Exhibit 10.7

 

EVERI HOLDINGS INC.

NOTICE OF GRANT OF RESTRICTED STOCK UNITS

(Performance-Based)

 

Everi Holdings Inc. (the “Company”) has granted to the Participant an award (the
“Award”) of certain units pursuant to the Everi Holdings Inc. 2014 Equity
Incentive Plan (the “Plan”), each of which represents the right to receive on
the applicable Settlement Date one (1) share of Stock, as follows:

 

Participant:

__________________________ 

Award Number:

________________________

Date of Grant:

__________________________

Total Number of Units:

                          , subject to adjustment as provided by the Restricted
Stock Units Agreement.

Vesting Start Date:

__________________________

Vested Units:

Except as provided in the Restricted Stock Units Agreement and provided that the
Participant’s Service has not terminated prior to the end of the Performance
Period, the number of Units that will be earned and become eligible to become
Vested Units (disregarding any resulting fractional Unit) shall be based on the
achievement of the performance metrics described on Exhibit A attached
hereto.  For the avoidance of doubt, 50% of the Total Number of Units may be
earned and become eligible to become Vested Units based on the Revenue Growth
Rate metric and 50% of the Total Number of Units may be earned and become
eligible to become Vested Units based on the Adjusted EBITDA Growth Rate metric
(each as defined in Exhibit A), with achievement of each metric to be determined
independently of one another.

At a meeting of the Committee occurring after the Committee has received the
Company’s audited financial statements for the fiscal year ending with the end
of the Performance Period, the Committee shall determine and certify in writing
the level of achievement of the performance metrics described on Exhibit A and
the resulting number of Units that have been earned and become eligible to
become Vested Units. 

Subject to the acceleration of vesting as provided below under “Termination of
Service” and “Change in Control,” the number of Units earned as determined
pursuant to Exhibit A and certified by the Committee will vest and become Vested
Units on the third anniversary of the Vesting Start Date (the “Final Vesting
Date”), subject to the Participant’s continued Service with the Company through
such Final Vesting Date.

Settlement Date:

Shares shall be settled and delivered (provided that such delivery is otherwise
in accordance with federal and state securities laws) with respect to Vested
Units as soon as practicable following the date on which a Unit becomes a Vested
Unit.

Termination of Service –

Death or Disability:

Upon the death or Disability of the Participant prior to the Final Vesting Date,
the number of Units that will be earned and become eligible to become Vested
Units (disregarding any resulting fractional Unit) shall be determined as
provided above based on the actual achievement of the performance metrics
through the end of the Performance Period (and without regard to the
Participant’s failure to serve for the entire Performance Period or to serve
through the Final Vesting Date).  The Award shall be settled on the Final
Vesting Date as provided above.

 

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Termination of Service –

Other than Death

or Disability

Termination without Cause during Performance Period: If the Participant’s
Service is terminated during the Performance Period by the Company without
Cause, then the number of Units that will be earned and become eligible to
become Vested Units (disregarding any resulting fractional Unit) shall be
determined as provided above, based on actual achievement of the performance
metrics through the end of the Performance Period, with the result prorated
based on the ratio of (i) the number of days that have elapsed from the
beginning of the Performance Period through the date the Participant ceases to
be an employee of the Company, to (ii) the total number of days in the
Performance Period. The Award shall be settled on the Final Vesting Date as
provided above.  If the Participant’s Service is terminated during the
Performance Period for any other reason, then the Award shall be immediately
forfeited and no Units shall be earned or become eligible to become Vested
Units.

Termination without Cause following Performance Period: If the Participant’s
Service is terminated following the end of the Performance Period and prior to
the Final Vesting Date by the Company without Cause, then the number of Units
that will be earned and become eligible to become Vested Units (disregarding any
resulting fractional Unit) shall be determined as provided above, based on
actual achievement of the performance metrics through the end of the Performance
Period (and without regard to the Participant’s failure to serve through the
Final Vesting Date). The Award shall be settled on the Final Vesting Date as
provided above. If the Participant’s Service is terminated following the end of
the Performance Period and prior to the Final Vesting Date for any other reason,
then the Award shall be immediately forfeited and no Units shall be earned or
become eligible to become Vested Units.

Change in Control:

Change in Control during Performance Period: Upon the occurrence of a Change in
Control during the Performance Period, if (i) the Award is not assumed,
continued, or substituted by the Acquiror as described in Section 13.1(b) of the
Plan, or (ii) the Award is assumed, continued, or substituted by the Acquiror as
described in Section 13.1(b) of the Plan and the Participant’s Service
terminates as a result of Involuntary Termination (as defined in Section 13.1(a)
of the Plan) within twenty four (24) months thereafter, then vesting shall
accelerate and the number of Units that will be earned and immediately become
Vested Units (disregarding any resulting fractional Unit) shall be determined
based on the greater of (A) the assumed achievement of the performance metrics
set forth in Exhibit A at 100% of Target with the result prorated based on the
ratio of (1) the number of days that have elapsed from the beginning of the
Performance Period through the date of the Change in Control or the Involuntary
Termination, as applicable, to (2) the total number of days in the Performance
Period, or (b) the actual achievement of the performance metrics set forth in
Exhibit A through the date of the Change in Control or the Involuntary
Termination, as applicable.  

Change in Control following Performance Period: Upon the occurrence of a Change
in Control following the end of the Performance Period and prior to the Final
Vesting Date, then vesting shall accelerate and the number of Units that will be
earned and immediately become Vested Units (disregarding any resulting
fractional Unit) shall be determined as provided above, based on actual
achievement of the performance metrics through the end of the Performance Period
(and without regard to the Participant’s failure to serve through the Final
Vesting Date).  

Superseding Agreement:

None.

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Interference with Business:

Participant acknowledges that because of Participant’s position in the Company,
Participant will have access to the Company’s and its affiliates’ new and
additional Proprietary Information (as defined below), including confidential
information and trade secrets.  Subject to clause 1(a) and 1(d) of the
Participant’s Employee Proprietary Information and Inventions Agreement
(“EPIIA”), Participant agrees that during Participant’s Service and for a period
of 12 months after termination of Participant’s Service, Participant shall not
directly or indirectly, either for Participant or for any other individual,
corporation, partnership, joint venture or other entity, participate in any
business (including, without limitation, any division, group, or franchise of a
larger organization) anywhere in the world that engages in or that proposes to
engage in any business in which the Company or any affiliate of the Company is
engaged or proposes to engage in during the term of Participant’s
Service.  Subject to clause 1(a) and 1(d) of the EPIIA, Participant also agrees
during Participant’s Service and for a period of 12 months after termination of
Participant’s Service, Participant shall not directly or indirectly, either for
Participant or for any other individual, corporation, partnership, joint venture
or other entity, (i) divert or attempt to divert from the Company or any
affiliate of the Company any business of any kind, including without limitation
the solicitation of or interference with any of its customers, clients, business
partners or suppliers, or (ii) solicit, induce, recruit or encourage any person
employed by the Company or any affiliate of the Company to terminate his or her
employment.  For purposes of the foregoing, the term “participate in” shall
include, without limitation, having any direct or indirect interest in any
corporation, partnership, joint venture or other entity, whether as a sole
proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise,
or rendering any direct or indirect service or assistance to any individual,
corporation, partnership, joint venture and other business entity (whether as a
director, officer, manager, supervisor, employee, agent, consultant or
otherwise).

“Proprietary Information” means all information and any idea in whatever form,
tangible or intangible, whether disclosed to or learned or developed by
Participant, pertaining in any manner to the business of the Company or to the
Company’s affiliates, consultants, or business associates, unless:  (i) the
information is or becomes publicly known through lawful means; (ii) the
information was rightfully in Participant’s possession or part of Participant’s
general knowledge prior to Participant’s employment by the Company; or (iii) the
information is disclosed to Participant without confidential or proprietary
restrictions by a third party who rightfully possesses the information (without
confidential or proprietary restrictions) and did not learn of it, directly or
indirectly, from the Company.  Participant further understands that the Company
considers the following information to be included, without limitation, in the
definition of Proprietary Information:  (A) schematics, techniques, employee
suggestions, development tools and processes, computer printouts, computer
programs, design drawings and manuals, electronic codes, formulas and
improvements; (B) information about costs, profits, markets, sales, customers,
prospective customers, customer contracts (including without limitation the
terms and conditions of such customer contracts) and bids; (C) plans for
business, marketing, future development and new product concepts; (D) customer
lists, and distributor and representative lists; (E) all documents, books,
papers, drawings, models, sketches, and other data of any kind and description,
including electronic data recorded or retrieved by any means, that have been or
will be given to the Participant by the Company (or any affiliate of it), as
well as written or verbal instructions or comments; (F) any information or
material not described in (A)-(E) above which relate to the Company’s
inventions, technological developments, “know how”, purchasing, accounts,
merchandising, or licensing; (G) employee personnel files and information about
employee compensation and benefits; and (H) any information of the type
described in (A)-(G) above which the Company has a legal obligation to treat as
confidential, or which the Company treats as proprietary or designates as
confidential, whether or not owned or developed by the Company.

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Participant acknowledges that Participant’s fulfillment of the obligations
contained in the section, including, but not limited to, Participant’s
obligation not to interfere with the Company’s business as provided above, is
necessary to protect the Proprietary Information and, consequently, to preserve
the value and goodwill of the Company. Participant further acknowledges the
time, geographic and scope limitations of Participant’s obligations as described
above are reasonable, especially in light of the Company’s desire to protect its
Proprietary Information, and that Participant will not be precluded from gainful
employment if Participant is obligated not to compete with the Company during
the specified period and within the specified geography.

The covenants contained herein shall be construed as a series of separate
covenants, one for each state, province, country and other political
subdivision.  Except for geographic coverage, each such separate covenant shall
be deemed identical in terms of the covenant contained herein.  In the event
that the scope, territory or period of time of any separate covenant is
determined to be unenforceable by a court of competent jurisdiction, the court,
if allowed under applicable law, shall reduce the scope, territory or period of
time of that separate covenant to a level that the court deems enforceable and
the remaining separate covenants, as well as all other terms and covenants in
this Grant Notice, shall be valid and be enforceable to the fullest extent
permitted by law.  In the event that any separate covenant is found to be
unenforceable in its entirety, the court, if allowed under applicable law, shall
eliminate such covenant from this Grant Notice in that case and the remaining
separate covenants, as well as all other terms and covenants in this Grant
Notice, shall be valid and be enforceable to the fullest extent permitted by
law.  The covenants set forth herein are intended to be enforced to the maximum
degree permitted by law.

 

 

[SIGNATURE PAGE TO FOLLOW]

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By their signatures below or by electronic acceptance or authentication in a
form authorized by the Company, the Company and the Participant agree that the
Award is governed by this Grant Notice and by the provisions of the Restricted
Stock Units Agreement and the Plan, both of which are made a part of this
document.  The Participant acknowledges that copies of the Plan, the Restricted
Stock Units Agreement and the prospectus for the Plan are available on the
Company’s internal web site and may be viewed and printed by the Participant for
attachment to the Participant’s copy of this Grant Notice.  The Participant
represents that the Participant has read and is familiar with the provisions of
the Restricted Stock Units Agreement and the Plan, and hereby accepts the Award
subject to all of their terms and conditions.

 

EVERI HOLDINGS INC.

 

PARTICIPANT

 

 

 

By:

 

 

 

 

[officer name]

 

Signature

 

[officer title]

 

 

 

 

 

 

 

 

 

Date

Address:

 

 

 

 

 

 

Address

 

 

 

 

 

ATTACHMENTS:

2014 Equity Incentive Plan, as amended to the Date of Grant; Restricted Stock
Units Agreement and Plan Prospectus

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EXHIBIT A

 

[PERFORMANCE-BASED VESTING CRITERIA – METRIC 1]

 

1.

The number of Units earned and eligible to become Vested Units will be
determined, based on the extent to which the Revenue Growth Rate metrics
described below have been achieved, as measured over the period beginning on the
Vesting Start Date and ending on _______ (the “Performance Period”).

2.

For purposes of this agreement, “Revenue” means the total consolidated revenues
of the Company determined in accordance with GAAP and as reported in the
Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange
Commission, for the corresponding fiscal year, as may be adjusted in accordance
with this Exhibit or the Plan.

3.

For purposes of this agreement, “Revenue Growth Rate” means the compounded
annual growth rate, expressed as a percentage (rounded to the nearest tenth of a
percent), of the Company’s Revenue during the Performance Period, as determined
at the end of the Performance Period.

4.

Based on the Revenue Growth Rate of the Company over the Performance Period, the
number of Units that will be earned and become eligible to become Vested Units
will be equal to the product of (a) Total Number of Units, multiplied by (b)
0.5, and multiplied by (c) the percentage determined below:

 

 

 

 

 

Vested %

Below Threshold

 

Revenue Growth Rate of less than     %

 

0%

Threshold

 

Revenue Growth Rate of     %

 

50%

Target

 

Revenue Growth Rate of     %

 

100%

Maximum

 

Revenue Growth Rate of     %

 

200%

 

Provided the Revenue Growth Rate equals or exceeds the Threshold rate, the
actual number of Units that will be earned and become eligible to become Vested
Units based on the Revenue Growth Rate metric will be determined using
straight-line interpolation between points of Revenue Growth Rate.  

5.

All calculations with respect to Revenue and the Revenue Growth Rate shall be
made by the Committee (or its designee) in the Committee’s sole discretion, and
such calculations and resulting determinations shall be final and binding.
Without limiting the foregoing, the calculation of Revenue and Revenue Growth
Rate shall exclude the effect (whether positive or negative) of any change in
accounting standards or any unusual or infrequently occurring event or
transaction, as determined by the Committee, including mergers, acquisitions,
divestitures or natural disasters, in each case occurring after the date of this
Agreement, with each such adjustment, if any, made solely for the purpose of
providing a consistent basis from period to period for the calculation of
Revenue and Revenue Growth Rate in order to prevent the dilution or enlargement
of the Participant’s rights with respect to the Award.  

 

 

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EXHIBIT A

 

[PERFORMANCE-BASED VESTING CRITERIA – METRIC 2]

 

1.

The number of Units earned and eligible to become Vested Units will be
determined, based on the extent to which the Adjusted EBITDA Growth Rate metrics
described below have been achieved, as measured over the period beginning on the
Vesting Start Date and ending on _______(the “Performance Period”).

2.

For purposes of this agreement, “Adjusted EBITDA” means the Company’s “Adjusted
EBITDA” as reported in the Company’s annual earnings release filed as an exhibit
to the Company’s Current Report on Form 8-K, as filed with the Securities and
Exchange Commission, for the corresponding fiscal year, as may be adjusted in
accordance with this Exhibit or the Plan.  

3.

For purposes of this agreement, “Adjusted EBITDA Growth Rate” means the
compounded annual growth rate, expressed as a percentage (rounded to the nearest
tenth of a percent), of the Company’s Adjusted EBITDA during the Performance
Period, as determined at the end of the Performance Period.

4.

Based on the Adjusted EBITDA Growth Rate of the Company over the Performance
Period, the number of Units that will be earned and become eligible to become
Vested Units will be equal to the product of (a) the Total Number of Units,
multiplied by (b) 0.5, and multiplied by (c) the percentage determined below:

 

 

 

 

 

Vested %

Below Threshold

 

Adjusted EBITDA Growth Rate of less than     %

 

0%

Threshold

 

Adjusted EBITDA Growth Rate of     %

 

50%

Target

 

Adjusted EBITDA Growth Rate of     %

 

100%

Maximum

 

Adjusted EBITDA Growth Rate of     %

 

200%

 

Provided the Adjusted EBITDA Growth Rate equals or exceeds the Threshold rate,
the actual number of Units that will be earned and become eligible to become
Vested Units based on the Adjusted EBITDA Growth Rate metric will be determined
using straight-line interpolation between points of Adjusted EBITDA Growth
Rate.  

5.

All calculations with respect to the Adjusted EBITDA Growth Rate shall be made
by the Committee (or its designee) in the Committee’s sole discretion, and such
calculations and resulting determinations shall be final and binding. Without
limiting the foregoing, the calculation of Adjusted EBITDA and Adjusted EBITDA
Growth Rate shall exclude the effect (whether positive or negative) of any
change in accounting standards or any unusual or infrequently occurring event or
transaction, as determined by the Committee, including mergers, acquisitions,
divestitures or natural disasters, in each case occurring after the date of this
Agreement, with each such adjustment, if any, made solely for the purpose of
providing a consistent basis from period to period for the calculation of
Adjusted EBITDA and Adjusted EBITDA Growth Rate in order to prevent the dilution
or enlargement of the Participant’s rights with respect to the Award.  

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