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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-9481
SANTA FE GAMING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 88-0304348
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION ORORGANIZATION) IDENTIFICATION NUMBER)
4949 N. Rancho Drive
Las Vegas, Nevada 89130
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 658-4300
The undersigned registrant hereby amends the following items of its
Annual Report for the fiscal year ended September 30, 1999 on Form 10-K as
set forth in the pages attached hereto.
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PART 1
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
See "Directors and Executive Officers" in Part III, Item 10 of this
report for certain information concerning the Company's executive officers.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The following is a list of the current executive officers and directors
of the Company:
<TABLE>
<CAPTION>
NAME POSITION WITH THE COMPANY
---- -------------------------
<S> <C>
Paul W. Lowden (3) Chairman of the Board, President and Chief Executive Officer
Thomas K. Land (3) Director, Senior Vice President and Chief Financial Officer,
Secretary
Suzanne Lowden Director, Executive Vice President, Assistant Secretary
Christopher W. Lowden Executive Vice President
James W. Lewis (1)(2) Director
John W. Delaney (1)(2)(3) Director
Peter J. Siris Director
</TABLE>
- --------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
The age, present position with the Company, and principal occupation
during the past five years of each Director, executive officer and nominee
named above is set forth below:
Paul W. Lowden
Paul Lowden is 56 years old and has served as President, Chairman of
the Board and Chief Executive Officer of the Company since its formation in
September 1993. Mr. Lowden held the same positions with the Company's
predecessor, Sahara Resorts, from 1982 through September 1993. Mr. Lowden is
married to Suzanne Lowden and is Christopher Lowden's father.
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Thomas K. Land
Thomas K. Land is 39 years old and joined the Company in February
1994 as Senior Vice President and Corporate Controller, and was elected Chief
Financial Officer of the Company in July 1994. Mr. Land was appointed to the
Board of Directors in December 1995. Prior to joining the Company, Mr. Land
was the Chief Financial Officer of a construction company, where he was
employed from 1990 through February 1994.
Suzanne Lowden
Suzanne Lowden is 47 years old and has served as a Director and
Executive Vice President of the Company since its formation, and had served
as a Director of Sahara Resorts since 1987. Mrs. Lowden was elected Vice
President of Sahara Resorts in July 1992. She is also a founding board member
of Commercial Bank of Nevada. Mrs. Lowden served as a Nevada State Senator
from November 1992 through 1996. She worked for the CBS affiliate in Las
Vegas from 1977 to 1987 as an anchorwoman, reporter, writer and producer of
television news. Mrs. Lowden is married to Paul W. Lowden.
Christopher W. Lowden
Christopher W. Lowden is 34 years old and has served as Executive
Vice President of Operations since September 1995 and Executive Vice
President since February, 1996. Mr. Lowden served as President of Sahara
Development Group from April 1991 through September 1995. From 1989 until
August 1993 he was General Manager of the Company's hotel-casino in Laughlin,
Nevada, the Pioneer Hotel and Gambling Hall. Mr. Lowden is the son of Paul W.
Lowden.
James W. Lewis
James W. Lewis is 73 years old and has served as a Director of the
Company since its formation. Mr. Lewis served as a Director of Sahara Resorts
from 1983 to September 1993. Mr. Lewis became associated with the Corporate
Finance Department of Westamerica Investment Group on January 1, 1995.
Previously, he was a Managing Director of F.L. Bryant & Co., Inc. commencing
July 1, 1992. Previously, he was Senior Vice President, Corporate Finance, of
Van Kasper & Co. commencing January 1, 1991. From 1980 to 1990, Mr. Lewis
served as a First Vice President and Managing Director of Bateman Eichler,
Hill Richards, Incorporated.
John W. Delaney
John W. Delaney is 51 years old and has served as a director of the
Company since January 1997, when he was appointed to fill a vacancy on the
Board of Directors. He was elected to his current term in February 1997. Mr.
Delaney is currently President and Chief Executive Officer of Cityfed
Mortgage Co., a mortgage banking firm, where he has been employed since 1978.
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Peter J. Siris
Peter J. Siris is 55 years old and has been a director of the
Company, elected by holders of the Company's Exchangeable Redeemable
Preferred Stock, since May 1999. Mr. Siris has been President of the Siris
Group, an investment and management consulting firm since 1966 and is
Managing Director of Guerilla Capital Management. Mr. Siris covered retail
and real estate companies with ABN-Amro, as a Senior Vice President in 1996,
and UBS Securities, as a Managing Director from 1990 to 1995. He also served
as Senior Vice President of Warnaco, Inc. in 1995. Currently, Mr. Siris is a
director of Crown American Realty Trust and E-Save Networks.
The Board of Directors and its Committees
During the fiscal year ended September 30, 1999, the Board of
Directors held eight meetings. Each Director attended at least seven of the
meetings of the Board and all meetings of any committees of which he or she
was a member.
The Board has standing Executive, Audit and Compensation Committees
but does not have a Nominating Committee. The Audit Committee held one
meeting, the Executive Committee held two meetings and the Compensation
Committee held three meetings during the last fiscal year. Memberships in the
various committees are determined by action of the full Board. The function
of the Executive, Audit and Compensation Committees and their membership are
described below.
The Executive Committee is authorized to exercise, to the fullest
extent permitted by Nevada law and the Bylaws of the Company, all of the
authority of the Board of Directors. The Executive Committee is composed of
Paul W. Lowden (Chairman), Thomas K. Land and John W. Delaney.
The Audit Committee reviews the principal accounting policies of the
Company, approves the scope and proposed fees for the annual audit, reviews
the results of the annual audit directly with the Company's independent
auditors and recommends to the full Board which firm of accountants should be
selected as the Company's independent auditors. The Audit Committee is
composed of James W. Lewis and John W. Delaney, neither of whom is an officer
or employee of the Company.
The Compensation Committee establishes compensation for the
executive officers of the Company, administers the 1993 Key Employee Stock
Option Plan (the "1993 Plan") and the Subsidiary Plans (as defined under ITEM
11 -"Executive Compensation"), authorizes grants of options and sales of
shares under the 1993 Plan and Subsidiary Plans and recommends to the full
Board any modifications of the 1993 Plan and Subsidiary Plans. The
Compensation Committee is composed of James W. Lewis and John W. Delaney,
neither of whom is an officer or employee of the Company. See ITEM 11
"EXECUTIVE COMPENSATION" below for additional information.
3
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities ("Reporting Persons"), to file
reports of ownership and changes in ownership and changes in ownership with
the SEC and with the American Stock Exchange. Reporting Persons are required
by SEC regulations to furnish the Company with copies of all forms they file
pursuant to Section 16(a).
Based solely on its review of the copies of such reports received by
it, and written representations from certain Reporting Persons that no other
reports were required for those persons, the Company believes that, during
the year ended September 30, 1999, the Reporting Persons complied with all
Section 16(a) filing requirements applicable to them.
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company and its affiliates
for the fiscal years ended September 30, 1999, 1998 and 1997 of those persons
who were, as of September 30, 1999, (i) the Chief Executive Officer and (ii)
the only other executive officer whose total annual salary and bonus exceeded
$100,000 during the fiscal year ended September 30, 1999 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
FISCAL SALARY BONUS COMPENSATION COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2)
- --------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul W. Lowden 1999 $550,000 $375,000(3) $0 $ 46,462
President, Chairman 1998 $550,000 $550,000(3) $0 $ 42,494
of the board and CEO 1997 $550,000 $200,000 $0 $ 41,924
Thomas K. Land 1999 $184,693 $ 15,000 $0 $ 3,835
Senior Vice President 1998 $174,676 $ 15,000 $0 $ 3,785
and Chief Financial Officer 1997 $138,704 $ 10,000 $0 $ 2,313
</TABLE>
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(1) The Company provides automobiles to its senior executives and provides
such persons complimentary privileges at the restaurants and bars of
the Company's hotel-casinos. It is impractical to ascertain the extent
to which such privileges are utilized for personal rather than business
purposes. However, after reasonable inquiry the Company believes the
value of any such personal benefits is less than 25% of the
compensation for each person reported above.
(2) "All Other Compensation" in fiscal 1999, 1998 and 1997 consists of
payments of life insurance premiums by the Company in the amounts of
$44,298, $39,937 and $40,653 for Paul W. Lowden and $2,113, $1,867 and
$1,868 for Thomas K. Land, respectively, and Company matching
contributions to the Retirement Savings 401(k) Plan.
(3) See "Compensation Arrangements with Mr. Lowden."
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COMPENSATION ARRANGEMENTS WITH MR. LOWDEN. The Compensation
Committee approved Mr. Lowden's compensation package for fiscal year 1999,
which provided for an annual base salary of $550,000. Additionally, in
recognition of Mr. Lowden's efforts, the Compensation Committee approved a
bonus in the amount of $200,000 payable in bi-weekly installments throughout
fiscal year 1999.
As previously disclosed by the Company, the Compensation Committee
approved payment in fiscal year 1998 of a $600,000 bonus (the "Fiscal Year
1998 Bonus") to Mr. Lowden in connection with the sales by the Company of the
Hacienda Resort Hotel and Casino (the "Hacienda") and the Sahara Hotel and
Casino (the "Sahara") in September and October, 1995, respectively.
Additionally, in fiscal year 1998 Mr. Lowden was entitled to a fee (the
"Personal Guarantee Fee") from the Company of $100,000 for personal
guarantees issued by Mr. Lowden for certain Company financing arrangements.
In January 1998, the Fiscal Year 1998 Bonus and the Personal Guarantee Fee
were satisfied through an offset against a loan owed by LICO, a Nevada
corporation wholly owned by Mr. Lowden ("LICO"), to the Company which had an
outstanding balance of approximately $700,000 at the date of satisfaction. In
December 1998, at the request of Mr. Lowden, the Company's payment of
$350,000 of bonus and fee obligations satisfied in January 1998 through the
offset of the LICO loan was rescinded, and LICO's obligation to pay to the
Company $350,000, together with interest thereon from January 1998, was
reinstated. In February 1999, the Company satisfied its obligation to pay the
remaining $350,000 to Mr. Lowden by the offset of the outstanding $350,000
obligation of LICO to the Company. In December 1999, at the request of Mr.
Lowden, the Company's payment of $175,000 of bonus and fee obligations
satisfied in February 1999 through the offset of the LICO loan was rescinded,
and LICO's obligation to pay to the Company $175,000, together with interest
thereon from January 1998, was reinstated. The Company satisfied its
obligation to pay the remaining $175,000 to Mr. Lowden by the offset of the
outstanding $175,000 obligation of LICO to the Company in January 2000.
In January 2000, the Company paid $50,000 to each of Messers. Paul
W. Lowden, Christopher W. Lowden and David G. Lowden in recognition of each
of them individually having entered into a fifteen year non-compete agreement
in November 1999 in connection with the sale by a subsidiary of the Company
to Stations Casino of the real property in Henderson, Nevada and other
agreements.
EMPLOYMENT AGREEMENT WITH MR. LAND. The Company and Thomas K. Land
are parties to an employment agreement entered into as of October 1, 1999, as
amended, which has a term of one year, subject to earlier termination in
accordance with its terms and to automatic renewal if the Company does not
provide to Mr. Land a notice that it intends not to renew the agreement.
Pursuant to the agreement, Mr. Land is entitled to receive a minimum annual
base salary of $185,000. The agreement also provides that Mr. Land may
participate in any employee benefit plans, including bonus plans, of the
Company. Upon the
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occurrence of certain events, including the transfer of substantially all of
the assets of the Company or the failure by Mr. Paul W. Lowden to own at
least 50% of the outstanding Common Stock, the agreement will terminate and
Mr. Land will be entitled to receive a lump sum payment in an amount equal to
one-half of his annual base salary plus other benefits that would have been
otherwise payable under the employment agreement. Pursuant to the employment
agreement, as a result of certain events related to the Company's subsidiary,
Pioneer Finance Corp., and its 13 1/2% First Mortgage Bonds due December 1,
1998, Mr. Land received a payment of $92,250 in January 2000.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its affiliates
receive $24,000 annually and $1,000 per Board meeting attended, $800 per
Committee meeting attended as a member and $900 per Committee meeting
attended as Chairman.
Additionally, upon first being elected to the Board of Directors,
each non-employee director receives options to purchase 12,500 shares of
Common Stock at an exercise price equal to the fair market value of the
Common Stock on the date of grant. Such options are fully vested at the date
of grant.
The Company requires all members of the Board of Directors to comply
with all Company policies prior to attending a newly elected director's first
meeting of the Board of Directors. These requirements include filing a gaming
application with the Nevada Gaming Authorities and executing a confidentiality
agreement, and compliance and disclosure statements. Until such time as an
elected individual has complied with these requirements, he or she will not be
entitled to the benefits of the directorship position, including any director
fees or stock option awards that would otherwise be paid or granted.
COMPENSATION PLANS
STOCK OPTION PLAN
The Company's 1993 Plan provides for the grant of options with
respect to an aggregate of 619,375 shares of the Common Stock to key
employees as determined by the Compensation Committee. No stock options were
awarded to, and no stock options were exercised by, the Named Executive
Officers in the fiscal year ended September 30, 1999.
1998 SUBSIDIARY STOCK OPTION PLANS
The Company and certain of its subsidiaries, Santa Fe Hotel Inc.,
Sahara Las Vegas Corp. and Pioneer Hotel Inc. (collectively, the
Subsidiaries"), have adopted various subsidiary stock option plans (the
"Subsidiary Plans"). The Subsidiary Plans provide for the grant of options by
each of the Subsidiaries with respect to an aggregate of up to 10% of the
outstanding shares of such Subsidiary's Common Stock to employees,
non-employee directors, consultants or affiliates of the Company or the
Subsidiaries. The purpose of the Subsidiary Plans is to enable the
Subsidiaries, the Company and any subsidiaries of the Company or Subsidiaries
to attract, retain and motivate their employees, non-employee directors,
consultants and affiliates by providing for or increasing the proprietary
interest of such persons in the Subsidiaries. Certain of the agreements under
which the Company's long-term debt is issued provide that if the Company
ceases to own, directly or indirectly, 100% of the outstanding capital stock
of specified Subsidiaries, an event of default will occur or an offer to
repurchase the debt must be made. As a result, the Subsidiary Plans provide
that options granted under the Subsidiary Plans may not be
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exercised if the exercise would result in a default, or require an offer to
repurchase the outstanding debt, under any agreement with respect to
long-term debt of the Company or any of its Subsidiaries. As of September 30,
1999, no options had been granted under any Subsidiary Plans.
SAVINGS PLAN
The Company has adopted a savings plan qualified under Section
401(k) of the Internal Revenue Code (the "Savings Plan"). The Savings Plan
covers substantially all employees, including the Company's executive
officers. Employee contributions to the Savings Plan are discretionary. The
Savings Plan allows eligible employees to contribute, on a pretax basis, up
to 6% of their gross salary to the plan; the Company matches 25% of such
employee contributions made. Employees may also contribute, on a pretax
basis, up to an additional 9% of their gross salary, and, on a post-tax
basis, up to an additional 10% of their salary. Such contributions are not
matched by the Company. The matching expense in fiscal 1999 was $113,000 of
which $2,164, $1,722, and $5,747 was contributed by the Company to the
accounts of Messrs. Lowden, Land and all other executive officers as a group,
respectively, as matches for employee contributions made.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information regarding beneficial ownership
of the Common Stock and the exchangeable redeemable preferred stock of the
Company (the "Preferred Stock"), as of January 26, 2000, person known to be
the beneficial owner of more than 5% of the outstanding Common Stock or
Preferred Stock; (ii) each Director of the Company; and (iii) all Directors
and officers of the Company as a group.
<TABLE>
<CAPTION>
NAME BENEFICIAL SHARES OF SHARES OF
OWNER COMMON STOCK PERCENT PREFERRED STOCK PERCENT
- --------------- ------------ ------- --------------- -------
<S> <C> <C> <C> <C>
Paul W. Lowden(1) 4,513,275(2) 68.85% 521,500(3) 5.89%
James W. Lewis 13,759(4) * - -
Suzanne Lowden 4,792(5) * 2,524(6) *
Thomas K. Land 69,175(7) 1.10% 1,000 *
Christopher W. Lowden 83,456(7) 1.33% 1,400 *
John W. Delaney 13,750(4) * - -
Peter J. Siris 12,500(8) * 140,300(9) 1.58%
Hudson Bay Partners(10) 53,600 * 2,971,400 33.55%
All directors and Officers
as a group (7 persons) 4,764,298 72.88% 3,638,124 41.08%
</TABLE>
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(1) The address for Paul W. Lowden is c/o Santa Fe Gaming Corporation, P.O.
Box 270850, Las Vegas, Nevada 89127. The shares owned by each person,
or by the group, and the shares included in the total number of shares
outstanding have been adjusted, and the percentage owned (where such
percentage exceeds 1%) has been computed, in accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934 (the "Exchange
Act").
(2) Includes 1,265,601 shares held by LICO, which is wholly owned by Mr.
Lowden.
(3) Includes 516,441 shares held by LICO, which is wholly owned by Mr.
Lowden.
(4) Of such shares, 12,500 may be acquired upon the exercise of outstanding
stock options.
(5) Includes 4,521 shares held by Mrs. Lowden as custodian for a child and
11,178 shares held jointly by Mr. Lowden and Mrs. Lowden and excludes
shares beneficially owned by Mr. Lowden reflected in the table.
(6) Includes 1,262 shares held by Mrs. Lowden as custodian for a child and
excludes shares beneficially owned by Mr. Lowden reflected in the
table.
(7) Of such shares, 68,175 may be acquired upon the exercise of outstanding
stock options.
(8) All shares may be acquired upon the exercise of outstanding stock
options. Upon being first elected to the Company's Board of Directors,
non-employee directors receive options to purchase 12,500 shares of
Common Stock at an exercise price equal to the fair market value of the
Common Stock on the date of grant. Such options are fully vested.
(9) Includes (i) 40,200 shares owned by Mr. Siris's wife; (ii) 80,100
shares owned by Mr. Siris's minor daughter; and (iii) 10,000 shares
owned by Guerilla Capital Management, of which Mr. Siris is a managing
director. Mr. Siris disclaims beneficial ownership of the 40,200
shares owned by his wife.
(10) Based solely on information contained in the Schedule 13D as amended,
filed by Hudson Bay Partners, LP., ("HBP") with the Securities and
Exchange Commission. According to HBP's Schedule 13D, as amended, the
address for Hudson Bay Partners is 237 Park Avenue, Suite 900,
New York, NY 10017.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See ITEM 11 - EXECUTIVE COMPENSATION for a description of certain
transactions during the fiscal year ended September 30, 1999 in which
officers and Directors of the Company and its affiliates or families had a
direct or indirect interest.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(c) Exhibits
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
10.75 Employment Agreement by and among Santa Fe Gaming Corporation
and Thomas K. Land dated October 1, 1999.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to its Form 10-K for the year ended September 30, 1999 to be
signed on its behalf by the undersigned, thereunto duly authorized in Las
Vegas, Nevada on the 28th day of January, 2000
SANTA FE GAMING CORPORATION
By: /s/ Thomas K. Land
--------------------------------
Thomas K. Land
9
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EXHIBIT 10.75
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- --------------------------------------------------------------------------------
DATED: October 1, 1999
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EMPLOYMENT AGREEMENT
- by and among -
SANTA FE GAMING CORPORATION
("Employer")
- AND -
THOMAS K. LAND
("Employee")
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- --------------------------------------------------------------------------------
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1
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
--------------------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on
this 30th day of September, 1999, by and among Santa Fe Gaming Corporation, a
Nevada corporation and its affiliates ("Employer"), and Thomas K. Land
("Employee").
W I T N E S S E T H :
WHEREAS, Employer is a corporation duly organized and existing under
the laws of the State of Nevada, maintains its principal place of business at
4949 N. Rancho Drive, Las Vegas, Nevada 89130, and is engaged in the business
of owning and operating casino/hotel properties in Las Vegas and Laughlin,
Nevada, and proposes to expand its legalized casino gaming business both
within the State of Nevada;
WHEREAS, Employer has entered into an agreement to operate certain
facilities of Santa Fe Gaming Corporation;
WHEREAS, in furtherance of its business, Employer has need of
qualified, experienced personnel;
WHEREAS, Employee is an adult individual presently residing at 8308
Emerald Isle Avenue, Las Vegas, Nevada 89128;
WHEREAS, Employee has represented and warranted to Employer that
Employee possesses sufficient qualifications and expertise in order to
fulfill the terms of the employment stated in this Agreement; and
WHEREAS, Employer is willing to employ Employee, and Employee is
desirous of accepting employment from Employer, under the terms and pursuant
to the conditions set forth herein;
WHEREAS, Employer and Employee have previously entered into
Employment Agreements dated February 28, 1994, October 1, 1996, October 1,
1997 and October 1, 1998, and the First Amendment to the Employment Agreement
dated October 1, 1998 ("First Amendment").
WHEREAS, Employer has paid the amount due Employee represented in
the First Amendment and Employer and Employee are desirous of executing this
Agreement.
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2
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
NOW, THEREFORE, for and in consideration of the foregoing recitals,
and in consideration of the mutual covenants, agreements, understandings,
undertakings, representations, warranties and promises hereinafter set forth,
and intending to be legally bound thereby, Employer, and Employee do hereby
covenant and agree as follows:
1. DEFINITIONS. As used in this Agreement, the words and terms
hereinafter defined have the respective meanings ascribed to them herein,
unless a different meaning clearly appears from the context:
(a) "Cause" - means
(i) the convictions of Employee by a court of
competent jurisdiction of a felony or any other
offense involving moral turpitude or dishonesty;
(ii) the indictment of Employee by a state or federal
grand jury of competent jurisdiction or the filing of
a criminal competent jurisdiction or the embezzlement
or misappropriation of funds or for any act of
dishonesty or lack of fidelity;
(iii) a decree of a court of competent jurisdiction
that the Employee is not mentally competent or is
unable to handle his own affairs;
(iv) the written confession by Employee of any act of
dishonesty or any embezzlement or misappropriation of
funds;
(v) the payment (or, by the operations solely of the
effect of a deductible, the failure of payment) by a
surety or insurer of a claim under a fidelity bond
issued for the benefit of Employer or Employer's
Affiliates reimbursing Employer or Employer's
Affiliates for a loss due the wrongful act or
wrongful omission to act of Employee;
(vi) Employee's breach of the restrictive covenants
set forth in Paragraphs 10 of this Agreement;
(vii)Employee's failure to secure or maintain in
force and in good standing any and all licenses,
permits and/or approvals required of Employee by the
relevant governmental authorities for the discharge
of the obligations of Employee under this Agreement;
provided, however, that Employee's disability due to
illness or accident or any other mental or physical
incapacity shall not constitute "Cause" as defined
herein;
(viii) Employee's poor work performance resulting in
two consecutive negative written performance
appraisals. Performance appraisals shall occur twice
annually and shall serve as a formal review of the
employee's work performance and contribution to the
company. If on two consecutive performance appraisals
the employee is evaluated poorly, the employer
reserves the right to
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3
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
terminate this agreement. Employee's poor work
performance would include, but not be limited to:
(1) engaging in conduct that is injurious, monetarily
or otherwise, to Employer or Employer's Affiliates;
(2) substantial failure to perform in a professional
manner, or refusal to perform in a professional
manner, any duty or duties assigned by Employer;
(3) substantial failure to adhere, or refusal to
adhere to any policies, rules or procedures of the
Employer; or
(4) engaging in conduct or in past conduct or
affiliations which, in the reasonable opinion of
Employer, would adversely impact Employer's,
Employer's Affiliates' privileged licenses.
(b) "Complete Disability" - means the inability of
Employee, due to illness or accident or other mental or
physical incapacity, to perform his obligations under this
Agreement for a period of one hundred eighty (180) calendar
days in the aggregate over a period of five hundred (500)
consecutive calendar days or less, such "Complete Disability"
to become effective upon the expiration of such one hundred
eightieth (180th) day.
(c) "Effective Date" - means the date first above written.
(d) "Employee" - means Employee as earlier defined in this
Agreement.
(e) "Employer" - means Employer as earlier defined in this
Agreement.
(f) "Employer's Affiliates" - means any parent, subsidiary or
affiliated corporation or other legal entity of Employer.
(g) "Prior Employment" - means any prior employment Employee
has had.
2. PRIOR EMPLOYMENT. This Agreement supersedes and replaces
any and all prior employment agreements, whether written or oral, by and
between Employee and Employer, Employer's Affiliates. From and after the
Effective Date, Employee shall be the employee of Employer under the terms
and pursuant to the conditions set forth in this Agreement.
3. BASIC EMPLOYMENT AGREEMENT. Subject to the terms and
pursuant to the conditions hereinafter set forth, Employer hereby employs
Employee during the Term hereinafter specified to serve in the position of
Senior Vice-President and Chief Financial Officer of Santa Fe Gaming
Corporation and with such duties not inconsistent
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4
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
with those generally understood within the casino/hotel industry to be those
of a Senior Vice-President and Chief Financial Officer, as the same may be
modified and/or assigned to Employee by Employer. Notwithstanding the
foregoing, Employer and Employee hereby covenant and agree that, in the
absence of mutual consent of both Employer and Employee, Employee shall not
be assigned duties by Employer which would diminish Employee's
responsibility, authority, general status or comparative compensation level
within Employer's table of organization. In addition and the foregoing
notwithstanding, Employee shall devote such time to Employer's Affiliates and
as required by Employer, provided such duties are not inconsistent with
Employee's primary duties to Employer hereunder ("Position").
4. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts the
employment set forth hereunder, under the terms and pursuant to the
conditions set forth in this Agreement. Employee hereby covenants and agrees
that, during the Term of this Agreement, Employee will devote the whole of
his working time and best efforts solely to the performance of Employee's
duties under this Agreement, and the Employer shall be entitled to all of the
income, benefits, or profits arising from or incident to all work, work
associations, services, or advise of Employee, unless otherwise authorized by
the Employee.
5. TERM. The Term of this Agreement shall consist of a term of
one (1) year commencing as of the Effective Date of this Agreement, unless
sooner terminated as provided below, or as provided in paragraph 6 of this
Agreement. In the event this Agreement is not terminated as provided below,
the Agreement will automatically extend for a one-year period.
(a) the giving of 30-day written notice by Employee to Employer of
the termination of this Agreement.
(b) the giving of 60-day written notice by Employer to Employee not
to renew this Agreement prior to the end of the term. In the event the
Employer gives notice not to renew, notice must be accompanied by Employer's
tender to Employee of (i) the lump sum of payments due to Employee pursuant
to Section 7(a) through the end of the term and (ii) representation from the
Employer satisfactory to Employee, in sole discretion of Employee, that
Employer will provide existing medical and or hospitalization plans for a
period of one year unless and until Employee is covered by subsequent
employment plan.
6. SPECIAL TERMINATION PROVISIONS. Notwithstanding the
provisions of Paragraph 5 of this Agreement, this Agreement shall terminate
upon the occurrence of any of the following events:
(a) the death of Employee;
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5
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
(b) the giving of written notice from Employer to Employee of the
termination of this Agreement upon the Complete Disability of Employee;
however, that upon approval of such an event by the Board of Directors
that the Employer tender to Employee the lump sum of payments due to
Employee for services rendered pursuant to Section 7 and in the case of
Section 7(a) will be equal to one-half the annual Base Salary, in
effect; and representation to provide existing medical and or
hospitalization plans for a period of one year unless covered by
subsequent employment plan.
(c) the giving of written notice by Employer to Employee of the
termination of this Agreement upon the discharge of Employee for Cause;
(d) the giving of written notice by Employer to Employee of the
termination of this Agreement without Cause; provided, however, that
such notice must be accompanied by Employer's tender to Employee of the
lump sum of payments due to Employee pursuant to Section 7 and in the
case of Section 7(a) will be equal to one-half the annual Base Salary,
in effect; and representation to provide existing medical and or
hospitalization plans for a period of one-year unless covered by
subsequent employment plan.
(e) the giving of written notice by Employee to Employer upon a
material breach of this Agreement by Employer including a change in the
Employee's responsibilities and/or position, provided however, Employer
shall have a period of seven (7) days after giving of such notice to
cure the breach or default; if the default is not cured within such
period, the Employee will be entitled to the lump sum of payments due
to Employee for services rendered pursuant to Section 7 and in the case
of Section 7(a) will be equal to one-half the annual Base Salary, in
effect; and representation to provide existing medical and or
hospitalization plans for a period of one-year unless covered by
subsequent employment plan.
(f) a transfer(including but not limited to either (a) sale of
substantially all of the assets or by sale/issuance of stock) of Santa
Fe Hotel, Inc. ("SFHI") to an entity not beneficially owned by more
than 50% by Paul W. Lowden or if Paul W. Lowden becomes beneficial
owner of less than 50% of the outstanding common stock of Santa Fe
Gaming; provided, however, that upon approval of a transaction to cause
such an event by the Board of Directors of either SFHI or Santa Fe
Gaming that the Employer tender to Employee the lump sum of payments
due to Employee for services rendered pursuant to Section 7 and in the
case of Section 7(a) will be equal to one-half the annual Base Salary,
in effect; and representation to provide existing medical and or
hospitalization plans for a period of one-year unless covered by
subsequent employment plan. Notwithstanding the provisions of
paragraphs 5 and 6(b)(c)(d)(e), unless this Agreement is terminated
pursuant to paragraph 6f, the terms and conditions of
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Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
paragraph 6f will continue in full force and effect for a period of one
year from the date written notice is given under paragraphs
5,6(b)(c)(d)(e)
7. COMPENSATION TO EMPLOYEE. For and in complete consideration of
Employee's full and faithful performance of this duties under this
Agreement, Employer hereby covenants and agrees to pay to Employee, and
Employee hereby covenants and agrees to accept from Employer, the
following items of compensation:
(a) Base Salary. Employer hereby covenants and agrees to pay to
Employee, and Employee hereby agrees to accept from Employer, a minimum
annual base salary of ONE HUNDRED EIGHTY-FIVE THOUSAND DOLLARS
($185,000.00), for the twelve month period beginning October 1, 1998,
payable in accordance with the normal payroll practices of the Employer
("the Base Salary"). Such Base Salary shall be exclusive of and in
addition to any other benefits which Employer may make available to
Employee, including, but not limited to, any profit sharing plans,
pension plans, retirement plans, company life insurance plan, medical
and/or hospitalization plans, or any and all other benefit plans which
may be in effect during the Term of this Agreement. Employer shall
deduct from this Base Salary all appropriate or authorized federal
income tax amounts and all other federal, state and local taxes,
including but not limited to existing or future FICA and similar taxes.
(b) Employee Benefit Plans. Employer hereby covenants and agrees that
it shall include Employee, if otherwise eligible, in any profit sharing
plans, bonus participation plans, stock options plans, pension plans,
retirement plans, company life insurance plans, medical and/or
hospitalization plans, and/or any and all other benefit plans which may
be placed in effect by Employer during the Term of this Agreement.
(c) Expense Reimbursement. During the Term of this Agreement, Employer
shall either pay directly or reimburse Employee for Employee's
reasonable, necessary and customary expenses incurred for the benefit
of Employer in accordance with Employer's general policy regarding
reimbursement, as the same may be amended, modified or changed from
time to time. Such reimbursable expenses shall include, but are not
limited to, reasonable entertainment and promotional expenses, gift and
travel expenses, professional societies and fraternal organizations,
and the like; provided, however, such reimbursable expenses are
approved by Employer. Prior to reimbursement, Employee shall provide
Employer with sufficient detailed invoices of such expenses in
accordance with the then applicable guidelines of the Internal Revenue
Service so as to entitle Employer to a deduction for such services.
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Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
(d) Licensing Expenses. Employer hereby covenants and agrees that the
Employer shall pay all reasonable and ordinary licensing fees and
expenses incurred by Employee in securing and maintaining such licenses
and permits required of Employee in order to perform his duties under
this Agreement.
(e) Vacations and Holidays. Commencing as of the Effective Date of this
Agreement, Employee shall be entitled to annual paid vacation leave in
accordance with Employer's standard policy therefor, to be taken at
such times as selected by Employee and approved by Employer.
(f) Transportation Expenses. During the term of this Agreement,
Employer hereby agrees to furnish to Employee for Employee's exclusive
use an automobile. Such automobile shall be either leased or purchased
by Employer and Employer shall pay all insurance, maintenance, and
repair expenses incident to such automobile.
8. LICENSING REQUIREMENTS. Employer and Employee hereby
covenant and agree that, in order for Employee to discharge the duties
required under this Agreement, Employee may be required to submit for
licensure by gaming regulatory authorities. Employer shall pay for all
licensing fees and expenses incurred by Employee, including attorneys' fees
and costs, in securing and maintaining such licenses and permits required of
Employee in order to perform his duties under this Agreement. Such expenses
shall be borne by Employer.
9. CONFIDENTIALITY. Employee hereby warrants, covenants and
agrees that, without the prior express written approval of Employer, during
such time as Employee remains employed by Employer and for a period of 2
years after the termination of this Agreement, Employee shall hold in the
strictest confidence, and shall not disclose to any person, firm, corporation
or other entity, any of Employer's proprietary or confidential data,
including but not limited to (i) information or other documents concerning
Employer's, Employer's Affiliates business, customers or suppliers, (ii)
Employer's, Employer's Affiliates marketing methods, files, and credit and
collection techniques and files, (iii) Employer's, Employer's Affiliates
trade secrets and other "know-how" or information not of public nature,
regardless of how such information came to the custody of Employee. The
warranty, covenant and agreement set forth in this Paragraph 10 shall not
expire, shall survive this Agreement and shall be binding upon Employee
without regard to the passage of time or other events except as expressly set
forth herein.
10. RESTRICTIVE COVENANT. Employee hereby covenants and agrees
that, during such time as Employee remains employed by Employer, Employee
shall not directly or indirectly (either as a principal, agent, employee,
employer, consultant,
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Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
partner, shareholder of a closely held corporation or shareholder in excess
of five per cent (5%) of a publicly traded corporation, corporate officer or
director, or in any other individual or representative capacity) engage or
otherwise participate in any manner or fashion in any business that is in
competition in any manner whatsoever with the principal business activity of
Employer, Employer's Affiliates, in the state of Nevada. Employee hereby
further covenants and agrees that the restrictive covenant contained in this
Paragraph 10 is reasonable as to duration, terms and geographical area and
that the same protects the legitimate interests of Employer, imposes no undue
hardship on Employee, and is not injurious to the public.
11. BEST EVIDENCE. This Agreement may be executed in original
and "Xerox" or photostatic copies and each copy bearing original signatures
in ink shall be deemed an original.
12. SUCCESSION. This Agreement shall be binding upon and inure
to the benefit of Employer and Employee and their respective successors and
assigns.
13. ASSIGNMENT. The rights, benefits and obligations of
Employee under this Agreement shall not be assignable. Any purported
assignment in violation of this Paragraph 14 shall be null and void and of no
force and effect.
14. AMENDMENT OR MODIFICATION. This Agreement may not be
amended, modified, changed or altered except by a writing signed by both
Employer and Employee.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Nevada in effect on the
Effective Date of this Agreement without resort to any conflict of laws
principles, and the parties hereto specifically agree and consent that courts
of the state of Nevada shall have sole and exclusive jurisdiction over any
matter brought under, or by reason of, this Agreement.
16. NOTICES. Any and all notices required under this Agreement
shall be in writing and shall be either hand-delivered or mailed, certified
mail, return receipt requested, addressed to:
TO EMPLOYER: Santa Fe Gaming Corporation
4949 N. Rancho Drive
Las Vegas, NV 89130
Attention: Paul W. Lowden, President
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9
Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
With copy to: William Raggio
JONES VARGAS
201 West Liberty Street
PO Box 281
Reno, NV 89504-0281
TO EMPLOYEE: Thomas K. Land
8308 Emerald Isle Avenue
Las Vegas, NV 89128
All notices hand-delivered shall be deemed delivered as of the date actually
delivered. All notices mailed shall be deemed delivered as of three (3)
business days after the date postmarked. Any changes in any of the addresses
listed herein shall be amended by notice as provided in this Paragraph 17.
17. INTERPRETATION. The preamble recitals to this Agreement are
incorporated into and made a part of this Agreement; titles of paragraphs are
for convenience only and are not to be considered a part of this Agreement.
18. SEVERABILITY. In the event any one or more provisions of
this Agreement is declared judicially void or otherwise unenforceable, the
remainder of this Agreement shall survive and such provision(s) shall be
deemed modified or amended so as to fulfill the intent of the parties hereto.
19. DISPUTE RESOLUTION. Except for equitable actions seeking to
enforce the provisions of Paragraphs 9 and 10 of this Agreement which may be
brought by the Employer or Employer's Affiliates in any court of competent
jurisdiction in the state of Nevada, any and all claims, disputes, or
controversies arising between the parties hereto regarding any of the terms
of this Agreement or the breach thereof, on the written demand of either of
the parties hereto, shall be submitted to and be determined by final and
binding arbitration held in Las Vegas, Nevada, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. This
agreement to arbitrate shall be specifically enforceable in any state of
federal court of competent jurisdiction in the state of Nevada.
20. WAIVER. None of the terms of this Agreement, including this
Paragraph 20, or any term, right or remedy hereunder shall be deemed waived
unless such waiver is in writing and signed by the party to be charged
therewith and in no event by reason of any failure to assert or delay in
asserting any such term, right or remedy or similar term, right or remedy
hereunder.
21. PAROL. This Agreement constitutes the entire agreement
between Employer and Employee with respect to the subject matter hereto and
this Agreement
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Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
<PAGE>
supersedes any prior understandings, agreements or undertakings by and
between Employer and Employee with respect to the subject matter hereof.
22. GENERAL PROVISIONS.
(a) Time is of the essence.
(b) This Agreement has been carefully and fully examined by
Employee and Employee represents that the legal and factual
contents hereof are fully appreciated and comprehended by
Employee. Further, Employee has had ample opportunity to
review this Agreement with legal and/or such other counsel as
deemed appropriate, if any. Employee has decided to execute
this Agreement having considered the various advantages and
possible detriments associated therewith. Although this
Agreement has been prepared by Employer, it is the product of
discussions and negotiations and should be construed fairly
accordingly to its terms and not against one party as the
drafter thereof.
(c) In the event an action is filed in relation to this
Agreement, the unsuccessful party in the action shall pay to
the successful party, in addition to all sums that the party
may be order to pay, a reasonable sum for the successful
party's attorney fees.
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have executed and delivered this Agreement as of the year and date
first above written.
EMPLOYER
Santa Fe Gaming Corporation, a
Nevada Corporation
By:
---------------------------
Paul W. Lowden
President
EMPLOYEE
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Thomas K. Land
Senior Vice President and
Chief Financial Officer
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Employment Agreement by and between Santa Fe Gaming Corp. and Thomas K. Land
