EXHIBIT 10.1

 

THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

 

Third Amendment to Employment Agreement (this “Amendment”), dated as of
October 26, 2009, by and between Scientific Games Corporation, a Delaware
corporation (the “Company”), and Joseph R. Wright (“Executive”).

 

WHEREAS, the Company and Executive entered into an Employment Agreement
effective as of May 1, 2008 (executed on May 14, 2008) as amended by the
Amendment to Employment Agreement dated December 30, 2008 and the Second
Amendment to Employment Agreement dated April 22, 2009 (as amended, the
“Agreement”); and

 

WHEREAS, upon succeeding to the Chief Executive Officer position on January 1,
2009, Executive set out certain objectives for the Company relating to the
increase of operating margins, the reduction of the Company’s capital and
operating expenditures and the increase in the Company’s profit margins and free
cash flow;

 

WHEREAS, under Executive’s leadership and direction, the Company has implemented
a number of initiatives toward these objectives, including the Company’s
Profitability Improvement Program, that have substantially benefited the Company
and allowed the Company to remain resilient in the current economic environment
and to position itself for future growth on a more profitable basis; and

 

WHEREAS, in light of the substantial realization of the objectives described
above, Executive believes, and the Company agrees, that it is appropriate for
him to retire as Chief Executive Officer at the end of 2009 and to resume his
role as a non-employee director of the Company;

 

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

 

1.             NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE AGREEMENT, THE
TERM OF EMPLOYMENT OF EXECUTIVE UNDER THE AGREEMENT SHALL END ON DECEMBER 31,
2009 (THE “END OF TERM”), AT WHICH TIME EXECUTIVE SHALL CEASE SERVING AS CHIEF
EXECUTIVE OFFICER OF THE COMPANY.  EXECUTIVE’S SERVICE AS A DIRECTOR OF THE
COMPANY WILL CONTINUE FOLLOWING THE END OF TERM (AND HE WILL RECEIVE SUCH FEES
AND OTHER COMPENSATION AS MAY BE PAYABLE TO NON-EMPLOYEE DIRECTORS UNDER THE
COMPANY’S DIRECTOR COMPENSATION PROGRAM IN EFFECT FROM TIME TO TIME) UNTIL HE
CEASES TO SERVE IN SUCH CAPACITY (PROVIDED, HOWEVER, THAT EXECUTIVE WILL CEASE
BEING VICE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY (BUT NOT A
DIRECTOR) EFFECTIVE AS OF THE DATE HEREOF).

 

2.             UPON THE END OF TERM, THE COMPANY SHALL PROVIDE THE FOLLOWING TO
EXECUTIVE (IN LIEU OF ANY PAYMENTS OR BENEFITS THAT MAY OTHERWISE BE PAYABLE
UNDER THE AGREEMENT):

 

(a)           any accrued but unpaid base salary of Executive for services
rendered to the End of Term, payable in accordance with the Company’s regular
payroll policies (and subject to applicable withholdings);

 

(b)           an amount in respect of accrued and unpaid vacation as of the End
of Term, payable within 30 days of the End of Term (and subject to applicable
withholdings);

 

(c)           reimbursement in accordance with the Company’s policies of any
unpaid reasonable business expenses and disbursements incurred by Executive
prior to the End of Term;

 

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provided, however, that Executive must submit vouchers for any such expenses in
accordance with the Company’s standard procedures on or prior to the End of
Term;

 

(d)           US$1,000,000, representing a bonus for 2009 in lieu of any amount
Executive would have otherwise been entitled to under any applicable incentive
compensation plan in respect of calendar year 2009, payable within 30 days of
the End of Term (and subject to applicable withholdings);

 

(e)           US$2,500,000 representing a special payment, payable in a lump sum
on no earlier than the date that is six months plus one day following the End of
Term and no later than December 15, 2010 (and subject to applicable
withholdings);

 

(f)            all unvested restricted stock units (other than restricted stock
units granted in connection with Executive’s service on the Board of Directors)
held by Executive as of the End of Term (i.e., the unvested portion of the
grants of restricted stock units awarded to Executive on April 15, 2008,
February 23, 2009 and March 24, 2009) will become fully vested and
non-forfeitable as of the End of Term and the underlying shares in respect of
such units (together with the underlying shares in respect of all vested
restricted stock units held by Executive as of the End of Term which have not
been delivered as of the End of Term) will be delivered six months plus one day
(or as soon as reasonably practicable thereafter) following the End of Term;

 

(g)           all vested stock options held by Executive as of the End of Term
will be governed by the plans and programs and the agreements and other
documents pursuant to which the awards were granted (it being understood that
any such vested stock options granted on or after April 15, 2008 will remain
exercisable until the earlier of (i) the third anniversary of the End of Term
and (ii) the scheduled expiration date thereof);

 

(h)           all unvested stock options (other than stock options granted in
connection with Executive’s service on the Board of Directors) held by Executive
immediately prior to the End of Term will be forfeited and canceled as of the
End of Term; and

 

(i)            for a period of three (3) years after the End of Term, Executive
shall continue to participate in all employee and executive benefit plans,
programs, and arrangements under Section 3(g) of the Agreement providing health,
medical, disability and life insurance benefits in which Executive was
participating immediately prior to the End of Term, the terms of which allow
Executive’s continued participation, as if Executive had continued in employment
with the Company during such period or, if such plans, programs, or arrangements
do not allow Executive’s continued participation, the Company shall reimburse
Executive (not, for the avoidance of doubt, on an after-tax basis) for the costs
he incurs in obtaining benefits that are reasonably comparable to the benefits
Executive would have received under such plans, programs, and arrangements in
which Executive was participating immediately prior to the End of Term, as if
Executive had received credit under such plans, programs, and arrangements for
service and age with the Company during such period following the End of Term,
with such benefits payable by the Company at the same times and in the same
manner as such benefits would have been received by Executive under such plans
(it being understood that the value of any insurance-provided benefits will be
based on the premium cost to Executive, which shall not exceed the highest risk
premium charged by a carrier having an investment grade or better credit
rating); provided, however, that, to the extent (and during the time) Executive
is eligible to participate in another employer’s benefit plans, programs, and
arrangements providing health, medical, disability and life insurance benefits,
(i) Executive will not be eligible to continue to participate in such benefit
plans, programs, and arrangements under Section 3(g) of the

 

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Agreement and (ii) Executive will not be entitled to such reimbursement (except
to the extent of any additional costs Executive incurs in obtaining additional
health, medical, disability and/or life insurance benefits which, when added to
the benefits Executive is eligible to receive under such other employer’s
benefit plans, programs, and arrangements providing health, medical, disability
and life insurance benefits, are reasonably comparable to the benefits Executive
would have received under such plans, programs, and arrangements under
Section 3(g) of the Agreement providing health, medical, disability and life
insurance benefits in which Executive was participating immediately prior to the
End of Term (such reimbursement not, for the avoidance of doubt, on an after-tax
basis)).

 

Except for any payments or benefits Executive has accrued or vested in pursuant
to Executive’s participation in the Company’s 401(k) Plan, deferred compensation
plan or employee stock purchase plan, which payments or benefits shall be
subject to the terms and conditions set forth in such plans, Executive
acknowledges and agrees that the payments described in this Section 2 fulfill
any and all of the Company’s obligations due to Executive under any agreement or
bonus, incentive compensation, severance or separation plan or allowance or any
other compensation or benefit plan or arrangement maintained by the Company or
any of its subsidiaries (including the Agreement), and Executive specifically
acknowledges and agrees that Executive is entitled to no other compensation or
benefits from the Company or any of its subsidiaries of any kind or nature
whatsoever.

 

3.             THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE
TAX IMPLICATIONS OF THE COMPENSATION AND BENEFITS TO BE PAID TO EXECUTIVE UNDER
THIS AMENDMENT, INCLUDING, WITHOUT LIMITATION, UNDER SECTION 409A OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AND APPLICABLE
ADMINISTRATIVE GUIDANCE AND REGULATIONS.  SECTION 409A OF THE CODE 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.  IF EXECUTIVE OR THE COMPANY REASONABLY BELIEVES THAT ANY PORTION OF
THE PAYMENTS OR BENEFITS DUE TO EXECUTIVE PURSUANT TO THIS AMENDMENT DOES NOT
COMPLY WITH (OR IS NOT EXEMPT FROM) SECTION 409A OF THE CODE, EXECUTIVE OR THE
COMPANY WILL PROMPTLY ADVISE THE OTHER AND WILL REASONABLY NEGOTIATE IN GOOD
FAITH TO AMEND THE TERMS OF THE PAYMENTS OR BENEFITS IN ORDER THAT SUCH PAYMENTS
OR BENEFIT ARRANGEMENTS COMPLY WITH (OR ARE EXEMPT FROM) THE REQUIREMENTS OF
SECTION 409A OF THE CODE OR IN ORDER TO MITIGATE ANY ADDITIONAL TAXES THAT MAY
APPLY UNDER SECTION 409A OF THE CODE IF COMPLIANCE OR EXEMPTION IS NOT
PRACTICABLE.  TO THE EXTENT ANY PAYMENTS OF MONEY OR OTHER BENEFITS DUE TO
EXECUTIVE UNDER THIS AGREEMENT COULD CAUSE THE APPLICATION OF AN ACCELERATION OR
ADDITIONAL TAX UNDER SECTION 409A OF THE CODE, SUCH PAYMENTS OR OTHER BENEFITS
SHALL BE DEFERRED IF DEFERRAL WILL MAKE SUCH PAYMENT OR OTHER BENEFITS COMPLIANT
UNDER SECTION 409A OF THE CODE, 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 ACCELERATION OR ADDITIONAL TAX.  TO THE EXTENT
ANY REIMBURSEMENTS OR IN-KIND BENEFITS DUE TO EXECUTIVE UNDER THIS AGREEMENT
CONSTITUTE DEFERRED COMPENSATION UNDER SECTION 409A OF THE CODE, ANY SUCH
REIMBURSEMENTS OR IN-KIND BENEFITS SHALL BE PAID TO EXECUTIVE 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 OF THE CODE.

 

4.             EXCEPT AS SET FORTH IN THIS AMENDMENT, ALL TERMS AND CONDITIONS
OF THE EMPLOYMENT AGREEMENT SHALL REMAIN UNCHANGED AND IN FULL FORCE AND EFFECT
UNTIL THE END OF TERM; PROVIDED, HOWEVER, THAT (A) THIS AMENDMENT SHALL GOVERN
AND SUPERSEDE ANY COMPENSATION AND BENEFITS CONTEMPLATED BY THE AGREEMENT IN
CONNECTION WITH ANY TERMINATION OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY AFTER
THE DATE HEREOF, (B) THE COMPENSATION AND BENEFITS PROVIDED FOR IN THIS
AMENDMENT SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SECTIONS
4(K) (EXCEPT, FOR THE AVOIDANCE OF DOUBT, REFERENCES THEREIN TO “TERMINATION
PAYMENTS AND BENEFITS PROVIDED FOR IN THIS SECTION 4” SHALL BE DEEMED TO REFER
TO

 

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PAYMENTS AND BENEFITS PROVIDED FOR IN THIS AMENDMENT) AND 5 OF THE AGREEMENT,
AND (C) SECTIONS 4(H), 4(I), 4(J), 4(K),  5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16
(SOLELY TO THE EXTENT TO PROVIDE FOR THE PAYMENT ON BEHALF OF EXECUTIVE (OR, IF
ALREADY PAID BY EXECUTIVE, THE REIMBURSEMENT TO EXECUTIVE) OF THE REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL INCURRED BY EXECUTIVE IN CONNECTION WITH THE
NEGOTIATION, PREPARATION, EXECUTION, AND/OR DELIVERY OF THIS AMENDMENT AND
RELATED DOCUMENTS (NOT TO EXCEED $10,000)) AND 17 SHALL APPLY TO THIS AMENDMENT
AND SURVIVE FOLLOWING THE END OF TERM IN ACCORDANCE WITH THEIR TERMS).

 

5.             THIS AMENDMENT MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS, EACH
OF WHICH SHALL FOR ALL PURPOSES BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH
SHALL CONSTITUTE THE SAME INSTRUMENT.

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be
executed on its behalf as of the date first above written.

 

 

 

SCIENTIFIC GAMES CORPORATION

 

 

 

 

 

By:

/s/ Jeffrey S. Lipkin

 

Name:

Jeffrey S. Lipkin

 

Title:

Vice President and Chief Financial Officer

 

 

 

 

 

/s/ Joseph R. Wright

 

Joseph R. Wright

 

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