EXHIBIT 10.12
117
EMPLOYMENT AGREEMENT
Agreement, dated as of November 25, 1996, between Rio Hotel
& Casino, Inc., a Nevada corporation with its principal office
located at 0000 X. Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000
(together with its successors or assigns as permitted under this
agreement, the "Company"), and Xxxxx X. Xxxxxx, who resides at
c/o X.X. Xxx 00000, Xxxx, Xxxxxx 00000-0000 (the "Executive").
W I T N E S S E T H:
Whereas, the Company desires to employ the Executive and
enter into an agreement embodying the terms of such employment
(the "Agreement"), and the Executive desires to enter into the
Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.
Now, Therefore, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. DEFINITIONS
(a) "BASE SALARY" shall mean the salary provided for in
Paragraph 4 below subject to such increases as may be made from
time to time.
(b) "BOARD" shall mean the Board of Directors of the
Company.
(c) "BUSINESS DAY" shall mean any day other than a weekend,
a federal or state holiday or a vacation day for the Executive.
(d) "CAUSE" shall mean:
(i) the conviction of (including any act as a result
of pleading nolo contendere) or judgment against Executive
by a civil or criminal court of competent jurisdiction of a
felony, or any other offense involving embezzlement,
misappropriation of funds, any act of moral turpitude or
dishonesty;
(ii) the indictment of Executive by a state or federal
grand jury or the filing of a criminal complaint or
information for a felony, or any other offense involving
embezzlement, misappropriation of funds, any act of moral
turpitude or dishonesty, unless such indictment or filing is
dismissed within one hundred eighty (180) days from the date
of such indictment or filing. The Board may elect to
suspend and extend the Term of Employment by such one
hundred eighty (180) day period or the number of days
actually taken by Executive to dismiss such indictment or
filing, whichever is less; provided that
Executive notifies the Company in writing that Executive
intends to contest in good faith such indictment or filing
and pursues the dismissal of such indictment or filing with
reasonable diligence. During such period of suspension,
Employee may be relieved of his duties, but shall be
entitled to receive his Base Salary;
(iii) the written confession by Executive of
embezzlement, misappropriation of funds or any act of moral
turpitude or dishonesty;
(iv) the denial, revocation or suspension of a license,
qualification or certificate of suitability to Executive by
any of the Gaming Authorities;
(v) any action by Executive that results in (A) a
written communication from the Gaming Authorities to the
Company advising the Company that, or (B) administrative
action by the Gaming Authorities resulting in a
determination that: (Y) any licensing, qualification and/or
approval by the Gaming Authorities with respect to the
Company will be approved only upon terms and conditions
which are unacceptable to the Company; or (Z) the Gaming
Authorities will revoke or suspend any existing license held
by the Company or its subsidiaries;
(vi) the finding by a court of competent jurisdiction
in a criminal or civil action or by the U.S. Securities and
Exchange Commission or state blue sky agency in an
administrative proceeding that Executive has wilfully
violated any federal or state securities law;
(vii) the engagement by Executive in willful and
continued misconduct, or Executive's willful and continued
failure to substantially perform Executive's obligations as
a Director of the Company or as an employee of the Company,
if such failure or misconduct is materially damaging or
materially detrimental to the business and operations of the
Company;
(viii) the use by the Executive of alcohol or any
controlled substance to an extent that it interferes, in the
sole discretion of the Board, on a continuing and material
basis with the performance of Executive's duties under the
Agreement;
(ix) the willful, unauthorized disclosure by the
Executive of Confidential Information, as defined in
Paragraph 13, concerning the Company or any Subsidiary,
unless such disclosure was (A) believed in good faith by the
Executive to be appropriate in the course of properly
carrying out his duties under the Agreement, or (B) required
by an order of a court having jurisdiction over the subject
matter or a summons, subpoena or order in the nature thereof
of any legislative body (including any committee thereof) or
any governmental or administrative agency; or
(x) the performance of services by Executive, other
than in the course of properly carrying out his duties under
the Agreement and as otherwise provided herein, for any
other corporation or person that competes with the Company
or any Subsidiary while the Executive is employed by the
Company.
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(e) "CHANGE IN CONTROL" shall mean the occurrence of any
one of the following events:
(i) any "person" (as that term is used in Section
13(d) and 14(d) of the Securities and Exchange Act of 1934
(the "Exchange Act")), other than Xxxxxxx X. Xxxxxxx XX,
Xxxxx X. Xxxxxxx, Xx. or their affiliates, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
Company representing 25.0% or more of the combined voting
power of Company's outstanding securities ordinarily having
the right to vote at the election of directors; or
(ii) individuals who constitute the Board of Directors
of Company on the date hereof (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to
the date hereof whose election was approved by at least a
majority of the directors comprising the Incumbent Board, or
whose nomination or election was approved by a majority of
the Board of Directors of Company serving under an Incumbent
Board, shall be, for purposes of this clause (ii),
considered as if he or she were a member of the Incumbent
Board; or
(iii) the merger, consolidation or sale of all or
substantially all the assets of Company occurs; or
(iv) a proxy statement is distributed soliciting
proxies from stockholders of the Company, by someone other
than the current management of Company, seeking stockholder
approval of a plan of reorganization, merger or
consolidation of Company with one or more corporations as a
result of which the outstanding shares of Company's
securities are actually exchanged for or converted into cash
or property or securities not issued by Company.
(f) "COMMON STOCK" shall mean the common stock, $.01 par
value, of the Company.
(g) "CONSOLIDATED EBITDA" shall mean the Company's
consolidated "Earnings (Losses) from Operations" plus Interest,
Taxes, Depreciation and Amortization but excluding (i) the sale
of any material asset not in the ordinary course of business, and
(ii) any charge against earnings for stock options pursuant to
Paragraph 6 below. Consolidated EBITDA shall be determined on
the accrual basis of accounting in accordance with generally
accepted accounting principles. Consolidated EBITDA for a
calendar year shall be determined by the Company's independent
accountants based on audited financial statements. Consolidated
EBITDA for a period of less than one year shall be determined by
the Company's independent accountants based on a written report
setting forth the basis of the review.
(h) "CONSTRUCTIVE TERMINATION WITHOUT CAUSE" shall mean
that,
(i) without the Executive's prior written consent, one
or more of the following events occurs:
(1) the Executive is removed from the position of
Executive Vice President and Chief Operating Officer of
the Company and/or the position of
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President and Chief Operating Officer of Rio
Properties, Inc. ("Rio Properties") for any reason
other than the termination of his employment;
(2) the Executive suffers a material diminution
in the authorities, duties or responsibilities normally
associated with the foregoing positions, or there are
assigned to him duties and responsibilities materially
inconsistent with those normally associated with such
positions;
(3) the Executive's Base Salary or annual bonus
opportunity as provided for in Paragraphs 4 and 5
below, respectively, is decreased by the affirmative
act of the Company, or his benefits under any material
employee benefit plan or program of the Company or his
incentive or equity opportunity under any material
incentive or equity program is or are reduced by the
affirmative act of the Company;
(4) the Executive's office location is relocated
outside of the Las Vegas, Nevada metropolitan area; or
(5) the Company fails to obtain a written
agreement from any successors of the Company to assume
and perform the Agreement; and
(ii) within 90 days of learning of the occurrence of
such event (but in no event later than 180 days after the
occurrence of such event), the Executive terminates his
employment with the Company.
(i) "DISABILITY" shall mean the Executive's inability, for
a period of six consecutive months, to render substantially the
services provided for in Paragraph 3(a) below by reason of mental
or physical disability, whether resulting from illness, accident
or otherwise.
(j) "GAMING AUTHORITIES" means the Nevada Gaming Control
Board ("Nevada Board"), the Nevada Gaming Commission ("Nevada
Commission"), the Xxxxx County Liquor and Gaming Licensing Board
("Xxxxx County Board"), and any other federal, state, local or
tribal gaming authority to which the Company is now subject, or
may be subject during the Term of Employment.
(k) "SUBSIDIARY" shall mean any corporation in which the
Company owns 50% or more of the Voting Stock or any other venture
in which it owns 50% or more of the equity.
(l) "TERM OF EMPLOYMENT" shall mean the initial five-year
period specified in Paragraph 2 below and if, but only if,
automatically renewed as provided in Paragraph 2, shall include
the period of such renewal.
(m) "TERMINATION BY THE COMPANY DUE TO FAILURE TO RECEIVE
LICENSE" shall mean a termination of the Executive's employment
by the Company following a failure of Executive to obtain a
license required by the Nevada Board, Nevada Commission or the
Xxxxx County Board and any other federal, state, local or tribal
gaming authority to which the Company is now subject, or may be
subject during the Term of Employment.
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(n) "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
(a) The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, in the
position and with the duties and responsibilities as set forth in
Paragraph 3 below for the Term of Employment, subject to the
terms and conditions of the Agreement.
(b) The initial Term of Employment shall commence on
October 8, 1996 and shall, unless sooner terminated as provided
in Paragraph 10 hereof, terminate at 11:59 p.m. (P.D.T.) on
October 7, 2001; provided that the Term of Employment shall
automatically renew for successive one-year periods unless (i) it
has sooner terminated as provided in Paragraph 10 hereof or
(ii) either Party has notified the other in writing at least 60
days prior to the otherwise scheduled expiration of the Term of
Employment that such Term of Employment shall not so renew.
3. POSITION, DUTIES AND AUTHORITIES
(a) During the Term of Employment, the Executive shall be
employed as Executive Vice President and Chief Operating Officer
of the Company and as President and Chief Operating Officer of
the Company's wholly-owned subsidiary, Rio Properties. Subject
to supervision and in accordance with the policies and directives
established by the Board, and subordinate to and working under
the supervision of the Chief Executive Officer and President of
the Company, in the case of the Company, and the Chief Executive
Officer of Rio Properties, in the case of Rio Properties,
Executive shall be the Chief Operating Officer of the Company and
Rio Properties' day-to-day business operations, with the duties,
responsibilities and authorities customarily associated with such
positions. It is also the intention of the Parties that the
Executive shall serve as a Director of the Company and of Rio
Properties throughout the Term of Employment. The Executive
shall be entitled to no additional remuneration for serving on
the Board or as an officer or director of Rio Properties or any
other Subsidiary.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from engaging in charitable,
community and business affairs, managing his personal investments
and serving as a member of boards of directors of industry
associations or non-profit or for profit organizations and
companies so long as such activities do not materially interfere
in the opinion and sole discretion of the Chief Executive Officer
of the Company with Executive's carrying out his duties and
responsibilities under the Agreement. Executive shall disclose
all relationships covered under this Paragraph 3(b) in the
Executive's personal history disclosure form to be submitted to
the Nevada Gaming Control Board in connection with Executive's
required licensing and such form shall, prior to filing of such
form, be submitted to the Company's Chief Executive Officer for
review. Thereafter, not less often than on January 1 of each
year, Executive shall disclose in writing to the Chief Executive
Officer of the Company any changes to the information with
respect to involvement in such entities or organizations.
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4. BASE SALARY
During the Term of Employment, the Executive shall be paid
by the Company a Base Salary payable no less frequently than in
equal semi-monthly installments at an annualized rate of
(i) $580,000 during the period October 8, 1996 through
December 31, 1996, and (ii) $800,000 thereafter. The annual Base
Salary commencing January 1, 1997 and continuing to December 31,
1997 described in Paragraph 4(ii) shall be comprised of
(a) $580,000 in salary and (b) a guaranteed annual bonus of at
least $220,000, provided that the Executive's bonus opportunity
shall not be limited to the minimum annual guarantee of $220,000
herein described. Thereafter, until the end of the Term of
Employment, the Company may pay to the Executive his annual Base
Salary described in Paragraph 4(ii) in any combination of salary
and guaranteed annual bonus which the Company deems appropriate.
The guaranteed annual bonus payable under this Paragraph 4 is not
to be offset against or reduced by any bonus payable under
Paragraph 5 hereof.
5. PERFORMANCE BONUS
The Company shall pay the Executive performance bonuses for
each year during the Term of Employment in amounts determined in
accordance with Exhibit A hereto.
6. STOCK OPTIONS
The Executive shall be eligible for participation in the
Company's 1995 Long Term Incentive Plan, as amended from time to
time.
7. EMPLOYEE BENEFIT PROGRAMS
(a) During the Term of Employment, the Executive shall be
entitled, at the Company's expense, to medical, surgical,
hospitalization, dental and visual insurance coverage (which may
include any insured program provided by the Company to its
employees) providing him with 100% of all expenses both covered
and paid for by the Company's insurance program(s) or plan(s).
(b) During the Term of Employment, the Executive shall also
be provided with long-term disability insurance which shall
provide the Executive with an annual benefit of fifty percent
(50%) of Base Salary continued until age 65 or until the
Executive dies or is no longer disabled, if sooner. To the
extent available, the Executive shall be provided an opportunity
to purchase additional long-term disability insurance, at his own
expense. To the extent possible, the amount of long-term
disability insurance described in the first two sentences of this
Paragraph 7(b) shall be provided by an individual policy that
gives the Executive the right to assume the policy in the event
of his termination of employment, provided that the amount of
such insurance to be so provided shall be offset by long-term
disability insurance coverage provided to the Executive under the
Company's employee long-term disability insurance programs
described in Paragraph 7(d) below.
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(c) During the Term of Employment, the Company shall
provide the Executive, subject to insurability as a normal risk
and at reasonable cost, with life insurance coverage in an amount
equal to no less than three times the sum of the Executive's then
current Base Salary plus performance bonus amount determined on
the basis of 100% of the target bonus for the year in question
being achieved. To the extent available, the Executive shall be
provided an opportunity to purchase additional life insurance, at
his own expense, up to two times his then current total cash
compensation as described in the preceding sentence. To the
extent possible, the amount of life insurance described in the
first two sentences of this Paragraph 7(c) shall be provided by
an individual policy that gives the Executive the right to assume
the policy in the event of his termination of employment,
provided that the amount of such insurance to be so provided
shall be offset by life insurance coverage provided to the
Executive under the Company's employee group life insurance
programs described in Paragraph 7(d) below.
(d) During the Term of Employment, the Executive shall be
entitled to participate in all employee incentive and benefit
programs of the Company now or hereafter made available to the
Company's senior 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
and dental coverage, sick leave (including salary continuation
arrangements), long-term disability, holidays and up to four
weeks annually of vacations.
(e) During the Term of Employment, the Executive shall be
entitled to four (4) weeks paid vacation per calendar year. In
lieu of utilizing such paid vacation in any calendar year, the
Executive shall have the right to either (i) receive cash in an
amount equivalent to two (2) weeks of annual Base Salary, or (ii)
defer two (2) weeks of such paid vacation to the next calendar
year. Notwithstanding the foregoing, the Executive shall be
entitled to receive no more than four (4) weeks of annual Base
Salary in lieu of paid vacation in any calendar year. Except as
expressly set forth in Paragraph 7(e)(i) and (ii) herein, all
paid vacation benefits granted hereunder attributable to any
calendar year shall terminate on December 31 of said calendar
year.
8. RELOCATION EXPENSE, BUSINESS EXPENSE REIMBURSEMENT AND
PERQUISITES
(a) The Company shall pay the costs associated with the
Executive's relocation from Reno to Las Vegas, Nevada including
(i) costs associated with packing, moving and unpacking the
Executive's household goods, and (ii) the Executive's reasonable
temporary living expenses while he looks for a home in Las Vegas.
(b) During the Term of Employment, the Executive shall be
entitled to receive reimbursement by the Company, upon submission
of adequate documentation, for all reasonable out-of-pocket
expenses incurred by him in performing services under the
Agreement. Any legal fees and expenses incurred in connection
with the preparation and negotiation of the Agreement up to a
maximum of $20,000 shall be paid by the Company.
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(c) During the Term of Employment, the Executive shall be
entitled to use of an automobile and reimbursement for all
operating expenses associated therewith, including, without
limitation, collision and liability insurance. The Executive
shall have the right to choose the automobile; provided however,
the retail value of such automobile, excluding sales taxes and
licensing fees, shall not exceed $50,000.
(d) During the Term of Employment, the Executive shall be
entitled to an individual country club membership, along with
reimbursement for all reasonable business expenses associated
therewith, at a country club in the Las Vegas, Nevada
metropolitan area.
9. DEFERRED COMPENSATION
The Executive shall be entitled to defer up to 25% of his
Base Salary and any performance or other bonus for each calendar
year pursuant to a compensation deferral program to be adopted by
the Company.
10. TERMINATION OF EMPLOYMENT
(a) Termination Due to Death or Disability. In the event
of the termination of the Executive's employment under the
Agreement due to his death or Disability, the Executive or his
legal representatives, as the case may be, shall be entitled to:
(i) (A) in the case of death, continued Base Salary at
the rate in effect at the time of his death for a period of
3 months following the month in which such termination of
employment due to death occurs, or (B) in the case of
Disability, the disability benefit available under and only
to the extent of insurance maintained as provided in
Paragraph 7(b) above;
(ii) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(iii) a pro rata performance bonus for the year in
which his employment terminates due to death or Disability
based on performance in relation to the Consolidated EBITDA
targets for the period ending with the end of the month
immediately prior to the termination of his employment;
(iv) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(v) any deferred compensation pursuant to Paragraph 9,
including any interest accrued on such deferred amounts; and
(vi) any other compensation and benefits to which he or
his legal representatives may be entitled under applicable
plans, programs and agreements of the Company, including,
without limitation, life insurance as provided in
Paragraph 7(c) above.
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(b) Termination by the Company for Cause. At any time
after an event constituting Cause, the Company shall give the
Executive written notice of its intention to terminate him for
Cause, specifying in such notice the event forming the basis for
Cause. Subject only to the following sentence, termination shall
be effective immediately upon delivery of notice hereunder. If
the written notice is of an event constituting Cause under
Paragraph 1(d)(i) or 1(d)(viii), and if the event is capable of
being cured, the Executive shall have ten Business Days following
actual receipt of the notice of termination in which to cure, so
long as Executive advises the Company in writing within 48 hours
of receiving the notice of termination of Executive's intention
to attempt cure. In the event the Executive's employment is
terminated by the Company for Cause, the Executive shall be
entitled to:
(i) Base Salary at the rate in effect at the time of
his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation, pursuant to Paragraph 9
hereof including any interest accrued on such deterred
amounts; and
(v) any other compensation and benefits to which
he may be entitled under applicable plans, programs and
agreements of the Company.
The Executive's entitlement to the foregoing shall be
without prejudice to the right of the Company for any
damages or other legal or equitable remedy to which the
Company or a Subsidiary may be entitled as a result of such
Cause; provided, however, that offset shall not be available
to the Company in any event.
(c) Termination Without Cause or Constructive Termination
Without Cause. In the event the Executive's employment is
terminated by the Company without Cause (which shall not include
a termination pursuant to Paragraph 10(a)) or in the event of a
Constructive Termination Without Cause, the Executive shall be
entitled to those items described in the subparagraphs (i)
through (v) hereof. Termination Without Cause shall be effective
immediately, unless a later date is stated, upon delivery of a
written notice of such termination from the Company to Executive.
In the event Executive elects to resign based upon a Constructive
Termination Without Cause, the Executive shall give written
notice thereof to the Company and state therein the effective
date of such resignation.
(i) continued Base Salary payments for the remainder
of Term of Employment plus 100% of such amount
(collectively, the "Base Salary Termination Payment").
Notwithstanding the actual amount of the Base Salary
Termination Payment, however, Executive shall receive no
less than $1 million and no more than $2 million. The
Executive may elect, at the Executive's option, to receive
the Base Salary Termination
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Payment either (A) over the remainder of the original Term
of Employment (as if the same had not been terminated
hereunder), or (B) in a lump-sum payment promptly following
termination of the Executive's employment;
(ii) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(d) Termination by the Company Due to Failure to Receive
License. In the event of a Termination by the Company Due to
Failure to Receive License, the Executive shall be entitled to
those items specified in subparagraphs (i) through (v) hereof.
The effective date of the Termination by the Company Due to
Failure to Receive License shall be as stated in a written notice
from the Company to Executive.
(i) Base Salary at the rate in effect at the time of
his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(e) Voluntary Termination. A "Voluntary Termination" shall
mean a termination of employment by the Executive on his own
initiative other than a termination under Paragraph 10(a) or
10(c). In the event of a Voluntary Termination, the Executive
shall be entitled to:
(i) Base Salary at the rate in effect at the time of
his termination through the date of termination of this
employment;
(ii) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
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(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
A Voluntary Termination shall not, solely due to a
Voluntary Termination, be deemed a breach of this Agreement
and shall be effective upon the expiration of 60 days after
written notice delivered to the Company, unless another
period of time is agreed to in writing by the Parties.
(f) No Mitigation; No Offset. In the event of any
termination of the Executive's employment under the Agreement, he
shall be under no obligation to seek other employment, and there
shall be no offset against amounts due him under the Agreement on
account of any remuneration attributable to any subsequent
employment that he may obtain.
(g) Nature of Payments. Any amounts due the Executive
under the Agreement in the event of any termination of his
employment with the Company are in the nature of severance
payments, or liquidated damages which contemplate both direct
damages and consequential damages that he may suffer as a result
of the termination of his employment, or both, and are not in the
nature of a penalty.
11. CHANGE OF CONTROL
In the event a Change of Control occurs, the Executive shall
be entitled to:
(a) a lump-sum payment equal to the Base Salary due him for
the remainder of Term of Employment; provided, however, such
amount shall be no less than an amount equal to Base Salary
payments for a period of 12 months;
(b) a lump-sum payment equal to the Base Salary due him for
the remainder of Term of Employment in lieu of any performance or
other bonus for the fiscal period in which the Change of Control
occurs; provided, however, such amount shall be no less than an
amount equal to Base Salary payments for a period of 12 months;
(c) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(d) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(e) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred amounts;
and
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(f) any other compensation and benefits to which he may be
entitled under applicable plans, programs and agreements of the
Company.
Nothwithstanding the foregoing, in no event shall the
aggregate amount due to the Executive pursuant to Paragraphs
11(a) and (b) above exceed $3,000,000.
12. COVENANT NOT TO COMPETE
In the event of a Voluntary Termination under
Paragraph 10(e) above or a Termination Without Cause or a
Constructive Termination Without Cause under Paragraph 10(c)
above, the Executive shall not, for the remaining Term of
Employment or 12 months, whichever is shorter, engage in
competition with the Company. For purposes of this Paragraph 12,
the Executive shall be engaging in competition with the Company
if he engages in the casino and gaming business in Xxxxx County,
Nevada or any other location in which the Company is engaging in
the casino and gaming business at the time of the termination of
the Executive's employment, whether as an employee, Executive,
partner, principal, agent, representative, stockholder or
consultant (other than as a holder of not more than a 10% equity
interest) or in any other corporate or representative capacity,
so long as the Company is engaged in the casino and gaming
business in the location in question.
13. COVENANTS TO PROTECT CONFIDENTIAL INFORMATION
The Executive shall not, during the Term of Employment or
thereafter, without prior written consent of the Company,
divulge, publish or otherwise disclose to any other person any
Confidential Information regarding the Company or any Subsidiary
except in the course of carrying out his responsibilities on
behalf of the Company (e.g., providing information to the
Company's attorneys, accountants, bankers, etc.) or if required
to do so pursuant to the order of a court having jurisdiction
over the subject matter or a summons, subpoena or order in the
nature thereof of any legislative body (including any committee
thereof) or any governmental or administrative agency. For this
purpose, Confidential Information shall include, but not be
limited to, the Company's financial, real estate, marketing and
promotional plans and strategies, customer lists and customer
data bases. Confidential Information does not include
information that becomes available to the public other than
through a breach of the Agreement on the part of the Executive.
14. INDEMNIFICATION
(a) The Company shall indemnify the Executive to the
fullest extent permitted by Nevada law in effect as of the date
hereof against all costs, expenses, liabilities and losses
(including, without limitation, attorneys' fees, judgments,
fines, penalties, ERISA excise taxes and amounts paid in
settlement) reasonably incurred by the Executive in connection
with a Proceeding. For the purposes of this Paragraph 14, a
"Proceeding" shall mean any action, suit or proceeding by reason
of the fact that he is or was an officer, director or employee,
trustee or agent of any other entity at the request of the
Company.
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(b) The Company shall advance to the Executive all
reasonable costs and expenses incurred by him in connection with
a Proceeding within 20 days after receipt by the Company of a
written request for such advance. Such request shall include an
itemized list of the costs and expenses and an undertaking by the
Executive to repay the amount of such advance if it shall
ultimately be determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company against
such costs and expenses.
(c) The Executive shall not be entitled to indemnification
under this Paragraph 14 unless he meets the standard of conduct
specified in the Nevada Revised Statutes. Actions that fail to
meet the aforementioned standard of conduct shall include, but
are not limited to, the failure to act in good faith, failure to
act in the best interests of the Company, breach of the duty of
loyalty, appropriation of business opportunities, violation of
the provisions of the articles of incorporation or the bylaws of
the Company, violation of state or federal securities laws and
violation of criminal law. Notwithstanding the foregoing, to the
extent permitted by law neither N.R.S. 78.751(3) nor any similar
provision shall apply to indemnification under this Paragraph 14,
so that if the Executive in fact meets the applicable standard of
conduct, he shall be entitled to such indemnification whether or
not the Company (whether by the board of directors, the
stockholders, independent legal counsel or other party)
determines that indemnification is proper because he has met such
applicable standard of conduct. Neither the failure of the
Company to have made such a determination prior to the
commencement by the Executive of any suit or arbitration
proceeding seeking indemnification, nor a determination by the
Company that he has not met such applicable standard of conduct
shall create a presumption that he has not met the applicable
standard of conduct.
(d) The Company shall not settle any Proceeding or claim in
any manner which would impose on the Executive any penalty or
limitation without his prior written consent. Neither the
Company nor the Executive will unreasonably withhold its or his
consent to any proposed settlement.
15. 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 the
Agreement may be assigned or transferred by the Executive or the
Company except that (a) such rights or obligations of the Company
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 the
Agreement, either contractually or as a matter of law, and (b)
such obligations of the Company may be transferred by the
Executive by will or pursuant to the laws of descent or
distribution. The Company shall take all reasonable legal action
necessary to effect such assignment and assumption of the
Company's liabilities, obligations and duties under the Agreement
in circumstances described in clause (a) of the preceding
sentence.
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16. REPRESENTATION
The Company and the Executive respectively represent and
warrant to each other that, subject to any approval that may be
necessary from the Nevada Commission, each respectively is fully
authorized and empowered to enter into the Agreement and that its
or his entering into the Agreement and the performance of its or
his respective obligations under the Agreement will not violate
any agreement between the Company or the Executive respectively
and any other person, firm or organization or any law or
governmental regulation.
17. ENTIRE AGREEMENT
The 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.
18. AMENDMENT OR WAIVER
The Agreement cannot be changed, modified or amended without
the consent in writing of both the Executive and the Company. No
waiver by either Party at any time of any breach by the other
Party of any condition or provision of the Agreement shall be
deemed a waiver of a similar or dissimilar condition or provision
at the same or at any prior or subsequent time. Any waiver must
be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
19. SEVERABILITY
In the event that any provision or portion of the agreement
shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of the
Agreement shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.
20. SURVIVORSHIP
The respective rights and obligations of the Parties
hereunder shall survive any termination of the Agreement to the
extent necessary to the intended preservation of such rights and
obligations.
21. GOVERNING LAW
The Agreement shall be governed by and construed and
interpreted in accordance with the laws of Nevada without
reference to principles of conflict of laws.
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22. SETTLEMENT OF DISPUTES
Any disputes regarding the interpretation of the Agreement
shall be resolved by arbitration to be held in Nevada in
accordance with the rules and procedures of the American
Arbitration Association. The prevailing party in such proceeding
shall be entitled to recover the costs of the arbitration or
litigation from the other party, including, without limitation,
attorneys' fees.
23. NOTICES
Any notice given to either party shall be in writing and,
except as provided in the third sentence of Paragraph 10(b)
above, 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 or the Board:
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Chief Executive Officer
With a copy to:
General Counsel
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
If to the Executive:
Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
24. HEADINGS
The headings of the paragraphs contained in the Agreement
are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of the
Agreement.
25. COUNTERPARTS
The Agreement may be executed in two or more counterparts.
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26. TAXES
Compensation payable hereunder is gross and shall be subject
to such withholding taxes and other taxes as may be required by
law.
27. ACKNOWLEDGMENT
Executive acknowledges that he has been given a reasonable
period of time to study this Agreement before signing it.
Executive certifies that he has fully read, has received an
explanation of, and completely understands the terms, nature, and
effect of this Agreement. Executive further acknowledges that he
is executing this Agreement freely, knowingly, and voluntarily
and that Executive's execution of this Agreement is not the
result of any fraud, duress, mistake, or undue influence
whatsoever. In executing this Agreement, Executive does not rely
on any inducements, promises, or representations by the Company
other than the terms and conditions of this Agreement.
In Witness Whereof, the undersigned have executed the
Agreement as of the date first written above.
RIO HOTEL & CASINO, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
Its President
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
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EXHIBIT A
TO EMPLOYMENT AGREEMENT
DETERMINATION OF PERFORMANCE BONUS AMOUNTS
Executive shall be entitled to a performance bonus pursuant
to the terms of a management incentive compensation plan to be
approved by the Company's Compensation Committee and ratified by
the Board.
A-1
EXHIBIT B
TO EMPLOYMENT AGREEMENT
1995 LONG-TERM INCENTIVE PLAN ("LTIP")
STOCK OPTION GRANT
EMPLOYEE: Xxxxx X. Xxxxxx DATE OF GRANT: October 8, 1996
GRANT NO.: OPTION EXERCISE PRICE:
TYPE OF OPTION: Non-Qualified OPTION SHARES: 500,000
Subject to the terms of the LTIP and pursuant to this stock
option grant, Rio Hotel & Casino, Inc. (the "Company") hereby
grants the option to purchase the above described number of
shares of Rio Hotel & Casino, Inc. Common Stock exercisable at
the Option Price stated above.
Options granted hereunder shall be exercisable only to the
extent of "vesting." Vesting occurs when the Employee remains
continuously employed with the Company or its subsidiaries on the
date upon which the options are scheduled to vest in order to
have any right to exercise such options and any options which are
scheduled to vest thereafter. If the Employee has failed to
remain continuously employed with the Company or its subsidiaries
on a date upon which options are scheduled to vest, the Employee
shall have no right to nor be entitled to exercise those options
or any other options which may be scheduled to vest thereafter.
The vesting schedule for stock options under this stock option
grant is a follows:
October 8, 1996 (1) - 20% of Options will vest;
October 8, 1997 (1) - 40% of Options will vest;
October 8, 1998 (1) - 60% of Options will vest;
October 8, 1998 (1) - 80% of Options will vest;
October 8, 2000 (1) - 90% of Options will vest;
October 7, 2001 (1) - 100% of Options will vest.
Notwithstanding the foregoing, the options granted hereunder
will become fully vested and become exercisable in full upon a
Change in Control as defined in the Employment Agreement between
the Company and the Executive dated as of October 8, 1996 (the
"Employment Agreement").
I. Except as may be otherwise provided in the LTIP, vested
options granted thereunder shall expire the earlier of either:
A. ten (10) years after the Date of Grant;
B-1
B. three (3) years after the Employee's retirement
from the Company or any of its subsidiaries after the
Employee attains the age of 72 years;
C. three (3) years after the date of the Employee's
death;
D. three (3) months after the Employee's termination
from the Company or any of its subsidiaries (except for
Termination Without Cause or Constructive Termination
Without Cause) for reasons other than death or retirement
after attaining the age of 72 years; or
E. two (2) years after the Employee's Termination
Without Cause, Constructive Termination Without Cause or
following a Change of Control.
This grant is made pursuant to the terms and conditions of
the LTIP, a copy of which is attached hereto as Exhibit "A," and
by this reference made a part hereof and in addition is subject
to the following limitations:
I. If Employee resigns his position with the Company or
any of its subsidiaries without the written consent of the
Company, and accepts employment, consulting, or other
compensation for services, within six (6) months after Employee's
last day of employment with the Company or any of its
subsidiaries from a competitor company, Employee shall:
A. Forfeit all vested options in Employee's account
which were issued subject to this grant; and
B. Reimburse the Company for all profits earned
pursuant to any exercise of these options within six (6)
months prior to or six (6) months subsequent to the date of
giving notice of Employee's resignation.
II. A "competitor company" is defined as any gaming or
hotel company, or any affiliate thereof, located within fifty
miles of any location in which the Company conducts business.
III. "Profits" are defined as the differential between the
exercise price and the last reported sale price on the day of
exercise, multiplied by the number of shares exercised.
B-2
In Witness Whereof, the undersigned executes this stock
option grant as of the first date set forth herein:
RIO HOTEL & CASINO, INC.
Long Term Incentive Plan
Committee
By:
Xxxxxx X. Xxxxxxx
By:
Xxxxx X. Xxxxxx
Accepted and agreed to as of the Date of the Grant:
Name: Social Security Number:
Residence Address:
Street Address City, State, Zip Code
B-3
EMPLOYMENT AGREEMENT
Agreement, dated as of March 7, 1997, between Rio Hotel &
Casino, Inc., a Nevada corporation with its principal office
located at 0000 X. Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000
(together with its successors or assigns as permitted under this
agreement, the "Company"), and Xxxxxx X. Xxxxxxxxx (the
"Executive").
W I T N E S S E T H:
Whereas, the Company desires to employ the Executive and
enter into an agreement embodying the terms of such employment
(the "Agreement"), and the Executive desires to enter into the
Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.
Now, Therefore, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. DEFINITIONS
(a) "BASE SALARY" shall mean the salary provided for in
Paragraph 4 below subject to such increases as may be made from
time to time.
(b) "BOARD" shall mean the Board of Directors of the
Company.
(c) "BUSINESS DAY" shall mean any day other than a
weekend, a federal or state holiday or a vacation day for the
Executive.
(d) "CAUSE" shall mean:
(i) the conviction of (including any act as a
result of pleading nolo contendere) or judgment against the
Executive by a civil or criminal court of competent
jurisdiction of a felony, or any other offense involving
embezzlement, misappropriation of funds, any act of moral
turpitude or dishonesty;
(ii) the indictment of the Executive by a state or
federal grand jury or the filing of a criminal complaint or
information for a felony, or any other offense involving
embezzlement, misappropriation of funds, any act of moral
turpitude or dishonesty, unless such indictment or filing is
dismissed within one hundred eighty (180) days from the date
of such indictment or filing. The Board may elect to
suspend and extend the Term of Employment by such one
hundred eighty (180) day period or the number of days
actually taken by the Executive to dismiss such indictment
or filing, whichever is less; provided that the Executive
notifies the Company in writing that the Executive intends
to contest in
good faith such indictment or filing and pursues the
dismissal of such indictment or filing with reasonable
diligence. During such period of suspension, Employee may
be relieved of his duties, but shall be entitled to receive
his Base Salary;
(iii) the written confession by t he Executive of
embezzlement, misappropriation of funds or any act of moral
turpitude or dishonesty;
(iv) the denial, revocation or suspension of a
license, qualification or certificate of suitability to the
Executive by any of the Gaming Authorities;
(v) any action by the Executive that results in (A)
a written communication from the Gaming Authorities to the
Company advising the Company that, or (B) administrative
action by the Gaming Authorities resulting in a
determination that: (Y) any licensing, qualification and/or
approval by the Gaming Authorities with respect to the
Company will be approved only upon terms and conditions
which are unacceptable to the Company; or (Z) the Gaming
Authorities will revoke or suspend any existing license held
by the Company or its subsidiaries;
(vi) the finding by a court of competent
jurisdiction in a criminal or civil action or by the U.S.
Securities and Exchange Commission or state blue sky
agency in an administrative proceeding that the Executive
has wilfully violated any federal or state securities law;
(vii) the engagement by the Executive in willful and
continued misconduct, or the Executive's willful and
continued failure to substantially perform the Executive's
obligations as a Director of the Company or as an employee
of the Company, if such failure or misconduct is materially
damaging or materially detrimental to the business and
operations of the Company;
(viii) the use by the Executive of alcohol or any
controlled substance to an extent that it interferes, in the
sole discretion of the Board, on a continuing and material
basis with the performance of the Executive's duties under
the Agreement;
(ix) the willful, unauthorized disclosure by the
Executive of Confidential Information, as defined in
Paragraph 13, concerning the Company or any Subsidiary,
unless such disclosure was (A) believed in good faith by the
Executive to be appropriate in the course of properly
carrying out his duties under the Agreement, or (B) required
by an order of a court having jurisdiction over the subject
matter or a summons, subpoena or order in the nature thereof
of any legislative body (including any committee thereof) or
any governmental or administrative agency; or
(x) the performance of services by the Executive,
other than in the course of properly carrying out his duties
under the Agreement and as otherwise provided herein, for
any other corporation or person that competes with the
Company or any Subsidiary while the Executive is employed by
the Company.
-2-
(e) "CHANGE IN CONTROL" shall mean the occurrence of any
one of the following events:
(i) any "person" (as that term is used in Section
13(d) and 14(d) of the Securities and Exchange Act of 1934
(the "Exchange Act")), other than Xxxxxxx X. Xxxxxxx XX,
Xxxxx X. Xxxxxxx, Xx. or their affiliates, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 25.0% or more of the combined voting
power of the Company's outstanding securities ordinarily
having the right to vote at the election of directors; or
(ii) individuals who constitute the Board of
Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was
approved by at least a majority of the directors comprising
the Incumbent Board, or whose nomination or election was
approved by a majority of the Board of Directors of the
Company serving under an Incumbent Board, shall be, for
purposes of this clause (ii), considered as if he or she
were a member of the Incumbent Board; or
(iii) the merger, consolidation or sale of all or
substantially all the assets of the Company occurs; or
(iv) a proxy statement is distributed soliciting
proxies from stockholders of the the Company, by someone
other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or
consolidation of the Company with one or more corporations
as a result of which the outstanding shares of the Company's
securities are actually exchanged for or converted into cash
or property or securities not issued by the Company.
(f) "COMMON STOCK" shall mean the common stock, $.01 par
value, of the Company.
(g) "CONSOLIDATED EBITDA" shall mean the Company's
consolidated "Earnings (Losses) from Operations" plus Interest,
Taxes, Depreciation and Amortization but excluding (i) the sale
of any material asset not in the ordinary course of business, and
(ii) any charge against earnings for stock options pursuant to
Paragraph 6 below. Consolidated EBITDA shall be determined on
the accrual basis of accounting in accordance with generally
accepted accounting principles. Consolidated EBITDA for a
calendar year shall be determined by the Company's independent
accountants based on audited financial statements. Consolidated
EBITDA for a period of less than one year shall be determined by
the Company's independent accountants based on a written report
setting forth the basis of the review.
(h) "CONSTRUCTIVE TERMINATION WITHOUT CAUSE" shall mean
that,
(i) without the Executive's prior written consent,
one or more of the following events occurs:
-3-
(1) the Executive is removed from the position
of Vice President, Treasurer and Chief Financial
Officer of the Company and/or the position of Vice
President, Treasurer and Chief Financial Officer of
Rio Properties, Inc. ("Rio Properties") for any
reason other than the termination of his employment;
(2) the Executive suffers a material
diminution in the authorities, duties or
responsibilities normally associated with the
foregoing positions, or there are assigned to him
duties and responsibilities materially inconsistent
with those normally associated with such positions;
(3) the Executive's Base Salary or annual
bonus opportunity as provided for in Paragraphs 4 and
5 below, respectively, is decreased by the affirmative
act of the Company, or his benefits under any material
employee benefit plan or program of the Company or his
incentive or equity opportunity under any material
incentive or equity program is or are reduced by the
affirmative act of the Company;
(4) the Executive's office location is
relocated outside of the Las Vegas, Nevada
metropolitan area; or
(5) the Company fails to obtain a written
agreement from any successors of the Company to assume
and perform the Agreement; and
(ii) within 90 days of learning of the occurrence of
such event (but in no event later than 180 days after the
occurrence of such event), the Executive terminates his
employment with the Company.
(i) "DISABILITY" shall mean the Executive's inability, for
a period of six consecutive months, to render substantially the
services provided for in Paragraph 3(a) below by reason of mental
or physical disability, whether resulting from illness, accident
or otherwise.
(j) "GAMING AUTHORITIES" means the Nevada Gaming Control
Board ("Nevada Board"), the Nevada Gaming Commission ("Nevada
Commission"), the Xxxxx County Liquor and Gaming Licensing Board
("Xxxxx County Board"), and any other federal, state, local or
tribal gaming authority to which the Company is now subject, or
may be subject during the Term of Employment.
(k) "SUBSIDIARY" shall mean any corporation in which the
Company owns 50% or more of the Voting Stock or any other venture
in which it owns 50% or more of the equity.
(l) "TERM OF EMPLOYMENT" shall mean the initial three-year
period specified in Paragraph 2 below and if, but only if,
automatically renewed as provided in Paragraph 2, shall include
the period of such renewal.
(m) "TERMINATION BY THE COMPANY DUE TO FAILURE TO RECEIVE
LICENSE" shall mean a termination of the Executive's employment
by the Company following a failure of the Executive to obtain a
license required by the Nevada Board, Nevada Commission or the
Xxxxx County
-4-
Board and any other federal, state, local or tribal gaming
authority to which the Company is now subject, or may be subject
during the Term of Employment.
(n) "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
(a) The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, in the
position and with the duties and responsibilities as set forth in
Paragraph 3 below for the Term of Employment, subject to the
terms and conditions of the Agreement.
(b) The initial Term of Employment shall commence on
January 1, 1997 and shall, unless sooner terminated as provided
in Paragraph 10 hereof, terminate at 11:59 p.m. (P.D.T.) on
December 31, 1999; provided that the Term of Employment shall
automatically renew for successive one-year periods unless (i) it
has sooner terminated as provided in Paragraph 10 hereof or
(ii) either Party has notified the other in writing at least 60
days prior to the otherwise scheduled expiration of the Term of
Employment that such Term of Employment shall not so renew.
3. POSITION, DUTIES AND AUTHORITIES
(a) During the Term of Employment, the Executive shall be
employed as Vice President, Treasurer and Chief Financial Officer
of the Company and as Vice President, Treasurer and Chief
Financial Officer of the Company's wholly-owned subsidiary, Rio
Properties. Subject to supervision and in accordance with the
policies and directives established by the Board, and subordinate
to and working under the supervision of the Chief Executive
Officer and President of the Company, in the case of the
Company, and the Chief Operating Officer of Rio Properties in the
case of Rio Properties, the Executive shall be the Chief
Financial Officer of the Company's and Rio Properties' day-to-
day business operations, with the duties, responsibilities and
authorities customarily associated with such positions. The
Executive shall be entitled to no additional remuneration for
serving as an officer of Rio Properties or any other Subsidiary.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from engaging in charitable,
community and business affairs, managing his personal investments
and serving as a member of boards of directors of industry
associations or non-profit or for profit organizations and
companies so long as such activities do not materially interfere
in the opinion and sole discretion of the Chief Executive Officer
of the Company with the Executive's carrying out his duties and
responsibilities under the Agreement. The Executive shall
disclose all relationships covered under this Paragraph 3(b) in
the Executive's personal history disclosure form to be submitted
to the Nevada Gaming Control Board in connection with the
Executive's required licensing and such form shall, prior to
filing of such form, be submitted to the Company's Chief
Executive Officer for review. Thereafter, not less often than
on January 1
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of each year, the Executive shall disclose in writing to the
Chief Executive Officer of the Company any changes to the
information with respect to involvement in such entities or
organizations.
4. BASE SALARY
During the Term of Employment, the Executive shall be paid
by the Company a Base Salary payable no less frequently than in
equal semi-monthly installments at an annualized rate of
$255,000; subject to increase as may be determined by the Company
within its sole discretion and as set forth below.
Notwithstanding the foregoing, the Base Salary shall be increased
each January 1 during the term hereof in an amount equal to the
percentage increase in the Consumer Price Index - All Urban Areas
("CPI") issued by the U.S. Department of Labor, Bureau of Labor
Statistics, for the preceding calendar year; provided, however,
any such increase in Base Salary shall never exceed six percent
(6%) in any one year.
5. PERFORMANCE BONUS
The Company shall pay the Executive performance bonuses for
each year during the Term of Employment in amounts determined in
accordance with Exhibit A hereto.
6. STOCK OPTIONS
The Executive shall be eligible for participation in the
Company's 1995 Long Term Incentive Plan, as amended from time to
time.
7. EMPLOYEE BENEFIT PROGRAMS
(a) During the Term of Employment, the Executive and his
dependents shall be entitled, at the Company's expense, to
medical, surgical, hospitalization, dental and visual insurance
coverage (which may include any insured program provided by the
Company to its employees) providing him with 100% of all expenses
both covered and paid for by the Company's insurance program(s)
or plan(s).
(b) During the Term of Employment, the Executive shall
also be provided with long-term disability insurance which shall
provide the Executive with an annual benefit of fifty percent
(50%) of Base Salary continued until age 65 or until the
Executive dies or is no longer disabled, if sooner. To the
extent available, the Executive shall be provided an opportunity
to purchase additional long-term disability insurance, at his own
expense. To the extent possible, the amount of long-term
disability insurance described in the first two sentences of this
Paragraph 7(b) shall be provided by an individual policy that
gives the Executive the right to assume the policy in the event
of his termination of employment, provided that the amount of
such insurance to be so provided shall be offset by long-term
disability insurance coverage provided to the Executive under the
Company's employee long-term disability insurance programs
described in Paragraph 7(d) below.
-6-
(c) During the Term of Employment, the Company shall
provide the Executive, subject to insurability as a normal risk
and at reasonable cost, with life insurance coverage in an amount
equal to $500,000. To the extent available, the Executive shall
be provided an opportunity to purchase additional life insurance,
at his own expense. To the extent possible, the amount of life
insurance described in the first two sentences of this Paragraph
7(c) shall be provided by an individual policy that gives the
Executive the right to assume the policy in the event of his
termination of employment, provided that the amount of such
insurance to be so provided shall be offset by life insurance
coverage provided to the Executive under the Company's employee
group life insurance programs described in Paragraph 7(d) below.
(d) During the Term of Employment, the Executive shall be
entitled to participate in all employee incentive and benefit
programs of the Company now or hereafter made available to the
Company's senior 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
and dental coverage, sick leave (including salary continuation
arrangements), long-term disability, holidays and up to three
weeks annually of vacations.
(e) During the Term of Employment, the Executive shall be
entitled to three weeks paid vacation per calendar year. In
lieu of utilizing such paid vacation in any calendar year, the
Executive shall have the right to either (i) receive cash in an
amount equivalent to one week of annual Base Salary, or (ii)
defer one week of such paid vacation to the next calendar year.
Notwithstanding the foregoing, the Executive shall be entitled
to receive no more than three weeks of annual Base Salary in lieu
of paid vacation in any calendar year. Except as expressly set
forth in Paragraph 7(e)(i) and (ii) herein, all paid vacation
benefits granted hereunder attributable to any calendar year
shall terminate on December 31 of said calendar year.
(f) During the Term of Employment, the Company shall pay
all expenses incurred by the Executive in connection with
automobile insurance for two autombiles owned or leased by the
Executive in lieu of life insurance described at 7(c); not to
exceed $6,000.00.
8. BUSINESS EXPENSE REIMBURSEMENT AND PERQUISITES
During the Term of Employment, the Executive shall be
entitled to receive reimbursement by the Company, upon submission
of adequate documentation, for all reasonable out-of-pocket
expenses incurred by him in performing services under the
Agreement. Any legal fees and expenses incurred in connection
with the preparation and negotiation of the Agreement up to a
maximum of $2,000 shall be paid by the Company.
9. DEFERRED COMPENSATION
The Executive shall be entitled to defer up to 25% of his
Base Salary and any performance or other bonus for each calendar
year pursuant to a compensation deferral program to be adopted by
the Company.
-7-
10. TERMINATION OF EMPLOYMENT
(a) TERMINATION DUE TO DEATH OR DISABILITY. In the event
of the termination of the Executive's employment under the
Agreement due to his death or Disability, the Executive or his
legal representatives, as the case may be, shall be entitled to:
(i) (A) in the case of death, continued Base Salary
at the rate in effect at the time of his death for a period
of 3 months following the month in which such termination of
employment due to death occurs, or (B) in the case of
Disability, the disability benefit available under and only
to the extent of insurance maintained as provided in
Paragraph 7(b) above;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) a pro rata performance bonus for the year in
which his employment terminates due to death or Disability
based on performance in relation to the Consolidated EBITDA
targets for the period ending with the end of the month
immediately prior to the termination of his employment;
(iv) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(v) any deferred compensation pursuant to Paragraph
9, including any interest accrued on such deferred amounts;
and
(vi) any other compensation and benefits to which he
or his legal representatives may be entitled under
applicable plans, programs and agreements of the Company,
including, without limitation, life insurance as provided in
Paragraph 7(c) above.
(b) TERMINATION BY THE COMPANY FOR CAUSE. At any time
after an event constituting Cause, the Company shall give the
Executive written notice of its intention to terminate him for
Cause, specifying in such notice the event forming the basis for
Cause. Subject only to the following sentence, termination shall
be effective immediately upon delivery of notice hereunder. If
the written notice is of an event constituting Cause under
Paragraph 1(d)(i) or 1(d)(viii), and if the event is capable of
being cured, the Executive shall have ten Business Days following
actual receipt of the notice of termination in which to cure, so
long as the Executive advises the Company in writing within 48
hours of receiving the notice of termination of the Executive's
intention to attempt cure. In the event the Executive's
employment is terminated by the Company for Cause, the Executive
shall be entitled to:
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
-8-
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation, pursuant to
Paragraph 9 hereof including any interest accrued on such
deterred amounts; and
(v) any other compensation and benefits to which
he may be entitled under applicable plans, programs and
agreements of the Company.
The Executive's entitlement to the foregoing shall be
without prejudice to the right of the Company for any damages or
other legal or equitable remedy to which the Company or a
Subsidiary may be entitled as a result of such Cause; provided,
however, that offset shall not be available to the Company in any
event.
(c) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION
WITHOUT CAUSE. In the event the Executive's employment is
terminated by the Company without Cause (which shall not include
a termination pursuant to Paragraph 10(a)) or in the event of a
Constructive Termination Without Cause, the Executive shall be
entitled to those items described in the subparagraphs (i)
through (v) hereof. Termination Without Cause shall be effective
immediately, unless a later date is stated, upon delivery of a
written notice of such termination from the Company to the
Executive. In the event the Executive elects to resign based upon
a Constructive Termination Without Cause, the Executive shall
give written notice thereof to the Company and state therein the
effective date of such resignation.
(i) an amount equal to one (1) year of Base Salary
(the "Base Salary Termination Payment"). The Executive
may elect, at the Executive's option, to receive the Base
Salary Termination Payment either (A) in equal monthly
installments over a (1) year period commencing immediately
upon Termination of the Executive's employment, or (B) in a
lump-sum payment promptly following termination of the
Executive's employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(d) TERMINATION BY THE COMPANY DUE TO FAILURE TO RECEIVE
LICENSE. In the event of a Termination by the Company Due to
Failure to Receive License, the Executive shall be entitled to
those items specified in subparagraphs (i) through (v) hereof.
The effective date of the
-9-
Termination by the Company Due to Failure to Receive License
shall be as stated in a written notice from the Company to the
Executive.
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(e) VOLUNTARY TERMINATION. A "Voluntary Termination" shall
mean a termination of employment by the Executive on his own
initiative other than a termination under Paragraph 10(a) or
10(c). In the event of a Voluntary Termination, the Executive
shall be entitled to:
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of this
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
A Voluntary Termination shall not, solely due to a
Voluntary Termination, be deemed a breach of this Agreement and
shall be effective upon the expiration of 60 days after written
notice delivered to the Company, unless another period of time is
agreed to in writing by the Parties.
(f) NO MITIGATION; NO OFFSET. In the event of any
termination of the Executive's employment under the Agreement, he
shall be under no obligation to seek other employment, and there
shall be no offset against amounts due him under the Agreement on
account of any remuneration attributable to any subsequent
employment that he may obtain.
-10-
(g) NATURE OF PAYMENTS. Any amounts due the Executive
under the Agreement in the event of any termination of his
employment with the Company are in the nature of severance
payments, or liquidated damages which contemplate both direct
damages and consequential damages that he may suffer as a result
of the termination of his employment, or both, and are not in the
nature of a penalty.
11. CHANGE OF CONTROL
In the event a Change of Control occurs, the Executive shall
be entitled to:
(a) a lump-sum payment equal to the Base Salary due him
for the remainder of Term of Employment; provided, however, such
amount shall be no less than an amount equal to $300,000;
(b) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(c) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(d) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred amounts;
and
(e) any other compensation and benefits to which he may be
entitled under applicable plans, programs and agreements of the
Company.
12. COVENANT NOT TO COMPETE
In the event of a Voluntary Termination under
Paragraph 10(e) above or a Termination Without Cause or a
Constructive Termination Without Cause under Paragraph 10(c)
above, the Executive shall not, for the remaining Term of
Employment or 12 months, whichever is shorter, engage in
competition with the Company. For purposes of this Paragraph 12,
the Executive shall be engaging in competition with the Company
if he engages in the casino and gaming business in Xxxxx County,
Nevada or any other location in which the Company is engaging in
the casino and gaming business at the time of the termination of
the Executive's employment, whether as an employee, the
Executive, partner, principal, agent, representative, stockholder
or consultant (other than as a holder of not more than a 10%
equity interest) or in any other corporate or representative
capacity, so long as the Company is engaged in the casino and
gaming business in the location in question.
13. COVENANTS TO PROTECT CONFIDENTIAL INFORMATION
The Executive shall not, during the Term of Employment or
thereafter, without prior written consent of the Company,
divulge, publish or otherwise disclose to any other person any
Confidential Information regarding the Company or any Subsidiary
except in the course of carrying out his responsibilities on
behalf of the Company (e.g., providing information to the
Company's attorneys, accountants, bankers, etc.) or if required
to do so pursuant to the order of a
-11-
court having jurisdiction over the subject matter or a summons,
subpoena or order in the nature thereof of any legislative body
(including any committee thereof and any litigation or dispute
resolution method against the Company related to or arising out
of this Agreement) or any governmental or administrative agency.
For this purpose, Confidential Information shall include, but
not be limited to, the Company's financial, real estate,
marketing and promotional plans and strategies, customer lists
and customer data bases. Confidential Information does not
include information that becomes available to the public other
than through a breach of the Agreement on the part of the
Executive.
14. INDEMNIFICATION
(a) The Company shall indemnify the Executive to the
fullest extent permitted by Nevada law in effect as of the date
hereof against all costs, expenses, liabilities and losses
(including, without limitation, attorneys' fees, judgments,
fines, penalties, ERISA excise taxes and amounts paid in
settlement) reasonably incurred by the Executive in connection
with a Proceeding. For the purposes of this Paragraph 14, a
"Proceeding" shall mean any action, suit or proceeding by reason
of the fact that he is or was an officer, director or employee,
trustee or agent of any other entity at the request of the
Company.
(b) The Company shall advance to the Executive all
reasonable costs and expenses incurred by him in connection with
a Proceeding within 20 days after receipt by the Company of a
written request for such advance. Such request shall include an
itemized list of the costs and expenses and an undertaking by the
Executive to repay the amount of such advance if it shall
ultimately be determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company against
such costs and expenses.
(c) The Executive shall not be entitled to indemnification
under this Paragraph 14 unless he meets the standard of conduct
specified in the Nevada Revised Statutes. Actions that fail to
meet the aforementioned standard of conduct shall include, but
are not limited to, the failure to act in good faith, failure to
act in the best interests of the Company, breach of the duty of
loyalty, appropriation of business opportunities, violation of
the provisions of the articles of incorporation or the bylaws of
the Company, violation of state or federal securities laws and
violation of criminal law. Notwithstanding the foregoing, to the
extent permitted by law neither N.R.S. 78.751(3) nor any similar
provision shall apply to indemnification under this Paragraph 14,
so that if the Executive in fact meets the applicable standard of
conduct, he shall be entitled to such indemnification whether or
not the Company (whether by the board of directors, the
stockholders, independent legal counsel or other party)
determines that indemnification is proper because he has met such
applicable standard of conduct. Neither the failure of the
Company to have made such a determination prior to the
commencement by the Executive of any suit or arbitration
proceeding seeking indemnification, nor a determination by the
Company that he has not met such applicable standard of conduct
shall create a presumption that he has not met the applicable
standard of conduct.
(d) The Company shall not settle any Proceeding or claim
in any manner which would impose on the Executive any penalty or
limitation without his prior written consent. Neither the
-12-
Company nor the Executive will unreasonably withhold its or his
consent to any proposed settlement.
15. 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 the
Agreement may be assigned or transferred by the Executive or the
Company except that (a) such rights or obligations of the Company
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 the
Agreement, either contractually or as a matter of law, and (b)
such obligations of the Company may be transferred by the
Executive by will or pursuant to the laws of descent or
distribution. The Company shall take all reasonable legal action
necessary to effect such assignment and assumption of the
Company's liabilities, obligations and duties under the Agreement
in circumstances described in clause (a) of the preceding
sentence.
16. REPRESENTATION
The Company and the Executive respectively represent and
warrant to each other that, subject to any approval that may be
necessary from the Nevada Commission, each respectively is fully
authorized and empowered to enter into the Agreement and that its
or his entering into the Agreement and the performance of its or
his respective obligations under the Agreement will not violate
any agreement between the Company or the Executive respectively
and any other person, firm or organization or any law or
governmental regulation.
17. ENTIRE AGREEMENT
The 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.
18. AMENDMENT OR WAIVER
The Agreement cannot be changed, modified or amended without
the consent in writing of both the Executive and the Company. No
waiver by either Party at any time of any breach by the other
Party of any condition or provision of the Agreement shall be
deemed a waiver of a similar or dissimilar condition or provision
at the same or at any prior or subsequent time. Any waiver must
be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
-13-
19. SEVERABILITY
In the event that any provision or portion of this Agreement
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.
20. 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.
21. GOVERNING LAW
This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Nevada without
reference to principles of conflict of laws.
22. SETTLEMENT OF DISPUTES
Any disputes regarding the interpretation of, arising out
of, or related to this Agreement shall be resolved by arbitration
to be held in Nevada in accordance with the rules and procedures
of the American Arbitration Association. The prevailing party
in such proceeding shall be entitled to recover the costs of the
arbitration or litigation from the other party, including,
without limitation, attorneys' fees.
23. NOTICES
Any notice given to either party shall be in writing and,
except as provided in the third sentence of Paragraph 10(b)
above, 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 or the Board:
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Chief Executive Officer
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With a copy to:
General Counsel
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
If to the Executive:
Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx. 00000
24. HEADINGS
The headings of the paragraphs 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.
25. COUNTERPARTS
This Agreement may be executed in two or more counterparts.
26. TAXES
Compensation payable hereunder is gross and shall be subject
to such withholding taxes and other taxes as may be required by
law.
27. ACKNOWLEDGMENT
The Executive acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. The Executive certifies that he has fully read, has received
an explanation of, and completely understands the terms, nature,
and effect of this Agreement. The Executive further acknowledges
that he is executing this Agreement freely, knowingly, and
voluntarily and that the Executive's execution of this Agreement
is not the result of any fraud, duress, mistake, or undue
influence whatsoever. In executing this Agreement, the Executive
does not rely on any inducements, promises, or representations by
the Company other than the terms and conditions of this
Agreement.
-15-
IN WITNESS WHEREOF, the undersigned have executed the
Agreement as of the date first written above.
RIO HOTEL & CASINO, INC.
By: /s/Xxxxx X. Xxxxxxx, Xx.
Its: President
/s/Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
-16-
EXHIBIT A
TO EMPLOYMENT AGREEMENT
DETERMINATION OF PERFORMANCE BONUS AMOUNTS
The Executive shall be entitled to a performance bonus
pursuant to the terms of a management incentive compensation plan
to be approved by the Company's Compensation Committee and
ratified by the Board.
A-1
EXHIBIT B
TO EMPLOYMENT AGREEMENT
1995 LONG-TERM INCENTIVE PLAN ("LTIP")
STOCK OPTION GRANT
EMPLOYEE: _______________ DATE OF GRANT: _________, 1996
GRANT NO.: _______________ OPTION EXERCISE PRICE: _______
TYPE OF OPTION: Non-Qualified OPTION SHARES: _______________
Subject to the terms of the LTIP and pursuant to this
stock option grant, Rio Hotel & Casino, Inc. (the "Company")
hereby grants the option to purchase the above described number
of shares of Rio Hotel & Casino, Inc. Common Stock exercisable
at the Option Price stated above.
Options granted hereunder shall be exercisable only to the
extent of "vesting." Vesting occurs when the Employee remains
continuously employed with the Company or its subsidiaries on the
date upon which the options are scheduled to vest in order to
have any right to exercise such options and any options which are
scheduled to vest thereafter. If the Employee has failed to
remain continuously employed with the Company or its subsidiaries
on a date upon which options are scheduled to vest, the Employee
shall have no right to nor be entitled to exercise those options
or any other options which may be scheduled to vest thereafter.
The vesting schedule for stock options under this stock option
grant is a follows:
_________, 1997 (1) - 20% of Options will vest;
_________, 1998 (1) - 40% of Options will vest;
_________, 1999 (1) - 60% of Options will vest;
_________, 2000 (1) - 80% of Options will vest;
_________, 2001 (1) - 90% of Options will vest;
_________, 2002 (1) - 100% of Options will vest.
Notwithstanding the foregoing, the options granted hereunder
will become fully vested and become exercisable in full upon a
Change in Control as defined in the Employment Agreement between
the Company and the Executive dated as of __________, 1997 (the
"Employment Agreement").
I. Except as may be otherwise provided in the LTIP, vested
options granted thereunder shall expire the earlier of either:
A. ten (10) years after the Date of Grant;
B-1
B. three (3) years after the Employee's retirement
from the Company or any of its subsidiaries after the
Employee attains the age of 72 years;
C. three (3) years after the date of the Employee's
death;
D. three (3) months after the Employee's termination
from the Company or any of its subsidiaries (except for
Termination Without Cause or Constructive Termination
Without Cause) for reasons other than death or retirement
after attaining the age of 72 years; or
E. two (2) years after the Employee's Termination
Without Cause, Constructive Termination Without Cause or
following a Change of Control.
This grant is made pursuant to the terms and conditions of
the LTIP, a copy of which is attached hereto as Exhibit "A," and
by this reference made a part hereof and in addition is subject
to the following limitations:
I. If the Employee resigns his position with the Company
or any of its subsidiaries without the written consent of the
Company, and accepts employment, consulting, or other
compensation for services, within six (6) months after the
Employee's last day of employment with the Company or any of its
subsidiaries from a competitor company, the Employee shall:
A. Forfeit all vested options in the Employee's
account which were issued subject to this grant; and
B. Reimburse the Company for all profits earned
pursuant to any exercise of these options within six (6)
months prior to or six (6) months subsequent to the date of
giving notice of Employee's resignation.
II. A "competitor company" is defined as any gaming or
hotel company, or any affiliate thereof, located within fifty
miles of any location in which the Company conducts business.
III. "Profits" are defined as the differential between the
exercise price and the last reported sale price on the day of
exercise, multiplied by the number of shares exercised.
B-2
IN WITNESS WHEREOF, the undersigned executes this stock
option grant as of the first date set forth herein:
RIO HOTEL & CASINO, INC.
Long Term Incentive Plan Committee
By: ________________________
Xxxxxx X. Xxxxxxx
By: ________________________
Xxxxx X. Xxxxxx
Accepted and agreed to as of the Date of the Grant:
Name: __________________ Social Security Number: _____________
Residence Address: ______________________________________________
Xxxxxx Xxxxxxx Xxxx, Xxxxx, Xxx Xxxx
X-0
EMPLOYMENT AGREEMENT
Agreement, dated as of March 7, 1997, between Rio Hotel &
Casino, Inc., a Nevada corporation with its principal office
located at 0000 X. Xxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000
(together with its successors or assigns as permitted under this
agreement, the "Company"), and I. Xxxxx Xxxxxx (the "Executive").
W I T N E S S E T H:
Whereas, the Company desires to employ the Executive and
enter into an agreement embodying the terms of such employment
(the "Agreement"), and the Executive desires to enter into the
Agreement and to accept such employment, subject to the terms and
provisions of this Agreement.
Now, Therefore, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. DEFINITIONS
(a) "BASE SALARY" shall mean the salary provided for in
Paragraph 4 below subject to such increases as may be made from
time to time.
(b) "BOARD" shall mean the Board of Directors of the
Company.
(c) "BUSINESS DAY" shall mean any day other than a weekend,
a federal or state holiday or a vacation day for the Executive.
(d) "CAUSE" shall mean:
(i) the conviction of (including any act as a
result of pleading nolo contendere) or judgment against the
Executive by a civil or criminal court of competent
jurisdiction of a felony, or any other offense involving
embezzlement, misappropriation of funds, any act of moral
turpitude or dishonesty;
(ii) the indictment of the Executive by a state or
federal grand jury or the filing of a criminal complaint or
information for a felony, or any other offense involving
embezzlement, misappropriation of funds, any act of moral
turpitude or dishonesty, unless such indictment or filing is
dismissed within one hundred eighty (180) days from the date
of such indictment or filing. The Board may elect to
suspend and extend the Term of Employment by such one
hundred eighty (180) day period or the number of days
actually taken by the Executive to dismiss such indictment
or filing, whichever is less; provided that the Executive
notifies the Company in writing that the Executive intends
to contest in
good faith such indictment or filing and pursues the
dismissal of such indictment or filing with reasonable
diligence. During such period of suspension, Employee may
be relieved of his duties, but shall be entitled to receive
his Base Salary;
(iii) the written confession by the Executive of
embezzlement, misappropriation of funds or any act of moral
turpitude or dishonesty;
(iv) the denial, revocation or suspension of a
license, qualification or certificate of suitability to the
Executive by any of the Gaming Authorities;
(v) any action by the Executive that results in (A)
a written communication from the Gaming Authorities to the
Company advising the Company that, or (B) administrative
action by the Gaming Authorities resulting in a
determination that: (Y) any licensing, qualification and/or
approval by the Gaming Authorities with respect to the
Company will be approved only upon terms and conditions
which are unacceptable to the Company; or (Z) the Gaming
Authorities will revoke or suspend any existing license held
by the Company or its subsidiaries;
(vi) the finding by a court of competent
jurisdiction in a criminal or civil action or by the U.S.
Securities and Exchange Commission or state blue sky agency
in an administrative proceeding that the Executive has
willfully violated any federal or state securities law;
(vii) the engagement by the Executive in willful and
continued misconduct, or the Executive's willful and
continued failure to substantially perform the Executive's
obligations as a Director of the Company or as an employee
of the Company, if such failure or misconduct is materially
damaging or materially detrimental to the business and
operations of the Company;
(viii) the use by the Executive of alcohol or any
controlled substance to an extent that it interferes, in the
sole discretion of the Board, on a continuing and material
basis with the performance of the Executive's duties under
the Agreement;
(ix) the willful, unauthorized disclosure by the
Executive of Confidential Information, as defined in
Paragraph 13, concerning the Company or any Subsidiary,
unless such disclosure was (A) believed in good faith by the
Executive to be appropriate in the course of properly
carrying out his duties under the Agreement, or (B) required
by an order of a court having jurisdiction over the subject
matter or a summons, subpoena or order in the nature thereof
of any legislative body (including any committee thereof) or
any governmental or administrative agency; or
(x) the performance of services by the Executive,
other than in the course of properly carrying out his duties
under the Agreement and as otherwise provided herein, for
any other corporation or person that competes with the
Company or any Subsidiary while the Executive is employed by
the Company, except as disclosed in that certain conflict of
interest statement from the Executive to the Company in
August 1996.
-2-
(e) "CHANGE IN CONTROL" shall mean the occurrence of any
one of the following events:
(i) any "person" (as that term is used in Section
13(d) and 14(d) of the Securities and Exchange Act of 1934
(the "Exchange Act")), other than Xxxxxxx X. Xxxxxxx XX,
Xxxxx X. Xxxxxxx, Xx. or their affiliates, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 25.0% or more of the combined voting
power of the Company's outstanding securities ordinarily
having the right to vote at the election of directors; or
(ii) individuals who constitute the Board of
Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was
approved by at least a majority of the directors comprising
the Incumbent Board, or whose nomination or election was
approved by a majority of the Board of Directors of the
Company serving under an Incumbent Board, shall be, for
purposes of this clause (ii), considered as if he or she
were a member of the Incumbent Board; or
(iii) the merger, consolidation or sale of all or
substantially all the assets of the Company occurs; or
(iv) a proxy statement is distributed soliciting
proxies from stockholders of the the Company, by someone
other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or
consolidation of the Company with one or more corporations
as a result of which the outstanding shares of the Company's
securities are actually exchanged for or converted into cash
or property or securities not issued by the Company.
(f) "COMMON STOCK" shall mean the common stock, $.01 par
value, of the Company.
(g) "CONSOLIDATED EBITDA" shall mean the Company's
consolidated "Earnings (Losses) from Operations" plus Interest,
Taxes, Depreciation and Amortization but excluding (i) the sale
of any material asset not in the ordinary course of business, and
(ii) any charge against earnings for stock options pursuant to
Paragraph 6 below. Consolidated EBITDA shall be determined on
the accrual basis of accounting in accordance with generally
accepted accounting principles. Consolidated EBITDA for a
calendar year shall be determined by the Company's independent
accountants based on audited financial statements. Consolidated
EBITDA for a period of less than one year shall be determined by
the Company's independent accountants based on a written report
setting forth the basis of the review.
(h) "CONSTRUCTIVE TERMINATION WITHOUT CAUSE" shall mean
that,
(i) without the Executive's prior written consent,
one or more of the following events occurs:
-3-
(1) the Executive is removed from the position
of Vice President, Secretary and General Counsel of the
Company and/or the position of Vice President,
Secretary and General Counsel of Rio Properties, Inc.
("Rio Properties") for any reason other than the
termination of his employment;
(2) the Executive suffers a material
diminution in the authorities, duties or
responsibilities normally associated with the foregoing
positions, or there are assigned to him duties and
responsibilities materially inconsistent with those
normally associated with such positions;
(3) the Executive's Base Salary or annual
bonus opportunity as provided for in Paragraphs 4 and 5
below, respectively, is decreased by the affirmative
act of the Company, or his benefits under any material
employee benefit plan or program of the Company or his
incentive or equity opportunity under any material
incentive or equity program is or are reduced by the
affirmative act of the Company;
(4) the Executive's office location is
relocated outside of the Las Vegas, Nevada
metropolitan area; or
(5) the Company fails to obtain a written
agreement from any successors of the Company to assume
and perform the Agreement; and
(ii) within 90 days of learning of the occurrence of
such event (but in no event later than 180 days after the
occurrence of such event), the Executive terminates his
employment with the Company.
(i) "DISABILITY" shall mean the Executive's inability, for
a period of six consecutive months, to render substantially the
services provided for in Paragraph 3(a) below by reason of mental
or physical disability, whether resulting from illness, accident
or otherwise.
(j) "GAMING AUTHORITIES" means the Nevada Gaming Control
Board ("Nevada Board"), the Nevada Gaming Commission ("Nevada
Commission"), the Xxxxx County Liquor and Gaming Licensing Board
("Xxxxx County Board"), and any other federal, state, local or
tribal gaming authority to which the Company is now subject, or
may be subject during the Term of Employment.
(k) "SUBSIDIARY" shall mean any corporation in which the
Company owns 50% or more of the Voting Stock or any other venture
in which it owns 50% or more of the equity.
(l) "TERM OF EMPLOYMENT" shall mean the initial three-year
period specified in Paragraph 2 below and if, but only if,
automatically renewed as provided in Paragraph 2, shall include
the period of such renewal.
(m) "TERMINATION BY THE COMPANY DUE TO FAILURE TO RECEIVE
LICENSE" shall mean a termination of the Executive's employment
by the Company following a failure of the Executive to obtain a
license required by the Nevada Board, Nevada Commission or the
Xxxxx County
-4-
Board and any other federal, state, local or tribal gaming
authority to which the Company is now subject, or may be subject
during the Term of Employment.
(n) "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
(a) The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, in the
position and with the duties and responsibilities as set forth in
Paragraph 3 below for the Term of Employment, subject to the
terms and conditions of the Agreement.
(b) The initial Term of Employment shall commence on
January 1, 1997 and shall, unless sooner terminated as provided
in Paragraph 10 hereof, terminate at 11:59 p.m. (P.D.T.) on
December 31, 1999; provided that the Term of Employment shall
automatically renew for successive one-year periods unless (i) it
has sooner terminated as provided in Paragraph 10 hereof or
(ii) either Party has notified the other in writing at least 60
days prior to the otherwise scheduled expiration of the Term of
Employment that such Term of Employment shall not so renew.
3. POSITION, DUTIES AND AUTHORITIES
(a) During the Term of Employment, the Executive shall be
employed as Vice President, Secretary and General Counsel of the
Company and as Vice President, Secretary and General Counsel of
the Company's wholly-owned subsidiary, Rio Properties. Subject
to supervision and in accordance with the policies and directives
established by the Board, and subordinate to and working under
the supervision of the Chief Executive Officer and President of
the Company, in the case of the Company, and the Chief Operating
Officer of Rio Properties in the case of Rio Properties, the
Executive shall be the General Counsel of the Company's and Rio
Properties' day-to-day business operations, with the duties,
responsibilities and authorities customarily associated with such
positions. The Executive shall be entitled to no additional
remuneration for serving as an officer of Rio Properties or any
other Subsidiary.
(b) Anything herein to the contrary notwithstanding,
nothing shall preclude the Executive from engaging in charitable,
community and business affairs, managing his personal investments
and serving as a member of boards of directors of industry
associations or non-profit or for profit organizations and
companies so long as such activities do not materially interfere
in the opinion and sole discretion of the Chief Executive Officer
of the Company with the Executive's carrying out his duties and
responsibilities under the Agreement. The Executive shall
disclose all relationships covered under this Paragraph 3(b) in
the Executive's personal history disclosure form to be submitted
to the Nevada Gaming Control Board in connection with the
Executive's required licensing and such form shall, prior to
filing of such form, be submitted to the Company's Chief
Executive Officer for review. Thereafter, not less often than
on January 1
-5-
of each year, the Executive shall disclose in writing to the
Chief Executive Officer of the Company any changes to the
information with respect to involvement in such entities or
organizations.
4. BASE SALARY
During the Term of Employment, the Executive shall be paid
by the Company a Base Salary payable no less frequently than in
equal semi-monthly installments at an annualized rate of
$155,000; subject to increase as may be determined by the Company
within its sole discretion and as set forth below.
Notwithstanding the foregoing, the Base Salary shall be increased
each January 1 during the term hereof in an amount equal to the
percentage increase in the Consumer Price Index - All Urban Areas
("CPI") issued by the U.S. Department of Labor, Bureau of Labor
Statistics, for the preceding calendar year; provided, however,
any such increase in Base Salary shall never exceed six percent
(6%) in any one year.
5. PERFORMANCE BONUS
The Company shall pay the Executive performance bonuses for
each year during the Term of Employment in amounts determined in
accordance with Exhibit A hereto.
6. STOCK OPTIONS
The Executive shall be eligible for participation in the
Company's 1995 Long Term Incentive Plan, as amended from time to
time.
7. EMPLOYEE BENEFIT PROGRAMS
(a) During the Term of Employment, the Executive and his
dependents shall be entitled, at the Company's expense, to
medical, surgical, hospitalization, dental and visual insurance
coverage (which may include any insured program provided by the
Company to its employees) providing him with 100% of all expenses
both covered and paid for by the Company's insurance program(s)
or plan(s).
(b) During the Term of Employment, the Executive shall also
be provided with long-term disability insurance which shall
provide the Executive with an annual benefit of fifty percent
(50%) of Base Salary continued until age 65 or until the
Executive dies or is no longer disabled, if sooner. To the
extent available, the Executive shall be provided an opportunity
to purchase additional long-term disability insurance, at his own
expense. To the extent possible, the amount of long-term
disability insurance described in the first two sentences of this
Paragraph 7(b) shall be provided by an individual policy that
gives the Executive the right to assume the policy in the event
of his termination of employment, provided that the amount of
such insurance to be so provided shall be offset by long-term
disability insurance coverage provided to the Executive under the
Company's employee long-term disability insurance programs
described in Paragraph 7(d) below.
-6-
(c) During the Term of Employment, the Company shall
provide the Executive, subject to insurability as a normal risk
and at reasonable cost, with life insurance coverage in an amount
equal to $500,000.00. To the extent available, the Executive
shall be provided an opportunity to purchase additional life
insurance, at his own expense. To the extent possible, the
amount of life insurance described in the first two sentences of
this Paragraph 7(c) shall be provided by an individual policy
that gives the Executive the right to assume the policy in the
event of his termination of employment, provided that the amount
of such insurance to be so provided shall be offset by life
insurance coverage provided to the Executive under the Company's
employee group life insurance programs described in Paragraph
7(d) below.
(d) During the Term of Employment, the Executive shall be
entitled to participate in all employee incentive and benefit
programs of the Company now or hereafter made available to the
Company's senior 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
and dental coverage, sick leave (including salary continuation
arrangements), long-term disability, holidays and up to three
weeks annually of vacations.
(e) During the Term of Employment, the Executive shall be
entitled to three weeks paid vacation per calendar year. In
lieu of utilizing such paid vacation in any calendar year, the
Executive shall have the right to either (i) receive cash in an
amount equivalent to one week of annual Base Salary, or (ii)
defer one week of such paid vacation to the next calendar year.
Notwithstanding the foregoing, the Executive shall be entitled
to receive no more than three weeks of annual Base Salary in lieu
of paid vacation in any calendar year. Except as expressly set
forth in Paragraph 7(e)(i) and (ii) herein, all paid vacation
benefits granted hereunder attributable to any calendar year
shall terminate on December 31 of said calendar year.
(f) During the Term of Employment, the Company shall pay
the Executive's Nevada State Bar membership dues and all fees and
expenses to be incurred in connection with the Executive's
satisfaction of any Nevada State Bar continuing legal education
requirements, including reimbursement for reasonable travel
expenses to programs outside the Las Vegas Metropolitan area.
8. BUSINESS EXPENSE REIMBURSEMENT AND PERQUISITES
During the Term of Employment, the Executive shall be
entitled to receive reimbursement by the Company, upon submission
of adequate documentation, for all reasonable out-of-pocket
expenses incurred by him in performing services under the
Agreement. Any legal fees and expenses incurred in connection
with the preparation and negotiation of the Agreement up to a
maximum of $2,000 shall be paid by the Company.
-7-
9. DEFERRED COMPENSATION
The Executive shall be entitled to defer up to 25% of his
Base Salary and any performance or other bonus for each calendar
year pursuant to a compensation deferral program to be adopted by
the Company.
10. TERMINATION OF EMPLOYMENT
(a) TERMINATION DUE TO DEATH OR DISABILITY. In the event
of the termination of the Executive's employment under the
Agreement due to his death or Disability, the Executive or his
legal representatives, as the case may be, shall be entitled to:
(i) (A) in the case of death, continued Base Salary
at the rate in effect at the time of his death for a period
of 3 months following the month in which such termination
of employment due to death occurs, or (B) in the case of
Disability, the disability benefit available under and only
to the extent of insurance maintained as provided in
Paragraph 7(b) above;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) a pro rata performance bonus for the year in
which his employment terminates due to death or Disability
based on performance in relation to the Consolidated EBITDA
targets for the period ending with the end of the month
immediately prior to the termination of his employment;
(iv) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(v) any deferred compensation pursuant to Paragraph
9, including any interest accrued on such deferred amounts;
and
(vi) any other compensation and benefits to which he
or his legal representatives may be entitled under
applicable plans, programs and agreements of the Company,
including, without limitation, life insurance as provided in
Paragraph 7(c) above.
(b) TERMINATION BY THE COMPANY FOR CAUSE. At any time
after an event constituting Cause, the Company shall give the
Executive written notice of its intention to terminate him for
Cause, specifying in such notice the event forming the basis for
Cause. Subject only to the following sentence, termination shall
be effective immediately upon delivery of notice hereunder. If
the written notice is of an event constituting Cause under
Paragraph 1(d)(i) or 1(d)(viii), and if the event is capable of
being cured, the Executive shall have ten Business Days following
actual receipt of the notice of termination in which to cure, so
long as the Executive advises the Company in writing within 48
hours of receiving the notice of termination of the Executive's
-8-
intention to attempt cure. In the event the Executive's
employment is terminated by the Company for Cause, the Executive
shall be entitled to:
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation, pursuant to
Paragraph 9 hereof including any interest accrued on such
deterred amounts; and
(v) any other compensation and benefits to which
he may be entitled under applicable plans, programs and
agreements of the Company.
The Executive's entitlement to the foregoing shall be
without prejudice to the right of the Company for any damages or
other legal or equitable remedy to which the Company or a
Subsidiary may be entitled as a result of such Cause; provided,
however, that offset shall not be available to the Company in any
event.
(c) TERMINATION WITHOUT CAUSE OR CONSTRUCTIVE TERMINATION
WITHOUT CAUSE. In the event the Executive's employment is
terminated by the Company without Cause (which shall not include
a termination pursuant to Paragraph 10(a)) or in the event of a
Constructive Termination Without Cause, the Executive shall be
entitled to those items described in the subparagraphs (i)
through (v) hereof. Termination Without Cause shall be effective
immediately, unless a later date is stated, upon delivery of a
written notice of such termination from the Company to the
Executive. In the event the Executive elects to resign based upon
a Constructive Termination Without Cause, the Executive shall
give written notice thereof to the Company and state therein the
effective date of such resignation.
(i) an amount equal to one (1) year of Base Salary
(the "Base Salary Termination Payment"). The Executive
may elect, at the Executive's option, to receive the Base
Salary Termination Payment either (A) in equal monthly
installments over a (1) year period commencing immediately
upon termination of the Executive's employment, or (B) in a
lump-sum payment promptly following termination of the
Executive's employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
-9-
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(d) TERMINATION BY THE COMPANY DUE TO FAILURE TO RECEIVE
LICENSE. In the event of a Termination by the Company Due to
Failure to Receive License, the Executive shall be entitled to
those items specified in subparagraphs (i) through (v) hereof.
The effective date of the Termination by the Company Due to
Failure to Receive License shall be as stated in a written notice
from the Company to the Executive.
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of his
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
(e) VOLUNTARY TERMINATION. A "Voluntary Termination" shall
mean a termination of employment by the Executive on his own
initiative other than a termination under Paragraph 10(a) or
10(c). In the event of a Voluntary Termination, the Executive
shall be entitled to:
(i) Base Salary at the rate in effect at the time
of his termination through the date of termination of this
employment;
(ii) any performance or other bonus earned for a
fiscal period already completed but not yet paid;
(iii) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(iv) any deferred compensation pursuant to Paragraph
9 hereof, including any interest accrued on such deferred
amounts; and
(v) any other compensation and benefits to which he
may be entitled under applicable plans, programs and
agreements of the Company.
-10-
A Voluntary Termination shall not, solely due to a
Voluntary Termination, be deemed a breach of this Agreement and
shall be effective upon the expiration of 60 days after written
notice delivered to the Company, unless another period of time is
agreed to in writing by the Parties.
(f) NO MITIGATION; NO OFFSET. In the event of any
termination of the Executive's employment under the Agreement, he
shall be under no obligation to seek other employment, and there
shall be no offset against amounts due him under the Agreement on
account of any remuneration attributable to any subsequent
employment that he may obtain.
(g) NATURE OF PAYMENTS. Any amounts due the Executive
under the Agreement in the event of any termination of his
employment with the Company are in the nature of severance
payments, or liquidated damages which contemplate both direct
damages and consequential damages that he may suffer as a result
of the termination of his employment, or both, and are not in the
nature of a penalty.
11. CHANGE OF CONTROL
In the event a Change of Control occurs, the Executive shall
be entitled to:
(a) a lump-sum payment equal to the Base Salary due him for
the remainder of Term of Employment; provided, however, such
amount shall be no less than an amount equal to $200,000;
(b) any performance or other bonus earned for a fiscal
period already completed but not yet paid;
(b) reimbursement for expenses incurred but not yet
reimbursed by the Company;
(d) any deferred compensation pursuant to Paragraph 9
hereof, including any interest accrued on such deferred amounts;
and
(e) any other compensation and benefits to which he may be
entitled under applicable plans, programs and agreements of the
Company.
12. COVENANT NOT TO COMPETE
In the event of a Voluntary Termination under
Paragraph 10(e) above or a Termination Without Cause or a
Constructive Termination Without Cause under Paragraph 10(c)
above, the Executive shall not, for the remaining Term of
Employment or 12 months, whichever is shorter, engage in
competition with the Company. For purposes of this Paragraph 12,
the Executive shall be engaging in competition with the Company
if he engages in the casino and gaming business in Xxxxx County,
Nevada or any other location in which the Company is engaging in
the casino and gaming business at the time of the termination of
the Executive's employment, whether as an employee, the
Executive, partner, principal, agent, representative, stockholder
or consultant (other than as a holder of not more than a 10%
equity interest) or in any other corporate or
-11-
representative capacity, so long as the Company is engaged in the
casino and gaming business in the location in question.
13. COVENANTS TO PROTECT CONFIDENTIAL INFORMATION
The Executive shall not, during the Term of Employment or
thereafter, without prior written consent of the Company,
divulge, publish or otherwise disclose to any other person any
Confidential Information regarding the Company or any Subsidiary
except in the course of carrying out his responsibilities on
behalf of the Company (e.g., providing information to the
Company's attorneys, accountants, bankers, etc.) or if required
to do so pursuant to the order of a court having jurisdiction
over the subject matter or a summons, subpoena or order in the
nature thereof of any legislative body (including any committee
thereof and any litigation or dispute resolution method against
the Company related to or arising out of this Agreement) or any
governmental or administrative agency. For this purpose,
Confidential Information shall include, but not be limited to,
the Company's financial, real estate, marketing and promotional
plans and strategies, customer lists and customer data bases.
Confidential Information does not include information that
becomes available to the public other than through a breach of
the Agreement on the part of the Executive.
14. INDEMNIFICATION
(a) The Company shall indemnify the Executive to the
fullest extent permitted by Nevada law in effect as of the date
hereof against all costs, expenses, liabilities and losses
(including, without limitation, attorneys' fees, judgments,
fines, penalties, ERISA excise taxes and amounts paid in
settlement) reasonably incurred by the Executive in connection
with a Proceeding. For the purposes of this Paragraph 14, a
"Proceeding" shall mean any action, suit or proceeding by reason
of the fact that he is or was an officer, director or employee,
trustee or agent of any other entity at the request of the
Company.
(b) The Company shall advance to the Executive all
reasonable costs and expenses incurred by him in connection with
a Proceeding within 20 days after receipt by the Company of a
written request for such advance. Such request shall include an
itemized list of the costs and expenses and an undertaking by the
Executive to repay the amount of such advance if it shall
ultimately be determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the Company against
such costs and expenses.
(c) The Executive shall not be entitled to indemnification
under this Paragraph 14 unless he meets the standard of conduct
specified in the Nevada Revised Statutes. Actions that fail to
meet the aforementioned standard of conduct shall include, but
are not limited to, the failure to act in good faith, failure to
act in the best interests of the Company, breach of the duty of
loyalty, appropriation of business opportunities, violation of
the provisions of the articles of incorporation or the bylaws of
the Company, violation of state or federal securities laws and
violation of criminal law. Notwithstanding the foregoing, to the
extent permitted by law neither N.R.S. 78.751(3) nor any similar
provision shall apply to indemnification under this Paragraph 14,
so that if the Executive in fact meets the applicable standard of
conduct, he shall be entitled to
-12-
such indemnification whether or not the Company (whether by the
board of directors, the stockholders, independent legal counsel
or other party) determines that indemnification is proper because
he has met such applicable standard of conduct. Neither the
failure of the Company to have made such a determination prior to
the commencement by the Executive of any suit or arbitration
proceeding seeking indemnification, nor a determination by the
Company that he has not met such applicable standard of conduct
shall create a presumption that he has not met the applicable
standard of conduct.
(d) The Company shall not settle any Proceeding or claim in
any manner which would impose on the Executive any penalty or
limitation without his prior written consent. Neither the
Company nor the Executive will unreasonably withhold its or his
consent to any proposed settlement.
15. 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 the
Agreement may be assigned or transferred by the Executive or the
Company except that (a) such rights or obligations of the Company
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 the
Agreement, either contractually or as a matter of law, and (b)
such obligations of the Company may be transferred by the
Executive by will or pursuant to the laws of descent or
distribution. The Company shall take all reasonable legal action
necessary to effect such assignment and assumption of the
Company's liabilities, obligations and duties under the Agreement
in circumstances described in clause (a) of the preceding
sentence.
16. REPRESENTATION
The Company and the Executive respectively represent and
warrant to each other that, subject to any approval that may be
necessary from the Nevada Commission, each respectively is fully
authorized and empowered to enter into the Agreement and that its
or his entering into the Agreement and the performance of its or
his respective obligations under the Agreement will not violate
any agreement between the Company or the Executive respectively
and any other person, firm or organization or any law or
governmental regulation.
17. ENTIRE AGREEMENT
The 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.
-13-
18. AMENDMENT OR WAIVER
The Agreement cannot be changed, modified or amended without
the consent in writing of both the Executive and the Company. No
waiver by either Party at any time of any breach by the other
Party of any condition or provision of the Agreement shall be
deemed a waiver of a similar or dissimilar condition or provision
at the same or at any prior or subsequent time. Any waiver must
be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
19. SEVERABILITY
In the event that any provision or portion of this Agreement
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.
20. 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.
21. GOVERNING LAW
This Agreement shall be governed by and construed and
interpreted in accordance with the laws of Nevada without
reference to principles of conflict of laws.
22. SETTLEMENT OF DISPUTES
Any disputes regarding the interpretation of, arising out
of, or related to this Agreement shall be resolved by arbitration
to be held in Nevada in accordance with the rules and procedures
of the American Arbitration Association. The prevailing party
in such proceeding shall be entitled to recover the costs of the
arbitration or litigation from the other party, including,
without limitation, attorneys' fees.
23. NOTICES
Any notice given to either party shall be in writing and,
except as provided in the third sentence of Paragraph 10(b)
above, 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:
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If to the Company or the Board:
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Chief Executive Officer
With a copy to:
President
Rio Hotel & Casino, Inc.
0000 X. Xxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
If to the Executive:
I. Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
24. HEADINGS
The headings of the paragraphs 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.
25. COUNTERPARTS
This Agreement may be executed in two or more counterparts.
26. TAXES
Compensation payable hereunder is gross and shall be subject
to such withholding taxes and other taxes as may be required by
law.
27. ACKNOWLEDGMENT
The Executive acknowledges that he has been given a
reasonable period of time to study this Agreement before signing
it. The Executive certifies that he has fully read, has received
an explanation of, and completely understands the terms, nature,
and effect of this Agreement. The Executive further acknowledges
that he is executing this Agreement freely, knowingly, and
voluntarily and that the Executive's execution of this Agreement
is not the result of any fraud,
-15-
duress, mistake, or undue influence whatsoever. In executing this
Agreement, the Executive does not rely on any inducements,
promises, or representations by the Company other than the terms
and conditions of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed the
Agreement as of the date first written above.
RIO HOTEL & CASINO, INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
Its: President
/s/ I. Xxxxx Xxxxxx
I. Xxxxx Xxxxxx
-16-
EXHIBIT A
TO EMPLOYMENT AGREEMENT
DETERMINATION OF PERFORMANCE BONUS AMOUNTS
The Executive shall be entitled to a performance bonus
pursuant to the terms of a management incentive compensation plan
to be approved by the Company's Compensation Committee and
ratified by the Board.
A-1
[RIO LETTERHEAD]
1995 LONG-TERM INCENTIVE PLAN ("LTIP")
STOCK OPTION GRANT
Employee: Xxxxx Xxxxxx Date of Grant: October 8, 1996
Grant No.: 1996 Option Exercise Price: $15.50
Type of Option: Non-Statutory Option Shares: 15,000
Stock Options
Subject to the terms of the LTIP and pursuant to this stock
option grant, Rio Hotel & Casino, Inc. (the "Company") hereby
grants the option to purchase the above described number of
shares of Rio Hotel & Casino, Inc. Common Stock exercisable at
the option price stated above.
Options granted thereunder shall be exercisable only to the
extent they have vested. Options vest when the Employee remains
continuously employed with the Company or its subsidiaries until
the scheduled vesting dates below. Employees will only have the
right to exercise vested options. If the employee has failed to
remain continuously employed with the Company or its subsidiaries
until the date upon which options vest, the Employee shall have
no right, nor be entitled, to exercise those options. The vesting
schedule for stock options under this stock option grant is as
follows:
August 26, 1997 - 20% of Options will vest;
August 26, 1998 - 40% of Options will vest;
August 26, 1999 - 60% of Options will vest;
August 26, 2000 - 80% of Options will vest;
August 26, 2001 - 100% of Options will vest.
The attached LTIP details the conditions and restrictions
of the options and should be carefully read in its entirety. The
following is merely a summary of the conditions and restrictions
and is provided for your convenience. If there is any question,
ambiguity or contradiction in this letter, the language of the
attached LTIP shall govern:
ADMINISTRATION
The LTIP is administed by the LTIP Committee, which is
comprised of at least two independent members of the Board of
Directors who are not employees of the Company.
TERMINATION OF EMPLOYMENT OR ASSOCIATION
If you cease to be employed or associated with the Company,
other than by reason of death, retirement as determined under any
of the Company's pension plans, if any, or retirement after
attaining the age of seventy-two (72) years, all options which
have vested as of the date of termination shall expire on the
earlier of (i) the tenth anniversary after the date this letter
is executed or (ii) three months after the day your employment is
terminated.
If you retire pursuant to any of the Company's pension
plans, if any, or after attaining the age of seventy-two (72)
years, or if you die while in the employ of the Company, all
options which have vested as of the date of your retirement or
death shall expire on the earlier of (i) the tenth anniversary
after the date this letter is executed or (ii) three years after
the date of your retirement or death.
FORFEITURE AND REIMBURSEMENT OF PROFIT
If you resign your position without the written consent of
the Board of Directors and accept an employment, consulting, or
other compensation for services from a Competitor Company (as
defined in the LTIP) within six (6) months after you leave the
Company, you (i) forfeit all options, vested or otherwise, and
(ii) must reimburse the Company, under certain conditions and
definitions set forth in the LTIP, for profits derived from the
execise of any options within six (6) months before or after your
notice of resignation. This section does not apply once the
Company has entered into a contractual agreement for "Change of
Control" or within one (1) year after the "Change of Control" of
the Company as defined in the LTIP and summarized below.
CHANGE OF CONTROL
In the event of a Change of Control, all options
automatically vest and any share restrictions will lapse. The
definition of "Change of Control" is fully detailed in the LTIP.
Generally, the events that constitute a Change of Control include
(a) any person or corporation (other than Xxxxxxx X. Xxxxxxx XX,
Xxxxx X. Xxxxxxx, Xx., or their affiliates) acquiring 25.0% or
more of the Company, (b) individuals who currently constitute the
Board of Directors cease for any reason to constitute at least a
majority of the Board, (c) a merger or consolidation of the
Company with any other corporation or business organization or
the sale of all or substantially all the Company's assets
pursuant to approval of the Company's stockholders, (d)
outstanding shares of the Company's securities are exchanged for
or converted into cash or securities not issued by the Company
pursuant to a proxy solicitation, or (e) any event which a
majority of the Board of Directors declares to be a change of
control.
IN WITNESS WHEREOF, the undersigned executes this stock
option grant as of the first date set forth herein:
RIO HOTEL & CASINO, INC. RIO HOTEL & CASINO, INC.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx, LTIP Xxxxx X. Xxxxxx, LTIP
Committee Committee
Accepted and agreed to as of the Date of Grant:
Name: /s/ I. Xxxxx Xxxxxx Social Security Number: ________
Residence Address: 0000 Xxxxxxxx Xx. Xxxxxxxxx XX 00000
(street address) (city, state, zip code)
