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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superseded.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.
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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 (w
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