Exhibit 10.29
A. LORNE WEIL EMPLOYMENT AGREEMENT
Table of Contents
Page
1. Termination of Existing Employment Agreements..............................1
2. Employment; Term...........................................................1
3. Offices and Duties.........................................................2
4. Compensation...............................................................2
5. Benefits...................................................................4
6. Termination................................................................5
7. Compensation Following Termination Prior to the End of the Term............8
8. Excise Tax Restoration Payment............................................13
9. Offsets; Withholding......................................................14
10. Noncompetition; Nonsolicitation; Nondisclosure; etc.......................14
10.1 Noncompetition; Nonsolicitation.....................................14
10.2 Proprietary Information.............................................15
10.3 Confidentiality and Surrender of Records............................16
10.4 Nondisparagement....................................................16
10.5 No Other Obligations................................................17
10.6 Forfeiture of Outstanding Options...................................17
10.7 Enforcement.........................................................18
10.8 Cooperation with Regard to Litigation...............................18
10.9 Survival............................................................18
10.10 Company.............................................................18
11. Insurance for the Company's Benefit.......................................19
12. Indemnification...........................................................19
13. Notices...................................................................19
14. Assignability; Binding Effect.............................................20
15. Complete Understanding; Amendment; Waiver.................................21
16. Severability..............................................................21
17. Survivability.............................................................22
18. Governing Law; Arbitration; Expenses; Interest............................22
18.1 Governing Law.......................................................22
18.2 Arbitration.........................................................22
18.3 Reimbursement of Expenses in Enforcing Rights.......................22
18.4 Interest on Unpaid Amounts..........................................23
19. Reimbursement of Expenses of Executive in Negotiating Agreement...........23
20. Titles and Captions.......................................................23
i
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st
day of November, 2000 (the "Effective Date"), by and between SCIENTIFIC GAMES
CORPORATION, a Delaware corporation formerly known as Autotote Corporation (the
"Company"), and A. Lorne Weil ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company pursuant to an
Employment Agreement dated as of November 1, 1997, as amended by the letter
agreement dated September 10, 1998 and the Amendment to Employment Agreement
dated as of September 1, 2000 (the "Old Agreement"); and
WHEREAS, the Company desires to continue to employ Executive with
the Company, and Executive wishes to continue to serve the Company, in the
capacities and on the terms and conditions set forth in this Agreement; and
WHEREAS, the Company and Executive desire that this Agreement
replace and supersede the Old Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived herefrom and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Termination of Existing Employment Agreements. As of the Effective
Date, all existing employment agreements between the parties, whether oral or
written, including the Old Agreement, are hereby terminated, except as provided
in Section 12.
2. Employment; Term. The Company hereby agrees to employ Executive, and
Executive hereby accepts continued employment with the Company, in accordance
with and subject to the terms and conditions set forth herein. The term of
employment of Executive under this Agreement (the "Term") shall be the period
commencing on the Effective Date and ending on December 31, 2004, and any period
of extension thereof in accordance with this Section 2, subject to earlier
termination in accordance with Section 6. The Term shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term) first on December 31, 2004 (extending the Term to
December 31, 2005) and then on each succeeding December 31 thereafter, unless
either party shall have given written notice to the other party prior to the
June 30 preceding the date upon which such extension would become effective
electing not to further extend the Term, in which case Executive's employment
shall terminate on the date upon which such extension would otherwise have
become effective, unless earlier terminated in accordance with Section 6;
provided, however, that any termination pursuant to this Section 2 shall be
subject to and without limitation of or prejudice to Executive's rights with
respect to (i) a termination for Good Reason pursuant to Section 6(e)(viii), or
(ii) a termination without Cause pursuant to Section 6(g), as applicable.
3. Offices and Duties.
(a) During the Term, Executive shall serve as Chairman of the Board,
President and Chief Executive Officer of the Company and shall report solely to
the Board of Directors of the Company (the "Board"). Executive agrees to serve
during the Term as a member of the Board, and of any Board committee to which
the Board may elect him.
(b) Executive shall perform such duties and responsibilities and
have such authority as are customary for the chairman of the board, president
and chief executive officer of a publicly held corporation of the size, type,
and nature of the Company as they may exist from time to time, but in no event
shall such duties, responsibilities and authority be reduced from those of
Executive at the Effective Date.
(c) Executive shall devote his full business time and attention and
best efforts to his positions with the Company without commitment to other
business endeavors, except that so long as such activities do not preclude or
render unlawful Executive's employment by the Company or otherwise materially
inhibit the performance of his duties under this Agreement or materially impair
the business of the Company or its subsidiaries, Executive (i) may make personal
investments which are not in conflict with his duties to the Company and manage
personal and family financial and legal affairs, (ii) may continue to serve on
any board of directors on which he is known by the Board to be serving on the
Effective Date, as specified in Schedule A hereto, (iii) may undertake public
speaking engagements, and (iv) may serve as a director of (or hold a similar
position with) any other organization.
(d) Executive shall be the highest-ranking executive of the Company.
4. Compensation.
(a) Base Salary. During the Term the Company shall pay Executive a
base salary (the "Base Salary") at the initial rate of $750,000 per annum,
payable biweekly (except to the extent deferred under a deferred compensation
plan) and subject to all withholdings that are legally required or are agreed to
by Executive. The Base Salary shall be increased annually on each January 1
during the Term by a percentage of the Base Salary then in effect equal to the
percentage increase, if any, during the preceding twelve months in the Consumer
Price Index for the Greater New York area. In no event shall the Base Salary be
reduced.
(b) Incentive Compensation. Executive shall have the opportunity
annually to earn incentive compensation in amounts determined by the
Compensation Committee of the Board (the "Committee") in accordance with the
applicable plan(s) of the Company as in effect from time to time; provided,
however, that (i) Executive shall have the opportunity to earn annually up to
100% of the Base Salary as incentive compensation pursuant to, and subject to
the terms and conditions of, the Company's Management Incentive Compensation
Plan as in effect from time to time (provided, however, that if no Management
Incentive Compensation Plan is in effect at any relevant time, or if such plan,
as in effect at any relevant time, does not provide a reasonable opportunity for
Executive to earn annually up to 100% of the Base Salary as incentive
compensation, then the Company shall provide such
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reasonable opportunity to Executive independently of such plan, and provided
further that Executive may in the discretion of the Committee or the Board
receive additional incentive compensation); and (ii) Executive's annual
opportunity for incentive compensation shall, for each year, be on terms and
conditions at least as favorable to Executive as the most favorable terms and
conditions for incentive compensation offered to any other employee of the
Company for such year. Any incentive compensation payable to Executive shall be
paid in accordance with the Company's usual practices with respect to payment of
incentive compensation to its other senior executives (except to the extent
deferred under a deferred compensation plan). To accommodate the change in the
Company's fiscal year end from October 31 to December 31, the first annual
period during the Term for purposes of Executive's incentive compensation shall
be the fourteen-month period from the Effective Date through December 31, 2001,
and Executive's annual opportunity for incentive compensation based on Base
Salary for such first annual period of the Term, ending December 31, 2001, shall
be determined with reference to the Base Salary (as determined in accordance
with the terms hereof) payable in respect of such fourteen-month period.
Notwithstanding anything to the contrary herein or in any plan, policy or
program of the Company, any other compensation or benefit to which Executive is
entitled that is based on a fiscal year of the Company shall be computed for
fiscal year 2001 so that the months of November and December 2000 are included
in such computation for the benefit of Executive, except to the extent (if any)
that (i) such months previously had been reflected in a computation of such
compensation or benefit, or (ii) inclusion of such months would otherwise result
in a duplication or overlap of such compensation or benefit or the computation
thereof; provided, however, that if, in the case of clause (i) or (ii) above,
the amount or value of such compensation or benefit in respect of such months
(or portion thereof) as so computed is less than what the amount or value of
such compensation or benefit would be for such months (or portion thereof) if
such months (or portion thereof) had been included in the computation of such
compensation or benefit for fiscal year 2001, then the amount or value of such
compensation or benefit for fiscal year 2001 shall be increased by the amount of
such difference (it being understood that, for the computation of any
compensation or benefit which is based on a comparison between amounts with
respect to a given reference period, including, without limitation, for purposes
of Section 5(h) of this Agreement, the amounts to be compared shall each be
computed for the same reference period).
(c) Executive Compensation Plans. Executive shall be entitled during
the Term to participate, without discrimination or duplication, in the Company's
supplemental executive retirement plan and all other executive compensation
plans and programs which are made generally available by the Company to its
other senior executives (including, without limitation, any stock option plans,
performance share plans, management incentive plans, deferred compensation
plans, and supplemental retirement plans) in accordance with the terms of such
plans and programs and subject to the Company's right to at any time amend or
terminate any such plan or program; provided, however, that Executive shall be
eligible to participate in such executive compensation plans and programs on
terms and conditions at least as favorable to Executive as the most favorable
terms and conditions offered to any other employee of the Company. In the event
of a Change in Control, all outstanding stock options then held by Executive
shall become fully vested and non-forfeitable. For purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred if: the stockholders of the
Company approve a merger, consolidation, recapitalization, or reorganization of
the Company, or a reverse stock split of any class of voting securities of the
Company, or the consummation of any such
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transaction if stockholder approval is not obtained (in each case excluding any
transaction with Olivetti, S.p.A., Cirmatica Gaming, S.A., Lottomatica S.p.A.,
or their respective affiliates), other than any such transaction which would
result in at least 60% of the total voting power represented by the voting
securities of the Company or the surviving entity outstanding immediately after
such transaction being beneficially owned by persons who together beneficially
owned at least 80% of the combined voting power of the voting securities of the
Company outstanding immediately prior to such transaction; provided that, for
purposes of this paragraph (c), such continuity of ownership (and preservation
of relative voting power) shall be deemed to be satisfied if the failure to meet
such 60% threshold is due solely to the acquisition of voting securities by an
employee benefit plan of the Company or such surviving entity or of any
subsidiary of the Company or such surviving entity.
5. Benefits.
(a) The Company shall reimburse Executive for all reasonable and
necessary travel, business entertainment and other business expenses incurred by
Executive in connection with the performance of his duties under this Agreement,
on a timely basis upon submission by Executive of vouchers therefor in
accordance with the Company's standard procedures.
(b) Executive shall be entitled to participate, without
discrimination or duplication, in any and all medical insurance, group health,
disability, life, accidental death, dismemberment insurance, pension,
retirement, profit sharing, stock ownership and other insurance, benefit, fringe
benefits and perquisite plans and programs which are made generally available by
the Company to its other senior executives; provided, however, that Executive
shall be eligible to participate in such insurance, benefit, fringe benefit and
perquisite plans and programs on terms and conditions at least as favorable to
Executive as the most favorable terms and conditions offered to any other
employee of the Company. The Company, in its sole discretion, may at any time
amend or terminate any such plans or programs; provided, however, that:
(i) At all times during the Term, such plans and programs in
effect, in the aggregate, shall provide Executive with benefits and compensation
substantially no less favorable than is provided by the Company to Executive
under such plans and programs as of the Effective Date;
(ii) The Company shall provide Executive with long-term
disability insurance and benefits substantially no less favorable (including any
required contributions by Executive) than such insurance and benefits in effect
on the Effective Date; and
(iii) The Company shall provide Executive with Company-paid
group and individual term life insurance providing a death benefit no less than
that provided under Company-paid insurance in effect on the Effective Date.
(c) If the Company adopts an equity investment program permitting
executives to elect to forego salary, annual incentive, other bonuses, annual
option opportunities under long-term incentive plans, or other specified
compensation or benefits in exchange for a
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grant of stock options, restricted stock or other equity or non-equity awards or
benefits, Executive will be eligible to participate in such program on terms no
less favorable than the terms of participation of any other employee of the
Company.
(d) Executive shall be entitled to participate in the Company's
deferred compensation plan in accordance with the terms of such plan and subject
to the Company's right to at any time amend or terminate any such plan.
(e) Executive shall be entitled to paid vacation, holidays, and any
other time off in accordance with the Company's policies in effect from time to
time.
(f) The Company will use its best efforts to file with the
Securities and Exchange Commission and thereafter maintain the effectiveness of
one or more registration statements registering under the Securities Act of
1933, as amended, the offer and sale of shares by the Company to Executive
pursuant to stock options or other equity-based awards granted to Executive
under Company plans.
(g) Executive shall be deemed to have commenced employment with the
Company on August 1, 1990, for purposes of calculating Executive's period of
service under this Agreement except to the extent, if any, that any provision of
this Agreement specifically credits Executive with a longer period of service
for purposes of such provision.
(h) For purposes of computing the "Retirement Benefit" or equivalent
payment or benefit due to Executive under any SERP (as defined in Section 7(a)
below) in which Executive participates during the Term, or any payment or
benefit under Section 7 of this Agreement in lieu of any SERP benefit or
payment, the "Final Average Compensation" or equivalent reference compensation
amount, in the case of Executive, shall, notwithstanding the terms of such SERP,
be the higher of (x) such amount as otherwise determined pursuant to the terms
of the SERP or (y) an amount equal to the sum of (i) Executive's then-current
Base Salary immediately prior to termination plus (ii) such then-current Base
Salary multiplied by (A) the sum of the Incentive Compensation Percentages for
each of the Reference Years divided by (B) 3; where (X) "Incentive Compensation
Percentage" for a Reference Year means the percentage expressed by dividing the
aggregate incentive compensation and bonuses paid to Executive in such Reference
Year by Executive's Base Salary in such Reference Year, and (Y) "Reference Year"
means each of the three consecutive calendar years with the highest Incentive
Compensation Percentages during the period of ten calendar years immediately
preceding termination.
6. Termination. Executive's employment hereunder may be terminated prior
to the end of the Term under the following circumstances:
(a) Death; Total Disability. Executive's employment hereunder shall
terminate upon Executive's death, and the Company may terminate Executive's
employment hereunder in the event of Executive's "Total Disability." For
purposes of this Agreement, "Total Disability" shall mean Executive's failure to
perform the duties and responsibilities contemplated under this Agreement for a
period of more than 180 days during any consecutive 12-month period, due to
physical or mental incapacity or impairment as determined by a
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physician or physicians selected by the Company and reasonably acceptable to
Executive unless, within 30 days after Executive has received written notice
from the Company of a proposed termination due to such failure (as determined in
accordance with the foregoing provisions of this sentence) which notice shall
include a copy of the findings of such physician or physicians and shall refer
to this Section 6(a), Executive shall have returned to the full performance of
his duties hereunder and shall have presented to the Company a written
certificate of Executive's good health by a physician selected by Executive and
reasonably acceptable to the Company.
(b) Retirement. Executive may terminate his employment hereunder
upon retirement at or after age 65 or at or after age 55 following at least 10
years of full-time employment with the Company ("Normal Retirement") or prior to
such age upon approval by the Committee ("Approved Early Retirement"), in each
case upon forty-five (45) days' prior written notice to the Company referring to
this Section 6(b).
(c) Termination by the Company for Cause. The Company may terminate
Executive's employment hereunder for Cause at any time upon written notice to
Executive referring to this Section 6(c). For purposes of this Agreement, the
term "Cause" shall mean Executive's gross misconduct (as defined herein) or
willful and material breach of Section 10.1(a) (other than the first sentence
thereof), 10.1(b), 10.2 (other than the first and penultimate sentences
thereof), 10.3, 10.4, or 10.8. For purposes of this definition, "gross
misconduct" shall mean (i) Executive's conviction in a court of law of a felony
under applicable federal or state law that was committed while Executive was
employed by the Company, or (ii) Executive's willful and continued failure
substantially to perform his material duties under this Agreement or any act or
omission on the part of Executive not requested or approved by the Board
constituting willful malfeasance or gross negligence in the performance of
Executive's material duties under this Agreement. For purposes of this
Agreement, an act or failure to act on Executive's part shall be considered
"willful" if it was done or omitted to be done by him not in good faith and
shall not include any act or failure to act resulting from any physical or
mental incapacity or impairment of Executive. Executive may not be terminated
for Cause unless and until there shall have been delivered to him, within ninety
(90) days after the Board (A) had actual knowledge of conduct or an event
allegedly constituting Cause and (B) had reason to believe that such conduct or
event could be grounds for termination for Cause, a copy of a resolution duly
adopted by the Board by a vote of Directors constituting a majority of the Board
(excluding Executive) at a meeting of the Board which a quorum is present and
which is called and held for such purpose (after giving Executive reasonable
notice of the specific grounds for such termination and, except if a felony
conviction is the grounds for termination, 30 days to correct such grounds, and
affording Executive and his counsel the opportunity to be heard before the
Board) finding that, in the good faith opinion of the Board, Executive was
guilty of conduct constituting Cause (the "Cause Resolution").
If, within 30 days of Executive's receipt of notice of his termination for
Cause, Executive in good faith files a claim in arbitration disputing the
termination for Cause, Executive shall, during the pendency of the arbitration,
be considered a suspended employee of the Company and be entitled to receive
compensation and benefits under this Agreement as if he had not been terminated.
If the arbitration panel finds that the Company had Cause to terminate
Executive's employment, Executive shall, within 5 days of the arbitration award,
repay any amounts provided to him by the Company in respect of periods
commencing after his
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termination, including but not limited to salary continuation and the value of
all benefits provided to Executive in respect of periods commencing after his
termination, in excess of any amounts to which he was entitled under this
Agreement upon a termination for Cause. If the arbitration panel finds that the
Company did not have Cause to terminate Executive's employment: (x) Executive's
employment shall be deemed to have been terminated without Cause as of the date
which is 90 days after the date of notice of his termination for Cause; and (y)
any amounts paid to Executive by the Company in respect of periods commencing
after 90 days following the date of the notice of his termination for Cause,
including but not limited to salary continuation and the value of all benefits
provided to Executive, shall be credited against amounts owed to Executive under
Section 7(c) of this Agreement.
(d) Termination by the Company Without Cause. The Company may
terminate Executive's employment hereunder at any time, without Cause, for any
reason or no reason.
(e) Termination by Executive for Good Reason. Executive may
terminate his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean: without Executive's prior written consent,
(i) a material change, adverse to Executive, in Executive's positions, titles or
offices as set forth in Section 3, or status rank, nature of responsibilities,
or authority within the Company, or removal of Executive from, or failure to
nominate, reappoint or reelect Executive as the Chairman of the Board, or as a
member of any Board committee on which he has served during the Term (except if
required by a change in law, accounting rule, or the rules of any national
securities exchange or automated quotation system on which the Company's
securities may be listed or quoted), including a failure of the Board or
stockholders to take such actions (notwithstanding their legal right to do so),
except, in such case, in connection with the termination of Executive's
employment for Cause, Total Disability, Normal Retirement or Approved Early
Retirement, or death, (ii) an assignment of any significant duties to Executive
which are inconsistent with his positions or offices held under Section 3, (iii)
a decrease in Base Salary or other compensation or in any compensation
opportunities or a material decrease in the aggregate benefits provided under
this Agreement, (iv) any other failure by the Company to perform any material
obligation under, or breach by the Company of any material provision of, this
Agreement, (v) a relocation of the Corporate Offices of the Company more than 35
miles from the latest location of such offices prior to such relocation, (vi)
any failure to secure the agreement of any successor corporation or other entity
to the Company to fully assume the Company's obligations under this Agreement in
a form reasonably acceptable to Executive, (vii) any attempt by the Company to
terminate Executive for Cause which does not result in a valid termination for
Cause, except where (x) valid grounds for Cause exist but are corrected as
permitted under Section 6(c) or (y) the Company, prior to 35 days after
Executive's receipt of a copy of the Cause Resolution, revokes the Cause
Resolution, takes any and all other steps reasonably necessary to retract its
allegations of Cause and fully restore Executive to active employment in
accordance with the terms of this Agreement, effective immediately prior to the
adoption of the Cause Resolution, and pays (or reimburses Executive for) any
costs and expenses reasonably incurred by Executive in connection with such
attempted termination, and (viii) the failure of the parties to agree in writing
at the end of the Term (or any extension thereof) to the terms of Executive's
continued employment where only Executive, and not the Company, has given notice
electing not to further extend the Term pursuant to the last sentence of Section
2; provided, however, that in the case of termination
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pursuant to this clause (viii), the payment provided for in Section 7(c)(i)
shall be in a total amount equal to two times, rather than three times, the sum
of items (x) and (y) specified therein, but Section 7(c) shall apply in all
other respects to termination pursuant to this clause (viii). Executive shall
not be considered to have terminated for Good Reason unless Executive shall have
provided the Company with written notice of the specific reasons for such
termination within ninety (90) days after he has actual knowledge of the event
that is the basis for such termination and (except in the case of a termination
pursuant to clause (vii) or (viii) of the preceding sentence) affords the
Company at least thirty (30) days to cure the alleged conduct.
(f) Termination by Executive for Other than Good Reason. Executive
may terminate his employment hereunder for any reason or no reason upon thirty
(30) days' prior written notice to the Company referring to this Section 6(f);
provided, however, that a termination of Executive's employment by reason of
death, Total Disability, Normal or Early Retirement, or Good Reason shall not
constitute a termination by Executive for other than Good Reason pursuant to
this Section 6(f).
(g) Termination Upon the Company's Failure to Extend the Term. An
election by the Company not to extend the Term pursuant to Section 2 hereof
shall be deemed for all purposes of this Agreement (including, without
limitation, for purposes of Sections 7(c) and 10.1(a) hereof) to be a
termination of Executive's employment hereunder by the Company without Cause as
of the date of expiration of the Term.
7. Compensation Following Termination Prior to the End of the Term. In the
event that Executive's employment hereunder is terminated prior to the end of
the Term, Executive shall be entitled only to the following compensation and
benefits:
(a) Termination by Reason of Death, Normal Retirement, or Approved
Early Retirement. In the event that Executive's employment is terminated prior
to the expiration of the Term by reason of Executive's death, pursuant to
Section 6(a), or by reason of his Normal Retirement or Approved Early Retirement
pursuant to Section 6(b), the Company shall pay the following amounts, and make
the following other benefits available, to Executive (or Executive's spouse or
estate, as the case may be):
(i) Any accrued but unpaid Base Salary (as determined pursuant
to Section 4(a)) for services rendered to the date of termination;
(ii) All vested, nonforfeitable amounts owing or accrued at
the date of termination under any compensation and benefit plans, programs, and
arrangements set forth or referred to in Sections 4(b), 4(c), and 5 (including
any earned and vested annual incentive compensation and long term incentive
award but excluding any incentive compensation under Section 4(b) for the year
of termination) in which Executive theretofore participated, to be paid in
accordance with the terms and conditions of such plans, programs, and
arrangements (and agreements and documents thereunder);
(iii) In lieu of any incentive compensation under Section 4(b)
for the year of termination, an amount equal to the amount of annual incentive
compensation payable to Executive assuming achievement of the maximum
performance targets for such year,
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multiplied by a fraction the numerator of which is the number of days Executive
was employed in the year of termination and the denominator of which is the
total number of days in the year of termination;
(iv) Stock options held by Executive at termination, if not
then vested and exercisable, will become fully vested and exercisable at the
date of such termination, and any such options which were granted on or after
November 1, 1997 (that is, the Effective Date of the Old Agreement) shall remain
exercisable until the earlier of three years after the date of such termination
or the scheduled expiration date, and, in other respects, all such options shall
be governed by the plans and programs and the agreements and other documents
pursuant to which such options were granted;
(v) All deferred stock awards, and all deferral arrangements
under any deferred compensation plan, will be settled in accordance with the
plans and programs under which the awards were granted or governing the deferral
including, if so permitted by the plans or programs, Executive's duly executed
deferral election forms or the terms of any mandatory deferral;
(vi) Reasonable business expenses and disbursements incurred
by Executive prior to such termination will be reimbursed in accordance with
Section 5(a);
(vii) If Executive's employment terminates due to his Normal
Retirement or Approved Early Retirement, Executive may elect continued
participation after termination in the Company's health and medical coverage for
himself and his spouse and dependent children after such coverage would
otherwise end until such time as Executive becomes eligible for Medicare;
provided, however, that in the event of such election, Executive shall pay the
Company each year an amount equal to the then-current annual COBRA premium being
paid (or payable) by any other former employee of the Company;
(viii) Executive shall be entitled to designate (and change,
to the extent permitted under applicable law) a beneficiary or beneficiaries to
receive any compensation or benefits payable hereunder following Executive's
death;
(ix) In lieu of any payments and benefits under any
supplemental executive retirement plan or substantially similar plan (a "SERP")
in which Executive participated during the Term, Executive shall be entitled to
receive the greater of: (y) all payments and benefits to which Executive
otherwise would have been entitled under the SERP (computed in accordance with
Section 5(h) hereof); and (z) all payments and benefits to which Executive
otherwise would have been entitled under the SERP (computed in accordance with
Section 5(h) hereof) if Executive had 15 years of service with the Company. Such
payments and benefits shall be payable in a lump sum or in equal installments,
as determined by Executive in his discretion, in accordance with the terms and
conditions of the SERP; provided, however, that Executive shall not be entitled
to receive payments in installments unless at least 12 months prior to the date
of the termination of his employment, he elected to receive payments in
installment form under the SERP. If Executive receives such payment(s) under
this Section 7(a)(ix), Executive shall forfeit all rights under the SERP, and
the SERP shall have no force and effect with respect to Executive;
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Provided, however, that Executive will be entitled to the benefit of any terms
of plans or agreements applicable to Executive which are more favorable than
those specified in this Section 7(a).
Amounts payable under (i), (ii), (iii), and (vi) above will be paid as promptly
as practicable after termination of Executive's employment; provided, however,
that, to the extent that the Company would not be entitled to deduct any such
payments (other than those under (i) above) under Internal Revenue Code Section
162(m), such payments shall be made at the earliest time that the payments would
be deductible by the Company without limitation under Section 162 (m) (unless
this provision is waived by the Company).
(b) Termination by the Company for Cause; Termination by Executive
for Other than Good Reason. In the event that Executive's employment is
terminated by the Company for Cause pursuant to Section 6(c) or by Executive for
other than Good Reason pursuant to Section 6(f), the Company shall pay the
following amounts, and make the following other benefits available, to
Executive:
(i) Any accrued but unpaid Base Salary (as determined pursuant
to Section 4(a)) for services rendered to the date of termination;
(ii) All vested nonforfeitable amounts owing or accrued at the
date of termination under any compensation and benefit plans, programs, and
arrangements set forth or referred to in Sections 4(b), 4(c), and 5 hereof
(including any earned and vested annual incentive compensation) in which
Executive theretofore participated will be paid under the terms and conditions
of such plans, programs, and arrangements (and agreements and documents
thereunder);
(iii) Except as provided in Section 10.6, all stock options
and deferred stock awards will be governed by the terms of the plans and
programs under which the options or awards were granted;
(iv) Non-forfeitable amounts credited to any deferral account
of Executive under deferral arrangements referred to in Section 5(d) hereof at
the date of termination will be settled in accordance with the plans and
programs under which the awards were granted or governing the deferral
including, if so permitted by the plans or programs, Executive's duly executed
deferral election forms or the terms of any mandatory deferral; and
(v) Reasonable business expenses and disbursements incurred by
Executive prior to such termination will be reimbursed, in accordance with
Section 5(a).
Amounts payable under (i), (ii), and (v) above will be paid as promptly as
practicable after termination of Executive's employment; provided, however,
that, to the extent that the Company would not be entitled to deduct any such
payments under Internal Revenue Code Section 162(m), such payments shall be made
at the earliest time that the payments would be deductible by the Company
without limitation under Section 162(m) (unless this provision is waived by the
Company).
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(c) Termination by Reason of Total Disability; Termination by the
Company Without Cause; Termination by Executive For Good Reason. In the event
that Executive's employment is terminated by reason of Total Disability pursuant
to Section 6(a), or by the Company without Cause pursuant to Section 6(d) or
6(g), or by Executive for Good Reason pursuant to Section 6(e), the Company
shall pay the following amounts, and make the following other benefits
available, to Executive:
(i) A lump sum cash payment in an amount equal (except as
provided in clause (viii) of Section 6(e)) to three times the sum of (x)
Executive's then-current Base Salary at the rate payable in accordance with
Section 4(a) hereof, at the date of termination plus (y) the Severance Annual
Incentive Amount (as defined below), will be paid to Executive; provided,
however, that Executive may elect to receive the amount payable under this
Section 7(c)(i) in equal monthly installments over the 36 months following
termination, without interest, in lieu of receiving a lump sum cash payment. For
purposes of this Section 7(c)(i) and Section 7(c)(iv), the "Severance Annual
Incentive Amount" shall be the greater of (1) the average annual incentive
compensation paid to Executive for the three years immediately preceding the
year of termination or (2) the annual incentive compensation payable to
Executive upon achievement of the maximum performance targets for the year of
termination;
(ii) The unpaid portion of Base Salary at the rate payable, in
accordance with Section 4(a) hereof, at the date of termination, pro rated
through such date of termination, will be paid;
(iii) All vested, nonforfeitable amounts owing or accrued at
the date of termination under any compensation and benefit plans, programs, and
arrangements set forth or referred to in Sections 4(b) and 5(a) and 5(c) hereof
(including any earned and vested annual incentive compensation) in which
Executive theretofore participated will be paid under the terms and conditions
of such plans, programs, and arrangements (and agreements and documents
thereunder);
(iv) In lieu of any annual incentive compensation under
Section 4(b) for the year in which Executive's employment terminated (unless
otherwise payable under (iii) above), Executive will be paid an amount equal to
(X) the Severance Annual Incentive Amount as defined in Section 7(c)(i),
multiplied by (Y) a fraction the numerator of which is the number of days
Executive was employed in the year of termination and the denominator of which
is the total number of days in the year of termination;
(v) Stock options held by Executive at termination, if not
then vested and exercisable, will become fully vested and exercisable at the
date of such termination, and any such options which were granted on or after
November 1, 1997 or, if previously granted, were not "in the money" as of
November 1, 1997 shall remain exercisable until the scheduled expiration date,
and, in other respects, all such options shall be governed by the plans and
programs and the agreements and other documents pursuant to which such options
were granted;
(vi) Deferred stock held by Executive at termination will
become fully vested and non-forfeitable, and shall be settled upon such
termination, without regard to any stated period of deferral otherwise remaining
in respect of such amounts;
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(vii) Executive shall be entitled to receive an amount equal
to the amount accrued under any deferred compensation plan or agreement in
effect at the date of termination in which Executive is a participant or party,
less required withholding taxes under Section 9, as promptly as practicable
following such date of termination; the amount paid under this Section 7(c)(vii)
shall be equal to Executive's account balance on the date of the termination of
Executive's employment if the deferred compensation amount is in the form of an
account balance or, if the deferred compensation amount is not in the form of an
account balance, the present value of the deferred compensation on the date of
the termination of Executive's employment, calculated using a discount rate (the
"Discount Rate") equal to the yield, at the time of determination, for U.S.
Treasury securities having a maturity of thirty years; if Executive elects to
receive payment under this Section 7(c)(vii), Executive shall forfeit all rights
under any such deferred compensation plan or agreement, and such deferred
compensation plan or agreement shall have no force and effect with respect to
Executive;
(viii) Reasonable business expenses and disbursements incurred
by Executive prior to such termination will be reimbursed, in accordance with
Section 5(a);
(ix) For (A) a period of 3 years after such termination other
than due to Total Disability or (B) the period from termination due to Total
Disability until Executive attains age 65, Executive shall continue to
participate in all employee and executive benefit plans, programs, and
arrangements under Section 5 providing health, medical, disability and life
insurance benefits in which Executive was participating immediately prior to
termination, the terms of which allow Executive's continued participation, as if
Executive had continued in employment with the Company during such period or, if
such plans, programs, or arrangements do not allow Executive's continued
participation, Executive shall receive a cash payment equivalent on an after-tax
basis to the value of the additional benefits Executive would have received
under such plans, programs, and arrangements in which Executive was
participating immediately prior to termination, as if Executive had received
credit under such plans, programs, and arrangements for service and age with the
Company during such period following Executive's termination as provided in
clause (A) or (B) above (as applicable), with such benefits payable by the
Company at the same times and in the same manner as such benefits would have
been received by Executive under such plans (it being understood that the value
of any insurance-provided benefits will be based on the premium cost to
Executive, which shall not exceed the highest risk premium charged by a carrier
having an investment grade or better credit rating);
(x) In lieu of any payments and benefits under any SERP in
which Executive participated during the Term, Executive shall be entitled to
receive the greater of: (y) all payments and benefits to which Executive
otherwise would have been entitled under the SERP (computed in accordance with
Section 5(h) hereof); and (z) all payments and benefits to which Executive
otherwise would have been entitled under the SERP if Executive had 15 years of
service with the Company (computed in accordance with Section 5(h) hereof). Such
payments and benefits shall be payable in a lump sum or in equal installments,
as determined by Executive in his discretion, in accordance with the terms and
conditions of the SERP; provided, however, that Executive shall not be entitled
to receive payments in installments unless at least 12 months prior to the date
of the termination of his employment, he elected to receive payments in
installment form under the SERP; if Executive receives such payment(s) under
this Section
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7(c)(x), Executive shall forfeit all rights under the SERP, and the SERP shall
have no force and effect with respect to Executive;
Provided, however, that if the Company terminates Executive's employment without
Cause and does not provide Executive with at least 90 days' prior written notice
of such termination, the date of Executive's termination for all purposes of
this Agreement except Section 7(c)(viii) shall be the 90th day after Executive
received written notice from the Company of the termination; and
Provided further that Executive will be entitled to the benefit of any terms of
plans or agreements applicable to Executive which are more favorable than those
specified in this Section 7(c). Except as otherwise expressly provided above,
amounts payable under this Section 7(c), will be paid as promptly as practicable
after termination of Executive's employment, and in no event more than 30 days
after such termination.
Notwithstanding the foregoing, if a reduction in Base Salary or other level of
compensation or benefit was a basis for Executive's termination for Good Reason,
the Base Salary or other level of compensation in effect before such reduction
shall be used to calculate payments or benefits under this Section 7(c).
(d) No Obligation to Mitigate. Executive shall not be required to
seek other employment or otherwise to mitigate Executive's damages upon any
termination of employment; provided, however, that, to the extent Executive
receives from a subsequent employer health or other insurance benefits
substantially similar to the benefits referred to in Section 5, any such
benefits to be provided by the Company to Executive following the Term shall be
correspondingly reduced.
(e) No Other Benefits or Compensation. Except as may be provided
under this Agreement, under any other written agreement between Executive and
the Company, or under the terms of any plan or policy applicable to Executive,
Executive shall have no right to receive any other compensation from the
Company, or to participate in any other plan, arrangement or benefit provided by
the Company, with respect to any future period after such termination or
resignation.
(f) Release of Employment Claims. Executive agrees, as a condition
to receipt of any termination payments and benefits provided for in Section 7
(other than compensation and benefits earned through the date of termination),
that he will execute a general release agreement, in a form reasonably
satisfactory to the Company, releasing any and all claims arising out of
Executive's employment (other than enforcement of this Agreement)
8. Excise Tax Restoration Payment. Notwithstanding anything to the
contrary in this Agreement, in the event that any payment or distribution of any
type to or for the benefit of Executive made by the Company, by any of its
affiliates, by any person who acquires ownership or effective control or
ownership of a substantial portion of the Company's assets (within the meaning
of section 280G of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder (the "Code")) or by any affiliate of such person, whether
paid or payable or distributed or distributable pursuant to the terms of an
employment agreement or otherwise (the
- 13 -
"Total Payments"), would be subject to the excise tax imposed by section 4999 of
the Code or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest or penalties, are collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (an "Excise Tax Restoration Payment") in an amount that shall
fund the payment by Executive of any Excise Tax on the Total Payments as well as
all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax
imposed on the Excise Tax Restoration Payment and any interest or penalties
imposed with respect to taxes on the Excise Tax Restoration or any Excise Tax.
9. Offsets; Withholding. Amounts required to be paid by the Company to
Executive pursuant to this Agreement shall not be subject to offset except for
any amounts that are owed to the Company by Executive due to his receipt of
funds as a result of his fraudulent activity. The foregoing and other provisions
of this Agreement notwithstanding (but without limiting the terms of Section 8),
all payments to be made to Executive under this Agreement, including under
Section 7, or otherwise by the Company will be subject to required withholding
taxes and other legally required deductions.
10. Noncompetition; Nonsolicitation; Nondisclosure; etc.
10.1 Noncompetition; Nonsolicitation.
(a) Executive acknowledges the highly competitive nature of
the Company's business and that access to the Company's confidential records and
proprietary information renders him special and unique within the Company's
industry. In consideration of the amounts that may hereafter be paid to
Executive pursuant to this Agreement (including, without limitation, Sections 4
and 7), Executive agrees that during the Term (and any extensions thereof) and
during the Covered Time (as defined in Section 10.1(e)), Executive, alone or
with others, will not, directly or indirectly, engage (as owner, investor,
partner, stockholder, employer, employee, consultant, advisor, director or
otherwise) in any business in which he has been directly engaged on behalf of
the Company, or which he has supervised as an executive thereof, during the last
two years prior to such termination, or was engaged in by the Company with
Executive's actual knowledge or planned by the Company with Executive's actual
knowledge at the time of such termination, in any geographic area in which such
business was conducted or planned to be conducted (a "Competing Business");
provided, however, that this Section 10.1(a) shall not restrict Executive from
engaging in (and the term "Competing Business" shall not include) any business
in which the Company no longer engages or plans to engage; provided further that
this Section 10.1(a) shall not apply if Executive terminates his employment for
Good Reason pursuant to clause (i), (ii), (iii), (iv), (v), (vi), or (vii) of
Section 6(e) or if Executive's employment is terminated by the Company without
Cause; and provided further that activities of the Company, or activities
engaged in by Executive for or on behalf of the Company, are not restricted by
this Section 10.1(a) and shall not constitute a "Competing Business." Ownership
of (i) the securities of any entity for which a Competing Business represents
less than 10% of net sales or net income (as determined in accordance with
generally accepted accounting principles) for the most recent fiscal year (or if
such entity has not completed a fiscal year, net sales or net income projected
for its first fiscal year) or (ii) not more than two percent of the equity
securities of any company having securities listed on an exchange or regularly
traded in the over-the-counter market shall not, of itself, be deemed
inconsistent with this Section 10.1(a).
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Nothing herein shall require Executive to sell or otherwise dispose of any
securities of any entity if the acquisition of such securities did not violate
the terms of this Section 10.1(a) at the time of such acquisition.
(b) In further consideration of the amounts that may hereafter
be paid to Executive pursuant to this Agreement (including, without limitation,
Sections 4, 5, and 7), Executive agrees that during the Term (including any
extensions thereof) and during the Covered Time he shall not, directly or
indirectly, (i) solicit or attempt to induce any of the employees, agents,
consultants or representatives of the Company to terminate his, her, or its
relationship with the Company; (ii) solicit or attempt to induce any of the
employees, agents, consultants or representatives of the Company to become
employees, agents, consultants or representatives of any other person or entity;
(iii) solicit or attempt to induce any customer, vendor or distributor of the
Company to curtail or cancel any business with the Company; or (iv) hire any
person who, to Executive's actual knowledge, is, or was within 180 days prior to
such hiring, an employee of the Company.
(c) During the Term (including any extensions thereof) and
during the Covered Time, Executive agrees that upon the earlier of Executive's
(i) negotiating with any Competitor (as defined below) concerning the possible
employment of Executive by the Competitor, (ii) responding to (other than for
the purpose of declining) an offer of employment from a Competitor, or (iii)
becoming employed by a Competitor, (x) Executive will provide copies of Section
10 of this Agreement to the Competitor, and (y) in the case of any circumstance
described in (i) or (ii) above occurring during the Covered Time, and in the
case of any circumstance described in (iii) above occurring during the Term or
during the Covered Time, Executive will promptly provide notice to the Company
of such circumstances. Executive further agrees that the Company may provide
notice to a Competitor of Executive's obligations under this Agreement. For
purposes of this Agreement, "Competitor" shall mean any entity (other than the
Company) that engages, directly or indirectly, in the United States in any
Competing Business.
(d) Executive understands that the restrictions in this
Section 10.1 may limit his ability to earn a livelihood in a business similar to
the business of the Company but nevertheless agrees and acknowledges that the
consideration provided under this Agreement (including, without limitation,
Sections 4, 5, and 7) is sufficient to justify such restrictions. In
consideration thereof and in light of Executive's education, skills and
abilities, Executive agrees that he will not assert in any forum that such
restrictions prevent him from earning a living or otherwise should be held void
or unenforceable.
(e) For purposes of this Section 10.1, "Covered Time" shall
mean the period beginning on the date of termination of Executive's employment
(the "Date of Termination") and ending twenty-four months after the Date of
Termination; provided, however, that if Executive terminates his employment for
Good Reason pursuant to clause (viii) of Section 6(e), "Covered Time" shall mean
for purposes of Section 10.1(a) the period beginning on the Date of Termination
and ending six months after the Date of Termination.
10.2 Proprietary Information. Executive acknowledges that during the
course of his employment with the Company he will necessarily have access to and
make use of
- 15 -
proprietary information and confidential records of the Company. Executive
covenants that he shall not during the Term or at any time thereafter, directly
or indirectly, use for his own purpose or for the benefit of any person or
entity other than the Company, nor otherwise disclose to any individual or
entity, any such proprietary information, unless such disclosure has been
authorized in writing by the Company or is otherwise required by law. The term
"proprietary information" means: (a) the software products, programs,
applications, and processes utilized by the Company; (b) the name and/or address
of any customer or vendor of the Company or any information concerning the
transactions or relations of any customer or vendor of the Company with the
Company; (c) any information concerning any product, technology, or procedure
employed by the Company but not generally known to its customers or vendors or
competitors, or under development by or being tested by the Company but not at
the time offered generally to customers or vendors; (d) any information relating
to the Company's computer software, computer systems, pricing or marketing
methods, sales margins, cost of goods, cost of material, capital structure,
operating results, borrowing arrangements or business plans; (e) any information
identified as confidential or proprietary in any line of business engaged in by
the Company; (f) any information that, to Executive's actual knowledge, the
Company ordinarily maintains as confidential or proprietary; (g) any business
plans, budgets, advertising or marketing plans; (h) any information contained in
any of the Company's written or oral policies and procedures or manuals; (i) any
information belonging to customers, vendors or any other person or entity which
the Company, to Executive's actual knowledge, has agreed to hold in confidence;
(j) any inventions, innovations or improvements covered by this Agreement; and
(k) all written, graphic, electronic data and other material containing any of
the foregoing. Executive acknowledges that information that is not novel or
copyrighted or patented may nonetheless be proprietary information. The term
"proprietary information" shall not include information generally known or
available to the public or generally known or available to the industry or
information that becomes available to Executive on a non-confidential basis from
a source other than the Company or its directors, officers, employees, or agents
(without breach of any obligation of confidentiality of which Executive has
actual knowledge at the time of the relevant disclosure by Executive.)
10.3 Confidentiality and Surrender of Records. Executive shall not
during the Term or at any time thereafter (irrespective of the circumstances
under which Executive's employment by the Company terminates), except as
required by law, directly or indirectly publish, make known or in any fashion
disclose any confidential records to, or permit any inspection or copying of
confidential records by, any individual or entity other than in the course of
such individual's or entity's employment or retention by the Company, nor shall
he retain, and will deliver promptly to the Company, any of the same following
termination of his employment hereunder for any reason or upon request by the
Company. For purposes hereof, "confidential records" means those portions of
correspondence, memoranda, files, manuals, books, lists, financial, operating or
marketing records, magnetic tape, or electronic or other media or equipment of
any kind in Executive's possession or under his control or accessible to him
which contain any proprietary information. All confidential records shall be and
remain the sole property of the Company during the Term and thereafter.
10.4 Nondisparagement. Executive shall not, during the Term and
thereafter, disparage in any material respect the Company, any affiliate of the
Company, any of their respective businesses, any of their respective officers,
directors or employees, or the reputation
- 16 -
of any of the foregoing persons or entities. Notwithstanding the foregoing,
nothing in this Agreement shall preclude Executive from making truthful
statements that are required by applicable law, regulation or legal process or
are reasonably required to describe the conduct, decisions, or policies of the
Company or any of its affiliates, or their respective businesses, officers,
directors or employees.
10.5 No Other Obligations. Executive represents that he is not
precluded or limited in his ability to undertake or perform the duties described
herein by any contract, agreement or restrictive covenant. Executive covenants
that he shall not employ the trade secrets or proprietary information of any
other person in connection with his employment by the Company without such
person's authorization.
10.6 Forfeiture of Outstanding Options. The provisions of Section 7
notwithstanding, if Executive willfully and materially fails to comply with any
restrictive covenant under Section 10.1(a) (other than the first sentence
thereof), 10.1(b), 10.2 (other than the first and penultimate sentences
thereof), 10.3, 10.4, or 10.8, all options to purchase Common Stock granted by
the Company and then held by Executive or a transferee of Executive shall be
immediately forfeited and thereupon such options shall be cancelled.
Notwithstanding the foregoing, Executive shall not forfeit any option (i) unless
there shall have been delivered to him, within ninety (90) days after the Board
(A) had knowledge of conduct or an event allegedly constituting grounds for such
forfeiture and (B) had reason to believe that such conduct or event could be
grounds for such forfeiture, a copy of a resolution duly adopted by the Board by
a vote of Directors constituting a majority of the Board (excluding Executive)
at a meeting of the Board in which a quorum is present and which is called and
held for such purpose (after giving Executive reasonable notice specifying the
nature of the grounds for such forfeiture and not less than 30 days to correct
such grounds and affording Executive and his counsel the opportunity to be heard
before the Board) finding that, in the good faith opinion of the Board,
Executive has engaged and continues to engage in conduct set forth in this
Section 10.6 which constitutes grounds for forfeiture of Executive's options;
and (ii) if, within 30 days following his receipt of such resolution, Executive
commences an arbitration proceeding in accordance with Section 18.2 disputing
such grounds, in which case such forfeiture shall be tolled pending the
resolution of Executive's claim and shall not occur if the arbitration panel
finds that the Company is not entitled to cause the forfeiture.
If the arbitration panel finds that the Company is entitled to cause
the forfeiture of Executive's options, Executive shall be required to forfeit
such options immediately. If any option is exercised after delivery of the
Board's notice of forfeiture and if such forfeiture subsequently occurs pursuant
to the foregoing terms of this Section 10.6, Executive shall be required to
return to the Company all shares acquired upon such exercise; provided further
that if Executive has sold any shares he acquired upon such exercise, Executive
shall pay to the Company an amount equal to the difference between the aggregate
sale price of the shares sold and the aggregate exercise price paid by Executive
for such shares. Any such forfeiture shall apply to such options notwithstanding
any term or provision of any option agreement. If the Board or the arbitration
panel finds that the Company is not entitled to cause a forfeiture for which a
notice is given to Executive, the Company shall pay (or reimburse, if already
paid by Executive) all expenses actually incurred by Executive in connection
with such attempted forfeiture.
- 17 -
10.7 Enforcement. Executive acknowledges and agrees that, by virtue
of his position, services and access to and use of confidential records and
proprietary information, any violation by him of any of the undertakings
contained in this Section 10 would cause the Company immediate, substantial and
irreparable injury for which it has no adequate remedy at law. Accordingly,
Executive agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining any violation or
threatened violation of any undertaking contained in this Section 10. The
Company agrees and consents to the entry of an injunction or other equitable
relief by a court of competent jurisdiction restraining the Company from making
any defamatory statements, whether orally or in writing, relating to alleged
violations or threatened violations by Executive of any undertaking contained in
this Section 10. Executive and the Company each waive posting of any bond
otherwise necessary to secure such injunction or other equitable relief. Rights
and remedies provided for in this Section 10 are cumulative and shall be in
addition to rights and remedies otherwise available to the parties hereunder or
under any other agreement or applicable law. Subject to Section 18.3, the
Company shall bear all costs and expenses arising in connection with any
enforcement pursuant to this Section 10.7.
10.8 Cooperation with Regard to Litigation. Except to the extent
that Executive has or intends to assert in good faith an interest or position
adverse to or inconsistent with the interest or position of the Company,
Executive agrees to cooperate reasonably with the Company, during the Term and
thereafter (including following Executive's termination of employment for any
reason), by making himself reasonably available to testify on behalf of the
Company in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and reasonably to assist the Company in any
such action, suit, or proceeding, by providing information and meeting and
consulting with the Board or its representatives or counsel, or representatives
or counsel to the Company, in each case, as reasonably requested by the Company.
The Company agrees to pay (or reimburse, if already paid by Executive) all
expenses actually incurred in connection with Executive's cooperation and
assistance including, without limitation, reasonable fees and disbursements of
counsel, if any, chosen by Executive if Executive reasonably determines in good
faith, on the advice of counsel, that it is appropriate that Executive be
separately represented by his own counsel in such proceeding. Without limiting
the foregoing, after the expiration of this Agreement or the termination of
Executive's employment by the Company for any reason, such cooperation and
assistance shall not require Executive to forgo or significantly interrupt any
professional or personal commitment that he reasonably deems significant or to
take any action (including, without limitation, travel to, attendance at or
preparation for any meeting, deposition or other proceeding or event of any
type) that, in his reasonable judgment, could impair his ability to perform the
responsibilities of, or could jeopardize the continuation of, his then current
employment, or would otherwise impose any undue burden on Executive.
10.9 Survival. The provisions of this Section 10 shall survive the
termination of the Term and any termination or expiration of this Agreement.
10.10 Company. For purposes of this Section 10, references to the
"Company" shall include both the Company and each subsidiary of the Company.
- 18 -
11. Insurance for the Company's Benefit. The Company may at any time and
for the Company's own benefit (or for the benefit of a lender to the Company)
apply for and take out life, health, accident or other insurance covering
Executive, either independently or together with others, in any amount which the
Company may deem to be in its best interests. The Company shall own all rights
in such insurance and proceeds thereof and Executive shall not have any right,
title or interest therein. Executive shall assist the Company at the Company's
expense in obtaining and maintaining any such insurance by submitting to
reasonable and customary medical examinations and preparing, signing and
delivering such applications and other documents as reasonably may be required.
12. Indemnification. During the Term of this Agreement and all periods
after the expiration of this Agreement or termination of Executive's employment
for any reason, the Company shall indemnify Executive to the full extent
permitted under the Company's Certificate of Incorporation or By-Laws and
pursuant to any other agreements or policies in effect from time to time;
provided, however, that Executive shall at all times have at least all rights to
indemnification by the Company as are provided in the Company's Certificate of
Incorporation or By-Laws or pursuant to other agreements in effect on or
immediately prior to the Effective Date, and the Company shall also advance
expenses for which indemnification may be ultimately claimed as such expenses
are incurred to the fullest extent permitted under applicable law, subject to
any requirement that Executive provide an undertaking to repay such advances if
it is ultimately determined that Executive is not entitled to indemnification;
provided, however, that any determination required to be made with respect to
whether Executive's conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law and
the Company's Certificate of Incorporation, By-Laws, or other agreement, shall
be made by independent counsel mutually acceptable to Executive and the Company
(except to the extent otherwise required by law). After the Effective Date, the
Company shall not amend its Certificate of Incorporation or By-Laws or any
agreement in any manner which adversely affects the rights of Executive to
indemnification thereunder. Any provision contained herein notwithstanding, this
Agreement shall not limit or reduce, and the Company hereby agrees to provide to
Executive, any and all rights to indemnification to the full extent permitted
under applicable law. In addition, the Company will maintain directors' and
officers' liability insurance in effect and covering acts and omissions of
Executive during the Term and for a period of six years thereafter on terms
substantially no less favorable than those in effect on the Effective Date. The
indemnification rights made available to Executive pursuant to this Section 12
shall at all times be at least as favorable to Executive as the indemnification
rights made available at such times to any other employee of the Company. For
purposes of this Section 12, references to the "Company" shall include both the
Company and each of its subsidiaries for which Executive has acted, acts or will
in the future act in any capacity. The provisions of this Section 12 shall
survive the termination of the Term and any termination or expiration of this
Agreement.
13. Notices. Whenever under this Agreement it becomes necessary to give
notice, such notice shall be in writing, signed by the party or parties giving
or making the same, and shall be served on the person or persons for whom it is
intended or who should be advised or notified, by Federal Express or other
similar overnight service or by certified or registered mail, return receipt
requested, postage prepaid and addressed to such party at the address set forth
below or at such other address as may be designated by such party by like
notice:
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To the Company:
Scientific Games Corporation
750 Lexington Avenue
25th Floor
New York, New York 10022
Attention: General Counsel
With a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
(212) 715-9100
Attention: Peter G. Smith, Esq.
To Executive:
A. Lorne Weil
51 East 90th Street
Penthouse B
New York, New York 10128
With a copy to:
Hogan & Hartson L.L.P.
885 Third Avenue
New York, New York 10022
Attention: Andrew J. Trubin, Esq.
If the parties by mutual written agreement supply each other with telecopier
numbers for the purposes of providing notice by facsimile, such notice shall
also be proper notice under this Agreement and shall be deemed given on the next
business day after the date on which successful and complete transmission is
confirmed by the receiving facsimile machine or otherwise confirmed in writing
on behalf of the recipient. In the case of Federal Express or other similar
overnight service, such notice or advice shall be effective on the next business
day after it is sent, and, in the cases of certified or registered mail, shall
be effective 5 days after deposit into the mails by delivery to the U.S. Postal
Service.
14. Assignability; Binding Effect. Neither this Agreement nor the rights
or obligations hereunder of the parties hereto shall be transferable or
assignable by Executive, except in accordance with the laws of descent and
distribution and as specified below. The Company may assign this Agreement and
the Company's rights and obligations hereunder, and shall assign this Agreement
and such rights and obligations, to any Successor (as hereinafter defined)
which, by operation of law or otherwise, continues to carry on substantially the
business of the Company prior to the event of succession, and the Company shall,
as a condition of the
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succession, require such Successor to agree in writing to assume the Company's
obligations and be bound by this Agreement. For purposes of this Agreement,
"Successor" shall mean any person that succeeds to, or has the practical ability
to control, the Company's business directly or indirectly, by merger or
consolidation, by purchase or ownership of voting securities of the Company or
all or substantially all of its assets, or otherwise. This Agreement shall be
binding upon and inure to the benefit of Executive, his heirs, executors,
administrators, and beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.
15. Complete Understanding; Amendment; Waiver. This Agreement constitutes
the complete understanding between the parties with respect to the employment of
Executive and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
(including the Old Agreement), except as provided in Section 12, and no
statement, representation, warranty or covenant has been made by either party
with respect thereto except as expressly set forth herein. This Agreement shall
not be modified, amended or terminated except by a written instrument signed by
each of the parties. Any waiver of any term or provision hereof, or of the
application of any such term or provision to any circumstances, shall be in
writing signed by the party charged with giving such waiver. Waiver by either
party of any breach hereunder by the other party shall not operate as a waiver
of any other breach, whether similar to or different from the breach waived. No
delay by either party in the exercise of any rights or remedies shall operate as
a waiver thereof, and no single or partial exercise by either party of any such
right or remedy shall preclude other or further exercise thereof.
16. Severability. If any provision of this Agreement or the application of
any such provision to any person or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. If any
provision of this Agreement, or any part thereof, is held to be invalid or
unenforceable because of the scope or duration of or the area covered by such
provision, the parties hereto agree that the court making such determination
shall reduce the scope, duration and/or area of such provision (and shall
substitute appropriate provisions for any such invalid or unenforceable
provisions) in order to make such provision enforceable to the fullest extent
permitted by law and/or shall delete specific words and phrases, and such
modified provision shall then be enforceable and shall be enforced. The parties
hereto recognize that if, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants contained in this Agreement, then that
invalid or unenforceable covenant contained in this Agreement shall be deemed
eliminated from these provisions to the extent necessary to permit the remaining
separate covenants to be enforced. In the event that any court determines that
the time period or the area, or both, are unreasonable and that any of the
covenants is to that extent invalid or unenforceable, the parties hereto agree
that such covenants will remain in full force and effect, first, for the
greatest time period, and second, in the greatest geographical area that would
not render them unenforceable. To the extent that a court of competent
jurisdiction determines that Executive willfully and materially breached Section
10.1(a) (other than the first sentence thereof), 10.1(b), 10.2 (other than the
first and penultimate sentences thereof), 10.3, 10.4, or 10.8, the Company's
obligations to make payments hereunder shall immediately be limited to the
amounts, if any, remaining to be paid pursuant to
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Section 7(b) to the extent not theretofore paid, provided that the Company's
obligations to make such greater payments shall immediately be reinstated in the
event that the determination of such court is overturned or reversed by any
higher court.
17. Survivability. The provisions of this Agreement which by their terms
call for performance subsequent to termination of Executive's employment
hereunder, or of this Agreement, shall so survive such termination, whether or
not such provisions expressly state that they shall so survive.
18. Governing Law; Arbitration; Expenses; Interest.
18.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be wholly performed within that State, without regard to
its conflict of laws provisions.
18.2 Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
New York, New York by three arbitrators in accordance with the rules of the
American Arbitration Association in effect at the time of submission to
arbitration; provided, however, that the Company shall be entitled to commence
an action in any court of competent jurisdiction to enforce Section 10, in part
or in its entirety. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. For purposes of entering such judgment or seeking
enforcement of Section 10, the Company and Executive hereby consent to the
jurisdiction of any or all of the following courts: (i) the United States
District Court for the Southern District of New York; (ii) any of the courts of
the State of New York or the State of Delaware; or (iii) any other court having
jurisdiction. The Company and Executive further agree that any service of
process or notice requirements in any such proceedings shall be satisfied if the
rules of such court relating thereto have been substantially satisfied. The
Company and Executive hereby waive, to the fullest extent permitted by
applicable law, any objection which either may now or hereafter have to such
jurisdiction and any defense of inconvenient forum. The Company and Executive
hereby agree that a judgment upon an award rendered by the arbitrators may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Subject to Section 18.3, the Company shall bear all costs and
expenses arising in connection with any arbitration proceeding pursuant to this
Section 18.2. Notwithstanding any provision in this Section 18, Executive shall
be entitled to seek in any court of competent jurisdiction specific performance
of Executive's right (which is hereby acknowledged and agreed to by the Company)
to be paid all compensation, benefits and other amounts required to be paid
during the pendency of any dispute or controversy arising under or in connection
with this Agreement, which, to the extent such amounts are paid by the Company
(or, in the case of a termination of Executive's employment by the Company
without Cause, are so paid in respect of periods commencing after 90 days
following the date of such termination) shall be credited against the total
amounts otherwise finally determined to be owed to Executive pursuant to this
Agreement.
18.3 Reimbursement of Expenses in Enforcing Rights. All reasonable
costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel) incurred by Executive in seeking to interpret this
Agreement or enforce rights pursuant to this Agreement shall be paid by the
Company on behalf of Executive (or, if already paid by
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Executive, reimbursed to Executive by the Company) as such costs and expenses
are incurred. If any claim of Executive is found to be frivolous by a final,
nonappealable determination of the arbitration panel or court hearing the claim,
Executive shall reimburse the Company within 30 days of such determination for
all amounts paid by the Company under this Section 18.3 in connection with the
claim.
18.4 Interest on Unpaid Amounts. Any amounts that have become
payable pursuant to the terms of this Agreement or any decision by arbitrators
or judgment by a court of law pursuant to this Agreement but which are not
timely paid shall bear interest at the prime rate in effect at the time such
payment first becomes payable, as quoted by the Company's principal bank.
19. Reimbursement of Expenses of Executive in Negotiating Agreement. All
reasonable costs and expenses (including, without limitation, reasonable fees
and disbursements of counsel) incurred by Executive in connection with the
negotiation, preparation, execution, or delivery of this Agreement shall be paid
on behalf of Executive (or, if already paid by Executive, reimbursed to
Executive) promptly by the Company.
20. Titles and Captions. All paragraph titles or captions in this
Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any provision hereof.
IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Agreement as of the date first above written.
SCIENTIFIC GAMES CORPORATION
By:_____________________________________
Name:
Title:
________________________________________
A. Lorne Weil
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