Exhibit 10.29
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of August
13, 2002, by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation
("Company"), and JOHN A. GODFREY, an individual ("Executive"), with respect to
the following facts and circumstances:
RECITALS
Company desires to employ Executive as of the date hereof and to retain
Executive as Senior Vice President and General Counsel of Company commencing on
or about August 28, 2002, on the terms and conditions set forth herein.
Executive desires to be retained by Company in such capacities, on the terms and
conditions and for the consideration set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
EMPLOYMENT AND TERM
1.1 Employment. Company agrees to employ Executive and to engage Executive
in the capacity as Senior Vice President & General Counsel of the Company, and
Executive hereby accepts such engagement by Company upon the terms and
conditions specified below
1.2 Term. The term of this Agreement (the "Term") shall commence on the
date hereof and shall continue in force until September 1, 2007, unless earlier
terminated under Article 6 below.
ARTICLE 2
DUTIES OF EXECUTIVE
2.1 Duties. Executive shall perform all the duties and obligations
generally associated with the position of Senior Vice President & General
Counsel, as chief legal officer with responsibility for supervision of the
legal, regulatory and compliance functions of the Company and its affiliates,
including any parent(s) thereof, subject to the control and supervision of the
Chief Executive Officer, and such other executive duties consistent with the
foregoing as may be assigned to him from time to time by the Chief Executive
Officer of Company. Executive shall report to the Chief Executive Officer and
shall be appointed by the Board of Directors as a corporate executive officer of
the Company at all times during the Term Executive shall perform the services
contemplated herein faithfully, diligently, to the best of his ability and in
the best interests of Company. Executive shall devote all his business time and
efforts to the rendition of such services. Executive shall, at all times perform
such services in compliance with, and to the extent of his authority, shall to
the best
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of his ability cause Company to be in compliance with any and all laws, rules
and regulations applicable to Company of which Executive is aware. Executive
shall, at all times during the Term, in all material respects adhere to and obey
any and all written internal rules and regulations governing the conduct of
Company's employees, as established or modified from time to time; provided,
however, in the event of any conflict between the provisions of this Agreement
and any such rules or regulations, the provisions of this Agreement shall
control.
2.2 Location of Services. Executive's principal place of employment shall
be at Company's office in Las Vegas, Nevada, or at such other location as
Executive and the Chief Executive Officer shall agree upon. Executive
understands he will be required to travel to Company's various operations and
offices as part of his employment.
2.3 Exclusive Service. Except as otherwise expressly provided herein,
Executive shall devote his entire business time, attention, energies, skills,
learning and best efforts to the business of Company. Executive may participate
in social, civic, charitable, religious, business, educational or professional
associations and, with the prior approval of the Chief Executive Officer, serve
on the boards of directors of companies, so long as such participation does not
materially interfere with the duties and obligations of Executive hereunder.
This Section 2.3, however, shall not be construed to prevent Executive from
making passive outside investments so long as such investments do not require
material time of Executive or otherwise interfere with the performance of
Executive's duties and obligations hereunder. Executive shall not make any
investment in an enterprise that competes with Company without the prior written
approval of Company after full disclosure of the facts and circumstances;
provided, however, that this sentence shall not preclude Executive from owning
up to one percent (1%) of the securities of a publicly traded entity (a
"Permissible Investment"). During the Term, Executive shall not directly or
indirectly work for or provide services to or, except as permitted above, own an
equity interest in any person, firm or entity engaged in the casino gaming, card
club or horse racing business. In this regard, Executive acknowledges that the
gaming industry is national in scope and that accordingly this covenant shall
apply throughout the United States. This Section 2.3. shall also not be
construed to prevent Executive from consulting with and assisting the law firm
of Schreck Brignone Godfrey or its successor (the "Firm") for a reasonable
period of time in transitioning cases, files and client matters that Executive
has been working on or been responsible for while a partner with the Firm,
provided, however, that Executive shall not be involved in any matters with the
Firm that conflict with or are adverse to the Company's business.
ARTICLE 3
COMPENSATION
3.1 Salary. In consideration for Executive's services hereunder, Company shall
pay Executive an annual salary at the rate of $360,000 per year during each of
the years of the Term; payable in accordance with Company's regular payroll
schedule from time to time (less any deductions required for Social Security,
state, federal and local withholding taxes, and any other authorized or mandated
withholdings), such salary to commence on the date
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Executive becomes Senior Vice President and General Counsel of the Company. From
the date hereof until such date Executive shall be paid the lump sum of $500,
subject to applicable withholdings.
3.2 Bonus. Executive shall be entitled to earn bonuses with respect to each
year of the Term during which Executive is employed under this Agreement of up
to $180,000 per year in the discretion of the Chief Executive officer or Board
of Directors, as applicable, provided, however, that for the first two years of
Executive's employment, Executive shall be entitled to receive a bonus of at
least $100,000 per year. Any such bonuses received or earned by Executive shall
be paid annually within ninety (90) days after the conclusion of Company's
fiscal year. The amount of and criteria for earning bonuses may be adjusted by
mutual agreement of Executive and the Company. Bonuses relative to partial years
(or a termination caused by death or disability) shall be prorated.
3.3 Stock Options. As an additional element of compensation to Executive,
in consideration of the services to be rendered hereunder, Company shall grant
to Executive options to purchase 250,000 shares of the Company's common stock
which shall have an exercise price equal to the fair market value of such stock
on the date hereof. The options shall vest in five equal consecutive annual
installments of 20% each, with the first 20% vested on the first anniversary of
the date hereof. In the event of a termination caused by death or disability,
the options shall vest as of the date of death or disability (in addition to any
vesting that previously occurred) with respect to a percentage of the shares
subject to this Option determined by multiplying 20% by a fraction, the
numerator of which is the number of days from the first day of the year in which
such death or disability occurs until the date of such death or disability, and
the denominator of which is 365. The terms and conditions of such options shall
be governed by the stock option agreement of even date herewith.
ARTICLE 4
EXECUTIVE BENEFITS
4.1 Vacation. In accordance with the general policies of Company applicable
generally to other senior executives of Company pursuant to Company's personnel
policies from time to time, Executive shall be entitled to four weeks vacation
each calendar year, without reduction in compensation.
4.2 Company Employee Benefits. Executive shall receive all group insurance
and pension plan benefits and any other benefits on the same basis as they are
available generally to other senior executives of Company under Company
personnel policies in effect from time to time.
4.3 Conferences and Seminars. Executive will attend conferences and
seminars from time to time as a representative of the Company upon the approval
of the Chief Executive Officer, including, but not limited to, continuing legal
education events and the annual conference of the International Association of
Gaming Attorneys. The Company
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shall pay on behalf of Executive, or reimburse Executive for, all reasonable
costs and expenses of Executive in connection with such conferences, seminars
and events.
4.4 Benefits. Executive shall receive all other such fringe benefits as
Company may offer to any other senior executive of Company under Company
personnel policies in effect from time to time, such as health and disability
insurance coverage and paid sick leave. In the event that the Company's group
health plan does not cover the annual physical examination of Executive the
Company shall bear the cost of such examinations.
4.5 Indemnification. Executive shall have the benefit of indemnification to
the fullest extent permitted by applicable law, which indemnification shall
continue after the termination of this Agreement for such period as may be
necessary to continue to indemnify Executive for his acts during the term
hereof. Company shall cause Executive to be covered by the current policies of
directors and officers liability insurance covering directors and officers of
Company, copies of which have been provided to Executive, in accordance with
their terms, to the maximum extent of the coverage available for any director or
officer of Company. Company shall use commercially reasonable efforts to cause
the current policies of directors and officers liability insurance covering
directors and officers of Company to be maintained throughout the term of
Executive's employment with Company and for such period thereafter as may be
necessary to continue to cover acts of Executive during the term of his
employment (provided that Company may substitute therefor, or allow to be
substituted therefor, policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect).
ARTICLE 5
REIMBURSEMENT FOR EXPENSES
5.1 Executive shall be reimbursed by Company for all ordinary and necessary
expenses incurred by Executive in the performance of his duties or otherwise in
furtherance of the business of Company in accordance with the policies of
Company in effect from time to time. Executive shall keep accurate and complete
records of all such expenses, including but not limited to, proof of payment and
purpose. Executive shall account fully for all such expenses to Company.
ARTICLE 6
TERMINATION
6.1 Termination for Cause. Without limiting the generality of Section 6.2,
Company shall have the right to terminate Executive's employment, without
further obligation or liability to Executive, upon the occurrence of any one or
more of the following events, which events shall be deemed termination for
cause.
6.1.1 Failure to Perform Duties. If Executive neglects to perform the
material duties of his employment under this Agreement in a professional and
businesslike
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manner after having received written notice specifying such failure to perform
and a reasonable opportunity to perform.
6.1.2 Willful Breach. If Executive willfully commits a material breach
of this Agreement or a material willful breach of his fiduciary duty to Company.
6.1.3 Wrongful Acts. If Executive is convicted of a felony involving
acts of moral turpitude or commits fraud, misrepresentation, embezzlement or
other acts of material misconduct against the Company (including violating or
condoning the violation of any material rules or regulations of gaming
authorities which could have a material adverse effect on the Company) that
would make the continuance of his employment by Company materially detrimental
to Company.
6.1.4 Disability. If Executive is physically or mentally disabled from
the performance of a major portion of his duties for a continuous period of 120
days or greater, which determination shall be made in the reasonable exercise of
Company's judgment, provided, however, if Executive's disability is the result
of a serious health condition as defined by the federal Family and Medical Leave
Act (or its Nevada equivalent) ("FMLA"), Executive's employment shall not be
terminated due to such disability at any time during or after any period of
FMLA-qualified leave except as permitted by FMLA. If there should be a dispute
between Company and Executive as to Executive's physical or mental disability
for purposes of this Agreement, the question shall be settled by the opinion of
an impartial reputable physician or psychiatrist agreed upon by the parties or
their representatives, or if the parties cannot agree within ten days after a
request for designation of such party, then a physician or psychiatrist designed
by the Los Angeles County Medical Association. The certification of such
physician or psychiatrist as to the questioned dispute shall be final and
binding upon the parties hereto.
6.1.5 Failure To Be Licensed. Executive shall apply for all applicable
gaming licenses within 90 days of the date hereof. If Executive fails to be
licensed in all jurisdictions in which the Company or its subsidiaries has
gaming facilities within the date required by any jurisdiction, or if any of
such licenses shall be revoked or suspended at any time during the Term, then
the Company may by written notice to Executive terminate the Agreement for
cause. Executive agrees to promptly submit to the licensing requirements of all
jurisdictions in which the Company or its subsidiaries does business. The
Company shall bear all expenses incurred in connection with such licenses.
6.2 Termination Without Cause. Notwithstanding anything to the contrary
herein, Company shall have the right to terminate Executive's employment under
this Agreement at any time without cause by giving notice of such termination to
Executive.
6.3 Termination by Executive for Good Reason. Executive may terminate his
employment under this Agreement on thirty (30) days prior notice to Company for
good reason. For purposes of this Agreement, "good reason" shall mean and be
limited to (a) a material breach of this Agreement by Company (including without
limitation any material reduction in the authority or duties of Executive, or
any relocation of his or its principal place of business outside the greater Las
Vegas metropolitan area (without Executive's
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consent) and the failure of Company to remedy such breach within thirty (30)
days after written notice (or as soon thereafter as practicable so long as it
commences effectuation of such remedy within such time period and diligently
pursues such remedy to completion as soon as practicable); or (b) a "change of
control" with respect to the Company followed by (i) any diminution of
Executive's authority, duties or responsibilities as set forth in Section 2.1;
(ii) during the first twelve (12) months following a change in control, the
failure of the Company to award Executive an annual bonus equal to at least
seventy-five percent (75%) of the average amount of the annualized bonus paid to
Executive for the last two (2) full years; or (iii) his termination by the
Company. For purposes of this Agreement, a change of control shall mean (i) a
sale of all or substantially all of the property of the Company (ii) a sale to
any one person, corporation, entity or group of stock possessing more than
thirty percent (30%) of the aggregate voting power of the then outstanding stock
of Company to another person, corporation or entity, (iii) a change in the
majority of the Board of Directors which is not approved by a majority of the
members of the Board of Directors as of the date of this Agreement or directors
whose election or appointment to the Board of Directors is approved by
directors; (iv) the dissolution for liquidation of Company; or (v) the
reorganization, merger or combination of the Company with one or more
corporations or entities unless the Company's shareholders immediately before
such reorganization, merger or combination own stock or equity possessing more
than 50% of the voting power of the stock or equity of the surviving corporation
or entity in substantially the same proportions after such reorganization,
merger or combination as they owned in the Company immediately before such
reorganization, merger, or combination.
6.4 Effectiveness on Notice. Any termination under this Section 6 shall be
effective upon receipt of notice by Executive or Company, as the case may be, of
such termination or upon such other later date as may be provided herein or
specified by Company or Executive in the notice (the "Termination Date"), except
as otherwise provided in this Section 6.
6.5 Effect of Termination.
6.5.1 Payment of Salary and Expenses Upon Termination. If the Term of
this Agreement is terminated, all benefits provided to Executive by Company
hereunder shall thereupon cease and Company shall pay or cause to be paid to
Executive all accrued but unpaid salary and vacation benefits. In addition,
promptly upon submission by Executive of his unpaid expenses incurred prior to
the Termination Date and owing to Executive pursuant to Article 5, reimbursement
for such expenses shall be made. If the Term of the Agreement is terminated for
"cause," Executive shall not be entitled to receive any payments other than as
specified in this Section 6.5.1, and provided that Executive may exercise any
vested options.
(a) Termination for Disability. In the event of a termination
under Section 6.1.4 (for disability), Executive may be
eligible for benefits under the applicable State Disability
Insurance program for his first six months of disability. In
addition, Executive shall be eligible for benefits provided
for and shall
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immediately thereafter be eligible for the benefits under
any long term disability insurance policy which Company may
have as in effect from time to time. Eligibility and
benefits with regard to either insurance program shall be
governed by the provisions of the insurance program or
policy and shall not be the responsibility of Company. In
the event of a termination under Section 6.1.4, the
"Covenant Not to Compete" set forth in Section 7.4 below
shall not apply in any respect to Executive and the term of
the "No Hire Away Policy" in Section 7.5 shall be limited to
six months from the date of termination.
6.5.2 Termination Without Cause or Termination by Executive for Good
Reason. If Company terminates Executive without cause or Executive terminates
for good reason, the following shall apply:
(a) So long as Executive does not compete with Company or its
subsidiaries in the gaming business prior to the end of the
Term, Executive shall be entitled to receive an amount equal
to $360,000 per year (plus unpaid guaranteed bonuses
applicable to the first two years of Executive's employment,
plus, in the event of a "change in control" of the Company
as defined in Section 6.3(b) in the middle of a year, any
bonus or prorated portion thereof that Executive is
otherwise entitled to for that year) through the end of the
Term, or, if the remaining portion of the Term is less than
one year, for one year (the "Severance Benefit"), payable in
accordance with Company's regular salary payment schedule
from time to time, plus any amounts payable under Section
6.5.1 above, plus a continuation of health and disability
insurance coverage as specified in Section 6.5.2(c),
provided that in the event Executive's employment is
terminated by the Company or by Executive after a "change in
control" of the Company, as defined in Section 6.3(b)
followed by (i) Executive's termination by the Company, or
(ii) any diminution of Executive's authority, duties or
responsibilities as set forth in Section 2.1, or (iii)
during the first twelve (12) months following a change in
control, the failure of the Company to award Executive an
annual bonus equal to at least seventy-five percent (75%) of
the average amount of the annualized bonus paid to Executive
for the last two full years, the Severance Benefit shall be
payable to Executive in a lump sum as soon as practicable,
but in no event later than thirty (30) days after the
termination of Executive's employment. If the Company
terminates Executive without cause other than in connection
with a "change in control" of the Company, shall have an
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affirmative obligation to mitigate his Severance Benefit,
except with respect to two year's base salary plus one
year's guaranteed bonus to the extent such guaranteed
bonuses have not already been paid to Executive. Executive
shall have no obligation to mitigate to the extent he is
entitled to receive a lump sum Severance Benefit]. Should
Executive compete with Company or its subsidiaries prior to
the end of the Term, Executive shall not be entitled to
receive any additional payments from Company with respect to
periods after the commencement of any such competitive
activity under this Section 6.5.3 or otherwise and all such
obligations shall be extinguished.
(b) In addition to those already vested, all unvested stock
options held by Executive shall be deemed immediately and
fully vested and exercisable by Executive;
(c) So long as Executive does not compete with Company or its
subsidiaries in the gaming business prior to the end of the
Term, Executive will also be entitled to receive health
benefits coverage for Executive and his dependents, and
disability insurance coverage for Executive, under the same
plan(s) or arrangement(s) under which Executive was were
covered immediately before his termination of employment or
plan(s) established or arrangement(s) provided by the
Company or any of its Subsidiaries thereafter for the
benefit of senior executives. Such health benefits and
disability coverage shall be paid for by the Company to the
same extent as if Executive were still employed by the
Company, and Executive will be required to make such
payments as Executive would be required to make if Executive
were still employed by the Company. The benefits provided
under this Section 6.5.2(c) shall continue until the earlier
of (a) the end of the Term, or, if the remaining portion of
the Term is less than one year, for one year following
Executive's termination of employment with the Company and
all of its Subsidiaries, (b) the date Executive becomes
covered under any other group health plan or group
disability plan (as the case may be) not maintained by the
Company or any of its Subsidiaries; provided, however, that
if such other group health plan excludes any pre-existing
condition that Executive or Executive's dependents may have
when coverage under such group health plan would otherwise
begin, coverage under this Section 6.5.2(c) shall continue
(but not beyond the period described in clause (a) of this
sentence) with respect to such pre-existing condition until
such exclusion under such other group health plan lapses or
expires.
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In the event Executive is required to make an election under
Sections 601 through 607 of the Employee Retirement Income
Security Act of 1974, as amended (commonly known as COBRA)
to qualify for the benefits described in this Section
6.5.2(c), the obligations of the Company and its
Subsidiaries under this Section 6.5.2(c) shall be
conditioned upon Executive's timely making such an election.
(d) The "Covenant Not to Compete" set forth in Section 7.4 below
shall not apply in any respect to Executive (except as the
same may affect his entitlement to payments under Section
6.5.3(a) hereof) and the term of the "No Hire Away Policy"
in Section 7.5 shall be limited to six months from the date
of termination.
6.6 Suspension. In lieu of terminating Executive's employment hereunder for
cause under Section 6.1, Company shall have the right, at its sole election, to
suspend the performance of duties by Executive under this Agreement during the
continuance of events or circumstances under Section 6.1 for an aggregate of not
more than 30 days during the Term (the "Default Period") by giving Executive
written notice of Company's election to do so at any time during the Default
Period. Company shall have the right to extend the Term beyond its normal
expiration date by the period(s) of any suspension(s). Company's exercise of its
right to suspend the operation of this Agreement shall not preclude Company from
subsequently terminating Executive's employment hereunder. Executive shall not
render services to any other person, firm or corporation in the casino business
during any period of suspension. Executive shall be entitled to continued
compensation and benefits pursuant to the provisions of this Agreement during
the Default Period.
6.7 Exercisability of Options. As provided in the stock option agreements,
all vested options will terminate on the earlier of (a) the expiration of the
ten (10) year term of such options, or (b) one (1) year after the termination of
Executive's employment with the Company, regardless of the cause of such
termination, except that, in the event of a termination for "Cause" or
Executive's termination without good reason, all vested options will terminate
on the earlier of (I) the expiration of the ten (10) year term of such options,
or (II) ninety (90) days after the termination. As provided in the stock option
agreements, unvested options will terminate on the termination of Executive's
employment with the Company, except to the extent that such options become
vested as a result of such termination under the terms of the governing stock
option agreement.
ARTICLE 7
CONFIDENTIALITY
7.1 Nondisclosure of Confidential Material. In the performance of his
duties, Executive may have access to confidential records, including, but not
limited to, development, marketing, organizational, financial, managerial,
administrative and sales information, data, specifications and processes
presently owned or at any time hereafter
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developed or used by Company or its agents or consultants that is not otherwise
part of the public domain (collectively, the "Confidential Material"). All such
Confidential Material is considered secret and is disclosed to Executive in
confidence. Executive acknowledges that the Confidential Material constitutes
proprietary information of Company which draws independent economic value,
actual or potential, from not being generally known to the public or to other
persons who could obtain economic value from its disclosure or use, and that
Company has taken efforts reasonable under the circumstances, of which this
Section 7.1 is an example, to maintain its secrecy. Except in the performance of
his duties to Company or as required by a court order, Executive shall not,
directly or indirectly for any reason whatsoever, disclose, divulge,
communicate, use or otherwise disclose any such Confidential Material, unless
such Confidential Material ceases to be confidential because it has become part
of the public domain (not due to a breach by Executive of his obligations
hereunder). Executive shall also take all reasonable actions appropriate to
maintain the secrecy of all Confidential Information. All records, lists,
memoranda, correspondence, reports, manuals, files, drawings, documents,
equipment, and other tangible items (including computer software), wherever
located, incorporating the Confidential Material, which Executive shall prepare,
use or encounter, shall be and remain Company's sole and exclusive property and
shall be included in the Confidential Material. Upon termination of this
Agreement, or whenever requested by Company, Executive shall promptly deliver to
Company any and all of the Confidential Material, not previously delivered to
Company, that is in the possession or under the control of Executive.
7.2 Assignment of Intellectual Property Rights. Any ideas, processes,
know-how, copyrightable works, maskworks, trade or service marks, trade secrets,
inventions, developments, discoveries, improvements and other matters that may
be protected by intellectual property rights, that relate to Company's business
and are the results of Executive's efforts during the Term (collectively, the
"Executive Work Product"), whether conceived or developed alone or with others,
and whether or not conceived during the regular working hours of Company, shall
be deemed works made for hire and are the property of Company. In the event that
for whatever reason such Executive Work Product shall not be deemed a work made
for hire, Executive agrees that such Executive Work Product shall become the
sole and exclusive property of Company, and Executive hereby assigns to Company
his entire right, title and interest in and to each and every patent, copyright,
trade or service mark (including any attendant goodwill), trade secret or other
intellectual property right embodied in Executive Work Product. Company shall
also have the right, in its sole discretion to keep any and all of Executive
Work Product as Company's Confidential Material. The foregoing work made for
hire and assignment provisions are and shall be in consideration of this
agreement of employment by Company, and no further consideration is or shall be
provided to Executive by Company with respect to these provisions. Executive
agrees to execute any assignment documents Company may require confirming
Company's ownership of any of Executive Work Product. Executive also waives any
and all moral rights with respect to any such works, including without
limitation any and all rights of identification of authorship and/or rights of
approval, restriction or limitation on use or subsequent modifications.
Executive promptly will disclose to Company any Executive Work Product.
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7.3 No Unfair Competition After Termination of Agreement. Executive hereby
acknowledges that the sale or unauthorized use or disclosure of any of Company's
Confidential Material obtained by Executive by any means whatsoever, at any time
before, during or after the Term shall constitute unfair competition. Executive
shall not engage in any unfair competition with Company either during the Term
or at any time thereafter.
7.4 Covenant Not to Compete. In the event this Agreement is terminated by
Company for cause under Section 6.1 above, or by Executive, for a reason other
than one specified in Section 6.3 above, then for a period of one year after the
effective date of such termination, Executive shall not, directly or indirectly,
work for or provide services to or own an equity interest (except for a
Permissible Investment) in any person, firm or entity engaged in the casino
gaming, card club or horseracing business which competes against Company in any
"market" in which Company owns or operates a casino, card club or horseracing
facility. For purposes of this Agreement, "market" shall be defined as the area
within a 100 mile radius of any casino, card club or horseracing facility owned
or operated by Company. This Section 7.4 shall not apply to the private practice
of law by Executive, provided that Executive shall not provide legal services
for any person, firm or entity in any matter that conflicts with or is adverse
to the Company during such one-year period.
7.5 No Hire Away Policy. In the event this Agreement is terminated prior to
the normal expiration of the Term, either by Company for cause under Section 6.1
above, or by Executive, for a reason other than one specified in Section 6.3
above, then for a period of one year after the effective date of such
termination, Executive shall not, directly or indirectly, for himself or on
behalf of any entity with which he is affiliated or employed, hire any person
known to Executive to be an employee of Company or any of its subsidiaries (or
any person known to Executive to have been such an employee within six months
prior to such occurrence). Executive shall not be deemed to hire any such person
so long as he did not directly or indirectly engage in or encourage such hiring.
7.6 No Solicitation. During the Term and for a period of one year
thereafter, or for a period of one year after earlier termination of this
Agreement prior to expiration of the Term, and regardless of the reason for such
termination (whether by Company or Executive), Executive shall not directly or
indirectly, for himself or on behalf of any entity with which he is affiliated
or employed, solicit any employee of Company or any of its subsidiaries (or any
person who was such an employee within six months prior to such occurrence) or
encourage any such employee to leave the employment of Company or any of its
subsidiaries.
7.7 Non-Solicitation of Customers. During the Term and for a period of one
year thereafter, or for a period of one year after the earlier termination of
this Agreement prior to the expiration of the Term, and regardless of the reason
for such termination (whether by Company or Executive), Executive shall not use
customer lists or Confidential Material to solicit any customers of Company or
its subsidiaries or any of their respective casinos or card clubs, or knowingly
encourage any such customers to leave Company's casinos or card clubs or
knowingly encourage any such customers to use the facilities or services of any
competitor of Company or its subsidiaries.
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7.8 Irreparable Injury. The promised service of Executive under this
Agreement and the other promises of this Article 7 are of special, unique,
unusual, extraordinary, or intellectual character, which gives them peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law.
7.9 Remedies for Breach. Executive agrees that money damages will not be a
sufficient remedy for any breach of the obligations under this Article 7 and
Article 2 hereof and that Company shall be entitled to injunctive relief (which
shall include, but not be limited to, restraining Executive from directly or
indirectly working for or having an ownership interest (except for a Permissible
Investment in any person engaged in the casino, gaming or horseracing businesses
in any market which Company or its affiliates owns or operates any such
business, using or disclosing the Confidential Material) and to specific
performance as remedies for any such breach. Executive agrees that Company shall
be entitled to such relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of proving actual
damages and without the necessity of posting a bond or making any undertaking in
connection therewith. Any such requirement of a bond or undertaking is hereby
waived by Executive and Executive acknowledges that in the absence of such a
waiver, a bond or undertaking might otherwise be required by the court. Such
remedies shall not be deemed to be the exclusive remedies for any breach of the
obligations in this Article 7, but shall be in addition to all other remedies
available at law or in equity.
ARTICLE 8
ARBITRATION
8.1 General. Except for a claim for injunctive relief under Section 7.9,
any controversy, dispute, or claim between the parties to this Agreement,
including any claim arising out of, in connection with, or in relation to the
formation, interpretation, performance or breach of this Agreement shall be
settled exclusively by arbitration, before a single arbitrator, in accordance
with this Article 8 and the then most applicable rules of the American
Arbitration Association. Judgment upon any award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction thereof. Such
arbitration shall be administered by the American Arbitration Association.
Arbitration shall be the exclusive remedy for determining any such dispute,
regardless of its nature. Notwithstanding the foregoing, either party may in an
appropriate matter apply to a court for provisional relief, including a
temporary restraining order or a preliminary injunction, on the ground that the
award to which the applicant may be entitled in arbitration may be rendered
ineffectual without provisional relief. Unless mutually agreed by the parties
otherwise, any arbitration shall take place in the City of Los Angeles,
California.
8.2 Selection of Arbitrator. In the event the parties are unable to agree
upon an arbitrator, the parties shall select a single arbitrator from a list of
nine arbitrators drawn by the parties at random from the "Independent" (or "Gold
Card") list of retired judges or, at the option of Executive, from a list of
nine persons (which shall be retired judges or corporate or litigation attorneys
experienced in executive employment agreements) provided by the office of the
American Arbitration Association having jurisdiction over Los Angeles,
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California. If the parties are unable to agree upon an arbitrator from the list
so drawn, then the parties shall each strike names alternately from the list,
with the first to strike being determined by lot. After each party has used four
strikes, the remaining name on the list shall be the arbitrator. If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.
8.3 Applicability of Arbitration; Remedial Authority. This agreement to
resolve any disputes by binding arbitration shall extend to claims against any
parent, subsidiary or affiliate of each party, and, when acting within such
capacity, any officer, director, stockholder, employee or agent of each party,
or of any of the above, and shall apply as well to claims arising out of state
and federal statutes and local ordinances as well as to claims arising under the
common law. In the event of a dispute subject to this paragraph the parties
shall be entitled to reasonable discovery subject to the discretion of the
arbitrator. The remedial authority of the arbitrator (which shall include the
right to grant injunctive or other equitable relief) shall be the same as, but
no greater than, would be the remedial power of a court having jurisdiction over
the parties and their dispute. The arbitrator shall, upon an appropriate motion,
dismiss any claim without an evidentiary hearing if the party bringing the
motion establishes that he or it would be entitled to summary judgement if the
matter had been pursued in court litigation. In the event of a conflict between
the applicable rules of the American Arbitration Association and these
procedures, the provisions of these procedures shall govern.
8.4 Fees and Costs. Any filing or administrative fees shall be borne
initially by the party requesting arbitration. The Company shall be responsible
for the costs and fees of the arbitration, unless Executive wishes to contribute
(up to 50%) of the costs and fees of the arbitration. Notwithstanding the
foregoing, the prevailing party in such arbitration, as determined by the
arbitrator, and in any enforcement or other court proceedings, shall be
entitled, to the extent permitted by law, to reimbursement from the other party
for all of the prevailing party's costs (including but not limited to the
arbitrator's compensation), expenses, and attorneys' fees.
8.5 Award Final and Binding. The arbitrator shall render an award and
written opinion, and the award shall be final and binding upon the parties. If
any of the provisions of this paragraph, or of this Agreement, are determined to
be unlawful or otherwise unenforceable, in whole or in part, such determination
shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all
conflicts between the parties, including those arising out of statutory claims,
shall be resolved by neutral, binding arbitration. If a court should find that
the arbitration provisions of this Agreement are not absolutely binding, then
the parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.
ARTICLE 9
MISCELLANEOUS
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9.1 Amendments. The provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the signed written
consent of the parties sought to be bound by such waiver, alteration, amendment
or repeal.
9.2 Entire Agreement. This Agreement and the Non-Qualified Stock Option
Agreement of even date herewith constitute the total and complete agreement of
the parties and supersedes all prior and contemporaneous understandings and
agreements heretofore made, and there are no other representations,
understandings or agreements.
9.3 Counterparts. This Agreement may be executed in one of more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument. Facsimile signatures shall be
deemed original so long as the manually executed signature is delivered as soon
as practicable.
9.4 Severability. Each term, covenant, condition or provision of this
Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant, condition or provision shall be deemed by an arbitrator or
a court of competent jurisdiction to be invalid or unenforceable, the court or
arbitrator finding such invalidity or unenforceability shall modify or reform
this Agreement to give as much effect as possible to the terms and provisions of
this Agreement. Any term or provision which cannot be so modified or reformed
shall be deleted and the remaining terms and provisions shall continue in full
force and effect.
9.5 Waiver or Delay. The failure or delay on the part of Company, or
Executive to exercise any right or remedy, power or privilege hereunder shall
not operate as a waiver thereof. A waiver, to be effective, must be in writing
and signed by the party making the waiver. A written waiver of default shall not
operate as a waiver of any other default or of the same type of default on a
future occasion.
9.6 Successors and Assigns. This Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns, except as otherwise provided herein.
9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any
of the rights, benefits, obligations or duties hereunder may be assigned or
transferred by Executive. Any purported assignment or transfer by Executive
shall be void.
9.8 Necessary Acts. Each party to this Agreement shall perform any further
acts and execute and deliver any additional agreements, assignments or documents
that may be reasonably necessary to carry out the provisions or to effectuate
the purpose of this Agreement.
9.9 Governing Law. This Agreement and all subsequent agreements between the
parties shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Nevada.
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9.10 Notices. All notices, requests, demands and other communications to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service, if personally served on the party to whom
notice is to be given, or 48 hours after mailing, if mailed to the party to whom
notice is to be given by certified or registered mail, return receipt requested,
postage prepaid, and properly addressed to the party at his address set forth as
follows or any other address that any party may designate by written notice to
the other parties:
To Executive:
John A. Godfrey
8744 Double Eagle Drive
Las Vegas, NV 89117
Telephone: 702 255 6288
Facsimile: 702 243 9019
To Company:
Pinnacle Entertainment, Inc.
330 North Brand Boulevard, Suite 1100
Glendale, CA 9123-2308
Telephone: 818 662 5900
Facsimile: 818 662 5901
with copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn: Al Segel
Telephone: 310 277 1010
Facsimile: 310 284 3052
9.11 Headings and Captions. The headings and captions used herein are
solely for the purpose of reference only and are not to be considered as
construing or interpreting the provisions of this Agreement.
9.12 Construction. All terms and definitions contained herein shall be
construed in such a manner that shall give effect to the fullest extent possible
to the express or implied intent of the parties hereby.
9.13 Counsel. Executive has been advised by Company that he should consider
seeking the advice of counsel in connection with the execution of this Agreement
and Executive has had an opportunity to do so. Executive has read and
understands this Agreement, and has sought the advice of counsel to the extent
he has determined appropriate. The Company shall reimburse Executive for the
reasonable fees and expenses of Executive's counsel in connection with this
Agreement.
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9.14 Withholding of Compensation. Executive hereby agrees that Company may
deduct and withhold from the compensation or other amounts payable to Executive
hereunder or otherwise in connection with Executive's employment any amounts
required to be deducted and withheld by Company under the provisions of any
applicable Federal, state and local statute, law, regulation, ordinance or
order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above.
EXECUTIVE COMPANY
JOHN A. GODFREY PINNACLE ENTERTAINMENT, INC.
/s/ John A. Godfrey /s/ Daniel R. Lee
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By: Daniel R. Lee
Its: Chief Executive Officer
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