Exhibit 10.2
This EMPLOYMENT AGREEMENT (this
“Agreement”) is made on August 2, 2006 but as of
January 1, 2006 (the “Effective Date”), by and between
SCIENTIFIC GAMES CORPORATION, a Delaware corporation (the
“Company” or “SGC”), and Robert Becker
(“Executive”).
W I T N E S S E T H
WHEREAS, Executive has been employed
pursuant to an agreement with the Company which has been modified
from time to time by the Board of Directors (the “Original
Agreement”); and
WHEREAS, the Company and Executive
desire that this Agreement replace and supersede the Original
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 Original Agreement, are hereby terminated and
superseded. As part of the termination of the Original
Agreement, amounts paid to Executive during 2006 as transportation
allowances are eliminated as of the Effective Date and shall be
deducted from the lump sum catch-up payment of base salary payable
under Section 4 as a result of the increase in Executive’s
base salary rate which will be implemented as of August 1,
2006.
2.
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, 2008, as may be
extended in accordance with this Section and subject to earlier
termination in accordance with Section 5. 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, 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, 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 5. It is also intended that Executive’s previous
term of employment with the Company shall be included when
calculating Executive’s tenure at the Company for all
purposes.
3.
Offices and Duties.
During the Term, the Executive will
serve as Vice President and Treasurer of the Company, and as an
officer or director of any subsidiary or affiliate of the Company
if elected to any such position by the shareholders or by the Board
of Directors of the Company or any subsidiary or affiliate, as the
case may be. In such capacities, the Executive shall perform such
duties and shall have such responsibilities as are normally
associated with
such positions and as otherwise may
be assigned to the Executive from time to time by the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer
or upon the authority of the Board of Directors of the Company.
Subject to Section 5(e), Executive’s functions, duties and
responsibilities are subject to reasonable changes as the Company
may in good faith determine. The Executive hereby agrees to accept
such employment and to serve the Company to the best of the
Executive’s ability in such capacities, devoting
substantially all of the Executive’s business time to such
employment.
4.
Compensation;
Benefits
(a)
Base Salary.
During the Term the Company
shall pay Executive a base salary (the “Base Salary”)
at the initial rate of three hundred and eleven thousand dollars
($311,000) per annum, payable in accordance with the
Company’s regular payroll policies and subject to all
withholdings that are legally required or are agreed to by
Executive. 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)
Incentive
Compensation . Executive shall have the opportunity
annually to earn incentive compensation in amounts determined by
the Compensation Committee of the Board of Directors of SGC (the
“Compensation Committee”) in accordance with the
applicable incentive compensation plan of the Company as in effect
from time to time (“Incentive Compensation”). Under
such plan, Executive shall have the opportunity to earn up to 50%
of Base Salary as Incentive Compensation at Target Opportunity
(“Target Bonus”) and up to 100% of Base Salary as
Incentive Compensation at Maximum Opportunity.
(c)
Eligibility for Annual Equity
Awards .
Executive shall be eligible to receive an annual grant of stock
options or other equity awards, in the sole discretion of the
Compensation Committee, 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)
Expense
Reimbursement . 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 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.
(e)
Health and Welfare
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
2
terminate any such plan or program.
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)
Taxes and Internal Revenue
Code 409A . 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
Internal Revenue Code of 1986, as amended (the “Code”),
and applicable administrative guidance and regulations.
Internal Revenue Code 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 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 5 of this Agreement, Executive consents to the
Company adopting such conforming amendments as the Company deems
necessary, in its reasonable discretion, to comply with
Section 409A (including, but not limited to, delaying payment
until six months following termination of employment).
5.
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 60 days’ prior
written notice to the Company referring to this Section 5(a);
provided, however, that a termination of Executive’s
employment for “Good Reason” (as defined below) shall
not constitute a termination by Executive for other than Good
Reason pursuant to this Section 5(a). In the event the
Executive terminates his employment for other than Good Reason, the
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 4(a)) for services rendered
to the date of termination paid to Executive in accordance with
regular payroll policies;
(ii)
All vested nonforfeitable amounts
owing or accrued at the date of termination under benefit plans,
programs, and arrangements set forth or referred to in
Section 4 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)
Except as provided in
Section 6.6, 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
(iv)
Reasonable business expenses and
disbursements incurred by Executive prior to such termination will
be reimbursed in accordance with Section 4(d).
3
(b)
Termination by Reason of
Death . If
Executive dies during the Term of this Agreement, the Company shall
pay to the last beneficiary designated by the 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 5(a));
and
(ii)
A lump sum
payment equal to Executive’s annual Base Salary, payable
within 30 days of termination.
(c)
Termination By Reason of Total
Disability .
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 the Executive’s
“Total Disability.” For purposes of this Agreement,
“Total Disability” shall mean Executive’s
(a) becoming eligible to receive benefits under any long-term
disability insurance program or (b) 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. 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 5(a));
(ii)
An amount equal to the sum of (A)
Executive’s annual Base Salary and (B) Executive’s
“Severance Bonus Amount” (as defined below) payable
over a period of twelve (12) months after termination in accordance
with Section 5(f) of this Agreement, provided such amount shall be
reduced by any disability payments provided to Executive as a
result of any disability plan sponsored by the Company or its
affiliates providing benefits to Executive. For purposes of this
Agreement, “ Severance Bonus Amount ” shall
mean an amount equal to the highest annual Incentive
Compensation paid to Executive in respect of the two most recent
fiscal years of the Company but not more than the Executive’s
Target Bonus for the-then current fiscal year;
(iii)
In lieu of any Incentive
Compensation for the year in which such termination of employment
occurs, payment of an amount equal to (A) the highest annual
Incentive Compensation paid to Executive in respect of the two most
recent fiscal years of the Company but not more than
Executive’s Target Bonus for the year of termination,
multiplied by (B) 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, payable as and when such Incentive
Compensation would otherwise have been payable under
Section 4(b); 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 twelve (12) months.
4
(d)
Termination by the Company for
Cause .
The
Company may terminate Executive’s employment hereunder for
“Cause” upon written notice to Executive referring to
this Section 5(d). For purposes of this Agreement, the term
“Cause” shall mean (i) gross neglect by the
Executive of the Executive’s duties hereunder;
(ii) conviction (including conviction on a nolo contendere
plea) of the Executive of any felony; (iii) conviction
(including conviction on a nolo contendere plea) of the Executive
of any non-felony crime or offense involving the property of the
Company or any of its subsidiaries or affiliates or evidencing
moral turpitude; (iv) willful misconduct by the Executive in
connection with the performance of the Executive’s duties
hereunder; (v) intentional breach by the Executive of any
material provision of this Agreement; (vi) material violation of
material provision of the Company’s Code of Conduct; or (vii)
any other willful or grossly negligent conduct on the part of the
Executive which would make the Executive’s continued
employment by the Company materially prejudicial to the best
interests of the Company; provided, however, that a termination by
the Company under Sections 5(d)(i), 5(d)(v), 5(d)(vi) or 5(d)(vii),
if curable, shall be effective only if, within 21 days following
delivery of a written notice by the Company to Executive that the
Company is terminating Executive’s employment for Cause and
setting forth in reasonable detail the facts and circumstances
allegedly constituting Cause, Executive has failed to cure the
circumstances giving rise to Cause. In the event that
Executive’s employment is terminated by the Company for
Cause, the Executive shall be entitled to receive only the Standard
Termination Payments (as defined in Section 5(a)).
(e)
Termination by the Company
Without Cause or by Executive for Good Reason
. The Company may terminate Executive’s
employment hereunder at any time, without Cause, for any reason or
no reason, and Executive may terminate his employment hereunder for
“Good Reason” (as defined below) if the Company has
failed to cure the event or condition constituting Good Reason
within thirty days after Executive gives written notice to the
Company setting forth in reasonable detail the facts and
circumstances allegedly constituting Good Reason and specifically
referencing this Section 5(e). For purposes of this Agreement,
“Good Reason” shall mean that without Executive’s
prior written consent, any of the following shall have occurred
within ninety days prior to the delivery of such notice:
(i) a material change, adverse to Executive, in
Executive’s positions, titles, offices, or duties as provided
in Section 3, except, in such case, in connection with the
termination of Executive’s employment for Cause, Total
Disability or death; (ii) an assignment of any significant
duties to Executive which are inconsistent with Executive’s
positions or offices held under Section 3; (iii) a
decrease in Base Salary or material decrease in Executive’s
incentive compensation opportunities provided under this Agreement;
and (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. In the event that Executive’s
employment is terminated by the Company without Cause or by
Executive for Good Reason, 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 5(a));
5
(ii)
An amount equal to the sum of (A)
Executive’s annual Base Salary and (B) Executive’s
Severance Bonus Amount payable over a period of twelve (12) months
after termination in accordance with Section 5(f) of this
Agreement;
(iii)
Except to the extent otherwise
provided at the time of grant under the terms of any equity award
made to Executive, all stock options, deferred stock, restricted
stock and other equity-based awards held by Executive at
termination will become fully vested and non-forfeitable, and, in
all other respects, all such options and other awards shall be
governed by the plans and programs and the agreements and other
documents pursuant to which the awards were granted;
(iv)
In lieu of any Incentive
Compensation for the year in which such termination of employment
occurs, payment of an amount equal to (A) the highest annual
Incentive Compensation paid to Executive in respect of the two most
recent fiscal years of the Company but not more than the
Executive’s Target Bonus for the year of termination,
multiplied by (B) 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, payable as and when such Incentive
Compensation would otherwise have been payable under
Section 4(b);
(v)
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 twelve (12) months;
and
(vi)
Reasonable closing costs incurred by
Executive for the sale of Executive’s residence in New York
shall be reimbursed on an after-tax basis following receipt of
proof of such costs, provided however, that such sale occurs within
six months of termination of employment.
(f)
Timing of Certain Payments
Under Section 5. Payments pursuant to Sections 5(c)(ii) or
5(e)(ii) of this Agreement, if any, shall be payable in equal
installments in accordance with the Company’s standard
payroll practices over a period of twelve (12) months following the
date of termination; provided, however, that if necessary to comply
with Section 409A of the Code, and applicable administrative
guidance and regulations, such payments shall be made as
follows: (1) no payments shall be made for a six-month period
following the date of termination, (2) an amount equal to the
aggregate sum that would have been otherwise payable during the
initial six-month period shall be paid in a lump sum six months
following the date of termination, and (3) during the period
beginning six months following the date of termination through the
remainder of the twelve-month period, payment of the remaining
amount due shall be payable in equal installments in accordance
with the Company’s standard payroll practices. In addition,
notwithstanding any other provision with respect to the timing of
payments under this Agreement, if necessary to comply with Section
409A of the Code, and applicable administrative guidance and
regulations, amounts payable following termination of employment in
a lump sum, including pursuant to Sections 5(c)(iii), 5(e)(iv) and
5(e)(vi) of this Agreement, shall instead be paid six months
following the date of termination.
6
(g)
No Obligation to
Mitigate . The Executive shall have no obligation to
mitigate damages pursuant to this Section 5, but shall be obligated
to promptly advise the Company regarding any compensation earned or
any payments that will become due with respect to services provided
to another employer during any period of continued
payment
