EXHIBIT 10.4
OPBIZ, LLC
EMPLOYMENT AGREEMENT
This Agreement is made between OpBiz, LLC ("the Company") and Xxxxxxx
Xxxxx ("Executive").
1. EMPLOYMENT. The Company agrees to employ the Executive and the
Executive agrees to be employed by the Company in the capacity of President and
Chief Executive Officer, as set forth herein, reporting directly to the
Company's Board of Managers. Until the expiration or sooner termination of this
Agreement pursuant to Section 4 below, Executive shall also enjoy a seat on the
Board of Managers of the Company. Executive warrants and represents that, to the
extent such employment requires licensing by the Nevada Gaming Commission,
Executive is able to secure such licensing and there are no threatened or
pending actions against Executive which would compromise such licensing efforts.
2. TERM. Executive's employment with the Company pursuant to this
Agreement commenced May 11, 2003 ("Services Commencement Date") and shall
continue for a period of five years subject to the terms and conditions set
forth herein.
3. PERFORMANCE OF DUTIES. The Executive agrees to devote his
full-time efforts to the discharge of his responsibilities and duties under this
Agreement and such other hours and efforts as may be reasonably necessary. From
and after the Services Commencement Date until the expiration or sooner
termination of this Agreement in accordance with Section 4 herein, Executive
shall not, without the consent of the Company, directly or indirectly, provide
services to or for any person or firm for compensation, or engage in any
practice that competes with the interest of the Company.
4. TERMINATION OF AGREEMENT. The Company shall have the right to
terminate this Agreement and the employment of Executive (i) at any time and
without liability for "Cause" (defined below); and (ii) at any time without
"Cause" upon the payment to Executive of twelve (12) months of the then Base Pay
(defined below); provided however, Executive shall have the right to terminate
this Agreement and the employment of Executive (i) without liability and at any
time for "Good Reason" (defined below); and (ii) at any time without "Good
Reason" upon ninety (90) days prior written notice to the Company.
For purposes this Agreement, "Cause" is defined as Executive's (i) loss
of Executive's key license issued by the Nevada Gaming Commission; (ii)
conviction of Executive of a felony; (iii) any material breach of this Agreement
by Executive; provided, however, in the event of such a breach, the Company
shall give written notice of such breach and the Executive shall have ten (10)
business days to cure such breach; or (iv) the Executive shall engage in any
unauthorized, morally-bankrupt activity which shall be determined by a
two-thirds (2/3) vote of the Board of
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Managers, acting reasonably, to have a material and adverse impact on the
Company's name, reputation or goodwill in the Las Vegas, Nevada community.
For purposes of this Agreement, "Good Reason" is defined as (i) the
assignment to Executive of duties incommensurate with his status as President
and Chief Executive Officer, or any material reduction of the Executive's
duties, authority or responsibilities or any reduction, whether material or not,
in Executive's title or reporting responsibilities, relative to Executive's
duties, authority, responsibilities, title or reporting responsibilities as in
effect immediately prior to such reduction, except if agreed to in writing by
the Executive; (ii) a reduction by the Company in the Executive's Base Pay, or
Bonus as in effect immediately prior to such reduction; (iii) the relocation of
the Executive to a facility or location more than thirty-five (35) miles from
the Executive's then present location, without the Executive's written consent;
or (iv) any material breach of this Agreement by the Company; provided, however,
in the event of such a breach, the Executive shall give the Company written
notice of such breach and the Company shall have ten (10) business days to cure
such breach.
This Agreement shall automatically renew upon expiration for successive
five (5) year periods unless notice is given no less than ninety (90) days prior
to the expiration of the term or any renewal thereof by either party of its
intention not to so renew.
5. COMPENSATION. From and after the Services Commencement Date
and until the expiration or sooner termination of this Agreement in accordance
with the terms and conditions set forth in Section 4 above, the Company shall
pay or provide to the Executive as compensation for the services of the
Executive:
(a) An annual base salary of $450,000 per year, payable
in such installments as the Company may provide, but
not less than once per month; such amount to be
adjusted annually by the Board of Managers,
commencing April 11, 2005 and then annually
thereafter within thirty (30) days of April 11th of
any subsequent year (but in any event no less than
$450,000 per annum) (the "Base Pay"); and
(b) A performance based bonus payment representing a
percentage of the Base Pay received by Executive for
such twelve month period ("Bonus"), payable within 30
days after the end of each year following
determination of the Bonus by the Board of Managers,
as follows:
(i) From the Services Commencement Date until
December 31, 2003, the Bonus shall be
calculated as a fixed $250,000 for the 2003
calendar year, however, in the event that
the Company assumes operating control of the
Aladdin property (the "Company Takeover"),
prior to December 31, 2003, the Bonus shall
be calculated as a fixed $250,000 per annum
bonus payment,
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calculated on a pro-rata annualized basis,
and the Bonus for the rest of the year shall
be calculated on a pro-rata basis as set
forth in Section (b)(iii) such that, in any
event, the minimum Bonus calculation for
2003 shall be $250,000.
(ii) In the event that the Company Takeover does
not occur on or before December 31, 2003,
then from January 1, 2004 until the Company
Takeover the Bonus shall be calculated as a
fixed $250,000 per annum bonus payment,
calculated on a pro-rata annualized basis.
(iii) From and after the Company Takeover until
such time as the Company shall commence its
construction and rebranding efforts (the
"Rebranding Commencement"), the Bonus shall
be determined on an incremental, pro rata
basis such that the Executive's bonus will
equal, for example, 100% of the Executive's
Base Pay in the event that 100% of projected
EBITDA is achieved, 110% of the Executive's
Base Pay in the event that 110% of projected
EBITDA is achieved, or 200% of the
Executive's Base Pay in the event that 200%
of projected EBITDA is achieved, etc. with
EBITDA being calculated at 110% of the
EBITDA of the Aladdin property prior to the
Company Takeover, such Bonus to be
calculated on a pro-rata annualized basis.
During this period of time, Executive will
only receive a Bonus in the event that 100%
of the projected EBITDA, or greater, is
achieved.
(iv) From and after the Rebranding Commencement
until such time as the hotel/casino property
is re-opened to the public (the "Public
Reopening"), 50% of the Bonus shall be
determined on an incremental, pro-rata basis
such that the Executive's Bonus will equal,
for example, 100% of the Executive's Base
Pay in the event that 100% of projected
EBITDA is achieved, 110% of the Executive's
Base Pay in the event that 110% of projected
EBITDA is achieved, or 200% of the
Executive's Base Pay in the event that 200%
of projected EBITDA is achieved, etc., and
50% of the Bonus shall be determined on a
sliding scale based on actual CAPEX against
budget as established by the Board of
Managers, such Bonus to be calculated on a
pro-rata annualized basis. During this
period of time, Executive will only receive
a Bonus in the event that 100% of the
projected EBITDA, or greater, is achieved.
(v) From and after the Public Reopening, the
Bonus shall be determined on an incremental,
pro-rata basis such that the
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Executive's Bonus will equal, for example,
100% of the Executive's Base Pay in the
event that 100% of projected EBITDA is
achieved, 110% of the Executive's Base Pay
in the event that 110% of projected EBITDA
is achieved, or 200% of the Executive's Base
Pay in the event that 200% of projected
EBITDA is achieved, etc., such Bonus to be
calculated on a pro-rata annualized basis.
During this period of time, Executive will
only receive a Bonus in the event that 100%
of the projected EBITDA, or greater, is
achieved.
For purposes of Sections 5(b)(iv) and 3(b)(v) above,
EBITDA shall be the following:
First year following Rebranding Commencement - $33
million;
Second year following Rebranding Commencement - $69
million;
Third year following Rebranding Commencement - $99
million;
Fourth year following Rebranding Commencement - $103
million;
Fifth year following Rebranding Commencement - $105
million; or
such other revised EBITDA figures as may be mutually
agreed to in writing by the parties hereto.
In the event of any termination other than a
termination by the Company of the Executive for
"Cause," the Company shall pay to Executive all
accrued but unpaid Bonus up to such date of
termination, as determined by the Board of Managers
utilizing the above formulas against year to date
budgets and adjusted for budgeted seasonality.
(c) STOCK OPTIONS. Executive shall receive stock options
representing an amount equal to three percent (3%) of
the outstanding equity of Company as of April 11,
2003; such stock options to vest automatically in
accordance with the following schedule:
(i) 33 1/3% on April 11, 2004, provided that
Executive is still employed by Company;
(ii) 33 1/3% on April 11, 2005, provided that
Executive is still employed by Company; and
(iii) the remainder on April 11, 2006, provided
that Executive is still employed by Company;
The exercise price for such stock shall be based on a
current subscription valuation and payable by
Executive to Company upon exercise of such stock
options once vested. In the event that this Agreement
expires or is
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sooner terminated in accordance with Section 4 above,
whether due to the resignation of Executive or
otherwise, any vested options must be exercised
within ninety (90) days of such expiration or sooner
termination and Executive shall also be entitled to
exercise the pro-rata share of stock options
scheduled to vest during that year, if any.
It is anticipated as of the date of this Agreement
that the current per share valuation is approximately
$1.0 million per 1%. The stock options shall have
customary non-discrimination and tag-along rights.
During the term of this Agreement and thereafter, the
Company shall retain a right of first refusal (the
"ROFR") with respect to any sale by Executive of any
shares in the Company. In order to exercise the ROFR,
the Company shall have the option, within thirty (30)
days after receiving the terms and conditions of a
bona fide third party offer for all or a portion of
shares owned by Executive, to purchase such shares at
the cash equivalent of such offer.
(d) EMPLOYEE BENEFITS. During Executive's employment with
the Company, Executive shall be eligible to
participate in (i) all employee benefit plans
currently and hereafter maintained by the Company for
senior management, including, without limitation,
life, group health, disability insurance, incentive,
profit sharing, savings, deferred compensation and
retirement plans, practices, policies and programs
according to their terms, and; (ii) such other
employee benefits as are set forth in this Agreement.
6. HEALTH INSURANCE. During the term of this Agreement, the
Company shall provide to Executive and his wife, Xxxxxx Xxxxx, family health
insurance that is to be 100% funded by the Company (i.e., no deductibles or out
of pocket expenses). Additionally, once per year, Executive and his wife may
obtain, at the Company's expense, a comprehensive physical examination at the
clinic or health care facility of Executive's choice.
7. EXPENSES. During the term of this Agreement, the Company will
pay or reimburse Executive for all travel, entertainment and other expenses
incurred by Executive in the furtherance of or in connection with the
performance of Executive's duties hereunder.
8. DISABILITY INSURANCE. During the term of this Agreement, the
Company will obtain the greatest amount of disability insurance available to
Executive.
9. LIFE INSURANCE. During the term of this Agreement, the Company
will obtain term life insurance for Executive in an amount equal to five times
the amount Executive's Base Salary, payable to the beneficiary designated by
Executive.
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10. AUTOMOBILE. During the term of this Agreement, the Company
shall pay Executive a monthly auto allowance of $2,000.00 and reimburse
Executive for the maintenance and insurance costs of such automobile.
11. D&O INSURANCE. During the term of this Agreement, the Company
agrees to maintain director and officer liability insurance in scope and amounts
reasonably satisfactory to Executive.
12. INDEMNIFICATION. The Company shall indemnify Executive to the
same extent as other senior executives and directors of the Company are
indemnified. The foregoing indemnification shall not be inclusive of any other
right which Executive may have or hereafter acquire under any statute, provision
of the Articles of Organization or Operating Agreements, agreement, vote of
stockholders or disinterested directors or otherwise. The foregoing
indemnification shall not be deemed to affect any rights to subrogation which
may exist in any policy of directors and officers liability.
13. VACATION. Executive shall be entitled to paid vacation of four
weeks per year in accordance with the Company's vacation policy, with the timing
and duration of specific vacations mutually and reasonably agreed to by the
parties hereto.
14. LEGAL FEE REIMBURSEMENT. The Company agrees to reimburse
Executive for the legal fees incurred arising solely from the termination of his
prior employment and entering into this Agreement upon receiving an invoice for
such legal fees; provided, however, the Company shall not have an obligation to
reimburse the Executive for legal fees arising out of his unauthorized violation
of any provision during said Agreement.
15. FRINGE BENEFIT GROSS-UP. Executive will be fully "grossed-up"
by the Company for any imputed income required to be recognized under Sections
6, 7, 8, 9 and 10 hereof so that the economic effect to Executive is the same as
if these benefits were provided to Executive on a non-taxable basis.
16. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company. Any such successor of the Company
shall be deemed substituted for the Company under the terms of this Agreement
for all purposes. As used herein, "successor" shall include any person, firm,
corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires all or substantially all of
the assets or business of the Company.
17. NOTICES. All notices, requests, demands and other
communications called for hereunder shall be in writing and shall be deemed
given if delivered personally or three (3) days after being mailed by registered
or certified mail, or sent by Federal Express or some other private express
delivery company, return receipt requested, prepaid and addressed to the parties
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or their successors in interest at the following addresses, or at such other
addresses as the parties may designate by written notice in the manner
aforesaid:
If to the Company:
If to Executive: Xxxxxxx Xxxxx
00 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
18. GUARANTEE. Xxxx Xxxxxxxxxx and Xxxxxx Xxxx hereby
unconditionally and irrevocably guarantee to Executive the performance of all
payment obligations of the Company, its successors and assigns with respect to
the Agreement until such time as the Company Takeover occurs.
19. SEVERABILITY. In the event that any provision hereof becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision.
20. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding between the Company and Executive concerning
Executive's employment and director relationship with the Company, and
supersedes and replaces any and all prior agreements and understandings
concerning Executive's employment relationship with the Company.
21. NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE. This
Agreement may only be amended, canceled or discharged in writing signed by
Executive and the Company.
22. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Nevada.
23. CONFIDENTIALITY. The parties hereto agree that this Agreement
and the terms contained herein constitute confidential information which shall
not be directly or indirectly disclosed to any third party or recorded in any
public records except to the extent that such disclosure is required to
implement or enforce the terms of this Agreement, as may be required by law.
24. MISCELLANEOUS. The rights and duties of the parties hereunder
are personal and may not be assigned or delegated without the express written
consent of all other parties to this Agreement. The captions used herein are
solely for the convenience of the parties and are not used in construing this
Agreement. Time is of the essence of this Agreement and the performance by each
party of its or his duties and obligations hereunder. The prevailing party in
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any litigation, arbitration or mediation relating to this Agreement shall be
entitled to recover its reasonable attorney's fees from the other party. This
Agreement may be signed in more than one counterpart, in which case each
counterpart shall constitute an original of this Agreement. Facsimile signatures
shall be treated as original signatures for all purposes.
IN WITNESS WHEREOF, the undersigned have executed this Agreement.
OPBIZ, LLC
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By:
Dated: April 11, 2003
XXXXXXX XXXXX
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Dated: April 11, 2003
XXXXXX XXXX
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Dated: April 11, 2003
XXXX XXXXXXXXXX
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Dated: April 11, 2003
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