Exhibit 10.32
E MPLOYMENT A GREEMENT
T HIS E MPLOYMENT A GREEMENT (this “Agreement”) is made and
entered into as of September 8, 2009, by and between
C OLONY
R ESORTS LVH A CQUISITIONS , LLC , a Nevada limited liability company, d/b/a Las
Vegas Hilton (the “Company”), and D
AVID M ONAHAN (“Executive”).
W ITNESSETH :
W HEREAS , the Company hereby employs Executive, and
Executive hereby accepts employment from the Company in the
capacity of Chief Operating Officer.
N OW , THEREFORE , in consideration of the mutual promises,
covenants and agreements herein contained, together with other good
and valuable consideration the receipt of which is hereby
acknowledged, the parties hereto do hereby agree as
follows:
1. S
ERVICES
AND
D
UTIES
. The Company hereby employs Executive, and
Executive hereby accepts employment with the Company in the
capacity of Chief Operating Officer (subject to approval of such
title by the Board of Directors and Executive obtaining necessary
Nevada licensure). At the earlier of December 31, 2009 or the
retirement of the current Chief Executive Officer of the Company,
Executive shall assume the position of Chief Executive Officer and
General Manager. Executive shall report directly to Nicholas L.
Ribis and Thomas Barrack (or their successors, as applicable). The
Company anticipates that Executive will assume from the current
Chief Executive Officer overall operating control of the Las Vegas
Hilton no later than November 1, 2009. Executive shall be a
full-time employee of the Company and shall dedicate all of
Executive’s working time to the Company. During the Term of
this Agreement, Executive shall have no other employment and no
other business ventures, activities or relationships without first
obtaining express written authorization from the Company. Such
authorization may be granted or denied in the sole discretion of
the Company. Notwithstanding the foregoing, Executive shall be
permitted to be affiliated with civic and charitable activities,
and trade or professional organizations, and to manage his personal
investments, provided that such activities do not materially
interfere with the performance of Executive’s duties
hereunder. In addition, Executive shall be permitted to remain on
the boards of directors of Smeralda Resorts, Consorzio Boards and
Fairmont Raffles through the first anniversary of the Commencement
Date (as defined below). At the first anniversary of the
Commencement Date, the Company will evaluate the effect of
Executive’s outside board memberships on the performance of
Executive’s duties hereunder and determine in good faith
whether or not the designated board memberships interfere with the
performance of Executive’s duties for Company or whether
Executive will be permitted to continue such activities during the
remainder of the term of this Agreement. Executive will perform
such duties as are required by the Company and normally associated
with Executive’s position, together with such additional
duties, commensurate with Executive’s position, as may be
assigned to Executive from time to time by the Company. The Company
has the right and discretion to modify, expand or contract, without
limitation, Executive’s duties and responsibilities during
the Term of this Agreement; provided, however, the duties and
responsibilities assigned to Executive shall be consistent with the
duties and responsibilities normally held by a person in
Executive’s title. Executive shall perform Executive’s
duties and responsibilities at the Company’s offices in
Las
Vegas, Nevada, and shall perform duties as
directed by management related to the Las Vegas Hilton and any
other affiliated location; provided, however, the Company shall
have the right to require Executive to travel as necessary to
perform Executive’s duties and responsibilities.
2. T
ERM
. The term of this Agreement shall be from
September 8, 2009 (the “Commencement Date”)
through August 31, 2012 (the “Term”), subject to
earlier termination pursuant to Section 6 herein. Each annual
period ending August 31 during the Term shall be a
“Contract Year.” If Executive remains employed after
the expiration of the Term, Executive shall be considered an
“at-will” employee subject to termination at any time
with or without cause and without notice. None of the provisions of
this Agreement shall apply to such at-will employment, except that
Sections 7 and 8 shall apply fully during the period of continued
employment and thereafter as set forth in said sections. As a
courtesy, the Company shall notify Executive not less than ninety
(90) days prior to the expiration of the Term if it intends to
terminate Executive’s employment at the end of the Term.
Failure to provide such notice shall not, in any way, cause
Executive to be entitled to any severance pay or benefits; nor
shall such failure constitute “Good Reason” for
Executive to terminate his employment within the meaning of
Section 6(b) of this Agreement.
3. C
OMPENSATION
.
(a) Base Salary . In
consideration of Executive’s full and faithful satisfaction
of Executive’s duties under this Agreement, the Company
agrees to pay to Executive a salary at the rate of Five Hundred
Thousand ($500,000) Dollars per annum. Said salary shall be payable
in such installments as the Company pays its similarly placed
executives, subject to usual and customary deductions for
withholding taxes and similar charges, and customary contributions
to health and welfare programs in which Executive is enrolled. Said
salary shall be reviewed on an annual basis by the Company and may
be adjusted in the sole discretion of the Company, but shall not be
subject to reduction.
(b) Bonus Compensation . In
addition to Base Salary, Executive shall be paid an incentive bonus
in an amount determined in accordance with this Section 3(b),
provided that the minimum annual bonus for each Contract Year
during the term shall not be less than $200,000 (the “Minimum
Bonus”). For each Contract Year during the Term, Executive
shall be paid an incentive bonus based upon the Company’s
trailing twelve month EBITDA (“TTM EBITDA”) as of
August 31, as follows: In the event the TTM EBITDA is above
the First Threshold, the incentive bonus shall be $200,000 plus an
incremental $25,000 in incentive bonus for every incremental $1
million in TTM EBITDA above the First Threshold and up to the
Second Threshold, plus an incremental $40,000 in incentive bonus
for every incremental $1 million in TTM EBITDA above the
Second Threshold. For purposes of this Section, the First Threshold
shall be an amount equal to the TTM EBITDA as of August 31,
2009 for the first Contract Year, TTM EBITDA as of August 31,
2010 for the second Contract Year, and TTM EBITDA as of
August 31, 2011 for the third Contract Year; and the Second
Threshold for each Contract Year shall be an amount equal to the
First Threshold for such Contract Year plus $10 million. For
example, if TTM EBITDA equals $20 million as of August 31,
2009 and $38 million for the first Contract Year, the incentive
bonus would be $200,000 plus 10 times $25,000, plus 8 times
$40,000, for a total incentive bonus of $770,000.
For purposes of this Agreement, the EBITDA of
the Company shall mean the earnings of the Company for the subject
period, plus interest expense, income tax expense and depreciation
and amortization expense for such period. The determination by the
Company of the Company’s EBITDA shall be conclusive and
binding upon the parties.
(c) Option to Purchase Membership
Units . Subject to obtaining all necessary consents and
approvals by the members and managing board of the Company and any
necessary amendments to the Colony Resorts LVH Acquisitions, LLC
2004 Incentive Plan (the “Incentive Plan”), the Company
shall grant to Executive an option (the “Option”) to
purchase 0.0167 Class A Membership Units of the Company at a
per unit price equal to the fair market value thereof, and 16,667
Class B Membership Units of the Company at a price equal to the
fair market value thereof (collectively, the “Option
Units”), which shall comprise not less than one
(1%) percent of the outstanding Class A and Class B
Membership Units of the Company, respectively, as of the date of
such grant. The Company agrees that it will take all reasonable
steps to enable the members and managing board of the Company to
take all steps necessary to issue the Option Units as soon as
practicable. The Option shall be granted pursuant to the Incentive
Plan, shall be subject to three-year vesting and otherwise conform
to the terms and conditions set forth in the form of Membership
Unit Option Agreement attached hereto as Exhibit A (the
“Option Agreement”). The Option and Executive’s
rights and obligations with respect to the Option Units shall be
subject in all respects to the terms of (i) the Incentive
Plan, (ii) the Option Agreement and (iii) the
Company’s Limited Liability Company Agreement, as may be
amended from time to time.
(d) Moving and Living Expenses;
Travel . The Company shall reimburse Executive for costs
reasonably incurred by Executive moving his personal belongings
(and immediate family) to Las Vegas, Nevada, from Waimea, Hawaii,
during the Term. In the event the Company reports such moving
expense reimbursement as taxable income to Executive on form W-2 or
1099 or the Internal Revenue Service subsequently determines that
all or a portion of such reimbursement is taxable income to
Executive, then the Company shall pay Executive an additional
amount sufficient to reimburse Executive for the federal and state
income taxes (determined at the highest marginal rates applicable
to Executive) and Executive’s share of any applicable payroll
taxes attributable to (i) the taxable portion of the
reimbursement and (ii) the tax gross-up payment made pursuant
to this clause, on or before April 15 of the year following
the year in which the reimbursement of such expenses is paid to
Executive or within ten (10) days of receipt of documentation
of the IRS adjustment, respectively. Executive will be provided
with lodging at the Las Vegas Hilton during the Term of this
Agreement. This lodging is provided for the convenience of the
Company because Executive is required to be available to the
Company twenty-four (24) hours per day. The Company shall
reimburse Executive for the cost of up to three business class
round-trip airline tickets per month for travel between Las Vegas,
Nevada, and Waimea, Hawaii, by Executive or his family members. In
addition to the foregoing, the Company shall pay reasonable
relocation expenses for Executive’s family in the event
Executive decides to move his family to the Las Vegas, Nevada,
area. Executive shall make application for reimbursement for said
expenses promptly after they are incurred. In the event
Executive’s family relocates to the Las Vegas area, the
Company and Executive shall review the need for Executive’s
availability on a twenty-four (24) hour per day
basis.
(e) Car Allowance . During
the Term of this Agreement, Executive will be reimbursed in an
amount up to $1,000 per month for the cost of leasing and operating
an automobile. This allowance shall include costs of fuel,
maintenance and insurance within the $1,000 per month reimbursement
limit.
(f) Business Expenses . The
Company shall reimburse Executive for all reasonable business,
entertainment and promotion expenses related to the performance of
his duties and responsibilities hereunder. Executive shall be
reimbursed for food, entertainment and laundry service expenses on
property in a manner consistent with the past practice of
reimbursement for such expenses applied to similarly-situated
executives of the Company.
4. B
ENEFITS
. The Company shall provide Executive with a
minimum of four (4) weeks paid vacation per Contract Year and
term life insurance with a death benefit of Seven Hundred Thousand
($700,000) Dollars. In addition, Executive shall be entitled to
other benefits offered to employees at Executive’s level,
including sick time, participation in the Company’s sponsored
medical, dental and insurance programs, as well as the ability to
participate in any Company retirement savings plan (the
“Benefit Plans”), subject to the limitations imposed by
the terms of such plans. To the extent permitted by the terms of
each Benefit Plan, Executive shall be eligible to participate in
each Benefit Plan in accordance with the terms and conditions of
such plan. In the event Executive elects not to participate or
enroll his eligible dependents in the Company’s medical
insurance plan, then the Company will reimburse Executive for the
premiums paid by Executive to maintain Executive’s existing
medical insurance plan at existing limits of coverage and terms for
Executive and/or his eligible dependents. It is the Company’s
intent to make any payments necessary to continue the existing
level of medical coverage for Executive and his
dependents.
5. L
ICENSING
R
EQUIREMENTS
. Executive hereby covenants and agrees that, at
all times during the Term of this Agreement, Executive shall keep
and maintain, in full force and effect, any and all licenses,
permits or work authorizations that may be required by any Federal,
State or local government agency (the “License
Requirements”), including, but not limited to, any casino
gaming regulatory agency having jurisdiction over Executive or the
Company necessary for Executive to perform Executive’s duties
hereunder. The Company shall pay or reimburse all costs, fees and
expenses necessary to apply for and maintain any required licenses,
permits or work authorizations.
6. T
ERMINATION
. Executive’s Employment with the Company
may be terminated (a) by the Company for Cause (as defined
below); (b) by the Company at any time without Cause;
(c) by Executive at any time for Good Reason (as defined
below), (d) by Executive at any time without Good Reason,
(e) upon Executive’s death or disability, or
(f) upon the expiration of the Term.
(a) Cause .
“Cause” shall mean the following: (i) illegal,
immoral or unethical conduct, including, but not limited to, fraud,
embezzlement or other dishonest behavior in the performance of
Executive’s duties; (ii) material breach by Executive of
any of the terms of this Agreement; (iii) a determination by
any gaming regulatory authority that Executive is not deemed fit
for licensure whether or not such a license is actually needed by
Executive to perform Executive’s duties under this Agreement
in the jurisdiction Executive’s employment is
located;
(iv) material breach of any rule, policy or
directive of the Company, including, but not limited to, the
Company’s policy against sexual and other illegal harassment,
the Company’s policy against illegal discrimination, and the
Company Code of Conduct; (v) willful neglect of duties;
(vi) use, possession and/or sale of illegal drugs at any time
(whether on or off duty) and in any location (whether on or off
Company premises); (vii) abuse of alcohol, including, but not
limited to, reporting to or engaging in work under the influence of
alcohol; and/or (iii) any conduct that materially injures the
reputation or business of the Company.
If Executive’s employment with
the Company is terminated by the Company for Cause prior to the end
of the Term, Executive shall not be entitled to any further
compensation or benefits other than accrued but unpaid Base Salary
and accrued and unused vacation pay through the date of such
termination.
(b) Good Reason . “Good
Reason” shall mean, without Executive’s written
consent, a willful and material breach by the Company of its
o
