Exhibit 10.1
This EMPLOYMENT AGREEMENT (this
“Agreement”) is made as of May 1, 2008 (the
“Effective Date”), by and between SCIENTIFIC GAMES
CORPORATION, a Delaware corporation (the “Company”),
and Joseph R. Wright, Jr.
(“Executive”).
W I
T N E S S E T H:
WHEREAS, Executive has been a member of the
Board of Directors of the Company (the “Board of
Directors”) since 2004; and
WHEREAS, the Company and Executive desire to
enter into this Agreement under which Executive will serve the
Company in the capacities set forth herein on the terms and subject
to the conditions set forth in this 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.
Employment Term. The
Company hereby agrees to employ Executive, and Executive hereby
accepts 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, 2011, as may be extended in
accordance with this Section 1 and subject to earlier
termination in accordance with Section 4. The Term shall
be extended automatically without further action by either party by
one additional year (added to the end of the Term), and then on
each succeeding annual anniversary thereafter (each such initial
and succeeding year-long extension (if any), an “Extension
Term”), unless either party shall have given written notice
to the other party at least ninety (90) days prior to the date upon
which such extension would otherwise have become effective electing
not to further extend the Term (a “Nonrenewal Notice”),
in which case Executive’s employment shall terminate on the
date of expiration of the then current Term (whether it be the
initial Term or the then current Extension Term), unless earlier
terminated in accordance with Section 4. Except to the
extent (if any) that the context specifically requires otherwise,
references to the Term hereafter in this Agreement shall include
the initial Term and any Extension Term. In the event that
Executive’s employment terminates because the Company shall
have given a timely Nonrenewal Notice to Executive, in accordance
with the preceding sentence, then, notwithstanding anything to the
contrary set forth herein, Executive shall upon such termination be
entitled to receive the compensation and benefits set forth in
Section 4(e) as if Executive’s employment had been
terminated by the Company without Cause, or by Executive for Good
Reason, as of the date of expiration of the Term (including, as the
case may be, the date of expiration of the Extension Term during
which the Nonrenewal Notice is given).
2.
Offices and
Duties.
(a)
For so long as Executive continues as a director of the Company
during the Term and subject to the appointment to such position by
the Board of Directors, Executive shall serve as Vice Chairman of
the Board of Directors, unless the Board of Directors appoints him
as Chairman of the Board of Directors.
(b)
From the Effective Date until December 31, 2008, Executive
shall serve as an officer or director of any subsidiary or
affiliate of the Company if elected or appointed to any such
position by the shareholders or by the board of directors of such
subsidiary or affiliate, as the case may be.
(c)
From and after January 1, 2009 until the end of the Term,
Executive shall serve as Chief Executive Officer of the Company,
and as an officer or director of any subsidiary or affiliate of the
Company if elected or appointed to any such position by the
shareholders or by the board of directors of such subsidiary or
affiliate, as the case may be.
(d)
In such capacities, Executive shall perform such duties and shall
have such responsibilities as are normally associated with such
positions and as otherwise may be assigned to Executive from time
to time by the Board of Directors. Subject to
Section 4(e) and to Executive’s right to continue
to receive the compensation and benefits provided for herein,
Executive’s functions, duties and responsibilities are
subject to reasonable changes as the Board of Directors may in good
faith determine after consultation with Executive. At all
times during the Term, Executive shall report solely and directly
to the Board of Directors.
(e)
Executive hereby agrees to accept such employment and to serve the
Company to the best of his ability in such capacities, devoting
substantially all of his business time to such employment;
provided, however, that Executive shall be entitled to
(i) manage his personal investments and otherwise attend to
personal affairs, including family financial and legal affairs,
(ii) continue his service as a member of the boards of the
entities listed in Schedule 1 attached to this Agreement,
(iii) teach, lecture or perform other public-service
activities, and (iv) serve on the boards of directors of up to
three additional public corporations or other entities with the
approval of the Board (which approval will not be unreasonably
withheld), each in a manner that does not materially conflict or
unreasonably interfere with his responsibilities
hereunder.
3.
Compensation and
Benefits.
(a)
Base Salary. The
Company shall pay Executive a base salary (the “Base
Salary”) at a minimum rate of (i) one million U.S.
Dollars (US$1,000,000) per annum from the Effective Date until
December 31, 2008 (pro-rated for 2008), (ii) one million
two hundred and fifty thousand U.S. Dollars (US$1,250,000) per
annum from January 1, 2009 until December 31, 2009 and
(iii) one million five hundred thousand U.S. Dollars
(US$1,500,000) per annum from January 1, 2010 until the end of
the Term, subject to such increase(s) as may be determined in
the discretion of the Compensation Committee of the Board of
Directors (the “Compensation Committee”). The
Base Salary shall be payable biweekly (except to the extent
deferred under a deferred compensation plan) in accordance with the
Company’s regular payroll practices and subject to such
deductions or amounts to be withheld as required by applicable law
and regulations. In the event that the Company, in its sole
discretion, from time to time determines to increase the Base
Salary, such increased amount shall, from and after the effective
date of the increase, constitute the “Base Salary” for
purposes of this Agreement.
(b)
Annual Incentive Compensation
. Executive shall have the opportunity annually to be
paid annual incentive compensation in amounts determined by the
Compensation
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Committee in accordance with the applicable
annual incentive compensation plan of the Company as in effect from
time to time. Under such plan, Executive shall have the opportunity
to earn a target bonus equal to 100% of Base Salary (the
“Target Bonus”) as annual incentive compensation at
Target Opportunity and a maximum bonus equal to 200% of Base Salary
as annual incentive compensation at Maximum Opportunity.
“Target Opportunity” and “Maximum
Opportunity” shall have the meaning ascribed to them in the
applicable annual incentive compensation plan. Notwithstanding
anything contained in this Agreement to the contrary, Executive
shall be paid a minimum annual incentive compensation equal to
(i) $666,667 for fiscal year 2008 and (ii) $500,000 for
fiscal year 2009.
(c)
Eligibility for Annual Long-Term
Incentive Equity-Based and/or Cash-Based Awards .
During 2009 and in each year thereafter during the Term, Executive
shall be eligible to receive an annual grant of long-term incentive
compensation in the form of equity-based compensation or cash-based
compensation, or a combination of both, in the sole discretion of
the Compensation Committee but commensurate with Executive’s
position as Chief Executive Officer of the Company, in accordance
with the applicable plans and programs for senior executives of the
Company and subject to the Company’s right to at any time
amend or terminate any such plan or program, so long as any such
change does not adversely affect any accrued or vested interest
under any such plan or program.
(d)
Incentive Equity Awards
.
(i)
On April 15, 2008, the Company granted to Executive as a
sign-on bonus (the “2008 Special Grant”) 220,000
restricted stock units and 500,000 options (with an exercise price
of $25.69), subject to forfeiture in the event (and, in the case of
clause (B) below, to the extent) either of the following
conditions subsequent is not satisfied: (A) this
Agreement is executed by the parties hereto by May 1, 2008;
and (B) the Company’s stockholders approve an amendment
to the 2003 Incentive Compensation Plan (or a new equity
compensation plan) that provides for a sufficient increase in the
number of shares of common stock of the Company available for the
2008 Special Grant by the applicable vesting date (in the case of
restricted stock units) or the date of exercise (in the case of
options). Subject to the approval of the Company’s
stockholders of an amendment to the 2003 Incentive Compensation
Plan (or a new equity compensation plan) that provides for a
sufficient increase in the number of shares of common stock of the
Company available for equity awards, during the Term, the Company
shall grant to Executive no later than May 1, 2009 (the
“2009 Special Grant”) and April 30, 2010 (the
“2010 Special Grant” and, collectively with the 2008
Special Grant and the 2009 Special Grant, the “Special Equity
Grants” and each, individually, a “Special Equity
Grant,” with the respective date each Special Equity Grant is
made being the “Grant Date” thereof) at least 50,000
restricted stock units and at least 50,000 options as part of (and
not in addition to)_the compensation outlined in
Section 3(c) above. Each Special Equity Grant shall
be granted under and subject to the terms and conditions of the
Company’s 2003 Incentive Compensation Plan, as amended and
restated, or an applicable successor plan (in either case, the
“Equity Plan”) and a restricted stock unit and option
agreement in the form attached hereto as Exhibit A to
be entered into with respect to such Special Equity Grant by and
between the Company and Executive (each, an “Equity
Agreement”); provided, however, that the parties hereby
agree, and the Equity Agreements shall respectively provide, that
the options comprising the Special Equity Grants shall have an
exercise price equal to 100% of the fair market value of the common
stock of the
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Company on the applicable Grant Date thereof,
that all vested restricted stock units shall receive dividend
equivalents, and that each Special Equity Grant shall vest with
respect to one-fourth (1/4) of the total award on each anniversary
of the applicable Grant Date thereof, subject to certain provisions
relating to accelerated vesting and forfeiture as described in this
Agreement, the applicable Equity Agreement and the Equity Plan;
provided, further, however, that, notwithstanding anything to the
contrary set forth in the Equity Plan, in the Equity Agreements, in
this Agreement or in any other Company plan or policy, it is hereby
agreed that this Agreement (or any written amendment hereto signed
by Executive and the Company that expressly states that it
supersedes this proviso) and the Equity Agreement in the form of
Exhibit A hereto contain the only provisions regarding
forfeiture that shall apply to the Special Equity Grants. In
each case, the applicable Equity Agreement shall provide that
delivery to Executive of shares of Company common stock subject to
vested restricted stock units under the applicable Special Equity
Grant shall occur on the earliest date on which such shares may be
so delivered (A) without becoming subject to taxes, interest
or penalties as a result of Section 409A
(“Section 409A”) of the Internal Revenue Code of
1986, as amended (the “Code”) and applicable
administrative guidance and regulations, and (B) without affecting any compensation
deduction applicable thereto as a result of
Section 162(m) (“Section 162(m)”), but,
notwithstanding (A) and (B) above, in no event
shall such shares be delivered (x) later than six
(6) months plus one (1) day after the date of termination
of Executive’s employment (the date of termination of
Executive’s employment, regardless of the ground or reason
therefore, being referred to in this Agreement as the
“Termination Date”), nor (y) sooner than five
(5) days after the Termination Date. In the event and to
the extent that the Company’s stockholders do not approve an
amendment to the 2003 Incentive Compensation Plan (or a new equity
compensation plan) that provides for a sufficient increase in the
number of shares of common stock of the Company available for
equity awards to cover the delivery of the applicable number of
shares underlying the Special Equity Grants by the vesting date (in
the case of restricted stock units) or the date of exercise (in the
case of options) (or sufficient shares are not otherwise available
as of such date), the Company shall be obligated to grant to
Executive, on the same basis and at the same time with respect to
such Special Equity Grant, a cash-settled restricted stock unit as
replacement of restricted stock units and an appropriate cash-based
award in replacement of options, that provides to Executive the
exact same after-tax economic equivalent of each Special Equity
Grant (the “Replacement Awards”), subject to applicable
withholding.
(ii)
Notwithstanding anything to the contrary set forth in this
Agreement, in the Equity Agreements or in the Equity Plan, in the
event that Executive’s employment is terminated (A) by
the Company without Cause, (B) by Executive for Good Reason
(including, without limitation, a deemed termination by the Company
without Cause due to a Failed Termination for Cause (as defined in
Section 4(c) pursuant to Section 4(c)), or
(C) by Executive without Good Reason on or after May 1,
2011, if such termination of employment occurs before all stock
options or restricted stock units included in the Special Equity
Grants (or the Replacement Awards, if applicable) have vested
(except by reason of forfeiture pursuant to the terms of
Section 4(k)), then all such unvested stock options shall
fully vest and become exercisable as of the Termination Date (and
any such options shall remain exercisable until the scheduled
expiration date) and all such restricted stock units shall fully
vest and become non-forfeitable as of the Termination Date and, in
each case, Executive shall be entitled to the benefits thereof, as
provided in Section 4(e).
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e.
Expense Reimbursement . The Company shall promptly
reimburse Executive for all reasonable and necessary travel,
business entertainment and other business expenses incurred by
Executive in connection with the performance of Executive’s
duties under this Agreement, on a timely basis upon submission by
Executive of vouchers therefore in accordance with the
Company’s standard procedures.
f.
Use of Company Aircraft . Executive shall have use of the
Company’s “Flight Options” fractional ownership
aircraft as agreed with the CEO during 2008 and thereafter
Executive shall have use of such aircraft, or any substitute or
replacement private aircraft wholly or partially owned, leased, or
chartered by the Company or otherwise made available by the Company
to any executive officers of the Company (collectively, the
“Company Plane”) for personal use, provided that such
personal use shall not interfere with the business use of the
Company Plane. Family members and/or other guests may
accompany Executive on Company Plane flights, whether such flights
are for personal use, business use or a combination thereof, as
seating permits. When using the Company Plane for a flight
that is exclusively for personal use, Executive shall reimburse the
Company for the out-of-pocket cost to the Company of such flight as
invoiced by Flight Options LLC or a successor owner, charterer,
lessor or servicer of the Company Plane, as the case may be (the
“Invoiced Amount”). When using the Company Plane
on a flight that has a bona fide business-related purpose (whether
or not such business-related purpose is the sole purpose of such
flight), Executive shall reimburse the Company for any personal use
in respect of such flight in an amount that is computed in
accordance with the provisions of Section 274(e) of the
Code and regulations promulgated thereunder and any applicable
interpretations by the U.S. Internal Revenue Service (the
“IRS Amount”); provided, however, that if the IRS
Amount is greater than the Invoiced Amount for such flight, then
Executive shall reimburse the Company for the Invoiced Amount,
instead of the IRS Amount, for such flight.
g.
Other Benefits. Executive shall be entitled to
participate, without discrimination or duplication, in any and all
medical insurance, group health, disability, life, accidental
death, dismemberment insurance, 401(k) or other retirement,
deferred compensation, profit sharing, stock ownership and such
other plans and programs which are made generally available by the
Company to its other senior executives 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 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. Executive shall be entitled to
participate in any and all perquisites programs and arrangements
which are made generally available by the Company to its other
senior executives in accordance with the terms of such
programs/arrangements and subject to the Company’s right to
at any time amend or terminate any such plan or program; provided,
however, that Executive shall at all times during the Term be
entitled to (i) use of an appropriate automobile provided by
the Company and (ii) first-class air transportation, ground
transportation and hotel accommodations for all reasonable and
necessary business travel. 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.
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h.
Taxes
. Payment of all
compensation and benefits to Executive specified in this
Section 3 and in Section 4 shall be subject to all
legally required and customary withholdings. The Company
makes no representations regarding the tax implications of the
compensation and benefits to be paid to Executive under this
Agreement, including, without limitation, under Section 409A
of the Code and applicable administrative guidance and
regulations. Section 409A governs plans and arrangements
that provide “nonqualified deferred compensation” (as
defined under the Code) which may include, among others,
nonqualified retirement plans, bonus plans, stock option plans,
employment agreements and severance agreements. The Company reserves the right (but is not
required) to provide compensation and benefits under any plan or
arrangement in amounts, at times and in a manner that minimizes
taxes, interest or penalties as a result of Section 409A. In
addition, in the event any benefits or amounts paid hereunder are
deemed to be subject to Section 409A, including payments under
Section 4, Executive consents to the Company adopting such
conforming amendments as the Company or Executive deems necessary,
in its or his reasonable discretion, to comply with
Section 409A (including, but not limited to, delaying payment
until six (6) months following termination of
employment). Any installment payments made to Executive under
this Agreement are to be treated as a series of separate payments
in accordance with the Section 409A rules. The Company
and Executive agree that they will cooperate in good faith to
ensure that all compensation paid to Executive by the Company,
whether directly or indirectly, fully complies with
Section 409A and the regulations promulgated thereunder so
that Executive is never subject to any tax, interest or penalties
under Section 409A.
i.
Registration
. 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 and this Agreement.
j.
Assistants.
Consistent with the
Company’s payroll policies, the Company will engage as
full-time employees on Executive’s behalf, Helen Fletcher as
an executive assistant (or her replacement as selected by Executive
in his sole discretion) and Robert Lum as a driver (or his
replacement as selected by Executive in his sole
discretion).
4.
Termination of
Employment. Executive’s employment hereunder
may be terminated prior to the end of the Term under the following
circumstances:
(a)
Termination
by Executive for Other than Good Reason.
Executive may terminate
his employment hereunder for any reason or no reason upon 45
days’ prior written notice to the Company referring to this
Section 4(a); provided, however, that a termination of
Executive’s employment for “Good Reason” shall
not constitute a termination by Executive for other than Good
Reason pursuant to this Section 4(a). In the event
Executive terminates his employment for other than Good Reason,
Executive shall be entitled only to the following compensation and
benefits (collectively, the “Standard Termination
Payments”):
(i)
Any accrued but unpaid Base Salary (as determined pursuant to
Section 3(a)) for services rendered to the Termination Date,
payable on the next regular payday following the Termination
Date;
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(ii)
All vested nonforfeitable amounts owing or accrued at the
Termination Date under compensation and benefit plans, programs,
and arrangements set forth or referred to in Section 3 hereof
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)
Reasonable business expenses and disbursements incurred by
Executive prior to such termination will be reimbursed in
accordance with Section 3(e);
(iv)
Except as provided in Section 5.6, all stock options and other
equity awards will be governed by the terms of the plans and
programs under which the options or other awards were granted;
and
(v)
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 (on a monthly basis) an amount
equal to the then-current annual COBRA premium being paid (or
payable) by any other former employee of the Company.
(b)
Termination
by Reason of Death . If Executive dies during the Term, the
Company shall pay to the last beneficiary designated by Executive
by written notice to the Company or, failing such designation, to
Executive’s estate, the following amounts:
(i)
The Standard Termination Payments (as defined in
Section 4(a));
(ii)
A lump sum payment equal to (A) Executive’s annual Base
Salary, plus (B) Executive’s Target Bonus for the year
of termination, payable in accordance with Section 4(g);
and
(iii)
A pro rata portion of Executive’s Target Bonus for the year
of termination through the date of death, payable in accordance
with Section 4(g).
(c)
Termination
by the Company for Cause . The Company may terminate
Executive’s employment hereunder for Cause by giving a Cause
Termination Notice (as defined below) in accordance with and
subject to the provisions of this Section 4(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 5.1(a) (other than the
first sentence thereof), 5.1(b), 5.2 (other than the first and
penultimate sentences thereof) or 5.3. “Gross
misconduct” shall mean (i) Executive’s conviction
(including conviction on a nolo contendere plea) in a court of law
of a felony, or (ii) Executive’s willful and continued
failure substantially to perform his 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
knowingly, purposefully and not in good faith and shall not
include, without limitation, any act or failure to act resulting
from any disagreement or difference of views between Executive and
one or more directors or officers of the Company or any of its
affiliates with respect to any matter(s) relating to the
business, affairs or operations of the Company and/or any of its
affiliates (including, without limitation, with respect to any
management, business or operational matter,
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strategy, plan, proposal, initiative or
decision, any issue regarding the hiring, firing, appointment or
removal of any director, officer, employee, agent, consultant,
advisor or contractor, any proposed transaction, venture,
affiliation or alliance, or any change in business, structure,
organization, management or operations). Executive may not be
terminated for Cause unless and until there shall have been
delivered to him ,
within 90 days after the Company first had actual knowledge of the
most recent conduct or event comprising an element of the alleged
ground for termination for Cause (it not being necessary that all
elements comprising the alleged ground for termination for Cause
have occurred within such 90 day period), a copy of a resolution
duly adopted by the Board of Directors by a vote of Directors
constituting a majority of the Board of Directors (excluding
Executive) at a meeting of the Board of Directors at which a quorum
is physically present in person and which is called and held for
such purpose (after giving Executive reasonable notice of the
specific grounds for such termination including a reasonably
detailed statement of the facts and circumstances claimed as the
basis 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 of Directors) finding that, in the good faith
opinion of the Board of Directors, Executive was guilty of conduct
constituting Cause (the “Cause Resolution”). The
Company’s delivery of the Cause Resolution to Executive shall
be accompanied or followed by delivery by the Company to Executive
of a written notice of termination for Cause referring to this
Section 4(c), stating the grounds for such termination (which
shall be the same grounds as set forth in the Cause Resolution) and
specifying the effective date of such termination for Cause, which
date shall be no earlier than 31 days after the date on which
Executive receives such written notice of termination for Cause
(the “Cause Termination Notice”), provided that at any
time prior to the effective date of such termination, the Board of
Directors may, in accordance with the next sentence, relieve
Executive of all or a portion of his duties and treat him as a
suspended employee of the Company, and until the Termination Date
Executive shall be entitled to continue to receive all compensation
and benefits under this Agreement as if he had not been suspended
or given notice of termination (and such suspension for the
avoidance of doubt shall not constitute “Good Reason”
for purposes of this Agreement). Any such suspension shall be
effected either (i) pursuant to the Cause Resolution or
(ii) pursuant to a resolution otherwise approved (which
approval need not be by meeting on formal notice) either by a
majority of the Board of Directors (excluding Executive) or, if a
majority of the Board of Directors cannot reasonably be convened
promptly in person or by telephone, by a majority of the Executive
Committee of the Board of Directors (excluding Executive), in each
case determining, in the good faith opinion of the participants,
that Executive was guilty of conduct constituting Cause and that
prompt suspension of Executive is reasonably required in the best
interests of the Company, which resolution is confirmed within 10
days by a Cause Resolution. Notwithstanding any such
suspension, Executive shall be afforded such opportunity as may be
reasonable under the circumstances to correct grounds for
termination as contemplated by the fifth sentence of this
Section 4(c) until the expiration of the 30-day period
provided therein.
If
Executive disputes the Company’s allegation of Cause by
initiating arbitration pursuant to Section 12 and the
arbitration panel finds that the Company properly terminated
Executive’s employment for Cause in accordance with the
provisions of this Section 4(c), Executive shall, within 30
days of the arbitration award, repay the amount (if any) by which
(A) the amounts provided to him by the Company in respect of
periods commencing after the termination date of his employment set
forth in the Cause Termination Notice, including but not limited to
salary
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continuation
and the value of all benefits provided to Executive in respect of
periods commencing after his termination date, exceed (B) the
amounts to which he is entitled under this Agreement upon a
termination for Cause. If the amount in (A) does not
exceed the amount in (B), the Company may reduce any amounts owed
to Executive by the amount in (A). If the arbitration panel
does not find that the Company properly terminated
Executive’s employment for Cause in accordance with the
provisions of this Section 4(c) (a “Failed
Termination for Cause”), then (x) Executive’s
employment shall be deemed to have been terminated by the Company
without Cause as of the date (the “Deemed Termination
Date”) which is 31 days after the date on which the Cause
Resolution and the Cause Termination Notice were delivered to
Executive; (y) the Company shall provide Executive with the
payments and benefits set forth in Section 4(e) hereof as
if the Company had terminated Executive without Cause as of the
Deemed Termination Date, provided that any amounts previously paid
to Executive by the Company as a suspended employee in respect of
periods commencing on or after the Deemed Termination Date shall be
credited against amounts owed to Executive under
Section 4(e) hereof; and (z) the Company shall pay
(or reimburse, if already paid by Executive) all reasonable
expenses actually incurred by Executive in connection with
contesting such Failed Termination for Cause.
In
the event that Executive’s employment is terminated by the
Company for Cause in accordance with this Section 4(c),
Executive shall be entitled to receive only the Standard
Termination Payments (as defined in Section 4(a)).
The
Company hereby acknowledges and agrees that, as of the date on
which this Agreement is executed by the Company, the Company is not
aware of grounds for terminating Executive for Cause.
(d)
Termination
By Reason of Total Disability. The Company may terminate
Executive’s employment by reason of “Total
Disability” (as defined below). Executive and the
Company agree that Executive may not reasonably be expected to be
able to perform his duties and the essential functions of his
office 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 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 4(d), 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. In the event that
Executive’s employment is terminated by reason of Total
Disability, the Company shall pay the following amounts, and make
the following other benefits available, to Executive:
(i)
The Standard Termination Payments (as defined in
Section 4(a));
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(ii)
A lump sum payment equal to (A) Executive’s annual Base
Salary, plus (B) Executive’s Target Bonus for the year
of termination, payable in accordance with
Section 4(g);
(iii)
A pro rata portion of Executive’s Target Bonus for the year
of termination through the Termination Date, payable in accordance
with Section 4(g); and
(iv)
If Executive elects to continue medical coverage under the
Company’s group health plan in accordance with COBRA, the
Company shall pay the monthly premiums for such coverage for a
period of 18 months.
(e)
Termination
by the Company Without Cause or by Executive for Good
Reason. The Company may terminate
Executive’s employment at any time, without Cause, for any
reason or no reason, and Executive may terminate his employment
hereunder for “Good Reason” (as defined below).
For purposes of this Agreement, “Good Reason” shall
mean that without Executive’s prior written consent, any of
the following shall have occurred, within 60 days after Executive
first had actual knowledge of the most recent conduct or event
comprising an element of the alleged ground for termination for
Good Reason (it not being necessary that all elements comprising
the alleged ground for termination for Good Reason have occurred
within such 60-day period): (I) a material change
(A) that is adverse to Executive, in Executive’s
positions, titles, offices, or duties as provided in
Section 2, except, in such case, in connection with the
termination of Executive’s employment for Cause, Total
Disability or death, or (B) represented by any of the
following: (w) the failure to promote Executive to the
position of Chief Executive Officer of the Company by
January 1, 2009, (x) the failure to re-elect Executive as
a member of the Board of Directors, (y) the failure to appoint
Executive to, or the removal of Executive from, the position of
either Chairman or Vice Chairman of the Board of Directors, or
(z) a change in Executive’s reporting arrangement so
that he no longer reports solely and directly to the Board of
Directors; (II) an assignment of any significant duties to
Executive which are materially inconsistent with Executive’s
positions or offices held under Section 2; (III) a
decrease in Base Salary or material decrease in Executive’s
compensation opportunities or in the aggregate benefits provided
under this Agreement; (IV) any other material failure by the
Company to perform any material obligation under, or material
breach by the Company of any material provision of, this Agreement;
(V) a relocation of the principal executive offices of the
Company more than thirty-five (35) miles from their existing
lo
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