Exhibit 10.2

 

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Luke Alvarez

 

803 Majestic Ocean Plaza 

 

Ocean Village 

 

Gibraltar 

 

GX11 1AA 

 

  March 23, 2017

 

Dear Luke

 

Service Agreement between Inspired Gaming (Gibraltar) Limited (the “Company”)
and Luke Alvarez dated 1st April 2015 (the “Service Agreement”)

 

We refer to the Service Agreement and hereby propose and agree that from January
1, 2017 (the “Deemed Effective Date”), the Service Agreement be amended such
that:

 

1.Clause 5 (Remuneration) be de deleted and replaced with a new clause 5 as
follows:

 

5.1       The Company shall pay to the Executive during the continuance of his
employment a salary (which shall accrue from day to day) at the rate of four
hundred and seventy eight thousand seven hundred and thirty six pounds sterling
(£478,736) per year. The salary shall be payable by 12 equal monthly instalments
per annum in arrears and shall be subject to review by the Compensation
Committee annually but without any commitment to increase. For the avoidance of
doubt, the Executive’s salary (as may be increased from time to time) shall not
be decreased during his employment.

 

5.2       The Executive will, during the continuance of his employment, be
eligible to earn a target annual bonus of not less than 100% of Executive’s
annual base salary (“Target Bonus”) and a maximum annual bonus of 200% of
Executive’s annual base salary (“Maximum Bonus”). Annual performance goals,
which shall be the same as the Executive Chairman, will be established by the
Compensation Committee in consultation with the Executive, and such goals, once
final, will be communicated to the Executive not later than 70 days after the
start of the applicable fiscal year. Any annual bonus that becomes payable
hereunder shall be paid to Executive within two and one-half (2.5) months after
the end of the applicable fiscal year. For the purposes of the calculation of
Target Bonus and Maximum Bonus a salary level of £525,000.00 shall be used. In
addition “Compensation Committee” shall mean the committee of the Parent Board
constituted in accordance with its Charter as adopted by the Parent Board from
time to time. “Parent Board” shall mean the Board of Directors of the Parent.
“Parent” shall mean Inspired Entertainment, Inc.

 

 

 

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5.3       Effective as of December 29, 2016, the Executive has been granted
940,583 shares of restricted stock pursuant to the Group’s 2016 Equity Incentive
Plan (the “Plan”). As of the date of this amendment letter the Executive
understands and agrees that, subject to the ratification of the Compensation
Committee, an administrative error on completion of the transaction between
Hydra Industries Acquisitions Corp and the Inspired Gaming Group led to the
Executive being granted too many shares and as such the Executive agrees,
subject to the completion of separate paperwork to a reduction of the grant by
14,311 shares of restricted stock pursuant to the Plan.

 

5.4       In the event that the Executive ceases to be employed by the Company,
any equity-based compensation held by the Executive shall be subject to the
terms and conditions of the applicable plan and equity award agreement(s) as
well as the terms of this Agreement, whichever is more favourable to the
Executive.

  

2.A new Clause shall be inserted into clause 17 (Termination of Employment) as
follows:

 

17.3      If the Executive leaves or is required to leave his employment as a
result of injury, disability, ill-health, retirement, redundancy or is otherwise
dismissed (whether fairly or unfairly, constructively or otherwise) he shall be
entitled to receive a pro-rated amount of the Target Bonus during the
contractual notice period as if all of the performance conditions of the annual
bonus had been satisfied.

 

The Executive will not be entitled to receive an annual bonus under the terms of
the scheme if he is dismissed for gross misconduct or voluntarily resigns his
employment at any time before the end of then current fiscal year.

 

3.New Clauses shall be added into clause 24 (Miscellaneous) as follows:

 

24.3     SECTION 409A.

 

(a)       The intent of the parties hereto is that payments and benefits under
this Agreement are either exempt from or comply with Code Section 409A and,
accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to that end; provided, that no such interpretation shall be used to
diminish the Executive’s rights and entitlements hereunder. For the purposes of
this Agreement “Code” shall mean the U.S. Internal Revenue Code of 1986, as
amended.

 

 

 

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(b)       If any payment, compensation or other benefit provided to the
Executive in connection with his employment termination is determined, in whole
or in part, to constitute “nonqualified deferred compensation” within the
meaning of Code Section 409A and the Executive is a “specified employee” as
defined in Code Section 409A, no part of such payments shall be paid before the
day that is six (6) months plus one (1) day after the Executive’s date of
termination or, if earlier, the Executive’s death (the “New Payment Date”). The
aggregate of any payments that otherwise would have been paid to the Executive
during the period between the date of termination and the New Payment Date shall
be paid to Executive in a lump sum on such New Payment Date. Thereafter, any
payments that remain outstanding as of the day immediately following the New
Payment Date shall be paid without delay over the time period originally
scheduled, in accordance with the terms of this Agreement.

 

(c)       A termination of employment shall not be deemed to have occurred for
purposes of any provision of this Agreement providing for the payment of any
amounts or benefits subject to Code Section 409A upon or following a termination
of employment until such termination is also a “separation from service” within
the meaning of Code Section 409A and for purposes of any such provision of this
Agreement, references to a “resignation,” “termination,” “terminate,”
“termination of employment” or like terms shall mean separation from service.

 

(d)       All reimbursements for costs and expenses under this Agreement shall
be paid in no event later than the end of the calendar year following the
calendar year in which the Executive incurs such expense. With regard to any
provision herein that provides for reimbursement of costs and expenses or
in-kind benefits, except as permitted by Code Section 409A, (i) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit, and (ii) the amount of expenses eligible for
reimbursements or in-kind benefits provided during any taxable year shall not
affect the expenses eligible for reimbursement or in-kind benefits to be
provided in any other taxable year.

 

(e)       Whenever a payment under this Agreement specifies a payment period
with reference to a number of days (e.g., “payment shall be made within thirty
(30) days following the date of termination”), the actual date of payment within
the specified period shall be within the sole discretion of the Company.

 

(f)       If under this Agreement, an amount is paid in two or more instalments,
for purposes of Code Section 409A, each instalment shall be treated as a
separate payment.

 

 

 

 

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24.4     Parachute Payments.

 

(a)        Notwithstanding anything to the contrary contained in this Agreement,
to the extent that any amount, stock option, restricted stock, RSUs, other
equity awards or benefits paid or distributed to the Executive pursuant to this
Agreement or any other agreement or arrangement between the Company and the
Executive (collectively, the "280G Payments") (a) constitute a "parachute
payment" within the meaning of Section 280G of the Code and (b) but for this
Section 21, would be subject to the excise tax imposed by Section 4999 of the
Code, then the 280G Payments shall be payable either (i) in full or (ii) in such
lesser amount which would result in no portion of such 280G Payments being
subject to excise tax under Section 4999 of the Code; whichever of the foregoing
amounts, taking into account the applicable federal, state and local income or
excise taxes (including the excise tax imposed by Section 4999) results in the
Executive’s receipt on an after-tax basis, of the greatest amount of benefits
under this Agreement, notwithstanding that all or some portion of such benefits
may be taxable under Section 4999 of the Code. Unless the Executive and the
Company otherwise agree in writing, any determination required under this
Section shall be made in writing by an independent public accountant selected by
the Company (the "Accountants"), whose determination shall be conclusive and
binding upon the Executive and the Company for all purposes. For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Executive shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section, as well as any reasonable
legal or accountant expenses, or any additional taxes, that the Executive may
incur as a result of any calculation errors made by the Accountant and/or the
Company in connection with the Code Section 4999 excise tax analysis
contemplated by this Section.

 

(b)       Additional 280G Payments. If the Executive receives reduced 280G
Payments by reason of this Section 20 and it is established pursuant to a final
determination of the court or an Internal Revenue Service proceeding that the
Executive could have received a greater amount without resulting in an excise
tax, then the Company shall promptly thereafter pay the Executive the aggregate
additional amount which could have been paid without resulting in an excise tax
as soon as practicable.

 

(c)       Review of Accountant Determinations. The parties agree to cooperate
generally and in good faith with respect to (i) the review and determinations to
be undertaken by the Accountants as set forth in this Section 20 and (ii) any
audit, claim or other proceeding brought by the Internal Revenue Service or
similar state authority to review or contest or otherwise related to the
determinations of the Accountants as provided for in this Section 20, including
any claim or position taken by the Internal Revenue Service that, if successful,
would require the payment by the Executive of any additional excise tax, over
and above the amounts of excise tax established under the procedure set forth in
this Section 20.

 

 

 

 

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(d)       Order of 280G Payment Reduction. The reduction of 280G Payments, if
applicable, shall be effected in the following order (unless the Executive, to
the extent permitted by Section 409A of the Code, elect another method of
reduction by written notice to the Company prior to the Section 280G event): (i)
payments that are payable in cash that are valued at full value under Treasury
Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero),
with amounts that are payable last reduced first; (ii) payments and benefits due
in respect of any equity valued at full value under Treasury Regulation Section
1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are
determined under Treasury Regulation Section 1.280G-1, Q&A 24), will next be
reduced; (iii) payments that are payable in cash that are valued at less than
full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that
are payable last reduced first, will next be reduced; (iv) payments and benefits
due in respect of any equity valued at less than full value under Treasury
Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as
such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24),
will next be reduced; and (v) all other non-cash benefits not otherwise
described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions
made pursuant to each of clauses (i)-(v) above will be made in the following
manner: first, a pro-rata reduction of cash payment and payments and benefits
due in respect of any equity not subject to Section 409A, and second, a pro-rata
reduction of cash payments and payments and benefits due in respect of any
equity subject to Section 409A as deferred compensation.

 

All of your existing terms and conditions of employment shall continue save to
the extent amended by this letter.

 

We should be grateful if you would indicate your acceptance of this letter as an
amendment to the Service Agreement by signing this letter where indicated below.

 

Yours sincerely       /s/ Dave Wilson               Dave Wilson, Director      
For and on behalf of       Inspired Gaming (Gibraltar) Limited  

  

 

 

 

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I have read and agree to the above terms and conditions of this letter and
acknowledge that this letter amends the Service Agreement.

 

Signed and delivered as a deed on the date set out above by Luke Alvarez.

  

/s/ Luke Alvarez               Luke Alvarez  

  In the presence of:                   Witness           Name           Address