Exhibit 10.34
EMPLOYMENT AGREEMENT
Employment Agreement, dated as of July 1, 1998 (this
"Agreement"), by and between Riviera Holdings Corporation and its wholly-owned
subsidiary Riviera Operating Corporation (collectively the "Company") and Xxxxxx
Xxxxxxx ("Executive").
In consideration of the mutual agreements hereinafter set forth,
the parties hereto agree as follows:
1. Employment. During the "Term" (hereinafter defined) the Company agrees to
employ Executive as Executive Vice President of Gaming Operations of the Company
upon the terms and conditions and for the compensation herein provided, and
Executive agrees to be so employed and to render the services herein specified.
2. Term of Employment. The term of employment of Executive hereunder (the
"Term") will be for a three year period commencing on July 1, 1998 and ending on
June 30, 2001, subject to earlier termination as provided in Section 10.
3. Duties. During the Term Executive agrees to (a) devote his full and exclusive
business time and attention to the business of the Company and its subsidiaries
(vacation and sick leave in accordance with the Company's policy and personal
time consistent with his position excluded) and (b) perform such duties as the
Company's chief executive officer shall from time to time assign to Executive.
4. Salary. During the Term Executive shall receive a salary at the following
rates per annum, payable bi-weekly in arrears ("Base Salary"):
One Year Period
Commencing
7/1/98 $200,000
7/1/99 $225,000
7/1/2000 and thereafter $250,000
5. Stay Put Bonus.
a. Executive shall be entitled to a bonus ("Stay Put Bonus") of $125,000 if he
remains an employee of the Company on each of January 1, 2001 and July 1, 2001
(or an aggregate of $250,000) or if Executive has been discharged without
"Cause" (hereinafter defined) prior to each such date he will receive
immediately any unpaid balance of the $250,000 Stay Put Bonus.
b. At the closing of a "Change of Control" (hereinafter defined) the Stay Put
Bonus (i) shall be deposited in a Rabbi Trust with US Bank and (ii) shall be
invested in a money market fund. One-half of the amount of the Rabbi Trust
established for Executive will be paid on each of January 1, 2001 and July 1,
2001 provided Executive remains an employee on each such date or has been
discharged without Cause.
c. A "Change of Control" shall mean (i) the sale of more than a majority of the
Company's common stock, (ii) a merger in which the Company is not the surviving
company or a majority of the stock of the Company as the surviving company shall
be held by a party or related group of parties (excluding the present holders of
more than 10% of the Company's common stock, Morgens Waterfall, Sun Life and
Keyport Life) or (iii) sale of substantially all of the Company's assets.
6. Incentive Bonus.
a. Executive may be eligible for a bonus ("Normal Incentive Bonus") under the
Company's Senior Management Compensation Plan (the "Plan"). The Plan provides
for a target of $25 million of EBITDA for the Years 1999 and 2000 with amounts
being credited to the Plan pool up to a maximum of $1.2 million ("Cap"). If
Xxxxxxx X. Xxxxxxxxx ceases to be the Company's Chief Executive Officer,
Executive shall be entitled to no less a Normal Incentive Bonus (in terms of a
percentage of all bonuses) than in the prior fiscal year and at least 90% of the
bonus pool under the Plan will be distributed to all Plan participants,
including Executive by March 15 of the following year. In calculating EBITDA
there shall be included any management fees earned by the Company from its Black
Hawk, Colorado subsidiary ("Black Hawk"), but there shall be excluded any Black
Hawk EBITDA until at least a 20% return has been earned on capital invested
(debt and equity) in Black Hawk. Also, if the Company becomes involved in
projects other than Black Hawk which require that the Company invest its funds,
a 20% per annum return on such investment must be earned before
any EBITDA generated from such project will be included in the EBITDA
calculation under the Plan, unless the Company pays more than five times
trailing 12 months' EBITDA, in which case, the ROI will be adjusted accordingly.
Under the Plan the Company's CEO determines in his sole discretion (subject to
approval by the Company's Board of Directors or Compensation Committee) the
persons to whom Normal Incentive Bonuses are paid and the amount thereof.
b. In addition to Normal Incentive Bonuses Executive shall receive a bonus
("Special Incentive Bonus") in an amount equal to one-third of any amount in
excess of $1,200,000 which would otherwise be credited to the Plan pool but for
the Cap until Executive has received Special Incentive Bonuses aggregating
$350,000 during the Term and then shall be entitled to one-sixth (together with
one-sixth for each)* and the other Plan participants 50% of any excess credited
to the Plan pool.
c. For the Year 2001 if the Plan EBITDA target is more than $25 million of
EBITDA, Executive will be entitled to a Special Incentive Bonus based upon a
pro-forma target of $25 million.
d. The amount of the Special Incentive Bonus that has been earned shall be paid
to the Executive on March 15, 2001 and March 15, 2002 provided (i) the
Executive's employment has not been terminated by reason of (A) resignation or
(B) "Cause" (hereinafter defined) and (ii) if the Company terminates for any
reason other than Cause, as the case may be, Executive will be entitled to his
Special Bonus prior to March 15, 2001 or March 15, 2002, as the case may be. If
the Executive's employment has been terminated for (iii) death or (iv)
disability, the Special Incentive Bonus earned for the year of the Executive's
death or disability shall be paid in accordance with Section 7(a)(iii) hereof.
e. On the occurrence of a Change of Control (herebefore defined), at the option
of the Executive:
(i) The greater of the amount earned as a Special Incentive Bonus up until the
time of the Change of Control or $250,000 shall also be placed in the Rabbi
Trust established under 5b and the Executive shall waive the right to any other
amounts under this Section 6(b) or;
(ii) The Executive may elect to continue to participate in the Special Incentive
Bonus.
7. Death and Disability.
a. Upon the death or "Disability" (hereinafter defined) of Executive, the
following amounts will become payable to (i) Executive's "Designated
Beneficiary" in the case of death or (ii) Executive in the case of Disability:
(i) Base Salary shall be paid to the end of the month in which death or
Disability occurs.
(ii) Stay Put Bonus. A "Pro-Rata" (hereinafter defined) portion shall be paid as
soon as practicable after the date of death or Disability.
(iii) Normal Incentive Bonus. Whether Executive shall be entitled to a Normal
Incentive Bonus for the year of his death or Disability shall be determined and
paid in accordance with the Plan as promptly as practicable after the end of
such year, provided that (A) since payment of any Normal Incentive Bonus is
normally at the discretion of the Company's chief executive officer, in the case
of death or Disability the deceased or disabled Executive shall be entitled to
no less a Normal Incentive Bonus (in terms of percentage of all bonuses) than in
the prior fiscal year adjusted however on a "Pro-Rata" basis, and
(iv) Special Incentive Bonus. With respect to payment of a Special Incentive
Bonus in the case of Executive's death or disability, the bonuses shall be paid
promptly after the end of the year in which death or disability occurred, on a
"Pro-Rata" basis to the end of the month in which death or disability occurred.
b. The following terms shall have the following meanings:
(i) "Pro-Rata" - a fraction the numerator of which is the number of days to the
date of death, Disability or discharge without Cause and the denominator of
which is 365.
(ii) "Designated Beneficiary" shall be the person designated in writing by the
Executive prior to the Executive's death and if the Executive fails to designate
a beneficiary or if a designated beneficiary does not survive the Executive, all
amounts payable hereunder shall be paid to the Executive's personal
representative or pursuant to the terms of the Executive's will or the laws of
descent and distribution.
(iii) "Disability" - the Company shall find on the basis of medical evidence
satisfactory to it that Executive is so totally mentally or physically disabled
as to be unable to engage in further employment by Company and that such
disability shall be determined to be such that it will cause, or actually does
cause or has caused, Executive to be absent from work for a period, or aggregate
of periods, in excess of three months in any one twelve month period.
8. Profit-Sharing and 401(k) Plan. In addition to the Base Salary, Stay Put
Bonus and Incentive Bonus, Executive shall be eligible for participation in the
Defined Contribution Plan adopted by Company.
9. Additional Benefits and Compensation. During the Term, Executive shall be
entitled to:
a. life insurance, group health insurance, including major medical and
hospitalization, comparable to such benefits offered to other key executives of
the Company;
b. reimbursement for all reasonable expenses incurred by Executive in connection
with the performance of his duties and in accordance with any applicable policy
of the Company (including 100% of reasonable travel and entertainment expenses),
subject to submission of appropriate documentation therefor; and
10. Termination By Company or By Executive.
a. If the Company shall discharge Executive for "Cause" (hereinafter defined),
Executive shall not be entitled to receive any payment with respect to (i) Base
Salary after the date of discharge, (ii) the Stay Put Bonus and (iii) the
Incentive Bonus.
b. If the Company shall discharge Executive without "Cause", subject to his
obligation to "Mitigate" (hereinafter defined), Executive shall be entitled to
(i) Base Salary to the end of the Term, (ii) his full Stay Put Bonus but with
payment accelerated to the date of discharge and (iii) a Normal Incentive Bonus
"Pro-Rata" to the date of discharge and otherwise subject to the proviso of
Sub-Section 7(a)(iii) and (iv) a Special Incentive bonus "Pro-Rata" to the date
of
discharge and otherwise subject to the proviso of Sub-Section 7(a)(iv).
c. If Executive shall resign prior to the expiration of the Term, he shall not
be entitled to any compensation or benefits from the Company after the date of
his resignation.
d. The following terms shall have the following meanings:
(i) Cause - (A) felony conviction of Executive; (B) a final civil judgment shall
be entered after all appeals shall have been exhausted in which a material
aspect involved Executive's fraud or dishonesty whether or not involving the
Company, provided that the foregoing shall not apply to the action by Xxxxx
Xxxxxxx and other plaintiffs against the Company and other defendants which
involves allegations of violation of Nevada law, including RICO and "fraud" on
the part of the Company, and which on the date hereof is pending in the Federal
District Court for the Central District of California; (C) refusal by Executive
to perform "Reasonable Duties" (hereinafter defined) assigned to him by the
Company's chief executive officer, provided Executive shall fail to correct any
such failure within 30 days after written notice ("Cure Period") or (D) the
Gaming Authorities of the State of Nevada or any other state in which the
Company shall conduct gaming operations shall determine that Executive is
unsuitable to act as an executive of a gaming company in his individual
capacity. "Reasonable Duties" - Executive shall not be required (x) on a
permanent basis to spend more than 50% of his business time outside of Las Vegas
(or be required to change his residence), (y) to expose himself to a risk to his
physical safety or jeopardize his ability to be licensed by any state gaming
authority or (z) perform duties which are inconsistent with his role specified
in Section 1 hereof.
(ii) Mitigate - Executive shall be required to use his best efforts to obtain
gainful employment as similar as possible to his duties with the Company,
provided that (A) a finding by an arbitration tribunal that Executive has failed
to do so will result in the Company being relieved of any obligation to pay
Executive and (B) any amount received by Executive from such employment shall
reduce the amount payable by the Company under Section 10(b).
11. Confidential Information; Non-Competition.
a. During the Term and for a three year period commencing on the termination of
the Term of this Agreement for any reason, (i) Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or its affiliates, and
their respective businesses which shall not be public knowledge (other than
information which becomes public as a result of acts of Executive or his
representatives in violation of this Agreement), including, without limitation,
customer/client lists, matters subject to litigation, and technology or
financial information of the Company or its subsidiaries, and (ii) Executive
shall not, without the prior written consent of the Company, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it in writing.
b. During the Term, the Executive will not, directly or indirectly, own, manage,
operate, control or participate in the ownership, management or control of, or
be connected as an officer, employee, partner, director, or consultant or
otherwise with, or have any financial interest in any hotel or casino.
c. During the Term and for a one-year period commencing on termination of the
Term for any reason, Executive will not solicit or contact any employee of the
Company or its affiliates with a view to inducing or encouraging such employee
to leave the employ of the Company or its affiliates for the purpose of being
employed by Executive, an employer affiliated with Executive, or any competitor
of the Company or any affiliate thereof.
d. Executive acknowledges that the provisions of this Section 11 are reasonable
and necessary for the protection of Company and that the Company will be
irrevocably damaged if such provisions are not specifically enforced.
Accordingly, Executive agrees that, in addition to any other relief to which the
Company may be entitled in the form of actual or punitive damages, the Company
shall be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction (without posting of a bond therefor) for the purposes of
restraining Executive from any actual or threatened breach of such provisions.
12. Miscellaneous
a. This Agreement shall be governed, construed and interpreted in accordance
with the internal laws of the State of Nevada applicable to agreements executed
in that State.
b This Agreement supersedes all prior agreements and understandings among the
parties, and contains the full understanding of the parties hereto with respect
to the subject matter hereof. Any change, modification or waiver of this
Agreement must be in writing, signed by both parties hereto or, in the case of a
waiver, by the party waiving compliance. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original. The captions of
each article and section are intended for convenience only. All references
herein to days, weeks and months shall mean by calendar unless specifically
stated to the contrary. All references herein to the singular shall include the
plural, and all references to gender shall, as appropriate, include other
genders. All representations and warranties made hereunder shall survive the
execution and delivery and closing of this Agreement. At the termination of this
Agreement, Executive agrees to execute in recordable form an instrument
sufficient to evidence said termination.
c. It is the intention of the parties hereto that this Agreement shall not inure
to the benefit of any third parties not parties to this Agreement, and it is
specifically intended that no third party beneficiary relationships, benefits or
obligations shall arise or be deemed to exist as a result of this Agreement.
d. This Agreement shall inure to the benefit of and be binding upon each of the
parties hereto, their heirs, assigns, successors, executors and personal
representatives, however, as a personal service contract, it shall not be
assignable by Executive.
e. The failure or delay by either party in any one or more instances to enforce
one or more of the terms and conditions of this Agreement or to exercise any
right or privilege under this Agreement shall not thereafter be construed as a
waiver of any such term, condition, right or privilege and the same and all
other terms, conditions, rights or privileges under this Agreement shall
continue to remain in full force and effect as though no such failure or delay
had occurred.
f. Any and all disputes between the parties hereto, however significant, arising
out of, relating in any way to or in connection with this Agreement (including
the validity, scope, and enforceability of this arbitration clause) will be
solely settled by an arbitration conducted in accordance with the rules of the
American Arbitration Association or any similar successor body before a panel of
three arbitrators. Each party shall appoint one arbitrator. If a party fails to
nominate an arbitrator within 10 days from the date when the claimant's request
for arbitration has been communicated to the other party in writing, the
appointment shall be made within 10 days thereof by the American Arbitration
Association. The two arbitrators so appointed shall attempt to agree upon the
third arbitrator to act as chairman. If the two arbitrators fail to nominate the
chairman within 10 days from the date of appointment of the later appointed
arbitrator, the chairman shall be selected within 10 days thereof by the
American Arbitration Association. The arbitration shall be conducted with a view
to commencing proceedings within 30 days from the date when the claimant's
request for arbitration was communicated to the other party in writing and to
rendering the award or other judgment not more than 15 days thereafter. The
award or other judgment of the arbitrators shall be final, and the parties agree
to waive their right to any form of appeal, to the greatest extent allowed by
law, and to share equally the fees and expenses of the arbitrators. Judgment
upon any award of the arbitrators may be entered in any court having
jurisdiction or application may be made to such court for the judicial
acceptance of the award and for order of enforcement. Such arbitration shall be
held only in Las Vegas, Nevada. Pending resolution of the dispute, there shall
be no stoppage by either party under the terms hereof; rather, the parties
hereto shall perform diligently under this Agreement pending ultimate resolution
of the dispute. By agreeing to arbitration, neither party hereto is waiving any
benefit of any statute of limitations or other equitable defenses.
g. No voluntary or involuntary successor in interest of the Company shall
acquire any rights or powers under this Agreement, except as specifically set
forth herein. Otherwise, the Company shall not assign all or any part of this
Agreement.
13. Notices. All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing and delivered personally or mailed by
certified or registered mail, return receipt requested, to the following
addresses for each party during the Term or until such time as written notice,
as provided hereby, of a change of address to be used thereafter is given to the
other party, with copies to such legal counsel as each party, from time to time,
may designate:
Company Executive
RIVIERA HOLDINGS CORPORATION Xxxxxx Xxxxxxx
2901 Las Vegas Blvd. So. 0000 Xxx Xxxxx Xxxx. Xx.
Xxx Xxxxx, Xxxxxx 00000 Xxx Xxxxx, Xxxxxx 00000
Attn.: Xxxxxxx X. Xxxxxxxxx, Chief PERSONAL & CONFIDENTIAL
Executive Officer
Notices delivered personally shall be deemed to have been given upon delivery;
notices delivered by certified or registered mail shall be deemed to have been
given seventy-two (72) hours after the date deposited in the mail, except as
otherwise provided herein.
14. Government Approvals. Notwithstanding any other terms and provisions set
forth in this Agreement, it is understood and agreed that the engagement of
Executive hereunder, the obligation of the parties hereto, and the effect of the
Agreement, shall be subject to the approval of each and all of the terms,
covenants and provisions of this Agreement by the Nevada Gaming Authorities and
other Governmental Authorities from whom approval, if any, is required under the
laws of the State of Nevada, the County of Xxxxx, or any and all other
governmental agencies having jurisdiction thereover. Each of the parties hereby
covenant and agree to exercise their best good faith efforts to proceed to
obtain any and all such necessary approvals.
IN WITNESS WHEREOF, the parties herein have entered into this Agreement the day
and year first above mentioned.
COMPANY: EXECUTIVE:
RIVIERA HOLDINGS CORPORATION
By: /s/ /s/
Xxxxxxx X. Xxxxxxxxx Xxxxxx Xxxxxxx
Its: Chief Executive Officer
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* Xxxxx and Xxxxxxxx in the case of Xxxxxxx
Xxxxxxxx and Xxxxxxx in the case of Xxxxx.
Xxxxxxx and Xxxxx in the case of Xxxxxxxx.
