EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 29th day of February, 2000
(this "Agreement"), by and between Mirage Resorts, Incorporated,
a Nevada corporation (the "Company"), and Xxxxxxx X. Xxxx (the
"Executive").
WHEREAS, the Board of Directors of the Company (the
"Board"), has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have
the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive's
full attention and dedication to the current Company and in the
event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements
upon a Change of Control that ensure that the compensation and
benefits expectations of the Executive will be satisfied and that
are competitive with those of other corporations. Therefore, in
order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Section 1. Certain Definitions. (a) "Effective Date" means
the first date during the Change of Control Period (as defined
herein) on which a Change of Control occurs. Notwithstanding
anything in this Agreement to the contrary, if a Change of
Control occurs and if the Executive's employment with the Company
is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment (1) was at the request of a
third party that has taken steps reasonably calculated to effect
a Change of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then "Effective Date" means
the date immediately prior to the date of such termination of
employment.
(b) "Change of Control Period" means the period commencing on
the date hereof and ending on the third anniversary of the date
hereof; provided, however, that, commencing on the date one year
after the date hereof, and on each annual anniversary of such
date (such date and each annual anniversary thereof, the "Renewal
Date"), unless previously terminated, the Change of Control
Period shall be automatically extended so as to terminate three
years from such Renewal Date, unless, at least 60 days prior to
the Renewal Date, the Company shall give notice to the Executive
that the Change of Control Period shall not be so extended.
EXHIBIT 10.74
(c) "affiliated company" means any company controlled by,
controlling or under common control with the Company.
(d) "Change of Control" means:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section 1(d), the
following acquisitions shall not constitute a Change of Control:
(i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any affiliated company or (iv) any acquisition by any
corporation pursuant to a transaction that complies with Sections
1(d)(3)(A), 1(d)(3)(B) and 1(d)(3)(C); or
(2) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(3) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 60% of the then-outstanding shares of common stock and
the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding Company
-2-
Common Stock and the Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of
the then-outstanding voting securities of such corporation,
except to the extent that such ownership existed prior to the
Business Combination, and (C) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination; or
(4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
Section 2. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the third anniversary of the
Effective Date (the "Employment Period").
Section 3. Terms of Employment. (a) Position and Duties.
(1) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant
of those held, exercised and assigned at any time during the 120-
day period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the office where the
Executive was employed immediately preceding the Effective Date
or at any other location less than 10 miles from such office.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company
and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently
such responsibilities. During the Employment Period, it shall
not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of
the Company in accordance with this Agreement. It is expressly
understood and agreed that, to the extent that any such
activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive's
-3-
responsibilities to the Company.
(b) Compensation. (1) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary (the
"Annual Base Salary"), which Annual Base Salary shall be paid at
a monthly rate at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary that has
been earned but deferred, to the Executive by the Company and the
affiliated companies in respect of the 12-month period
immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary
shall be reviewed at least annually, beginning no more than 12
months after the last salary increase awarded to the Executive
prior to the Effective Date. Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any such increase and the term "Annual Base
Salary" shall refer to the Annual Base Salary as so increased.
(2) Annual Bonus. In addition to the Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in
cash at least equal to the Executive's highest bonus under the
Company's applicable annual cash bonus plans, or any comparable
bonus under any predecessor or successor plan, for the last three
full fiscal years prior to the Effective Date (annualized, in the
event that the Executive was not employed by the Company for the
whole of such fiscal year) (the "Recent Annual Bonus"). Each
such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(3) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices,
policies, and programs applicable generally to other peer
executives of the Company and the affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than the most favorable of
those provided by the Company and the affiliated companies for
the Executive under such plans, practices, policies and programs
as in effect at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the
affiliated companies.
(4) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and the affiliated companies
-4-
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, split-dollar life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and the affiliated companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with benefits that are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer
executives of the Company and the affiliated companies.
(5) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and
the affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.
(6) Fringe Benefits. During the Employment Period, the
Executive shall be entitled to fringe benefits, including,
without limitation, tax and financial planning services, payment
of club dues, and, if applicable, use of an automobile with a
driver and company aircraft and payment of related expenses, in
accordance with the most favorable plans, practices, programs and
policies of the Company and the affiliated companies in effect
for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the
affiliated companies.
(7) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the
most favorable of the foregoing provided to the Executive by the
Company and the affiliated companies at any time during the 120-
day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company
and the affiliated companies.
(8) Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company
and the affiliated companies as in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and the affiliated companies.
-5-
(c) Purchase and Sale Rights. Within ten days following the
Effective Date, the Executive shall have the right to elect, by
written notice to the Company, to purchase any or all of the
following: (i) the Gulfstream III aircraft owned by the Company
(or an affiliated company) as of the date hereof, at a price
equal to its fair market value as of the date of notice, as
determined by an appraiser selected by the Executive in his sole
discretion, and/or (ii) the Company's (or an affiliated
company's) New York City apartment located on Fifth Avenue, at a
price equal to its fair market value as of the date of notice, as
determined by an appraiser from Sotheby's in New York
(collectively, the "Purchase Right"). Upon the exercise of the
Purchase Right with respect to any of the items in clauses (i) or
(ii), the Executive shall have 120 days following the date of
notice to make payment or secure financing for any such purchase.
During the five-year period following the Effective Date (without
regard to the earlier expiration of the Employment Period or the
Executive's termination of employment), at the written request of
the Executive or his estate or beneficiary (as applicable), the
Company shall be required and have the obligation to purchase for
cash, payable in a lump sum within thirty days following the date
of the Executive's request, the Executive's house located at
Shadow Creek in North Las Vegas, Nevada and the furnishings,
artwork and personal effects therein (to the extent requested by
the Executive), at a price equal to the Executive's cost,
including the cost of all additions and improvements thereto,
with the costs communicated to the Company by the Executive to be
determinative of the actual costs (the "Put Right").
Section 4. Termination of Employment. (a) Death or
Disability. The Executive's employment shall terminate
automatically if the Executive dies during the Employment Period.
If the Company determines in good faith that the Disability (as
defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"),
it may give to the Executive written notice in accordance with
Section 11(b) of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive's duties. "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-
time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness that is determined
to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the
Executive's legal representative; provided, however, that any
handicap resulting from the Executive's condition commonly known
as "retinitis pigmentosa" shall not be considered a legitimate
basis for the termination of the Executive's employment due to
Disability.
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. "Cause" means:
-6-
(1) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or
any affiliated company (other than any such failure resulting
from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company that specifically identifies the manner in which the
Board or the Chief Executive Officer of the Company believes that
the Executive has not substantially performed the Executive's
duties, or
(2) the willful engaging by the Executive in illegal conduct or
gross misconduct that is materially and demonstrably injurious to
the Company.
For purposes of this Section 4(b), no act, or failure to act, on
the part of the Executive shall be considered "willful" unless it
is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission
was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief
Executive Officer of the Company or a senior officer of the
Company or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not
be deemed to be 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 purpose (after reasonable notice is provided to
the Executive and the Executive is given an opportunity, together
with counsel for the Executive, to be heard before the Board),
finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in Section 4(b)(1)
or 4(b)(2), and specifying the particulars thereof in detail.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. "Good Reason" means:
(1) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a), or any other
action by the Company that results in a diminution in such
position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(2) any failure by the Company to comply with any of the
provisions of Section 3(b), other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and that is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
-7-
(3) the Company's requiring the Executive to be based at any
office or location other than as provided in Section 3(a)(1)(B)
or the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required
immediately prior to the Effective Date;
(4) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this
Agreement; or
(5) any failure by the Company to comply with and satisfy
Section 10(c).
For purposes of this Section 4(c), any good faith
determination of Good Reason made by the Executive shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason during
the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason
for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 11(b). "Notice of Termination" means a
written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (3)
if the Date of Termination (as defined herein) is other than the
date of receipt of such notice, specifies the Date of Termination
(which Date of Termination shall be not more than 30 days after
the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's respective rights
hereunder.
(e) Date of Termination. "Date of Termination" means (1) if the
Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified in the Notice
of Termination, as the case may be, (2) if the Executive's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company notifies the Executive of such termination, and (3)
if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may
be.
Section 5. Obligations of the Company upon Termination. (a)
Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company terminates the
-8-
Executive's employment other than for Cause, death or Disability
or the Executive terminates employment for Good Reason:
(1) the Company shall pay to the Executive, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate
of the following amounts:
(A) the sum of (i) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
the product of (x) the higher of (I) the Recent Annual Bonus and
(II) the Annual Bonus paid or payable, including any bonus or
portion thereof that has been earned but deferred (and annualized
for any fiscal year consisting of less than 12 full months or
during which the Executive was employed for less than 12 full
months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount, the "Highest
Annual Bonus") and (y) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination and the denominator of which is 365, and (iii) any
compensation previously deferred by the Executive (together with
any accrued interest or earnings thereon) and any accrued
vacation pay, in each case, to the extent not theretofore paid
(the sum of the amounts described in subclauses (i), (ii) and
(iii), the "Accrued Obligations"); and
(B) the amount equal to the product of (i) three and (ii) the
sum of (x) the Executive's Annual Base Salary and (y) the Highest
Annual Bonus; and
(C) an amount equal to the additional Company matching
contributions that would have been made on the Executive's behalf
in the Company's Retirement Savings Voluntary Plan or any
successor plan (the "401(k) Plan") (assuming continued
participation on the same basis as immediately prior to the
Effective Date), plus the additional amount of any benefit the
Executive would have accrued under any excess or supplemental
plans (the "SERP") as a result of contribution limitations in the
401(k) Plan that the Executive would receive if the Executive's
employment continued for three years after the Date of
Termination, assuming for this purpose that the Executive's
compensation in each of the three years is that required by
Section 3(b)(1) and Section 3(b)(2) and that the Company's
matching contributions are determined pursuant to the applicable
provisions of the 401(k) Plan and the SERP, as in effect during
the 12-month period immediately prior to the Effective Date; and
(2) for three years after the Executive's Date of Termination,
or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's family
at least equal to those that would have been provided to them in
accordance with the plans, programs, practices and policies
described in Section 3(b)(4) if the Executive's employment had
not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other
peer executives of the Company and the affiliated companies and
their families, provided, however, that, if the Executive becomes
-9-
reemployed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed until three years after the
Date of Termination and to have retired on the last day of such
period; and
(3) the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services the scope and provider
of which shall be selected by the Executive in the Executive's
sole discretion; and
(4) the Executive shall have the right to exercise the Put Right
for the remainder of the period set forth in Section 3(c); and
(5) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or that the Executive is
eligible to receive under any plan, program, policy or practice
or contract or agreement of the Company and the affiliated
companies (such other amounts and benefits, the "Other
Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than for payment of Accrued Obligations and the timely payment or
provision of the Other Benefits. The Accrued Obligations shall
be paid to the Executive's estate or beneficiary, as applicable,
in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of the Other Benefits, the term
"Other Benefits" as utilized in this Section 5(b) shall include,
without limitation, and the Executive's estate and/or
beneficiaries shall be entitled to receive, benefits at least
equal to the most favorable benefits provided by the Company and
the affiliated companies to the estates and beneficiaries of peer
executives of the Company and the affiliated companies under such
plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer
executives and their beneficiaries at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and the
affiliated companies and their beneficiaries. In addition, the
Executive's estate or beneficiary, as applicable, shall have the
right to exercise the Put Right for the remainder of the period
set forth in Section 3(c).
(c) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment
-10-
Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued
Obligations and the timely payment or provision of the Other
Benefits. The Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of the Other Benefits, the term
"Other Benefits" as utilized in this Section 6(c) shall include,
and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the
Company and the affiliated companies to disabled executives
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Company and the affiliated companies and their families. In
addition, the Executive shall have the right to exercise the Put
Right for the remainder of the period set forth in Section 3(c).
(d) Cause; Other Than for Good Reason. If the Executive's
employment is terminated for Cause during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (1)
the Executive's Annual Base Salary through the Date of
Termination, (2) the amount of any compensation previously
deferred by the Executive, and (3) the Other Benefits, in each
case, to the extent theretofore unpaid. If the Executive
voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other
than for the Accrued Obligations and the timely payment or
provision of the Other Benefits. In such case, all the Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. In addition, the
Executive shall have the right to exercise the Put Right for the
remainder of the period set forth in Section 3(c).
Section 6. Non-exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company or the affiliated companies and for which
the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the
Company or the affiliated companies. Amounts that are vested
benefits or that the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or
agreement with the Company or the affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program or
contract or agreement, except as explicitly modified by this
Agreement.
Section 7. Full Settlement. The Company's obligation to make
-11-
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense, or other claim, right
or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of
the amounts payable to the Executive under any of the provisions
of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. The Company
agrees to pay as incurred, to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably
incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity
or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus, in each case, interest
on any delayed payment at the applicable federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
Section 8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be
determined that any payment, right or distribution by or from the
Company or the affiliated companies to or for the benefit of the
Executive (whether paid or payable, exercised or exercisable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise but determined without regard to any
additional payments required under this Section 8) (the
"Payment") would be subject to the excise tax imposed by Section
4999 of the Code, or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, collectively, the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (the "Gross-Up Payment") in an amount such
that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments. Notwithstanding the foregoing provisions of
this Section 8(a), if it shall be determined that the Executive
is entitled to the Gross-Up Payment, but that the Payments do not
exceed 110% of the greatest amount that could be paid to the
Executive such that the receipt of the Payments would not give
rise to any Excise Tax (the "Reduced Amount"), then no Gross-Up
Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
-00-
Xxxxxx Xxxxxxxx LLP or such other certified public accounting
firm as may be designated by the Executive (the "Accounting
Firm") that shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-
Up Payment, as determined pursuant to this Section 8, shall be
paid by the Company to the Executive within five days of the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by
the Company should have been made (the "Underpayment"),
consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later
than 10 business days after the Executive is informed in writing
of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest
such claim, the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
-13-
(4) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest, and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 8(c), the
Company shall control all proceedings taken in connection with
such contest, and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of
such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company shall determine;
provided, however, that, if the Company directs the Executive to
pay such claim and xxx for a refund, the Company shall advance
the amount of such payment to the Executive, on an interest-free
basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any
extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which the
Gross-Up Payment would be payable hereunder, and the Executive
shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company
pursuant to Section 8(c), a determination is made that the
Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
Section 9. Confidential Information. The Executive shall
-14-
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or the affiliated companies, and their respective
businesses, which information, knowledge or data shall have been
obtained by the Executive during the Executive's employment by
the Company or the affiliated companies and which information,
knowledge or data shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those persons designated by the Company. In
no event shall an asserted violation of the provisions of this
Section 9 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
Section 10. Successors. (a) This Agreement is personal to
the Executive, and, without the prior written consent of the
Company, shall not be assignable by the Executive other than by
will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
"Company" means the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that assumes
and agrees to perform this Agreement by operation of law or
otherwise.
Section 11. Miscellaneous. (a) This Agreement shall be
governed by and construed in accordance with the laws of the
State of Nevada, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
if to the Executive:
At the most recent address on
file for the Executive at the Company
-15-
if to the Company:
Mirage Resorts, Incorporated
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such United States federal, state or local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to
Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a
waiver of such provision or right or any other provision or right
of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, subject to Section
1(a), prior to the Effective Date, the Executive's employment may
be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall
have no further rights under this Agreement; provided that this
Agreement may not be terminated by the Company if it is
reasonably demonstrated by the Executive that such termination
(1) was at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control or (2)
otherwise arose in connection with or anticipation of a Change of
Control. From and after the Effective Date, this Agreement shall
supersede any other agreement between the parties with respect to
the subject matter hereof.
-16-
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from the Board,
the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
/s/ Xxxxxxx X. Xxxx
---------------------------------------------
XXXXXXX X. XXXX
MIRAGE RESORTS, INCORPORATED
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer and Treasurer
-17-
