Document:

Exhibit 10.1

 

EXECUTIVE TRANSITION AGREEMENT

 

THIS EXECUTIVE TRANSITION AGREEMENT (this “Agreement”) is dated as of [                        ], 20[    ] (the “Effective Date”) and is by and between International Game Technology, a Nevada corporation (the “Corporation”), and [                        ] (the “Executive”).

 

[WHEREAS, the Executive is currently a party to an Executive Transition Agreement, dated [                        , 20    ], 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 Executive and the Corporation each acknowledge and agree that the Executive’s employment with the Corporation is on an “at-will” basis and terminable by either party at any time, for any reason (or no reason), and without any payment under this Agreement, subject to Section 5 hereof.  Nothing contained in this Agreement constitutes a continued employment or service commitment by the Corporation or any of its affiliates, confers upon the Executive any right to remain employed by the Corporation or any of its affiliates or interferes in any way with the right of the Corporation or any of its affiliates at any time to terminate such employment.

 

2.                                      Confidential Information.  Except as provided below, the Executive shall not, during the period of time that the Executive is employed by the Corporation (the “Period of Employment”) 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 his or 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 himself or herself or by others, concerning any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the 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.

 

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3.                                      Ventures; Invention Assignment Agreement.  If, during the Period of Employment, 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 Corporation’s Board of Directors (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 otherwise payable to the Executive in accordance with the Corporation’s usual payroll practices.  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.

 

4.                                      Noncompetition Covenant; Non-Solicitation.

 

4.1                               Noncompetition.  The parties hereto acknowledge and agree that the Corporation’s entry into this Agreement with the Executive 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.

 

4.2                               Non-Solicitation.  The Executive agrees that during the Period of Employment 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 5.2(a)(iii)) thereafter, he or 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.

 

5.                                      Termination.

 

5.1                               Termination of Employment.  The Executive’s employment by the Corporation, and the Period of Employment, 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 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 Period of Employment, 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.

 

5.2                               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 his or her death, the Executive’s estate) any Accrued Obligations (as such term is defined below).

 

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(ii)                                  If the Executive’s employment by the Corporation 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 5.2(b), also pay the Executive (or, in the event of the Executive’s death, the Executive’s estate) a severance benefit equal to a Pro-Rata Bonus (as such term is defined below).  In addition, subject to the conditions set forth in Section 5.2(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 during the one-year period following the Executive’s last day of employment by the Corporation (such period continuing through and ending with the first anniversary of such last day of employment), 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 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 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 5.2(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)[; provided, however, that any stock option granted by the Corporation to the Executive that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, shall not be subject to this exercise period provision].  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 5.2(b), the Executive shall also be entitled to the COBRA (as such term is defined below) benefit provided for in Section 5.2(a)(iv).

 

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(iii)                               If, during the Period of Employment, 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 5.2(a)(ii) does not apply, then the Corporation shall, subject to the conditions set forth in Section 5.2(b), also pay the Executive a severance benefit equal to: (x) one times the sum of the Executive’s highest annualized rate of base salary from the Corporation in effect during the Period of Employment plus the Executive’s target bonus amount from the Corporation for the fiscal year in which such termination of employment occurs (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 5.2(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), and not later than two and one-half months following the month in which the Separation From Service occurs.  In addition, subject to the conditions set forth in Section 5.2(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 during the one-year period following the Executive’s last day of employment by the Corporation (such period continuing through and ending with the first anniversary of such last day of employment), 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 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 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

 

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applicable award so as to avoid any tax, penalty or interest under Section 409A.  Subject to the conditions set forth in Section 5.2(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)[; provided, however, that any stock option granted by the Corporation to the Executive that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, shall not be subject to this exercise period provision].  In addition, subject to the conditions set forth in Section 5.2(b), the Executive shall also be entitled to the COBRA benefit provided for in Section 5.2(a)(iv).

 

(iv)                              If the Executive is entitled to the benefits provided in Section 5.2(a)(ii) (other than due to a termination of Executive’s employment as a result of his or her death) or Section 5.2(a)(iii) and, in each case, satisfies the conditions set forth in Section 5.2(b), the Corporation shall also pay or reimburse the Executive for his or 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 his or 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 5.6, 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 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, he or she shall notify the 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 5.2(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 his or 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) his or 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 5.2(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 5.2, if the Executive breaches his or her obligations to the Corporation under the Invention Agreement, under Section 2, under Section 4, or under Section 5.4 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 him or her a reasonable period (not to exceed 30 days) to cure such

 

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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 5.2 (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 5.2(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 5.2 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 5.2 shall be paid without regard to whether the Executive has taken or takes actions to mitigate damages.

 

(d)                                 The foregoing provisions of this Section 5.2 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.

 

5.3                                            Certain Defined Terms.

 

As used herein, “Accrued Obligations” means any:

 

·                  Base salary from the Corporation that had accrued in accordance with the Corporation’s usual payroll practices but had not been paid prior to the date of termination (which shall be paid upon or promptly following the date of termination); and

·                  any annual bonus that had become payable to the Executive by the Corporation with respect to a fiscal year ended prior to the termination of the Executive’s employment but had not actually been paid; 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).

 

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

 

·                  willful and material failure to perform his or her duties for the Corporation and its affiliates (other than any such failure due to the Executive’s physical or mental illness), or the Executive’s willful and material breach of his or her obligations to the Corporation or any of its affiliates, 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 him or her in any jurisdiction in which the Corporation or any of its affiliates 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 perform the duties of his or her employment by the Corporation; or

·                  embezzlement, fraud or misappropriation of the property or assets of the Corporation or any of its affiliates.

 

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 his or 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 his 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 without the Executive’s express written consent: (i) 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; or (ii) a reduction by the Corporation of the Executive’s rate of annual base salary or target annual bonus opportunity as in effect immediately prior to such reduction; 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 from the Corporation the Executive would have received (had his or her employment not terminated) for the fiscal year of the Corporation in which his or her employment by the Corporation terminated, as reasonably determined by the

 

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Compensation Committee of the Board 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 5.2(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.

 

5.4                               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 he or 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.

 

5.5                               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.

 

5.6                               Section 409A Compliance.  Notwithstanding anything in this Section 5 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 his or her separation from service, no amount that constitutes a deferral of compensation which is payable on account of his or her separation from service shall be paid to him or her before the date (the “Delayed Payment Date”) which is the first day of the seventh month after the date of his or her separation from service or, if earlier, the date of his or 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.

 

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6.                                      Miscellaneous.

 

6.1                               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.

 

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

 

6.3                               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.

 

6.4                               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.

 

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

 

6.6                               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 2 or Section 4 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 2 and 4 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.

 

6.7                               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 6.6 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 6.9 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 his or her decision, the arbitrator shall have no authority to change or modify any provision of this Agreement.

 

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6.8                               Withholding Taxes.  The Corporation may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required to be withheld pursuant to any law or governmental regulation or ruling.

 

6.9                               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:

 

[                        ]
 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.

 

6.10                        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.

 

6.11                        Provisions that Survive Termination.  The provisions of Sections 2, 3, 4, 5 and 6 shall survive any termination of the Executive’s employment.

 

6.12                        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.

 

6.13                        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

 

10

 

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, as well as any Indemnification Agreement entered into by and between the Corporation and the Executive, are outside of the scope of the foregoing integration clause.

 

6.14                        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.]

 

11

 

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:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
[                        ]
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Its:
    	
 
    	
 
    	
 
    

 

12

 

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 [                        ] (the “Executive”) and is presented to Executive on this          day of                       , 20      .

 

WHEREAS, Corporation and the Executive are parties to that certain Executive Transition Agreement dated as of [                        , 20    ] (as amended from time to time, the “Transition 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 5.2 of the Transition Agreement and subject to applicable withholding, the benefits provided for in Section [5.2(a)(ii) / 5.2(a)(iii)] of the Transition 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 he or she may then own or hold or he 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 his or her right to payments under Section 5 of the Transition Agreement, his or her right to exercise options in accordance with the terms of any option agreement between the Corporation and the Executive, or his 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 his or 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 he or 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

 

13

 

that he or she 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 he or 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 his or 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 6.6 (Injunctive Relief) and 6.7 (Arbitration) in the Executive’s Transition 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 6.11 of Executive’s Transition 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.  Prior agreements between the parties concerning confidentiality, non-disclosure, non-competition, non-solicitation and invention assignment shall, however, remain in full force and effect.

 

14

 

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, he or she represents and confirms that he or 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 his or 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.]

 

15

 

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

 

	
INTERNATIONAL GAME TECHNOLOGY
    	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
[                        ]
    
	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    

 

16Exhibit 10.1

Execution

 

AMENDED
AND RESTATED

SIXTH
AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS
AMENDED AND RESTATED SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), effective as of January
13, 2014 (the “Amendment Date”), is by and among precision aerospace
components, inc., a Delaware corporation (“Parent”),
and Freundlich supply company, inc., a Delaware corporation, tiger-tight
corp., a Delaware corporation, AERO-MISSILE COMPONENTS, INC. (formerly Apace Acquisition I, Inc.),
a Delaware corporation and CREATIVE ASSEMBLY SYSTEMS, INC., (formerly Apace Acquisition II, Inc.), a Delaware corporation
(each a “Borrower” and together with Parent, each an “Obligor” and collectively “Obligors”),
the lenders from time to time party to this Agreement (together with their respective successors and permitted assigns, each individually
a “Lender” and collectively the “Lenders”) and NEWSTAR BUSINESS CREDIT, LLC, a Delaware
limited liability company, as administrative agent (in such capacity, the “Administrative Agent”), as follows:

 

RECITALS:

 

A.Obligors,
Lenders and Administrative Agent are parties to the certain Loan and Security Agreement dated as of May 25, 2012, as amended by
the First Amendment to Loan and Security Agreement dated as of July 27, 2012, the Second Amendment to Loan and Security Agreement
dated as of September 28, 2012, the Third Amendment to Loan and Security Agreement dated as of March 27, 2013, the Fourth
Amendment to Loan and Security Agreement dated as of April 26, 2013, the Fifth Amendment to Loan and Security Agreement dated
as of August 6, 2013 and the Sixth Amendment to Loan and Security Agreement dated as of January 13, 2014, (as may be further amended,
modified, extended or renewed from time to time, “Loan Agreement”).

 

B.Obligors
are in non-compliance with certain requirements of the Loan Agreement as specified in Schedule A. Each such instance of
non-compliance listed in Schedule A constitutes an Event of Default (each such Event of Default, hereinafter called a “Stated
Event of Default” and collectively, the “Stated Events of Default”).

 

C.Obligors
have requested Administrative Agent and the Lenders to amend the Loan Agreement in certain respects, and Administrative Agent
and the Lenders are willing to do so, subject to the terms provided by this Amendment.

 

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

ARTICLE
1

Definitions

Section
1.1            
Definitions. Terms defined by the Loan Agreement and which are not otherwise defined herein shall have the same
meanings in this Amendment as are prescribed by the Loan Agreement. Terms defined in the Recitals to this Amendment shall have
the same meanings in this Amendment as are prescribed by such Recitals.

    	1

    	 

    

 

ARTICLE
2

Amendment

 

Section
2.1            
Amendment to Section 1.1. Effective as of the Amendment Date, the definitions of “Borrowing Base” and
“Inventory Limitation Factor” in Section 1.1 of the Loan Agreement are hereby amended to read as follows, respectively:

 

“Applicable
Margin” means, on any day, 4.50%.

 

“Borrowing
Base” means, with respect to a Borrower as of any day of determination, an amount equal to the sum of:

 

(a)the
lesser of:

 

(i)the
sum of (A) eighty-five percent (85%) of the Net Amount of Eligible Accounts of such Borrower plus (B) eighty-five percent
(85%) of NOLV of Eligible Inventory of such Borrower, provided, that the amount included in the Borrowing Base of such
Borrower under this clause (a)(i)(B), together with the aggregate amount included in the Borrowing Base of each other Borrower
under this clause (a)(i)(B) is limited to, and shall not exceed, an amount equal to the lesser of (x) $6,500,000 or
(y) an amount equal to the Inventory Limitation Factor on such day times the aggregate amount included in the Borrowing
Base of all Borrowers under clause (a)(i)(A); or

 

(ii)the
Revolving Credit Limit, minus

 

(b)the
aggregate amount of reserves implemented by Administrative Agent pursuant to Section 2.1 with respect to such Borrower,
in each case determined as of such day.

 

“Designated
Index” means, on any day, the LIBOR Rate.

 

“Inventory
Limitation Factor” means, on any day during a period, the percentage specified for such period as follows:

 

	Period	Inventory
    Limitation Factor
	January
    13, 2014 through January 11, 2014	2.450
	January
    12, 2014 through January 18, 2014	2.400
	January
    19, 2014 through January 25, 2014	2.300
	January
    26, 2014 through February 22, 2014	2.200
	February
    23, 2014 and thereafter	2.100

 

“Revolving
Credit Limit” means, on any day, an amount equal to (a) $8,200,000 less the aggregate unpaid principal balance
of the Term Loans on such day.

 

Section
2.2            
Addition of Definitions to Loan Agreement. Effective as of the Amendment Date, the following definition is added
to Section 1.1 of the Loan Agreement, which shall be deemed inserted in it is appropriate alphabetical position therein
and read as follows:

 

    	2

    	 

    

 

 

“Financial
Advisor” means, with respect to an incorporated Person, a senior officer of such Person, selected by, duly appointed
by and reporting solely to such Person’s board of directors, to advise on such Person’s affairs, including without
limitation, business planning, restructuring and other arrangements with creditors (including the power and authority to discuss
such Person’s affairs with existing and potential future creditors of such Person), agreements with suppliers and other
trade creditors, profit and cash flow improvement, staffing and other matters bearing on the business and financial viability
of such Person.

 

Section
2.3            
Effective as of the Amendment Date, Section 4.2 is hereby amended and restated to read as follows:

 

Section
4.2     Reserved.

 

Section
2.4            
Effective as of the Amendment Date, Section 4.3 is hereby amended to add Section 4.3(d), which shall
be deemed inserted following Section 4.3(c) and read as follows:

 

(d)Non-Performance
Fee. In the event Obligors fail to timely perform any of the requirements of Section 9.27, Obligors shall pay to Administrative
Agent, for the benefit of the Lenders, a non-performance fee in the amount of $150,000, which amount shall be deemed fully earned
upon any such non-performance.

Section
2.5            
Addition of Sections 9.25, 9.26 and 9.27. Effective as of the Amendment Date, Sections 9.25, 9.26
and 9.27 are hereby added to the Loan Agreement, each of which shall be deemed added in numerical order following Section
9.24 of the Loan Agreement and read as follows:

 

Section
9.25Financial Advisor. On or before January 17, 2014, Obligors shall demonstrate to Administrative Agent, to its satisfaction,
that a Financial Advior for Obligors, acceptable to Administrative Agent, has been appointed and a Financial Advisor for Obligors
shall be employed and engaged full time in such capacity at all times on and after January 17, 2014.

 

Section
9.26Subordinated Debt. On or before January 17, 2014, Obligors shall cause existing Debt owing by Obligors (or any
of them) to Andrew Prince, in a principal amount not less than $500,000, to constitute Subordinated Debt, pursuant to which payment
of such Debt, and interest in respect thereof, and all enforcement rights and remedies with respect thereto, shall be postponed
until the Obligations have been paid in full and all Commitments have been terminated.

 

Section
9.27Refinancing. On or before March 15, 2014, Obligors shall deliver to Administrative Agent a true and correct copy
of (a) a commitment letter, signed by Obligors (or by the Borrower Representative on behalf of the Obligors) and a financial institution
or other commercial lender acceptable to Administrative Agent in its discretion, setting forth definitive terms for a credit facility
for Obligors, in sufficient amount and providing (among other purposes, if any) for refinancing and paying the Obligations in
full on or before March 29, 2014, or (b) a letter of intent or other agreement, signed by Obligors (or by the Borrower Representative
on behalf of the Obligors) and one or more purchasers acceptable to Administrative Agent in its discretion, setting forth definitive
terms providing for the sale of all or any portion of the assets of each Obligor, for an aggregate purchase price payable to such
Obligor in an amount sufficient to pay the Obligations owing by such Obligor in full on or before March 29, 2014. Obligors shall
cause all Obligations to be paid concurrently upon consummating the transaction contemplated by clauses (a) of (b)
preceding, as applicable, which shall occur no later than March 29, 2014.

 

    	3

    	 

    

 

 

Section
2.6            
Effective as of the Amendment Date, Section 11.1(c)(i) is hereby amended and restated to read as follows:

 

(i)Sections
9.1 through 9.3, Sections 9.5 through 9.7, Section 9.11, Section 9.12, Section
9.21, Section 9.23, Section 9.25 through Section 9.27, Section 10.1 or Sections 10.3
through 10.14;

Section
2.7            
Amendment to Schedule 1.1. Effective as of the Amendment Date, Schedule 1.1 is hereby amended and restated
to read as appears in Schedule 1.1 attached to this Amendment.

 

ARTICLE
3

Reservation of Rights

Section
3.1            
nothing shall constitute a waiver of the Stated Events of Default or of any other
Default or Event of Default, if any, which may now or hereafter exist, or a waiver of any other rights and remedies of Administrative
Agent and the Lenders under the Loan Documents or Applicable Law. Administrative Agent shall have the right to exercise any rights
or remedies as a consequence of the Stated Events of Default or any such other Default or Event of Default, in its sole discretion
without any requirement for prior notice except to the extent, if any, otherwise expressly provided by the Loan Documents. All
rights of Administrative Agent and the Lenders under the Loan Documents and Applicable Law are expressly reserved.

ARTICLE
4

Conditions

Section
4.1            
Conditions Precedent. The effectiveness of Article 2 of this Amendment is subject to the satisfaction of
the following conditions precedent:

(a)               
the representations and warranties contained herein and in all other Loan Documents, as amended hereby, shall be true and correct
in all material respects as of the date hereof as if made on the date hereof, except for such representations and warranties limited
by their terms to a specific date;

 

(b)              
after giving effect to this Amendment, no Default or Event of Default other than the Stated Events of Default shall be in existence;

(c)               
Obligors shall have delivered to Administrative Agent an executed copy of this Amendment, in form and substance satisfactory to
Administrative Agent;

(d)              
all proceedings taken in connection with the transactions contemplated by this Amendment and all documentation and other legal
matters incident thereto shall be satisfactory to Administrative Agent; and

 

(e)               
Obligors shall have paid to Lender the fee required by Section 3.2.

 

 

 

    	4

    	 

    

 

Section
4.2            
Accommodation Fee. Subject to the terms of the Loan Agreement, in consideration of this Amendment, Obligors jointly
and severally agree to pay to Administrative Agent, for the account of the Lenders, an accommodation fee in the amount of $16,000,
which amount shall be payable on the Amendment Date.

ARTICLE
5

Ratifications, Representations and Warranties

Section
5.1            
Ratifications. The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent
terms and provisions set forth in the Loan Agreement and, except as expressly modified and superseded by this Amendment, the terms
and provisions of the Loan Agreement and the other Loan Documents are ratified and confirmed and shall continue in full force
and effect. Obligors, Administrative Agent and the Lenders agree that the Loan Agreement as amended hereby and the other Loan
Documents shall continue to be legal, valid, binding, and enforceable in accordance with their respective terms.

Section
5.2            
Representations and Warranties. Each Obligor hereby represents and warrants to Administrative Agent and Lenders
that (a) the execution, delivery, and performance of this Amendment and any and all other Loan Documents executed and/or
delivered in connection herewith have been authorized by all requisite action on the part of such Obligor and will not violate
the governing documents of such Obligor and (b) after giving effect to this Amendment, (i) the representations and warranties
contained in the Loan Agreement, as amended hereby, and the other Loan Documents are true and correct in all material respects
on and as of the date hereof as though made on and as of the date hereof (except to the extent that such representations and warranties
were expressly made only in reference to a specific date), (ii)  no Default or Event of Default other than the Stated Events
of Default has occurred and is continuing, and (iii) Obligors are in full compliance with all covenants and agreements contained
in the Loan Agreement, as amended hereby, and the other Loan Documents.

Section
5.3            
Arms Length. Each Obligor acknowledges, represents and warrants that (a) it has had the opportunity to have
this Agreement reviewed by counsel of its choice, (b) the terms of this Agreement have been negotiated at arm’s length,
(c) such Obligor has determined that the terms of this Agreement are in its best interest, (d) such Obligor has concluded, independently,
to execute and enter into this Agreement and (e) in making its decision to enter into this Agreement, such Obligor has not relied
upon any statement or representation of Administrative Agent or any Lender, or any of their respective representatives, except
as expressly set forth in this Agreement.

ARTICLE
6

Other Agreements

Section
6.1            
Survival of Representations and Warranties. All representations and warranties made in this Amendment or any other
Loan Document delivered in connection with this Amendment shall survive the execution and delivery of this Amendment.

Section
6.2            
Reference to Loan Agreement. Each of the Loan Documents, including the Loan Agreement and any and all other agreements,
documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the
Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement as amended hereby.

Section
6.3            
Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable
shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held
to be invalid or unenforceable.

 

    	5

    	 

    

 

Section
6.4            
Successors and Assigns. This Amendment is binding upon and shall inure to the benefit of Obligors, Lenders and Administrative
Agent and their respective successors and assigns, except Obligors may not assign or transfer any of its respective rights or
obligations hereunder without the prior written consent of Administrative Agent.

Section
6.5            
Counterparts. This Amendment may be executed in one or more counterparts, and on telecopy or other electronically
transmitted counterparts each of which when so executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same agreement.

Section
6.6            
Ratification. Each Obligor reaffirms its obligations under each of such Loan Documents, as amended hereby, and agrees
that each of the Loan Documents, as amended hereby, remains in full force and effect and is hereby ratified and confirmed.

Section
6.7            
Headings. The headings, captions, and arrangements used in this Amendment are for convenience only and shall not
affect the interpretation of this Amendment.

Section
6.8            
Waiver and Release. In consideration of this agreement, each Obligor represents
and warrants that, as of the date hereof, there are no offsets, defenses or counterclaims against or in respect of its obligations
under the Loan Documents and each Obligor hereby releases and discharges Administrative Agent and each Lender and their respective
agents, employees, successors and assigns, of and from all claims, actions, causes of action, damages, costs, expenses and liabilities,
known or unknown, fixed, contingent or conditional, at law or in equity, in connection with the Loan Documents or any transactions
or acts in connection therewith, in each case existing on or before the date of this Agreement, which such Obligor may have against
any such Person, irrespective of whether any such claims, actions, causes of action, damages, costs, expenses or liabilities are
based on contract, tort or otherwise.

Section
6.9            
Entire Agreement. This Amendment embodies the final, entire agreement among
the parties hereto relating to the subject matter hereof and supersedes any and all prior agreements, written or oral, relating
to the subject matter of this Amendment. This Amendment may not be contradicted or varied by evidence of prior, contemporaneous,
or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties.

 

SIGNATURES
FOLLOW

REMAINDER
OF PAGE BLANK

 

 

 

 

 

 

 

    	6

    	 

    

 

IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment on the respective dates set forth with their signatures
below, effective as of the Amendment Date first written above.

 

OBLIGORS:

 

precision
aerospace components, inc.

 

 

By:

Name:Andrew
S. Prince

Title:President,
Chief Executive Officer and Treasurer

Date
Signed: 

 

 

Freundlich
supply company, inc.

 

 

By:

Name:Andrew
S. Prince

Title:Chief
Executive Officer and Treasurer

Date
Signed: 

 

 

tiger-tight
corp

 

By:

Name:Andrew
S. Prince

Title:Chief
Executive Officer and Treasurer

Date
Signed: 

 

 

AERO-MISSILE
COMPONENTS, INC.

(formerly
Apace Acquisition I, Inc.)

 

 

By:

Name:Andrew
S. Prince

Title:Chief
Executive Officer and Treasurer

Date
Signed:

 

 

CREATIVE
ASSEMBLY SYSTEMS, INC.

(formerly
Apace Acquisition II, Inc.)

 

 

By:

Name:Andrew
S. Prince

Title:Chief
Executive Officer and Treasurer

Date
Signed:

 

 

    	7

    	 

    

 

 

ADMINISTRATIVE
AGENT:

 

NEWSTAR
BUSINESS CREDIT, LLC

as
Administrative Agent

 

 

By:

Name:Greg
Gentry

Title:Senior
Vice President

Date
Signed:

 

 

LENDERS:

 

NEWSTAR
BUSINESS CREDIT, LLC, as servicer for and on behalf of the Lenders and as servicer for and on behalf of the Swing Lender

 

 

By:

Name:

Title:

Date
Signed: 

 

 

 

    	8

    	 

    

 

Schedule
A

to

Amended
and Restated

Sixth
Amendment to Loan and Security Agreement

 

 

 

Stated
Events of Default

 

Failure
by each Borrower to pay to Administrative Agent, for the account of the Lenders, the amount by which the unpaid balance of the
Revolving Loans to such Borrower exceeds the Borrowing Base of such Borrower and failure by Obligors to pay the amount by which
the unpaid balance of the Revolving Loans to all Borrowers exceeds the lesser of the Revolving Credit Limit and the Aggregate
Borrowing Base, in each case as required by Section 5.2(a) of the Loan Agreement, from time to time since October 1, 2013.

Non-compliance
with the requirements of Section 10.14(a) (minimum Fixed Charge Coverage Ratio) as of the last day of July, August, September,
October, November and December of 2013.

 

 

    	9

    	 

    

 

SCHEDULE
1.1A

Lenders’
Commitments

	Lender	Commitment
    Amount	Percentage
    Share
	NewStar
        Business Credit, LLC

        8401
        North Central Expressway, Suite 600

        Dallas,
        Texas 75225

        Fax
        No.: (214) 242-5840

        Attention:
        Portfolio Manager, URGENT

        with
        a complete copy to:

        Hunton
        & Williams, LLP

        1445
        Ross Avenue, Suite 3700

        Dallas,
        Texas 75201

        Fax
        No.: (214) 468-3326

        Attention:
        Daniel C. Garner
	Revolving
        Loans (aggregate):$8,200,000 less

        on
        any day, the aggregate principal balance of Term Loans on such day

        Term
        Loans (aggregate):$1,666,666,64

        Apace
        I[1] Term Loan: $755,000.00

        Apace
        II[2] Term Loan:$911,666.64

        ____________

         

        Total
        (aggregate):$8,200,000

        less
        aggregate principal reductions under the Term Loans
	100%

        100%

        100%

        100%

         

         

        100%

 

 

 

 

[1]
Aero-Missile Components, Inc.

[2]
Creative Assembly Systems, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]