Contract
Exhibit 10.2
AGREEMENT
made as of the 23rd day of October, 2009, by and between INTERNATIONAL GAME
TECHNOLOGY (the Company”) and Xxxxx X. Xxxxxxx (the “Executive”).
1. Background. This
Agreement provides for certain payments and benefits to the Executive in the
event of the involuntary termination of the Executive’s employment with the
Company or an Affiliate.
2. Certain Defined
Terms. The following terms have the following meanings when used in this
Agreement.
(a) “Accrued
Compensation” means, as of any date, (1) the unpaid amount, if any, of the
Executive’s previously earned base salary, (2) the unpaid amount, if any, of the
bonus earned by the Executive for the year preceding the year in which the
Executive’s employment is terminated, and (3) such additional payments or
benefits, if any, earned by the Executive under and in accordance with any
employee plan, program or arrangement of or with the Company or an Affiliate
(other than this Agreement).
(b) “Affiliate”
means an entity at least 50% of the voting, capital
or profits interests of which are owned directly or indirectly by the
Company.
(c) “Board”
means the Board of Directors of the Company.
(d) “Cause”
means the Executive’s: (1) willful and material failure to perform the duties of
the Executive’s employment with the Company and its Affiliates (other than any
such failure due to the Executive’s physical or mental illness), or the
Executive’s willful and material breach of the Executive’s obligations to the
Company or any Affiliate arising out of the Executive’s employment, in each case
following the Executive’s receipt of written notice thereof from the Company;
(2) engaging in willful and serious misconduct that has caused or is reasonably
expected to result in material injury to the Company; (3) being convicted of, or
entering a plea of guilty or nolo contendre to, a crime
that constitutes a felony; (4) failure or inability to obtain or retain any
governmental approval, license or authorization required to be obtained or
retained by the Executive in any jurisdiction in which the Company or an
Affiliate does or proposes to do business, which failure has or would reasonably
be expected to have a material detrimental effect on the Executive’s ability to
perform the duties of the Executive’s employment; or (5) embezzlement, fraud or
misappropriation of the property or assets of the Company or an Affiliate. The
Board, acting in its own discretion, will be responsible for determining whether
particular conduct constitutes “Cause” for the purposes of this
Agreement.
(e) “Code”
means the Internal Revenue Code of 1986, as amended.
(f) “Company”
means International Game Technology, a Nevada corporation, and any successor
thereto
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(g) “Compensation
Committee” means the Compensation Committee of the Board.
(h) “Good Reason” means
the occurrence of any of the following without the Executive’s express written
consent: (1) a material reduction of the Executive’s duties, position or
responsibilities relative to the Executive’s duties, position or
responsibilities in effect immediately prior to such reduction; or (2) a
material reduction by the Company of the Executive’s rate of annual base salary
or annual target bonus opportunity as in effect immediately prior to such
reduction that is not based upon the Company’s standard annual competitive
market review; provided, however, that any such occurrence shall not give rise
to Good Reason unless, within 90 days after such occurrence is first known (or
first reasonably should have been known to exist) by the Executive, the
Executive furnishes written notice to the Company of the Executive’s intention
to terminate employment due to such occurrence and the Company shall have failed
to reasonably cure the circumstances promptly (and in no event more than 30 days
after) its receipt of such notice.
(i) “Involuntary
Termination” means a termination of the Executive’s employment with the Company
and its Affiliates under any of the following circumstances: (1) termination by
the Company or an Affiliate without Cause; or (2) termination by the Executive
for Good Reason.
(j) “Pro
Rata Bonus” means the Executive’s annual target bonus opportunity, expressed as
a percentage of the Executive’s base salary, for the fiscal year in which the
Executive’s employment terminates, multiplied by a fraction, the numerator of
which is the number of days elapsed from the beginning of such fiscal year until
the date the Executive’s employment terminates, and the denominator of which is
365.
3. Severance
Protections. Subject to the provisions hereof, upon termination of the
Executive’s employment with the Company and its Affiliates, the Executive (or
the Executive’s beneficiary, as the case may be) will be entitled to receive the
applicable severance payments and benefits (if any) described in this
Section.
(a) Involuntary Termination of
Employment. In the event of an Involuntary Termination, the Executive (or
the Executive’s beneficiary, as the case may be) shall receive the following
payments and benefits:
(i) Accrued
Compensation;
(ii) Pro
Rata Bonus, payable in a single sum payment within 30 days following the
Involuntary Termination;
(iii) An
amount equal to 1.0 times the Executive’s highest annual rate of base salary at
any time during the preceding 24 months, payable in 12 equal, monthly
installments and in accordance with the Company’s normal payroll
practice;
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(iv) Accelerated
vesting of outstanding equity incentive awards (including, without limitation,
stock options and time-based restricted stock) based upon the additional vesting
that would have been earned if the Executive’s employment had continued for an
additional year; and
(v) Company-paid
COBRA group health care continuation coverage until the earlier to occur of one
year following termination of employment, the date you become eligible for
medical coverage under another employer plan or, the date you become eligible
for coverage under Medicare
(b) Termination other than
Involuntary Termination. If the Executive’s employment with the Company
and its Affiliates terminates other than due to an Involuntary Termination, then
the Executive shall be entitled to receive any Accrued Compensation, subject to
set off for amounts owed by the Executive to the Company or an Affiliate, and
nothing more.
4. Golden Parachute Tax
Limitation. If the Executive is entitled to receive payments and benefits
under this Agreement and if, when combined with the payments and benefits the
Executive is entitled to receive under any other plan, program or arrangement of
the Company or an Affiliate, the Executive would be subject to excise tax under
Section 4999 of the Code or the Company would be denied a deduction under
Section 280G of the Code, then the severance amounts otherwise payable to the
Executive under this Agreement will be reduced by the minimum amount necessary
to ensure that the Executive will not be subject to such excise tax and the
Company will not be denied any such deduction.
5. Effect of Other
Agreements. Notwithstanding the provisions hereof, the
post-termination payment and benefit provisions of the Executive’s written
employment or other agreement with the Company or an Affiliate in force at the
termination of the Executive’s Employment (if any) will apply in lieu of the
provisions hereof if and to the extent that, with respect to the Executive’s
termination of Employment, the provisions of such employment or other agreement
would provide greater payments or benefits to the Executive (or to the
Executive’s covered dependents or beneficiaries). If any termination
or severance payments or benefits are made or provided to the Executive by the
Company or any or its Affiliates pursuant to a written employment or other
agreement with the Company or an Affiliate, such payments and benefits shall
reduce the amount of the comparable payments and benefits payable
hereunder. This Section is intended to provide the Executive with the
most favorable treatment and, at the same time, avoid duplication of payments or
benefits, and it will be construed and interpreted accordingly.
6. Release of
Claims. Notwithstanding anything herein to the contrary, the
Compensation Committee or the Board may condition severance payments or benefits
otherwise payable under this Agreement upon the execution and delivery by the
Executive (or the Executive’s beneficiary) of a general release in favor of the
Company, its Affiliates and their officers, directors and employees, in such
form as the Board or the Compensation Committee may specify; provided, however,
that no such release will be required as a condition of the Executive’s (or the
beneficiary’s) entitlement to Accrued Compensation. Any payment or
benefit that is so conditioned may be deferred until the expiration of the seven
day revocation period prescribed by the Age Discrimination in Employment Act of
1967, as amended, or any similar revocation period in effect on the effective
date of the termination of the Executive’s Employment.
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7. Restoration. Any
severance payments and benefits payable under this Agreement shall be subject to
and conditioned upon the Executive’s continuing compliance with any
non-competition and non-disclosure obligations of the Executive to the Company
and/or any Affiliate.
8. No Duty to
Mitigate. The Executive’s entitlement to payments or benefits
hereunder is not subject to mitigation or a duty to mitigate by the
Executive.
9. Amendment. The Board
or the Compensation Committee may amend this Agreement, provided, however, that,
no such action which would have the effect of reducing or diminishing the
Executive’s entitlements under this Agreement shall be effective without the
express written consent of the Executive.
10. Successors and
Beneficiaries.
(a) Successors and Assigns of
the Company. The Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company and its subsidiaries
taken as a whole, expressly and unconditionally to assume and agree to perform
or cause to be performed the Company’s obligations under this
Agreement. In any such event, the term “the Company,” as used herein
shall mean the Company, as defined in Section 2 hereof, and any such successor
or assignee. The Executive acknowledges and agrees that this
Agreement shall be fully enforceable by the Company's successor or
assignee.
(b) The Executive’s
Beneficiary. For the purposes hereof, the Executive’s
beneficiary will be the person or persons designated as such in a written
beneficiary designation filed with the Company, which may be revoked or revised
in the same manner at any time prior to the Executive’s death. In the
absence of a properly filed written beneficiary designation or if no designated
beneficiary survives the Executive, the Executive’s beneficiary hereunder will
be deemed to be the Executive’s surviving spouse, if any, or, if none, the
Executive’s estate.
11. Nonassignability.
With the exception of the Executive’s beneficiary designation, neither the
Executive nor the Executive’s beneficiary may pledge, transfer or assign in any
way the right to receive payments or benefits hereunder, and any attempted
pledge, transfer or assignment shall be void and of no force or
effect.
12. Not a Contract of
Employment. This Agreement shall not be deemed to constitute a
contract of employment between the Executive and the Company or any of its
Affiliates. Nothing contained herein shall be deemed to give the
Executive a right to be retained in the employ or other service of the Company
or any of its Affiliates or to interfere with the right of the Company or any of
its Affiliates to terminate the Executive’s employment at any time.
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13. Governing Law; Arbitration
of Disputes. This Agreement shall be governed by the laws of the State of
Nevada, excluding its conflict of law rules. Any controversy or claim arising
out of or relating to this Agreement shall be settled by binding arbitration,
with a single neutral arbitrator, in accordance with the rules of the American
Arbitration Association relating to employment. The proper venue for any such
action is Washoe County, Nevada. In any action to enforce this Agreement, the
Executive and the Company each agree to accept service of process by
mail. In any action in which service is made pursuant to this
paragraph, the Executive and the Company each waive any challenge to the
personal jurisdiction of the American Arbitration Association. Any judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. In reaching a decision, the arbitrator shall have no
authority to change or modify any provision of this Agreement.
14. Compliance With Section 409A
of the Code. Notwithstanding anything in this Agreement to the contrary,
no amount payable as severance which constitutes a “deferral of compensation”
within the meaning of the Treasury Regulations issued pursuant to Section 409A
of the Code (the “Section 409A Regulations”) shall be paid unless and until
Executive incurs a “separation from service” within the meaning of the Section
409A Regulations. Furthermore, to the extent that the Executive is a
“specified employee” within the meaning of the Section 409A Regulations as of
the date of the Executive’s separation from service, no amount that constitutes
a deferral of compensation which is payable on account of such separation from
service shall be paid before the date (the “Delayed Payment Date”) which is the
first day of the seventh month after the date of the Executive’s separation from
service or, if earlier, the date of the Executive’s death. All such amounts that
would, but for this Section, become payable prior to the Delayed Payment Date
will be accumulated and paid on the Delayed Payment Date. For purposes of
Section 409A of the Code, the right to a series of installment payments under
this Agreement shall be treated as a right to a series of separate
payments.
15. Withholding. the
Company and its Affiliates may withhold from any and all amounts payable under
this Agreement such federal, state and local taxes as may be required to be
withheld pursuant to applicable law.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
| INTERNATIONAL GAME TECHNOLOGY | |||
|
|
By:
|
/s/ Xxxx Xxxxxx | |
| /s/ Xxxxx X. Xxxxxxx | |||
| Executive | |||
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