Exhibit 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("AGREEMENT"), is dated March 10, 1999, and is by and between
Sodak Gaming, Inc., a South Dakota corporation (the "COMPANY"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, an individual resident of ▇▇▇▇▇▇ County, South Dakota ("EXECUTIVE").
WHEREAS, Executive is currently employed by the Company; and
WHEREAS, the Company, International Game Technology ("PARENT") and a
wholly-owned subsidiary of Parent ("SUB"), have entered into an Agreement and
Plan of Merger, dated as of March 10, 1999 (the "MERGER AGREEMENT"), pursuant to
which Sub will be merged with and into the Company (the "MERGER"), with the
result that the Company will be a wholly-owned subsidiary of Parent after the
Merger; and
WHEREAS, the Company wishes to continue to employ Executive after the Merger to
render services for the Company on the terms and conditions set forth in this
Agreement, and Executive wishes to be retained and employed by the Company on
such terms and conditions;
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 as its 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. Unless terminated at an earlier date in accordance with Section 8
of this Agreement, the term of Executive's employment hereunder shall be for a
period of one (1) year, commencing on the Effective Date (as defined in Section
9.1) (the "INITIAL TERM"). Thereafter, the term of this Agreement shall be
automatically extended for successive one (1) year periods, subject to Section 8
hereof, unless either party objects to such extension by written notice to the
other party at least thirty (30) days prior to the end of the Initial Term or
any extension term. The Initial Term and any subsequent one-year extensions of
this Agreement are collectively referred to as the "TERM".
3. POSITION AND DUTIES.
3.1 SERVICE WITH COMPANY. During the Term, Executive agrees to
perform such reasonable employment duties as the Board of Directors of the
Company shall assign to him from time to time consistent with Executive's title
and position as President and Chief Executive Officer of the Company. Executive
also agrees to serve, for any period for which he is so elected, as a director
of the Company. The Company shall use its reasonable best efforts to cause
Executive to be nominated and elected as a member of its Board of Directors and
to serve as such during the Term. This obligation shall cease on the event of a
sale of the Company or the Company is merged with or into Parent or a subsidiary
of Parent after the date hereof. During the Term, Executive shall report to (a)
the President and (b) the Chief Executive Officer of Parent unless otherwise
determined by the Board of Directors of Parent. The President of Parent shall
review the performance of Executive on an annual basis and make recommendations
concerning the compensation of Executive to the Compensation Committee of
Parent.
3.2 PERFORMANCE OF DUTIES. During the Term, Executive agrees to
serve the Company faithfully and to the best of his ability and to devote his
full working time, attention and reasonable efforts to the business and affairs
of the Company. Executive hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement, and
that during the Term, he will not render or perform services for any other
corporation, firm, entity or person which are in breach of the provisions of
this Agreement.
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4. COMPENSATION.
4.1 BASE SALARY. As compensation for the services to be rendered by
Executive under this Agreement during the Initial Term, the Company shall pay to
Executive a base salary of $400,000 (the "BASE SALARY"), which Base Salary shall
be paid in accordance with the Company's normal payroll procedures and policies.
If the Initial Term is extended pursuant to Section 2, the Base Salary payable
to Executive during each subsequent year shall be mutually agreed upon by the
Company and Executive prior to the commencement of each such year, provided that
the Base Salary may be increased from $400,000 but not be decreased from
$400,000.
4.2 INCENTIVE COMPENSATION. In addition to the Base Salary,
Executive shall be eligible for the annual cash incentive bonus (the "BONUS")
equal to a percentage of his Base Salary corresponding to the percentage of the
performance target ("PERFORMANCE TARGET") established for the applicable fiscal
year that is achieved by the Company, based on the table below:
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PERCENTAGE OF PERFORMANCE TARGET ACHIEVED BY THE BONUS EXPRESSED AS A
COMPANY PERCENTAGE OF BASE SALARY
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120% 120%
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100% 60%
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80% 30%
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For Company performance which exceeds 100% but is less than 120% of the
Performance Target for a fiscal year, the amount of Executive's Bonus for such
fiscal year, as a percentage of Base Salary, shall be increased by 3% for each
percentage point the Company's performance exceeds 100%, subject to the maximum
bonus of 120%.
For Company performance which is less than 100% but exceeds 80% of the
Performance Target for a fiscal year, the amount of Executive's Bonus for such
fiscal year, as a percentage of Base Salary, shall be decreased by 1.5% for each
percentage point that the Company's performance is less than 100%.
For Company performance which is less than 80% of the Performance Target for a
fiscal year, the Company may elect but will not be required to pay Executive a
Bonus for such year.
The Performance Target shall be an annual operating profit target for the
Company that shall be established by mutual agreement of the Company and
Executive no later than October 31 of the fiscal year to which such Performance
Target relates except that with respect to fiscal 1999, Parent and Executive
will mutually agree upon a Performance Target at the time of execution of this
Agreement and in so doing shall adjust Company's performance in fiscal 1999
through the date of the Merger to reflect the use of an operating profit target.
For purposes of this determining whether the Performance Target has been met,
the operating profit of the Company shall be derived from the Parent's audited
financial statements for the relevant fiscal year, adjusted to exclude (i) any
charges or revenues recorded as a result of the accounting treatment of the
Merger, (ii) any gains or losses from the sale of non-core assets, (iii)
extraordinary items of income or expense and (iv) expenses relating to the Bonus
payments. The Company shall pay the Bonus to Executive as soon as reasonably
practicable, but in no event more than 10 days, after delivery of the audited
financial statements of Parent for the relevant fiscal year to the Board of
Directors of Parent.
4.3 PARTICIPATION IN BENEFIT PLANS. Executive shall also be entitled
to participate in all executive and employee benefit plans or programs
(including vacation time) of the Company at a level commensurate with his
position, title, tenure, salary and other qualifications. 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. Further, in light of the Restricted Stock grant to Executive described
below, the granting of any additional equity incentives to Executive shall be at
the sole and absolute discretion of Parent.
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4.4 RESTRICTED STOCK.
(i) AWARD AND PURCHASE OF RESTRICTED STOCK. On the Effective Date,
Parent shall grant to Executive an award of 50,000 shares of restricted common
stock of Parent at a price of $.01 per share, under and in accordance with the
provisions of Parent's 1993 Stock Option Plan (the "PLAN"). Executive hereby
acknowledges that he has received and reviewed a copy of the Plan.
(ii) RESTRICTIONS ON TRANSFER. The shares of Common Stock awarded to
Executive pursuant to Section 4.4(i) above and any additional shares
attributable thereto received by Executive as a result of any stock dividend,
recapitalization, merger, reorganization or similar event described in Section
6.2 of the Plan (collectively, the "RESTRICTED STOCK") shall be subject to the
restrictions set forth herein and may not be sold, assigned, transferred,
pledged or otherwise disposed of, or encumbered, during the applicable
Restricted Period (as defined below), except as permitted hereby. The
"Restricted Period" shall terminate on the second anniversary of the Effective
Date.
(iii) PURCHASE OPTION. For a period of three months after the
termination of the Restricted Period, Executive shall have the option to require
Parent to purchase all or a portion of the Restricted Stock at a cash price of
$20.00 per share, payable in full at the closing of such sale. The closing of
the sale of any such shares of Restricted Stock to Parent shall take place as
soon as reasonably practicable, but in no event more than ten days, after
delivery by Executive of written notice to Parent of his election to require
Parent to purchase such shares.
(iv) STOCK CERTIFICATE. A stock certificate issued in respect of the
shares of Restricted Stock issued pursuant to this Agreement shall be registered
in the name of Executive and shall be deposited by Executive with Parent
together with a stock power endorsed in blank. Parent shall provide Executive
with a receipt for such stock certificate acknowledging that Parent is holding
such certificate pursuant to the terms of this Agreement.
All stock certificates for shares of Restricted Stock during the Restricted
Period shall bear the following legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions contained
in an Agreement entered into between the registered owner and
International Game Technology. A copy of such Agreement is on file in the
office of the Secretary of International Game Technology, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇."
Parent shall use commercially reasonable efforts to cause, within 10
days of the date the Restricted Period expires, the transfer of such shares free
of all restrictions set forth in the Plan and this Agreement to Executive or, in
the event of such Executive's death, to Executive's legal representative, heir
or legatee.
(v) STOCKHOLDER'S RIGHTS. Subject to the terms of this Agreement,
during the Restricted Period, Executive shall have, with respect to the
Restricted Stock, all rights of a shareholder of Parent, including the right to
vote such shares and the right to receive all regular cash dividends paid with
respect to the shares of Restricted Stock; provided, that the right to receive
regular cash dividends shall terminate immediately with respect to any shares of
Restricted Stock upon forfeiture of those shares pursuant to Section 8 of this
Agreement.
(vi) REGULATORY COMPLIANCE. The issue and sale of shares of
Restricted Stock shall be subject to full compliance with all then applicable
requirements of law and the requirements of any stock exchange upon which the
Common Stock of Parent may be listed. Parent hereby represents and warrants that
the offer, grant and sale of the shares of Restricted Stock have been registered
on Form S-8 and that such registration is currently, and Parent will use its
best efforts to cause such registration to continue, in effect.
(vii) FEDERAL INCOME TAX ELECTION. Executive hereby acknowledges
receipt of advice that pursuant to current federal income tax laws, (i)
Executive has 30 days following the date of this Agreement in which to elect to
be taxed in the current taxable year on the Fair Market Value (as defined in the
Plan) of the Restricted Stock in accordance with the provisions of Internal
Revenue Code Section 83(b) and, (ii) if no such election is made, the taxable
event will occur when the shares of Restricted Stock cease to be subject to
restriction, and the tax will be measured by the Fair Market Value of the
Restricted Stock on the date of the taxable event.
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4.5 LIFE INSURANCE. During the Initial Term only, the Company shall
provide to Executive a life insurance policy for $1 million, and the Company
shall pay the expenses and premiums on such policy up to an aggregate amount of
$20,000.
4.6 EXPENSES. The Company will pay or reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement subject to the presentment of
appropriate documentation in accordance with the Company's normal policies for
expense verification and reimbursement.
4.7 WITHHOLDING TAXES. The Company may withhold from any benefits
payable under this Agreement, including the shares of Restricted Stock, all
federal, state, city or other taxes as shall be required to be withheld pursuant
to any law or governmental regulation or ruling.
5. 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 of Parent, the Company or any of their 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 Parent, the Company
and their respective 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.
6. 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 amounts to be paid
to Executive as provided in this Agreement. In the event Executive is required
by Parent to purchase the Company's interest in, and to assume the Company's
obligations under, the Louisiana Joint Venture Agreements (as defined in the
Merger Agreement) (either directly and/or through the purchase of all the
Company's interests in Sodak Louisiana, L.L.C.) pursuant to the Merger Agreement
and that certain Irrevocable Proxy and Voting Agreement, dated as of March 10,
1999, by and between Executive and Parent, the provisions of this Section 6 (and
Sections 5 and 7) shall not apply to such purchase and assumption or to
Executive's subsequent engagement in or association with the joint venture in
Shreveport, Louisiana.
7. NONCOMPETITION COVENANT.
7.1 AGREEMENT NOT TO COMPETE. Executive agrees that,
(i) during the Term and
(ii) except as otherwise provided in this Section 7.1, for a period of two (2)
years after the termination of the Term,
Executive shall not, without the written consent of the Company's Board of
Directors (determined by majority vote excluding Executive should he be serving
on said Board), 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
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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 or selling of accessories, devices, or systems
related to the products or services being sold by the Company. Notwithstanding
the foregoing, if, prior to the expiration of the term set forth in Section 2,
Executive is terminated by the Company Without Cause (as defined in Section
8.3), the covenants not to compete set forth in this Section 7.1 shall remain in
effect for the remainder of the Term, but only for so long as the Company
continues to fulfill its obligations to make all payments to Executive of the
pursuant to Section 8.6. If the Company fails to make any payment required
pursuant to Section 8.6, the covenants not to compete set forth in this Section
7.1 shall terminate and be of no force or effect from and after the first date
the Company fails to make any such payment.
7.2 GEOGRAPHIC EXTENT OF COVENANT. The obligations of Executive
under Section 7.1 shall apply to any geographic area in which the Company or
Parent:
(i) has engaged in business during the Term through production,
promotional, sales or marketing activity, or otherwise; or
(ii) has otherwise established its goodwill, business reputation, or
any customer or supplier relations.
7.3 LIMITATION ON COVENANT. Ownership by Executive, as a passive
investment, of less than five percent (5%) of the outstanding shares of capital
stock of any corporation listed on a national securities exchange or publicly
traded in an over-the counter market shall not constitute a breach of this
Section 7.
7.4 INDIRECT COMPETITION. Executive further agrees that, during the
Term, he will not, directly or indirectly, assist or encourage any other person
in carrying out, directly or indirectly, any activity that would be prohibited
by the above provisions of this Section 7 if such activity were carried out by
Executive, either directly or indirectly; and in particular Executive agrees
that he will not, directly or indirectly, induce any employee of the Company to
carry out, directly or indirectly, any such activity.
7.5 NON-SOLICITATION. Executive agrees that during the Term and for
a period of 24 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
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,
Parent or any of their affiliates.
8. TERMINATION.
8.1 TERMINATION DUE TO DEATH OR DISABILITY. In the event that
Executive's employment hereunder terminates due to death or is terminated by the
Company due to Executive's Disability (as defined below), no termination
benefits shall be payable to or in respect of Executive except as provided in
Section 8.6(ii). For purposes of this Agreement, "Disability" shall mean a
physical or mental disability that prevents the performance by Executive of his
duties hereunder for periods aggregating six months in any twelve month period.
The determination of Executive's Disability shall be made by an independent
physician who is reasonably acceptable to the Company and Executive (or his
representative) and shall be based on such competent medical evidence as shall
be presented to such independent physician by Executive and/or the Company or by
any physician or group of physicians or other competent medical experts employed
by Executive and/or the Company to advise such independent physician.
8.2 TERMINATION BY THE COMPANY FOR CAUSE. Executive's employment
hereunder may be terminated by the Company for Cause (as defined below),
provided that Executive shall be permitted to attend a meeting of the Board
within 30 days after delivery to him of a Notice of Termination (as defined
below) to explain why he should not be terminated for Cause and if, following
any such explanation by Executive, the Board determines that the Company does
not have Cause to terminate Executive's employment, any such prior Notice of
Termination delivered to Executive shall thereupon be withdrawn and of no
further force or effect. "CAUSE" shall mean (i) the willful and material failure
of Executive to perform his duties hereunder (other than any such failure
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due to Executive's physical or mental illness), or the willful and material
breach by Executive of his obligations hereunder, (ii) Executive's engaging in
willful and serious misconduct that has caused or is reasonably expected to
result in material injury to the Company, (iii) Executive's conviction of, or
entering a plea of guilty or nolo contendere to, a crime that constitutes a
felony or (iv) 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
Parent or the Company does or proposes to do business.
8.3 TERMINATION WITHOUT CAUSE. Executive's employment hereunder may
be terminated by the Company Without Cause. A termination "WITHOUT CAUSE" shall
mean a termination of Executive's employment by the Company other than due to
disability as described in Section 8.1 or for Cause as described in Section 8.2.
8.4 TERMINATION BY EXECUTIVE. Executive may terminate his employment
with the Company for any reason. A termination of employment by Executive for
"GOOD REASON" shall mean a termination by Executive of his employment with the
Company (or any successor) as a result of the occurrence, without Executive's
consent, of any of the following events: (i) the assignment to Executive of
duties that result in a substantial diminution of the duties specified in
Section 3 hereof, (ii) a reduction in the rate of Executive's Base Salary or
annual incentive compensation opportunity, (iii) a material breach by the
Company of its obligations hereunder or (iv) the failure of the Company to
obtain the assumption of this Agreement by any successor to the Company as
contemplated by Section 9.8; provided that in the case of any of clauses (i),
(ii) and (iii), within 30 days following the occurrence of any of the events set
forth therein, Executive shall have delivered written notice to the Company of
his intention to terminate his employment for Good Reason, which notice
specifies in reasonable detail the circumstances claimed to give rise to
Executive's right to terminate his employment for Good Reason, and the Company
shall not have cured such circumstances to the reasonable satisfaction of
Executive.
8.5 NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 8.1, 8.2 or 8.3, or by Executive pursuant to Section 8.4, shall be
communicated by a written Notice of Termination addressed to the other party to
this Agreement. A "NOTICE OF TERMINATION" shall mean a notice stating that
Executive's employment with the Company has been or will be terminated and
setting forth the provisions of this Agreement under which such employment is
being terminated and, in reasonable detail, the reasons therefor.
8.6 PAYMENTS UPON CERTAIN TERMINATIONS.
(i) In the event of a termination of Executive's employment by the
Company Without Cause or a termination by Executive of his employment for Good
Reason during the Term, the Company shall pay to Executive within 5 business
days following the date of termination a lump sum payment equal to (a) his full
Base Salary through the end of the Term (the remaining period of the Term being
determined as though Executive's employment had not terminated and the Company
had elected not to renew the then current initial or extension term, as the case
may be) and (b) a Bonus equal to the amount that would have been payable to
Executive pursuant to Section 4.2 for the fiscal year of his termination if he
had remained employed for the entire fiscal year and the Company had achieved
100% of the Performance Target applicable for such fiscal year, prorated to
reflect Executive's early termination. In addition, at the end of the Restricted
Period, Executive shall be entitled to receive the Restricted Stock in
accordance with Section 4.4; provided that Executive has not breached the
Non-Competition Agreement dated as of March 10, 1999 between the Company and
Executive.
(ii) If Executive's employment shall terminate upon his death or
disability, the Company shall pay to Executive a lump sum payment equal to (a)
his full Base Salary through the end of the Term (the remaining period of the
Term being determined as though Executive's employment had not terminated and
the Company had elected not to renew the then current initial or extension term,
as the case may be) and (b) a Bonus equal to the amount that would have been
payable to Executive pursuant to Section 4.2 for the fiscal year of his
termination if he had remained employed for the entire fiscal year and the
Company had achieved 100% of the Performance Target applicable for such fiscal
year, prorated to reflect Executive's early termination. The Executive shall
also be entitled to such death or disability benefits, as applicable, as are
provided under the terms of any employee or executive death benefit or
disability plans or programs referred to in Section 4.3 or otherwise. In
addition, if Executive is terminated due to death or Disability during the
Initial Term, all Restricted Stock shall, upon the date of termination, be
forfeited and returned to Parent, and no cash payment shall be made to Executive
upon forfeiture of such Restricted Stock. If Executive is terminated due to
death after the Initial Term but before the second anniversary of
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the Effective Date, all Restricted Stock shall, upon the date of termination, be
forfeited and returned to Parent, and Parent shall pay to the estate of
Executive, in addition to the amounts set forth above, a lump sum payment of
$1,000,000. If Executive is terminated due to Disability after the Initial Term
but before the second anniversary of the Effective Date, at the end of the
Restricted Period, Executive shall be entitled to receive the Restricted Stock
in accordance with Section 4.4; provided that Executive has not breached the
Non-Competition Agreement dated as of March 10, 1999 between the Company and
Executive.
(iii) If the Company shall terminate Executive's employment for
Cause or Executive shall terminate his employment without Good Reason during the
Term, the Company shall pay Executive his full Base Salary through the date of
termination and a Bonus equal to the amount that would have been payable to
Executive pursuant to Section 4.2 for the fiscal year of his termination if he
had remained employed for the entire fiscal year and the Company had achieved
100% of the Performance Target applicable for such fiscal year, prorated to
reflect Executive's early termination. In addition, if the Company terminates
Executive for Cause or Executive terminates his employment without Good Reason
during the Initial Term, all Restricted Stock which are then subject to any
restrictions set forth in Section 4.4(ii), shall, upon the date of termination,
be forfeited and returned to Parent and no payments other than those set forth
above shall be made to Executive upon forfeiture of such Restricted Stock. If
the Company terminates Executive for Cause or if Executive terminates his
employment without Good Reason after the Initial Term but before the second
anniversary of the Effective Date, at the end of the Restricted Period,
Executive shall be entitled to receive the Restricted Stock in accordance with
Section 4.4; provided that Executive has not breached the Non-Competition
Agreement dated as of March 10, 1999 between the Company and Executive.
(iv) In addition to the foregoing, Executive shall be entitled to
receive all amounts payable and benefits accrued under any otherwise applicable
plan, policy, program or practice of the Company in which Executive was a
participant during his employment with the Company (or any affiliate thereof) in
accordance with the terms thereof; provided that Executive shall not be entitled
to receive any payments or benefits under any such plan, policy, program or
practice providing any annual bonus or severance compensation or benefits (and
the provisions of this Section 8.6 shall supersede the provisions of any such
plan, policy, program or practice).
8.7 SURRENDER OF RECORDS AND PROPERTY. Upon termination of his
employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company, and all other property, trade secrets and confidential
information of the Company, including, but not limited to, all documents which
in whole or in part contain any trade secrets or confidential information of the
Company, which in any of these cases are in his possession or under his control.
9. MISCELLANEOUS.
9.1 EFFECTIVENESS. This Agreement shall be effective as of the
Effective Time (as defined in the Merger Agreement) of the Merger (the
"Effective Date"). This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties.
9.2 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 South Dakota, without regard to
principles of conflict of laws.
9.3 PRIOR AGREEMENTS. This Agreement contains the entire agreement
of the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter, including,
without limitation, the Employment Agreement, dated as of June 30, 1993, by and
between Executive and the Company, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. Notwithstanding anything to the
contrary to Section 5.5(c) of the Merger Agreement, Executive hereby
acknowledges and confirms that the Amended and Restated Employment Agreement,
dated as of January 14, 1999 (the "AMENDED AGREEMENT"), by and between Executive
and the Company, shall terminate as of the Effective Date, without any
requirement or obligation that the Company make any payments to Executive in
connection with such termination or as a result of the Merger, and Executive
hereby releases the Company of all of its obligations of any kind thereunder.
Notwithstanding the
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foregoing, (x) this Agreement does not in any way relieve Executive of his
obligations under that certain Non-Competition Agreement dated March 10, 1999
between the Company and Executive and (y) the provisions of Section 4.6 of the
Amended Agreement (and the provisions of the Agreement defining any capitalized
term used in such Section 4.6) shall survive the termination of such agreement
and shall remain in full force and effect in accordance with the terms thereof.
9.4 AMENDMENTS. No amendment or modification of this Agreement shall
be deemed effective unless made in writing and signed by all of the parties
hereto.
9.5 NOTICES. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed to have been effectively made or
given if personally delivered, or if telegraphed, telexed, cabled, or mailed to
the other party at its address set forth below in this Section 9.5, or at such
other address as such party may designate by written notice to the other party
hereto. Any effective notice hereunder shall be deemed given on the date
personally delivered or on the date telegraphed, telexed, cabled or deposited in
the United States mail (sent by certified mail, return receipt requested)
mailed, as the case may be at the following address:
If to the Company:
Sodak Gaming, Inc.
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▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
If to Executive:
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9.6 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.
9.7 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.
9.8 ASSIGNMENT. This Agreement shall not be assignable, in whole or
in part, by any party without the written consent of the other parties, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to Parent or any subsidiary of Parent.
Notwithstanding the foregoing, the Company shall require any successor thereto
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the Company in the
same amount and on the same terms as Executive would be entitled hereunder if
the Company had terminated
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Executive's employment Without Cause as described in Section 8, except that for
purposes of implementing the foregoing, the date on which any succession becomes
effective shall be deemed the date of termination.
9.9 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, including without limitation the provisions of Sections 5, 7
and 8.7. 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.
9.10 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or breach thereof, shall be settled by arbitration in
accordance with the Voluntary Labor Arbitration Rules of the American
Arbitration Association, 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.
COMPANY:
SODAK GAMING, INC., a South Dakota corporation
By:
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Its:
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EXECUTIVE:
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PARENT (WITH RESPECT TO SECTION 4.4 HEREOF ONLY):
INTERNATIONAL GAME TECHNOLOGY, a
Nevada corporation
By:
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