PRIVILEGED & CONFIDENTIAL — FOR DISCUSSION PURPOSES ONLY
EXECUTIVE EMPLOYMENT AGREEMENT
by and between
REDSTONE GAMING CORP.
and
MARCUS J. ELLENDER
November 17, 2023
DRAFT — PRIVILEGED & CONFIDENTIAL — FOR DISCUSSION PURPOSES ONLY
Prepared by Calderwood & Harkness LLP Nadia Petrov and James Underwood Reviewed by Renata Vasquez, Partner Matter No. 1033-00005
Right-click to update Table of Contents
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this "Agreement") is entered into as of __, 2024 (the "Effective Date"), by and between:
REDSTONE GAMING CORP., a Delaware corporation with its principal executive offices at 4100 Sandstone Ridge Boulevard, Las Vegas, Nevada 89119 (the "Company"),
and
MARCUS J. ELLENDER, an individual residing at 2288 Bristlecone Pines Drive, Reno, Nevada 89511 (the "Executive" and, together with the Company, each a "Party" and collectively the "Parties").
RECITALS
WHEREAS, the Company is a publicly traded gaming and media entertainment company listed on the Nasdaq Stock Market under the ticker symbol "RDGM," engaged in the business of casino gaming, resort operations, interactive digital gaming, and media entertainment across multiple domestic and international jurisdictions;
WHEREAS, the Company desires to employ Executive as its Executive Vice President and Chief Financial Officer, and Executive desires to accept such employment with the Company, on the terms and conditions set forth herein;
WHEREAS, the Company's Board of Directors (the "Board"), acting through its Compensation Committee (the "Compensation Committee"), has reviewed and approved the framework for the terms and conditions of Executive's employment as set forth in this Agreement pursuant to Compensation Committee Resolution No. CC-2023-014, dated November 3, 2023;
WHEREAS, Executive is currently employed as Executive Vice President and Chief Accounting Officer of Grandview Resorts International, Inc., a privately held hospitality and gaming company headquartered in Reno, Nevada, and will resign from all positions held with Grandview Resorts International, Inc. prior to the Start Date (as defined herein);
WHEREAS, as a material condition of Executive's employment hereunder, Executive agrees to be bound by the restrictive covenant obligations set forth in Article VII of this Agreement, which the Parties acknowledge are reasonable and necessary to protect the Company's legitimate business interests; and
WHEREAS, the Company and Executive desire to set forth the terms and conditions of Executive's employment relationship with the Company in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the employment of Executive by the Company, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined in this Article I shall have the meanings ascribed to them elsewhere in this Agreement.
Section 1.1 "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to vote fifty percent (50%) or more of the securities or other ownership interests of such other Person having ordinary voting power.
Section 1.2 "Annual Bonus" has the meaning set forth in Section 4.2.
Section 1.3 "Base Salary" has the meaning set forth in Section 4.1.
Section 1.4 "Board" means the Board of Directors of Redstone Gaming Corp., as constituted from time to time.
Section 1.5 "Cause" means the occurrence of any one or more of the following events:
(a) Executive's willful misconduct or gross negligence in the performance of Executive's duties and responsibilities under this Agreement, which misconduct or negligence is materially injurious to the Company or any of its Affiliates;
(b) Executive's conviction of, or plea of guilty or nolo contendere to, (i) a felony under the laws of the United States or any state thereof, or (ii) any crime involving fraud, dishonesty, moral turpitude, or breach of fiduciary duty, whether or not such crime constitutes a felony;
(c) Executive's material breach of any provision of this Agreement, including without limitation the restrictive covenant obligations set forth in Article VII, which breach, if capable of cure, is not cured within thirty (30) days after the Company has provided Executive with written notice specifying in reasonable detail the nature of such breach;
(d) Executive's commission of fraud, embezzlement, or misappropriation of funds or assets of the Company or any of its Affiliates, regardless of the amount involved;
(e) Executive's willful and continued failure to comply with the lawful written directives of the Chief Executive Officer or the Board that are consistent with Executive's position and duties, after the Company has provided Executive with written notice specifying in reasonable detail the nature of such failure and Executive has failed to cure such failure within thirty (30) days following receipt of such notice; or
(f) Executive's material violation of any written policy of the Company applicable to Executive, including without limitation the Company's code of conduct, insider trading policy, anti-corruption policy, or any policy relating to compliance with gaming regulatory requirements, which violation, if capable of cure, is not cured within thirty (30) days after the Company has provided Executive with written notice specifying in reasonable detail the nature of such violation.
For purposes of this definition, no act or failure to act on the part of Executive shall be deemed "willful" unless done, or omitted to be done, by Executive in bad faith and without reasonable belief that Executive's action or omission was in the best interests of the Company. A termination of Executive's employment shall not be deemed to be for Cause unless and until the Company has provided Executive with written notice setting forth in reasonable detail the specific conduct or event(s) alleged to constitute Cause.
Section 1.6 "Change in Control" means the occurrence of any one or more of the following events:
(a) the acquisition by any Person or group of Persons (within the meaning of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than the Company, any of its Affiliates, or any employee benefit plan maintained by the Company or any of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then-outstanding voting securities entitled to vote generally in the election of directors;
(b) a change in the composition of the Board such that individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director subsequent to the Effective Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (as such term is used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) the consummation of a merger, consolidation, statutory share exchange, or reorganization involving the Company, unless, following such transaction, (i) the holders of the Company's voting securities outstanding immediately prior to such transaction continue to hold (in substantially the same proportions relative to each other) more than fifty percent (50%) of the combined voting power of the voting securities of the surviving or acquiring entity (or its ultimate parent) outstanding immediately after such transaction, and (ii) no Person (other than any Person who beneficially owned more than fifty percent (50%) of the combined voting power of the Company's voting securities immediately prior to such transaction) beneficially owns fifty percent (50%) or more of the combined voting power of the surviving or acquiring entity's voting securities outstanding immediately after such transaction;
(d) the sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any Person or group of Persons (other than an Affiliate of the Company); or
(e) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred solely as a result of a restructuring, recapitalization, or similar transaction that does not involve a third party. In addition, for purposes of any payment or benefit that constitutes "nonqualified deferred compensation" within the meaning of Section 409A, the definition of Change in Control shall be interpreted in a manner consistent with the requirements of Treasury Regulation Section 1.409A-3(i)(5).
Section 1.7 "CIC Protection Period" has the meaning set forth in Section 8.5.
Section 1.8 "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.
Section 1.9 "Company" has the meaning set forth in the preamble.
Section 1.10 "Compensation Committee" means the Compensation Committee of the Board, as constituted from time to time.
Section 1.11 "Confidential Information" means all non-public, proprietary, or confidential information and data (whether written, oral, electronic, or otherwise) relating to the business, operations, finances, strategies, prospects, customers, suppliers, employees, technology, intellectual property, or other affairs of the Company or any of its Affiliates, including without limitation: (a) trade secrets, proprietary data, know-how, inventions, processes, techniques, algorithms, software, databases, and compilations of information; (b) financial information, projections, budgets, business plans, and strategic plans; (c) customer and supplier lists, pricing information, contract terms, marketing strategies, and customer relationship data; (d) information relating to gaming operations, gaming system designs, player analytics, and regulatory submissions; (e) employee compensation data, talent assessments, and organizational plans; (f) information concerning pending or threatened litigation, regulatory investigations, or government examinations; and (g) any information designated as confidential or proprietary by the Company. Confidential Information shall not include information that: (i) is or becomes generally available to the public through no act or omission of Executive in violation of this Agreement; (ii) was known to Executive on a non-confidential basis prior to the commencement of Executive's employment with the Company, as evidenced by contemporaneous written records; or (iii) is received by Executive from a third party who is not, to Executive's knowledge, under an obligation of confidentiality to the Company with respect to such information.
Section 1.12 "Disability" means Executive's inability, by reason of a physical or mental impairment, to perform the essential functions of Executive's position, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive calendar days, or for an aggregate of two hundred seventy (270) calendar days in any consecutive twelve (12)-month period, as determined by a licensed physician mutually agreed upon by the Company and Executive (or Executive's legal representative). If the Company and Executive (or Executive's legal representative) are unable to agree on a physician within ten (10) business days, each shall select a physician, and the two physicians so selected shall designate a third physician who shall make the determination. Any determination of Disability under this Section shall be made in a manner consistent with the requirements of Section 409A of the Code to the extent applicable.
Section 1.13 "Effective Date" has the meaning set forth in the preamble.
Section 1.14 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
Section 1.15 "Executive" has the meaning set forth in the preamble.
Section 1.16 "Good Reason" means the occurrence of any one or more of the following events without Executive's prior written consent:
(a) a material diminution in Executive's Base Salary or target Annual Bonus opportunity (expressed as a percentage of Base Salary);
(b) a material diminution in Executive's authority, duties, or responsibilities as Executive Vice President and Chief Financial Officer, including a change that results in Executive no longer serving as the most senior financial officer of a publicly traded company or that removes from Executive's oversight any of the core financial functions described in Section 2.1;
(c) a relocation of Executive's principal place of employment to a location more than fifty (50) miles from the Company's current headquarters at 4100 Sandstone Ridge Boulevard, Las Vegas, Nevada 89119; or
(d) any other material breach by the Company of any provision of this
Notwithstanding the foregoing, an event described in clauses (a) through (d) above shall not constitute Good Reason unless: (i) Executive provides the Company with written notice specifying in reasonable detail the condition or event constituting Good Reason within ninety (90) days of the initial existence of such condition or event; (ii) the Company fails to cure such condition or event within thirty (30) days following receipt of such written notice (the "Cure Period"); and (iii) Executive actually terminates employment within thirty (30) days following the expiration of the Cure Period. Executive's failure to provide timely notice or to terminate employment within the time periods specified herein shall constitute a waiver of Executive's right to terminate for Good Reason with respect to such condition or event.
Section 1.17 "Initial RSU Award" has the meaning set forth in Section 5.1.
Section 1.18 "Initial PSU Award" has the meaning set forth in Section 5.2.
Section 1.19 "Initial Term" has the meaning set forth in Section 3.1.
Section 1.20 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, governmental entity, or other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
Section 1.21 "Relocation Allowance" has the meaning set forth in Section 6.3.
Section 1.22 "Renewal Term" has the meaning set forth in Section 3.2.
Section 1.23 "Restricted Period" means the applicable period during which a restrictive covenant obligation under Article VII remains in effect following Executive's termination of employment, as specified in each respective Section of Article VII.
Section 1.24 "Section 409A" means Section 409A of the Code, together with all regulations, guidance, and other interpretive authority issued thereunder.
Section 1.25 "Separation from Service" means Executive's "separation from service" as defined in Treasury Regulation Section 1.409A-1(h), applied using the default provisions thereof.
Section 1.26 "Signing Bonus" has the meaning set forth in Section 4.3.
Section 1.27 "Start Date" has the meaning set forth in Section 2.2.
Section 1.28 "Term" means the Initial Term and any Renewal Term, as applicable.
Section 1.29 "Territory" means
ARTICLE II — EMPLOYMENT AND DUTIES
Section 2.1 — Position and Title. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve, as Executive Vice President and Chief Financial Officer of the Company, effective as of the Start Date. In such capacity, Executive shall report directly to the Company's Chief Executive Officer (currently Gavin T. Ashford) and shall have such duties, responsibilities, and authority as are customary for the position of Chief Financial Officer of a publicly traded company of the size and scope of the Company, including without limitation oversight and management responsibility for all financial reporting and accounting functions, treasury and capital markets activities, tax planning and compliance, investor relations, financial planning and analysis, internal audit coordination, and such other duties and responsibilities consistent with Executive's position as may be assigned to Executive from time to time by the Chief Executive Officer or the Board. Executive shall be the most senior financial officer of the Company and shall serve as the Company's "principal financial officer" for purposes of the Exchange Act and the rules and regulations of the Securities and Exchange Commission and the Nasdaq Stock Market.
Section 2.2 — Start Date. Executive's employment with the Company shall commence on February 15, 2024 (the "Start Date"), subject to satisfaction of the pre-employment conditions set forth in Article XI of this Agreement. In the event that the pre-employment conditions set forth in Article XI have not been satisfied (or waived in writing by the Company) on or before February 15, 2024, the Company and Executive shall cooperate in good faith to establish a mutually agreeable revised Start Date, which shall be no later than March 15, 2024.
Section 2.3 — Place of Employment. Executive's principal place of employment shall be the Company's headquarters, currently located at 4100 Sandstone Ridge Boulevard, Las Vegas, Nevada 89119, or such other principal office of the Company as may be established in the Las Vegas, Nevada metropolitan area from time to time. Executive acknowledges and agrees that the performance of Executive's duties hereunder will require reasonable business travel, both domestic and international, as may be necessary or appropriate in connection with the Company's business operations and Executive's responsibilities.
Section 2.4 — Exclusive Service. During the Term, Executive shall devote substantially all of Executive's business time, attention, skill, and efforts to the faithful and diligent performance of Executive's duties and responsibilities under this Agreement. Executive shall not, without the prior written consent of the Board, engage in any other employment, business, or professional activity, whether or not such activity is pursued for gain, profit, or other pecuniary advantage, during the Term. Notwithstanding the foregoing, the following activities shall be permitted, provided that such activities do not individually or in the aggregate materially interfere with Executive's performance of duties hereunder and are otherwise consistent with the Company's policies:
(a) service on the board of directors (or comparable governing body) of up to one (1) outside for-profit company that does not compete with the Company or any of its Affiliates, subject in each case to the prior written approval of the Board;
(b) participation in charitable, civic, educational, professional, community, and industry affairs and organizations;
(c) passive personal investments in publicly traded or privately held companies; provided that Executive shall not acquire, directly or indirectly, an ownership interest in excess of two percent (2%) of the outstanding equity securities of any entity that competes with the Company or any of its Affiliates without the prior written consent of the Board; and
(d) management of Executive's personal financial affairs and investments, including service as a trustee or executor of family trusts and estates.
Section 2.5 — Compliance with Company Policies. Executive shall at all times comply with all policies, rules, procedures, and codes of conduct applicable to employees and senior executives of the Company, as may be in effect from time to time, including without limitation the Company's code of business conduct and ethics, insider trading policy, securities trading window restrictions, anti-corruption and anti-bribery policies, and all policies relating to compliance with gaming regulatory requirements in each jurisdiction in which the Company or its Affiliates operates. Executive acknowledges that the position of Chief Financial Officer of a publicly traded gaming company may require individual licensing, registration, qualification, or approval by gaming regulatory authorities in various jurisdictions, including without limitation the Nevada Gaming Control Board, the Nevada Gaming Commission, and gaming regulatory authorities in other states and foreign jurisdictions in which the Company or its Affiliates hold or seek gaming licenses. Executive agrees to cooperate fully and in good faith with all such licensing and regulatory approval processes, including by completing all required applications, submitting to background investigations, and providing all information and documentation reasonably requested by such regulatory authorities. The Company shall bear all reasonable costs and expenses associated with Executive's gaming regulatory licensing and approval processes.
ARTICLE III — TERM
Section 3.1 — Initial Term. Unless earlier terminated in accordance with Article VIII, the initial term of Executive's employment under this Agreement shall commence on the Start Date and shall continue for a period of three (3) years, ending on the third anniversary of the Start Date (i.e., February 14, 2027) (the "Initial Term").
Section 3.2 — Renewal Terms. Upon expiration of the Initial Term, Executive's employment under this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current Term (whether the Initial Term or any Renewal Term). For the avoidance of doubt, a notice of non-renewal given by the Company shall be treated as a termination of Executive's employment by the Company without Cause for purposes of Article VIII, and Executive shall be entitled to the severance payments and benefits set forth in Section 8.2 (or Section 8.5, if applicable), subject to the terms and conditions thereof. A notice of non-renewal given by Executive shall be treated as a voluntary resignation by Executive without Good Reason for purposes of Section 8.3.
ARTICLE IV — COMPENSATION
Section 4.1 — Base Salary. The Company shall pay Executive an annual base salary of Six Hundred Fifty Thousand Dollars ($650,000) (the "Base Salary"), payable in accordance with the Company's standard payroll practices as in effect from time to time (currently semi-monthly). The Base Salary shall be subject to annual review by the Compensation Committee, in consultation with the Chief Executive Officer, and may be increased (but not decreased without Executive's prior written consent) based on such review. Any increase in the Base Salary shall become the "Base Salary" for all purposes of this Agreement upon the effective date of such increase. For the avoidance of doubt, any decrease in Executive's Base Salary without Executive's prior written consent shall constitute Good Reason as defined in Section 1.16(a) of this Agreement.
Section 4.2 — Annual Cash Bonus.
(a) Eligibility. Executive shall be eligible to receive an annual performance bonus for each fiscal year during the Term (the "Annual Bonus"), based upon the achievement of performance goals established by the Compensation Committee in its discretion, in consultation with the Chief Executive Officer and Executive.
(b) Target and Maximum. Executive's target Annual Bonus opportunity shall be equal to eighty-five percent (85%) of Executive's Base Salary (the "Target Annual Bonus"), which, based on the initial Base Salary, equals Five Hundred Fifty-Two Thousand Five Hundred Dollars ($552,500). Executive's maximum Annual Bonus opportunity shall be equal to one hundred seventy percent (170%) of Executive's Base Salary, which, based on the initial Base Salary, equals One Million One Hundred Five Thousand Dollars ($1,105,000). The actual Annual Bonus paid may range from zero percent (0%) to one hundred seventy percent (170%) of Base Salary, depending upon the level of achievement of the applicable performance goals.
(c) Performance Goals. The performance goals for each fiscal year shall be established by the Compensation Committee within the first ninety (90) days of such fiscal year. Such performance goals may include, without limitation, financial targets (such as revenue, adjusted EBITDA, earnings per share, free cash flow, or return on invested capital), operational metrics, strategic objectives, or individual performance criteria, as the Compensation Committee shall determine in its discretion.
(d) Payment. The Annual Bonus, if any, shall be calculated and paid no later than March 15 of the calendar year following the fiscal year to which such Annual Bonus relates, in accordance with the Company's standard bonus payment practices.
(e) Proration for Partial Year. For the fiscal year in which the Start Date occurs, Executive's Annual Bonus shall be prorated based on the number of days of Executive's employment during such fiscal year divided by the total number of days in such fiscal year.
(f) Discretion. The Annual Bonus for each fiscal year shall be determined by the Compensation Committee in its sole discretion based on the level of achievement of the applicable performance goals and such other factors as the Compensation Committee may deem relevant. Except as otherwise expressly provided in this Agreement, Executive must be employed by the Company on the date the Annual Bonus is paid in order to be eligible to receive such Annual Bonus.
Section 4.3 — Signing Bonus.
(a) Payment. In consideration of Executive's acceptance of employment with the Company and Executive's agreement to relocate to the Las Vegas, Nevada metropolitan area, the Company shall pay Executive a one-time lump sum cash signing bonus of Three Hundred Thousand Dollars ($300,000) (the "Signing Bonus"). The Signing Bonus shall be paid within thirty (30) days following the Start Date, subject to applicable withholding.
ARTICLE V — EQUITY AWARDS
Section 5.1 — Initial Restricted Stock Unit Grant.
(a) Grant. On the Start Date, or such later date as the Compensation Committee may determine in its discretion (not to exceed thirty (30) days after the Start Date), the Company shall grant Executive thirty-five thousand (35,000) restricted stock units (the "Initial RSU Award"), each representing the contingent right to receive one (1) share of the Company's common stock, par value $0.001 per share, as listed on the Nasdaq Stock Market under the ticker symbol "RDGM."
(b) Vesting. The Initial RSU Award shall vest in three (3) equal annual installments, with one-third (1/3) of the Initial RSU Award (11,666 or 11,667 restricted stock units, as applicable, with rounding applied to the final installment) vesting on each of the first, second, and third anniversaries of the grant date, subject in each case to Executive's continued employment with the Company through the applicable vesting date, except as otherwise provided in Sections 5.4 and 8.5.
(c) Settlement. Vested restricted stock units shall be settled in shares of the Company's common stock as soon as practicable following the applicable vesting date (but in no event later than thirty (30) days following such vesting date), subject to applicable tax withholding.
(d) Award Agreement. The Initial RSU Award shall be evidenced by a Restricted Stock Unit Award Agreement in substantially the form attached hereto as Exhibit B and shall be subject to the terms and conditions of the Company's equity incentive plan then in effect (currently the Redstone Gaming Corp. 2021 Omnibus Equity Incentive Plan, as amended). In the event of any conflict between this Agreement and the RSU Award Agreement or the equity incentive plan, the terms of this Agreement shall control with respect to the economic terms of the Initial RSU Award.
Section 5.2 — Initial Performance Stock Unit Grant.
(a) Grant. On the Start Date, or such later date as the Compensation Committee may determine in its discretion (not to exceed thirty (30) days after the Start Date), the Company shall grant Executive twenty thousand (20,000) performance stock units at target (the "Initial PSU Award"), each representing the contingent right to receive one (1) share of the Company's common stock, subject to satisfaction of performance criteria and continued employment.
(b) Performance Period and Vesting. The Initial PSU Award shall be subject to cliff vesting at the end of a three (3)-year performance period commencing on the grant date and ending on the third anniversary of the grant date (the "Performance Period"). The number of shares of common stock issuable upon settlement of the Initial PSU Award shall range from zero percent (0%) to two hundred percent (200%) of the target number of performance stock units (i.e., from zero (0) to forty thousand (40,000) shares), based upon the level of achievement of performance metrics established by the Compensation Committee.
(c) Performance Metrics. The specific performance metrics applicable to the Initial PSU Award shall be established by the Compensation Committee within the first ninety (90) days following the grant date and shall be communicated to Executive in writing. Such performance metrics may include, without limitation, relative total shareholder return (measured against a peer group of publicly traded gaming and hospitality companies to be designated by the Compensation Committee), revenue growth, adjusted EBITDA margin, return on invested capital, or such other financial or operational measures as the Compensation Committee may determine.
(d) Settlement. To the extent earned, performance stock units shall be settled in shares of the Company's common stock as soon as practicable following the Compensation Committee's certification of achievement of the applicable performance metrics (but in no event later than seventy-five (75) days following the end of the Performance Period), subject to applicable tax withholding.
(e) Award Agreement. The Initial PSU Award shall be evidenced by a Performance Stock Unit Award Agreement in substantially the form attached hereto as Exhibit C and shall be subject to the terms and conditions of the Company's equity incentive plan then in effect. In the event of any conflict between this Agreement and the PSU Award Agreement or the equity incentive plan, the terms of this Agreement shall control with respect to the economic terms of the Initial PSU Award.
Section 5.3 — Annual Equity Awards. During each fiscal year of the Term commencing with the fiscal year beginning after the Start Date, Executive shall be eligible to participate in the Company's annual long-term incentive program applicable to senior executives of the Company, as determined by the Compensation Committee in its sole discretion, on terms and conditions generally no less favorable than those applicable to other senior executives of the Company with comparable positions and responsibilities. The form, amount, and terms of any such annual equity awards shall be determined by the Compensation Committee in its discretion and shall be governed by the applicable equity incentive plan and award agreements.
Section 5.4 — Treatment of Equity Upon Termination. The treatment of Executive's unvested equity awards upon termination of Executive's employment shall be as set forth in Article VIII and in the applicable award agreements. Without limiting the foregoing, in the event of a termination of Executive's employment by the Company without Cause or by Executive for Good Reason (in each case, Executive shall be entitled to:
Settlement of any accelerated equity awards under this Section 5.4 shall occur within sixty (60) days following the date of termination (or, in the case of performance stock units, at the time specified in the applicable award agreement, if later), subject to applicable tax withholding and compliance with Section 409A. The accelerated vesting described in this Section 5.4 shall be subject to Executive's execution and non-revocation of the Release (as defined in Section 8.2) and Executive's continued compliance with the restrictive covenant obligations of Article VII.
ARTICLE VI — EMPLOYEE BENEFITS AND PERQUISITES
Section 6.1 — Benefit Plans. During the Term, Executive shall be eligible to participate in all employee benefit plans, programs, and arrangements that the Company maintains or establishes for its senior executive officers, on terms and conditions no less favorable than those generally available to other senior executives of the Company, including without limitation: (a) group health insurance (medical, dental, and vision); (b) group life insurance and supplemental life insurance; (c) short-term and long-term disability insurance; (d) the Company's 401(k) retirement savings plan (including any employer matching contributions); (e) flexible spending accounts or health savings accounts, as applicable; and (f) any other welfare or retirement benefit plans or programs as may be established by the Company from time to time. The Company reserves the right to amend, modify, or terminate any such plans, programs, or arrangements in its discretion; provided, however, that any such amendment, modification, or termination shall be applied on a basis no less favorable to Executive than to other similarly situated senior executives of the Company.
Section 6.2 — Vacation and Paid Time Off. Executive shall be entitled to paid time off in accordance with the Company's policies for senior executives, as in effect from time to time; provided, however, that Executive shall be entitled to no fewer than four (4) weeks (twenty (20) business days) of paid vacation per calendar year. Vacation for any partial calendar year shall be prorated based on the number of days of Executive's employment during such calendar year. Unused vacation shall be subject to the Company's accrual and carryover policies as in effect from time to time.
Section 6.3 — Relocation Allowance.
(a) Allowance. The Company shall provide Executive with a relocation allowance of up to One Hundred Fifty Thousand Dollars ($150,000) (the "Relocation Allowance") to cover reasonable costs and expenses associated with Executive's relocation from Reno, Nevada to the Las Vegas, Nevada metropolitan area in connection with Executive's commencement of employment hereunder. Eligible expenses under the Relocation Allowance shall include, without limitation:
(i) reasonable costs of transporting household goods and personal effects;
(ii) temporary housing expenses in the Las Vegas metropolitan area for a period not to exceed ninety (90) days;
(iii) real estate brokerage commissions, closing costs, and other transaction costs incurred in connection with the sale of Executive's current primary residence and/or the purchase of a new primary residence in the Las Vegas metropolitan area;
(iv) reasonable travel expenses for up to three (3) house-hunting trips for Executive and Executive's spouse or domestic partner; and
(v) other reasonable and customary relocation-related incidental expenses.
(b) Completion Deadline. Executive's relocation to the Las Vegas, Nevada metropolitan area must be completed within twelve (12) months following the Start Date. The Company may, in its sole discretion, extend such deadline upon Executive's written request.
(c) Reimbursement. Reimbursement of relocation expenses shall be made upon Executive's submission of appropriate documentation and receipts, in accordance with the Company's relocation policy, a summary of which is attached hereto as Exhibit D. Reimbursements shall be processed within thirty (30) days following the Company's receipt of complete documentation.
(d) Tax Gross-Up. To the extent that any relocation benefits provided under this Section 6.3 constitute taxable income to Executive, the Company shall provide Executive with an additional payment (the "Relocation Tax Gross-Up") in an amount sufficient, on an after-tax basis (taking into account all applicable federal, state, and local income and employment taxes), to place Executive in the same after-tax position that Executive would have been in had such relocation benefits not been subject to taxation. The Relocation Tax Gross-Up shall be paid to Executive no later than the end of the calendar year following the calendar year in which Executive remits the applicable taxes.
Section 6.4 — Directors' and Officers' Insurance; Indemnification.
(a) D&O Insurance. During the Term and for a period of six (6) years following the termination of Executive's employment for any reason, the Company shall cover Executive under its directors' and officers' liability insurance policy (currently maintained with Pinnacle Investors Indemnity Group), with coverage and limits no less favorable than those provided to other senior executive officers of the Company. The Company shall use commercially reasonable efforts to maintain such coverage during the applicable period; provided, however, that in no event shall the Company be required to pay annual premiums for such insurance in excess of three hundred percent (300%) of the amount of the annual premiums paid by the Company for such insurance as of the date of Executive's termination of employment.
(b) Indemnification. The Company shall indemnify and hold harmless Executive to the fullest extent permitted by the laws of the State of Delaware and the Company's certificate of incorporation and bylaws, as in effect from time to time, for any and all claims, damages, expenses (including reasonable attorneys' fees), judgments, fines, and amounts paid in settlement arising out of or in connection with Executive's service as an officer, director, or employee of the Company or any of its Affiliates, or as a fiduciary of any employee benefit plan of the Company or any of its Affiliates. The Company shall advance to Executive all reasonable expenses incurred by Executive in connection with any such claim, action, suit, or proceeding, subject to Executive's undertaking to repay such amounts if it is ultimately determined that Executive is not entitled to indemnification. The obligations of the Company under this Section 6.4(b) shall survive the termination of this Agreement and Executive's employment for any reason.
Section 6.5 — Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable and necessary business expenses incurred by Executive in the performance of Executive's duties hereunder, in accordance with the Company's expense reimbursement policies and procedures as in effect from time to time. Executive shall submit documentation of such expenses in accordance with the Company's standard practices. Reimbursements shall be made within thirty (30) days following the Company's receipt of appropriate documentation and shall comply with the requirements of Treasury Regulation Section 1.409A-3(i)(1)(iv) to the extent applicable.
Section 6.6 — Legal Fees. The Company shall reimburse Executive for reasonable attorneys' fees and legal costs incurred by Executive in connection with the negotiation, preparation, and review of this Agreement, up to a maximum aggregate amount of Twenty-Five Thousand Dollars ($25,000). Such reimbursement shall be made within thirty (30) days following Executive's submission of appropriate documentation and invoices, and in no event later than March 15, 2025.
ARTICLE VII — RESTRICTIVE COVENANTS
Executive acknowledges and agrees that, during the course of Executive's employment with the Company, Executive will have access to and become familiar with Confidential Information, trade secrets, and proprietary information of the Company and its Affiliates, including without limitation information relating to the Company's financial operations, business strategies, gaming operations, customer and player analytics, technology platforms, and relationships with employees, customers, vendors, gaming regulators, and business partners. Executive further acknowledges that the Company's relationships with its employees, customers, and business partners are valuable assets that the Company has invested substantial time, effort, and resources in developing and maintaining. Executive agrees that the restrictive covenant obligations set forth in this Article VII are reasonable and necessary to protect the Company's legitimate business interests, including its Confidential Information, goodwill, and workforce stability, and that the consideration provided to Executive under this Agreement, including the compensation, equity awards, and severance benefits set forth herein, constitutes adequate and sufficient consideration for such restrictive covenant obligations.
Section 7.1 — Confidentiality.
(a) Obligation. Executive shall not, during or at any time after the termination of Executive's employment with the Company, for any reason whatsoever, directly or indirectly, disclose, reveal, report, publish, transfer, or use for any purpose, or permit the disclosure, revelation, reporting, publication, transfer, or use of, any Confidential Information, except (i) in the good-faith performance of Executive's duties and responsibilities under this Agreement, (ii) as authorized in writing by the Board or the Company's General Counsel, or (iii) as required by law, regulation, or legal process, subject to the provisions of Section 7.1(c) below.
(b) Perpetual Duration. The confidentiality obligations set forth in this Section 7.1 are perpetual and shall survive the termination of this Agreement and Executive's employment with the Company for any reason, without limitation as to time.
(c) Legal Process. In the event that Executive is compelled by law, legal process, or order of a court or governmental authority to disclose any Confidential Information, Executive shall, to the extent permitted by law, promptly provide the Company with written notice of such requirement so that the Company may seek a protective order, confidential treatment, or other appropriate remedy. If, in the absence of a protective order or other remedy, Executive is nonetheless compelled to disclose Confidential Information, Executive may disclose only such portion of the Confidential Information as Executive is legally required to disclose and shall exercise commercially reasonable efforts to ensure that confidential treatment is afforded to such information.
(d) Defend Trade Secrets Act Notice. Pursuant to 18 U.S.C. § 1833(b), Executive acknowledges that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Executive further acknowledges that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
Section 7.2 — Non-Competition.
(a) Restriction. During the Term and for a period of months following the date of termination of Executive's employment with the Company for any reason (the "Non-Competition Restricted Period"), Executive shall not, directly or indirectly, whether as an employee, employer, consultant, advisor, independent contractor, agent, partner, member, manager, officer, director, stockholder, investor, or in any other individual or representative capacity, engage in, own, manage, operate, control, participate in, consult for, render services to, or be employed or engaged by, any business, enterprise, or entity (or any division, segment, or line of business thereof) that competes with the Company's casino gaming, resort operations, interactive digital gaming, or media entertainment businesses within the Territory, as such businesses are conducted as of the date of Executive's termination of employment.
(b) Passive Investment Exception. Notwithstanding the foregoing, the ownership by Executive of less than two percent (2%) of the outstanding equity securities of any entity whose securities are traded on a national securities exchange or an established over-the-counter market shall not, by itself, constitute a violation of this Section 7.2, provided that Executive does not otherwise participate in the management or operations of such entity.
(c) Scope. The Parties acknowledge that the Territory, as defined in Section 1.29, reflects the geographic scope of the Company's
Section 7.3 — Non-Solicitation of Employees.
(a) Restriction. During the Term and for a period of twenty-four (24) months following the date of termination of Executive's employment with the Company for any reason (the "Employee Non-Solicitation Restricted Period"), Executive shall not, directly or indirectly, whether on Executive's own behalf or on behalf of any other Person:
(i) recruit, solicit, encourage, induce, or attempt to recruit, solicit, encourage, or induce any employee of the Company or any of its Affiliates to terminate, leave, or otherwise cease his or her employment or service with the Company or any of its Affiliates; or
(ii) hire, engage, or attempt to hire or engage any person who was an employee of the Company or any of its Affiliates at any time during the six (6)-month period immediately preceding such recruitment, solicitation, or hiring.
(b) Scope. The restrictions set forth in this Section 7.3 shall apply to employees of the Company or any of its Affiliates at the level of director or above, or employees with whom Executive had material contact or over whom Executive had managerial responsibility during the last twelve (12) months of Executive's employment with the Company.
(c) Exceptions. Notwithstanding the foregoing, this Section 7.3 shall not prohibit Executive from (i) providing general employment references for current or former employees of the Company, or (ii) placing general solicitations or advertisements for employment that are not specifically targeted at employees of the Company or any of its Affiliates, provided that Executive does not hire any individual who responds to such general solicitation in violation of this Section 7.3.
Section 7.4 — Non-Solicitation of Customers and Business Partners. During the Term and for a period of eighteen (18) months following the date of termination of Executive's employment with the Company for any reason, Executive shall not, directly or indirectly, whether on Executive's own behalf or on behalf of any other Person, solicit, divert, take away, or seek to divert or take away the business or patronage of any customer, client, vendor, supplier, licensee, gaming patron, or business partner of the Company or any of its Affiliates with whom Executive had a material business relationship, or about whom Executive obtained Confidential Information, during the last twelve (12) months of Executive's employment with the Company.
Section 7.5 — Non-Disparagement.
(a) Executive's Obligation. Executive shall not, at any time during or after the Term, make or publish any oral or written statement (including on social media or other electronic platforms) that disparages, defames, or casts in an unfavorable light the Company, any of its Affiliates, or any of their respective officers, directors, employees, shareholders, agents, products, services, or business practices.
(b) Company's Obligation. Following any termination of Executive's employment, the Company shall instruct its then-current officers and members of the Board not to make or publish any oral or written statement that disparages, defames, or casts in an unfavorable light Executive or Executive's reputation, character, or professional abilities.
(c) Exceptions. Notwithstanding the foregoing, nothing in this Section 7.5 shall prohibit either Party from (i) making truthful statements in response to legal process, subpoena, or governmental inquiry, (ii) making truthful statements as reasonably required in connection with any litigation, arbitration, or regulatory proceeding, (iii) making statements to enforce such Party's rights under this Agreement, or (iv) providing truthful information to any governmental agency or regulatory authority in connection with any investigation or proceeding.
Section 7.6 — Intellectual Property and Work Product.
(a) Assignment. Executive agrees that all inventions, discoveries, improvements, works of authorship, designs, software, analyses, reports, memoranda, and other materials (collectively, "Work Product") that are conceived, developed, created, or reduced to practice by Executive, alone or jointly with others, during the course of Executive's employment with the Company, and that relate to the Company's business or result from Executive's use of the Company's resources, shall be the sole and exclusive property of the Company. Executive hereby irrevocably assigns and transfers to the Company, without additional consideration, all of Executive's right, title, and interest in and to any and all such Work Product, including all patents, copyrights, trademarks, trade secrets, and other intellectual property rights therein.
(b) Cooperation. Executive shall, at the Company's request and expense, execute all documents and take all actions reasonably necessary to perfect, register, and enforce the Company's rights in any Work Product, including without limitation executing patent applications, copyright registrations, and assignments. This obligation shall survive the termination of Executive's employment.
(c) Prior Inventions. Executive represents that there are no inventions, discoveries, or works of authorship made or owned by Executive prior to the commencement of Executive's employment with the Company that relate to the Company's business or that Executive desires to exclude from the scope of this Section 7.6.
Section 7.7 — Remedies for Breach of Restrictive Covenants.
(a) Irreparable Harm. Executive acknowledges and agrees that a breach or threatened breach of any of the restrictive covenant obligations set forth in this Article VII would cause irreparable harm to the Company that cannot be adequately compensated by monetary damages alone.
(b) Injunctive Relief. In the event of any breach or threatened breach of this Article VII, the Company shall be entitled to seek and obtain temporary, preliminary, and permanent injunctive relief, specific performance, and any other equitable remedies as may be appropriate, without the necessity of posting a bond or other security and without the need to prove actual damages, in addition to all other remedies available at law or in equity. The availability of injunctive relief shall not limit the Company's right to pursue any other remedies, including an action for damages.
(c) Reformation. If a court of competent jurisdiction or arbitrator determines that any restrictive covenant set forth in this Article VII is unenforceable as written because it is overly broad in scope, duration, geographic area, or otherwise, the Parties agree that such court or arbitrator shall reform such provision to the minimum extent necessary to make it enforceable, rather than invalidating such provision in its entirety, and shall enforce such provision as so reformed (the "blue pencil" or reformation principle).
(d) Tolling. The duration of any Restricted Period applicable to a restrictive covenant under this Article VII shall be tolled and suspended during any period in which Executive is in violation of such restrictive covenant, and such Restricted Period shall be extended by the duration of such violation, so that the Company receives the full benefit of the agreed-upon restricted period.
Section 7.8 — Restrictive Covenant Consideration. Executive acknowledges and agrees that the restrictive covenant obligations set forth in this Article VII are supported by adequate and sufficient consideration, including without limitation: (a) the Base Salary, Annual Bonus opportunity, Signing Bonus, equity awards, and other compensation and benefits provided under this Agreement; (b) the Company's agreement to provide Executive with access to Confidential Information and trade secrets; (c) Executive's exposure to and relationships with the Company's employees, customers, and business partners; and (d) the severance payments and benefits set forth in Article VIII. Executive further acknowledges that the severance payments under Section 8.2 and Section 8.5 are, in part, consideration for Executive's compliance with the restrictive covenant obligations of this Article VII, and that Executive's entitlement to such severance payments and benefits is expressly conditioned upon such continued compliance.
ARTICLE VIII — TERMINATION OF EMPLOYMENT
Section 8.1 — Termination Events. Executive's employment with the Company may be terminated during the Term as follows:
(a) by the Company for Cause, in accordance with Section 8.3;
(b) by the Company without Cause, in accordance with Section 8.2;
(c) by Executive for Good Reason, in accordance with Section 8.2;
(d) by Executive without Good Reason (voluntary resignation), in accordance with Section 8.3;
(e) due to Executive's death, in accordance with Section 8.4;
(f) due to Executive's Disability, in accordance with Section 8.4; or
(g) upon the expiration of the Term following timely notice of non-renewal by either Party, in accordance with Section 3.2.
Upon any termination of Executive's employment, the Company shall pay to Executive (or Executive's estate or beneficiary, as applicable) all Accrued Obligations. "Accrued Obligations" means: (i) any earned but unpaid Base Salary through the date of termination; (ii) any accrued but unused vacation or paid time off, to the extent payable under the Company's policies and applicable law; (iii) any unreimbursed business expenses incurred by Executive prior to the date of termination, subject to submission of appropriate documentation in accordance with the Company's policies; and (iv) any vested benefits to which Executive is entitled under the terms of any employee benefit plan or program of the Company. The Accrued Obligations shall be paid within the time period required by applicable law, but in no event later than thirty (30) days following the date of termination (or such earlier date as required by applicable law).
Section 8.2 — Severance Upon Termination Without Cause or for Good Reason (Absent Change in Control).
(a) Entitlement. If, during the Term and outside of the CIC Protection Period (as defined in Section 8.5), the Company terminates Executive's employment without Cause, or Executive resigns for Good Reason, then, subject to the conditions set forth in Section 8.2(c) below, Executive shall be entitled to the following payments and benefits, in addition to the Accrued Obligations:
(i) Cash Severance. A severance payment equal to one and one-half times (1.5×) Executive's Base Salary as in effect on the date of termination (or, if higher, the Base Salary in effect immediately prior to any reduction that constituted Good Reason), which, based on the initial Base Salary, equals Nine Hundred Seventy-Five Thousand Dollars ($975,000). The cash severance shall be paid in substantially equal installments over a period of eighteen (18) months following the date of termination, in accordance with the Company's regular payroll schedule, commencing on the first regularly scheduled payroll date following the date on which the Release (as defined below) becomes effective and irrevocable, with the first payment to include any installments that would have been payable between the date of termination and such first payment date.
(ii) Pro-Rata Annual Bonus. A pro-rata Annual Bonus for the fiscal year in which the termination occurs, based on the actual achievement of the applicable performance goals for such fiscal year, calculated by multiplying the Annual Bonus that would have been payable to Executive for such fiscal year (had Executive remained employed through the payment date) by a fraction, the numerator of which is the number of days of Executive's employment during such fiscal year through the date of termination and the denominator of which is the total number of days in such fiscal year. The pro-rata Annual Bonus shall be payable at the time annual bonuses are ordinarily paid to other senior executives of the Company, but in no event later than March 15 of the calendar year following the fiscal year in which the termination occurs.
(iii) COBRA Continuation. Subject to Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay, on Executive's behalf, the employer portion of the monthly premium for Executive's continued participation in the Company's group health insurance plans (medical, dental, and vision) for a period of eighteen (18) months following the date of termination, or until Executive becomes eligible for comparable group health insurance coverage through a subsequent employer, whichever occurs first. Executive shall be responsible for paying the employee portion of such premiums, if any. In the event that the Company's payment of COBRA premiums would result in adverse tax consequences to the Company or other participants in the Company's health plans, the Company may instead provide Executive with a taxable monthly cash payment equal to the applicable employer portion of the COBRA premium for the remainder of the applicable period.
(iv) Equity Acceleration.
(b) Resignation Without Good Reason — Notice Requirement. In the event that Executive desires to voluntarily resign from employment without Good Reason, Executive shall provide the Company with at least sixty (60) days' prior written notice. The Company may, in its discretion, waive all or any portion of such notice period and accelerate Executive's last day of employment, in which case Executive shall be paid the Base Salary through the originally scheduled last day of the notice period.
(c) Conditions. Executive's receipt of the severance payments and benefits set forth in Section 8.2(a) shall be expressly conditioned upon: (i) Executive's execution, delivery, and non-revocation of a general release of