EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of, March 24, 2003,
(Employment Agreement") by and between The Majestic Star Casino, LLC ("the
Company") and Troy L. Keeping ("Executive).
RECITALS
A. The Company and the Executive desire to enter into an Employment
Agreement, which supersedes any and all other agreements, either oral
or in writing with respect to the employment of Executive by the
Company.
B. The Company and the Executive desire that the Employment Agreement
shall become effective on March 24, 2003.
1. Terms
The Company hereby agrees to employ Executive, and Executive hereby
agrees to serve the Company, on the terms and conditions of the
Employment Agreement, for Twenty-Four (24) month period ("Period of
Employment") commencing on or about May 1, 2003 (such Period of
Employment being subject to earlier termination as provided herein).
Upon the expiration of the Period of Employment, Executive's employment
with the Company shall cease, unless mutually extended by both parties.
2. Duties and Services
During the period(s) of employment, Executive agrees to serve the
Company as its Vice President and Assistant General Manager for its
Gary, Indiana location and offices and positions of the Company within
his areas of expertise and to perform such other reasonable and
appropriate duties consistent with such positions (s) as may be
requested of him by the President and Chief Executive Officer and /or
his designee of the Company, in accordance with the terms herein set
forth. Excluding periods of personal time off to which Executive is
entitled, Executive shall devote his full time energy and skills to the
business and affairs of the Company and to the promotion of its
interests. The Executive shall perform all such duties to the best of
his ability and in a diligent manner. Executive may be reasonably
required to travel outside Gary, Indiana from time to time. Executive
acknowledges and agrees that this Employment is subject to the
licensing and regulatory control of the Indiana Gaming Control
Commission and various other state, county and city gaming regulatory
enforcement agencies (collectively the "Gaming Authorities") which may
require that Executive be investigated for personal suitability and
licensing. Executive shall fully cooperate with the Gaming Authorities
in order that he may obtain all required licenses, permits, approvals
or findings of suitability required in connection with his employment
hereunder. Company agrees to pay all reasonable costs associated with
licensing of Executive.
1
3. Compensation
(a) Salary. As compensation for his services hereunder, the
Company shall pay Executive, during the Period of Employment,
an annual salary of One Hundred Fifty-Eight Thousand, Six
Hundred Dollars ($ 158,600) less all applicable federal, state
and local taxes, social security and other governmental
mandated deductions, which shall be payable in installments in
accordance with the Company's compensation schedule as in
existence from time to time. After six months (6) of
employment, the Executive shall receive a performance review
at which time he shall be considered for a merit increase in
his annual salary. Thereafter, Executive will be eligible for
a performance review on the anniversary date of his original
hire date.
(b) Executive shall be entitled to participate in the managerial
incentive plan pursuant to which bonus distributions are made.
(c) Fringe Benefits. For such period of time as Executive is
employed by the Company during the Period of Employment,
Executive shall receive coverage for himself and eligible
dependents under the Company's medical insurance program (as
such program is in effect from time to time) on terms no less
favorable than those generally made available to the Company's
executives. Executive shall receive life insurance coverage at
three (3) times his annual pay as well as long-term and
short-term disability. In addition, Executive shall receive a
Five Thousand Dollar ($5,000) per annum allowance for
unreimbursed medical expenses submitted in accordance with
expense reporting procedures. Nothing contained herein shall
preclude the Executive from participating in the any present
or future employee benefit plans of the Company, including
without limitation any 401 (k) plan, profit- sharing plan,
savings plan, deferred compensation plan and health and
accident plan or arrangement, if he meets the eligibility
requirements therefor.
(d) Vacation. Executive shall be entitled to three (3) weeks
vacation to be taken at time or times mutually acceptable to
Executive and the Company, in accordance with the vacation
policy in effect at the time.
(e) Business Expenses. All reasonable travel and other expenses
incident to the rendering of services by Executive hereunder
shall be paid by the Company. If any such expenses are paid in
the first instance by Executive, the Company shall reimburse
him therefor on presentation of appropriate documentation
required by the Internal Revenue Code and Regulations or
otherwise required under the Company policy in connection with
such expenses.
4. Early Termination
(a) Notwithstanding the provisions of Section 1 hereof, the
Executive may be terminated by the Company for Cause (as
defined herein), in which event the period of employment
hereunder shall cease and terminate and the Company
2
shall have no further obligation or duties under this
Employment Agreement, except for obligations accrued and
earned under Section 3 as of the date of termination.
(b) Prior to termination for a performance deficiency as described
in Sections 4(a)(v), (vi), (vii) and (viii). Executive shall
be given notice of deficiency and thirty (30) days within
which to cure the same.
For the purposes of this Employment Agreement ("Cause") shall be deemed
to exist only upon (i) conviction of a felony (ii) embezzlement or
misappropriation of funds or property of the Company or any affiliates;
(iii) failure to obtain and maintain during the period (s) of
employment all licenses, permits, approvals or findings or suitability
with Gaming and other Regulatory Authorities approval or finding of
suitability; (iv) conviction of any criminal or other improper act
which could result in the suspension or revocation of any such license,
permit, approval or finding of suitability; (v) Executive's repeated
failure to comply with any policies or procedures of the Company
whether or not now in effect; (vi) upon the material breach by
Executive of this Employment Agreement; (vii) excessive absenteeism in
accordance with Company guidelines on the part of the Executive or
(viii) any other conduct, such as moral turpitude which has or may
reasonably be expected to have a material adverse effect on the Company
or the business of the Company.
(c) In addition, the Period of Employment hereunder shall cease
and terminate upon the earliest to occur of the following
events: (i) death of executive, or (ii) the inability of
Executive by reason of physical or mental disability to
continue the proper performance of his duties hereunder for a
period of sixty (60) consecutive days (subject to the
requirements of the Americans with Disabilities Act and Family
Medical Leave Act). Upon the occurrence of these events the
Company shall continue to pay to Executive or his estate, the
entire compensation otherwise payable to him under Section
3(a) hereof for the lesser of sixty (60) days or the remaining
Period of Employment and shall have no further obligation or
duties under this Employment Agreement.
(d) In the event that the Executive is discharged by the Company
other than for cause, pursuant to Section 4 (a) hereof or is
discharged by reason of physical or mental disability pursuant
to Section 4 (b) hereof, the Company shall continue to pay the
Executive for a period of twelve (12) months under Section (1)
hereof or the balance of his Employment Agreement otherwise
payable to him under Section 3 (a) hereof, whichever is
greater; provided, however, that Executive shall continue to
be bound by the provisions of Section 5 hereof. However, if
Executive should die prior to the end of such period, the
provisions of Section 4 (a) hereof shall be applicable as
though the Executive's employment hereunder had not been
terminated.
(e) This Employment Agreement may be terminated by mutual
agreement of the Company and the Executive. The terms and
conditions of any such termination agreement shall be set
forth in writing and signed by both parties.
3
5.) Confidentiality, Intellectual Property and Non- Competition
(a) The Company and Executive acknowledge that the services to be
performed by Executive under this Employment Agreement are
unique and extraordinary and, as a result of such employment,
Executive will be in possession of confidential information,
proprietary information and trade secrets (collectively,
"Confidential Information") relating to the business practices
of the Company and its affiliates, and that these constitute
"Trade Secrets" under the Indiana Trade Secrets Act.
Trade Secrets Act. The Confidential Information referenced herein
includes but is not limited to the following which are or were
developed for the Company by Executive or any other Company employee or
agent; names and addresses of guests; computer programs; software and
disks; business plans; analytical techniques and methodology;
measurement criteria; guest development techniques; market research;
training manuals and video tapes. Executive agrees that he will not
disclose or use the Confidential Information, directly or indirectly
during or after his employment, other than in the performance of his
duties for the Company.
(b) The Company and Executive agree that violation of Executive's
obligations under Section 5(a) of this Employment Agreement
shall constitute "misappropriation" of the Company's trade
secrets under the Indiana Trade Secrets Act, and the Company's
remedies for any such violation shall be those set out in the
said Act.
(c) Upon termination of his employment with Company for any
reason, Executive shall (i) immediately return to the Company
all the materials delivered to Executive during employment or
paid for by the Company, including but not limited to,
originals, duplicates or copies of keys, tools, telephones,
pagers, manuals, plans, memoranda, reports, systems,
procedures, forms, advertising materials, office supplies,
presentations, flow charts, narratives, organization charts
and other employment agreements, (ii) give to the Company on
computer disk and then destroy any trade secrets in any
physical form, including originals, duplicates, or copies to
the Company and (iii) give to the Company on computer disk and
then destroy any trade secrets or any other Company
information stored in any computer or electronic device owned
or used by Executive.
(d) All programs, ideas, strategies, approaches, practices or
inventions created, developed, obtained or conceived of by
Executive during the term hereof by reason of his employment
by the Company, shall be owned and belong exclusively to the
Company, provided that they are related in any manner to
business or that of any of it's affiliates. Executive shall
(i) promptly disclose all such programs ideas, strategies,
approaches, practices, inventions or business opportunities to
the Company and (ii) execute and deliver to the Company,
without additional compensation, such instruments as the
Company may require from time to time to evidence its
ownership of any such terms.
4
(e) Executive agrees that during the period of employment, he will
not become a stockholder, director, officer, employee or agent
of or consultant to any corporation, or member of or
consultant to any partnership or other entity, or engage in
any business as a sole proprietor or act as a consultant to
any such entity, or otherwise engage, directly or indirectly,
in any enterprise, in each case which competes with or has a
vendor relationship with any business or activity engaged in,
or known by Executive to be contemplated to be engaged in, by
the Company or any of it's affiliates, provided, however, that
competition shall not include the ownership (solely as an
investor and without participation in or contact with the
management of the business) of less than one percent of the
outstanding shares of stock of any corporation engaged in any
such business, which shares are regularly traded on a national
securities exchange or in an over-the counter market. The
Company, in its sole discretion, may waive one or more of the
restrictions set forth in this subsection; however, any such
waiver must be in writing executed by an authorized Company
representative, and shall be effective only to the extent it
is set forth in writing.
(f) Executive agrees that for a period of one (1) year in
Northwest Indiana or any gaming operation within direct
competition with Majestic Star Casino, should he terminate his
employment with the Company before the end of Twenty-Four (24)
month period "(Employment Period)" he will not become a
stockholder, director, officer, employee or agent of or
consultant to any corporation, or member of or consultant to
any partnership or other entity or engage in any business as a
sole proprietor in or act as a consultant to any such entity
in or otherwise engage, directly or indirectly, in any
enterprise in each case which competes with or has a vendor
relationship with any business or activity engaged in, or
known by Executive to be contemplated to be engaged in, by the
Company or any of its affiliates, provided, however, that
competition shall not include the ownership (solely as an
investor and without any other participation in or contact
with the management of the business) of less than one percent
of the outstanding shares of stock of any corporation engaged
in any such business, which shares are regularly traded on a
national securities exchange or in an over-the-counter market.
Should the Executive and or the Company or any of its
affiliates decide not to renew the Employment Agreement
following the initial Twenty-Four (24) month term of
Employment, the Company shall waive the non-compete agreement
as set forth in this subsection. The Company, in its sole
discretion, may waive one or more of the restrictions set
forth in this subsection; however, any such waiver must be in
writing executed by an authorized Company representative, and
shall be effective only to the extent it is set forth in
writing.
(g) Executive further agrees that neither Executive nor any person
or enterprise controlled by Executive will solicit for
employment any person employed by the Company or any of its
sister properties during and within one year following the
termination of Executive's employment.
5
(h) Unless required by law, Executive shall not disclose the
existence of this Employment Agreement or the terms and
conditions hereof to any other person, except to Executive's
attorneys, accountants and financial/banking institutions who
have a need to know.
(i) The covenants in this Section 5 on the part of the Executive
shall be construed as an agreement independent of any other
provision in this Employment Agreement; and the existence of
any claim or cause of action of Executive against Company,
whether predicated on this Employment Agreement or otherwise,
shall not constitute a defense to the enforcement by Executive
of these covenants. It is agreed by the parties hereto that if
any portion of these covenants against solicitation are held
to be unreasonable, arbitrary or against public policy, the
covenants herein shall be considered divisible both as to time
and scope; and each month of the specified period shall be
deemed a separate period of time, so that the lesser period of
time shall remain effective so long as the same is not
unreasonable, arbitrary, or against public policy. The parties
hereto agree that, in the event any court determines the
specified time period to be unreasonable, arbitrary or against
public policy, a lesser time period which is determined to be
reasonable, not arbitrary and not against public policy may be
enforced against Executive. It is further agreed by the
parties hereto that, in the event of a breach or violation or
threatened breach or violation by Executive of the provisions
of this section, the Company shall be entitled to obtain
injunctive relief from a court of competent jurisdiction
restraining the activities set forth herein in breach or
violation of this section (without posting a bond therefor and
upon 24 hours notice to Executive), whether directly or
indirectly. Nothing herein shall be construed as prohibiting
Company from pursuing any other remedies available to it by
law or by this Employment Agreement for breach, violation or
threatened breach or violation of the provisions of this
section, including, by way of illustration and not by way of
limitation, the recovery of damages from Executive or any
other person, firm, corporation or entity. The provisions of
this section shall survive any termination of this Employment
Agreement for the purpose of providing Company with the
protection of Covenants of Executive provided herein.
Executive acknowledges that his capabilities and education are
such that enforcement of the restrictions contained herein
shall not prevent him from earning a livelihood.
6. Representations and Warranties
(a) Executive represents and warrants to Company that his
execution, delivery and performance of this Employment
Agreement will not result in or constitute a breach of or
conflict with any term, covenant, condition, or provision of
any commitment, contract, or other agreement or instrument,
including, without limitation, any other employment agreement,
to which Executive is or has been a party.
(b) Executive shall indemnify, defend, and hold harmless Company
for, from, and against any and all losses, claims, suits,
damages, expenses, or liabilities, including court costs and
counsel fees, which Company has incurred or to which
6
Company may become subject, insofar as such losses, claims,
suits, damages, expenses, liabilities, costs, or fees, arise
out of or are based upon any failure of any representation or
warranty of Executive in section 6(a) hereof to be true and
correct when made.
7. Assignment and Change of Control
(a) Executive shall not assign his rights or delegate the
performance of these obligations hereunder without the prior
written consent of the Company. Subject to the provisions of
the preceding sentence, all the terms of this Employment
Agreement shall be binding upon and shall inure to the benefit
of the parties and their legal representatives, heirs,
successors and assigns.
(b) Upon a "Change of Control", the Company may assign this
Employment Agreement. For this purpose, a "Change of Control"
shall mean a sale of substantially all of the assets of the
Company. Upon the occurrence of a Change of Control, Company
will pay Employee all payments Company would have been
obligated to make pursuant to Section 3 hereof, based upon a
termination date that is twelve (12) months after the date on
which the period of employment would have expired but for such
termination by reason of a Change of Control.
8. Arbitration
Any dispute which may arise between the parties hereto shall be
submitted to binding arbitration in accordance with the Rules of the
American Arbitration Association; provided that any such dispute shall
first be submitted to the Board of Managers in an effort to resolve
such dispute without resort to arbitration, and provided, further, that
the Board shall have a period of sixty (60) days within which to
respond to the Executive's submitted dispute, and of the Board of
Managers fails to respond within said time, or the Executives dispute
is not resolved, the matter may then be submitted for arbitration.
9. Notice
Any notice or other communication required or permitted to be given
hereunder shall be made in writing and shall be delivered in person or
mailed by prepaid registered or certified mail, return receipt
requested, addressed to the parties as follows:
If to the Company:
The Majestic Star Casino, LLC
1 Buffington Harbor Drive
Gary, Indiana 46406- 3000
Attention: Executive Vice President and Chief Operating Officer
7
If to the Executive:
Troy L. Keeping
509 Beech Lane
New Lenox, Illinois 60451
or to such other addresses as the party shall have furnished in writing
in accordance with this Section. Such notices or communication shall be
effective upon delivery in person, and upon actual receipt or three (3)
days after mailing, whichever is earlier, if delivered by mail.
10. Breach of Agreement
Should the Company be in breach of this Employment Agreement and/or it
be determined that Executive has not been terminated for Cause (the
position first taken by Company for terminating the contract), then
this entire Employment Agreement shall be null and void and of no
further force or effect. Further, Executive shall be entitled to all
benefits and compensation under the Employment Agreement as well as
attorney fees and costs incurred in vindicating himself or establishing
a breach by the Company. Conversely, if the Executive is determined to
be in breach of this Employment Agreement, the Company shall be
entitled to costs and attorney fees in validating that breach.
11. Parties In Interest
The benefits and obligations of this Employment Agreement shall be
binding upon and inure to the benefit of Executive, and it shall be
binding upon and inure to the benefit of the Company, its subsidiaries
and related entities, as well as any corporation succeeding to all or
substantially all of the business assets of the Company by merger,
consolidation, purchase of assets or otherwise.
12. Entire Agreement
This Employment Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect to
the employment of Executive by the Company and contains all of the
covenants and agreements between the parties with respect to such
employment in any manner whatsoever. Any modification of this
Employment Agreement will be effective only if it is in writing signed
by the party to be charged.
8
13. Governing Law and Venue
This Agreement is to be governed by and construed in accordance with
the laws of the State of Indiana applicable to contracts made and to be
performed wholly within such State, and without regard to the conflicts
of laws principles thereof.
14. Acknowledgement
Executive acknowledges that he has been given a reasonable period of
time to study this Agreement before signing it. Executive certifies
that he has fully read, has received an explanation of, and completely
understands the terms, nature, and effect of this Agreement and to seek
the advice of legal counsel. Executive further acknowledges that he is
executing this Agreement freely, knowingly, and voluntarily and that
Executive's execution of this Agreement is not the result of any fraud,
duress, mistake, or undue influence whatsoever. In executing this
Agreement, Executive does not rely on any inducements, promises, or
representations by Company other than the terms and conditions of this
Agreement.
15. Effective Date
This Employment Agreement shall become effective on March 24, 2003.
9
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth hereinabove.
COMPANY: EXECUTIVE:
The Majestic Star Casino, LLC
By: /s/ Judith F. Talbott By: /s/ Troy L. Keeping
--------------------------- -------------------------
Judith F. Talbott Troy L. Keeping
Corporate Vice President, Human Resources Executive
10
ADDENDUM TO EMPLOYMENT AGREEMENT
The following addendum to the Employment Agreement ("Agreement") entered into as
of March 24, 2003 by and between The Majestic Star Casino, LLC ("Company") and
Troy L. Keeping. ("Executive") represents the amended terms pursuant to SECTION
2 DUTIES AND SERVICES, SECTION 3 AND 3C COMPENSATION AND FRINGE BENEFITS of
Executive's Agreement. All other terms not addressed in this Addendum shall
remain in effect for the term of the Agreement.
1. Executive agrees to serve the Company as its Vice President
and General Manager for its Gary, Indiana location.
2. As compensation for his services hereunder, the Company shall
pay Executive during the period of Employment and annual
salary of Two Hundred Thousand Dollars ($200,000) less all
applicable federal, state and local taxes, social security and
other governmental mandated deductions which shall be payable
in installments in accordance with the Company's compensation
schedule. After twelve (12) months from the date of
Executive's promotion, Executive shall receive a performance
review at which time he shall be considered for an increase in
his annual salary. Thereafter, Executive shall be eligible for
a performance review on the anniversary of his promotion date.
3. Executive shall be entitled to an automobile allowance to
cover all associated automobile costs of Five Hundred Dollars
($500.00) per month during the term of Executive's Agreement.
In witness WHEREOF, the parties hereto have caused this Addendum to
Executive's Agreement to be duly executed as of the date set forth in
the Agreement.
FOR THE COMPANY: FOR THE EXECUTIVE
The Majestic Star Casino, LLC
By: /s/ Judith F. Talbott By: /s/ Troy L. Keeping
--------------------------- ------------------------
Judith F. Talbott Troy L. Keeping
Corporate Vice President Human Resources
11