EXHIBIT 4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "AGREEMENT"), is
made and entered into as of the 22nd day of December, 1997, by and between
Station Casinos, Inc., a Nevada corporation, with its principal offices located
at 2411 West Sahara Avenue, Las Vegas, Nevada 89102 (the "COMPANY"), and MR.
FRANK J. FERTITTA III (the "EXECUTIVE").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of May 1, 1993, amended as of November 30, 1994 (such
agreement, as so amended, the "FORMER AGREEMENT");
WHEREAS, the Company has proposed a plan (the "REORGANIZATION PLAN)
to, among other things, convert to a real estate investment trust (REIT) for
federal income tax purposes and spin-off the stock of a newly formed subsidiary
(the "MANAGEMENT COMPANY");
WHEREAS, the Executive has agreed to continue his employment with the
Company on the terms and conditions set forth herein; PROVIDED that if the
Reorganization Plan is consummated, and subject to the Company and the
Management Company and the Executive entering into effective employment
agreements on substantially the same terms and conditions set forth herein (the
"MANAGEMENT COMPANY EMPLOYMENT AGREEMENT") for the same aggregate consideration
and benefits, the Executive has agreed to assume additional employment with the
Management Company; and
WHEREAS, the parties to this Agreement desire to amend and restate the
Former Agreement in its entirety with this Agreement and the Former Agreement
shall no longer be of any force or effect;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Company and
the Executive (each individually a "PARTY" and together the "PARTIES") agree as
follows.
1. DEFINITIONS.
In addition to certain terms defined elsewhere in this Agreement, the
following terms shall have the following respective meanings:
1.1. "AFFILIATE" shall mean any Person controlling, controlled by or
under common control with the Company,
1.2. "BASE AMOUNT" shall have the meaning ascribed to such term in
Section 280G of the Code.
1.3. "BASE SALARY" shall mean the salary provided for in SECTION 3 of
this Agreement or any increased salary (a) granted to the Executive by the Board
or (b) pursuant to the provisions of SECTION 3.
1.4. "BOARD" shall mean the Board of Directors of the Company.
1.5. "CAUSE" shall mean (a) the Executive is convicted of a felony
involving moral turpitude or is found unsuitable to hold a gaming license, or
(b) the Executive, in carrying out his duties under this Agreement, is guilty of
continued willful gross neglect or continued willful gross misconduct resulting,
in either case, in material economic harm to the Company, unless such act, or
failure to act, was believed by the Executive in good faith to be in the best
interests of the Company or any Affiliate.
1.6. A "CHANGE OF CONTROL" shall be deemed to have occurred if (i)
the Company sells, conveys, transfers or leases, directly or indirectly, all
or substantially all of the properties and assets of the Company to any
person, corporation, entity or group, (ii) any "person" (as such term is used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) (other than "qualified institutional buyers" as defined in Rule 144A
of the Securities Act of 1933, as amended, approved by the Board within 10
days of being notified of such ownership by such qualified institutional
buyer, and the Existing Equity Holders) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, as amended, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly of securities representing 15% (or after the
consummation of the Reorganization Plan, 5.5% with respect to the Company and
10% with respect to the Management Company) or more of the combined voting
power of the Company's Voting Stock (iii) the Company consolidates with or
merges into another corporation, or any corporation consolidates with or
merges into the Company, in either event pursuant to a transaction in which
the outstanding Voting Stock of the Company is changed into or exchanged for
cash, securities or other property, other than any such transactions between
the Company and its wholly-owned subsidiaries, with the effect that any
"person" (other than "qualified institutional buyers" as defined in Rule 144A
of the Securities Act of 1933, as amended, approved by the Board within 10
days of being notified of such ownership by such qualified institutional
buyer, and the Existing Equity Holders) becomes the
"beneficial owner," directly or indirectly, of securities representing 15%
(or after the consummation of the Reorganization Plan, 5.5% with respect to
the Company and 10% with respect to the Management Company) or more of the
combined voting power of the Company's Voting Stock or (iv) during any period
of 36 consecutive months, individuals who at the beginning of such period
constituted the Board (together with any new or replacement directors whose
election by the Board, or whose nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved), cease
for any reason to constitute a majority of the directors then in office.
1.7. "CODE" shall the Internal Revenue Code of 1986, as amended.
1.8. "CONFIDENTIAL INFORMATION" shall mean all nonpublic information
respecting the Company's business including, but not limited to, its products,
research and development, processes, customer lists, intellectual property,
software, trademarks, marketing plans and strategies. Confidential Information
does not include information that is, or becomes, available to the public unless
such availability occurs through an unauthorized act on the part of the
Executive.
1.9. "DISABILITY" shall mean the Executive's inability to render, for
a period of six consecutive months, full and effective services hereunder by
reason of permanent mental or physical disability, whether resulting from
illness, accident or otherwise; PROVIDED, HOWEVER, that in no event will the
Executive be considered disabled for the purposes of this Agreement unless he is
deemed disabled pursuant to the Special Long-Term Disability Plan.
1.10. "EXISTING EQUITY HOLDERS" shall mean Frank J. Fertitta,
Blake L. Sartini, Delise F. Sartini, Lorenzo J. Fertitta, Glenn C. Christenson
and Scott M. Nielson and their executors, administrators or the legal
representatives of their estates, their heirs, distributees and beneficiaries,
and any trust as to which any of the foregoing is a settlor or co-settlor and
any corporation, partnership or other entity which is an Affiliate of any of the
foregoing, and any lineal descendants of such persons (but only to the extent
that the beneficial ownership of the Voting Stock held by such lineal
descendants was directly received by gift, trust or sale from any such person).
1.11. "GOOD REASON" shall mean and exist if, without
the Executive's prior written consent, one or more of the following events
occurs:
(a) the Executive is not appointed to or is otherwise removed
from the office(s) provided for in SUBSECTION 2.3, for any reason
other than the termination of his employment;
(b) the Executive is assigned any duties or responsibilities
that are inconsistent, in any significant respect, with the scope of
duties and, responsibilities associated with the Executive's position
as described in SUBSECTION 2.3 or is required to be located or
maintain an office outside of Las Vegas;
(c) the Executive suffers a reduction in the authorities, duties
or responsibilities associated with his position as described in
SUBSECTION 2.3, on the basis of which he makes a determination in good
faith that he can no longer carry out such position in the manner
contemplated at the time this Agreement was entered into;
(d) the Executive's Base Salary is decreased by the Company, or
his benefits or opportunities under any employee benefit or incentive
plan or program of the Company is or are materially reduced;
(e) the Company fails to pay the Executive any deferred payments
under any bonus or incentive plans;
(f) the Company fails to reimburse the Executive for business
expenses in accordance with the Company's policies, procedures or
practices;
(g) the Company fails to agree to or actually indemnify the
Executive for his actions and/or inactions, as either a director or
officer of the Company, to the fullest extent permitted by Nevada law,
and/or the Company fails to maintain satisfactory levels of directors'
and officers' liability insurance coverage for the Executive when such
insurance is available;
(h) the Company fails to obtain a written agreement satisfactory
to the Executive from any successor or assign of the Company to assume
and perform this Agreement; or
(i) the Company purports to terminate the Executive's employment
for Cause and such purported termination of employment is not effected
in accordance
with the procedures required by this Agreement, and for purposes of
this Agreement, such purported termination of employment shall be
invalid and of no force and effect.
1.12. "PERSON" shall mean any individual, firm, partnership,
association, trust, company, corporation or other entity.
1.13. "PRO RATA BONUS" shall mean an amount equal to the annual
bonus otherwise payable with respect to the year in question, calculated as if
the Executive had been employed by the Company for the full year, multiplied by
a fraction, the numerator of which is the number of days in such year during
which the Executive is actually employed by the Company and the denominator of
which is 365.
1.14. "SPECIAL LONG-TERM DISABILITY PLAN" shall mean the Company's
Special Long-Term Disability Plan, effective as of November 30, 1994 and, after
the consummation of the Reorganization Plan, each of such plan and the Special
Long-Term Disability Plan of Management Company.
1.15. "SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN" shall mean the
Company's Supplemental Executive Retirement Plan, effective as of November 30,
1994 and, after the consummation of the Reorganization Plan, each of such plan
and the Supplemental Executive Retirement Plan of Management Company.
1.16. "TERM OF EMPLOYMENT" shall mean the period specified in
SUBSECTION 2.2.
1.17. "VOTING STOCK" shall mean capital stock of any class or
classes having general voting power under ordinary circumstances, in the absence
of contingencies, to elect the directors of a corporation.
2. TERM OF EMPLOYMENT, POSITIONS AND DUTIES.
2.1. EMPLOYMENT ACCEPTED. The Company hereby employs the Executive,
and the Executive hereby accepts employment with the Company, for the Term of
Employment, in the positions and with the duties and responsibilities set forth
in SUBSECTION 2.3, and upon such other terms and conditions as are hereinafter
stated.
2.2. TERM OF EMPLOYMENT. The initial term of employment shall
commence upon the date of this Agreement and, unless earlier terminated pursuant
to the provisions hereof, shall terminate upon the close of business on the day
immediately preceding the fifth anniversary of the date of this Agreement;
provided that such initial term of employment shall automatically be extended
thereafter for successive five year periods if neither Party has advised the
other in writing in accordance with Section 19 at least one year prior to the
end of the then current Term of Employment that such Term of Employment shall
not be extended for an additional five year period. If the Term of Employment
is terminated on any date pursuant to the provisions hereof, the same date shall
be the last day of the Term of Employment.
2.3. DUTIES AND RESPONSIBILITIES. During the Term of Employment, the
Executive shall be employed as the President, Chief Executive Officer and
Chairman of the Board of the Company and shall serve on the Board. In addition,
subject to the Recitals set forth herein, after the consummation of the
Reorganization Plan, the Executive shall enter into the Management Company
Employment Agreement providing that he shall be employed as the Chief Executive
Officer and Chairman of the Board of the Management Company and shall serve on
its board of directors. The Executive in carrying out his duties under this
Agreement shall only report to the Board. During the Term of Employment, the
Executive shall devote reasonable time and attention to the business and affairs
of the Company and shall use his best efforts, skills and abilities to promote
the Company's interests. Anything herein to the contrary notwithstanding, the
Executive shall not be precluded from engaging in charitable and community
affairs and managing his personal investments. The Executive may serve as a
member of the board of directors of other corporations, subject to the approval
of a majority of the Board, which approval shall not be unreasonably withheld or
delayed.
3. BASE SALARY. During the Term of Employment, the Executive shall be
entitled to receive a Base Salary payable no less frequently than in equal
semi-monthly installments at an annualized rate of no less than $1,000,000;
PROVIDED that if the Reorganization Plan is consummated, the Executive's Base
Salary shall be apportioned $500,000 under this Agreement and $500,000 under
the Management Company Employment Agreement. Such Base Salary shall be
reviewed annually for increase (but not decrease) in the discretion of the
Human Resources Committee. In conducting any such annual review, the Board
shall take into account any change in the Executive's responsibilities,
increases in the compensation of other executives of the Company or any
Affiliate (or any competitor(s) of either or both), the performance of the
Executive and/or other pertinent factors. Such increased Base Salary shall
then constitute the Executive's "Base Salary" for purposes of this Agreement.
4. ANNUAL BONUS. The Company may pay the Executive an annual bonus for
each calendar year ending during the Term of Employment in an amount that will
be determined by the performance of the Executive in achieving predetermined
goals that have been
determined by the Human Resources Committee. Any bonuses due the Executive
shall be paid to the Executive at the same time bonuses are paid to other
senior officers of the Company, unless the Executive has elected to defer
receipt of all or part of the bonus amounts to which he is entitled in
respect of any such calendar year, in accordance with the terms and
provisions of any deferred compensation program maintained by the Company.
5. EMPLOYMENT BENEFIT PROGRAMS.
5.1. PENSION AND WELFARE BENEFIT PLANS. During the Term of
Employment, the Executive shall be entitled to participate in all employee
benefit programs made available to the Company's executives or salaried
employees generally, as such programs may be in effect from time to time,
including, without limitation, pension and other retirement plans, profit
sharing plans, group life insurance, accidental death and dismemberment
insurance, hospitalization, surgical, major medical coverage, long-term
disability, sick leave (including salary continuation arrangements), vacations,
holidays and other employee benefit programs sponsored by the Company.
5.2. SPECIAL LTD BENEFIT. The Executive shall also be entitled to a
special disability benefit as set forth in the Special Long-Term Disability
Plan, in addition to any other benefit pursuant to any other disability plan
under which the Executive is covered.
5.3. SPECIAL SERP BENEFIT. The Executive shall also be entitled to an
annual supplemental retirement benefit as set forth in the Supplemental
Executive Retirement Plan, in addition to any other benefit pursuant to any
other retirement plan under which the Executive is covered.
5.4. LIFE INSURANCE. During the Term of Employment, the Company shall
provide the Executive with supplemental life insurance coverage, through an
individual policy, a group policy or a combination thereof, in an amount of no
less than $10,000,000. In the event of termination of the Executive's
employment with the Company, the Executive shall have the right to assume
without any payment to the Company and continue at his own expense whatever
individual policy or policies of insurance as are then maintained by the Company
pursuant to this SUBSECTION 5.4 and his coverage under the Company's group
insurance policy or policies to the extent permitted thereunder. Any right
under the policies to reimbursement of premiums paid shall be reimbursed to the
Executive if they were paid by Executive
6. BUSINESS EXPENSE REIMBURSEMENT AND PERQUISITES.
6.1. EXPENSE REIMBURSEMENT. During the Term of Employment, the
Executive shall be entitled to receive reimbursement by the Company for all
reasonable out-of-pocket expenses incurred by him in performing services under
this Agreement.
6.2. PERQUISITES. During the Term of Employment, the Executive shall
also be entitled to any of the Company's executive perquisites in accordance
with the terms and provisions of such arrangements, including, without
limitation:
(a) use of an automobile;
(b) payment or reimbursement of the cost of an annual physical
examination;
(c) vacation of at least four weeks per year;
(d) payment or reimbursement of initiation fees and annual membership
fees and assessments for a country club, a luncheon club and a physical
fitness program of the Executive's choice; and
(e) payment or reimbursement of legal fees and expenses incurred in
connection with this Agreement.
7. TERMINATION OF EMPLOYMENT.
7.1. TERMINATION DUE TO DEATH OR DISABILITY. In the event of the
Executive's death or a termination of the Executive's employment by the Company
due to the Executive's Disability, in addition to any other compensation or
benefits payable pursuant to this Agreement or otherwise, the Executive or his
legal representative, as the case may be, shall be entitled to:
(a) Base Salary at the rate in effect at the time of his termination,
through (x) in the case of death, for a period of 24 months following the
termination of employment, and (y) in the case of Disability, for the
period between the date of his termination and the date by which the
Special Long-Term Disability Plan has commenced paying its benefits;
(b) any bonus awarded but not yet paid;
(c) a Pro Rata Bonus for the fiscal year in which death or Disability
occurs;
(d) any deferred bonuses including interest or other credits on the
deferred amounts;
(e) reimbursement for expenses incurred but not paid prior to such
termination of employment;
(f) in the case of death, the Executive's beneficiary's rights to
other compensation and benefits as may be provided in applicable plans and
programs of the Company shall be determined according to the terms and
provisions of such plans and programs; and
(g) in the case of Disability, the Company shall continue the
Executive's health and welfare benefits at the level in effect on the date
of termination through the end of the 60th month following the termination
of the Executive's employment or provide the economic equivalent thereof,
and the Executive's rights to other compensation and benefits as may be
provided in applicable plans and programs of the Company shall be
determined according to the terms and provisions of such plans and
programs.
7.2. TERMINATION BY THE COMPANY FOR CAUSE. In the event the Company
terminates the Executive's employment for Cause, in addition to any other
compensation or benefits payable pursuant to this Agreement or otherwise, the
Executive shall be entitled to:
(a) Base Salary at the rate in effect at the time of his termination
through the date of termination of employment;
(b) any bonus awarded but not yet paid;
(c) any deferred bonus, including interest or other credits on the
deferred amounts;
(d) reimbursement for expenses incurred, but not paid prior to such
termination of employment; and
(e) such rights to other compensation and benefits as may be provided
in applicable plans and programs of the Company, including, without
limitation, applicable employee benefit plans and programs, according to
the terms and conditions of such plans and programs.
In any case described in this SUBSECTION 7.2, the Executive shall be
given written notice authorized by a vote of at least a majority of the members
of the Board that the Company intends to terminate his employment for Cause.
Such written notice shall specify the particular act or acts, or failure to act,
which is or are the basis for the decision to so terminate the
Executive's employment for Cause. The Executive shall be given the
opportunity within 30 days of the receipt of such notice to meet with the
Board to defend such act or acts, or failure to act, and the Executive shall
be given 30 days after such meeting to correct such act or failure to act.
Upon failure of the Executive, within 30 days, to correct such act or failure
to act, the Executive's employment by the Company shall automatically be
terminated under this SUBSECTION 7.2 for Cause.
Anything herein to the contrary notwithstanding, if, following a
termination of the Executive's employment by the Company for Cause based upon
the conviction of the Executive for a felony, such conviction is overturned
on appeal, the Executive shall be entitled to the payments and the economic
equivalent of the benefits he would have received if his employment had been
terminated without Cause under SUBSECTION 7.3.
In the event the Executive terminates employment on his own
initiative for any reason other than as set forth in Section 7.7 below, then
such termination shall be treated as a termination for Cause without regard
to the preceding two paragraphs.
7.3. TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event that
the Company terminates the Executive's employment without Cause whether prior
to or after a Change in Control, other than due to death or Disability, in
addition to any other compensation or benefits payable pursuant to this
Agreement or otherwise, the Executive shall thereupon be entitled to:
(a) a lump sum payment in an amount equal to five times his Base
Amount;
(b) any bonus awarded but not yet paid;
(c) any deferred bonus, including interest or other credits on the
deferred amounts;
(d) reimbursement for expenses incurred, but not paid prior to such
termination of employment; and
(e) continuation of the health and welfare benefits of the Executive,
including, without limitation, benefits under his Special Long-Term
Disability Plan and any other long-term disability insurance generally
provided to senior executives of the Company, at the level in effect at the
time of his termination of employment through the end of the 60th month
following such termination of the Executive's employment or provide the
economic equivalent thereof as if such Executive were employed during such
period (so that, for example, any Disability during such period shall be
deemed a termination
for Disability), and the Executive's rights to other compensation and
benefits as may be provided in applicable plans and programs of the
Company shall be determined according to the terms and provisions of
such plans and programs.
Any payments to which the Executive shall be entitled under this
SUBSECTION 7.3, including any economic equivalent of any benefit, shall be
made as promptly as possible following the termination of the Executive's
employment hereunder and in no event later than 90 days following such
termination of employment.
7.4. NO MITIGATION; NO OFFSET. In the event of any termination of
employment under this SECTION 7, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that the Executive may obtain. Any amounts due
under this SECTION 7 are in the nature of severance payments, or liquidated
damages, or both, and are not in the nature of a penalty.
7.5. SPECIAL REIMBURSEMENT. If any payment or benefit paid or
payable, or received or to be received, by or on behalf of the Executive in
connection with a Change of Control or the termination of the Executive's
employment, whether any such payments or benefits are pursuant to the terms
of this Agreement or any other plan, arrangement or agreement with the
Company, any Affiliate, any Person, or otherwise (the "Total Payments"), will
or would be subject to the excise tax imposed under section 4999 of the Code
(the "Excise Tax"), the Company shall pay to the Executive an additional
amount (the "Gross-Up Payment") such that, after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Total Payments.
(a) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise
Tax, (i) the Total Payments shall be treated as "parachute payments"
within the meaning of section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless in the opinion of
tax counsel (delivered to the Executive) selected by the Company and
reasonably acceptable to the Executive such Total Payments (in whole or
in part) (a) do not
constitute parachute payments, including (without limitation) by reason
of section 280G(b)(4)(A) of the Code, (b) such excess parachute payments
(in whole or in part) represent reasonable compensation for services
actually rendered, within the meaning of section 280G(b)(4)(B) of the
Code, or (c) are otherwise not subject to the Excise Tax, and (ii) the
value of any non-cash benefits or any deferred payment or benefit shall
be determined by the Company's independent auditors in accordance with
the principles of sections 280G(d)(3) and (4) of the Code.
(b) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(B)
of the Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the termination
of the Executive's employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such excess) at the
time that the amount of such excess is finally determined. The
Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings
concerning the existence or amount of any such subsequent liability
for Excise Tax with respect to the Severance Payments.
7.6. CHANGE OF CONTROL. Immediately upon a Change of Control, in
addition to any other compensation or benefits payable pursuant to this
Agreement or otherwise, the Executive shall be entitled to a payment in cash
equal to three times his Base Amount, less one dollar ($1.00). The
Executive's rights upon a Change of Control to benefits under programs, plans
and policies of the Company shall be determined according to the terms and
provisions of such programs, plans and policies.
7.7. TERMINATION OF THE EXECUTIVE'S EMPLOYMENT AFTER A CHANGE OF
CONTROL. In the event of a Change of Control during the Term of Employment, if
the Executive's employment with the Company is terminated following such Change
of Control (i) by the Company
for any reason other than for Cause or (ii) by Executive's termination on his
own initiative for Good Reason, in addition to any other compensation or
benefits payable pursuant to this Agreement or otherwise the Executive shall
be entitled to:
(a) an amount of cash equal to the greater of (x) five times his Base
Amount at the time of the Change of Control or (y) five times his Base
Amount at the time of the termination of his employment;
(b) immediate vesting of any restricted stock of the Company held in
the Executive's name or to his benefit;
(c) immediate vesting of any stock options and stock appreciation
rights granted by the Company which stock options and stock appreciation
rights shall continue to be and shall remain exercisable for the remaining
term of such stock options and stock appreciation rights as set forth in
the agreement granting, or otherwise under the award of, such stock option
or stock appreciation right as if no termination had taken place;
(d) immediate vesting and cash-out of any phantom stock units granted
to the Executive;
(e) immediate vesting and pay out of any incentive share units;
(f) unless already covered by Section 7.3, continuation of all
employee benefits and perquisites for a period of five years following such
termination of employment, or the economic equivalent thereof as if such
employee were an employee of the Company during such period (so that, for
example, any Disability during such period shall be deemed a termination
for Disability);
(g)immediate vesting of the Executive's supplemental retirement
benefit as set forth in the Supplemental Executive Retirement Plan and
continued funding of the Executive's split dollar insurance as if the
Executive were employed by the Company through the maturity date of such
policies or payment in full of all premium obligations under such
insurance; and
(h) an additional amount which, after the payment of all federal,
state and local income taxes attributable to such additional amount, equals
the positive difference, if any, of:
(i) $20,000,000 MINUS
(ii) the product of:
(A) the amount received by the Executive under SUBSECTION
7.3(A), 7.6 and 7.7(A) above MULTIPLIED by:
(B) the difference of:
(I) one MINUS
(II) the Executive's combined marginal
income tax rate.
8. INDEMNIFICATION.
8.1. GENERAL. The Company agrees that if the Executive is made a
party or is threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "PROCEEDING"), by
reason of the fact that he is or was a director or officer of the Company or
is or was serving at the request of the Company as a director, officer,
member, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plans, whether or not the basis of such Proceeding is
alleged action in an official capacity as a director, officer, member,
employee or agent while service as a director, officer, member, employee or
agent, he shall be indemnified and held harmless by the Company to the
fullest extent authorized by Nevada law, as the same exists or may hereafter
be amended, against all expense, liability and loss (including attorneys',
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by the Executive in
connection therewith.
8.2. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a Proceeding in advance of its
final disposition conferred in this SECTION 8 shall not be exclusive of any
other right which the Executive may have or hereafter may acquire under any
statute, provision of the certificate of incorporation or by-laws of the
Company, agreement, vote of stockholders or disinterested directors or
otherwise.
8.3. D&O INSURANCE. The Company agrees to obtain a directors' and
officers' liability insurance policy covering the Executive and that this
policy shall be maintained and provide coverage that is reasonable in
relation to the Executive's position during the Term of Employment.
9. COVENANTS TO PROTECT CONFIDENTIAL INFORMATION.
9.1. GENERAL. The Executive shall not, during the Term of
Employment or for a period of one year thereafter, without the prior written
consent of the Company, divulge, disclose or make accessible to any other
Person Confidential Information except while employed by the Company in the
business of and for the benefit of the Company or when required to do so by a
court of competent jurisdiction.
9.2. NOTES, MEMORANDA AND OTHER ITEMS. Except as may be otherwise
consented to in writing by the Company, the Executive shall proffer to an
appropriate officer of the Company, at the termination of his employment, all
memoranda, diaries, notes, records, cost information, customer lists,
marketing plans and strategies, and any other documents relating or referring
to any Confidential Information made available to the Executive by the
Company in his possession at such time.
10. DISPUTE RESOLUTION. The Company agrees that in the event the
Executive finds it necessary to initiate any legal action to obtain any
payments, benefits or rights provided by this Agreement to him, the Company
shall reimburse the Executive for all attorney's fees and other related
expenses incurred by him to the extent the Executive is successful in such
action.
11. EFFECT OF AGREEMENT ON OTHER BENEFITS. Nothing in this Agreement
shall curtail the Executive's entitlement to full participation during the
Term of Employment in the executive compensation, employee benefit and other
plans or programs in which senior executives of the Company are eligible to
participate.
12. BENEFICIARIES/REFERENCES. The Executive shall be entitled to
select (and change) a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following the Executive's death,
and may change such election, in either case by giving the Company written
notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender
in this Agreement shall include, where appropriate, the feminine.
13. SURVIVORSHIP. The respective rights and obligations of the Parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this SECTION 13 are in addition to the survivorship provisions
of any other Section of this Agreement.
14. REPRESENTATION. The Company represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between the Company and any other Person.
15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto.
16. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale
or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law.
17. AMENDMENT OR WAIVER. No provision in this Agreement may be amended
or waived unless such amendment or waiver is agreed to in writing, signed by
the Executive. No waiver by the Executive of any breach by the other Party
of any condition or provision of this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time.
18. SEVERABILITY. In the event that any provision or portion of this
Agreement, except SECTION 7, shall be determined to be invalid or
unenforceable for any reason, in whole or in part, the remaining provisions
of this Agreement shall be unaffected thereby and shall remain in full force
and effect to the fullest extent permitted by law. If SECTION 7 is
determined to be invalid or unenforceable for any reason, in whole or in
part, the Executive may terminate his employment with the Company and he
shall immediately be released by the Company from any obligations or duties
under this Agreement.
19. NOTICES. Any notice given to either Party shall be in writing and
shall be deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt requested, duly
addressed to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give notice of:
If to the Company: Station Casinos, Inc.
2411 West Sahara Avenue
Las Vegas, NV 89102
Attn: Scott M. Nielson
With a copy to: Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, CA 90017
Attn: Eric H. Schunk
If to the Executive: Frank J. Fertitta III
2411 West Sahara Avenue
Las Vegas, NV 89102
20. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of Nevada without reference to
the principles of conflict of laws thereof.
21. HEADINGS. The headings of the sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.
22. COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed an original and all of which shall constitute one
and the same agreement with the same effect as if all Parties had signed the
same signature page. Any signature page of this Agreement may be detached
from any counterpart of this Agreement and reattached to any other
counterpart of this Agreement identical in form hereto but having attached to
it one or more additional signature pages.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
STATION CASINOS, INC.
/s/ Glenn C. Christenson
------------------------
By: Glenn C. Christenson
Name:
Title: Executive Vice President, Chief Financial
Officer, Chief Administrative Officer and
Treasurer
/s/ Frank J. Fertitta III
-------------------------
Frank J. Fertitta III