rules of the American Arbitration Association (the "AAA")
then in existence, subject to this paragraph 13. Such arbitration shall be
conducted by a panel of three arbitrators. The Executive and the Company each
shall appoint one arbitrator, and the third shall be appointed by the two
arbitrators appointed by the parties. The third arbitrator shall serve as
chairman of the panel. The parties shall appoint their arbitrators within 30
days after the
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demand for arbitration is served. If either party fails to do so, the AAA
promptly shall appoint a defaulting party's arbitrator. The two arbitrators
selected by the parties and/or the AAA shall select the third arbitrator within
15 days after their appointment, and if they cannot agree or fail so to appoint,
then the AAA promptly shall appoint the third arbitrator. The arbitrators shall
render their decision in writing within 60 days after the close of evidence or
other termination of the proceedings by the panel. The determination or award
rendered in such arbitration shall be binding and conclusive upon the parties
and shall not be appealable. Judgment may be entered thereon in accordance with
applicable law in any court of competent jurisdiction. Any arbitration hearings
shall be held in Las Vegas, Nevada, and shall be private and not open to the
public. Each party shall bear the fees and expenses of its arbitrator, counsel
and witnesses, and the fees and expenses of the third arbitrator shall be shared
equally by the parties. Other costs of the arbitration, including the fees of
AAA, shall be shared equally by the parties.
14. Assumption of Agreement on Merger, Consolidation or Sale of Assets
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The Company agrees that until the termination of this Agreement as
above provided, it will not (i) enter into any merger or consolidation with
another company in which the Company is not the surviving company, or (ii) sell
or dispose of all or substantially all of its assets, unless the company which
is to survive such merger or consolidation or to purchase such assets first
makes a written agreement with the Executive to either: (1) assume the Company's
financial obligations to the Executive under this Agreement; or (2) make such
other provision for the Executive as is satisfactory to the Executive and
approved by him in writing in lieu of assuming the Company's financial
obligations to him under this Agreement.
15. Assurances on Liquidation
--------------------------
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The Company agrees that until the termination of this Agreement as
above provided, it will not voluntarily liquidate or dissolve without first
making a full settlement or, at the discretion of the Executive, a written
agreement with the Executive satisfactory to and approved by him in writing, in
fulfillment of or in lieu of its obligations to him under this Agreement.
16. Amendments
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This Agreement may not be amended or modified orally, and no provision
hereof may be waived, except in a writing signed by the parties hereto.
17. Assignment
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17.1 Except as otherwise provided in paragraph 17.2, this Agreement
cannot be assigned by either party hereto, except with the written consent of
the other. Any assignment of this Agreement by either party shall not relieve
such party of its or his obligations hereunder.
17.2 The Company may elect to perform any or all of its obligations
under this Agreement through its wholly-owned subsidiary, ▇▇▇▇▇▇'▇ Operating
Company, Inc., or another subsidiary, and if the Company so elects, Executive
will be an employee of ▇▇▇▇▇▇'▇ Operating Company, Inc., or such other
subsidiary. Notwithstanding any such election, the Company's obligations to the
Executive under this Agreement will continue in full force and effect as
obligations of the Company, and the Company shall retain primary liability for
their performance.
18. Binding Effect
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This Agreement shall be binding upon and inure to the benefit of the
personal representatives and successors in interest of the Company.
19. Choice of Law
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This Agreement shall be governed by the law of the Sate of Nevada as to
all matters, including but not limited to matters of validity, construction,
effect and performance.
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20. Severability of Provisions
--------------------------
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby, and this Agreement shall be interpreted as
if such invalid, illegal or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name and on its behalf
and its corporate seal to be hereunto affixed and attested by its corporate
officers thereunto duly authorized.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(Corporate Seal) ▇▇▇▇▇▇'▇ ENTERTAINMENT, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Its: Senior Vice President
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Secretary
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