Document:

Exhibit 10.5

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) between Radius Health, Inc. a Delaware corporation (including its successors and assigns, the “Company”), and Michael A. Metzger (the “Executive”) is dated as of November 12, 2013 and shall become effective, if at all, on the date the Executive commences employment with the Company, which shall be no later than November 25, 2013 (the actual date Executive commences employment with the Company, the “Effective Date”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires the Executive to provide employment services to the Company, and wishes to provide the Executive with certain compensation and benefits in return for such employment services; and

 

WHEREAS, the Executive wishes to be employed by the Company and to provide employment services to the Company in return for certain compensation and benefits;

 

NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                      EMPLOYMENT TERM.  The Company hereby offers to employ the Executive, and the Executive hereby accepts employment by the Company, upon the terms and conditions set forth in this Agreement, during the period commencing on the Effective Date and ending on the date of the termination of the Executive’s employment in accordance with Section 7 below (the “Employment Term”).  The Executive shall be employed at will, meaning that either the Company or the Executive may terminate this Agreement and the Executive’s employment at anytime, for any reason or no reason, with or without cause, subject to the terms of this Agreement.

 

2.                                      POSITION & DUTIES.

 

(a)                                 Except as provided in Section 2(b) below, the Executive shall serve as the Company’s Executive Vice President, Chief Business Officer and shall report to the Company’s President and Chief Executive Officer (the “CEO”) during the Employment Term.  As Executive Vice President, Chief Business Officer, the Executive shall have such duties, authorities and responsibilities as are commensurate with the position of Executive Vice President, Chief Business Officer and such other duties and responsibilities as the CEO or the Company’s Board of Directors (the “Board”) shall designate that are consistent with the Executive’s position as Executive Vice President, Chief Business Officer.

 

(b)                                 During the Employment Term, the Executive agrees to devote his full business time, attention and energies to the performance of all of the lawful duties, responsibilities and authority that may be assigned to him hereunder.  Nothing contained in this Agreement will preclude the Executive from (i) serving as a director of, or member of a committee of the directors of one (1) corporation or organization during the first year of the Employment Term, provided that after the first anniversary of the Employment Term the

 

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Executive may serve as a director of, or member of a committee of the directors of, up to two (2) corporations or organizations and any such service shall be subject to the prior written approval of the CEO and the Board, (ii) devoting time to personal and family investments, (iii) serving as a director of any not-for-profit company, or (iv) from participating in charitable or industry associations, in each case, provided  that such activities or services do not (x) materially interfere with the Executive’s performance of duties hereunder or (y) violate the terms of the Confidentiality Agreement (as defined below).

 

(c)                                  During the Employment Term, the Executive’s principal place of employment shall be the Company’s offices in Cambridge, Massachusetts, provided  that the Executive shall divide his time among the Company’s office in Cambridge, Massachusetts and such other location(s) as may be agreed upon by the Executive and the CEO, subject to customary business travel consistent with the Executive’s duties and responsibilities and provided  further  that the Executive will not be required to relocate from his current residence to Massachusetts or elsewhere.  The Executive will be permitted to work a reasonable amount of time from the Company’s office to be established in the northern New Jersey area, provided  that the Executive will maintain a consistent presence in the Company’s office in Cambridge, Massachusetts and provided  further  that the Executive’s principal place of employment will remain the Company’s office in Cambridge, Massachusetts unless otherwise agreed between the CEO and the Executive and approved by the Board.  For purposes of this Agreement, “Initial Public Offering” means the consummation of the Company’s first underwritten initial public offering of common equity securities under the Securities Act of 1933, as amended, after the Effective Date, that results in such common equity securities being listed for trading on a national securities exchange.

 

3.                                      BASE SALARY.  The Company agrees to pay the Executive a base salary (the “Base Salary”) at an annual rate of $355,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly.  The Executive’s Base Salary shall be subject to review by the Board (or a committee thereof) at least annually and may be increased, but not decreased, from time to time by the Board.  The base salary as determined herein from time to time shall constitute “Base Salary” for purposes of this Agreement.

 

4.                                      BONUSES.

 

(a)                                 ANNUAL BONUS.  With respect to each full calendar year during the Employment Term, the Executive shall be eligible to earn an annual, performance-based bonus (an “Annual Bonus”) with a target bonus value equal to forty percent (40%) of the Executive’s Base Salary (the “Target Bonus”) based upon the achievement of performance targets, which shall be established by the Board (or a committee thereof) within the first 90 days of each calendar year during the Employment Term, with the actual amount of the Annual Bonus for a particular year determined by the Board (or a committee thereof) in its discretion.  The Board (or a committee thereof) shall consider the Executive’s performance from the Effective Date through December 31, 2013 in addition to the Executive’s performance in the 2014 calendar year when determining the Executive’s Annual Bonus for the 2014 calendar year.  Subject to Section 8 below, in order to be eligible for an Annual Bonus, the Executive must remain employed for the entire calendar year for which the performance targets will have been set.  Any Annual Bonus earned by the Executive will be paid no later than March 15 of the calendar year immediately

 

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following the calendar year in which the Annual Bonus is being measured.  The Executive’s Target Bonus shall be subject to review by the Board (or a committee thereof) at least annually and may be increased, but not decreased, from time to time by the Board.

 

(b)                                 TRANSACTION BONUS MULTIPLIER. In the first year of the Employment Term during which the Company consummates either (i) a Qualified Initial Public Offering or (ii) a strategic partnership, collaboration or licensing transaction approved by the Board with respect to any one or more of the United States, Europe, or the rest of the world relating to BA-058 that the Board determines in its discretion constitutes a significant transaction, the Executive will be eligible to receive a one-time discretionary multiplier of up to 200%, such multiplier to be determined by the Board in its discretion, applied to the Executive’s Annual Bonus for such year (e.g., if the Executive’s Annual Bonus were earned at target, the bonus would equal the product of the Base Salary multiplied by 40% multiplied by the applicable bonus multiplier).  In the event that the Company consummates an Initial Public Offering, which does not qualify as a Qualified Initial Public Offering, the Board may still, in its discretion, apply a multiplier of up to 200% to the Executive’s Annual Bonus.  The Executive acknowledges that all decisions related to the Company’s decision to effect an Initial Public Offering of its equity securities, including without limitation establishing the gross proceeds and per share price for such Initial Public Offering, or any transaction that could constitute a significant transaction shall be made by the Board in its sole discretion.  For purposes of this Agreement, “Qualified Initial Public Offering” means an Initial Public Offering with gross proceeds to the Company of at least $50 million.

 

(c)                                  SIGN-ON BONUS.  The Company shall pay the Executive a one time sign-on bonus of $140,000 in cash (the “Sign-on Bonus”), $80,000 of which is payable within fifteen (15) days following the Effective Date, and the remaining $60,000 of which is payable within fifteen (15) days following the earliest to occur of: (x) the consummation of an Initial Public Offering; (y) the first anniversary of the Effective Date; and (z) such earlier date as the Board in its discretion determines the Executive’s performance merits.  Payment of the Sign-on Bonus is conditioned upon the Executive’s continued employment with the Company through the payment date.  The Executive agrees to reimburse the Company an amount equal to $60,000 of the Sign-on Bonus if the Company terminates his employment for Cause or he resigns without Good Reason, in each instance, during the 12-month period following the Effective Date, and the Company shall be entitled in its discretion to deduct such reimbursable amount from any other compensation or amounts payable by the Company or its affiliates to the Executive.

 

5.                                      EQUITY.

 

(a)                                 The Option.  Subject to Board approval, not later than the first Board meeting following the Effective Date, the Company will grant to the Executive a stock option (the “Option”) under the Radius Health, Inc. 2011 Equity Incentive Plan (as amended, the “Plan”) for the purchase of 674,204 shares of the Company’s common stock (“Common Stock”)  at a price per share equal to the fair market value of such Common Stock, as determined by the Board, at the time of grant.  The Option will include a four-year vesting schedule, under which the Option will vest as to twenty-five percent (25%) of the shares subject to the Option twelve (12) months following the Effective Date and the Option will vest as to the remaining shares in substantially equal monthly installments over the following three years, subject to the

 

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Executive’s continued employment with the Company on the applicable vesting date (the “Ordinary Vesting Schedule”).  The Option will be subject to the terms and conditions of the Plan and the Executive’s option agreement (the “Stock Option Agreement”), provided that in the event of a conflict between this Section 5 and the Stock Option Agreement or the Plan, this Section 5 shall control.

 

(b)                                 Qualified Initial Public Offering.  Notwithstanding the Ordinary Vesting Schedule, if there is a Qualified Initial Public Offering during the first year of the Employment Term, then the Company will provide the Executive with accelerated vesting such that, as of the date of the Qualified Initial Public Offering, the Option will vest with respect to twenty-five percent (25%) of the shares subject to the Option, with such twenty-five percent (25%) portion taken pro rata from the unvested shares subject to the Option, and the remaining unvested shares subject to the Option, as reduced by this Section 5(b), will continue to vest in accordance with the Ordinary Vesting Schedule, subject to the Executive’s continued employment with the Company on each applicable vesting date and the terms of the Plan and Stock Option Agreement.

 

(c)                                  Acceptance of NDA. Notwithstanding Ordinary Vesting Schedule, if the Company files a New Drug Application (“NDA”) for BA-058 with the Food and Drug Administration (“FDA”) and the FDA accepts such application during the Employment Term, then the Company will provide the Executive with accelerated vesting such that, as of the date of the acceptance of the NDA, the Option will vest with respect to twenty-five percent (25%) of the unvested shares subject to the Option, with such twenty-five percent (25%) portion taken pro rata from the unvested shares subject to the Option, and the remaining unvested shares subject to the Option, as reduced by this Section 5(c), shall continue to vest in accordance with the Ordinary Vesting Schedule, subject to the Executive’s continued employment with the Company on each applicable vesting date and the terms of the Plan and Stock Option Agreement.

 

(d)                                 FDA Approval. Notwithstanding the Ordinary Vesting Schedule, if the Company obtains FDA approval for BA-058 during the Employment Term, then then the Company will provide the Executive with accelerated vesting such that, as of the date of the FDA approval, the Option will vest with respect to twenty-five percent (25%) of the unvested shares subject to the Option, with such twenty-five percent (25%) portion taken pro rata from the unvested shares subject to the Option, and the remaining unvested shares subject to the Option, as reduced by this Section 5(d), shall continue to vest in accordance with the Ordinary Vesting Schedule, subject to the Executive’s continued employment with the Company on each applicable vesting date and the terms of the Plan and Stock Option Agreement.

 

(e)                                  Change of Control.  If there is a Change of Control (as defined in the Plan) during the Employment Term, then fifty percent (50%) of all outstanding unvested shares subject to the Option as of the date of the Change of Control shall become fully vested; provided that this Section 5(e) shall only apply to the first Change of Control that occurs during the Employment Term.  If the unvested portion of the Option (after giving effect to the accelerated vesting in the preceding sentence) is not continued, substituted or assumed (as provided in Section 8.4(b)(1) of the Plan) in connection with the first Change of Control that occurs during the Employment Term, the entire remaining unvested portion of the Option, if any, shall become fully vested, provided  that, if the Company reasonably determines that it will not result in

 

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adverse tax consequences under Section 409A of the Code, the Company may in its sole discretion elect in lieu of the accelerated vesting set forth in this sentence to convert the unvested portion of the Option (which, for the avoidance of doubt, shall not include any portion of the Option that vests in the Change of Control pursuant to the first sentence of this Section 5(e)) into the right to receive an amount in cash equal to the excess, if any, of (y) the product of (I) the consideration paid in respect of one share of Common Stock in connection with the Change of Control (with the cash value of any non-cash consideration being equal to the fair market value, as determined by the Board in good faith, of such non-cash consideration) multiplied by (II) the number of shares of Common Stock subject to the unvested portion of the Option over (z) the aggregate exercise price of the unvested portion of the Option (the “Deferred Cash Payment”); provided  further  that nothing in this Section 5(e) shall prevent the Company from cancelling the Option (as provided in Section 8.4(b)(4) of the Plan) in the event the Deferred Cash Payment would be zero.  The Deferred Cash Payment, if any, will be made on the later of (i) the date(s) that payment(s) would be made in the Change of Control to holders of Common Stock generally or (ii) subject to the Executive’s continued employment with the Company on each applicable vesting date, in accordance with the vesting schedule applicable to the Option as of the Change of Control, including the accelerated vesting provisions set forth in Sections 5(b)-(d), 8(d)(5) and 8(e) of this Agreement.

 

6.                                      EMPLOYEE BENEFITS.

 

(a)                                 BENEFIT PLANS.  The Executive shall be entitled to participate in all employee benefit plans that the Company generally makes available to its senior executives (other than severance plans) from time to time, including any group health plans, life, disability and AD&D insurances, a 401(k) plan, tuition reimbursement, parking or public transportation and various types of paid time off, subject to the terms and conditions of such benefit plans.  Notwithstanding the foregoing, the Company shall make a group health plan available to the Executive, which provides applicable coverage at both his permanent residence and his principal place of employment.

 

(b)                                 VACATION.  The Executive shall be entitled to twenty (20) days of paid vacation per year, in accordance with the Company’s vacation policy.

 

(c)                                  BUSINESS AND ENTERTAINMENT EXPENSES.  The Company will reimburse the Executive for all reasonable business expenses incurred by the Executive in connection with the discharge of his duties for the Company, subject to the Company’s expense reimbursement policy in effect from time to time.  Further, and without duplication, the Company will reimburse the Executive for (i) the reasonable, documented expenses the Executive incurs for travel between his home in New York and the Company’s office in Cambridge, Massachusetts; (ii) the reasonable, documented living expenses the Executive incurs in connection with his lodging in the Cambridge, Massachusetts area; and (iii) appropriate industry seminars and mandatory continuing education.  Travel and lodging expenses will be deemed “reasonable” for purposes of the immediately preceding sentence to the extent such expenses conform to the Company’s business travel policy and are approved by the CEO.  In addition, if the payment or reimbursement of any travel or lodging expenses incurred by the Executive is determined to be taxable as ordinary income to the Executive, the Company will make an additional cash payment to the Executive (the “Commuting Gross-Up Payment”), in an

 

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amount which, after the reduction of any income or employment taxes associated with the Commuting Gross-Up Payment, is sufficient to satisfy the amount of the income and employment taxes incurred by the Executive as a result of such payment or reimbursement of the Executive’s travel and lodging expenses.  The Commuting Gross-Up Payment will be paid to the Executive in a single lump sum within thirty (30) days following the Company’s receipt of the Executive’s last set of reimbursement expense documentation for the calendar year.  The Executive agrees to notify the Company as soon as reasonably practical if the Commuting Gross-Up Payment provided to the Executive in a given year exceeds the amount of the taxes actually incurred by the Executive attributable to the Commuting Gross-Up Payment and the payment or reimbursement of the Executive’s travel and lodging expenses set forth in this Section, and the Executive shall promptly reimburse the Company for any such excess or the Company may, in its discretion, deduct such excess amount from other amounts payable by the Company to the Executive.

 

(d)                                 INDEMNIFICATION.  The Company shall indemnify the Executive to the maximum extent that its officers and employees are entitled to indemnification pursuant to the Company’s Certificate of Incorporation and Bylaws for any acts or omissions by reason of being an officer or employee of the Company as of the Effective Date.  At all times during the Employment Term, the Company shall maintain in effect a directors and officers liability insurance policy with the Executive as a covered officer.

 

7.                                      TERMINATION.  The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

 

(a)                                 DISABILITY.  Upon the 30th day following the Executive’s receipt of  notice of the Company’s intention to terminate the Executive’s employment due to Disability (as defined in this Section 7(a)); provided  that, the Executive has not returned to full-time performance of his duties within 30 days after receipt of such notice.  If the Company determines in good faith that the Executive’s Disability has occurred during the term of this Agreement, it will give the Executive written notice of its intention to terminate his employment.  For purposes of this Agreement, “Disability” shall mean the Executive’s inability to substantially perform the essential duties of his job on a full-time basis for 180 calendar days during any consecutive twelve-month period or for 90 consecutive days as a result of incapacity due to mental or physical illness.

 

(b)                                 DEATH.  Automatically on the date of death of the Executive.

 

(c)                                  CAUSE.  Immediately upon written notice by the Company to the Executive of a termination for Cause.  “Cause” shall mean (i) the Executive’s commission of an act of fraud, embezzlement or theft against the Company or its subsidiaries; (ii) the Executive’s conviction of, or a plea of no contest to, a felony; (iii) willful nonperformance by the Executive (other than by reason of illness) of his material duties as an employee of the Company, which, to the extent it is curable by the Executive, is not cured within thirty (30) days after written notice thereof is given to the Executive by the Company; (iv) the Executive’s material breach of this Agreement or any other material agreement between the Executive and the Company or any of its subsidiaries, including the Confidentiality Agreement, which, to the extent it is curable by the Executive, is not cured within thirty (30) days after written notice thereof is given to the

 

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Executive by the Company; or (v) the Executive’s gross negligence, willful misconduct or any other act of willful disregard for the Company’s or any of its subsidiaries’ best interests, which, to the extent it is curable by the Executive, is not cured within thirty (30) days after written notice thereof is given to the Executive by the Company.

 

(d)                                 WITHOUT CAUSE.  Upon written notice by the Company to the Executive of an involuntary termination without Cause and other than due to death or Disability.

 

(e)                                  GOOD REASON.  “Good Reason” for the Executive to terminate the Executive’s employment hereunder shall mean the occurrence of any of the following conditions during the Employment Term without the Executive’s express written consent; provided  that any resignation by the Executive due to any of the following conditions shall only be deemed for Good Reason if: (i) the Executive gives the Company written notice of the intent to terminate for Good Reason within sixty (60) days following the first occurrence of the condition(s) that the Executive believes constitutes Good Reason, which notice shall describe such condition(s); (ii) the Company fails to remedy, if remediable, such condition(s) within thirty (30) days following receipt of the written notice (the “Cure Period”) of such condition(s) from the Executive; and (iii) the Executive actually resigns his employment within the first thirty (30) days after expiration of the Cure Period:

 

(1)                                 any material reduction by the Company of the Executive’s Base Salary or Target Bonus as initially set forth herein or as the same may be increased from time to time;

 

(2)                                 any material diminution in the Executive’s duties, title, responsibilities or authority;

 

(3)                                 a requirement that the Executive report to another corporate officer or employee instead of reporting directly to the CEO;

 

(4)                                 any material breach of this Agreement or any material written agreement between the Company and the Executive, including a breach of the Company’s obligations under Section 5 or Section 13(b);

 

(5)                                 a requirement that the Executive relocate to a principal place of employment more than seventy-five (75) miles from Cambridge, Massachusetts; or

 

(6)                                 a requirement that the Executive relocate from his current permanent residence to Cambridge, Massachusetts or elsewhere.

 

(f)                                   WITHOUT GOOD REASON.  The Executive shall provide two (2) weeks’ prior written notice (the “Transition Period”) to the Company of the Executive’s intended termination of employment without Good Reason (“Voluntary Termination”).  During the Transition Period, the Executive shall assist and advise the Company in any transition of business, customers, prospects, projects and strategic planning, and the Company shall pay the pro rata portion of the Executive’s Base Salary and benefits through the end of the Transition Period.  The Company may, in its sole discretion, upon written notice to the Executive, make such termination of employment effective earlier than the expiration of the Transition Period

 

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(“Early Termination Right”), but it shall pay the pro rata portion of the Executive’s Base Salary and benefits through the earlier of: the end of the Transition Period, or the date that the Executive accepts employment or a consulting engagement from a third party.

 

8.                                      CONSEQUENCES OF TERMINATION.  Any termination payments made and benefits provided under this Agreement to the Executive shall be in lieu of any termination or severance payments or benefits for which the Executive may be eligible under any of the plans, policies or programs of the Company or its affiliates as may be in effect from time to time.  Subject to satisfaction of each of the conditions set forth in Section 9, the following amounts and benefits shall be due to the Executive:

 

(a)                                 DISABILITY.  Upon employment termination due to Disability, the Company shall pay or provide the Executive: (i) any unpaid Base Salary through the date of termination and any accrued vacation; (ii) reimbursement for any unreimbursed expenses owed to Executive; and (iii) all other payments and benefits to which the Executive is entitled under the terms of any applicable compensation arrangement or benefit, equity or other plan or program, including but not limited to any applicable insurance benefits, payable on the next regularly scheduled Company payroll date following the date of termination or earlier if required by applicable law (collectively, “Accrued Amounts”).  In addition, upon the Executive’s termination due to Disability, the Company shall pay the amounts described in Sections 8(d)(3) and 8(d)(4) to the Executive.

 

(b)                                 DEATH.  In the event the Employment Term ends on account of the Executive’s death, the Executive’s estate (or to the extent a beneficiary has been designated in accordance with a program, the beneficiary under such program) shall be entitled to any Accrued Amounts, including but not limited to proceeds from any Company sponsored life insurance programs.  In addition, upon the Executive’s death, the Company shall pay the amounts described in Sections 8(d)(3) and 8(d)(4) to the Executive’s estate.

 

(c)                                  TERMINATION FOR CAUSE OR WITHOUT GOOD REASON.  If the Executive’s employment should be terminated (i) by the Company for Cause, or (ii) by the Executive without Good Reason, the Company shall pay to the Executive any Accrued Amounts only, and shall not be obligated to make any additional payments to the Executive.

 

(d)                                 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.  If the Executive’s employment by the Company is terminated by the Company other than for Cause (and not due to Disability or death) or by the Executive for Good Reason, other than in circumstances described in Section 8(e), then the Company shall pay or provide the Executive with the Accrued Amounts and subject to compliance with Section 12:

 

(1)                                 continued payment of the Executive’s Base Salary as in effect immediately preceding the last day of the Employment Term for a period of twelve (12) months following the termination date (the “Salary Severance Period”) in accordance with the Company’s ordinary payroll practices (for purposes of calculating the Executive’s severance benefits, the Executive’s Base Salary shall be calculated based on the rate in effect prior to any material reduction in Base Salary that would give the Executive the right to resign for Good Reason (as provided in Section 7(e)(1)));

 

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(2)                                 if the Executive timely elects continued coverage under COBRA for himself and his covered dependents under the Company’s group health plans following such termination, then the Company shall pay the COBRA premiums necessary to continue the Executive’s and his covered dependents’ health insurance coverage in effect on the termination date until the earliest of (i) twelve (12) months following the termination date (the “COBRA Severance Period”); (ii) the date when the Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment; or (iii) the date the Executive ceases to be eligible for COBRA continuation coverage for any reason, including plan termination (such period from the termination date through the earlier of (i)-(iii), the “COBRA Payment Period”).  Notwithstanding the foregoing, if at any time the Company determines that its payment of COBRA premiums on the Executive’s behalf would result in a violation of applicable law (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums pursuant to this Section 8(d)(2), the Company shall pay the Executive on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding (such amount, the “Special Severance Payment”), such Special Severance Payment to be made without regard to the Executive’s payment of COBRA premiums.  Nothing in this Agreement shall deprive the Executive of his rights under COBRA or ERISA for benefits under plans and policies arising under his employment by the Company.

 

(3)                                 in the event that the Executive’s employment is terminated after December 31 of any performance year, but prior to the Annual Bonus payment date for such performance year, the Executive shall receive: (i) the amount of the Annual Bonus as determined by the Board in good faith for the performance year immediately prior to the year in which the Executive’s termination occurs if the Company has not determined the amount of the Executive’s Annual Bonus as of the date of the Executive’s termination; or (ii) the amount of the Annual Bonus as already determined by the Board in good faith for the performance year immediately prior to the year in which the Executive’s termination occurs if the Company has already determined the amount of the Executive’s Annual Bonus as of the date of the Executive’s termination, payable in either case as a lump sum at the same time annual bonuses are paid to the Company’s executives generally, but no later than March 15 of the calendar year immediately following the calendar year in which the Annual Bonus is being measured;

 

(4)                                 in the event that the Executive’s employment is terminated: (i) on or before the date Annual Bonus performance goals are established for the performance year in which the Executive’s termination occurs, the Executive shall receive a pro-rata portion of the Executive’s Target Bonus for the performance year in which the Executive’s termination occurs, with such pro-rata portion calculated based upon the number of days that the Executive was employed during such performance year divided by the total number of days in such performance year; or (ii) after the date Annual Bonus performance goals are established for the performance year in which the Executive’s termination occurs, the Executive shall receive a pro-rata portion of the Executive’s Target Bonus for the performance year in which the Executive’s termination occurs, with such pro-rata portion calculated based upon the Executive’s achievement of performance goals as determined by the Board in good faith, payable in either case as a lump sum payment on the Company’s first ordinary payroll date occurring on or after

 

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the General Release effective date (namely, the date it can no longer be revoked) or as soon thereafter as is reasonable practicable thereafter; and

 

(5)                                 twenty-five percent (25%) of all outstanding unvested shares subject to the Option (the “Termination Acceleration Percentage”) as of the date of the Executive’s termination shall vest; provided  that in the event that any of the shares subject to the Option were accelerated under Sections 5(b)-(e) during the year of the Executive’s termination, the Termination Acceleration Percentage shall be reduced by the percentage of shares previously accelerated.  By way of example, in the event that twenty-five percent (25%) of the outstanding unvested shares subject to the Option are accelerated under Section 5(c) during the second year of the Employment Term and the Executive is terminated in that same year, no additional shares shall vest under this Section 8(d)(5) upon termination.

 

(e)                                  TERMINATION WITHOUT CAUSE OR FOR GOOD REASON FOLLOWING A CHANGE OF CONTROL.  If the Executive’s employment by the Company is terminated by the Company other than for Cause (and not due to Disability or death), or by the Executive for Good Reason, in either case on or within twelve (12) months immediately following a Change of Control (as defined in the Plan, disregarding for this purpose clause (d) of such definition), then the Company shall pay or provide the Executive with the Accrued Amounts and all of the benefits described in Section 8(d) above, subject to compliance with Section 12; provided  that: (i) in lieu of the pro-rata bonus described in Section 8(d)(4), the Company shall pay the Executive the full Target Bonus for the performance year in which the Executive’s termination occurs, payable as a lump sum payment on the Company’s first ordinary payroll date occurring on or after the General Release effective date (namely, the date it can no longer be revoked); and (ii) in lieu of the vesting acceleration described in Section 8(d)(5), all of the outstanding unvested shares subject to the Option shall become fully vested.

 

9.                                      CONDITIONS.  Any payments or benefits made or provided pursuant to Section 8 (other than Accrued Amounts) are subject to the Executive’s (or, in the event of the Executive’s death, the beneficiary’s or estate’s, or in the event of the Executive’s Disability, the guardian’s):

 

(a)                                 compliance with the provisions of Section 12 hereof;

 

(b)                                 delivery to the Company of the executed Agreement and General Release (the “General Release”), which shall be in the form attached hereto as Appendix A (with such changes therein or additions thereto as needed under then applicable law to give effect to its intent and purpose) within 21 days following the date of termination of employment, and permitting the General Release to become effective in accordance with its terms; and

 

(c)                                  delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans.

 

Notwithstanding the due date of any post-employment payments, any amounts due following a termination under this Agreement (other than Accrued Amounts) shall not be due until after the expiration of any revocation period applicable to the General Release without the Executive having revoked such General Release, and any such amounts shall be paid or

 

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commence being paid to the Executive on the Company’s first ordinary payroll date occurring on or after the expiration of such revocation period without the occurrence of a revocation by the Executive (or such later date as may be required under Section 19 or the final sentence of this Section 9).  Nevertheless (and regardless of whether the General Release has been executed by the Executive), upon any termination of Executive’s employment, Executive shall be entitled to receive any Accrued Amounts, payable after the date of termination in accordance with the Company’s applicable plan, program, policy or payroll procedures.  Notwithstanding anything to the contrary in this Agreement, if any severance pay or benefits are deferred compensation under Section 409A (as defined below), and the period during which the Executive may sign the General Release begins in one calendar year and ends in another, then the severance pay or benefit shall not be paid or the first payment shall not occur until the later calendar year.

 

10.                               LEGAL FEES.  The Company will pay for the reasonable, documented legal fees of counsel incurred during 2013 by the Executive in connection with the negotiation and preparation of this Agreement, up to a maximum payment obligation of $2,000.

 

11.                               SECTION 4999 EXCISE TAX.

 

(a)                                 Notwithstanding anything in this Agreement or any other agreement between the Executive and the Company (or any of its subsidiaries or affiliates) to the contrary, in the event that the provisions of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) relating to “parachute payments” (as defined in the Code) shall be applicable to any payment or benefit received or to be received by the Executive from the Company or its affiliates in connection with a change in the ownership or effective control of the Company within the meaning of Section 280G of the Code (a “Change of Control Transaction”) (collectively, “Payments”), then (a) at the Executive’s request, the Company agrees to submit such Payments to a shareholder vote intended to comply with the provisions of Section 280G(b)(5) of the Code, or (b) in the event that the Executive does not request a shareholder vote as set forth above or the provisions of Section 280G(b)(5) are inapplicable to the Company, then any such Payments shall be equal to the “Reduced Amount” where the Reduced Amount is (1) the largest portion of the Payments that will result in no portion of such Payments being subject to the excise tax imposed by Section 4999 of the Code, or (2) the entire amount of the Payments otherwise scheduled to be paid (without reduction), whichever of the forgoing amounts after taking into account all applicable federal, state and local employment taxes, income taxes and the excise tax of Section 4999 of the Code (all computed at the highest applicable merged rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of all state and local taxes), results in the Executive’s receipt, on an after-tax basis, of the greatest amount of Payments.  If subsection (1) above applies and a reduced amount of the Payments is payable, then any reduction of Payments required by such provision shall occur in the following order:  (i) first, a reduction of any Payments that are subject to Section 409A on a pro-rata basis or such other manner that complies with Section 409A, as reasonably determined by the Company, and (ii) second, a reduction of any Payments that are exempt from Section 409A in a manner the Company reasonably determines will provide the Executive with the greatest post-reduction economic benefit.

 

(b)                                 In connection with a Change of Control Transaction, the Company shall engage a certified public accounting firm (“Accountants”) to perform the calculations to

 

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determine if the Payments to the Executive would reasonably be subject to Section 280G of the Code, and the Company shall use commercially reasonable efforts to (1) cause the Accountants to finalize such calculations and (2) deliver such calculations and supporting documentation to the Executive, by no later than five (5) days before the closing of the Change of Control Transaction.  If the Executive, in good faith, disagrees with or disputes any of the assumptions, findings or determinations of the Accountants in respect of such calculations, the Company shall use reasonable efforts to cause its Accountants to consider in good faith the Executive’s position and revise such calculations if the Accountants determine that it is more-likely-than-not, based on the technical merits, that the Executive’s position will be sustained upon examination by the Internal Revenue Service.

 

12.                               CONFIDENTIALITY AND POST-EMPLOYMENT OBLIGATIONS.  As a condition of employment, the Executive agrees to execute and abide by the Company’s current form of Confidentiality and Non-Competition Agreement (“Confidentiality Agreement”), which may be amended by the parties from time to time without regard to this Agreement.  The Confidentiality Agreement contains provisions that are intended by the parties to survive and do survive termination of this Agreement.

 

13.                               ASSIGNMENT.

 

(a)                                 The Executive may not assign or delegate any rights or obligations hereunder without first obtaining the written consent of the Company.

 

(b)                                 This Agreement shall be binding upon and inure to the benefit of the Company and its successors, assigns and legal representatives.  The Company will require any acquiror or successor of the Company in any merger, consolidation, sale, or acquisition of the Company, or a similar transaction to assume the Company’s obligations under this Agreement, and any failure to do so shall constitute a material breach of this Agreement.

 

14.                               NOTICE.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the address (or to the facsimile number) shown on the records of the Company.

 

If to the Company:

 

Radius Health, Inc.

201 Broadway, 6th Floor

Cambridge, MA  02139

Attention: Chairman of the Board

(617) 551-4701 (fax)

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

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15.                               SECTION HEADINGS; INCONSISTENCY.  The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.  If there is any inconsistency between this Agreement and any other agreement (including but not limited to any option, stock, long-term incentive or other equity award agreement), plan, program, policy or practice (collectively, “Other Provision”) of the Company the terms of this Agreement shall control over such Other Provision.

 

16.                               SEVERABILITY.  The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

 

17.                               COUNTERPARTS.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instruments.  One or more counterparts of this Agreement may be delivered by facsimile, with the intention that delivery by such means shall have the same effect as delivery of an original counterpart thereof.

 

18.                               MISCELLANEOUS.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer or director of the Company as may be designated or authorized by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement together with all exhibits hereto and the Confidentiality Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts without regard to its conflicts of law principles.

 

19.                               SECTION 409A.

 

(a)                                 Notwithstanding anything to the contrary herein, the following provisions apply to the extent severance benefits provided herein are subject to Section 409A of Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”).  Severance benefits payable upon a termination of employment shall not commence until Executive has a “separation from service” for purposes of Section 409A.   Each installment of severance benefits is a separate “payment” for purposes of Treas. Reg. Section 1.409A-2(b)(2)(i), and the severance benefits are intended to satisfy the exemptions from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9).  However, if such exemptions are not available and Executive is, upon separation from service, a “specified employee” for purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the severance benefits shall be delayed until the earlier of (i) six (6) months and one day after Executive’s separation from service, or (ii) Executive’s death.  The parties acknowledge that the exemptions from application of Section 409A to severance benefits

 

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are fact specific, and any later amendment of this Agreement to alter the timing, amount or conditions that will trigger payment of severance benefits may preclude the ability of severance benefits provided under this Agreement to qualify for an exemption.

 

(b)                                 It is intended that this Agreement shall comply with the requirements of Section 409A, and any ambiguity contained herein shall be interpreted in such manner so as to avoid adverse personal tax consequences under Section 409A. Notwithstanding the foregoing, the Company shall in no event be obligated to indemnify the Executive for any taxes or interest that may be assessed by the IRS pursuant to Section 409A of the Code to payments made pursuant to this Agreement.

 

20.                               MITIGATION OF DAMAGES.  In no event shall the Executive be obliged to seek other employment or take any other action by way of mitigation of the severance benefits payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any severance benefit hereunder be reduced by any compensation earned by the Executive as a result of employment by another employer, except as set forth in this Agreement.

 

21.                               REPRESENTATIONS.  The Executive represents and warrants to the Company that the Executive has the legal right to enter into this Agreement and to perform all of the obligations on the Executive’s part to be performed hereunder in accordance with its terms and that the Executive is not a party to any agreement or understanding, written or oral, which could prevent the Executive from entering into this Agreement or performing all of the Executive’s obligations hereunder.  The Executive further represents and warrants that he has been advised to consult with an attorney and that he has been represented by the attorney of his choosing during the negotiation of this Agreement, that he has consulted with his attorney before executing this Agreement, that he has carefully read and fully understand all of the provisions of this Agreement and that he is voluntarily entering into this Agreement.

 

22.                               NON-DISPARAGEMENT.  Both during and after the Employment Term, the Executive and the Company (through its officers and directors) agree not to disparage the other party, and the other party’s officers, directors, employees, shareholders, affiliates and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided  that both the Executive and the Company may respond accurately and fully to any question, inquiry or request for information when required by legal process and provided further that nothing in this Section 22 shall preclude any party from making truthful statements that are reasonably necessary or to enforce or defend the party’s rights under this Agreement.

 

23.                               WITHHOLDING.  The Company may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

24.                               SURVIVAL.  The respective obligations of, and benefits afforded to, the Company and the Executive which by their express terms or clear intent survive termination of the Executive’s employment with the Company, including, without limitation, the provisions of Sections 8 through 26, inclusive of this Agreement, will survive termination of the Executive’s employment with the Company, and will remain in full force and effect according to their terms.

 

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25.                               AGREEMENT OF THE PARTIES.  The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent.  Neither the Executive nor the Company shall be entitled to any presumption in connection with any determination made hereunder in connection with any arbitration, judicial or administrative proceeding relating to or arising under this Agreement.

 

26.                               DISPUTE RESOLUTION.  In the event of any controversy, dispute or claim between the parties under, arising out of or related to this Agreement (including but not limited to, claims relating to breach, termination of this Agreement, or the performance of a party under this Agreement) whether based on contract, tort, statute or other legal theory (collectively referred to hereinafter as “Disputes”), the parties shall follow the dispute resolution procedures set forth below.  Any Dispute shall be finally settled by arbitration in accordance with the Employment Arbitration Rules & Procedures of JAMS (“JAMS”) then in force, and that the arbitration hearings shall be held in Boston, Massachusetts.  The parties agree to (i) appoint an arbitrator who is knowledgeable in employment and human resource matters and, to the extent possible, the industry in which the Company operates, and instruct the arbitrator to follow substantive rules of law; (ii) require the testimony to be transcribed; and (iii) require the award to be accompanied by findings of fact and a statement of reasons for the decision.  The arbitrator shall have the authority to permit discovery, to the extent deemed appropriate by the arbitrator, upon request of a party, but such discovery process shall continue for no more than thirty (30) days.  The arbitrator shall have no power or authority to add to or detract from the written agreement of the parties.  If the parties cannot agree upon an arbitrator within ten (10) days after demand by either of them, either or both parties may request JAMS name a panel of five (5) arbitrators.  The Company shall strike the names of two (2) off this list, the Executive shall also strike two (2) names, and the remaining name shall be the arbitrator.  The Company and the Executive shall each pay for their own attorneys’ fees and expenses and their pro rata share of the JAMS fees and expenses.  Any award shall be final, binding and conclusive upon the parties and a judgment rendered thereon may be entered in any court having jurisdiction thereof.  This Section shall not limit the right of any party to sue for injunctive relief for a breach of the obligations of this Agreement, including but not limited to the obligations in Section 12, or the Confidentiality Agreement.

 

27.                               CLAW-BACK.  All compensation received by the Executive from the Company will be subject to the provisions of any claw-back policy implemented by the Company to comply with applicable law or regulation (including stock exchange rules), including, without limitation, any claw-back policy adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder; provided  that any claw-back policy will be applied to the Executive in a manner consistent with all other executive officers of the Company subject to the policy and no more extensively than is necessary to comply with applicable law or the policy.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

 

	
 
    	
 
    	
RADIUS   HEALTH, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Kurt C. Graves
    
	
 
    	
 
    	
 
    	
Kurt   C. Graves
    
	
 
    	
 
    	
 
    	
Its:  Chairman of the Board
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
MICHAEL   A. METZGER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/   Michael A. Metzger
    

 

[Signature page to Employment Agreement]

 

 

APPENDIX A

 

FORM OF RELEASE

 

AGREEMENT AND GENERAL RELEASE

 

Radius Health, Inc. (the “Company”) and Michael A. Metzger (“Executive”) agree:

 

1.                                      Last Day of Employment.  Executive’s last day of employment with Employer was [INSERT DATE] (the “Termination Date”).  In addition, effective as of the Termination Date, Executive ceased to serve as the Executive Vice President, Chief Business Officer of the Company and its affiliates and ceased to be eligible for any benefits or compensation from the Company and its affiliates other than as specifically provided in Section 8 of the Executive Employment Agreement between the Company and Executive dated as of November 12, 2013 (the “Employment Agreement”).  Executive further acknowledges and agrees that from and after the date Executive executes this Agreement and General Release Executive will not represent (and since the Termination Date the Executive has not represented) the Executive as being a director, employee, officer, trustee, agent or representative of the Company or its affiliates for any purpose.  In addition, effective as of Termination Date, Executive resigns from all offices, directorships, trusteeships, committee memberships and fiduciary capacities held with, or on behalf of, the Company and its affiliates or any benefit plans of the Company and its affiliates.  These resignations will become irrevocable as set forth in Section 3 below.

 

2.                                      Consideration.  The parties acknowledge that this Agreement and General Release is being executed in accordance with Section 9 of the Employment Agreement.

 

3.                                      Revocation.  Executive may revoke this Agreement and General Release for a period of seven (7) calendar days following the day Executive executes this Agreement and General Release.  Any revocation within this period must be submitted in writing to the Company and state, “I hereby revoke my acceptance of our Agreement and General Release.” The revocation must be personally delivered to Chairman of the Board, Radius Health, Inc., 201 Broadway, 6th Floor, Cambridge, MA  02139, or his designee.  This Agreement and General Release shall become effective and irrevocable on the eighth (8th) day after Executive executes it, unless earlier revoked by Executive in accordance with this Section 3 (the “Effective Date”).

 

4.                                      General Release of Claims.  (A) Executive and the Executive’s heirs, executors, administrators, successors and assigns (collectively referred to throughout this Agreement as “Employee”) knowingly and voluntarily release and forever discharge the Company and its affiliates, subsidiaries, divisions, benefit plans, successors and assigns in such capacity, and the current, future and former employees, officers, directors, trustees and agents thereof (collectively referred to as “Employer”) from any and all actions, causes of action, contributions, indemnities, duties, debts, sums of money, suits, controversies, restitutions, understandings, agreements, promises, claims regarding stock, stock options or other forms of equity compensation, commitments, damages, fees and liabilities, responsibilities and any and all claims, demands, executions and liabilities of whatsoever kind, nature or description, oral or written, known or unknown, matured or unmatured, suspected or unsuspected at the present time, in law or in equity, whether known and unknown, against Employer, which the Employee has, has ever had

 

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or may have as of the date of Executive’s execution of this Agreement and General Release, including, but not limited to, any alleged violation of:

 

·                              Title VII of the Civil Rights Act of 1964, as amended;

 

·                              The Civil Rights Act of 1991;

 

·                              Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

 

·                              The Employee Retirement Income Security Act of 1974, as amended;

 

·                              The Immigration Reform and Control Act, as amended;

 

·                              The Americans with Disabilities Act of 1990, as amended;

 

·                              The Age Discrimination in Employment Act of 1967, as amended;

 

·                              The Older Workers Benefit Protection Act of 1990;

 

·                              The Worker Adjustment and Retraining Notification Act, as amended;

 

·                              The Occupational Safety and Health Act, as amended;

 

·                              The Family and Medical Leave Act of 1993;

 

·                              Any wage payment and collection, equal pay and other similar laws, acts and statutes of the Commonwealth of Massachusetts;

 

·                              Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;

 

·                              Any public policy, contract, tort, or common law; or

 

·                              Any allegation for costs, fees, or other expenses including attorneys’ fees incurred in these matters.

 

Notwithstanding anything herein to the contrary, the sole matters to which the Agreement and General Release do not apply are: (i) Employee’s express rights or claims for accrued vested benefits under any employee benefit plan, policy or arrangement maintained by Employer or under COBRA; (ii) Employee’s rights under the provisions of the Employment Agreement which are intended to survive termination of employment; (iii) Employee’s rights as a stockholder; or (iv) any rights of the Executive to indemnification as a Director or Officer of the Company.

 

5.                                      No Claims Permitted.  Employee waives Executive’s right to file any charge or complaint against Employer arising out of Executive’s employment with or separation from Employer before any federal, state or local court or any state or local administrative agency, except where such waivers are prohibited by law (with the understanding that that this

 

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Agreement and General Release bars the Executive from recovering monetary relief from Employer in connection with any charges or complaints which are not waived hereunder).

 

6.                                      Affirmations.  Employee affirms Executive has not filed, has not caused to be filed, and is not presently a party to, any claim, complaint, or action against Employer in any forum.  Employee further affirms that the Executive has been paid and/or has received all compensation, wages, bonuses, commissions, and/or benefits to which Executive may be entitled and no other compensation, wages, bonuses, commissions and/or benefits are due to Executive, except as provided in Section 8 of the Employment Agreement.  Employee also affirms Executive has no known workplace injuries.

 

7.                                      Cooperation; Return of Property.  Employee agrees to reasonably cooperate with Employer and its counsel in connection with any investigation, administrative proceeding or litigation relating to any matter that occurred during Executive’s employment in which Executive was involved or of which Executive has knowledge.  Employer will reimburse the Employee for any reasonable out-of-pocket travel, delivery or similar expenses incurred in providing such service to Employer.  Employee represents that Executive has returned to Employer all property belonging to Employer, including but not limited to any leased vehicle, laptop, cell phone, keys, access cards, phone cards and credit cards, provided that Executive may retain, and Employer shall cooperate in transferring, Executive’s cell phone number and Executive’s personal rolodex and other address books.

 

8.                                      Governing Law and Interpretation.  This Agreement and General Release shall be governed and conformed in accordance with the laws of the Commonwealth of Massachusetts without regard to its conflict of laws provisions.  In the event Employee or Employer breaches any provision of this Agreement and General Release, Employee and Employer affirm either may institute an action to specifically enforce any term or terms of this Agreement and General Release.  Should any provision of this Agreement and General Release be declared illegal or unenforceable by any court of competent jurisdiction and should the provision be incapable of being modified to be enforceable, such provision shall immediately become null and void, leaving the remainder of this Agreement and General Release in full force and effect.  Nothing herein, however, shall operate to void or nullify any general release language contained in the Agreement and General Release.

 

9.                                      No Admission of Wrongdoing.  Employee agrees neither this Agreement and General Release nor the furnishing of the consideration for this Agreement and General Release shall be deemed or construed at any time for any purpose as an admission by Employer of any liability or unlawful conduct of any kind.

 

10.                               Non-Disparagement. Employee and Employer (through its officers and directors) agree not to disparage the other party, and the other party’s officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation or personal reputation; provided  that both Employee and Employer may respond accurately and fully to any question, inquiry or request for information when required by legal process and provided  further that nothing in this Section 10 shall preclude Employer or Employee from making truthful statements that are reasonably necessary or to enforce or defend the party’s rights under this Agreement and General Release.

 

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11.                               Amendment.  This Agreement and General Release may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement and General Release.

 

12.                               Entire Agreement.  This Agreement and General Release and the Confidentiality Agreement (as defined in the Employment Agreement) sets forth the entire agreement between the parties hereto and fully supersedes any prior agreements or understandings between the parties; provided, however, that notwithstanding anything in this Agreement and General Release, the provisions in the Employment Agreement which are intended to survive termination of the Employment Agreement, including but not limited to those contained in Section 12 thereof, shall survive and continue in full force and effect.  Employee acknowledges Executive has not relied on any representations, promises, or agreements of any kind made to Executive in connection with Executive’s decision to accept this Agreement and General Release.

 

13.                               ADEA. Employee understands and acknowledges that Employee is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary.  Employee understands and agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date Executive signs this Agreement and General Release.  Employee understands and acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled.  Employee further understands and acknowledges that Employee has been advised by this writing that nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law.

 

[signature page follows]

 

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EMPLOYEE HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

 

EMPLOYEE AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD. IN THE EVENT EMPLOYEE SIGNS THIS AGREEMENT AND GENERAL RELEASE AND RETURNS IT TO THE COMPANY IN LESS THAN THE TWENTY-ONE (21) DAY PERIOD IDENTIFIED ABOVE, EMPLOYEE HEREBY ACKNOWLEDGES THAT EMPLOYEE HAS FREELY AND VOLUNTARILY CHOSEN TO WAIVE THE TIME PERIOD ALLOTTED FOR CONSIDERING THIS AGREEMENT AND GENERAL RELEASE.

 

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN THE EMPLOYMENT AGREEMENT, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EXECUTIVE HAS OR MIGHT HAVE AGAINST EMPLOYER.

 

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and General Release as of the date set forth below:

 

	
 
    	
RADIUS   HEALTH, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MICHAEL   A. METZGER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date:Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of November 14, 2013 (the “Effective Date”) and is by and between International Game Technology, a Nevada corporation (the “Corporation”), and Patti S. Hart (the “Executive”).

 

WHEREAS, the Executive is currently a party to an Employment Agreement, dated March 20, 2009, with the Corporation (the “Prior Agreement”), and the Executive and the Corporation desire to amend and restate the Prior Agreement in its entirety as set forth herein effective as of the Effective Date;

 

NOW, THEREFORE, in consideration of the premises and the respective undertakings of the Corporation and the Executive set forth below, the Corporation and the Executive agree as follows:

 

1.             Employment. The Corporation shall continue to employ the Executive in the position of Chief Executive Officer, and the Executive accepts such continued employment and agrees to perform services for the Corporation, for the Term (as such term is defined below) and upon the other terms and conditions set forth in this Agreement.  As Chief Executive Officer, the Executive shall be responsible for:

 

·                  the day-to-day operations of the Corporation;

·                  the monitoring and development of the strategic course of direction for the Corporation;

·                  maintaining a strong team of managers for the Corporation reporting to the Chief Executive Officer and ensuring that each has a competent replacement;

·                  each year, developing an annual operating plan for the Corporation to be submitted to the Corporation’s Board of Directors (the “Board”) against which (as modified and/or approved by the Board or the Compensation Committee of the Board (the “Compensation Committee”)) the Executive and the Executive’s management team will be measured and, if appropriate, granted incentive compensation awards; and

·                  such other duties, consistent with the Executive’s position, as the Board may delegate to the Executive from time to time.

 

The Executive shall report to the Board.  Additionally, during the Term the Executive shall serve as a director of the Corporation, but, in her capacity as a director, shall be subject to appointment, election and removal in accordance with the Corporation’s Bylaws, Articles of Incorporation and any other policies or procedures of the Corporation in effect from time-to-time, and shall also be subject to Section 7.4 of this Agreement.  The Executive will not be entitled to any additional compensation for serving as a director.

 

During the Term, the Executive will devote her full business time and efforts to the performance of the Executive’s duties and responsibilities under this Agreement and to the business and affairs of the Corporation, its subsidiaries and affiliates.  The Executive may engage in personal, charitable, professional and investment activities to the extent such activities do not conflict or interfere with the Executive’s duties and obligations under this Agreement or the Executive’s ability to perform her duties and responsibilities under this Agreement.  During the Term, the Executive shall not serve on the board of directors (or similar governing body) of any other business entity without the prior approval of the Board.  During the Term, the Executive shall, promptly following receipt of a written request from the Board, resign from any board of directors (or other body) on which she may then serve (even if such service has been approved by the Board) if the Board determines in its sole discretion that the Executive’s activities on such board (or other body) conflict or interfere with the performance of the Executive’s duties for the Corporation.  The Executive shall also be subject to and shall comply with the Corporation’s code of conduct, insider trading policy, executive compensation recoupment policy, and other governance guidelines as the Corporation may implement from time-to-time.

 

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2.             Term.  The “Term” shall commence on the Effective Date and end on the date the Executive’s employment by the Corporation terminates as provided in Section 7 hereof.

 

3.             Compensation.  As compensation for the services to be rendered by the Executive under this Agreement:

 

3.1          Base Salary.  During the Term, the Corporation shall pay to the Executive a base salary at an annualized rate of One Million Dollars ($1,000,000) (the “Base Salary”), which Base Salary shall be paid in accordance with the Corporation’s normal payroll procedures and policies.  The Base Salary amount shall be subject to annual review at the end of each fiscal year of the Corporation during the Term by the Compensation Committee.

 

3.2          Bonus Opportunity.  For each fiscal year of the Corporation that ends during the Term (and for any fiscal year of the Corporation in which the Term ends, to the extent provided for in Section 7.2(a)(ii) or Section 7.2(a)(iii)), the Executive shall have the opportunity to earn a bonus with a target amount of One Hundred and Fifty Percent (150%) of the Executive’s Base Salary paid to the Executive for such fiscal year, up to a maximum of Three Hundred Percent (300%) of the Executive’s Base Salary paid to the Executive for such fiscal year (the “Annual Bonus”).  A portion of each such bonus opportunity will be based on the Corporation’s annual financial performance, and the remaining portion of each such bonus opportunity will be based on the Executive’s achievement of non-financial performance objectives, each as determined by the Compensation Committee in its sole discretion prior to or promptly following the commencement of the fiscal year.  Promptly following the conclusion of the applicable fiscal year, the Compensation Committee will reasonably determine whether and to what extent the Executive has met the objectives previously established. The Annual Bonus will be determined and payable by the Corporation no later than the 15th day of the third month following the end of the fiscal year for which the bonus is earned.

 

3.3          Review of Equity Incentives.  The type, amount and terms and conditions of equity incentives provided to Executive in connection with her services to the Corporation shall be subject to annual review at the end of each fiscal year during the Term by the Compensation Committee, and any grants, including the terms and conditions of accelerated vesting of such grants, shall be made by the Compensation Committee in its sole discretion.

 

3.4          Participation in Benefit Plans.  During the Term, the Executive shall also be entitled to participate in all employee benefit plans or programs of the Corporation available to senior executives of the Corporation in accordance with the terms of the applicable plans or programs.  The Corporation does not guarantee the adoption or continuance of any particular employee benefit plan or program during the Term, and the Executive’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto and as amended from time-to-time.

 

3.5          Withholding Taxes.  The Corporation may withhold from any compensation or other 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 provided below, the Executive shall not, during the Term or at any time thereafter, divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course of the business of the Corporation or any of its respective affiliates) any confidential or secret knowledge or information of the Corporation which the Executive has acquired or becomes acquainted with or will acquire or become acquainted with prior to the termination of the period of her employment by the Corporation (including employment by the Corporation or any affiliated or predecessor companies prior to the date of this Agreement), whether developed by herself or by others,

 

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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 Corporation, any customer or supplier lists of the Corporation, any confidential or secret development or research work of the Corporation, or any other confidential information or secret aspects of the business of the Corporation.  The Executive acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of the Corporation and represents a substantial investment of time and expense by the Corporation, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Corporation and its affiliates would be wrongful and would cause irreparable harm to the Corporation.  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 the Executive.  The foregoing obligations of confidentiality shall not, however, limit the Executive’s disclosure of information (1) to the extent necessary to comply with government disclosure requirements or other applicable laws and regulations, (2) pursuant to subpoena or order of any judicial, legislative, executive, regulatory or administrative body, or for the Executive to enforce the Executive’s rights under this Agreement, and (3) to employees, advisors, counsel, financial advisors and other third parties as may be necessary and appropriate in connection with the proper performance and enforcement of this Agreement.

 

5.             Ventures; Invention Assignment Agreement.  If, during the Term, the Executive is engaged in or associated with the planning or implementing of any project, program or venture involving the Corporation and a third party or parties, all rights with respect to such project, program or venture shall belong to the Corporation.  Except as approved by the Board, the 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 the Executive as provided in this Agreement.  The Executive has previously executed and delivered to the Corporation an Invention and Secrecy Agreement (the “Invention Agreement”), which the Executive hereby affirms and which shall continue in effect.

 

6.             Noncompetition Covenant; Non-Solicitation.

 

6.1          Noncompetition.  The parties hereto acknowledge and agree that the consideration paid hereunder shall be considered additional consideration for the noncompetition provisions included in any equity award agreement evidencing an equity award granted by the Corporation to the Executive, and the Executive agrees that such provisions are fair and reasonable.

 

6.2          Non-Solicitation.  The Executive agrees that during the Term and for a period of twelve (12) months (twenty-four (24) months in the event the Executive’s employment terminates during a Protected Period (as such term is defined below) and in circumstances that entitle the Executive to the benefits set forth in Section 7.2(a)(iii)) thereafter, she will not, without the prior written approval of the Board, solicit or otherwise induce (a) any employee of the Corporation or one of its subsidiaries who earned annually $75,000 or more as an employee of the Corporation or one of its subsidiaries during the last twelve months of the Executive’s own employment by the Corporation, or (b) any person or entity who was, within the then most recent prior 12-month period, a customer, supplier or contractor of the Corporation or any of its affiliates, to cease or curtail his, her or its relationship with the Corporation.

 

7.             Termination.

 

7.1          Termination of Employment.  The Executive’s employment by the Corporation, and the Term, may be terminated at any time by the Corporation either: (1) with Cause (as such term is defined below), (2) without Cause, (3) in the event of the Executive’s death, or (4) in the event of the Executive’s Disability (as such term is defined below).  In the case of Disability, if Executive has a Disability, as

 

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defined below, the termination of Executive’s employment shall be effective ten (10) days after Executive has received written notice from the Corporation of the Corporation’s view that Disability has existed. The Executive’s employment by the Corporation, and the Term, may be terminated at any time by the Executive on no less than sixty (60) days prior written notice to the Corporation.  The Corporation may place the Executive on a paid leave of absence during any such notice period.

 

7.2               Benefits Upon Termination.

 

(a)               If the Executive’s employment by the Corporation is terminated for any reason by the Corporation or by the Executive, the Corporation shall have no further obligation to make or provide to the Executive, and the Executive shall have no further right to receive or obtain from the Corporation, any payments or benefits except:

 

(i)            The Corporation shall pay the Executive (or, in the event of her death, the Executive’s estate) any Accrued Obligations (as such term is defined below).

 

(ii)           If, during the Term, the Executive’s employment is terminated either due to the Executive’s death or by the Corporation due to the Executive’s Disability, then the Corporation shall, subject to the conditions set forth in Section 7.2(b), also pay the Executive (or, in the event of the Executive’s death, the Executive’s estate) a severance benefit equal to: (x) one times the Executive’s highest annualized rate of Base Salary in effect during the Term; and (y) a Pro-Rata Bonus (as such term is defined below).   Subject to the conditions set forth in Section 7.2(b), the aggregate amount of the severance benefit set forth in clause (x) above shall be paid in a single lump sum payment in the month that includes the 60th day following the Executive’s Separation From Service (as defined below).  In addition, subject to the conditions set forth in Section 7.2(b), any unvested equity awards granted by the Corporation to the Executive that were originally subject to only time-based vesting requirements (with no performance-based vesting condition, a “time-based award”) shall, to the extent such awards are outstanding immediately prior to such termination of employment and were scheduled to vest in the calendar year that includes the Executive’s last day of employment by the Corporation (the “Calendar Year of Termination”) or in the two calendar years immediately following the Calendar Year of Termination, be deemed to be vested upon such last day of the Executive’s employment by the Corporation (subject to any greater vesting that may be provided for in the circumstances pursuant to the applicable award agreement).  Any equity awards granted by the Corporation to the Executive that included a performance-based vesting element shall be treated as follows (to the extent such awards are outstanding immediately prior to such termination of employment subject to any greater vesting that may be provided for in the circumstances pursuant to the applicable award agreement): (x) subject to the next clause, the payout of the award shall be determined as though the Executive’s employment had not terminated and the performance conditions applicable to the award were satisfied at the “target” level of performance (and any performance-based modifier that could result in actual payment being or more less than the “target” level shall not apply); and (y) the payout shall be pro-rated based on the number of days in the applicable performance period that occurred while the Executive was employed by the Corporation (for purposes of this pro-ration, the Executive’s last day of employment by the Corporation shall be deemed to be the last day of the second calendar year immediately following the Calendar Year of Termination) to the total number of calendar days in the applicable performance period (except that in no event shall the total number of days in the applicable performance period that occurred while the Executive was employed by the Corporation be deemed to be more than the total number of calendar days in that performance period).  Any equity award granted by the Corporation to the Executive that included a performance-based vesting element, but as to which the applicable performance condition has been satisfied or otherwise no longer applies (for example, because, pursuant to the

 

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terms of the award, the performance condition ceased to apply upon a change in control), shall, to the extent the award is outstanding immediately prior to such termination of employment, be treated as a time-based award.  Payment of a vested award shall be made at the time specified in the applicable award so as to avoid any tax, penalty or interest under Section 409A (as such term is defined below).  Subject to the conditions set forth in Section 7.2(b), any stock options granted by the Corporation to the Executive that are vested and exercisable on the last day of the Executive’s employment by the Corporation (including any that become vested by operation of the foregoing provisions of this paragraph), shall remain exercisable following such termination of employment for the greater of one year or the period of time otherwise provided for in the applicable award agreement (in each case, not longer than the original maximum term of such option and subject to earlier termination in connection with a change in control or similar event pursuant to the provisions of the Corporation’s equity incentive plan under which the award was granted).  In the event the termination of the Executive’s employment is by the Corporation due to the Executive’s Disability (and not the result of the Executive’s death), and subject to the conditions set forth in Section 7.2(b), the Executive shall also be entitled to the COBRA (as such term is defined below) benefit provided for in Section 7.2(a)(iv).

 

(iii)          If, during the Term, the Executive’s employment is terminated either (1) by the Corporation other than for Cause (as such term is defined below) or (2) by the Executive for Good Reason (as such term is defined below), and in either case Section 7.2(a)(ii) does not apply, then the Corporation shall, subject to the conditions set forth in Section 7.2(b), also pay the Executive a severance benefit equal to: (x) one times (two times if such termination of employment occurs during the Protected Period) the sum of the Executive’s highest annualized rate of Base Salary in effect during the Term plus the Executive’s target bonus with respect to the most recently paid Annual Bonus (disregarding any reductions that gave rise to a Good Reason condition); and (y) a Pro-Rata Bonus.   Subject to the conditions set forth in Section 7.2(b), the aggregate amount of the severance benefit set forth in clause (x) above shall be paid in a single lump sum payment in the month that includes the 60th day following the Executive’s Separation From Service (as defined below).  In addition, subject to the conditions set forth in Section 7.2(b), any unvested equity awards granted by the Corporation to the Executive that were originally subject to only time-based vesting requirements (with no performance-based vesting condition) shall (to the extent such awards are outstanding immediately prior to such termination of employment) be treated as follows: (x) if such termination of employment does not occur during the Protected Period, to the extent such awards were scheduled to vest following the Executive’s last day of employment by the Corporation and on or before the last day of the calendar year immediately following the Calendar Year of Termination, such portion of the awards shall be deemed to be vested upon such last day of the Executive’s employment by the Corporation (subject to any greater vesting that may be provided for in the circumstances pursuant to the applicable award agreement); and (y) if such termination occurs during the Protected Period, the entire unvested portion of the awards shall be deemed to be vested upon such last day of the Executive’s employment by the Corporation.  Any equity awards granted by the Corporation to the Executive that included a performance-based vesting element shall be treated as follows (to the extent such awards are outstanding and subject to one or more performance-based vesting conditions immediately prior to such termination of employment and subject to any greater vesting that may be provided for in the circumstances pursuant to the applicable award agreement): (w) subject to the next three clauses, the payout of the award shall be determined as though the Executive’s employment had not terminated; (x) if such termination of employment occurs before a Change in Control Event, the payout shall remain subject to attainment of the applicable performance conditions in accordance with the terms of the award; (y) if such termination of employment occurs on or after a Change in Control Event, the payout of the award shall be determined as though the performance conditions applicable to the award were satisfied

 

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at the “target” level of performance (and any performance-based modifier that could result in actual payment being or more less than the “target” level shall not apply); and (z) the payout shall be pro-rated based on the number of days in the applicable performance period that occurred while the Executive was employed by the Corporation (for purposes of this pro-ration, the Executive’s last day of employment by the Corporation shall be deemed to be the last day of the calendar year immediately following the Calendar Year of Termination) to the total number of calendar days in the applicable performance period (except that in no event shall the total number of days in the applicable performance period that occurred while the Executive was employed by the Corporation be deemed to be more than the total number of calendar days in that performance period), provided that there shall be no pro-ration if such termination of employment occurs during the Protected Period (i.e., if such termination of employment occurs during the Protected Period, the payout of the entire award shall be determined as though the Executive’s employment had not terminated, with the performance conditions subject to clause (y) above).  Any equity award granted by the Corporation to the Executive that included a performance-based vesting element, but as to which the applicable performance condition has been satisfied or otherwise no longer applies (for example, because, pursuant to the terms of the award, the performance condition ceased to apply upon a change in control) immediately prior to such a termination of employment, shall, to the extent the award is outstanding immediately prior to such termination of employment, be treated as a time-based award.  Payment of a vested award shall be made at the time specified in the applicable award so as to avoid any tax, penalty or interest under Section 409A.  Subject to the conditions set forth in Section 7.2(b), any stock options granted by the Corporation to the Executive that are vested and exercisable on the last day of the Executive’s employment by the Corporation (including any that become vested by operation of the foregoing provisions of this paragraph), shall remain exercisable following such termination of employment for the greater of one year (two years if such termination of employment occurs during the Protected Period) or the period of time otherwise provided for in the applicable award agreement (in each case, not longer than the original maximum term of such option and subject to earlier termination in connection with a change in control or similar event pursuant to the provisions of the Corporation’s equity incentive plan under which the award was granted).  In addition, subject to the conditions set forth in Section 7.2(b), the Executive shall also be entitled to the COBRA benefit provided for in Section 7.2(a)(iv).

 

(iv)          If the Executive is entitled to the benefits provided in Section 7.2(a)(ii) (other than due to a termination of Executive’s employment as a result of her death) or Section 7.2(a)(iii) and, in each case, satisfies the conditions set forth in Section 7.2(b), the Corporation shall also pay or reimburse the Executive for her premiums charged to continue medical coverage pursuant to COBRA, at the same or reasonably equivalent medical coverage for the Executive (and, if applicable, the Executive’s eligible dependents) as in effect immediately prior to the date her employment by the Corporation terminated, to the extent that the Executive elects such continued coverage; provided that the Corporation’s obligation to make any payment or reimbursement pursuant to this paragraph shall, subject to Section 7.6, commence with continuation coverage for the month following the month in which the Executive’s Separation From Service occurs and shall cease with continuation coverage for the twelfth month (or, if the Executive is entitled to the benefits provided in Section 7.2(a)(iii) and the termination of the Executive’s employment with the Corporation occurs during a Protected Period, the twenty-fourth month) following the month in which the Executive’s Separation From Service occurs (or, if earlier, shall cease upon the first to occur of the Executive’s death, the date the Executive becomes eligible for coverage under the health plan of a future employer, or the date the Corporation ceases to offer group medical coverage to its active executive employees or the Corporation is otherwise under no obligation to offer COBRA continuation coverage to the Executive).  To the extent the Executive elects COBRA coverage, she shall notify the

 

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Corporation in writing of such election prior to such coverage taking effect and complete any other continuation coverage enrollment procedures the Corporation may then have in place.

 

(b)           As a condition precedent to any obligation of the Corporation to the Executive pursuant to Section 7.2(a) above (other than payment of Accrued Obligations and other than benefits that result from a termination of Executive’s employment with the Corporation as a result of her death), the Executive shall, upon or within twenty-one (21) days following (within 45 days following, to the extent that a 45-day period is required under applicable law in order to make the release maximally enforceable) her last day of employment with the Corporation, provide the Corporation with a valid, executed, written Release (as such term is defined below) and such Release shall have not been revoked by the Executive pursuant to any revocation rights afforded by applicable law.  The Corporation shall have no obligation to make any payment to the Executive that is conditioned upon this Section 7.2(b) unless and until the Release contemplated by this paragraph becomes irrevocable by the Executive in accordance with all applicable laws, rules and regulations.  In addition, and notwithstanding the foregoing provisions of this Section 7.2, if the Executive breaches her obligations to the Corporation under the Invention Agreement, under Section 4, under Section 6, or under Section 7.4 at any time, then (subject to the Corporation providing written notice to the Executive of such breach and, if a cure is reasonably possible in the circumstances, affording her a reasonable period (not to exceed 30 days) to cure such breach) from and after the date of such breach and not in any way in limitation of any right or remedy otherwise available to the Corporation, the Executive will no longer be entitled to, and the Corporation will no longer be obligated to pay, any remaining unpaid portion of any severance or other benefits provided by this Section 7.2 (other than payment of the Accrued Obligations); provided that, if the Executive provides (and does not revoke) the Release contemplated by the foregoing provisions of this Section 7.2(b), in no event shall the Executive be entitled to severance benefits (in addition to any Accrued Obligations) pursuant to the applicable provisions of this Section 7.2 of less than $5,000 (or the amount of such benefits, if less than $5,000), which amount the parties agree is good and adequate consideration, in and of itself, for the Executive’s Release.

 

(c)           The Corporation and Executive acknowledge and agree that there is no duty of the Executive to mitigate damages under this Agreement.  All amounts paid to the Executive pursuant to Section 7.2 shall be paid without regard to whether the Executive has taken or takes actions to mitigate damages.

 

(d)           The foregoing provisions of this Section 7.2 shall not affect: (1) the Executive’s receipt of benefits otherwise due terminated employees under group insurance coverage consistent with the terms of the applicable Corporation welfare benefit plan; (2) the Executive’s rights under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) to continue participation in medical, dental, hospitalization and life insurance coverage; (3) the Executive’s receipt of benefits otherwise due in accordance with the terms of the Corporation’s Profit Sharing Plan (401(k) plan) (if any); (4) the Executive’s receipt of benefits otherwise due in accordance with the terms of the Corporation’s nonqualified deferred compensation plan, if any; or (5) any rights that the Executive may have under and with respect to a stock option or restricted stock award, to the extent that such award was granted before the date that the Executive’s employment by the Corporation terminates and to the extent expressly provided in the written agreement evidencing such award (after giving effect to any vesting provided for in the circumstances pursuant to this Agreement or the award agreement).  For purposes of clarity, if the terms of an equity award granted by the Corporation to the Executive (as such terms are set forth in the applicable award agreement and/or plan under which the award was granted) provide for more favorable accelerated vesting terms for the Executive in the particular circumstances than those otherwise provided in this Agreement, the Executive will be entitled, as to that award, to the more favorable provisions of the award agreement and/or plan, as the case may be.

 

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7.3 Certain Defined Terms.

 

As used herein, “Accrued Obligations” means any:

 

·                  Base Salary that had accrued but had not been paid prior to the date of termination (which shall be paid upon or promptly following the date of termination); and

·                  bonus (including the Annual Bonus) that had become payable to the Executive with respect to a fiscal year ended prior to the termination of the Executive’s employment but had not actually been paid (which shall be paid at the time provided in Section 3.2); and

·                  reimbursement of reasonable business expenses incurred by the Executive prior to the termination of the Executive’s employment and in accordance with the Corporation’s expense reimbursement policies and which had not previously been paid (which shall be paid in accordance with such policies).

 

As used herein, “Cause” means the Executive’s:

 

·                  willful and material failure to perform her duties hereunder (other than any such failure due to the Executive’s physical or mental illness), or the Executive’s willful and material breach of her obligations hereunder, in each case following the Executive’s receipt of written notice thereof from the Corporation;

·                  engaging in willful and serious misconduct that has caused or is reasonably expected to result in material injury to the Corporation;

·                  being convicted of, or entering a plea of guilty or nolo contendre to, a crime that constitutes a felony;

·                  failure or inability to obtain or retain any Government Approval required to be obtained or retained by her in any jurisdiction in which the Corporation does or proposes to do business, which failure has or would reasonably be expected to have a material detrimental effect on the Executive’s ability to act as the Chief Executive Officer of the Corporation or to perform her obligations hereunder; or

·                  embezzlement, fraud or misappropriation of the Corporation’s property or assets.

 

As used herein, “Change in Control Event” has the same meaning as the term “Change in Control Event” under the Plan.

 

As used herein, “Disability” means a physical or mental impairment which substantially limits a major life activity of the Executive and which renders the Executive unable to perform the essential functions of her position, even with reasonable accommodation which does not impose an undue hardship on the Corporation, for ninety (90) days in any consecutive one-hundred eighty (180) day period. The Board reserves the right, in good faith, to make the determination of whether or not a Disability exists for purposes of this Agreement based upon information supplied by the Executive and/or her medical personnel, as well as information from medical personnel (or others) selected by the Corporation or its insurers.

 

As used herein, “Good Reason” means the occurrence of any of the following: (i) without the Executive’s express written consent, a material reduction of the Executive’s duties, position or responsibilities relative to the Executive’s duties, position or responsibilities in effect immediately prior to such reduction (including duties, position and responsibilities as a member of the Board), or the removal of the Executive from such duties, position and responsibilities (including duties, position and responsibilities as a member of the Board), (ii) Executive ceases to be the chief executive officer of an entity, the common stock of which is publicly traded on a national U.S. securities exchange (other than as a result of the delisting of the Corporation’s common stock for failure to meet applicable listing standards regarding total market

 

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capitalization or price per share); (iii) a reduction by the Corporation of the Executive’s rate of Base Salary or target Annual Bonus opportunity as in effect immediately prior to such reduction; or (iv) any material breach of this Agreement by the Corporation; provided that Good Reason shall not exist unless the Executive shall have first provided written notice to the Corporation of the circumstances that would otherwise constitute Good Reason and the Corporation shall have failed to reasonably cure such circumstances promptly (and in no event more than 30 days after) its receipt of such notice; further provided that any termination for Good Reason must be made not later than 90 days after the circumstances giving rise to such claim of Good Reason are first known to exist (or first reasonably should have been known to exist) by the Executive.

 

As used herein, “Government Approval” shall mean any required filing, recordation, declaration, registration, permit, approval, license, order, statement or finding of suitability of any governmental or quasi-governmental entity, including any federal, state or local court, tribunal, administrative agency, commission, agency, body or self-regulatory organization.

 

As used herein, “Pro-Rata Bonus” shall equal (i) the Annual Bonus the Executive would have received (had her employment not terminated) for the fiscal year of the Corporation in which her employment by the Corporation terminated, as reasonably determined by the Compensation Committee based on actual performance, multiplied by (ii) a fraction, the numerator of which is the number of calendar days in such fiscal year the Executive was actually employed by the Corporation and the denominator of which is the total number of calendar days in such fiscal year.  Subject to the conditions set forth in Section 7.2(b), any Pro-Rata Bonus shall be paid at the same time the Annual Bonus for such fiscal year would have otherwise been paid by the Corporation had the Executive’s employment by the Corporation continued.

 

As used herein, “Protected Period” shall mean the period of time commencing with a Change in Control Event and continuing for eighteen (18) months following the Change in Control Event.

 

As used herein, “Release” shall mean a written release substantially in the form attached hereto as Exhibit A, as the same may be modified solely to ensure the enforceability of such release in accordance with applicable federal, state and/or local law.

 

7.4          Resignation From Board; Cooperation.

 

(a)           Upon or promptly following any termination of Executive’s employment with the Corporation, unless otherwise requested by the Board, the Executive agrees to resign from (1) each and every board of directors (or similar body, as the case may be) of the Corporation and each of its affiliates on which the Executive may then serve (if any), and (2) each and every office of the Corporation and each of its affiliates that the Executive may then hold, and all positions that she may have previously held with the Corporation and any of its affiliates.

 

(b)           Following the Executive’s last day of employment by the Corporation, the Executive shall reasonably cooperate with the Corporation in connection with: (a) any internal or governmental investigation or administrative, regulatory, arbitral or judicial proceeding involving the Corporation or any of its affiliates; and (b) any audit of the financial statements of the Corporation or any of its affiliates that covers any portion of the period of time when the Executive was employed by the Corporation.

 

7.5          Means and Effect of Termination.  Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party.  The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.

 

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7.6          Section 409A Compliance.  Notwithstanding anything in this Section 7 to the contrary, no amount payable as severance which constitutes a “deferral of compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (“Section 409A”) shall be paid unless and until Executive incurs a “separation from service” within the meaning of the Section 409A (a “Separation From Service”) .  Furthermore, to the extent that the Executive is a “specified employee” within the meaning of Section 409A as of the date of her separation from service, no amount that constitutes a deferral of compensation which is payable on account of her separation from service shall be paid to her before the date (the “Delayed Payment Date”) which is first day of the seventh month after the date of her separation from service or, if earlier, the date of her death following such separation from service.  All such amounts that would, but for this Section, become payable prior to the Delayed Payment Date will be accumulated and paid on the Delayed Payment Date. For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. This Agreement shall be construed and interpreted to comply with, and avoid any tax, penalty or interest under, Section 409A.

 

8.             Indemnification and Insurance.  The Corporation will, at all times during the Term, maintain a directors and officers liability insurance policy covering the Executive.  In addition, the Executive shall be entitled to the indemnification provisions of the Corporation’s Bylaws and Articles of Incorporation.  The Executive and the Corporation have previously entered into an Indemnification Agreement (the “Indemnification Agreement”), which the parties hereby affirm and which shall continue in effect.

 

9.             Miscellaneous.

 

9.1          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.

 

9.2          Amendments.  No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by all of the parties hereto.

 

9.3          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.

 

9.4          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.  The 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.

 

9.5          Assignment.  This Agreement shall not be assignable, in whole or in part, by either party without the written consent of the other party.

 

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9.6          Injunctive Relief.  Each party agrees that it would be difficult to compensate the non-breaching party fully for damages for any violation of any provision set forth in Section 4 or Section 6 hereof.  Accordingly, each party specifically agrees that the other party shall be entitled to temporary and permanent injunctive relief to enforce the provisions of Sections 4 and 6 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 non-breaching party to claim and recover damages in addition to injunctive relief.

 

9.7          Arbitration.  Any controversy or claim arising out of or relating to this Agreement or the Executive’s employment by the Corporation shall, except for claims for injunctive relief set out in paragraph 9.6 above, be settled by binding arbitration, with a single neutral arbitrator, in accordance with the rules of the American Arbitration Association relating to employment.  The proper venue for any such action is Washoe County, Nevada.  In any action to enforce this Agreement, the Executive and the Corporation each agree to accept service of process by mail at its address, as applicable, as set forth in Section 9.8 below (or at any different address of which the Executive has notified the Corporation, or the Corporation has notified the Executive, as applicable, in writing).  In any action in which service is made pursuant to this paragraph, the Executive and the Corporation each waive any challenge to the personal jurisdiction of the American Arbitration Association.  Any judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  In reaching her or her decision, the arbitrator shall have no authority to change or modify any provision of this Agreement.

 

9.8          Notices.  All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (1) delivered by hand, (2) otherwise delivered against receipt therefor, or (3) sent by registered or certified mail, postage prepaid, return receipt requested.  Any notice shall be duly addressed to the parties as follows:

 

If to the Corporation:

 

International Game Technology 
 6355 South Buffalo Drive
 Las Vegas, Nevada 89113
 Attn: General Counsel

 

If to the Executive:

 

Patti S. Hart
 6355 South Buffalo Drive 
 Las Vegas, NV  89113

 

Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the foregoing provisions.  Any communication shall be effective when delivered by hand, when otherwise delivered against receipt therefor, or five (5) business days after being mailed in accordance with the foregoing.

 

9.9          Section Headings.  The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.

 

9.10        Provisions that Survive Termination.  The provisions of Sections 3.5, 4, 5, 6, 7 and 9 shall survive any termination or expiration of the Term.

 

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9.11        Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

 

9.12        Entire Agreement.  This Agreement embodies the entire agreement of the parties hereto respecting the matters within its scope.  This Agreement supersedes all prior and contemporaneous agreements of the parties hereto that directly or indirectly bears upon the subject matter hereof, including any letters or correspondence regarding offers of employment, whether executed or not.  Any prior negotiations, correspondence, agreements, proposals or understandings relating to the subject matter hereof shall be deemed to have been merged into this Agreement, and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no force or effect.  There are no representations, warranties, or agreements, whether express or implied, or oral or written, with respect to the subject matter hereof, except as expressly set forth herein.  Without limiting the generality of the foregoing, this Agreement supersedes the Prior Agreement as of the Effective Date.  The Prior Agreement is of no further force or effect.  The Invention Agreement and the Indemnification Agreement are outside of the scope of the foregoing integration clause.

 

9.13        Legal Counsel; Mutual Drafting.  Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice.  Each party has cooperated in the drafting, negotiation and preparation of this Agreement.  Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language.

 

[The signature page follows on the next page.]

 

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IN WITNESS WHEREOF, the Executive and the Corporation have executed this Agreement as of the date set forth in the first paragraph.

 

	
INTERNATIONAL   GAME TECHNOLOGY
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   John Vandemore
    	
 
    	
/s/   Patti S. Hart
    
	
 
    	
 
    	
 
    	
Patti   S. Hart
    
	
Name:
    	
John   Vandemore
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Its:
    	
EVP   Emerging Businesses, Chief Financial Officer and Treasurer
    	
 
    	
 
    

 

13

 

EXHIBIT A

 

Form of Written Release

 

SEVERANCE AGREEMENT AND RELEASE

 

This Severance Agreement and Release (the “Agreement”) is entered into by and between International Game Technology (the “Corporation”) and Patti S. Hart (the “Executive”) and is presented to Executive on this          day of                       , 20      .

 

WHEREAS, Corporation and the Executive are parties to that certain Employment Agreement dated as of November 14, 2013 (as amended from time to time, the “Employment Agreement”); and

 

WHEREAS, Corporation and  Executive desire to resolve any and all potential disputes or claims or causes of action arising out of Executive’s employment with and separation from Corporation.

 

Therefore, in consideration of the mutual promises and covenants contained herein, and effective eight (8) days after Executive’s execution of this Agreement (the “effective date”), the parties voluntarily agree as follows:

 

1.             Executive’s separation from Corporation occurred on                   , 20    .

 

2.             Corporation agrees to pay Executive, at the time provided for in and subject to the terms and conditions of Section 7.2 of the Employment Agreement and subject to applicable withholding, the benefits provided for in Section [7.2(a)(ii) / 7.2(a)(iii)] of the Employment Agreement.

 

3.             In exchange for the consideration described in paragraph 2, Executive knowingly and voluntarily covenants and agrees never to assert, and hereby irrevocably and unconditionally waives and releases the Corporation, its predecessors, successors, parents, subsidiaries, divisions, affiliates, assigns, agents, directors, officers, employees, stockholders, members, representatives, attorneys, insurers, past and present, and all persons acting by, through, under or in concert with any of them (collectively, the “Releasees”), from, any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which she may then own or hold or she at any time held or may in the future hold as against any or all of Releasees, arising out of or in any way connected with the Executive’s employment relationship with the Corporation (except that the Executive does not release her right to payments under Section 7 of the Employment Agreement, her right to exercise options in accordance with the terms of any option agreement between the Corporation and the Executive, or her right to receive equity awards that vest in accordance with the terms of any restricted stock or similar award made by the Corporation to the Executive) and each of its subsidiaries with which the Executive has had such a relationship, or the termination of her employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of the Releasees, or any of them, committed or omitted prior to the date of such release including, without limiting the generality of the foregoing, any claim under Section 1981 of the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, any other claim under any other federal, state or local law or regulation, and any other claim for severance pay, bonus or incentive pay, sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other fringe benefit, medical expenses, or disability.

 

4.             Executive further agrees and warrants that she has not heretofore assigned or transferred to any person or entity, other than the Corporation, any released matter or any part or portion thereof and that she

 

14

 

will defend, indemnify and hold harmless the Corporation and the Releasees from and against any claim (including the payment of attorneys’ fees and costs actually incurred whether or not litigation is commenced) that is directly or indirectly based on or in connection with or arising out of any such assignment or transfer made, purported or claimed.

 

5.             This Agreement shall not in any way be construed as an admission by Corporation or the other Releasees of any acts of wrongdoing, harassment, retaliation, negligence, discrimination or violation of any statute, law or legal right whatsoever against Executive or any person, and Corporation specifically disclaims any such illegal discrimination or violation against Executive or any other person.

 

6.             Executive will not make or publish any disparaging or derogatory statements or otherwise disparage Corporation, any of its affiliates, or any of their respective directors, officers, employees, agents or other representatives (collectively, “Representatives”).  Corporation will not, and will cause its subsidiaries and use commercially reasonable efforts to cause its other Representatives not to, make or publish any disparaging or derogatory statements or otherwise disparage Executive.  The foregoing shall not prohibit any person from (i) making truthful statements when required by law, court order, subpoena or the like, to a governmental agency or body or in connection with any legal proceeding, or otherwise making any statements required by law, and (ii) making or publishing any statements to Corporation, or Representatives of Corporation or its subsidiaries.

 

7.             As a further material inducement to enter into this Agreement, any party who breaches this Agreement must reimburse the non-breaching party for any and all loss, cost, damage or expense, including without limitation, attorneys’ fees arising out of any breach of this Agreement.  In addition, any breach of this Agreement will entitle the non-breaching party to seek injunctive relief and to recover any actual damages incurred as a result of said breach.

 

8.             Executive represents and acknowledges that in executing this Agreement she does not rely and has not relied upon any prior representation made by Corporation or its agents, representatives or attorneys with regard to the subject matter of said Agreement.

 

9.             This Agreement shall be binding upon Executive and upon her heirs, administrators, representatives, executors, dependents, descendants, successors and assigns, and shall inure to the benefit of their heirs, administrators, representatives, executors, successors and assigns.

 

10.          This Agreement is made and entered into within the State of Nevada and shall, in all respects, be interpreted, enforced and governed under the laws of the State of Nevada.  The language of this Agreement shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties.

 

11.          This Agreement shall be subject to and hereby adopts Sections 9.6 (Injunctive Relief) and 9.7 (Arbitration) in the Executive’s Employment Agreement.

 

12.          Should any provision of this Agreement be declared or be determined by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected and any illegal or invalid part, term, or provision, should not be deemed to be part of this Agreement.

 

13.          This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall be deemed one and the same instrument.

 

14.          Unless otherwise stated herein or in Section 9.10 of Executive’s Employment Agreement, this Agreement sets forth the entire agreement between the parties, and fully supersedes any and all prior agreements or understandings between the parties pertaining to the subject matter in this Agreement.

 

15

 

Prior agreements between the parties concerning confidentiality, non-disclosure, non-competition, non-solicitation and invention assignment shall, however, remain in full force and effect.

 

15.          The parties agree that Executive may revoke this Agreement within seven (7) days from execution of this Agreement.

 

16.          By Executive’s signature below, she represents and confirms that she: (a) has read this Agreement carefully and completely, (b) has been given a period of at least twenty-one (21) days to consider and review this Agreement, (c) has been informed of her right to consult with legal counsel and has had ample opportunity to do so, and (d) understands all provisions contained in this Agreement.

 

[The signature page follows on the next page.]

 

16

 

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES THE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

	
INTERNATIONAL   GAME TECHNOLOGY
    	
EXECUTIVE
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
PATTI   S. HART
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    

 

17

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