EXHIBIT 10(21)
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of May 4, 1998,
by and between Xxxxxx'x Operating Company, Inc. and/or one or more of its
subsidiaries ("Company") and Xxxx X. Xxxxxxx ("Executive").
The Company and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive as VP and COO.
2. Duties. During the term of this Agreement ("Active Employment"), the
Executive shall devote substantially all of his working time, energies, and
skills to the benefit of the Company's business. The Executive agrees to serve
the Company diligently and to the best of his ability, and to follow the
policies and directions of the Company.
3. Compensation. The Executive's compensation and benefits during his
Active Employment shall be as follows:
(a) Base Salary. The Company shall pay the Executive a base salary
("Base Salary") of $500,000 per year, which will be reviewed annually by the
Company during the term of this Agreement in accordance with its compensation
practices regarding senior executives and which shall not be reduced during the
Executive's Active Employment without his written consent. The Executive's Base
Salary shall be paid biweekly in accordance with the Company's normal payroll
schedule. All payments shall be subject to the Executive's chosen benefit
deductions and the deduction of payroll taxes and similar assessments as
required by law.
(b) Bonus. In addition to the Base Salary, the Executive shall be
eligible for an annual bonus, as described in the attached Addendum.
4. Insurance and Benefits. The Executive will be eligible to participate
in each employee benefit plan and receive each executive benefit that the
Company provides for its senior executives, in accordance with the applicable
plan rules, except as provided herein or in the Addendum to this Agreement.
5. Term. The term of this Agreement shall be for three (3) years,
beginning May 4, 1998, and ending May 3, 2001.
6. No Cause Termination/Non-Renewal of Agreement. The Company may
terminate the Executive's Active Employment at any time without cause upon
thirty (30) days' prior written notice ("no cause termination"). The Company
also, in its sole discretion, may elect not to renew this Agreement upon its
expiration ("non-renewal of Agreement"). In the event of such termination or
non-renewal by the Company, the Executive shall remain an employee of the
Company and shall be entitled only to the salary and benefits set forth below,
unless otherwise specified in this Agreement.
Benefit Termination Date
------- ----------------
Base Salary (rate as of 12 months (52 weeks) ("Salary
Separation Date) Continuation Period") from last day
worked ("Separation Date").
PTO and Service Credit Separation Date.
Use of Credit Cards Separation Date.
Bonus--Payment and Eligibility (i) Eligible for prior year bonus if
termi-nated during payment year but prior to
payment; (ii) eligible for prorated bonus
for current year if in job for more than 6
months and termination occurs after June 30;
(iii) not eligible for bonus for year
following termination year.
Group Health and Life End of Salary Continuation Period.
Insurance 18-month COBRA rights period for
health insurance will commence on
Separation Date.
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Benefit Termination Date
------- ----------------
Retaining Existing Stock See attached Addendum and Matrix.
Options for Vesting and Other
Rights
Eligibility for New Separation Date.
Restricted Stock or New Stock
Options
TARSAP See attached Addendum and Matrix.
Use of Financial Counseling End of Salary Continuation Period.
per Plan Provisions The maximum remaining benefit shall
be annual benefit remaining as of
Separation Date.
Savings and Retirement Plan End of year of Separation Date.
Deduction (Active
Participation)
Executive Deferred End of year of Separation Date. Distribution
Compensation Plan/Deferred will commence after Salary Continuation
Compensation Plan (Active Period, in accordance with previously made
Participation) elections, and at the termination rate
unless the Executive qualifies for the
retirement rate. 3X death benefit provision
waived for death after Separation Date. EDCP
and other deferred compensation balances
will continue to be protected by
then-existing Escrow Agreement subject to
all terms and conditions thereof.
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Subject to the provisions of Paragraph 12, below, nothing herein shall be
construed as limiting the Executive's right to take other employment or engage
in self-employment following his termination pursuant to this Paragraph 6,
without adversely affecting his rights under this same Paragraph.
7. Death of Executive. Upon the death of the Executive during his Active
Employment, his salary and all rights and benefits hereunder will terminate, and
his estate and beneficiary(ies) will receive the benefits to which they are
entitled under the terms of the Company's benefit plans and programs by reason
of a participant's death during employment, including the 3X death benefit
provided by the EDCP (applies only if death during Active Employment) and the
applicable rights and benefits under the Company's stock plans. If the Executive
dies during the Salary Continuation Period, all of the provisions of the
previous sentence apply except that the remaining salary continuation will be
paid in a lump sum to the Executive's estate.
8. Termination by Company for Cause. The Company shall have the right to
terminate the Executive's Active Employment for cause. All salary and benefits
shall cease, except COBRA rights and as otherwise provided in applicable benefit
plans. Termination for cause shall be effective immediately upon notice received
by the Executive. For purposes of this Agreement, the term "cause" shall mean
and be strictly limited to: (i) conviction of any crime that materially
discredits the Company or is materially detrimental to the reputation or
goodwill of the Company; (ii) commission of any material act of fraud or
dishonesty against the Company, or commission of an immoral or unethical act
that materially reflects negatively on the Company, or engaging in willful
misconduct; provided that the Executive shall first be provided with written
notice of the claim against him under this provision (ii) and with an
opportunity to contest said claim before the Board of Directors of the Company
(excluding the Executive); or (iii) material breach of the Executive's
obligations under Paragraph 2. of this Agreement, as so determined by the Board
of Directors (excluding the Executive), after (x) the Executive has received
notice of the breach and has failed to cure same within 10 business days
thereafter, and (y) the Executive has had an opportunity to appear and contest
said claim before said Board of Directors.
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9. Voluntary Termination/Notice Period. The Executive may terminate this
Agreement voluntarily at any time and for any or no reason during its term upon
thirty (30) days' prior written notice to the Company, except as specified in
this paragraph. If the Executive is going to work or act in competition with the
Company as described in Paragraph 12. of this Agreement, the Executive must give
the Company six (6) months' prior written notice of his intention to do so. The
written notice provided by the Executive shall specify the last day to be worked
by the Executive ("Separation Date"), which Separation Date must be at least
thirty (30) days or six (6) months (as appropriate) after the date the notice is
received by the Company. Unless otherwise specified herein, or in a writing
executed by both parties, the Executive shall not receive any of the benefits
provided in this Agreement after the Separation Date set forth in his written
notice.
10. Change in Control. If a Change in Control, as defined in the
Executive's Severance Agreement, occurs during the Executive's Active
Employment, and if the Severance Agreement is in force when the Change in
Control occurs, then the Severance Agreement supersedes and replaces this
Agreement, except that the documents attached to and made part of this Agreement
(the Addendum to Employment Agreement, the Matrix captioned "Extended
Vesting/Exercisability", and the document entitled "Xxxx Xxxxxxx-TARSAP) shall
remain in full force and effect except to the extent the Severance Agreement
provides greater benefits. If, prior to a Change in Control (as defined above),
the Executive's Active Employment has been terminated for any reason by either
party or this Agreement is not renewed by the Company, then the Executive's
Severance Agreement terminates automatically.
11. Disability. If the Executive becomes disabled prior to the termination
of his Active Employment or the non-renewal of this Agreement, 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 the programs (including the EDCP and the Company's
Stock Option and Restricted Stock 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 the Escrow Agreement (if then in force) and
his
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indemnification agreement will continue in force (the Escrow Agreement will be
subject to amendment or termination in accordance with its terms). If the
Executive is disabled so that he cannot perform his duties (as determined by the
Human Resources Committee (HRC), and if he does not apply for long-term
disability benefits or is not accepted for such benefits, then the Company may
terminate his duties under this Agreement. In such event, he will receive twelve
months salary 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.
If the Executive becomes disabled during the Salary Continuation Period,
he will be entitled only to the salary and benefits described in Paragraph 6.,
above, for the period set forth in that paragraph.
12. Non-competition.
(a) Non-competition. During the Executive's Active Employment, and
during the Salary Continuation Period described in Paragraph 6., above, the
Executive:
(i) shall not engage in any activity, whether as employer,
proprietor, partner, stockholder (other than the holder of less than 5% of the
stock of a corporation the securities of which are traded on a national
securities exchange or in the over-the-counter market), director, officer,
employee, consultant or otherwise, in competition with (x) the casino,
casino/hotel and/or casino resort businesses conducted at the date hereof by the
Company or any subsidiary or affiliate ("Company" for purposes of this Paragraph
12.) or (y) any casino, casino/hotel and/or casino resort business in which the
Company is substantially engaged at any time during the Active Employment
period;
(ii) shall not solicit, in competition with the Company, any
person who is a customer of the businesses conducted by the Company at the date
hereof or of any business in which the Company is substantially engaged at any
time during the term of this Agreement.
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(b) Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Executive contained in this Paragraph 12.:
(i) the covenants contained in paragraphs (i) and (ii) of
Paragraph 12.(a) shall apply within the United States, Canada and Mexico, plus
any territories in which Company is actively engaged in the conduct of business
while the Executive is employed under this Agreement, including, without
limitation, the territories in which customers are then being solicited;
(ii) without limiting the right of the Company to pursue all
other legal and equitable remedies available for violation by the Executive of
the covenants contained in this Paragraph 12., it is expressly agreed by the
Executive and the Company that such other remedies cannot fully compensate the
Company for any such violation and that the Company shall be entitled to
injunctive relief to prevent any such violation or any continuing violation
thereof;
(iii) each party intends and agrees that if, in any action
before any court or agency legally empowered to enforce the covenants contained
in this Paragraph 12., any term, restriction, covenant or promise contained
therein is found to be unreasonable and accordingly unenforceable, then such
term, restriction, covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(iv) the covenants contained in this Paragraph 12. shall
survive the conclusion of Executive's employment with the Company.
13. Post Employment Cooperation. Upon the termination of his Active
Employment, the Executive will cooperate with, and provide information to, the
Company in assuring an orderly transition of all matters being handled by him.
Upon the Company providing reasonable notice to him, he will also appear as a
witness at the Company's request and/or assist the Company in any litigation,
bankruptcy or similar matter in which the Company or any affiliate thereof is a
party; provided that the Company will defray any approved out-of-pocket expenses
incurred by him in connection with any such appearance and that, if the
Executive is no longer receiving salary from the Company, the Company will
compensate the Executive for all time spent, at the rate of compensation of (i)
his then current employment or (ii) his Base
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Salary on the Separation Date/Agreement expiration date, whichever is higher.
The Company agrees further to indemnify him as prescribed in his Indemnification
Agreement and Article TENTH of the Certificate of Incorporation of Xxxxxx'x
Entertainment, Inc., as amended, filed on November 2, 1989, in the Office of the
Secretary of State of the State of Delaware and recorded in Book 935, Page 780,
et seq.
14. Release. Upon the termination of the Executive's Active Employment,
and in consideration of the receipt of the salary and benefits described in this
Agreement, except for claims arising from the covenants, agreements, and
undertakings of the Company as set forth herein and except as prohibited by
statutory language, the Executive forever and unconditionally waives, and
releases Xxxxxx'x Entertainment, Inc., Xxxxxx'x Operating Company, Inc., their
subsidiaries and affiliates, and their officers, directors, agents, benefit plan
trustees, and employees ("Released Parties") from any and all claims, whether
known or unknown, and regardless of type, cause or nature, including but not
limited to claims arising under all salary, vacation, insurance, bonus, stock,
and all other benefit plans, and all state and federal anti-discrimination,
civil rights and human rights laws, ordinances and statutes, including Title VII
of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act,
concerning his employment with Xxxxxx'x Operating Company, Inc., its
subsidiaries and affiliates, and the cessation of that employment.
15. General Provisions.
(a) Notices. Any notice to be given hereunder by either party to the
other may be effected by personal delivery, in writing, or by mail, registered
or certified, postage prepaid with return receipt requested. Mailed notices
shall be addressed to the parties at the addresses set forth below, but each
party may change his or its address by written notice in accordance with this
Paragraph 15.(a). Notices shall be deemed communicated as of the actual receipt
or refusal of receipt.
If to Executive: ---------------------------
---------------------------
---------------------------
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If to Company: Xxxxxx'x Operating Company, Inc.
0000 Xxxxxx Xx.
Xxxxxxx, XX 00000
Attn: General Counsel
(b) Partial Invalidity. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provision shall, nevertheless, continue in full force and without
being impaired or invalidated in any way.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee, without regard to its
conflict of laws provisions.
(d) No Conflicting Agreement. By signing this Agreement, Executive
warrants that he is not a party to any restrictive covenant, agreement or
contract which limits the performance of his duties and responsibilities under
this Agreement or under which such performance would constitute a breach.
(e) Headings. The Section, paragraph, and subparagraph headings are
for convenience or reference only and shall not define or limit the provisions
hereof.
(f) Amendments. Any amendments to this Agreement must be in writing
and signed by both parties.
(g) Binding Agreement. This Agreement is binding on the parties and
their heirs, successors and assigns.
(h) Survival of Provisions. The provisions of this Agreement shall
survive any termination thereof if so provided herein and if necessary or
desirable fully to accomplish the purposes of such provisions, including without
limitation the rights and obligations of the Executive under Paragraphs 6, 12,
13, and 14 hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Xxxxxx'x Operating Company, Inc.
By: /s/ Xxxxxx X. Xxxxx
---------------------------
Xxxxxx X. Xxxxx
Chairman, President
and Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx
Executive
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ADDENDUM TO EMPLOYMENT AGREEMENT
This Addendum to Employment Agreement ("Addendum") is entered into as of
May 4, 1998, by and between Xxxxxx'x Operating Company, Inc. and/or one or more
of its subsidiaries ("Company") and Xxxx X. Xxxxxxx ("Executive").
The Company and the Executive agree to add the provisions set forth below
to the Employment Agreement between the parties also entered into as of May 4,
1998.
1. Management Bonus. As a salary grade 35 employee, the Executive will
have a target bonus of 60%, with a maximum of 120%, in accordance with the
provisions of the management bonus plan. For 1998, the Executive will receive a
pro-rated bonus based on his hire date, if a bonus is paid.
2. TARSAP. An award of 75,000 restricted shares for the Executive was
approved by the Human Resources Committee ("HRC") at its April 30, 1998,
meeting. Vesting will be identical to vesting for previous TARSAP grants under
the TARSAP program, except that for 3/1/99, the vesting will be 2/3 of any
achieved performance vesting percentage. For annual performance vesting
thereafter, the incremental target will be 30%, similar to other participants.
See attached Matrix dated 4/30/98 and the document entitled "Xxxx
Xxxxxxx-TARSAP," which are made a part of this Addendum, for provisions
regarding extended vesting and exercisability of TARSAP shares.
3. Stock Options. An award of 175,000 stock options for the Executive was
approved by the HRC at its April 30, 1998, meeting. The exercise price of all
such options will be $26.125 per share. The vesting schedule will be: 33,500
shares (1/1/99); 50,000 shares (1/1/00); 50,000 shares (1/1/01); and 41,500
shares (1/1/02). See attached Matrix dated 4/30/98, which is made a part of this
Addendum, for provisions regarding extended vesting and exercisability of the
award of stock options described above. Provisions regarding extended vesting
and exercisability of any further award of stock options and/or restricted
stock, if made, will be the same as those applying to other Executives with
Employment Agreements, which provisions are detailed in Paragraph 6 of those
Agreements.
4. Temporary Housing and Commuting. During the term of the Agreement, the
Company will provide to the Executive an apartment in Memphis. To the extent
that said provision of housing constitutes taxable income to the Executive, the
Company will pay him an amount equal to (a) the tax on the cost of the housing,
plus (b) the tax on the amount described in (a), plus the tax on any payments
described in (b), so that the Executive will be held harmless from any taxes due
on the provision of housing. The Company also will reimburse the Executive for
reasonable weekend commuting expenses to/from Boston. It is understood that this
reimbursement is not taxable to the Executive.
In Witness Whereof, the parties have executed this Addendum as of the date
first written above.
Xxxxxx'x Operating Company, Inc.
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Chairman, President and
Chief Executive Officer
/s/ Xxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxx
Executive
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4/30/98
Xxxx X. Xxxxxxx
Extended Vesting/Exercisability
----------------------------------------------------------------------------------------
Years of Active Employment
----------------------------------------------------------------------------------------
Event Benefit Plan Less Than Two Years Two-Three Years Three Years +
------------------- ------------ ---------------------------- -------------------------- ---------------------------
Stock No further vesting Next annual vesting Next annual vesting
Options
No further 1 year to exercise after 2 years to exercise after
exercisability termination termination
Resigns
------------ ---------------------------- -------------------------- ---------------------------
TARSAP No further vesting Next vesting at CEO and Next vesting at CEO and HRC
HRC discretion discretion
------------------- ------------ ---------------------------- -------------------------- ---------------------------
Termination Stock Next annual vesting Next annual vesting Next annual vesting
Without Cause Options
1 year to exercise 1 year to exercise after 2 years to exercise after
after termination termination termination
------------ ---------------------------- -------------------------- ---------------------------
TARSAP Next performance vesting at Next vesting at CEO and Next vesting at CEO and HRC
CEO and HRC discretion HRC discretion discretion
------------------- ------------ ---------------------------- -------------------------- ---------------------------
Resigns, Then Change No further vesting Next annual vesting Next annual vesting is
in Control Within Stock is accelerated upon Change accelerated upon Change in
One Year Options in Control Control
No further exercisability
1 year to exercise after 2 years to exercise after
termination unless cashed termination unless cashed
out per merger out per merger
------------ ---------------------------- -------------------------- ---------------------------
TARSAP No further vesting Next vesting accelerated Next vesting accelerated at
at CEO and HRC discretion CEO and HRC discretion
------------------- ------------ ---------------------------- -------------------------- ---------------------------
Termination Accelerated vesting of Accelerated vesting of Accelerated vesting of
Without Cause, Stock all remaining options all remaining options upon all remaining options upon
Then Change in Options upon Change in Control Change in Control Change in Control
Control Within
One Year 1 year to exercise 1 year to exercise 2 years to exercise
after termination unless after termination unless after termination unless
cashed out per merger cashed out per merger cashed out per merger
----------- ------------------------ -------------------------- --------------------------
TARSAP Accelerated vesting of Accelerated vesting of Accelerated vesting of all
all remaining shares all remaining shares upon remaining shares upon
upon Change in Control Change in Control Change in Control
-------------- ----------- ------------------------ -------------------------- --------------------------
* Stock 50% vesting of 50% vesting of 50% vesting of
Options remaining shares remaining shares remaining shares
1 year for estate to 1 year for estate to 1 year for estate to
Death exercise after death exercise after death exercise after death
----------- ------------------------ -------------------------- --------------------------
TARSAP No acceleration or No acceleration or No acceleration or
further vesting further vesting further vesting
-------------- ----------- ------------------------ -------------------------- --------------------------
*
Stock 50% vesting of 50% vesting of 50% vesting of
Options remaining shares remaining shares remaining shares
Disability
Under 1 year to exercise 1 year to exercise 1 year to exercise
LTD after disability after disability after disability
plan
----------- ------------------------ -------------------------- --------------------------
TARSAP No acceleration or No acceleration or No acceleration or
further vesting further vesting further vesting
----------- ------------------------ -------------------------- --------------------------
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-------------- ----------- ------------------------ -------------------------- --------------------------
Continued vesting Continued vesting Continued vesting
Disability As Stock during 1 year salary during 1 year salary during 1 year salary
Determined Options continuation continuation continuation
by HRC (not
under LTD) Exercisable during Exercisable during Exercisable during
1 year salary 1 year salary 1 year salary
continuation continuation continuation
----------- ------------------------ -------------------------- --------------------------
TARSAP Continued vesting Continued vesting Continued vesting
during 1 year salary during 1 year salary during 1 year salary
continuation continuation continuation
-------------- ----------- ------------------------ -------------------------- --------------------------
* These rights are the same as currently provided under the Stock Option
plan and TARSAP program.
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Corrected
Xxxx Xxxxxxx - TARSAP
Xxxx Xxxxxxx Others
Year Vesting Percentage Vesting Percentage Vest Date
------ ------------------- ------------------ ---------
1998 13.4 20 3/1/99
20.0 30
26.8 40
1999 43.4 50 3/1/00
50.0 60
56.8 70
2000 73.4 80 3/1/01
80.0 90
86.8 100
2001 100 100 1/1/02
