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Exhibit 10.1
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of
January 1, 2006 (the "Effective Date"), by and between SCIENTIFIC
GAMES CORPORATION, a Delaware corporation (the "Company"), and A.
Lorne Weil ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has been employed pursuant to an Amended and
Restated Employment Agreement with the Company, dated as of
February 28, 2003 (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are hereby terminated and superseded.
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, 2009, 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 (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 5. In the event that
Executive’s employment terminates because either party shall
have given timely a Nonrenewal Notice to the other party, 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 5(d) 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).
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. It is 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 ;
it being understood that for all such purposes Executive’s
tenure at the Company commenced on August 1, 1990.
3.
Offices and Duties.
a.
From January 1, 2006 through December 31, 2007, Executive will
serve as Chief Executive Officer of the Company and as Chairman of
the Board of Directors of the Company (the "Board of Directors"),
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.
b.
From and after January 1, 2008, Executive shall continue to serve
as both Chief Executive Officer and Chairman of the Board of
Directors, unless notice within the time frames in the following
sentence is provided by either Executive or the Company to the
other party. Executive will relinquish the role of Chief
Executive Officer of the Company (but will continue to be employed
as and serve in the capacity of Chairman of the Board of Directors
and shall continue to receive the compensation and benefits
provided for herein) if (i) for the period January 1, 2008 to
December 31, 2008, notice is provided by either party to the other
party no later than September 1, 2007, or (ii) for the period
January 1, 2009 to December 31, 2009, notice is provided by either
party to the other party no later than September 1, 2008, or (iii)
for each Extension Term, if any, notice is provided by either party
to the other party no later than September 1 in the calendar year
immediately preceding the commencement of such Extension
Term. Receipt or giving of such notice and subsequent change
in position shall not constitute "Cause" or "Good Reason" within
the meaning of Section 5 of this Agreement.
c.
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 5(d)
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
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Directors may in good faith determine after
consultation with Executive.
d.
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, and (ii) serve on the
boards of directors of up to three entities, each in a manner that
does not conflict or unreasonably interfere with his
responsibilities hereunder.
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 one
million five hundred thousand dollars ($1,500,000.00) per annum,
payable biweekly (except to the extent deferred under a deferred
compensation plan). The first payment of Base Salary
following the execution and delivery by the parties of this
Agreement shall be in an amount equal to the difference between (i)
the aggregate amount of Base Salary that Executive is entitled to
have received at a base salary rate of one million five hundred
thousand dollars ($1,500,000.00) per annum for all pay periods in
2006 up to and including the pay period covered by such first
payment date, and (ii) the aggregate amount of Base Salary that
Executive has received for such pay periods referred to in clause
(i). 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. For purposes of this Agreement, the percentage
increase, if any, during the preceding twelve months in the
Consumer Price Index for the Greater New York area will be computed
by dividing (i) the difference between (A) the Consumer Price
Index—All Urban Consumers, New York-Northern New Jersey-Long
Island, NY-NJ-CT-PA, All Items (1982-84=100), published by the U.S.
Department of Labor Bureau of Labor Statistics (the "CPI") for the
month of December in the calendar year most recently ended prior
to, or ending on, the date as of which the relevant increase is to
be made ( e.g. , December 2007 for an increase to be made on
January 1, 2008) and (B) the CPI for the month of December in the
calendar year immediately preceding the year referred to in clause
(i)(A) by (ii) the CPI referred to in clause (i)(B); provided,
however, that if such computation yields a negative number, such
percentage increase shall be deemed to be zero. Without
limiting the foregoing, 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.
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(b)
Incentive Compensation. Executive shall have the opportunity
annually to be paid incentive compensation in amounts determined by
the Compensation Committee of the Board of Directors of the Company
(the "Compensation Committee") in accordance with the applicable
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 (the "Target Bonus") up to 100% of Base Salary
as incentive compensation at Target Opportunity and a maximum bonus
up to 200% of Base Salary as incentive compensation at Maximum
Opportunity. "Target Opportunity" and "Maximum Opportunity"
shall have the meaning ascribed to them in the applicable incentive
compensation plan. Notwithstanding the foregoing, if no
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 incentive
compensation in the amounts described in the foregoing provisions
of this Section 4(b), then the Company shall provide such
reasonable opportunity to Executive independently of such
plan. 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 (regardless of whether, at such time, the Company has an
incentive compensation plan in effect), except that the Company
shall make available to Executive an opportunity to defer receipt
of the incentive compensation under a deferred compensation
plan.
(c)
Eligibility for Annual Equity Awards and Participation in Executive
Compensation Plans. 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. Executive shall be eligible to participate
in such plans and programs, and in other executive compensation
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)
in each case on terms no less favorable to Executive than the most
favorable terms of participation of any other executive of the
Company. For the avoidance of doubt, Executive’s
participation in any such equity award plan or program shall be
deemed to be on terms no less favorable to Executive than the most
favorable terms of participation of any other executive of the
Company if the absolute number or amount of stock options,
restricted stock units, or other equity awards awarded to Executive
is at least equal to the highest absolute number or amount of stock
options, restricted stock units or other equity award awarded to
any other executive of the Company in respect of the same period
(regardless of the percentage of Executive’s Base Salary,
incentive compensation or any other compensation or benefit
represented by such award).
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(d)
Incentive Equity Awards.
(i)
The Company shall grant to Executive (A) as a sign-on bonus thirty
days following the parties’ execution of this Agreement (the
"2006 RSU Grant"), 235,000 restricted stock units; and (B)
thereafter on June 30, 2007 (the "2007 RSU Grant" and collectively
with the 2006 RSU Grant, the "Special RSU Grants" and each
individually, a "Special RSU Grant") (the respective date each
Special RSU Grant is made, the "Grant Date" thereof) restricted
stock units in a number equal to (x) $8 million divided by (y) the
average closing price per share of the Company’s common stock
for the 30-day period preceding the Grant Date of the 2007 RSU
Grant (such closing prices, in each case, as reported in the Wall
Street Journal for those dates during such 30-day period on which
the principal national stock exchange or quotation system on which
the Company’s stock is traded is open for business).
Each Special RSU 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 agreement in the form attached hereto as Exhibit
A to be entered into with respect to such Special RSU Grant by
and between the Company and Executive (each, an "RSU Agreement"),
provided, however, that the parties hereby agree, and the RSU
Agreements shall respectively provide, that the 2006 RSU Grant
shall vest with respect to twenty-five percent (25%) of the shares
of common stock subject to the 2006 RSU Grant on December 31, 2006
and each subsequent December 31 st
through December 31, 2009, and that the 2007 RSU Grant shall
vest with respect to one third (1/3) of the shares of common stock
subject to the 2007 RSU Grant on December 31, 2007 and each
subsequent December 31 st through
December 31, 2009, subject to certain provisions relating to
accelerated vesting and forfeiture as described in this Agreement,
the applicable RSU Agreement and the Equity Plan; provided,
however, that, notwithstanding anything to the contrary set forth
in the Equity Plan, in the RSU 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 RSU Agreement in the form of Exhibit A hereto
contain the only provisions regarding forfeiture that shall apply
to the Special RSU Grants. In each case, the applicable RSU
Agreement shall provide that delivery to Executive of shares of
Company common stock subject to vested restricted stock units under
the applicable Special RSU Grant shall occur on earliest date on
which such shares may be so delivered 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
without affecting any compensation deduction applicable thereto as
a result of Section 162(m) of the Code but in no event shall such
shares be delivered (x) later than six months plus one day after
the date of termination of Executive’s employment (the date
of termination of Executive’s employment, regardless of the
ground or reason therefor, being referred to in this Agreement as
the "Termination Date"), nor (y) sooner than five (5) days after
the Termination Date.
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(ii)
Notwithstanding anything to the contrary set forth in this
Agreement, in the RSU Agreements or in the Equity Plan (but without
limiting any rights or entitlements of Executive in addition to the
following that may be provided elsewhere in this Agreement, the RSU
Agreements or the Equity Plan), in the event of any Change in
Control described in clause (B) or (C) of Section 5(e)(iii), or any
Change in Control described in Clause (A) of Section 5(e)(iii)
pursuant to which holders of the Company’s common stock
generally are entitled to receive cash and/or non-cash
consideration for all or substantially all of their shares:
(A) if such Change in Control occurs before the 2007 RSU Grant
has otherwise been made to Executive, then (x) the 2007 RSU
Grant shall be granted (or if not granted, shall be deemed to have
been granted) to Executive on the "Change in Control Reference
Date" (as defined below) and the Change in Control Reference Date
shall be the Grant Date of the 2007 RSU Grant, provided that (y)
the number of restricted stock units included in the 2007 RSU Grant
shall be the number determined using the Change in Control
Reference Date as the Grant Date of the 2007 RSU Grant, or such
lesser number of restricted stock units, if any, as may be
determined by dividing (I) $8 million by (II) the consideration per
share (including the fair value per share of any non-cash
consideration as specified by the governing legal documents in
connection with such Change in Control or otherwise determined in
good faith by the Board of Directors) to be received by holders of
the Company’s common stock generally for their shares
pursuant to such Change in Control transaction; (B) if such Change
in Control occurs before all restricted stock units included in the
Special RSU Grants (including those granted or deemed granted
pursuant to clause (A) of this paragraph 4(d)(ii) and
including those subject to the 2006 RSU Grant, whether or not such
Change in Control occurs prior to the Grant Date of the 2006 RSU
Grant) have vested (except by reason of forfeiture pursuant to the
terms of Section 5(j) of this Agreement or the terms of Section
5(a) or 5(c) of this Agreement and the applicable RSU Agreement),
then all such unvested restricted stock units shall fully vest and
become non-forfeitable as of the Change in Control Reference Date;
(C) any and all shares of the Company’s common stock
underlying vested restricted stock units included in the Special
RSU Grants (including those granted or deemed granted pursuant to
clause (A) of this paragraph 4(d)(ii) and those vested pursuant to
clause (B) of this paragraph 4(d)(ii)) that have not otherwise been
delivered as of the time of the Change in Control shall be deemed
to have been delivered to Executive at the latest date and time
that shall entitle Executive to receive for such shares, in the
manner described in clause (D) below, the consideration payable to
holders of the Company’s common stock generally for their
shares pursuant to such Change in Control transaction (provided,
for the avoidance of doubt, that no such shares shall be deemed to
have been delivered to Executive if such Change in Control
transaction is not consummated and holders of the Company’s
common stock generally receive no such consideration for their
shares pursuant thereto); and (D) Executive shall be entitled
to receive for shares of the Company’s common stock
underlying vested restricted stock units included in the Special
RSU Grants (including those granted or deemed granted pursuant to
clause (A) of this paragraph 4(d)(ii) and those vested pursuant to
clause (B) of this paragraph 4(d)(ii)), at substantially the same
time and as to
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the same percentage of common stock held, any
consideration payable to holders of the Company’s common
stock generally for their shares pursuant to such Change in Control
transaction, as if Executive held, as of the Change in Control
Reference Date, all shares of the Company’s common stock
underlying all the vested restricted stock units included in the
Special RSU Grants (including those granted or deemed granted
pursuant to clause (A) of this paragraph 4(d)(ii)) and those
vested pursuant to clause (B) of this paragraph 4(d)(ii)).
The "Change in Control Reference Date" shall mean the date of, and
the time immediately prior to the time of, the Change in Control,
or such earlier date and/or time as shall entitle Executive to
receive pursuant to such Change in Control transaction, at
substantially the same time and as to the same percentage of common
stock held, any consideration payable to holders of the
Company’s common stock generally for their shares, as the
holder of the common stock underlying all the vested restricted
stock units included in the Special RSU Grants (including those
granted or deemed granted pursuant to clause (A) of this paragraph
4(d)(ii) and those vested pursuant to clause (B) of this paragraph
4(d)(ii)). For purposes of this paragraph 4(d)(ii),
references to common stock underlying restricted stock units shall
include securities substituted or resubstituted therefor in
accordance with the terms of the RSU Agreements and the Equity
Plan.
(iii)
Notwithstanding anything to the contrary set forth in this
Agreement, in the RSU Agreements or in the Equity Plan, in the
event that Executive’s employment is terminated by reason of
Executive’s death or Total Disability, or by the Company
without Cause, or 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 5(c)
hereof) pursuant to Section 5(c) hereof): (A) if such
termination of employment occurs before the 2007 RSU Grant has
otherwise been made to Executive, then (x) the 2007 RSU Grant
shall be granted (or if not granted, shall be deemed to have been
granted) to Executive on the day immediately preceding the
Termination Date, and such day shall be the Grant Date of the 2007
RSU Grant; and (y) the number of restricted stock units
included in the 2007 RSU Grant shall be the number determined using
the day immediately preceding the Termination Date as the Grant
Date of the 2007 RSU Grant; and (B) if such termination of
employment occurs before all restricted stock units included in the
Special RSU Grants (including those granted or deemed granted
pursuant to clause (A) of this paragraph 4(d)(iii) and including
those subject to the 2006 RSU Grant, whether or not such
termination occurs prior to the Grant Date of the 2006 RSU Grant)
have vested (except by reason of forfeiture pursuant to the terms
of Section 5(j) of this Agreement), then all such vested restricted
stock units shall fully vest and become non-forfeitable as of the
Termination Date and Executive shall be entitled to the benefits
thereof, as provided in Section 5(b) (in the case of termination by
reason of Executive’s death) or 5(d) (in the case of
termination by reason of Executive’s Total Disability, by the
Company without Cause, or by Executive for Good Reason).
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(e)
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 therefor 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, or
any substitute or replacement private aircraft wholly or partially
owned, or leased, 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)
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 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 paid
vacation, holidays, and any other time off in accordance with the
Company’s policies in effect from time to time.
(h)
Residual SERP Benefit. Executive’s aggregate retirement
benefit under the Company’s Supplemental Executive Retirement
Plan, as amended, restated and
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finally terminated as of December 31, 2005
("SERP") had a value equal to $9,853,046 (representing the lump sum
present value of his SERP benefit as of December 31, 2005) which
will accrue interest at a rate of four percent (4%) per annum,
compounded annually, for the period from December 31, 2005 through
the date of distribution (the "SERP Benefit"). Executive
shall receive his aggregate SERP Benefit in a lump sum payment on
the date that is six months plus one day after the Termination
Date. Notwithstanding anything to the contrary contained in
the SERP, in any other plan or policy of the Company or in this
Agreement, it is hereby acknowledged and agreed that the SERP
Benefit is and shall remain a fully vested and nonforfeitable
benefit and shall be payable to Executive, in the manner provided
above, following any termination of his employment by the Company
regardless of the reason or grounds for such termination of
employment.
(i)
Taxes. Payment of all compensation and benefits to Executive
specified in this Section 4 and in Section 5 of this Agreement
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. 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 (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 5 of this Agreement,
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 months following
termination of employment)
(j)
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.
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 45 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" shall
not constitute a
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termination by Executive for other than Good
Reason pursuant to this Section 5(a). In the event Executive
terminates his employment for other than Good Reason, Executive
shall be entitled only to the following compensation and
benefits:
(i)
Any accrued but unpaid Base Salary (as determined pursuant to
Section 4(a)) for services rendered to the Termination Date,
payable on the next regular payday following the Termination
Date;
(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 4 hereof in
which Executive theretofore participated (including, without
limitation, any earned and vested annual incentive compensation and
the SERP benefit) 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 4(e).
(iv)
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, 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. Such
amount shall be payable in a lump sum in accordance with Section
5(f) of this Agreement;
(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, except to the extent otherwise
specifically provided under the terms of any "Non-Ordinary Course
Grant or Award" (as defined below) made to Executive after December
31, 2005, and any such options 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;
(vi)
Except to the extent otherwise specifically provided under the
terms of any Non-Ordinary Course Grant or Award made to Executive
after December 31, 2005 (including, without limitation, the RSU
Agreements governing the 2006 RSU Grant and the 2007 RSU Grant),
all deferred stock, restricted stock and other equity-based awards
will become fully vested and non-forfeitable, and all restrictions
and conditions with respect to such awards shall lapse, and all
such awards and arrangements will be settled in accordance with the
plans and programs under which the awards were granted or governing
such arrangements including, if so permitted by the plans or
programs, Executive’s duly executed deferral election forms
or the terms of any
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mandatory deferral under such plans or programs;
provided, however, if necessary to comply with Section
409A(a)(2)(B)(i) of the Code, and applicable administrative
guidance and regulations, such settlement shall be made on the date
that is six months plus one day following the Termination Date;
and
(vii)
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.
For purposes of this Agreement, a "Non-Ordinary-Course Grant or
Award" shall mean any grant or award conferring the right to
acquire equity-based securities of the Company, other than a
"Normal Course Award", and a "Normal Course Award" shall mean and
be limited to a grant or award to acquire equity-based securities
of the Company made under the annual equity incentive program of
the Company’s management incentive compensation program, or
under any amended, replacement or supplemental plan or program that
is established to take the place of, modify, or supplement such
equity incentive program (as the same may be hereafter amended,
replaced or supplemented), or to reinstitute such a plan or
program, in order to carry out the Company’s regular program
of equity grants to senior executives generally.
(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 payments and benefits referred to in clauses (i) through (iii),
inclusive, of Section 5(a) (collectively, the "Standard Termination
Payments");
(ii)
A lump sum payment equal to (A) Executive’s annual Base
Salary, plus (B) 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, payable within 30 days of the Termination
Date;
(iii)
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, except to the extent otherwise
specifically provided under the terms of any Non-Ordinary Course
Grant or Award made to Executive after December 31, 2005, and any
such options 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; and
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(iv)
Except to the extent otherwise specifically provided under the
terms of any Non-Ordinary Course Grant or Award made to Executive
after December 31, 2005, all deferred stock, restricted stock and
other equity-based awards will become fully vested and
non-forfeitable, and all restrictions and conditions with respect
to such awards shall lapse, and all such awards and arrangements
will be settled in accordance with the plans and programs under
which the awards were granted or governing such arrangements
including, if so permitted by the plans or programs,
Executive’s duly executed deferral election forms or the
terms of any mandatory deferral under such plans or programs.
(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 5(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 6.1(a) (other than the first
sentence thereof), 6.1(b), 6.2 (other than the first and
penultimate sentences thereof) or 6.3. "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,
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 ninety (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 ninety (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
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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 5(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
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