EXECUTIVE TRANSITION AGREEMENT
EXHIBIT
10.3
AGREEMENT
made as of the 23rd day of October, 2009, by and between INTERNATIONAL GAME
TECHNOLOGY (the "Company") and Xxxxxxx Xxxxxxxxx (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 arm-ova
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 lump sum 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 it 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 respeet to the Executive's termination of
Employment, the provisions of such employment or other agre,ement, would provide
greater payments or benefits to the Executive (or to the Executive's covered
dependents or beneficiaties).. 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 ExecntiVe'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 Executives
(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
heretindet
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
Executives 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 Ageement 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.
