[LETTERHEAD OF MAGNA ENTERTAINMENT CORP.]
Exhibit 10.16
October 5, 2000
PRIVATE & CONFIDENTIAL
Mr. Graham Orr
337 Magna Drive
Aurora, Ontario
L4G 7K1
Dear Graham:
Re: Employment with Magna Entertainment Corp.
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In accordance with our recent discussions, we are delighted to confirm the terms
and conditions of your employment with Magna Entertainment Corp. (the
"Corporation"), as follows:
1. Position: Subject to approval by the Board of Directors of the Corporation,
you are appointed effective January 1, 2001 (or such earlier date as may be
mutually agreed) as Executive Vice President and Chief Financial Officer of
the Corporation reporting to the President and Chief Executive Officer and
the Board and carrying out your day-to-day duties from agreed offices in
Toronto and Los Angeles.
2. Base Salary: Your Base Salary shall be U.S. $350,000 per annum (less
statutorily required deductions), payable monthly in arrears and otherwise
in accordance with the Corporation's standard payroll practices.
3. Annual Bonus: In addition to your Base Salary, you shall receive (a) a
bonus (the "Basic Bonus") equal to 2% of the pre-tax profits of the
Corporation at the end of each year of employment, and (b) a discretionary
bonus (the "Discretionary Bonus") as determined by the Board (the Basic
Bonus and the Discretionary Bonus are referred to herein collectively as
the "Annual Bonus"). The Annual Bonus shall not be less than US $350,000
and shall be inclusive of all entitlement to vacation pay, and less
statutorily required deductions.
4. Benefits: During your employment by the Corporation, you will be entitled
to:
(a) participate in all group insurance and benefit programs generally
applicable to salaried employees of the Corporation from time to time,
with the exception of any pension plan or Employee Equity
Participation and Profit Sharing Plan or any equivalent or related
plans in effect from time to time;
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(b) five weeks vacation in respect of each completed twelve month period,
to be taken at such time or times as are mutually convenient to you
and the Corporation, but not payment in lieu thereof;
(c) receive an automobile allowance of U.S. $800 per month; provided that
you shall be responsible for all automobile operating costs including,
without limitation, fuel, repairs, maintenance, insurance premiums and
insurance deductibles;
(d) reimbursement for all reasonable and documented business expenses
incurred on behalf of the Corporation in carrying out your duties, in
accordance with the Corporation's policies from time to time, but
excluding automobile operating costs;
5. MEC Stock Options: Subject to the express approval of the Board of
Directors of the Corporation and any regulatory bodies having jurisdiction
(including the consent of The Toronto Stock Exchange and NASDAQ to the
listing of the underlying shares), and subject to you entering into a Stock
Option Agreement with the Corporation in the standard form contemplated by
the Corporation's Long-Term Incentive Plan, the Corporation shall grant you
options (vesting over three years) to purchase 300,000 Class A Subordinate
Voting Shares of the Corporation ("Shares") at an exercise price per share
which is equal to the closing price on NASDAQ on the day prior to grant by
the Board of Directors of the Corporation. Such options shall be
exercisable by you only in accordance with the terms and conditions set
forth in the Stock Option Agreement referred to above. Upon receipt of an
executed copy of this agreement, we will place this matter before the Board
of Directors of the Corporation at the earliest opportunity. Each year the
Board will consider the grant of additional options for executive
management based on a program to be established by the Compensation
Committee and approved by the Board of Directors of the Corporation.
6. Stock Ownership: The Corporation requires that you accumulate and maintain
an investment in Class A Subordinate Voting Shares of the Corporation
("Shares") as a condition of your employment. As a minimum, you agree to
purchase within 90 days of commencement of employment, 50,000 Shares of the
Corporation. You shall retain such Shares for the term of this Agreement,
provided however that you may sell up to one quarter of such Shares
following each completed year of employment.
Evidence of your ownership of the required number of Shares must be
produced each year commencing in February, 2001, in order to obtain payment
of the cash portion of your Annual Bonus in each such year.
7. Termination: Your employment and this agreement, including all benefits
provided for under this agreement, will terminate on: (a) the acceptance
by the Corporation of your voluntary resignation; (b) at the Corporation's
option, your disability for an aggregate of six months or more in any
twenty-four month period, subject to any statutory requirement to
accommodate such disability; (c) your death; or (d) your dismissal for just
cause or by reason of your breach of the terms of this agreement.
Otherwise, you or the Corporation may, at any time in the first three years
of this agreement, terminate your employment and this agreement by
providing the other party with twenty-four (24) months prior written notice
of intention to terminate and, at any time
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in any year after the third year of this agreement, by providing the other
party with twelve (12) months prior written notice of intention to
terminate. In addition the Corporation may elect to terminate your
employment immediately by paying you a retiring allowance. Such retiring
allowance shall be equal to your salary and Annual Bonus for the two years
preceding termination, in the case of termination in the first three years
of this agreement, and equal to your salary and Annual Bonus for the one
year preceding termination, in the case of termination after the third year
of this agreement. Any such aforesaid payment of a retiring allowance will
be made in a lump sum within thirty days of the day of termination. If your
employment is terminated pursuant to this paragraph, the Corporation shall
maintain on your behalf the benefits referred to in paragraph 4(a) for a
period of two years, in the case of termination in the first three years of
this agreement, and thereafter one year from the day of termination.
On termination of this agreement other than for dismissal pursuant to sub-
paragraph 7(d), any stock options referenced in paragraph 5 will
immediately vest, and will continue to be exercisable in accordance with
the aforesaid Stock Option Agreement.
The termination provisions set forth above represent all severance pay
entitlement, notice of termination or pay in lieu thereof, salary, bonuses,
automobile allowances, vacation and/or vacation pay and other remuneration
and benefits payable or otherwise provided to you in relation to your
employment by the Corporation or any affiliates of Magna International Inc.
(the "Magna Group").
8. Other Conditions: You hereby acknowledge as reasonable and agree that you
shall abide by the following terms and conditions:
a) Technology, Know-How, Inventions, Patents: That all designs, devices,
improvements, inventions and ideas made or conceived by you resulting
from your access to the business of the Corporation and/or the Magna
Group shall be exclusive property of the Magna Group, and you and your
estate agree to take all necessary steps to ensure that such property
rights are protected.
b) Confidentiality: You shall keep confidential at any time during or
after your employment, any information (including proprietary or
confidential information) about the business and affairs of, or
belonging to, the Corporation or any member of the Magna Group or
their respective customers or suppliers, including information which,
though technically not trade secrets, the dissemination or knowledge
whereof might prove prejudicial to any of them.
c) Non-Competition: During the term of your employment with the
Corporation and for a period of twelve months after the termination of
your employment, you shall not, directly or indirectly, in any
capacity compete with the business of the Corporation or of any member
of the Magna Group in respect of which you have had access to
proprietary or confidential information or solicit the employees
thereof whether for employment or otherwise.
9. Term: Subject to earlier termination in accordance with the terms of this
agreement, your employment with the Corporation shall commence on January
1, 2001, or such earlier or later date as may be mutually agreed upon (the
"Start Date"), and shall expire on December 31, 2005. Upon expiry or other
termination of this agreement, paragraph 8
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shall continue in full force and effect. This agreement shall be null and
void and of no effect if you do not commence employment by August 15, 2000
or if you are unable to obtain the appropriate US immigration visa
permitting you to work for the Corporation for the term of this agreement.
10. Assignability: The Corporation may, in its sole discretion, assign this
agreement to an affiliated or other organization at any time. Upon any
such assignment, the terms and conditions of this agreement shall continue
in full force and affect.
If the terms of employment as set out in this agreement are acceptable to you,
please sign and date three copies in the places indicated and return two fully
signed copies to the attention of the Chairman by October 10, 2000, after which,
if not so signed and returned, this agreement shall become null and void and of
no effect. Upon execution by you, this agreement (i) replaces any prior written
or oral employment contract or other agreement concerning remuneration between
you and the Corporation or any member of the Magna Group, (ii) will continue to
apply to your employment in a similar or other capacity with the Corporation or
any member of the Magna Group, and (iii) will continue to be applicable in the
event that your employment with the Corporation continues beyond the expiry date
of the term specified above without this agreement being formally extended or
replaced.
Yours very truly,
MAGNA ENTERTAINMENT CORP.
____________________
Frank Stronach
Chairman
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I hereby accept the terms and conditions set out above and acknowledge that this
agreement contains all the terms and conditions of my employment with Magna
Entertainment Corp. and that no other terms, conditions or representations other
than those within this letter form part of this agreement.
_____________________________ ____________________________
Date , 2000 Graham Orr