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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superseded.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
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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).
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(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:
(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.
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(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));
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(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.
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(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 payments pursuant to this Section 5.
The Company&rs
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