EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of December 6,
2000, and is by and between IGT (the "Company"), and G. Xxxxxx Xxxxx
("Executive").
WHEREAS, Executive is currently employed by Company; and
WHEREAS, the Company considers it important and in its best
interest to xxxxxx the employment of key management personnel and desires to
retain the services of Executive on the terms and subject to the conditions in
this Agreement; and
WHEREAS, the Executive desires to continue employment by the
Company to render services to the Company on the terms and subject to the
conditions in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
respective undertakings of the Company and Executive set forth below, the
Company and Executive agree as follows:
1. Employment. The Company hereby employs Executive in the position of
President and Chief Executive Officer, and Executive accepts such employment and
agrees to perform services for the Company, for the period and upon the other
terms and conditions set forth in this Agreement.
2. Term. The term of Executive's employment pursuant to this contract
shall be for a period of three (3) years, commencing on December 6, 2000
(Commencement Date) to and including December 5, 2003, unless earlier terminated
as provided in this Agreement (the "Term").
3. Compensation.
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3.1 Base Salary. As compensation in full for the services to
be rendered by the Executive under this Agreement during the Term, the Company
shall pay to Executive a base salary of $650,000 for year one, $700,000 during
year two and $750,000 during year three (the "Base Salary"), which Base Salary
shall be paid in accordance with the Company's normal payroll procedures and
policies.
3.2 Bonus For each one percent increase in operating profits
before incentives over the previous fiscal year, Executive will receive 10
percent of his base salary. Executive shall receive 20 percent of his base
salary for any increase over prior year in excess of 10 percent. The bonus
calculation shall have a maximum of 300 percent of the base salary. In year one
of the Term, the bonus shall be paid based on the full 2000-2001 fiscal year
without proration. The bonus will also be payable based upon various management
objectives set by the Board of Directors in consultation with Executive. If the
bonuses earned in year one and year two of the Term exceeds 200 percent of base
pay, the amount over 200 percent will be accrued and payment deferred (the
"Deferred Bonus") to year three of the Term if Executive remains with the
Company through the Term. Deferred Bonus for years one and two, if any, will be
paid in conjunction with the bonus earned in year three.
3.3 Participation in Benefit Plans. Executive shall also be
entitled to participate in all employee benefit plans or programs of the Company
to the extent that his position, title, tenure, salary, age, health and other
qualifications make him eligible to participate. The Company does not guarantee
the adoption or continuance of any particular employee benefit plan or program
during the Term, and Executive's participation in any such plan or program shall
be subject to the provisions, rules and regulations applicable thereto.
3.4 Stock Option. Concurrent with the date of this Agreement,
the Company shall grant to Executive an option to purchase 500,000 shares of
common stock of the Company, in accordance with the provisions of the Company's
1993 Stock Option Plan (the "Stock Option") except that the Stock Option shall
vest one third at the Commencement Date of each year beginning on December 5,
2001. Therefore 166,667options shall vest on December 5, 2001; 166,667 options
shall vest on December 5, 2002 and 166,666 options shall vest on December 5,
2002. The strike price shall be set as of December 5, 2000.
3.5 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement, all federal, state, city or other taxes
as shall be required to be withheld pursuant to any law or governmental
regulation or ruling.
4. Confidential Information. Except as permitted or directed by the
Company's Board of Directors or required by an order of a court having
jurisdiction or under subpoena from an appropriate government agency, during the
Term or at any time thereafter Executive shall not divulge, furnish or make
accessible to anyone or use in any way (other than in the ordinary course of the
business the Company or any of its respective affiliates) any confidential or
secret knowledge or information of the Company which Executive has acquired or
become acquainted with or will acquire or become acquainted with prior to the
termination of the period of his employment by the Company (including employment
by the Company or any affiliated or predecessor companies prior to the date of
this Agreement), whether developed by himself or by others, concerning any trade
secrets, confidential or secret designs, processes, formulae, plans, devices or
material (whether or not patented or patentable) directly or indirectly useful
in any aspect of the business of the Company, any customer or supplier lists of
the Company, any confidential or secret development or research work of the
Company, or any other confidential information or secret aspects of the business
of the Company. Executive acknowledges that the above-described knowledge or
information constitutes a unique and valuable asset of the Company and
represents a substantial investment of time and expense by the Company, and that
any disclosure or other use of such knowledge or information other than for the
sole benefit of the Company and its affiliates would be wrongful and would cause
irreparable harm to the Company. Both during and after the Term, Executive shall
refrain from any acts or omissions that would reduce the value of such knowledge
or information to the Company. The foregoing obligations of confidentiality,
however, shall not apply to any knowledge or information which is now published
or which subsequently becomes generally publicly known, other than as a direct
or indirect result of the breach of this Agreement by Executive.
5. Ventures. If, during the Term, Executive is engaged in or
associated with the planning or implementing of any project, program or venture
involving the Company and a third party or parties, all rights with respect to
such project, program or venture shall belong to the Company. Except as approved
by the Company's Board of Directors, Executive shall not be entitled to any
interest in such project, program or venture or to any commission, finder's fee
or other compensation in connection therewith other than the salary to be paid
to Executive as provided in this Agreement.
6. Noncompetition Covenant.
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6.1 Agreement not to Compete. Executive agrees that during
the Term of this Agreement, Executive shall not, without the written consent of
the Company's Board of Directors, directly or indirectly, engage in competition
with the Company in any manner or capacity (e.g., as an advisor, principal,
agent, partner, officer, director, stockholder, employee, member of any
association, or otherwise) in any phase of the business which the Company is
conducting during the Term, including the design, development, manufacture,
distribution, marketing, leasing, financing or selling of accessories, devices,
or systems related to the products or services being sold by the Company.
6.2 Geographic Extent of Covenant. The obligations of
Executive under Section 6.1 shall apply to any geographic area in which the
Company has engaged in business during the Term.
6.3 Non-Solicitation. Executive agrees that during the Term
and for a period of 12 months thereafter, he will not, without the prior written
approval of the Company's Board of Directors, hire, solicit or endeavor to
entice away from the Company or, following termination of Executive's
employment, otherwise interfere with the relationship of the Company with any
management employee of the Company, or any person or entity who was, within the
then most recent prior 12-month period, a customer, supplier or contractor of
the Company or any of its affiliates.
7. Termination. This vAgreement shall terminate in accordance
with the following provisions:
7.1 Expiration of the Term. Unless earlier terminated in
accordance with the provisions hereof, this Agreement shall terminate upon
expiration of the three year Term as provided in Section 2. After the expiration
of the Term, the Board of Directors may continue the employment of Executive and
Executive may accept the employment on an at will basis. Company also agrees to
provide Executive with medical coverage for Executive only (excluding family
members) through the Company or through some other mutually agreed upon provider
for the remainder of his life. If such health insurance is provided by a
provider other than the Company's, the insurance shall provide for similar
coverage as is received by Executives of the Company.
7.2 Death. If the Executive dies during the Term, this
Agreement shall terminate, with the Termination Date being the date of the
Executive's death.
7.3 Disability. If the Executive has been absent from
service to the Company as required in this Agreement for a period of ninety (90)
days or more during any one-hundred eighty (180) day period during the Term as a
result of any physical or mental disability, the Company has the right to
terminate this Agreement, the Termination Date being ten (1) days after notice
thereof is given to Executive. Upon such disability during the Term, the
severance provided for in
paragraph 7.5 below shall be paid to Executive's estate or as he shall direct.
7.4 Termination by Company for Cause. The Company has the
right to terminate this Agreement for Cause as defined herein, such termination
to be effective immediately upon notice thereof from the Company to Executive.
For purposes of this Agreement, "Cause" shall mean:
|X| The willful and material failure of Executive to perform him
duties hereunder (other than any such failure due to
Executive's physical or mental illness), or the willful and material
breach by Executive of his obligations hereunder;
|X| Executive engaging in willful and serious misconduct that has caused or
is reasonably expected to result in material injury to the Company;
|X| Executive is convicted of,or enters a plea of guilty or nolo contendre,
to a crime that constitutes a felony;
|X| The failure or inability of Executive to obtain or retain any
license required to be obtained or retained by him in any
jurisdiction in which the Company does or proposes to do business.
7.5 Termination by Company Without Cause. If at any
time the Board of Directors of the Company decide terminate this Agreement
during the Term, it may do so under the following terms and conditions:
o Company shall pay Executive two years of
Executive's base salary and the Deferred
Bonus. Such payment will be based upon
the base salary in existence at the time
of termination.
o In the event of death of Executive
during the Term of the Agreement, the
two years of base salary and Deferred
Bonus shall be paid to the estate of
Executive or as he shall direct.
o Executive's stock options granted under
Paragraph 3.3 above, shall have their
vesting accelerated in full so as to
become one hundred percent vested as of
the date of termination.
7.6 Termination due to Change of Control.If at any time
during the Term a third party acquires a Controlling Interest in the Company,
Executive may at his discretion, elect to sever his relationship with the
Company. In this instance, the provisions of paragraph 7.5 above shall apply. A
Controlling Interest shall be defined as a transfer of ownership of 40 percent
or more of the outstanding shares of Company. In the event of a Change of
Control of Company occurring while Executive is employed by Company, Executive's
stock options granted under Paragraph 3.3 above, shall have their vesting
accelerated in full so as to become one hundred percent vested as of the date of
the Change of Control.
8. Miscellaneous.
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8.1 Governing Law. This Agreement and all rights and
obligations hereunder, including, without limitation, matters of construction,
validity and performance, is made under and shall be governed by and construed
in accordance with the internal laws of the State of Nevada, without regard to
principles of conflict of laws.
8.2 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed by all of
the parties hereto.
8.3 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
8.4 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provision of this Agreement be in excess
of that which is valid and enforceable under applicable law, then such provision
shall be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement be given
the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
8.5 Assignment. This Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party.
8.6 Injunctive Relief. Executive agrees that it would be
difficult to compensate the Company fully for damages for any violation of the
provisions of this Agreement, especially the provisions of Sections 4 and 6.
Accordingly, Executive specifically agrees that the Company shall be entitled to
temporary and permanent injunctive relief to enforce the provisions of this
Agreement and that such relief may be granted without the necessity of proving
actual damages. This provision with respect to injunctive relief shall not,
however, diminish the right of the Company to claim and recover damages in
addition to injunctive relief.
8.7 Arbitration. Any controversy or claim arising out of or
relating to this Agreement or breach thereof, except for claims for injunctive
relief set out in paragraph 8.6 above, shall be settled by arbitration in
accordance the rules of the American Arbitration Association relating to
employment and judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. In reaching his or her decision, the
arbitrator shall have no authority to change or modify any provision of this
Agreement.
IN WITNESS WHEREOF, Executive and the Company have executed
this Agreement as of the date set forth in the first paragraph.
IGT
By:___________________________________
Xxxxxxx X. Xxxxxxxxx
Chairman of the Board
EXECUTIVE
By:___________________________________
G. Xxxxxx Xxxxx
