Exhibit 10.47

 

Employment Agreement

 

This Employment Agreement (the “Agreement”) is made as of February 11, 2009 but
effective as of January 1, 2009 (the “Effective Date”), by and between
Scientific Games Corporation, a Delaware corporation (the “Company”), and
Stephen L. Gibbs (“Employee”).

 

WHEREAS, Employee has been employed pursuant to an Employment Agreement dated as
of March 1, 2007 as amended by an amendment dated as of December 30, 2008 (as
amended, the “Prior Agreement”); and

 

WHEREAS, the Company and Employee desire that this Agreement replace and
supersede the Prior Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual benefits to be
derived herefrom and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Company and Employee, the
parties hereto agree as follows.

 

1.                    Termination of Existing Employment Agreements. As of the
Effective Date, all existing employment agreements between the parties hereto,
whether oral or written, including the Prior Agreement, are hereby terminated
and superseded by this Agreement.

 

2.                    Employment; Term.  The Company hereby agrees to employ
Employee, and Employee hereby accepts employment with the Company, in accordance
with and subject to the terms and conditions set forth in this Agreement.  This
term of employment of Employee under this Agreement (the “Term”) shall be the
period commencing on the Effective Date and ending on February 28, 2011, as may
be extended in accordance with this Section 2 and subject to earlier termination
in accordance with Section 5 hereof.  The Term shall be automatically extended
without further action by either party hereto by one additional year (added to
the end of the Term), and then on each succeeding annual anniversary thereafter,
unless either party hereto shall have given written notice to the other party
hereto prior to the date which is ninety (90) days prior to the date upon which
such extension would otherwise have become effective electing not to further
extend the Term, in which case Employee’s employment shall terminate on the date
upon which such extension would otherwise have become effective, unless
terminated in accordance with Section 5 hereof.  It is also intended that
Employee’s previous term of employment with the Company shall be included when
calculating Employee’s tenure at the Company for all purposes.

 

3.                    Position and Duties.  During the Term, Employee will serve
as Vice President, Chief Accounting Officer and Corporate Controller of the
Company, and as an officer or director of any subsidiary or affiliate of the
Company if elected to any such position by the stockholders or by the board of
directors of any such subsidiary or affiliate, as the case may be.  In such
capacities, Employee shall perform such duties and shall have such
responsibilities as are normally associated with such positions and as otherwise
may be assigned to the Employee from time to time by the Chief Executive
Officer, Chief Operating Officer or Chief Financial Officer of the Company or
upon the authority of the Board of Directors of the Company.  Subject to
Section 5(e) hereof, Employee’s functions, duties and responsibilities are
subject to reasonable changes as the Company may in good faith determine from
time to time.  Employee hereby agrees to accept such employment and to serve the
Company and its subsidiaries and affiliates to the best of Employee’s ability in
such capacities, devoting substantially all of Employee’s business time to such
employment.

 

4.                    Compensation.

 

(a)                                Base Salary.  During the Term, Employee will
receive a base salary of two

 

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hundred seventy six thousand two hundred fifty U.S. Dollars (US$276,250) per
annum, paid in accordance with the Company’s regular payroll practices and
subject to such deductions or amounts to be withheld as required by applicable
law and regulations or as may be agreed to by Employee.  In the event that the
Company, in its sole discretion, from time to time determines to increase
Employee’s base salary, such increased amount shall, from and after the
effective date of such increase, constitute the “base salary” of Employee for
purposes of this Agreement.

 

(b)                               Incentive Compensation.  Employee shall have
the opportunity annually to earn incentive compensation in amounts determined by
the Compensation Committee of the Board of Directors of the Company (the
“Compensation Committee”) in accordance with the applicable incentive
compensation plan of the Company as in effect from time to time (“Incentive
Compensation”).  Under such plan, Employee shall have the opportunity annually
(beginning with respect to the 2009 performance period) to earn up to 43% of
Employee’s base salary as Incentive Compensation on the terms and subject to the
conditions of such plan.

 

(c)                                Eligibility for Annual Equity Awards. 
Employee shall be eligible to receive an annual grant of stock options,
restricted stock units or other equity awards in the sole discretion of the
Compensation Committee and in accordance with the applicable plans and programs
for similarly situated employees of the Company and subject to the Company’s
right to at any time amend or terminate any such plan or program, so long as any
such change does not adversely affect any accrued or vested interest of Employee
under any such plan or program.

 

(d)                               Expense Reimbursement.  Subject to
Section 4(g) hereof, the Company shall reimburse Employee for all reasonable and
necessary travel, business entertainment and other business expenses incurred by
Employee in connection with the performance of Employee’s duties under this
Agreement, on a timely basis upon timely submission by Employee of vouchers
therefor in accordance with the Company’s standard procedures.

 

(e)                                Health and Welfare Benefits.  Employee shall
be entitled to participate, without discrimination or duplication, in any and
all medical insurance, group health, disability, life insurance, accidental
death and dismemberment insurance, 401(k) or other retirement, deferred
compensation, stock ownership and such other plans and programs which are made
generally available by the Company to similarly situated employees in accordance
with the terms of such plans and programs and subject to the Company’s right to
at any time amend or terminate any such plan or program.  Employee shall be
entitled to paid vacation, holidays, and any other time off in accordance with
the Company’s policies in effect from time to time.

 

(f)                                  Special Equity Award.  The Company shall
grant to Employee seven thousand five hundred (7,500) restricted stock units
under the Scientific Games Corporation 2003 Incentive Compensation Plan, as
amended and restated (the “Plan”), pursuant to an equity award agreement (in the
form to be provided to Employee) to be entered into by and between the Company
and Employee (the “Equity Award Agreement”).  The Equity Award Agreement shall
provide that the equity award shall vest with respect to twenty percent (20%) of
the shares of common stock subject to such award on each of the first five
anniversaries of the date of grant, subject to any applicable provisions
relating to accelerated vesting and forfeiture as described in this Agreement,
the Equity Award Agreement or the Plan.

 

(g)                               Taxes and Internal Revenue Code 409A.  Payment
of all compensation and benefits to Employee specified in this Section 4 and in
Section 5 of this Agreement shall be subject to all legally required and
customary withholdings.  The Company makes no representations regarding the tax
implications of the compensation and benefits to be paid to Employee under this
Agreement, including, without limitation, under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”),

 

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and applicable administrative guidance and regulations (“Section 409A”). 
Section 409A governs plans and arrangements that provide “nonqualified deferred
compensation” (as defined under the Code) which may include, among others,
nonqualified retirement plans, bonus plans, stock option plans, employment
agreements and severance agreements.  The Company reserves the right to provide
compensation and benefits under any plan or arrangement in amounts, at times and
in a manner that minimizes taxes, interest or penalties as a result of
Section 409A.  In addition, in the event any benefits or amounts paid hereunder
are deemed to be subject to Section 409A, including payments under Section 5 of
this Agreement, Employee consents to the Company adopting such conforming
amendments as the Company deems necessary, in its reasonable discretion, to
comply with Section 409A (including, but not limited to, delaying payment until
six months following termination of employment).  Notwithstanding anything
herein to the contrary, if (i) at the time of Employee’s “separation from
service” (as defined in Treas. Reg. Section 1.409A-1(h)) with the Company other
than as a result of Employee’s death, (ii) Employee is a “specified employee”
(as defined in Section 409A(a)(2)(B)(i) of the Code), (iii) one or more of the
payments or benefits received or to be received by Employee pursuant to this
Agreement would constitute deferred compensation subject to Section 409A, and
(iv) the deferral of the commencement of any such payments or benefits otherwise
payable hereunder as a result of such separation of service is necessary in
order to prevent any accelerated or additional tax under Section 409A, then the
Company will defer the commencement of the payment of any such payments or
benefits hereunder to the extent necessary (without any reduction in such
payments or benefits ultimately paid or provided to Employee) until the date
that is six months following Employee’s separation from service with the Company
(or the earliest date as is permitted under Section 409A).  Any remaining
payments or benefits shall be made as otherwise scheduled hereunder. 
Furthermore, to the extent any payments of money or other benefits due to
Employee hereunder could cause the application of an accelerated or additional
tax under Section 409A, such payments or other benefits shall be deferred if
deferral will make such payment or other benefits compliant under Section 409A,
or otherwise such payments or other benefits shall be restructured, to the
extent possible, in a manner determined by the Company that does not cause such
an accelerated or additional tax.  To the extent any reimbursements or in-kind
benefits due to Employee under this Agreement constitute deferred compensation
under Section 409A, any such reimbursements or in-kind benefits shall be paid to
Employee in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv). 
Each payment made under this Agreement shall be designated as a “separate
payment” within the meaning of Section 409A.

 

5.                                     Termination of Employment.  Employee’s
employment may be terminated at any time prior to the end of the Term under the
terms described in this Section 5.

 

(a)                                Termination by Employee for Other than Good
Reason.  Employee may terminate Employee’s employment hereunder for any reason
or no reason upon 60 days’ prior written notice to the Company referring to this
Section 5(a); provided, however, that a termination by Employee for “Good
Reason” (as defined below) shall not constitute a termination by Employee for
other than Good Reason pursuant to this Section 5(a).  In the event Employee
terminates Employee’s employment for other than Good Reason, Employee shall be
entitled only to the following compensation and benefits (collectively, the
“Standard Termination Payments”):

 

(i)                           any accrued but unpaid base salary for services
rendered by Employee to the date of such termination, payable in accordance with
the Company’s regular payroll practices and subject to such deductions or
amounts to be withheld as required by applicable law and regulations or as may
be agreed to by Employee;

 

(ii)                        all vested non-forfeitable amounts owing or accrued
at the date of such termination under benefit plans, programs and arrangements
set forth or referred to in Section 4

 

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hereof in which Employee theretofore participated will be paid under the terms
and conditions of such plans, programs, and arrangements (and agreements and
documents thereunder);

 

(iii)                     except as provided in Section 6.6 hereof, all stock
options, restricted stock units and other equity awards will be governed by the
terms of the plans and programs under which such options, restricted stock units
or other awards were granted; and

 

(iv)                    reasonable business expenses and disbursements incurred
by Employee prior to such termination will be reimbursed in accordance with
Section 4(d) hereof.

 

(b)                               Termination By Reason of Death.  If Employee
dies during the Term, the last beneficiary designated by Employee by written
notice to the Company (or, in the absence of such designation, Employee’s
estate) shall be entitled to the following compensation and benefits:

 

(i)                                     the Standard Termination Payments; and

 

(ii)                                  a lump sum payment equal to Employee’s
annual base salary, payable within 30 days of death.

 

(c)                                Termination By Reason of Total Disability. 
The Company may terminate Employee’s employment in the event of Employee’s
“Total Disability.”  For purposes of this Agreement, “Total Disability” shall
mean Employee’s (1) becoming eligible to receive benefits under any long-term
disability insurance program of the Company or (2) failure to perform the duties
and responsibilities contemplated under this Agreement for a period of more than
180 days during any consecutive 12-month period due to physical or mental
incapacity or impairment.  In the event that Employee’s employment is terminated
by the Company by reason of Total Disability, the Company shall pay the
following amounts, and make the following other benefits available, to Employee:

 

(i)                                     the Standard Termination Payments;

 

(ii)                                  an amount equal to the sum of
(A) Employee’s annual base salary and (B) Employee’s “Severance Bonus Amount”
(as defined below), payable over a period of twelve (12) months after such
termination in accordance with Section 5(f) of this Agreement; provided such
amount shall be reduced by any disability payments provided to Employee as a
result of any disability plan sponsored by the Company or its affiliates
providing benefits to Employee.  For purposes of this Agreement, “Severance
Bonus Amount” shall mean  an amount equal to the highest annual Incentive
Compensation paid to Employee in respect of the two most recent fiscal years of
the Company but not more than the Employee’s “target bonus” for the-then current
fiscal year;

 

(iii)                               in lieu of any Incentive Compensation for
the year in which such termination occurs, payment of an amount equal to (A) the
highest annual Incentive Compensation paid to Employee in respect of the two
most recent fiscal years of the Company but not more than Employee’s “target
bonus” for the year of termination, multiplied by (B) a fraction the numerator
of which is the number of days Employee was employed in the year of such
termination and the denominator of which is the total number of days in the year
of such termination, payable as and when such Incentive Compensation would
otherwise have been payable under Section 4(b); and

 

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(iv)                              if Employee elects to continue medical
coverage under the Company’s group health plan in accordance with COBRA, the
Company shall pay the monthly premiums for such coverage for a period of twelve
(12) months.

 

(d)                               Termination by the Company for Cause.  The
Company may terminate the employment of Employee at any time for “Cause.”  For
purposes of this Agreement, “Cause” shall mean: (i) gross neglect by Employee of
Employee’s duties hereunder; (ii) Employee’s conviction (including conviction on
a nolo contendere plea) of a felony or any non-felony crime or offense involving
the property of the Company or any of its subsidiaries or affiliates or
evidencing moral turpitude; (iii) willful misconduct by Employee in connection
with the performance of Employee’s duties hereunder; (iv) intentional breach by
Employee of any material provision of this Agreement; (v) material violation by
Employee of a material provision of the Company’s Code of Conduct; or (vi) any
other willful or grossly negligent conduct of Employee which would make the
continued employment of Employee by the Company materially prejudicial to the
best interests of the Company.  In the event Employee’s employment is terminated
for “Cause,” Employee shall not be entitled to receive any compensation or
benefits under this Agreement except for the Standard Termination Payments.

 

(e)                                Termination by the Company without Cause or
by Employee for Good Reason.  The Company may terminate Employee’s employment at
any time without Cause, for any reason or no reason, and Employee may terminate
Employee’s employment for “Good Reason.”  For purposes of this Agreement “Good
Reason” shall mean that without Employee’s prior written consent, any of the
following shall have occurred:  (i) a material change, adverse to Employee, in
Employee’s positions, titles, offices, or duties as provided in Section 3
hereof, except, in such case, in connection with the termination of Employee’s
employment for Cause, Total Disability or death; (ii) an assignment of any
significant duties to Employee which are materially inconsistent with Employee’s
positions or offices held under Section 3 hereof; (iii) a material decrease in
base salary or material decrease in Employee’s incentive compensation
opportunities provided under this Agreement; and (iv) any other material failure
by the Company to perform any material obligation under, or material breach by
the Company of any material provision of, this Agreement; provided, however,
that a termination by Employee for Good Reason under any of clauses (i) —
(iv) of this Section 5(e) shall not be considered effective unless Employee
shall have provided the Company with written notice of the specific reasons for
such termination within thirty (30) days after he has knowledge of the event or
circumstance constituting Good Reason and the Company shall have failed to cure
the event or condition allegedly constituting Good Reason within thirty (30)
days after such notice has been given to the Company.  In the event that
Employee’s employment is terminated by the Company without Cause or by Employee
for Good Reason (and not, for the avoidance of doubt, in the event of a
termination pursuant to Section 5(a), (b), (c) or (d) hereof), the Company shall
pay the following amounts, and make the following other benefits available, to
Employee.

 

(i)                                     the Standard Termination Payments;

 

(ii)                                  an amount equal to the sum of
(A) Employee’s annual base salary and (B) Employee’s Severance Bonus Amount,
payable over a period of twelve (12) months after such termination in accordance
with Section 5(f) of this Agreement;

 

(iii)                               in lieu of any Incentive Compensation for
the year in which such termination occurs, payment of an amount equal to (A) the
highest annual Incentive Compensation paid to Employee in respect of the two
most recent fiscal years of the Company but not more than the Employee’s “target
bonus” for the year of such termination, multiplied by (B) a fraction the
numerator of which is the number of days Employee was employed in the year of
such termination and the denominator of which is the total number of days in the
year of such

 

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termination, payable as and when such Incentive Compensation would otherwise
have been payable under Section 4(b); and

 

(iv)                              if Employee elects to continue medical
coverage under the Company’s group health plan in accordance with COBRA, the
Company shall pay the monthly premiums for such coverage for a period of twelve
(12) months.

 

(f)                                  Timing of Certain Payments under
Section 5.  Payments pursuant to Sections 5(c)(ii) or 5(e)(ii) of this
Agreement, if any, shall be payable in equal installments in accordance with the
Company’s standard payroll practices over a period of twelve (12) months
following the date of termination (subject to such deductions or amounts to be
withheld as required by applicable law and regulations); provided, however, that
if and to the extent necessary to prevent any acceleration or additional tax
under Section 409A, such payments shall be made as follows:  (i) no payments
shall be made for a six-month period following the date of Employee’s separation
of service (as defined in Section 409A(a)(2)(B)(i) of the Code) with the
Company, (ii) an amount equal to the aggregate sum that would have been
otherwise payable during the initial six-month period shall be paid in a lump
sum six (6) months following the date of Employee’s separation of service with
the Company (subject to such deductions or amounts to be withheld as required by
applicable law and regulations), and (iii) during the period beginning six
(6) months following Employee’s separation of service with the Company through
the remainder of the twelve-month period, payment of the remaining amount due
shall be payable in equal installments in accordance with the Company’s standard
payroll practices (subject to such deductions or amounts to be withheld as
required by applicable law and regulations).   In addition, notwithstanding any
other provision with respect to the timing of payments under this Agreement, if
and to the extent necessary to comply with Section 409A, amounts payable
following termination of employment in a lump sum, including pursuant to
Sections 5(c)(iii) and 5(e)(iii) of this Agreement, shall instead be paid six
(6) months following the date of Employee’s separation of service (subject to
such deductions or amounts to be withheld as required by applicable law and
regulations).

 

(g)                               No Obligation to Mitigate.  Employee shall
have no obligation to mitigate damages pursuant to this Section 5, but shall be
obligated to promptly advise the Company regarding any compensation earned or
any payments that will become due with respect to services provided to another
employer during any period of continued payments pursuant to this Section 5. The
Company’s obligation to make continued payments to Employee shall be reduced by
any compensation earned by the Employee during the severance period (without
regard to when such compensation is paid).

 

(h)                               Set-Off.  To the fullest extent permitted by
law and provided an acceleration of income or the imposition of an additional
tax under Section 409A would not result, any amounts otherwise due the Employee
hereunder (including, without limitation, any payments pursuant to this
Section 5) shall be subject to set-off with respect to any amounts the Employee
otherwise owes the Company or any subsidiary or affiliate thereof.

 

(i)                                   No Other Benefits or Compensation.  Except
as may be provided under this Agreement, under any other written agreement
between Employee and the Company, or under the terms of any plan or policy
applicable to Employee, Employee shall have no right to receive any other
compensation from the Company, or to participate in any other plan, arrangement
or benefit provided by the Company, with respect to any future period after such
termination or resignation.

 

(j)                                   Release of Employment Claims; Compliance
with Section 6.  Employee agrees, as a condition to receipt of any termination
payments and benefits provided for in this Section 5 (other than the Standard
Termination Payments), that Employee will execute a general release agreement,
in a form reasonably satisfactory to the Company, releasing any and all claims
arising out of Employee’s

 

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employment (other than enforcement of this Agreement).  The Company shall
provide Employee with the proposed form of release referred to in the
immediately preceding sentence no later than two (2) days following the date of
termination.  Employee shall have 21 days to consider the release and if he
executes the release, shall have seven (7) days after execution of the release
to revoke the release, and, absent such revocation, the release shall become
binding.  Provided Employee does not revoke the release, payments contingent on
the release (if any) shall be paid no earlier than eight (8) days after
execution thereof in accordance with the applicable provisions herein.  The
Company’s obligation to make any termination payments and benefits provided for
in this Section 5 (other than the Standard Termination Payments) shall
immediately cease if Employee willfully and materially breaches Section 6.1, 6.2
, 6.3, 6.4, or 6.8 hereof.

 

6.                                     Noncompetition; Non-solicitation;
Nondisclosure; etc.

 

6.1                             Noncompetition; Non-solicitation.

 

(a)                                Employee acknowledges the highly competitive
nature of the Company’s business and that access to the Company’s confidential
records and proprietary information renders Employee special and unique within
the Company’s industry. In consideration of the amounts that may hereafter be
paid to Employee pursuant to this Agreement (including, without limitation,
Sections 4 and 5 hereof), Employee agrees that during the Term (including any
extensions thereof) and during the Covered Time (as defined in
Section 6.1(e) hereof), Employee, alone or with others, will not, directly or
indirectly, engage (as owner, investor, partner, stockholder, employer,
employee, consultant, advisor, director or otherwise) in any Competing Business.
For purposes of this Section 6, “Competing Business” shall mean any business:
(i) involving design and production of instant lottery tickets and the
management of related marketing and distribution programs; manufacture, sale,
operation or management of on-line lottery systems (Lotto-type games), video
gaming, including fixed odds or server-based betting terminals and video lottery
terminals; development and commercialization of licensed and other proprietary
game entertainment for all lottery product channels; provision of wagering
(whether pari-mutuel (pooled) or otherwise) or venue management services for
racetracks and off-track betting facilities; production of prepaid cellular
phone cards; or any other business in which the Company or its affiliates is
then or was within the previous twelve (12) months engaged or in which the
Company, to Employee’s knowledge, intends to engage during the Term or the
Covered Time (as defined below); (ii) in which the Employee was engaged or
involved (whether in an executive or supervisory capacity or otherwise) on
behalf of the Company or with respect to which the Employee has obtained
proprietary or confidential information; and (iii) which was conducted anywhere
in the United States or in any other geographic area in which such business was
conducted or planned to be conducted by the Company.

 

(b)                               In further consideration of the amounts that
may hereafter be paid to Employee pursuant to this Agreement (including, without
limitation, Sections 4 and 5 hereof), Employee agrees that, during the Term
(including any extensions thereof) and during the Covered Time, Employee shall
not, directly or indirectly:  (i) solicit or attempt to induce any of the
employees, agents, consultants or representatives of the Company to terminate
his, her, or its relationship with the Company; (ii) solicit or attempt to
induce any of the employees, agents, consultants or representatives of the
Company to become employees, agents, consultants or representatives of any other
person or entity; (iii) solicit or attempt to induce any customer, vendor or
distributor of the Company to curtail or cancel any business with the Company;
or (iv) hire any person who, to Employee’s actual knowledge, is, or was within
180 days prior to such hiring, an employee of the Company.

 

(c)                                During the Term (including any extensions
thereof) and during the Covered Time, Employee agrees that upon the earlier of
Employee’s (i) negotiating with any Competitor (as defined below) concerning the
possible employment of Employee by the Competitor, (ii) responding to (other

 

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than for the purpose of declining) an offer of employment from a Competitor, or
(iii) becoming employed by a Competitor, (A) Employee will provide copies of
Section 6 of this Agreement to the Competitor, and (B) in the case of any
circumstance described in (iii) above occurring during the Covered Time, and in
the case of any circumstance described in (i) or (ii) above occurring during the
Term or during the Covered Time, Employee will promptly provide notice to the
Company of such circumstances. Employee further agrees that the Company may
provide notice to a Competitor of Employee’s obligations under this Agreement.
For purposes of this Agreement, “Competitor” shall mean any person or entity
(other than the Company, its subsidiaries or affiliates) that engages, directly
or indirectly, in the United States in any Competing Business.

 

(d)                               Employee understands that the restrictions in
this Section 6.1 may limit Employee’s ability to earn a livelihood in a business
similar to the business of the Company but nevertheless agrees and acknowledges
that the consideration provided under this Agreement (including, without
limitation, Sections 4 and 5 hereof) is sufficient to justify such restrictions.
In consideration thereof and in light of Employee’s education, skills and
abilities, Employee agrees that Employee will not assert in any forum that such
restrictions prevent Employee from earning a living or otherwise should be held
void or unenforceable.

 

(e)                                For purposes of this Section 6.1, “Covered
Time” shall mean the period beginning on the date of termination of Employee’s
employment (the “Date of Termination”) and ending twelve (12) months after the
Date of Termination.

 

6.2                               Proprietary Information; Inventions.

 

(a)                                Employee acknowledges that, during the course
of Employee’s employment with the Company, Employee necessarily will have (and
during any employment by the Company prior to the Term has had) access to and
make use of proprietary information and confidential records of the Company. 
Employee covenants that Employee shall not during the Term or at any time
thereafter, directly or indirectly, use for Employee’s own purpose or for the
benefit of any person or entity other than the Company, nor otherwise disclose
to any person or entity, any such proprietary information, unless and to the
extent such disclosure has been authorized in writing by the Company or is
otherwise required by law.  The term “proprietary information” means:  (i) the
software products, programs, applications, and processes utilized by the
Company; (ii) the name and/or address of any customer or vendor of the Company
or any information concerning the transactions or relations of any customer or
vendor of the Company with the Company; (iii) any information concerning any
product, technology, or procedure employed by the Company but not generally
known to its customers or vendors or competitors, or under development by or
being tested by the Company but not at the time offered generally to customers
or vendors; (iv) any information relating to the Company’s computer software,
computer systems, pricing or marketing methods, sales margins, cost of goods,
cost of material, capital structure, operating results, borrowing arrangements
or business plans; (v) any information identified as confidential or proprietary
in any line of business engaged in by the Company; (vi) any information that, to
Employee’s actual knowledge, the Company ordinarily maintains as confidential or
proprietary; (vii) any business plans, budgets, advertising or marketing plans;
(viii) any information contained in any of the Company’s written or oral
policies and procedures or manuals; (ix) any information belonging to customers,
vendors or any other person or entity which the Company, to Employee’s actual
knowledge, has agreed to hold in confidence; and (x) all written, graphic,
electronic data and other material containing any of the foregoing. Employee
acknowledges that information that is not novel or copyrighted or patented may
nonetheless be proprietary information.  The term “proprietary information”
shall not include information generally known or available to the public or
generally known or available to the industry or information that becomes
available to Employee on an unrestricted, non-confidential basis from a source
other than the Company or its directors, officers, employees, or agents (without
breach of any obligation of

 

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confidentiality of which Employee has actual knowledge at the time of the
relevant disclosure by Employee).

 

(b)                               Employee agrees that all processes,
technologies and inventions (collectively, “Inventions”), including new
contributions, improvements, ideas and discoveries, whether patentable or not,
conceived, developed, invented or made by Employee during the Term (and during
any employment by the Company prior to the Term) shall belong to the Company,
provided that such Inventions grew out of the Employee’s work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company’s time or with the use of
the Company’s facilities or materials. Employee shall further:  (i) promptly
disclose such Inventions to the Company; (ii) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (iii) sign all papers necessary to carry
out the foregoing; and (iv) give testimony in support of the Employee’s
inventorship.  If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Employee within two
(2) years after the termination of the Employee’s employment with the Company,
it is to be presumed that the Invention was conceived or made during the Term. 
Employee agrees that Employee will not assert any rights to any Invention as
having been made or acquired by Employee prior to the date of this Agreement,
except for Inventions, if any, disclosed in Exhibit A to this Agreement.

 

6.3                               Confidentiality and Surrender of Records.
 Employee shall not, during the Term or at any time thereafter (irrespective of
the circumstances under which Employee’s employment by the Company terminates),
except to the extent required by law, directly or indirectly publish, make known
or in any fashion disclose any confidential records to, or permit any inspection
or copying of confidential records by, any person or entity other than in the
course of such person’s or entity’s employment or retention by the Company, nor
shall Employee retain, and will deliver promptly to the Company, any of the same
following termination of Employee’s employment hereunder for any reason or upon
request by the Company.  For purposes hereof, “confidential records” means those
portions of correspondence, memoranda, files, manuals, books, lists, financial,
operating or marketing records, magnetic tape, or electronic or other media or
equipment of any kind in Employee’s possession or under Employee’s control or
accessible to Employee which contain any proprietary information.  All
confidential records shall be and remain the sole property of the Company during
the Term and thereafter.

 

6.4                               Non-disparagement.  Employee shall not, during
the Term and thereafter, disparage in any material respect the Company, any
affiliate of the Company, any of their respective businesses, any of their
respective officers, directors or employees, or the reputation of any of the
foregoing persons or entities.  Notwithstanding the foregoing, nothing in this
Agreement shall preclude Employee from making truthful statements that are
required by applicable law, regulation or legal process.

 

6.5                               No Other Obligations.  Employee represents
that Employee is not precluded or limited in Employee’s ability to undertake or
perform the duties described herein by any contract, agreement or restrictive
covenant.  Employee covenants that Employee shall not employ the trade secrets
or proprietary information of any other person in connection with Employee’s
employment by the Company without such person’s authorization.

 

6.6                               Forfeiture of Outstanding Options.  The
provisions of Section 5 hereof notwithstanding, if Employee willfully and
materially fails to comply with Section 6.1, 6.2, 6.3, 6.4, or 6.8 hereof, all
options to purchase common stock, restricted stock units and other equity-based
awards granted by the Company (whether prior to, contemporaneous with, or
subsequent to the Effective Date) and held by Employee or a transferee of
Employee shall be immediately forfeited and cancelled.

 

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6.7                               Enforcement.  Employee acknowledges and agrees
that, by virtue of Employee’s position, services and access to and use of
confidential records and proprietary information, any violation by Employee of
any of the undertakings contained in this Section 6 would cause the Company
immediate, substantial and irreparable injury for which it has no adequate
remedy at law.  Accordingly, Employee agrees and consents to the entry of an
injunction or other equitable relief by a court of competent jurisdiction
restraining any violation or threatened violation of any undertaking contained
in this Section 6.  Employee waives posting of any bond otherwise necessary to
secure such injunction or other equitable relief.  Rights and remedies provided
for in this Section 6 are cumulative and shall be in addition to rights and
remedies otherwise available to the parties hereunder or under any other
agreement or applicable law.

 

6.8                               Cooperation with Regard to Litigation. 
Employee agrees to cooperate reasonably with the Company, during the Term and
thereafter (including following Employee’s termination of employment for any
reason), by being available to testify on behalf of the Company in any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative. 
In addition, except to the extent that Employee has or intends to assert in good
faith an interest or position adverse to or inconsistent with the interest or
position of the Company, Employee agrees to cooperate reasonably with the
Company, during the Term and thereafter (including following Employee’s
termination of employment for any reason), to assist the Company in any such
action, suit, or proceeding by providing information and meeting and consulting
with the Board of Directors of the Company or its representatives or counsel, or
representatives or counsel to the Company, in each case, as reasonably requested
by the Company.  The Company agrees to pay (or reimburse, if already paid by
Employee) all reasonable expenses actually incurred in connection with
Employee’s cooperation and assistance including, without limitation, reasonable
fees and disbursements of counsel, if any, chosen by Employee if Employee
reasonably determines in good faith, on the advice of counsel, that the
Company’s counsel may not ethically represent Employee in connection with such
action, suit or proceeding due to actual or potential conflicts of interests.

 

6.9                               Survival.  The provisions of this Section 6
shall survive the termination of the Term and any termination or expiration of
this Agreement.

 

6.10                        Company.  For purposes of this Section 6, references
to the “Company” shall include the Company and each subsidiary and/or affiliate
of the Company.

 

7.                                     Code of Conduct.  Employee acknowledges
that he has read the Company’s Code of Conduct and agrees to abide by such Code,
as amended or supplemented from time to time, and other policies applicable to
employees and executives of the Company.

 

8.                                     Indemnification.  The Company shall
indemnify Employee to the full extent permitted under the Company’s Certificate
of Incorporation or By-Laws and pursuant to any other agreements or policies in
effect from time to time in connection with any action, suit or proceeding to
which the Employee may be made a party by reason of the Employee being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.

 

9.                                     Assignability; Binding Effect.  Neither
this Agreement nor the rights or obligations hereunder of the parties hereto
shall be transferable or assignable by Employee, except in accordance with the
laws of descent and distribution and as specified below.  The Company may assign
this Agreement and the Company’s rights and obligations hereunder, and shall
assign this Agreement and such rights and obligations, to any Successor (as
hereinafter defined) which, by operation of law or otherwise, continues to carry
on substantially the business of the Company (or a business unit of the Company
for which Employee provided services) prior to the event of succession, and the
Company shall, as a condition of the succession, require such Successor to agree
in writing to assume the Company’s obligations and be

 

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bound by this Agreement.  For purposes of this Agreement, “Successor” shall mean
any person that succeeds to, or has the practical ability to control, the
Company’s business directly or indirectly, by merger or consolidation, by
purchase or ownership of voting securities of the Company or all or
substantially all of its assets or those relating to a particular business unit
of the Company to which Employee provides services, or otherwise.  The Company
may also assign this Agreement and the Company’s rights and obligations
hereunder to any affiliate of the Company, provided that upon any such
assignment the Company shall remain liable for the obligations to Employee
hereunder.  This Agreement shall be binding upon and inure to the benefit of
Employee, Employee’s heirs, executors, administrators, and beneficiaries, and
shall be binding upon and inure to the benefit of the Company and its successors
and assigns.

 

10.                                 Complete Understanding; Amendment; Waiver. 
This Agreement constitutes the complete understanding between the parties hereto
with respect to the employment of Employee and supersedes all other prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no statement, representation,
warranty or covenant has been made by either party hereto with respect thereto
except as expressly set forth herein.  Except as contemplated by
Section 4(g) hereof, this Agreement shall not be modified, amended or terminated
except by a written instrument signed by each of the parties hereto.  Any waiver
of any term or provision hereof, or of the application of any such term or
provision to any circumstances, shall be in writing signed by the party hereto
charged with giving such waiver.  Waiver by either party hereto of any breach
hereunder by the other party hereto shall not operate as a waiver of any other
breach, whether similar to or different from the breach waived.  No delay by
either party hereto in the exercise of any rights or remedies shall operate as a
waiver thereof, and no single or partial exercise by either party hereto of any
such right or remedy shall preclude other or further exercise thereof.

 

11.                                 Severability.  If any provision of this
Agreement or the application of any such provision to any person or
circumstances shall be determined by any court of competent jurisdiction to be
invalid or unenforceable to any extent, the remainder of this Agreement, or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid or unenforceable, shall not be
affected thereby, and each provision hereof shall be enforced to the fullest
extent permitted by law.  If any provision of this Agreement, or any part
thereof, is held to be invalid or unenforceable because of the scope or duration
of or the area covered by such provision, the parties hereto agree that the
court making such determination shall reduce the scope, duration and/or area of
such provision (and shall substitute appropriate provisions for any such invalid
or unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced. 
The parties hereto recognize that if, in any judicial proceeding, a court shall
refuse to enforce any of the separate covenants contained in this Agreement,
then that invalid or unenforceable covenant contained in this Agreement shall be
deemed eliminated from these provisions to the extent necessary to permit the
remaining separate covenants to be enforced.  In the event that any court
determines that the time period or the area, or both, are unreasonable and that
any of the covenants is to that extent invalid or unenforceable, the parties
hereto agree that such covenants will remain in full force and effect, first,
for the greatest time period, and second, in the greatest geographical area that
would not render them unenforceable.

 

12.                                 Survivability.  The provisions of this
Agreement which by their terms call for performance subsequent to termination of
Employee’s employment hereunder, or of this Agreement, shall so survive such
termination, whether or not such provisions expressly state that they shall so
survive.

 

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13.                                 Governing Law; Arbitration.

 

(a)                                  Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be wholly performed within that State,
without regard to its conflict of laws provisions.

 

(b)                                 Arbitration.

 

(i)                                     The Employee and the Company agree that,
except for claims for Workers’ Compensation, Unemployment Compensation, and any
other claim that is non-arbitrable under applicable law, final and binding
arbitration shall be the exclusive forum for any dispute or controversy between
them, including, without limitation, disputes arising under or in connection
with this Agreement, Employee’s employment, and/or termination of employment,
with the Company; provided, however, that the Company shall be entitled to
commence an action in any court of competent jurisdiction for injunctive relief
in connection with any alleged actual or threatened violation of any provision
of Section 6 hereof.  Judgment may be entered on the arbitrators’ award in any
court having jurisdiction.  For purposes of entering such judgment or seeking
injunctive relief with regard to Section 6 hereof, the Company and Employee
hereby consent to the jurisdiction of any or all of the following courts:
(i) the United States District Court for the Southern District of New York;
(ii) the Supreme Court of the State of New York, New York County; or (iii) any
other court having jurisdiction; provided that damages for any alleged violation
of Section 6 hereof, as well as any claim, counterclaim or cross-claim brought
by the Employee or any third-party in response to, or in connection with any
court action commenced by the Company seeking said injunctive relief shall
remain exclusively subject to final and binding arbitration as provided for
herein.  The Company and Employee hereby waive, to the fullest extent permitted
by applicable law, any objection which either may now or hereafter have to such
jurisdiction, venue and any defense of inconvenient forum.   Thus, except for
the claims carved out above, this Agreement includes all common-law and
statutory claims (whether arising under federal state or local law), including,
but not limited to, any claim for breach of contract, fraud, fraud in the
inducement, unpaid wages, wrongful termination, and gender, age, national
origin, sexual orientation, marital status, disability, or any other  protected
status.

 

(ii)                                  Any arbitration under this Agreement shall
be filed exclusively with the American Arbitration Association in New York, New
York before three arbitrators, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect at the time of submission to arbitration.  The Company and Employee
hereby agree that a judgment upon an award rendered by the arbitrators may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  The Company shall pay all costs uniquely attributable to
arbitration, including the administrative fees and costs of the arbitrators. 
Each party shall pay that party’s own costs and attorney fees, if any, unless
the arbitrators rule otherwise.  The Employee understands that he is giving up
no substantive rights, and this Agreement simply governs forum.  The arbitrators
shall apply the same standards a court would apply to award any damages,
attorney fees or costs.  The Employee shall not be required to pay any fee or
cost that he would not otherwise be required to pay in a court action, unless so
ordered by the arbitrators.

 

(c)                                  WAIVER OF JURY TRIAL.  BY SIGNING THIS
AGREEMENT, EXECUTIVE AND THE COMPANY ACKNOWLEDGE THAT THE RIGHT TO A COURT TRIAL
AND TRIAL BY JURY IS OF VALUE, AND KNOWINGLY AND VOLUNTARILY WAIVE THAT RIGHT
FOR ANY DISPUTE SUBJECT TO THE TERMS OF THIS ARBITRATION PROVISION.

 

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14.                                 Titles and Captions.  All paragraph titles
or captions in this Agreement are for convenience only and in no way define,
limit, extend or describe the scope or intent of any provision hereof.

 

15.                                 Joint Drafting.  In recognition of the fact
that the parties hereto had an equal opportunity to negotiate the language of,
and draft, this Agreement, the parties acknowledge and agree that there is no
single drafter of this Agreement and, therefore, the general rule that
ambiguities are to be construed against the drafter is, and shall be,
inapplicable.  If any language in this Agreement is found or claimed to be
ambiguous, each party hereto shall have the same opportunity to present evidence
as to the actual intent of the parties hereto with respect to any such ambiguous
language without any inference or presumption being drawn against any party
hereto.

 

16.                                 Notices.  All notices and other
communications to be given or to otherwise be made to any party to this
Agreement shall be deemed to be sufficient if contained in a written instrument
delivered in person or duly sent by certified mail or by a recognized national
courier service, postage or charges prepaid, (a) to Scientific Games
Corporation, Attn General Counsel, at 750 Lexington Avenue, 25th Floor, New
York, NY 10022, (b) to the Employee, at the last address shown in the Company’s
records, or (c) to such other replacement address as may be designated in
writing by the addressee to the addressor.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
on February 11, 2009, to be deemed effective as of Effective Date above written.

 

 

 

SCIENTIFIC GAMES CORPORATION

 

 

 

 

 

By:

/s/ DeWayne E. Laird

 

Name:

DeWayne E. Laird

 

Title:

Vice President and Chief Financial Officer

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

/s/ Stephen L. Gibbs

 

Name: Stephen L. Gibbs

 

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