Document:

EXHIBIT 10.1

 

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (“Agreement”) is made and entered into as of 8th
day of August, 2007 (“Effective Date”) by and between the River Rock
Entertainment Authority (“Authority”), a governmental instrumentality of the
Dry Creek Rancheria Band of Pomo Indians (“Tribe”), and Joseph Callahan (“Employee”).

 

The
parties hereto expressly intend that this Agreement describe Employee’s
relationship as an employee of Tribe and not as a contractor, including but not
limited to the meaning of such term as is used in 25 USC § 2711 and 25 CFR §
502.15. The parties have purposefully structured the terms and provisions of
this Agreement consistent with, and in furtherance of, this expressed intent.

 

l.
Employment.  On and subject to the terms and conditions of
this Agreement, the Authority hereby employs Employee, and Employee hereby
accepts employment with the Authority, as the Chief Financial Officer (CFO) of
the Authority and the CFO of the Authority’s gaming enterprise known as the
River Rock Casino (“Casino”). Employee shall assume overall responsibility for
the financial operation of all gaming related entities (together with the
Casino, the “Gaming Enterprise”). 
Employee shall report to, be accountable to and work under the authority
of the Authority’s Chief Executive Officer (CEO).

 

2.
Reporting. Employee shall
report directly to the CEO with respect to all financial activities of the
Gaming Enterprise, and otherwise to the extent requested by the CEO or the
Authority Board of Directors (“Authority Board”).  Without limiting the foregoing, Employee
shall perform such executive duties as are commonly attendant upon the office
of a casino CFO and such further executive duties as may be specified from time
to time by the CEO,  which shall
include:

 

(a)           Directing and overseeing all
the financial activities of the Gaming Enterprise including preparation of
current financial reports as well as summaries and forecasts for future
business growth and general economic outlook.

 

(b)           Responsibility for all
financial reports required by the Tribal, State and Federal agencies.

 

(c)           Directing and overseeing
investment portfolios with care and diligence to maximize income within the
constraint of maximum safety, growth of income and long-term appreciation of
capital; to ensure liquidity by defining maturities as required by cash flow
projections; and to preserve capital.

 

(d)           Responsibility for
safeguarding all Gaming Enterprise assets.

 

 

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(e)           Preparation of annual operating
budgets, capital budgets and required modifications to such budgets for all
gaming related entities and implementation of such budgets;

 

(f)            Preparation, implementation and
direction of Authority compliance programs, including assurance that the Gaming
Enterprise meets the requirements of the Indian Gaming Regulatory Act, the
Tribal-State Gaming Compact between the Tribe and the State of California (the
“Compact”), the laws and ordinances of the Tribe, all SEC reporting requirements
and other applicable laws as well as agreements to which the Tribe and/or the
Authority is a party.

 

(g)           Preparation, implementation and
direction of programs to assure that the Gaming Enterprise meets all federal,
Tribal and Compact requirements for internal controls, including establishment
and enforcement of policies designed to maintain the integrity of all gaming
operations for the protection of the Tribe, the Authority, the Authority Board,
the Gaming Enterprise, its customers and the public in accordance with laws and
standards in the gaming industry;

 

(h)           Organizing and assisting
construction development financial management activities.

 

3.
Term. The term of this Agreement (“Term”) shall commence on the Effective Date and
shall end three (3) years after the Effective Date, unless terminated earlier
by the parties as provided herein.
Notwithstanding the Term as described herein.

 

4.
Full-Time Service. Employee
agrees that during the Term of this Agreement unless earlier terminated, he
will commit his full time and energies to the duties imposed hereby and, further, agrees that during the term of this Agreement he will not
(whether as an officer, director, member, employee, partner, proprietor,
investor, security holder, lender, associate, consultant, adviser or otherwise)
directly or indirectly, engage in the business of the Gaming Enterprise as a
competitor or otherwise without the express prior written consent of the
Authority Board.

 

5.
Compensation.

 

(a)
Employee will be paid a base salary of Two Hundred Ten Thousand Dollars
($210,000.00) per annum (“Base Compensation”),
subject to applicable withholding taxes and required deductions.

 

(b)
Base Compensation shall be paid every other workweek on the day established by
the Authority for all employees of the Gaming Enterprise.

 

(c)
Upon satisfactory completion of 120 days of service under this Agreement or at
the discretion of the River Rock Entertainment Authority Board of Directors,
Employee’s Base Compensation shall be increased to an adjusted base salary of
Two Hundred Twenty-five Thousand Dollars ($225,000.00) per annum.

 

 

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(d)
Employee will be paid an annual discretionary bonus, payable within 45
days after the end of each Contract Year, of not more than twenty-five percent
(25%) of Employee’s Base Compensation, based on the following criteria:

 

(i)                                     Employee’s success in meeting or exceeding Gaming Enterprise
performance criteria proposed by Employee prior to the start of each fiscal
year of the Gaming Enterprise and approved by the CEO;

 

(ii)                                  Employee’s success in establishing and implementing all financial
internal control, financial reporting, financial guidance and compliance
programs and all other programs of the Gaming Enterprise with which Employee is
charged with responsibility; and

 

(iii)                               Employee’s demonstrated leadership and communication skills.

 

(e)
In the event the Authority adopts a deferred compensation/pension plan,
Employee shall be entitled to such benefits, including the right to have some
or all of any bonus placed into such a deferred compensation plan.

 

(f)
Employee will be entitled, on the same basis as
other employees of the Authority, to participate in and to receive benefits
under any of the Authority’s employee benefit plans, if any, as such plans may
be modified from time to time, except
that Employee will be entitled to one week of vacation in excess of the
Authority’s normal vacation policy for employees of the Authority, accrued in
accordance with the Authority’s normal vacation policy.

 

(g)
The Authority will reimburse Employee all reasonable and necessary business
expenses incurred on behalf of his employment during the performance of his
duties under this Agreement, subject to the existing reimbursement
policy established by the Authority. Such reimbursements shall be supported by
adequate record-keeping and other requirements as may be necessary or
appropriate to comply with the Internal Revenue Code.

 

(h)
Employee will have the right to be reimbursed for any legal fees incurred as
the result of defending himself in any third party lawsuit arising out of
Employee’s obligations under this Agreement; provided that all such defenses
shall be managed and controlled by Authority and with counsel reasonably approved by Authority.  Employee is and will continue to be covered
under the Authority’s errors and omissions insurance as such insurance covers
all members of the Board.

 

(i)
Employee will be entitled to a one-time payment of Six Thousand Five Hundred
Dollars ($6,500) to cover relocation costs, plus additional costs sufficient to
pay up to thirty (30) days stay at Extended Stay America in Santa Rosa,
California or other approved lodging.

 

6.
Licensing Issues.  Employee warrants and
represents that he is eligible and suitable for a background clearance and
license as being suitable for holding a key employee or manager’s position in a
gaming establishment under Tribal, State and federal law. Employee agrees to
timely apply for any license(s) and background investigations as may be
required under applicable law and as may be 

 

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necessary to enable him to engage in his
employment hereunder. The Authority or the Gaming Enterprise shall pay all
costs associated with such licensing and backgrounding. Employee will maintain
all gaming licenses and suitability determinations in good standing as a
continuing condition of his employment under this Agreement, and shall notify
the Tribal Gaming Commission (“TGA”) of any information that is material to, or
a change from, any information sought or contained in his Tribal gaming license
application or his suitability in general for a gaming license, and shall do so
as soon as possible after such information is known to Employee.

 

7.
Termination.

 

(a)
Employee may be terminated prior to the Termination Date by Authority only
under the following circumstances:

 

(i)
Upon termination, revocation or disapproval of any license required by law to
be held by Employee to perform as the CFO of the Authority and the CFO of the
Gaming Enterprise or if any event renders it unlawful for the Tribe and
Authority to continue to conduct casino gaming on the reservation; or

 

(ii)
Employee shall commit an act constituting “Cause,” Cause being defined as (a)
an act of intentional dishonesty against the Authority or the Gaming
Enterprise; (b) conviction of any criminal charge involving moral turpitude;
(c) the deliberate or intentional refusal by Employee (except by reason of
disability) to perform his duties hereunder; (d) gross negligence in the
performance of his duties hereunder; or, (e) failure to perform his duties in a
manner consistent with his professional obligations after prior sufficient
verbal and written warnings; or

 

(iii)
Employee shall die; or

 

(iv)
The Authority shall for any reason cease to conduct its gaming enterprises; or

 

(v)
Employee shall become unable to perform the duties and responsibilities set
forth in this Agreement by reason of long-term physical or mental disability,
defined as a period of disability that exceeds six (6) months; or

 

(vi)
Either party shall give the other party hereto thirty (30) days’ written notice
of Employee’s resignation or termination.

 

(b)
If Employee’s employment should be terminated under paragraphs 7 (a)(i), (a)(ii)
or (a)(vi) above (provided that this subparagraph (b) shall only apply to
paragraph 7 (a)(vi) to the extent that Employee has resigned), then Authority
shall within ten (l0) days of such termination pay Employee the Base
Compensation and accrued bonuses and benefits to the date Employee is
terminated, whereupon Authority shall have no further liability or obligation
to Employee under this Agreement.

 

(c)
If Employee is terminated under paragraphs 7 (a)(iii), (a)(iv), (a)(v) or
(a)(vi) (provided that this subparagraph (c) shall only apply to paragraph 7
(a)(vi) to the extent that Authority has

 

 

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terminated
Employee), the Authority shall pay to Employee his salary for a period of three
(3) months from the date of termination and he shall be eligible for all
employee benefits during that three-month period, pro-rated to that period and
shall receive as bonus compensation an amount equal to 25% of the prior year’s
bonus payable at the end of the three-month period.  Employee shall be paid all amounts due him at
the time of termination when they would otherwise be paid, including the pro
rata share of the bonus for the year in which the termination occurred.

 

(d)
Upon the payment of all or any part of the compensation provided for in this
paragraph 7, or its mitigation under this paragraph, the Authority will have no
further liability or obligation to Employee under this Agreement or arising
from the employment relationship except that obligation provided for in this
paragraph 7.

 

(e)
Employee will be liable in damages to the Authority for all losses and expenses
incurred by Authority if he terminates his employment for any reason not
authorized herein, with the exception of termination by written notice agreed to
by both parties. Any such unauthorized termination by Employee will constitute
a waiver by Employee of all claims against the Authority and the Gaming
Enterprise except for Base Compensation and accrued bonus and benefits to the
date of his termination.

 

8.
Confidentiality of Proprietary Information.  Any information acquired by Employee while in
the employ of the Authority related to employee lists, patron lists, marketing
plans, operating procedures and other information proprietary to the Authority
or the Gaming Enterprise are acknowledged by Employee to be confidential
information belonging to the Authority, and Employee shall not disclose such
information without the express written authorization of the Authority except
in the ordinary course of the business of the Gaming Enterprise.  Employee shall, upon termination of this
Agreement for any reason whatsoever, turn over to the Authority any and all
copies he may have of employee lists, patron lists, marketing programs,
operating procedures and other information proprietary to the Authority or the
Gaming Enterprise.  Employee acknowledges
that employee lists, patron lists, marketing programs, operating procedures and
other information proprietary to the Authority or the Gaming Enterprise are
confidential and proprietary information belonging to the Authority and the
Authority may exercise any and all remedies available to it at law or in equity
to enforce this Agreement with respect to non-disclosure of any such
proprietary information to which Employee has or will become privy while an
employee of Authority.  Particularly, the
parties agree that, because of the nature of the subject matter of this
paragraph 8, in event of a
threat or danger of disclosure of such information, it could be extremely difficult
to determine the actual damages suffered or to be suffered by Authority in the
event of a breach of this Agreement by Employee. Accordingly, Authority shall
be entitled to injunctive relief (both temporary and permanent), it being
acknowledged and agreed that any such actual or threatened breach will cause
irreparable injury to Authority and that money damages alone will not provide
an adequate remedy to Authority.
Notwithstanding the foregoing, Authority also shall be
entitled to money damages for any loss suffered or to be suffered as a
consequence of Employee’s breach of this Agreement. The
parties acknowledge that this provision shall survive the termination of this
Agreement.

 

9. Assignment.  This Agreement may be assigned by the
Authority to any entity formed by the Tribe or the Authority for the express
purpose of operating the Gaming Enterprise and any related 

 

 

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economic
development activities.  This Agreement
contemplates the personal services of Employee and neither this Agreement nor
any of the rights herein granted to Employee or the duties assumed by him
hereunder may be assigned by him.

 

10.
Miscellaneous.

 

(a)
Employee represents to Authority that there are no restrictions to which he is
subject or agreements to which he is a party that would be violated by his
execution of this Agreement and his employment hereunder.

 

(b)
This Agreement and all questions relating to its validity, interpretation,
performance and enforcement shall be governed by and construed in accordance
with the laws of the Dry Creek Rancheria and the State of California.

 

(c)
No amendment to this Agreement or any attempted waiver of a provision of this
Agreement shall be effective unless in writing and signed by the parties to
this Agreement.

 

(d)
Any controversy that arises out of this Agreement shall be determined
in accordance with the laws of the Tribe and the State of California. In no
event shall any liability of the Tribe, the Authority, TGA or the Gaming
Enterprise or any of them exceed an amount equal in total to three (3) months
of the Compensation for a one year period.

 

 

The Parties have executed
this Agreement this 17th day of October, 2007, effective as of the Effective
Date first written above.

 

 

	
  RIVER ROCK ENTERTAINMENT AUTHORITY

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ Betty J. Arterberry

  	
   

  
	
  Name:

  	
  Betty J. Arterberry

  	
   

  
	
  Its: 

  	
  Chairperson

  	
   

  

 

 

	
  EMPLOYEE

  
	
   

  
	
   

  
	
       /s/ Joseph Callahan

  	
   

  
	
  Joseph Callahan

  	
   

  

 

 

 

# 4721668_v4

 

 

 

6Exhibit 4.0

 

	
  WH

  	
  

  	
   

  
	
   

  	
   

  	
   

  
	
  COMMON
  STOCK

  	
  CHARTERED UNDER THE LAWS
  OF THE UNITED STATES OF AMERICA

  	
  SEE REVERSE FOR CERTAIN
  DEFINITIONS

  CUSIP 92934C 10 1

  

 

This Certifies that

 

is the owner of:

 

FULLY
PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF THE PAR VALUE OF $0.001 EACH
OF

WSB HOLDINGS INC.

 

(hereinafter referred to as
the “Corporation”), a Delaware corporation. The shares represented by this
certificate are transferable only on the stock transfer books of the
Corporation by the holder of record hereof, or by his duly authorized attorney
or legal representative, upon the surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Corporation’s transfer agent and registrar.

 

IN WITNESS WHEREOF, the
Corporation has caused this certificate to be executed by the facsimile
signatures of its duly authorized officers and has caused a facsimile of its
corporate seal to be hereunto affixed.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  [SEAL]

  WSB HOLDINGS INC

  	
  

  
	
  SECRETARY

  	
  2007

  	
  CHAIRMAN

  

 

	
   

  	
  COUNTERSIGNED AND
  REGISTERED:

  
	
   

  	
  AMERICAN
  STOCK TRANSFER & TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  TRANSFER
  AGENT AND REGISTRAR

  
	
   

  	
   

  
	
   

  	
  BY

  
	
   

  	
  

  
	
   

  	
  AUTHORIZED
  SIGNATURE

  

 

 

WSB HOLDINGS INC.

 

The shares represented by
this certificate are issued subject to all the provisions of the certificate of
incorporation and bylaws of WSB Holdings Inc. (the “Corporation”) as from time
to time amended (copies of which are on file at the principal executive office
of the Corporation), to all of which the holder by acceptance hereof assents.

 

The Corporation will furnish
to any shareholder upon request and without charge a full statement of the
designations, preferences, limitations and relative rights of the shares of
each class authorized to be issued, the variations in the relative rights and
preferences between the shares of each series of shares of the Corporation so
far as the same have been fixed and determined, and the authority of the Board
of Directors to fix and determine the relative rights and preferences of
classes and series of the shares of the Corporation. Such request may be made
to the Corporation or the Transfer Agent.

 

The
following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

 

	
  TEN COM

  	
  –

  	
  as tenants in common

  	
  UNIF
  GIFT MIN ACT–

  	
   

  	
  Custodian

  	
   

  
	
  TEN ENT

  	
  –

  	
  as tenants by the
  entireties

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
  JTTEN

  	
  –

  	
  as joint tenants with right
  of

  	
  under
  Uniform Gifts to Minors

  
	
   

  	
   

  	
  survivorship and not as

  	
  Act

  	
   

  	
   

  
	
   

  	
   

  	
  in common

  	
   

  	
  (State)

  	
   

  
									

 

Additional
abbreviations may also be used though not in the above list.

 

For value received,               hereby
sell, assign and transfer unto

 

PLEASE INSERT SOCIAL SECURITY
OR 

OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

PLEASE
PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

 

                                                                                                                                                                Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint 

 

                                                                                                                                                                Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises. 

 

Dated

 

	
  X 

  	
   

  
	
   

  	
   

  
	
  X 

  	
   

  
	
  NOTICE: 

  	
  THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
  WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
  WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

  

 

	
  SIGNATURE(S)
  GUARANTEED

  
	
   

  
	
  BY

  	
   

  	
   

  	
   

  

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

KEEP THIS
CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE
CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF
A REPLACEMENT CERTIFICATE.

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