EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 14th day of December, 2007, by and between STATION CASINOS, INC., a Nevada corporation, with its principal offices located at 1505 South Pavilion Center Drive, Las Vegas, Nevada 89135 (the “Company”), and KEVIN L. KELLEY (the “Executive”).
WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and
WHEREAS, the Executive desires to accept employment with the Company on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company and the Executive (each individually a “Party” and together the “Parties”) agree as follows.
1. DEFINITIONS. In addition to certain terms defined elsewhere in this Agreement, the following terms shall have the following respective meanings:
1.1 “Affiliate” shall mean any Person controlling, controlled by or under common control with, the Company.
1.2 “Base Salary” shall mean the salary provided for in Section 3.1 of this Agreement, as the same may be increased from time to time thereunder.
1.3 “Board” shall mean the Board of Directors of the Company.
1.4 “Cause” shall mean that the Executive:
(a) has been convicted of any felony;
(b) has been found unsuitable to hold a gaming license by a final non-appealable decision of the Nevada Gaming Commission; or
(c) in carrying out his duties under this Agreement, has engaged in acts or omissions constituting gross negligence or willful misconduct resulting, in either case, in material economic harm to the Company.
1.5 “Change in Control” shall mean the following: (A) prior to the occurrence of an Initial Public Offering (as defined in the LLC Agreement), the consummation of any transaction (including, without limitation, any merger or consolidation) as a result of which any “person” or “group” (in each case, as such term is used in Section 13(d)(3) of the Exchange Act), other than any Member of HoldCo LLC who is an Existing Equity Holder or Permitted Transferee (as defined in the LLC Agreement) of such a Member of HoldCo LLC, or an Affiliate thereof, becomes the “beneficial owner” (as such term is defined in rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of the total issued and outstanding Class A Units and Class B Units of HoldCo LLC; (B) after the occurrence of an Initial Public Offering, the consummation of any transaction (including, without limitation, any merger or consolidation) as a result of which any person or group, other than a Member of HoldCo LLC who is an Existing Equity Holder or Permitted Transferee of such a Member of HoldCo LLC, or any Affiliate thereof, becomes the beneficial owner of more than thirty-five percent (35%) of the total issued and outstanding shares of Voting Stock of the IPO Corporation; or (C) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation) in one or a series of related transactions, of more than fifty percent (50%) (as measured by fair market value at the time of transfer) of the assets of the Company to any person (other than the Company or a Company subsidiary), other than (x) any Member of HoldCo LLC on the date hereof or Permitted Transferee of such a Member of HoldCo LLC or Affiliate thereof or (y) as part of any financing transaction engaged in by the Company or a Company subsidiary. In addition, no Change of Control shall be deemed to have occurred as a result of any reorganization of or similar transaction engaged in by the Company or any subsidiary of the Company (including in respect of an Initial Public Offering).
1.6 “Code” shall mean the Internal Revenue Code of 1986, as amended.
1.7 “Company Property” shall mean all items and materials provided by the Company to the Executive, or to which the Executive has access, in the course of his employment, including, without limitation, all files, records, documents, drawings, specifications, memoranda, notes, reports, manuals, equipment, computer disks, videotapes, drawings, blueprints and other documents and similar items relating to the Company, its Affiliates or their respective customers, whether prepared by the Executive or others, and any and all copies, abstracts and summaries thereof.
1.8 “Competing Business” shall mean any Person engaged in the gaming industry that directly or through an affiliate or subsidiary conducts its business within the Restricted Area.
1.9 “Confidential Information” shall mean all nonpublic and/or proprietary information respecting the business of the Company or any Affiliate, including, without limitation, its products, programs, projects, promotions, marketing plans and strategies, business plans or practices, business operations, employees, research and development, intellectual property, software, databases, trademarks, pricing information and accounting and financing data. Confidential Information also includes information concerning the Company’s or any Affiliate’s customers, such as their identity, address, preferences, playing patterns and ratings or any other information kept by the Company or any Affiliate concerning its customers whether or not such information has been reduced to documentary form. Confidential Information does not include information that is, or becomes, available to the public unless such availability occurs through an unauthorized act on the part of the Executive.
1.10 “Deferred Compensation Plan for Executives” shall mean the Company’s Deferred Compensation Plan for Executives, effective as of November 30, 1994, as the same may be amended from time to time.
1.11 “Disability” shall mean a physical or mental incapacity that prevents the Executive from performing the essential functions of his position with the Company for a period of ninety (90) days as determined (a) in accordance with any long-term disability plan provided by the Company of which the Executive is a participant, or (b) by the following procedure: The Executive agrees to submit to medical examinations by a licensed healthcare professional selected by the Company, in its sole discretion, to determine whether a Disability exists. In addition, the Executive may submit to the Company documentation of a Disability, or lack thereof, from a licensed healthcare professional of his choice. Following a determination of a Disability or lack of Disability by the Company’s or the Executive’s licensed healthcare professional, the other Party may submit subsequent documentation relating to the existence of a Disability from a licensed healthcare professional selected by such other Party. In the event that the medical opinions of such licensed healthcare professionals conflict, such licensed healthcare professionals shall appoint a third licensed healthcare professional to examine the Executive, and the opinion of such third licensed healthcare professional shall be dispositive.
1.12 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.
1.13 “Existing Equity Holders” shall mean Frank J. Fertitta III, Blake L. Sartini, Delise F. Sartini, Lorenzo J. Fertitta, Scott M Nielson, William W. Warner and Richard J. Haskins, and their executors, administrators or the legal representatives of their estates, their heirs, distributees and beneficiaries, and any trust as to which any of the foregoing is a settlor or co-settlor and any corporation, partnership or other entity which is an affiliate of any of the foregoing, and any lineal descendants of such persons (but only to the extent that the beneficial ownership of the Class A and/or Class B Units of HoldCo LLC held by such lineal descendants was directly received by gift, trust or sale from any such person).
1.14 “Good Reason,” as used in Section 7.2, shall mean and exist if there has been a Change in Control and, thereafter, without the Executive’s prior written consent, one or more of the following events occurs:
(a) the Executive is assigned duties or responsibilities that are inconsistent, in any significant respect, with the position of a senior manager;
(b) the Executive is required to relocate from, or maintain his principal office outside of, Clark County, Nevada;
(c) the Executive’s Base Salary is decreased by the Company;
(d) the Executive is excluded from participation in any employee benefit or short-term incentive plan or program offered to other similarly situated executives of the Company or his benefits under such plans or programs or opportunities under any employee benefit or incentive plan or program of the Company is or are materially reduced;
(e) the Company fails to pay the Executive any deferred payments that have become payable under the Deferred Compensation Plan for Executives or other bonus or incentive plans;
(f) the Company fails to reimburse the Executive for business expenses in accordance with the Company’s policies, procedures or practices;
(g) the Company fails to agree to or to actually indemnify the Executive for his actions and/or inactions, as either a director or an officer of the Company, in accordance with Section 10, and/or the Company fails to maintain reasonably sufficient levels of directors’ and officers’ liability insurance coverage for the Executive when such insurance is available; or
(h) the Company fails to obtain a written agreement from any successor or assign of the Company to assume the obligations under this Agreement upon a Change in Control.
For purposes of this Agreement, a determination by the Executive that the Executive has “Good Reason” shall be final and binding on the Company and the Executive absent a showing of bad faith on the part of the Executive.
1.15 “HoldCo LLC” shall mean Fertitta Colony Partners LLC.
1.16 “IPO Corporation” shall mean the Company (or Affiliate thereof) which is the issuer of the equity interests offered and sold in the Initial Public Offering.
1.17 “LLC Agreement” shall mean that Second Amended and Restated Operating Agreement of Fertitta Colony Partners LLC, dated as of November 7, 2007, as the same may be amended from time to time in accordance with the terms thereof.
1.18 “Person” shall mean any individual, firm, partnership, association, trust, company, corporation or other entity.
1.19 “Pro Rata Annual Bonus” shall mean the amount of Annual Bonus, multiplied by a fraction, the numerator of which is the number of days in such year during which the Executive was actually employed by the Company and the denominator of which is 365.
1.20 “Restricted Area” shall mean (a) the City of Las Vegas, Nevada, and the area within a forty-five (45) mile radius of that city, and (b) any area in or within a one hundred fifty (150) mile radius of any other location in which the Company or any of its Affiliates are directly or indirectly engaged in the development, ownership, operation or management of any gaming activities or is actively pursuing any such activities; provided, however, that in the event the Executive voluntarily terminates this Agreement pursuant to Sections 6.3, 7.2 or 7.3, the Restricted Area shall (a) after the first twelve (12) months of the Restriction Period, exclude the Las Vegas Strip (which is defined as that area bounded by Koval Lane and straight extensions thereof on the East, Charleston Boulevard on the North, I-15 on the West, and Sunset Road on the South) and (b) after a Change in Control, exclude Downtown Las Vegas (which is defined as that area bounded by Eastern Avenue and straight extensions thereof on the East, I-515 (U.S. Highway 93/95) on the North, I-15 on the West, and Charleston Boulevard on the South).
1.21 “Restriction Period” shall mean the period ending twenty-four (24) months after the termination or expiration of the Term of Employment, regardless of the reason for such termination or expiration.
1.22 “Special Long-Term Disability Plan” shall mean the Company’s Special Long-Term Disability Plan, effective as of November 30, 1994, as the same may be amended from time to time.
1.23 “Sponsor Equity Holder” shall mean the affiliates of Colony Capital, LLC, including FC Investor, LLC and its affiliated funds and controlled accounts.
1.24 “Supplemental Management Retirement Plan” shall mean the Company’s Supplemental Management Retirement Plan, effective as of November 30, 1994, as the same may be amended from time to time.
1.25 “Target Annual Bonus” shall mean an amount that is no less than one hundred percent (100%) of the Executive’s then current Base Salary.