Exhibit 10
PRIVATE AND CONFIDENTIAL
July 18, 2002
Mr. Peter Beresford
30 Wilket Road
Toronto, Ontario
M2L 1N8
Dear Peter:
Re: Employment with Magna Entertainment Corp.
Further to our recent discussions, this letter will confirm the terms and
conditions of your employment with Magna Entertainment Corp. ("MEC" or the
"Corporation"), as follows:
1. Position: Subject to the approval of the Board of Directors of the
Corporation, you will be appointed Executive Vice-President, Marketing and
Strategic Planning of MEC. In such capacity, you shall perform the duties
assigned to you from time to time by the President and Chief Executive
Officer of MEC or his designee. You shall carry out your day-to-day duties
from the head office of the Corporation in Aurora; however, you acknowledge
that you will be expected to engage in reasonable business travel based on
the nature of your position and job responsibilities and the location of
MEC's properties and operations. You will devote substantially all of your
business time, energy and skill to the performance of your duties for the
Corporation.
2. Base Salary: You shall receive a Base Salary of US$400,000 per annum (less
statutorily required deductions and any deductions that you elect), payable
in arrears in equal instalments in accordance with MEC's standard payroll
practices.
3. Bonus: In addition to your Base Salary, you shall receive a guaranteed bonus
of US$200,000 per annum (less statutorily required deductions) (the
"Guaranteed Bonus"), payable in arrears in equal quarterly instalments in
accordance with the Corporation's standard practices, pro-rated for any
partial calendar years. You and the Corporation will attempt to settle upon
a mutually agreeable profit sharing arrangement, to be established as of
January 1, 2003, whereby you will receive a percentage of the pre-tax
profits of MEC (the "Profit Sharing Bonus"). In the event the Profit Sharing
Bonus arrangement is so determined and agreed upon, the Guaranteed Bonus
shall cease as of December 31, 2002 and the Profit Sharing Bonus shall
continue in its place effective January 1, 2003. In the absence of such
agreement, the Guaranteed Bonus shall continue until such time as the Profit
Sharing Bonus arrangement is determined and agreed upon.
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, as such insurance
and other benefit programs may be in effect and provided 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;
(b) four (4) weeks vacation in respect of each completed twelve (12) month
period in accordance with the Corporation's vacation policy, to be taken
at such time or times as are mutually convenient to you and the
Corporation, but not payment in lieu thereof, and such holidays as are
available to employees of the Corporation in accordance with the
Corporation's holiday policy; and
(c) 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 travel and expense reimbursement
policies from time to time, but excluding automobile operating costs.
5. Stock Options: Subject to compliance with all applicable laws, MEC shall
grant you options to purchase 250,000 shares of Class A Subordinate Voting
Stock of MEC at an exercise price per share which is equal to the closing
trading price of the shares on the trading day immediately preceding the
date that the options are granted. The options will have a term of ten years
from date of grant and will vest one-fifth on the date of grant and an
additional one-fifth on each of the first four anniversaries of the date of
grant. The grant of options will be subject to you entering into a Stock
Option Agreement with MEC in the standard form used by MEC from time to time
for employee stock option grants under MEC's Long-Term Incentive Plan,
except that, such Agreement will provide that, if your employment is
terminated by MEC in accordance with the provisions of Section 6(b), your
options which have vested as of such date may be exercised for a period of
eighteen (18) months from the date of termination. Should your employment
with MEC terminate for any other reason, the term of your options shall be
reduced as provided in the Stock Option Agreement referred to above. Such
options shall be subject to all other terms and conditions set forth in the
Stock Option Agreement referred to above and/or in MEC's Long-Term Incentive
Plan. Upon receipt of an executed copy of this Agreement, we will place this
matter before the Compensation Committee of the Board of Directors of MEC at
the earliest reasonable opportunity.
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6. Termination:
(a) Your employment and this Agreement, including all benefits provided for
under this Agreement, will terminate without notice or payment in lieu
thereof, on (a) the acceptance by the Corporation of your voluntary
resignation, (b) at the Corporation's option, your disability for an
aggregate of three (3) months or more in any twelve (12) 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.
(b) Notwithstanding Section 6(a), you may, at any time, terminate your
employment and this Agreement by providing the Corporation with sixty
(60) days prior written notice of intention to terminate. In addition,
the Corporation may at any time, for any reason, terminate your
employment and this Agreement by providing you with twelve (12) months
prior written notice of intention to terminate, or may elect to
terminate your employment and this Agreement immediately by paying you a
severance allowance of US$600,000 (less statutorily required deductions)
either in a lump sum within thirty (30) days of the date of termination
or monthly, in arrears and without interest, in twelve (12) equal
instalments commencing thirty (30) days from the date of termination.
The Corporation may also terminate your employment and this Agreement by
providing you with a combination of advance notice of less than twelve
(12) months and a severance allowance. In such case, the severance
allowance shall equal the severance allowance set forth above, pro-rated
based on the amount of time that elapsed between the date the
Corporation notified you of the termination and the effective date of
the termination. If your employment is terminated by the Corporation
pursuant to this Section 6(b), the Corporation shall maintain on your
behalf the benefits referred to in Section 4(a), except for disability
insurance, for a period of twelve (12) months from the date of
termination. Your disability insurance shall be continued for the period
required by applicable statute.
(c) Upon termination of this Agreement, the provisions of Section 7 shall
continue in full force and effect. In the event that you breach the
provisions of Section 7, the payment of any further instalments of your
severance allowance will immediately cease. At the option of the
Corporation, the amount paid to you in each instalment of your severance
allowance may be offset by any income earned by you, during the period
in which you are entitled to receive instalments, from alternate or
self-employment.
(d) The termination provisions set forth above in this Section 6 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
affiliated or related companies (the "Magna Group"), and the termination
of your employment and this Agreement.
7. 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 shall be the
exclusive property of the Corporation 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 all times during and
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.
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(c) Non-Competition: During the term of your employment with the Corporation
and for a period of twelve (12) months after the cessation of your
employment, you shall neither compete, directly or indirectly, in any
capacity, with the business of the Corporation or any other member of
the Magna Group in respect of which you have had access to proprietary
or confidential information, nor solicit any employee thereof.
(d) Other Agreements. In addition, if requested at any time, you shall
execute a separate form of Employee Confidentiality Agreement or such
other form of proprietary information and/or confidentiality agreement
that the Corporation may require from its employees from time to time,
as a condition of your continued employment.
8. Start Date: Your employment with the Corporation shall commence on Tuesday,
September 3, 2002, or such earlier or later date as may be mutually agreed
upon.
9. Assignability: The Corporation may, in its sole discretion, assign this
Agreement to an affiliated company or other company at any time. Upon any
such assignment, the terms and conditions of this Agreement shall continue
in full force and effect. You may not assign this Agreement or your
obligations hereunder.
10. Severability: In the event that a court of competent jurisdiction determines
that any portion of this Agreement is in violation of any statute or public
policy, then only the portions of this Agreement which violate such statute
or public policy shall be stricken, and all portions of this Agreement which
do not violate any statute or public policy shall continue in full force and
effect. Furthermore, any court order striking any portion of this Agreement
shall modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of you and the Corporation in entering
into this Agreement.
11. Modifications: This Agreement shall not be modified by any oral agreement,
express or implied, and all modifications hereof shall be in writing and
signed by you and the Corporation. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant or condition.
If the terms of employment as set out in this Agreement are acceptable to you,
please sign and date three (3) copies of this Agreement in the places indicated
and return two (2) fully signed copies to my attention by July 26, 2002, 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 will continue to apply
to your employment in a similar or other capacity with the Corporation, or any
other member of the Magna Group.
Yours very truly,
Jim McAlpine
President and Chief
Executive Officer
JM:hb
I hereby accept the terms and conditions set out above and acknowledge that this
Agreement contains all of the terms and conditions of my employment with the
Corporation and that no other terms, conditions or representations, other than
those within this letter, form part of this Agreement . I confirm that I am not
subject to any restrictions (contractual or otherwise) arising from my former
employment which would impair me in carrying out my duties and functions with
the Corporation. Furthermore, I confirm that during the term of my employment I
will not offer to the Corporation any confidential or proprietary information
that I have knowledge of with respect to my former employers, nor will I provide
such information to the Corporation should I be requested to do so, until such
time as such information is no longer confidential or proprietary, or comes into
the public domain.
Date: _________________ ____________________________________
Peter Beresford
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