EXHIBIT 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into
as of the 1st day of December, 1999, by and between Station Casinos, Inc., a
Nevada corporation, with its principal offices located at 0000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxx 00000 (the "COMPANY"), and XX. XXXXX X. XXXXXXXX III
(the "Executive").
WHEREAS, the Company and the Executive are parties to an Amended and
Restated Employment Agreement dated as of December 22, 1997 (the "FORMER
AGREEMENT"); and
WHEREAS, the Executive has agreed to continue his employment with the
Company on the terms and conditions set forth herein; and
WHEREAS, the parties to this Agreement desire to replace the Former
Agreement in its entirety with this Agreement, and the Former Agreement shall no
longer be of any force or effect;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Company and
the Executive (each individually a "PARTY" and together the "PARTIES") agree as
follows.
1. DEFINITIONS. In addition to certain terms defined elsewhere in this
Agreement, the following terms shall have the following respective meanings:
1.1 "AFFILIATE" shall mean any Person controlling, controlled by or
under common control with the Company,
1.2 "BASE AMOUNT" shall have the meaning ascribed to such term in
Section 280G of the Code.
1.3 "BASE SALARY" shall mean the salary provided for in SUBSECTION 3.1
or any increased salary granted to the Executive (a) by the Board or (b)
pursuant to the provisions of SUBSECTION 3 or SUBSECTION 7.1(b).
1.4 "BOARD" shall mean the Board of Directors of the Company,
including any successor of the Company in the event of a Change in Control.
1.5 "CAUSE" shall mean that the Executive:
(a) has been convicted of a felony or any crime involving fraud,
theft, embezzlement, dishonesty or moral turpitude;
(b) has been found unsuitable to hold a gaming license by final,
non-appealable decision of the Nevada Gaming Commission; or
(c) in carrying out his duties under this Agreement, has engaged in
acts or omissions constituting gross negligence or willful
misconduct resulting, in either case, in material economic harm
to the Company, unless such act, or failure to act, was believed
by the Executive in good faith to be in the best interests of the
Company or any Affiliate.
1.6 A "CHANGE IN CONTROL"
(a) shall be deemed to have occurred if:
(1) any Person, corporation, entity or group (other than the
Existing Equity Holders) is or becomes the beneficial owner,
directly or indirectly, of securities representing 50% or more of
the combined voting power of the Company's Voting Stock (an
"Acquisition Event"), or
(2) the Company consolidates with or merges into another
corporation or entity, or any corporation or entity consolidates
with or merges into the Company, with the effect that the
beneficial owners of the Company's Voting Stock held immediately
prior to the consummation of such consolidation or merger cease
to beneficially own, directly or indirectly, securities
representing 50% or more of the combined voting power of the
Company's Voting Stock (or if the Company is not the surviving
entity, the surviving company's voting securities) upon the
consummation of such consolidation or merger (a "Merger Event"),
or
(3) the Company sells, conveys, transfers or leases to any
person, corporation, entity or group, directly or indirectly, in
one transaction or series of related transactions, properties
and/or assets that accounted for 75% or more of the earnings
(before interest, taxes, depreciation and amortization) of the
Company, on a consolidated basis for the four-fiscal quarter
period immediately preceding the date of consummation of such
transaction (a "Sale Event").
(b) Notwithstanding the foregoing, a reincorporation, spin-off,
split-off or other reorganization transaction (a "Reorganization
Event"), or series of related transactions, in which either the
"beneficial owners" of the Company's Voting Stock or the Existing
Equity Holders beneficially own securities representing 50% or
more of the combined voting power of the Company's Voting Stock
upon the consummation of such transaction shall not constitute an
Acquisition Event, Merger Event or Sale Event for purposes of
this definition. For purposes of this definition, "beneficial
ownership" shall have the same meaning as defined in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, as amended,
except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time.
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(c) For the purposes of this definition, upon consummation of an
Acquisition Event, Merger Event, Sale Event or Reorganization
Event, the "Company's Board" and the "Company's Shareholders"
shall refer to (i) in the case of an Acquisition Event, the
Company, (ii) in the case of a Merger Event, the company
surviving the merger or consolidation, (iii) in the case of a
Sale Event, the transferee of the properties, and/or assets, and
(iv) in the case of a Reorganization Event, the entity or
entities surviving such Reorganization Event on a consolidated
basis.
1.7 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "COMPANY PROPERTY" shall mean all items and materials provided by
the Company to the Executive, or to which the Executive has access, in the
course of his employment, including, without limitation, all files, records,
documents, drawings, specifications, memoranda, notes, reports, manuals,
equipment, computer disks, videotapes, drawings, blueprints and other documents
and similar items relating to the Company, its Affiliates or their respective
customers, whether prepared by the Executive or others, and any and all copies,
abstracts and summaries thereof.
1.9 "CONFIDENTIAL INFORMATION" shall mean all nonpublic and/or
proprietary information respecting the business of the Company or any Affiliate,
including, without limitation, its products, programs, projects, promotions,
marketing plans and strategies, business plans or practices, business
operations, employees, research and development, intellectual property,
software, databases, trademarks, pricing information and accounting and
financing data. Confidential Information also includes information concerning
the Company's or any Affiliate's customers, such as their identity, address,
preferences, playing patterns and ratings or any other information kept by the
Company or any Affiliate concerning its customers whether or not such
information has been reduced to documentary form. Confidential Information does
not include information that is, or becomes, available to the public unless such
availability occurs through an unauthorized act on the part of the Executive.
1.10 "DEFERRED COMPENSATION PLAN FOR EXECUTIVES" shall mean the
Company's Deferred Compensation Plan for Executives, effective as of November
30, 1994, as the same may be amended from time to time.
1.11 "DISABILITY" shall mean a physical or mental incapacity that
prevents the Executive from performing the essential functions of his position
with the Company for a minimum period of ninety (90) days as determined (a) in
accordance with any long-term disability plan provided by the Company of which
the Executive is a participant, or (b) by the following procedure: The Executive
agrees to submit to medical examinations by a licensed healthcare professional
selected by the Company, in its sole discretion, to determine whether a
Disability exists. In addition, the Executive may submit to the Company
documentation of a Disability, or lack thereof, from a licensed healthcare
professional of his choice. Following a determination of a Disability or lack of
Disability by the Company's or the Executive's licensed healthcare professional,
the other Party may submit subsequent documentation relating to the existence of
a Disability from a licensed healthcare professional selected by such other
party. In the event that the medical opinions of such licensed healthcare
professionals conflict, such
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licensed healthcare professionals shall appoint a third licensed healthcare
professional to examine the Executive, and the opinion of such third licensed
healthcare professional shall be dispositive.
1.12 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.13 "EXISTING EQUITY HOLDERS" shall mean, in addition to the
Executive, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxx X.
Xxxxxxxxxxx and Xxxxx X Xxxxxxx and their executors, administrators or the legal
representatives of their estates, their heirs, distributees and beneficiaries,
and any trust as to which any of the foregoing is a settlor or co-settlor and
any corporation, partnership or other entity which is an Affiliate of any of the
foregoing, and any lineal descendants of such persons (but only to the extent
that the beneficial ownership of the Voting Stock held by such lineal
descendants was directly received by gift, trust or sale from any such person).
1.14 "GOOD REASON" shall mean and exist if, without the Executive's
prior written consent, one or more of the following events occurs:
(a) the Executive is not appointed to or is otherwise removed from
the office(s) provided for in SUBSECTION 2.3, for any reason
other than the termination of his employment;
(b) the Executive is assigned any duties or responsibilities that are
inconsistent with the scope of duties and responsibilities
associated with the Executive's position as described in
SUBSECTION 2.3;
(c) the Company gives the Executive notice pursuant to SUBSECTION 2.2
that it does not intend to extend the Term of Employment for an
additional five year period;
(d) the Executive is not appointed to or is removed from membership
on the Board;
(e) the Executive is required to relocate from, or maintain his
principal office outside of, Las Vegas;
(f) the Executive suffers a reduction in the authorities, duties or
responsibilities associated with his position as described in
SUBSECTION 2.3, on the basis of which he makes a determination in
good faith that he can no longer carry out such position in the
manner contemplated at the time this Agreement was entered into;
(g) the Executive's Base Salary is decreased by the Company or is not
increased as provided for in SUBSECTION 3.1 and/or SUBSECTION
7.1(b),
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(h) the Executive is excluded from participation in any employee
benefit or incentive plan or program offered to other executives
of the Company or his benefits or opportunities under any
employee benefit or incentive plan or program of the Company is
or are materially reduced;
(i) the Executive is not permitted to participate in the Deferred
Compensation Plan for Executives or any other incentive
compensation plans or programs offered by the Company to senior
executives;
(j) the Company fails to pay the Executive any deferred payments that
have become payable under the Deferred Compensation Plan for
Executives or any other bonus or incentive plans;
(k) the Company fails to reimburse the Executive for business
expenses in accordance with the Company's policies, procedures or
practices;
(l) the Company fails to agree to or to actually indemnify the
Executive for his actions and/or inactions, as either a director
or officer of the Company, to the fullest extent permitted by
Nevada law and the Company's by-laws, and/or the Company fails to
maintain reasonably sufficient levels of directors' and officers'
liability insurance coverage for the Executive when such
insurance is available;
(m) the Company fails to make any of the payments or to provide any
of the benefits required under SUBSECTION 7.1.
(n) the Company fails to obtain a written agreement satisfactory to
the Executive from any successor or assign of the Company to
assume and perform this Agreement; or
(o) the Company purports to terminate the Executive's employment for
Cause but such purported termination is not effected in
accordance with SECTION 6.2 of this Agreement.
1.15 "PERSON" shall mean any individual, firm, partnership,
association, trust, company, corporation or other entity.
1.16 "PRO RATA BONUS" shall mean an amount equal to seventy-five
percent (75%) of the Executive's current Base Salary, multiplied by a fraction,
the numerator of which is the number of days in such year during which the
Executive was actually employed by the Company and the denominator of which is
365.
1.17 "SPECIAL LONG-TERM DISABILITY PLAN" shall mean the Company's
Special Long-Term Disability Plan, effective as of November 30, 1994, as the
same may be amended from time to time.
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1.18 "SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN" shall mean the Company's
Supplemental Executive Retirement Plan, effective as of November 30, 1994, as
the same may be amended from time to time.
1.19 "TERM OF EMPLOYMENT" shall mean the period specified in
SUBSECTION 2.2.
1.20 "VOTING STOCK" shall mean capital stock of any class or classes
having general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.
2. TERM OF EMPLOYMENT, POSITIONS AND RESPONSIBILITIES.
2.1 EMPLOYMENT ACCEPTED. The Company hereby employs the Executive, and
the Executive hereby accepts employment with the Company, for the Term of
Employment, in the positions and with the duties and responsibilities set forth
in SUBSECTION 2.3, and upon such other terms and conditions as are stated in
this Agreement.
2.2 TERM OF EMPLOYMENT. The initial Term of Employment shall commence
upon the date of this Agreement and, unless earlier terminated pursuant to the
provisions of this Agreement, shall terminate upon the close of business on the
day immediately preceding the fifth anniversary of the date of this Agreement;
PROVIDED, HOWEVER, that the initial Term of Employment shall automatically be
extended for successive five-year periods if neither Party has advised the other
in writing in accordance with SECTION 13 at least twelve (12) months prior to
the end of the then current Term of Employment that such Term of Employment will
not be extended for an additional five (5) year period. In the event that such
notice is given, the Executive's employment shall terminate upon the close of
business on the day immediately preceding the fifth anniversary of the date that
such notice is given.
2.3 TITLE AND RESPONSIBILITIES. During the Term of Employment, the
Executive shall be employed as the President, Chief Executive Officer and
Chairman of the Board of the Company and shall serve as a member of the Board.
In carrying out his duties under this Agreement, the Executive shall only report
to the Board. During the Term of Employment, the Executive shall devote
reasonable time and attention to the business and affairs of the Company and
shall use his best efforts, skills and abilities to promote the Company's
interests. Anything herein to the contrary notwithstanding, the Executive shall
not be precluded from engaging in charitable and community affairs and managing
his personal investments. The Executive may serve as a member of the board of
directors of other corporations, subject to the approval of a majority of the
Board, which approval shall not be unreasonably withheld or delayed.
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3. COMPENSATION.
3.1 BASE SALARY. During the Term of Employment, the Executive shall be
entitled to receive a base salary (the "BASE SALARY") payable no less frequently
than in equal bi-weekly installments at an annualized rate of no less than
$1,250,000. Such Base Salary shall be reviewed annually for increase (but not
decrease) in the discretion of the Human Resources Committee of the Board. In
conducting any such annual review, the Human Resources Committee shall take into
account any change in the Executive's responsibilities, increases in the
compensation of other executives of the Company or any Affiliate (or any
competitor(s) of either or both), the performance of the Executive and/or other
pertinent factors. Such increased Base Salary shall then constitute the
Executive's "Base Salary" for purposes of this Agreement.
3.2 ANNUAL BONUS. The Company may pay the Executive an annual
discretionary bonus for each calendar year ending during the Term of Employment
in an amount that will be determined by the Human Resources Committee based on
the Executive's performance. Any annual bonus that may be awarded to the
Executive shall be paid at the same time as annual bonuses are paid to other
senior officers of the Company, unless the Executive has elected to defer
receipt of all or part of the bonus amounts to which he is entitled in respect
of any such calendar year, in accordance with the terms and provisions of any
deferred compensation program maintained by the Company.
3.3 DEFERRED COMPENSATION. The Executive shall be eligible to
participate in the Company's Deferred Compensation Plan for Executives, and any
other deferred compensation plans that the Company may adopt for executives,
pursuant to the terms of the plans.
4. EMPLOYEE BENEFIT PROGRAMS.
4.1 PENSION AND WELFARE BENEFIT PLANS. During the Term of Employment,
the Executive shall be entitled to participate in all employee benefit programs
made available to the Company's executives or salaried employees generally, as
such programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit sharing plans, group life insurance,
group health insurance, accidental death and dismemberment insurance, long-term
disability, sick leave (including salary continuation arrangements), vacations,
holidays and other employee benefit programs sponsored by the Company.
4.2 ADDITIONAL PENSION AND WELFARE BENEFITS. In addition to the
foregoing, the Company shall provide the Executive with the following benefits:
(a) Executive Group Health Insurance coverage pursuant to such plan
or plans as the Company may select and which shall be fully paid
for by the Company;
(b) full salary continuation during the first ninety (90) days of any
physical or mental incapacity that prevents the Executive from
performing his duties and, for any Disability that continues
thereafter, benefits pursuant to the Company's Special Long-Term
Disability Plan and any other long-term
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disability benefits pursuant to any other disability plan of
which the Executive is a participant;
(c) an annual supplemental retirement benefit as set forth in the
Supplemental Executive Retirement Plan, in addition to any other
benefit pursuant to any other retirement plan under which the
Executive is covered;
(d) life insurance coverage in an aggregate amount of not less than
$30,000,000 through individual and/or group policies, including a
split dollar policy and a term life policy; and
(e) the Executive shall be eligible to participate in any long-term
compensation programs maintained by the Company to the extent
provided in the applicable plan documents.
5. BUSINESS EXPENSE REIMBURSEMENT AND PERQUISITES.
5.1 EXPENSE REIMBURSEMENT. During the Term of Employment, the
Executive shall be entitled to receive reimbursement by the Company for all
reasonable out-of-pocket expenses incurred by him in performing services under
this Agreement, subject to providing the proper documentation of said expenses.
5.2 PERQUISITES. During the Term of Employment, the Executive shall
also be entitled to any of the Company's executive perquisites in accordance
with the terms and provisions of the applicable policies, including, without
limitation:
(a) use of an automobile;
(b) payment or reimbursement of the cost of an annual physical
examination;
(c) vacation of at least four weeks per year;
(d) payment or reimbursement of initiation fees and annual membership
fees and assessments for a country club, a luncheon club and a
physical fitness program of the Executive's choice; and
(e) payment or reimbursement of fees and expenses, up to a maximum
amount of $10,000.00, incurred in connection with having this
Agreement reviewed by legal counsel prior to execution.
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6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION DUE TO DEATH OR DISABILITY. The Executive's employment
shall be terminated immediately in the event of his death or Disability. In the
event of a termination due to the Executive's death or Disability, the Executive
or his estate, as the case may be, shall be entitled, in lieu of any other
compensation whatsoever, to:
(a) Base Salary at the rate in effect at the time of his termination,
in the case of death, for a period of twenty-four (24) months
following the termination of employment;
(b) any annual bonus awarded but not yet paid;
(c) a Pro Rata Bonus for the fiscal year in which death or Disability
occurs;
(d) any deferred compensation or bonuses, including interest or other
credits on the deferred amounts, to the extent provided in the
plans or programs providing for deferral;
(e) immediate vesting of all restricted stock and unvested stock
options and to exercise all stock options for the remaining
option term, as if his employment had not terminated;
(f) reimbursement for expenses incurred but not paid prior to such
termination of employment;
(g) in the case of Disability, continuation of the Executive's health
and welfare benefits at the level in effect on the date of
termination through the end of the 60th month following the
termination of the Executive's employment, or the economic
equivalent thereof, as if the Executive's employment had
continued during such period; and
(h) such rights to other compensation and benefits as may be provided
in applicable plans and programs of the Company, including,
without limitation, applicable employee benefit plans and
programs, according to the terms and provisions of such plans and
programs.
6.2 TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate
the Executive's employment for Cause at any time during the Term of Employment
by giving written notice to the Executive, authorized by a vote of at least a
majority of the members of the Board, that the Company intends to terminate his
employment for Cause. Such written notice shall specify the particular act or
acts, or failure to act, providing the basis for termination. The Executive
shall be given the opportunity within thirty (30) days of the receipt of such
notice to meet with the Board to defend such act or acts, or failure to act. If
at the conclusion of the Executive's presentation of his defense, a majority of
the Board, nonetheless, determines that the Executive's employment is terminable
for Cause, the Executive shall be given thirty (30) days after such meeting to
correct such acts or failure to act, unless the Board also determines that the
Executive's acts or failure to act are incapable of correction. Upon failure of
the Executive,
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within thirty (30) days, to correct such acts or failure to act, or upon the
Board's determination that correction is not possible, the Executive's
employment by the Company shall automatically be terminated under this
SUBSECTION 6.2 for Cause. During the pendency of the foregoing process, the
Executive shall continue to be paid his Base Salary but shall be placed on
leave of absence status.
In the event of a termination for Cause, the Executive shall be
entitled, in lieu of any other compensation whatsoever, to:
(a) Base Salary at the rate in effect at the time of his termination
through the date of termination of employment;
(b) any bonus awarded but not yet paid;
(c) any deferred compensation or bonuses, including interest or other
credits on the deferred amounts, to the extent provided in the
plans or programs providing for deferral;
(d) reimbursement for expenses incurred but not paid prior to such
termination of employment; and
(e) such rights to other benefits as may be provided in applicable
plans and programs of the Company, including, without limitation,
applicable employee benefit plans and programs, according to the
terms and conditions of such plans and programs.
Notwithstanding anything to the contrary in this SUBSECTION 6.2, if
the Executive's employment is terminated for Cause due to his having been
convicted pursuant to SUBSECTION 1.5(A) but said conviction is subsequently
overturned on appeal and he is not required to submit to re-trial within six (6)
months thereafter, the Executive shall be entitled to the payments and the
economic equivalent of the benefits he would have received if his employment had
been terminated without Cause under SUBSECTION 6.4.
6.3 TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. The Executive
may terminate his employment on his own initiative for any reason upon thirty
(30) days prior written notice to the Company. Such termination shall have the
same consequences as a termination for Cause under SUBSECTION 6.2.
6.4 TERMINATION BY THE COMPANY WITHOUT CAUSE. Notwithstanding any
other provision of this Agreement, the Company may terminate the Executive's
employment without Cause, other than due to death or Disability, at any time
during the Term of Employment by giving written notice to the Executive. In the
event that the Company terminates the Executive's employment without Cause, the
Executive shall be entitled, in lieu of any other compensation whatsoever, to:
(a) an amount equal to five times 175 percent of the Executive's Base
Salary at the rate in effect at the time of his termination;
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(b) any bonus awarded but not yet paid;
(c) any deferred bonus, including interest or other credits on the
deferred amounts, to the extent provided in the Deferred
Compensation Plan for Executives;
(d) immediate vesting of all restricted stock and unvested stock
options and to exercise all stock options for the remaining
option term, as if his employment had not terminated;
(e) reimbursement for expenses incurred but not paid prior to such
termination of employment;
(f) continuation of all benefits provided to the Executive pursuant
to SUBSECTION 4.2, including, without limitation, the Executive's
group health insurance and participation in the Company's Special
Long-Term Disability Plan and any other long-term disability
insurance generally provided to senior executives of the Company,
at the level in effect at the time of his termination of
employment, through the end of the 60th month following such
termination, or the economic equivalent thereof, as if such
Executive were employed during such period; and
(g) such rights to other benefits as may be provided in applicable
plans and programs of the Company, including, without limitation,
applicable employee benefit plans and programs, according to the
terms and conditions of such plans and programs.
6.5 TERMINATION BY THE EXECUTIVE WITH GOOD REASON. The Executive may
terminate his employment on his own initiative for Good Reason upon thirty (30)
days prior written notice to the Company. Such termination shall have the same
consequences as a termination without Cause under SUBSECTION 6.4.
7. CHANGE IN CONTROL.
7.1 CHANGE IN CONTROL. Immediately upon a Change in Control, in
addition to any other compensation or benefits payable pursuant to this
Agreement or otherwise, the Executive shall be entitled to:
(a) a payment in cash equal to three times 175 percent of his Base
Salary;
(b) minimum annual increases in the Executive's Base Salary equal to
the greater of (i) five percent, or (ii) the percentage of
increase in the Consumer Price Index for the [Nevada area] as
reported by the United States Department of Labor for the
immediately preceding calendar year;
(c) annual bonuses of at least 75 percent of his Base Salary;
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(d) immediate vesting of all benefits, without penalty or reduction
in rights or benefits, including, without limitation:
(i) vesting of all stock options and stock appreciation rights,
which shall be and remain exercisable for the remaining option
term;
(ii) vesting of all rights to all restricted stock of the Company
held in the Executive's name or for his benefit;
(iii) vesting and cash-out of any phantom stock units; and
(iv) vesting and payout of any incentive shares;
(e) immediate eligibility for retirement under the Supplemental
Executive Retirement Plan without penalty for early retirement;
(f) continued funding of the Executive's split dollar life insurance
policy and any other life insurance policies maintained by the
Company on behalf of the Executive, as if the Executive were
employed by the Company through the maturity date of such
policies or payment in full of all premium obligations under such
policies; and
(g) such rights to other benefits as may be provided in applicable
plans and programs of the Company, including, without limitation,
applicable employee benefit plans and programs, according to the
terms and conditions of such plans and programs.
7.2 TERMINATION OF THE EXECUTIVE'S EMPLOYMENT AFTER A CHANGE IN
CONTROL. If subsequent to a Change in Control, the Executive's employment is
terminated by the Company without Cause or by Executive for Good Reason, the
Executive shall be entitled, in addition to any compensation and benefits
provided pursuant to SUBSECTION 6.4 and SUBSECTION 7.1, above, to:
(a) an amount equal to the greater of (i) five times 175 percent of
his Base Salary at the time of the Change in Control or (ii) five
times 175 percent of his Base Salary at the time of the
termination of his employment;
(b) continuation of all employee benefits provided to the Executive
pursuant to SUBSECTION 4.2 for a period of sixty (60) months
following such termination of employment, or the economic
equivalent thereof, as if the Executive were an employee of the
Company during such period; and
(c) an additional amount which, after the payment of all federal,
state and local income taxes attributable to such additional
amount, equals the positive difference, if any, of:
(i) $20,000,000, MINUS
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(ii) the product of:
(A) the amount that would have been payable to the
Executive under SUBSECTION 6.4(a) if his employment had
been terminated without Cause prior to a Change in
Control, the amount paid pursuant to SUBSECTION 7.1(a)
and the amount payable pursuant to SUBSECTION 7.2(a),
MULTIPLIED by:
(B) the difference of:
(i) one, MINUS
(ii) the Executive's combined marginal income tax rate.
7.3 TERMINATION BY EXECUTIVE WITHOUT GOOD REASON AFTER A CHANGE IN
CONTROL. If the Executive terminates his employment without Good Reason
following a Change in Control, in addition to any payments paid or payable
pursuant to SUBSECTION 7.1, but in lieu of any other compensation and benefits
whatsoever, he shall be entitled to the following:
(a) if such termination occurs in the first twelve (12) months
following a Change in Control, the Executive shall be entitled to
an amount equal to eighty percent (80%) of the amounts payable to
the Executive pursuant to:
(i) SUBSECTION 6.4(a),
(ii) SUBSECTION 7.2(a),
(iii) an amount, if any, calculated in accordance with SUBSECTION
7.2(c), and
(iv) the benefits provided in SUBSECTION 6.4 (b), (c), (e), (f)
AND (g).
(b) if such termination occurs after the first twelve (12) months
following a Change in Control, the Executive shall be entitled to
an amount equal to one hundred percent (100%) of the amounts
provided for in paragraphs (a)(i) and (a)(ii) of SUBSECTION
7.3(a), an amount, if any, calculated in accordance with
SUBSECTION 7.2(c), using the sum of $20,000,000, and the benefits
provided in SUBSECTION 6.4(b), (c), (e), (f) AND (g), and
(c) in either instance, the Executive shall be entitled to such
rights to benefits as may be provided in applicable plans and
programs of the Company, including, without limitation,
applicable employee benefit plans and programs, according to the
terms and conditions of such plans and programs.
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7.4 TERMINATION FOR OTHER REASONS AFTER A CHANGE IN CONTROL. If the
Executive's employment is terminated by the Company for any reason not provided
by SUBSECTION 7.2 or SUBSECTION 7.3, his rights shall be determined in
accordance with the applicable Subsection of SECTION 6.
7.5 FUNDING OF PAYMENTS. All payments payable to the Executive
pursuant to this SECTION 7, except for payments payable as a lump sum, shall be
made to a trust which shall be established for such purpose and shall provide
for Towers Xxxxxx to serve as the trustee thereof.
8. CONDITIONS TO PAYMENTS.
8.1 TIMING OF PAYMENTS. Unless otherwise provided herein, any
payments to which the Executive shall be entitled under SECTIONS 6 AND 7
following the termination of his employment shall be made as promptly as
possible and in no event later than five business days following such
termination of employment.
8.2 NO MITIGATION; NO OFFSET. In the event of any termination of
employment under SECTIONS 6 OR 7, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due to
the Executive on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts payable to the
Executive are in the nature of severance payments, or liquidated damages, or
both, and are not in the nature of a penalty.
9. SPECIAL REIMBURSEMENT.
9.1 If any payment or benefit paid or payable, or received or to
be received, by or on behalf of the Executive in connection with a Change in
Control pursuant to SUBSECTION 7.1 or the termination of the Executive's
employment pursuant to SUBSECTIONS 7.2, 7.3 OR 7.4 , whether any such
payments or benefits are pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any Affiliate, any Person,
or otherwise (the "TOTAL PAYMENTS"), will or would be subject to the excise
tax imposed under Section 4999 of the Code (the "EXCISE TAX"), the Company
shall pay to the Executive an additional amount (the "GROSS-UP PAYMENT") such
that, after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes) imposed upon or in respect of
the Total Payments and the Gross-Up Payments, including, without limitation,
any income taxes (and any interest and penalties imposed with respect
thereto) and any Excise Tax imposed thereon, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Total
Payments.
9.2 For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax,
(a) the Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all
"excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company
and reasonably acceptable to the Executive
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(which opinion shall be provided to the Executive) such Total
Payments (in whole or in part) (i) do not constitute parachute
payments, including (without limitation) by reason of Section
280G(b)(4)(A) of the Code, (ii) such excess parachute payments
(in whole or in part) represent reasonable compensation for
services actually rendered, within the meaning of Section
280G(b)(4)(B) of the Code, or (iii) are not, in the opinion of
legal counsel, otherwise subject to the Excise Tax, and
(b) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors
in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code.
9.3 In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder, the Executive shall repay to
the Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of the
termination of the Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the initial
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
accordance with SUBSECTION 9.1 in respect of such excess Excise Tax (plus any
interest, penalties or additions payable by the Executive with respect to such
excess Excise Tax) at the time that the amount of such excess Excise Tax is
finally determined. The Executive and the Company shall each reasonably
cooperate with each other in connection with any administrative or judicial
proceedings concerning the existence or amount of any such subsequent liability
for Excise Tax with respect to the Total Payments.
10. INDEMNIFICATION.
10.1 GENERAL. The Company agrees that if the Executive is made a party
or is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (an "INDEMNIFIABLE ACTION"), by
reason of the fact that he is or was a director or officer of the Company or is
or was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Indemnifiable Action is alleged action
in an official capacity as a director, officer, member, employee or agent while
service as a director, officer, member, employee or agent, he shall be
indemnified and held harmless by the Company to the fullest extent authorized by
Nevada law and the Company's by-laws, as the same exist or may hereafter be
amended, against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by the Executive in connection
therewith.
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10.2 PROCEDURE. The indemnification provided pursuant to this SECTION
10 shall be subject to the following conditions:
(a) The Executive must promptly give the Company written notice of
any actual or threatened Indemnifiable Action;
(b) The Company will be permitted, at its option, to participate in,
or to assume, the defense of any Indemnifiable Action;
(c) The Executive must provide reasonable cooperation to the Company
in the defense of any Indemnifiable Action; and
(d) The Executive must refrain from settling any Indemnifiable Action
without obtaining the Company's prior written consent, which
consent shall not be unreasonably withheld.
10.3 ADVANCEMENT OF COSTS AND EXPENSES. The Company agrees to advance
all costs and expenses referred to in SUBSECTION 10.1; PROVIDED, HOWEVER, that
the Executive agrees to repay to the Company any amounts so advanced to the
extent that a court of competent jurisdiction finds that any acts or omissions
by the Executive were:
(a) in knowing violation of any agreement between the Executive and
the Company;
(b) in bad faith or involving intentional misconduct or a knowing
violation of law or that the Executive personally gained a
financial profit or other advantage to which he was not legally
entitled; or
(c) for which a court, having jurisdiction in the matter, determines
that indemnification is not lawful.
10.4 NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending an Indemnifiable Action in advance of
its final disposition conferred in this SECTION 10 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute, provision of the certificate of incorporation or by-laws of the
Company, agreement, vote of stockholders or disinterested directors or
otherwise.
10.5 D&O INSURANCE. The Company will maintain a directors' and
officers' liability insurance policy covering the Executive that provides
coverage that is reasonable in relation to the Executive's position during the
Term of Employment.
11. CONFIDENTIAL INFORMATION AND COMPANY PROPERTY.
11.1 CONFIDENTIAL INFORMATION. The Executive understands and
acknowledges that Confidential Information constitutes a valuable asset of the
Company and its Affiliates and may not be converted to the Executive's own or
any third party's use. Accordingly, the Executive hereby agrees that he shall
not, directly or indirectly, during the Term of Employment or for a period of
twelve (12) months after the termination of his employment, disclose any
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Confidential Information to any Person not expressly authorized by the Company
to receive such Confidential Information. The Executive further agrees that he
shall not directly or indirectly, during the Term of Employment or for a period
of twelve (12) months after the termination of his employment, use or make use
of any Confidential Information in connection with any business activity other
than that of the Company. The Parties acknowledge and agree that this Agreement
is not intended to, and does not, alter either the Company's rights or the
Executive's obligations under any state or federal statutory or common law
regarding trade secrets and unfair trade practices.
11.2 COMPANY PROPERTY. All Company Property is and shall remain
exclusively the property of the Company. Unless authorized in writing to the
contrary, the Executive shall promptly, and without charge, deliver to the
Company on the termination of employment hereunder, or at any other time the
Company may so request, all Company Property that the Executive may then possess
or have under his control.
11.3 REQUIRED DISCLOSURE. In the event the Executive is required by
law or court order to disclose any Confidential Information or to produce any
Company Property, the Executive shall promptly notify the Company of such
requirement and provide the Company with a copy of any court order or of any law
which requires such disclosure and, if the Company so elects, to the extent
permitted by applicable law, give the Company an adequate opportunity, at its
own expense, to contest such law or court order prior to any such required
disclosure or production by the Executive.
11.4 SURVIVAL. The Executive agrees that the provisions of this
SECTION 11 shall survive the termination of this Agreement and the termination
of the Executive's employment.
12. DISPUTE RESOLUTION. The Company agrees that in the event the
Executive finds it necessary to initiate any legal action to obtain any
payments, benefits or rights provided by this Agreement to him, the Company
shall reimburse the Executive for all attorney's fees and other related expenses
incurred by him to the extent the Executive is successful in such action.
13. NOTICES. All notices, demands and requests required or permitted
to be given to either Party under this Agreement shall be in writing and shall
be deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address as
such Party may subsequently give notice of:
If to the Company: Station Casinos, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxxx X Xxxxxxx
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With a copy to: Milbank, Tweed, Xxxxxx & XxXxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
If to the Executive: Xxxxx X. Xxxxxxxx III
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
14. EMPLOYEE BENEFIT PLAN DOCUMENTS. In the event that any provision
of this Agreement conflicts with the terms and provisions of any employee
benefit plan document, the provisions of this Agreement shall govern; and the
Company shall take any and all actions that may be necessary, including
amendment of any plan document, to the extent necessary to effect the provision
of benefits expressly provided upon termination of the Executive's employment
pursuant to SECTIONS 6 AND 7.
15. BENEFICIARIES/REFERENCES. The Executive shall be entitled to
select a beneficiary or beneficiaries to receive any compensation or benefit
payable hereunder following the Executive's death, and may change such election,
by giving the Company written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
16. SURVIVORSHIP. The respective rights and obligations of the Parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this SECTION 16 are in addition to the survivorship provisions of
any other Section of this Agreement.
17. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants
that he or it is fully authorized and empowered to enter into this Agreement and
that the performance of his or its obligations under this Agreement will not
violate any agreement between that Party and any other Person.
18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto. No
representations, inducements, promises or agreements not embodied herein shall
be of any force or effect.
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19. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs and assigns; PROVIDED, HOWEVER, that no rights or obligations of the
executive under this Agreement may be assigned or transferred by the Executive,
other than rights to compensation and benefits hereunder, which may be
transferred only by will or operation of law and subject to the limitations of
this Agreement; and PROVIDED, FURTHER, that no rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company,
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company under this
Agreement, either contractually or as a matter of law.
20. AMENDMENT OR WAIVER. No provision in this Agreement may be amended
or waived unless such amendment or waiver is agreed to in writing, signed by
both Parties. No waiver by one Party of any breach by the other Party of any
condition or provision of this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. No failure of the Company to exercise
any power given it hereunder or to insist upon strict compliance by the
Executive with any obligation hereunder, and no custom or practice at variance
with the terms hereof, shall constitute a waiver of the right of the Company to
demand strict compliance with the terms hereof.
21. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
22. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of Nevada without
reference to the principles of conflict of laws thereof. In the event of any
dispute or controversy arising out of or relating to this Agreement, the Parties
mutually and irrevocably consent to, and waive any objection to, the exclusive
jurisdiction of any court of competent jurisdiction in Xxxxx County, Nevada, to
resolve such dispute or controversy.
23. HEADINGS. The headings of the Sections and Subsections contained
in this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.
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24. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same Agreement with the same effect as if all Parties had signed the same
signature page. Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement identical in form hereto but having attached to it one or more
additional signature pages.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
STATION CASINOS, INC.
By: /s/ XXXXX X. XXXXXXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxxxxxx
Title: Executive Vice President
Chief Financial Officer
Chief Administrative Officer
/s/ XXXXX X. XXXXXXXX III
----------------------------
XXXXX X. XXXXXXXX III
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