EMPLOYMENT AGREEMENT by PINNACLE ENTERTAINMENT INC.
Company: PINNACLE ENTERTAINMENT INC.
SEC CIK: 356213
SEC Type: EX-10.6
SIC Code: 7011
SIC Industry: HOTELS & MOTELS
Date Filed: 2012-05-10
THIS EMPLOYMENT AGREEMENT (the Agreement) is made effective this 10th day of April, 2012, by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the Company), and NEIL E. WALKOFF, an individual (Executive), with respect to the following facts and circumstances:
The Company is currently employing Executive as its Senior Vice President and General Manager St. Louis pursuant to the Employment Agreement dated November 15, 2011 (the Employment Agreement).
The Company wishes to have Executive become Executive Vice President, Regional Operations of the Company and Executive is willing to assume such position, in each case on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the Company and Executive agree as follows:
EMPLOYMENT AND TERM
1.1 Employment. The Company agrees to continue to engage Executive in the capacity as Executive Vice President, Regional Operations of the Company and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below.
1.2 Term. The term of this Agreement shall commence on April 10, 2012 and, unless earlier terminated under Article 6 below, shall continue in force until April 9, 2015 (the Initial Term); provided that commencing on December 11, 2014 and as of December 11 of each year hereafter (a Renewal Date), this Agreement shall automatically renew for additional one-year periods (each, a Renewal Period), unless either party gives notice of non-renewal at least one hundred twenty (120) days prior to the next Renewal Date. The Term of this Agreement, including any Renewal Periods, is referred to as the Term.
DUTIES OF EXECUTIVE
2.1 Duties. Executive shall perform all the duties and obligations generally associated with the position of Executive Vice President, Regional Operations with responsibility for the St. Louis, Missouri, Indiana and Cincinnati, Ohio regions and such other regions as may be assigned from time to time, subject to the control and supervision of the Companys Chief Executive Officer, and such other executive duties consistent with the foregoing as may be
assigned to him from time to time by the Company. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Companys employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.
2.2 Location of Services. Executives principal place of employment shall be at the Companys facility in St. Louis County, Missouri, or at such other location as Executive and the Chief Executive Officer shall agree upon. Executive understands he will be required to travel to the Companys various operations as part of his employment.
2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executives duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one-half percent (0.5%) of the securities of a publicly traded entity (a Permissible Investment). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino, gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is international in scope and that accordingly this covenant shall apply throughout the United States and in Asia. With the prior approval of the Board of Directors (which approval may subsequently be revoked by the Board in its discretion) Executive may serve on boards of charitable and not for profit organizations so long as such activities, individually or in the aggregate do not materially interfere with Executives duties hereunder.
3.1 Base Salary. In consideration for Executives services hereunder, the Company shall pay Executive an annual base salary at the rate of Four Hundred Sixteen Thousand Dollars ($416,000.00) per year during each of the years of the Term; payable in accordance with the Companys regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings).
3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement, with a targeted bonus of Eighty Percent (80%) of Executives base salary, determined under the Companys Annual Performance Based Plan for Executive Officers, or any successor Plan (the Bonus Plan). Any such Bonus shall be structured to comply with Section 162(m) of the Internal Revenue Code unless otherwise determined by the Compensation Committee and shall be based on performance criteria developed by the Compensation Committee. Any such bonus shall be subject to (i) the Executive being employed by the Company on the day after the end of the Companys fiscal year or such later date as the Bonus Plan shall specify; and (ii) the Companys Policy on Recovery of Incentive Compensation in Event of Financial Restatement attached as Appendix A hereto and any other similar policies. Bonuses relative to partial years shall be prorated. Executive may also receive special bonuses in addition to his annual bonus eligibility at the discretion of the Board of Directors or the Compensation Committee; it being understood that there is no entitlement thereto hereunder. Any bonuses paid hereunder shall be paid, in the Companys discretion, in cash and/or restricted stock; provided, however, that Executives allocation of cash and restricted stock shall be the same as that of other senior executive officers for the year.
3.3 Equity Awards. The Company may grant to Executive options or other equity compensation pursuant to, and subject to the terms and conditions of, the then current equity compensation plan of the Company. The Companys Compensation Committee shall set the amount and terms of such options or other equity compensation.
4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Companys personnel policies from time to time, Executive shall be entitled to not less than four (4) weeks vacation each calendar year, without reduction in compensation. Vacation expense will not accrue and unused vacation time will not accrue for severance purposes.
4.2 Benefits. Executive shall receive all other such benefits as the Company may offer to other senior executives of the Company generally under the Company personnel plans, practices, policies and programs in effect from time to time, such as health and disability insurance coverage, paid sick leave and fully eligible participation in deferred compensation plans. The Company shall provide Executive coverage for those benefit items made generally available to its senior level executive employees that are not currently covered under Executives plan through his previous employer (e.g. short and long-term disability and so forth) on the same terms provided to its other senior level executive employees.
4.3 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of
this Agreement for such period as may be necessary to continue to indemnify Executive for his acts while an officer of the Company. In addition, the Company shall cause Executive to be covered by the Companys policies of directors and officers liability insurance in effect from time to time in accordance with their terms, to the maximum extent of the coverage available for any officer of the Company. In the event of any merger or other acquisition of the Company, the Company shall, no later than immediately prior to consummation of such transaction, purchase tail coverage under the officers liability insurance in effect at the time of such merger or acquisition.
REIMBURSEMENT FOR EXPENSES
5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.
6.1 Termination for Cause. Without limiting the generality of Section 6.3, the Company shall have the right to terminate Executives employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (Cause).
6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner, other than due to his Disability (unless such Disability is due to substance or alcohol abuse), after having received thirty (30) days written notice specifying such failure to perform and a reasonable opportunity to perform.
6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.
6.1.3 Wrongful Acts. If Executive is convicted of a felony or misdemeanor involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.
6.1.4 Failure To Be Licensed or Approved by the Companys Compliance Committee. Executive shall promptly, accurately and truthfully complete all forms provided by the Companys Compliance Committee and shall fully cooperate in any background investigation conducted pursuant to the Companys Compliance Program. Executive shall also promptly apply for all applicable gaming licenses, if required, to the extent Executive is not already licensed or on file as of the date hereof. If Executive fails to be recommended for approval and retention by the Compliance Committee or Executive fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, or if the Company is directed to cease business with Executive by any governmental authority; or if the Company determines in its reasonable judgment that Executive was or might be involved in, or is about to be involved in, any activity, relationship(s) or circumstance which could or does jeopardize the Companys business, reputation or any of such licenses; or any of the Companys licenses is threatened to be, or is, denied, curtailed, suspended or revoked as a result of Executives employment by the Company or as a result of his actions, then the Company may by thirty (30) days written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.
6.2 Death or Disability. This Agreement shall terminate on the death or Disability of Executive. Executive will be deemed to have a Disability when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a substantially continuous period of not less than one hundred eighty (180) days, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months. If there should be a dispute between the Company and Executive as to Executives physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designated by the Clark County Medical Association or similar body. The certification of such a physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.
6.3 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executives employment under this Agreement at any time without Cause by giving thirty (30) days written notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement Without Cause.
6.4 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (Good Reason). For purposes of this Agreement, Good Reason shall mean and be limited to (i) a material breach of this Agreement by the Company (including without limitation the assignment to Executive of duties materially inconsistent with his status as Executive Vice President, Regional Operations of the Company), or any material reduction in the authority, duties or responsibilities of Executive; (ii) any relocation of his or its principal place of business in Missouri outside the greater St. Louis County area (without Executives consent); (iii) a material reduction by the Company in Executives then Base Salary or Bonus targets, a material reduction in other benefits (except as such benefits may be changed or reduced for other senior executives), or the failure by the Company to pay Executive any material portion of his current compensation when due; or (iv) following a Change in Control, (A) the failure of any acquiring or successor company, or, if the acquiring or successor company is a subsidiary of another company, the failure of the highest-level parent of the acquiring or successor company, to enter into an agreement naming Executive as the Executive Vice President, Regional Operations of the acquiring or successor company, or of the highest-level parent, as the case may be; or (B) Executives termination for Good Reason from the Company and any parent entity or termination without cause by the Company and any parent entity within eighteen (18) months of a Change in Control. Notwithstanding the foregoing, except with respect to a termination by Executive following a Change in Control, Executives resignation shall not be treated as a resignation for Good Reason unless (a) Executive notifies the Company (including any acquiring and/or successor company) in writing of a condition constituting Good Reason within thirty (30) days following Executives becoming aware of such condition; (b) the Company fails to remedy such condition within thirty (30) days following such written notice (the Remedy Period); and (c) Executive resigns within thirty (30) days following the expiration of the Remedy Period. Further, in the event that Executive resigns for Good Reason and within two years from such