Exhibit 10.4
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this day
15th of April, 1999, by and between JAMES RIX (hereinafter referred to as
"EMPLOYEE") and AB CAPITAL, L.L.C. and PENINSULA GAMING, L.L.C, a Delaware
limited liability companies and, after closing, the entity holding the Riverboat
Gaining License in Dubuque, Iowa, (hereinafter referred to as "EMPLOYER") as of
the Closing Date (as defined in the Asset Purchase and Sale Agreement (the
"Asset Purchase Agreement"), dated January 15, 1999, between Greater Dubuque
Riverboat Entertainment Company, LC, an Iowa limited liability company
("GDREC"), and EMPLOYER).
WHEREAS, EMPLOYER has entered into that certain Asset Purchase and Sale
Agreement dated January 15, 1999, by and between GDREC and EMPLOYER, pursuant to
which GDREC will sell to EMPLOYER all of its assets to its riverboat gambling
business in Dubuque, Iowa (the "GDREC Sales Transaction");
WHEREAS, EMPLOYEE is currently employed by GDREC as its Chief Operating
Officer and such employment will terminate effective the closing date of the
GDREC Sales Transaction;
WHEREAS, EMPLOYER agrees to employ EMPLOYEE as its Chief Operating Officer
and EMPLOYEE agrees to such employment and to serve as the Chief Operating
Officer of EMPLOYER effective upon closing of the GDREC Sales Transaction.
NOW, THEREFORE, in consideration of the promises made in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties, the parties agree as follows:
1. TERM OF AGREEMENT: The term of EMPLOYEE'S employment and consulting
relationship if exercised pursuant to section five (5) of this Agreement, shall
be for three (3) years (the "Term") commencing the closing date of the GDREC
Sales Transaction (the "Employment Date"), unless earlier terminated as provided
in this Agreement. EMPLOYER and EMPLOYEE each acknowledges that until the
consummation of the GDREC Sales Transaction, EMPLOYEE shall be an employee of
GDREC and EMPLOYER shall not directly or indirectly control, supervise or
interfere with EMPLOYEE'S duties as an employee of GDREC of the operations of
GDREC's business or attempt any of the foregoing.
2. TERMINATION: The EMPLOYER may terminate this Agreement at any time for
"Good Cause" and the EMPLOYEE may terminate this Agreement for "Good Reason";
provided, however, that in the case of such termination, the terminating party
shall give sixty (60) days advance written notice to the other party, utilizing
hand delivery or restricted certified mail. If certified mail is used, such
notices will be deemed to have been given on the date it is deposited in any
United States Post Office mail receptacle, properly addressed and bearing proper
postage.
Upon such notice of termination, EMPLOYEE shall continue to render
services to
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EMPLOYER until the date of termination unless: (a) EMPLOYER directs EMPLOYEE to
cease rendering services at an earlier date; or (b) EMPLOYER and EMPLOYEE agree
that EMPLOYEE will cease rendering services at an earlier date.
Salary and severance shall be paid following notice of termination only as
follows:
a. EMPLOYEE shall be entitled to his regular pro-rated salary following
notice of termination for so long as EMPLOYEE is permitted to and
actually continues to render services to EMPLOYER during the 60-day
period following such notice.
b. If EMPLOYEE is directed by EMPLOYER to cease work prior to
expiration of the 60-day period EMPLOYEE shall be entitled to his
regular pro-rated salary until the end of the 60-day period.
c. If EMPLOYEE is terminated other than for Good Cause or if EMPLOYEE
terminates for Good Reason (in each case, a "Termination"), prior to
the expiration of the term of this Agreement, EMPLOYEE shall be
entitled to receive severance from EMPLOYER (i) the balance of
EMPLOYEE's compensation for the remaining term of the Agreement, as
defined in paragraphs 1 and 5 of this Agreement, and (ii) a
pro-rated portion of any incentive bonus earned or accrued by the
EMPLOYEE pursuant to the provisions of the incentive bonus plan
identified in Section 4(c), as of the date of termination.
3. DUTIES: EMPLOYEE shall carry out the duties and responsibilities of the
Chief Operating Officer of the EMPLOYER which shall include managing the
day-to-day operations of EMPLOYER, assisting EMPLOYER in performing post-closing
responsibilities, and assisting in the development of the operating plan,
including budgets and long term strategy. Employee shall report directly to
Brent Stevens, the Chief Executive Officer of A.B. Capital, L.L.C.
4. COMPENSATION AND BENEFITS:
(a) On the Employment Date, EMPLOYER shall pay EMPLOYEE, as a signing
bonus for entering into this Agreement, One Hundred Thousand Dollars
($100,000.00).
(b) EMPLOYEE shall be paid by EMPLOYER as compensation for his services,
a base annual salary of Two Hundred Fifty Thousand Dollars
($250,000.00) per annum.
(c) Commencing eighteen (18) months from the Employment Date, the
EMPLOYEE is entitled to, and the EMPLOYER hereby agrees to pay
EMPLOYEE, annual incentive performance bonuses (the "Incentive
Bonus") as specified in the attached Exhibit A so long as EMPLOYER
meets the jointly developed EBITDA budgeted figures for the just
concluded calendar year.
(d) EMPLOYEE shall be entitled to all current benefits accorded full
time employees of EMPLOYER in accordance with the terms of the
EMPLOYER'S personnel
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policies.
5. CONSULTING OPTION. Until the expiration or termination of this
Agreement, at the end of each of the first and second years of the Term,
EMPLOYEE and EMPLOYER shall have the option to convert the employment
arrangement contemplated by this Agreement into a nonexclusive consulting
arrangement or maintain the existing employment agreement. EMPLOYEE shall
provide the EMPLOYER with written notice at least ninety (90) days prior to the
expiration of such employment year of the intent to exercise such an option or
to extend the existing employment agreement. EMPLOYER shall have thirty (30)
days to give the EMPLOYEE written notice of the EMPLOYER's acceptance or
rejection of the EMPLOYEE's preference. Failure to reach a mutual agreement
shall result in the selection of the consulting option. The consulting
arrangement provided for by this Section 5 shall be effective and commence at
the beginning of the year during the term for which notice is given. If the
option is exercised by EMPLOYEE, EMPLOYEE agrees to, at the request of EMPLOYER,
act as a consultant with respect to the EMPLOYER's excursion boat gambling
business at Dubuque, Iowa during the employment/consulting year (the "Consulting
Services"), consistent with the EMPLOYEE's availability and knowledge. In
consideration of any Consulting Services to be provided by EMPLOYEE hereunder,
and in lieu of the compensation pursuant to Section 4 hereof, in the first
consulting year, EMPLOYER shall pay EMPLOYEE a consulting fee of (i) One Hundred
Thousand Dollars ($100,000.00) per annum for the first year in which EMPLOYEE is
engaged as a consultant and (ii) Seventy-Five Thousand Dollars ($75,000.00) per
annum for the second year in which EMPLOYEE is engaged as a consultant, in each
case, payable in equal quarterly installments at the beginning of each quarter
of such year. EMPLOYER shall also reimburse and pay EMPLOYEE for any and all
reasonable expenses incurred by EMPLOYEE in performing the Consulting Services,
including, but not limited to, reimbursement of travel expenses in the event
that EMPLOYEE agrees to perform Consulting Services at a location other than
EMPLOYER's place of business in Dubuque, Iowa. While EMPLOYEE is engaged as a
consultant during the term of this Agreement, EMPLOYEE shall (i) be an
independent contractor with full power and authority to select the means, manner
and method of performing the Consulting Services without direction or control of
EMPLOYER, (ii) not be an agent or employee of the EMPLOYER, and (iii) have no
right or power to bind the Company under any agreement or to transact any
business or make any representations or promises in the EMPLOYER's name or on
its behalf, except insofar as he is expressly authorized to do so in writing by
the EMPLOYER. In his capacity as a consultant hereunder, EMPLOYEE shall be
entitled during the term to provide consulting services to other persons or
entities that are not directly competing with the EMPLOYER, engaged in the
casino or gaming business located within a 50 mile radius of Dubuque, Iowa.
6. NON-COMPETITION AGREEMENT:
(a) Both parties acknowledge that the EMPLOYEE's position is one of
considerable responsibility and requires considerable training,
relationships and contacts with customers, clients and potential
customers and clients, and experience that it will take a
substantial amount of EMPLOYER's time to replace an employee who has
received such training, relationships, contacts and experience as
are typically afforded by EMPLOYER; and
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(b) As a condition of employment/engagement and continued
employment/engagement of EMPLOYEE by EMPLOYER, the parties mutually
agree that confidentiality is required in connection with the
business of EMPLOYER and in connection with the operations and the
names of EMPLOYER's customers and clients, and that accordingly, it
is vital that EMPLOYER be protected from direct competition from key
employees whose employment might be terminated by or from EMPLOYER,
said protection required during employment and for a reasonable
period of time after termination thereof.
(c) It is hereby agreed by and between the parties that, as a part of
the valuable consideration of the employment/engagement and
continued employment/engagement of EMPLOYEE by EMPLOYER:
(i) That EMPLOYEE shall treat and keep confidential all material
matters relating directly to the business of EMPLOYER,
including the content of all information contained in the
following that was not previously known by the EMPLOYEE, not
generally available to the public, and material to the
EMPLOYER's business: manuals, memoranda, production,
marketing, promotional and training materials, financial
statements, sales and operations records, business methods,
systems and forms, production records, billing rates, cost
rates, employee salaries and work histories, client lists,
mailing lists, processes, inventions, formulas, job production
and cost records, special terms with clients consistent with
the above qualifications. Notwithstanding the above, EMPLOYEE
shall treat and keep confidential all player development lists
and all proprietary customer information, without exception.
The EMPLOYEE further agrees to keep confidential and not to
keep and/or use any papers, records, or any information
relative to the matters referred to in the preceding sentence,
nor shall EMPLOYEE furnish, make available or otherwise
divulge any such information to any person during or after his
employment by EMPLOYER, unless specifically instructed to do
so in writing signed by the Chief Operating Officer of
EMPLOYER.
(ii) That if for any reason EMPLOYEE shall voluntarily or
involuntarily terminate his employment or EMPLOYER shall
terminate EMPLOYEE, it is specifically agreed and understood
that EMPLOYEE, for a period of one (1) year from the date of
termination shall not, within a radius of fifty (50) miles of
Dubuque, Iowa (the "Territory"), directly be connected with
any casino located within the Territory.
(iii) That if for any reason EMPLOYEE shall voluntarily or
involuntarily terminate his employment or EMPLOYER shall
terminate EMPLOYEE, it is specifically agreed and understood
that EMPLOYEE, for a period of one (1) year from the date of
termination, shall not, directly in any capacity whatsoever,
hire or solicit for employment any employee of EMPLOYER.
(d) The terms and provisions of this Section 6 shall be binding upon
EMPLOYEE whether EMPLOYEE is employed by EMPLOYER or engaged as a
consultant by EMPLOYER pursuant to the terms of this Agreement.
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7. INDEMNIFICATION: EMPLOYER shall indemnify, defend and hold and save
EMPLOYEE, his heirs, administrators or executors and each of them harmless from
any and all actions and causes of action, claims, demands, liabilities, losses,
damages or expenses, of whatsoever kind and nature, including judgments,
interest and attorney fees and all other reasonable costs, expenses and charges
which EMPLOYEE, his heirs, administrators or executors and each of them shall or
may at any time or from time to time, subsequent to the effective date of this
Agreement sustain or incur, or become subject to by reason of any claim or
claims against EMPLOYEE, his heirs, administrators or executors and each of them
while acting within the scope of his employment except for gross negligence,
misconduct or criminal acts or omissions on the part of the EMPLOYEE, and
provided that EMPLOYEE, his heirs, administrators or executors or one of them
properly and promptly notifies EMPLOYER of adverse claims or threatened or
actual lawsuits. EMPLOYEE, his heirs, administrators or executors as
appropriate, shall provide complete cooperation to EMPLOYER, its attorneys and
agents in such case to the extent possible.
8. ENTIRE AGREEMENT: This Agreement contains the entire agreement of the
parties and there are no other promises or conditions in any other agreement
whether oral or written. This Agreement supersedes any prior written or oral
agreement between the parties.
9. DEFINITIONS:
(a) "Good Cause" shall mean (i) EMPLOYEE's death, (ii) EMPLOYEE becoming
physically or mentally disabled (a "Disability"), which Disability
renders EMPLOYEE unable to perform, as certified by a mutually
agreeable competent medical physician, a substantial portion of
EMPLOYEE's duties hereunder, (iii) EMPLOYEE's commission of an act
of embezzlement, fraud, misappropriation against EMPLOYER, (iv)
EMPLOYEE's conviction of, or entry of a plea of guilty or nolo
contendere or its equivalent to, a felony, (v) EMPLOYEE's engagement
of conduct injurious to EMPLOYER or having an adverse effect on
EMPLOYER's reputation or business operations, all of which threatens
or is likely to threaten the licensed status of the EMPLOYEE or the
EMPLOYER, (vi) EMPLOYEE's continued neglect or failure to discharge
EMPLOYEE's duties or responsibilities or the repeated taking of any
action prohibited by EMPLOYEE's immediate supervisor, the managing
member or the board of managers of EMPLOYER, materially affecting
the fundamental operating results of the EMPLOYER, (vii) the
revocation, suspension for more than thirty (30) days, or voluntary
relinquishment of any gaming license necessary for the performance
of EMPLOYEE's duties hereunder, or (viii) EMPLOYEE's breach or
violation of any material term or material provision of this
Agreement; provided, however, that in the case of clauses (v), (vi),
(vii) and (viii) of this Section 9(a), EMPLOYEE shall be entitled to
thirty (30) days notice of termination, during which thirty (30) day
period EMPLOYEE shall have the right to remedy any such breach or
default.
(b) The term "Good Reason" shall mean (a) the failure of the EMPLOYER to
pay the EMPLOYEE any portion of the EMPLOYEE'S base salary,
Incentive Bonus or other compensation or benefits within ten (10)
days of the time in which such amount is due and payable to the
EMPLOYEE; (b) a material change in the duties of the EMPLOYEE
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as defined in Section 3 of this Agreement; (c) misrepresentation by
EMPLOYER of any material fact relating to the conditions of
Employment; (d) a failure by the EMPLOYER to provide a reasonable
working environment; and/or (e) a failure by EMPLOYER to comply with
the provisions of this Agreement.
10. AMENDMENTS: This Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.
11. SEVERABILITY: If any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, the remaining provisions shall continue
to be valid and enforceable. If a court finds that any provision of this
Agreement is invalid or unenforceable, but that by limiting such provision it
would become valid and enforceable, then such provision shall be deemed to be
written, construed, and enforced as so limited.
12. WAIVER OF CONTRACTUAL RIGHT: The failure of either party to enforce
any provision of this Agreement shall not be construed as a waiver or limitation
of that party's right to subsequently enforce and compel strict compliance with
every provision of this Agreement.
13. APPLICABLE LAW: This Agreement shall be governed by the laws of the
State of Iowa.
14. REPRESENTATION: The undersigned parties (a) each acknowledge that they
have reviewed the terms of this Agreement, have consulted with their respective
legal counsel regarding the terms of this Agreement, and agree that the terms of
this Agreement are fair to each party and (b) each further acknowledges that
each are executing this Agreement under their own free will without any duress
from either party. The undersigned person executing this Agreement for and on
behalf of EMPLOYER represents that its execution hereof is authorized under
EMPLOYER's Articles of Organization and Operating Agreement, and that the
undersigned is fully authorized to sign this Agreement for and on behalf of
EMPLOYER, and that EMPLOYEE may rely upon this representation.
15. ASSIGNABILITY. This Agreement shall not be assigned without the
approval of the parties.
IN WITNESS WHEREOF, EMPLOYER and EMPLOYEE have duly executed and delivered
this Agreement as of the date first written above.
EMPLOYEE: EMPLOYEE:
By: /s/ M. Brent Stevens /s/ James P. Rix
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M. Brent Stevens, Managing Member James P. Rix
On behalf of the board of Managers for
AB CAPITAL, L.L.C. and
PENINSULA GAMING, L.L.C
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