Exhibit 10.1
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of April
10, 2002, by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation
("Company"), and DANIEL R. LEE, an individual ("Executive"), with respect to the
following facts and circumstances:
RECITALS
Company desires to retain Executive as Chief Executive Officer of Company
and as a member and Chairman of the Company's Board of Directors 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 engage Executive in the capacity as Chief
Executive Officer of the Company, and Executive hereby accepts such engagement
by Company upon the terms and conditions specified below. The Company further
agrees to cause Executive to be elected as a Director and Chairman of the Board
of Directors, and Executive agrees to serve in such capacities without
additional compensation.
1.2 Term. The term of this Agreement (the "Term") shall commence on the
date hereof and shall continue in force until April 15, 2006, 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 positions of Chairman and Chief Executive Officer,
subject to the control and supervision of the Board of Directors, and such other
executive duties consistent with the foregoing as may be assigned to him from
time to time by the Board of Directors of Company. Executive shall report to the
Chairman of the Board of Directors, if a person other than Executive occupies
such position. 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 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 may
rely on Company's inside counsel and outside lawyers in connection with
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such matters. 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 headquarters at such location as Executive and the Board of
Directors shall agree upon. Executive understands he will be required to travel
to Company's various operations 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 serve on the boards of directors of companies, including Lynch
Interactive, 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.
ARTICLE 3
COMPENSATION
3.1 Salary. In consideration for Executive's services hereunder, Company
shall pay Executive an annual salary at the rate of $600,000 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).
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 (a)
$300,000 per year based upon Executive's service hereunder during the year; and
(b) at least an additional $100,000 in targeted bonuses based upon meeting
performance targets established annually by the Board in consultation with
Executive. Any such bonus 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
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Executive and 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 865,801 shares of Company's common stock which
shall have an exercise price equal to the fair market value of such stock on the
date hereof. Of such options, 100,000 shall be incentive stock options granted
under the Pinnacle Entertainment, Inc. 2001 Stock Option Plan (the "Plan"),
515,000 shall be granted as nonqualified stock options outside such Plan but
subject to shareholder approval in accordance with the applicable rules of the
New York Stock Exchange, and 250,801 shall be granted as nonqualified stock
options outside such Plan and not subject to shareholder approval. The terms and
conditions of such options shall be governed by three stock option agreements of
even date herewith.
3.4 Long Term Bonus. Executive understands that shareholder approval is
required relative to the issuance of certain of the shares covered by the option
specified in Section 3.3 above under applicable rules of the New York Stock
Exchange. The Company agrees that if such approval, has not been secured by the
date on which Executive wishes to exercise the option or the end of the Term,
whichever is sooner, then Executive shall be paid a cash bonus equal, with
respect to each option as to which shareholder approval was required and not
obtained, to the difference between $8.45 and the Fair Market Value of the
Company's common stock on the relevant date or dates. Such bonus shall be
payable, however, only to the extent that Executive could have exercised such
options under the terms of the governing stock option agreement, disregarding
the requirement of shareholder approval. If the outstanding shares of the Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities of the Company or a successor
entity, or for other property (including without limitation, cash), through
reorganization, recapitalization, reclassification, stock combination, stock
dividend, stock split, reverse stock split, spin off or other similar
transaction, an appropriate and proportionate adjustment will be made in such
bonus corresponding to the adjustment that would have been made in the options
under Section 5.1 of the governing stock option agreement. Fair Market Value
shall mean the closing sales price for the Company's Common Stock on the
principal exchange on which the Company's common stock is then listed.
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
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generally to other senior executives of Company under Company personnel policies
in effect from time to time.
4.3 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 and
Executive's wife, or any pregnancy of Executive's wife, the Company shall bear
the cost of such examinations or the medical costs of such pregnancy.
4.4 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).
4.5 Interim Expense Reimbursement. The Company shall reimburse Executive
for all travel expenses and the cost of appropriate accommodations in the Los
Angeles area for Executive and his family for up to one year from the day hereof
and all related expenses, including any federal and state income tax liabilities
incurred by Executive with respect to his receipt of any such reimbursements
from the Company.
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.
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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 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 California 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.
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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 (other
than cessation of his being Chairman of the Board due to the requirements of any
state regulation or applicable rules or regulations of the SEC or any Exchange
on which the Company's stock is listed or admitted for trading), or any
relocation of his or its principal place of business outside the greater Los
Angeles or Las Vegas metropolitan areas (without Executive's 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. 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
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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 California State
Disability Insurance program for his first six months of
disability. In addition, Executive shall be eligible for
benefits provided for and shall 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 $900,000 per 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, the Severance Benefit shall be payable to
Executive in a lump sum as soon as practicable after the
termination of Executive's employment. 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.
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(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. 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
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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 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
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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.
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
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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.
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.
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
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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,
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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
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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,
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
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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
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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
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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
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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
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 and original, but all of which shall
together constitute one and the same instrument.
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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 California.
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: Dan Lee
7521 Amigo Road, Suite 200
Las Vegas, NV 89119
Telephone: 702 933 3000
Facsimile: 702 933 3001
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with copy to: Latham & Watkins
633 West Fifth Street
Los Angeles, CA 90071-2007
Attn: James D. C. Barrall
Telephone: 213 485 1234
Facsimile: 213 891 8763
To Company: Pinnacle Entertainment, Inc.
330 North Brand Boulevard, Suite 1100
Glendale, CA 9123-2308
Attn: Loren Ostrow
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.
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.
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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
DANIEL R. LEE PINNACLE ENTERTAINMENT, INC.
/s/ Daniel R. Lee /s/ Loren S. Ostrow
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By: Loren Ostrow
Its: Vice President and General Counsel
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Social Security No
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