EXHIBIT 10.39

 

AMENDMENT TO SUPERSEDING EMPLOYMENT, SEPARATION AND GENERAL RELEASE AGREEMENT

 

AMENDMENT TO SUPERSEDING EMPLOYMENT, SEPARATION AND GENERAL RELEASE AGREEMENT
(THIS “AMENDMENT”), DATED AS OF DECEMBER 30, 2008, BY AND BETWEEN SCIENTIFIC
GAMES INTERNATIONAL, INC., A DELAWARE CORPORATION (THE “COMPANY”), AND WILLIAM
J. HUNTLEY (“EXECUTIVE”).

 

WHEREAS, Executive has been employed pursuant to an Employment Agreement dated
as of August 1, 2006 by and between the Company and Executive (the “Original
Agreement”), as amended by the Superseding Employment, Separation and General
Release Agreement dated as of July 1, 2008 (the “Superseding Agreement” and,
together with the Original Agreement, the “Employment Agreement”); and

 

WHEREAS, the Company and Executive desire to amend the Employment Agreement as
set forth herein to bring the Employment Agreement into compliance with
Section 409A of the Internal Revenue Code of 1986 and the regulations and
Treasury guidance thereunder; and

 

WHEREAS, the amendments contemplated hereby are intended to bring the timing of,
and certain procedural aspects with respect to, certain payments under the
Employment Agreement into compliance with Section 409A but not to otherwise
affect Executive’s right to such payments.

 

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.                                      SECTION 4(G) OF THE ORIGINAL AGREEMENT
IS HEREBY AMENDED BY ADDING THE FOLLOWING THREE SENTENCES AT THE END THEREOF:

 

“To the extent any payments of money or other benefits due to Executive
hereunder 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.”

 

For the avoidance of doubt, Section 4(g) of the Original Agreement (as amended
hereby) shall apply to the Original Agreement as well as the Superseding
Agreement, as may be applicable (notwithstanding anything in the Superseding
Agreement to the contrary).

 

2.                                      SECTION 5(F) OF THE ORIGINAL AGREEMENT
IS HEREBY AMENDED BY DELETING THE END OF THE FIRST SENTENCE COMMENCING WITH “AND
SUCH AMOUNT” AND REPLACING SUCH PORTION OF THE SENTENCE WITH THE FOLLOWING:

 

“AND SUCH AMOUNT SHALL BE PAYABLE OVER A PERIOD OF TWELVE (12) MONTHS AFTER
TERMINATION IN ACCORDANCE WITH SECTION 5(H) OF THIS AGREEMENT; PROVIDED,
HOWEVER, TO THE EXTENT THAT SUCH FOREGOING AMOUNT IS EXEMPT FROM SECTION 409A OF
THE CODE AND/OR IF SUCH CHANGE IN CONTROL CONSTITUTES A CHANGE IN OWNERSHIP,
CHANGE IN EFFECTIVE CONTROL OR A CHANGE IN OWNERSHIP OF A

 

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SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY UNDER TREASURY REGULATION
SECTION 1.409A-3(I)(5), THE FOREGOING AMOUNT, AS WELL AS THE AMOUNT PAYABLE
UNDER SECTION 5(E)(IV) OF THIS AGREEMENT, SHALL BE PAID IN A LUMP SUM IN
ACCORDANCE WITH SECTION 5(H) OF THIS AGREEMENT.”

 

3.                                      SECTION 5(H) OF THE ORIGINAL AGREEMENT
IS HEREBY AMENDED BY SUBSTITUTING “SECTION 5(C)(II), 5(E)(II) OR 5(F) (SOLELY
WITH RESPECT TO THE AMOUNT DETERMINED BY REFERENCE TO SECTION 5(E)(II) AND
SUBJECT TO THE PROVISO IN THE FIRST SENTENCE OF SECTION 5(F))” FOR “SECTIONS
5(C)(II) OR 5(E)(II)” IN THE FIRST SENTENCE OF SUCH SECTION.

 

4.                                      SECTION 2(B) OF THE SUPERSEDING
AGREEMENT IS HEREBY AMENDED AS FOLLOWS:

 

(A)                                  NOTWITHSTANDING ANYTHING IN THE SUPERSEDING
AGREEMENT TO THE CONTRARY, THE AMOUNTS REFERRED TO IN SECTION 2(B)(II) OF THE
SUPERSEDING AGREEMENT (OTHER THAN UNUSED VACATION AS OF FEBRUARY 1, 2009) SHALL
BE PAID ON A SPECIFIED PAYMENT DATE (WITHIN THE MEANING OF THE TREASURY
REGULATIONS UNDER IRC SECTION 409A) COMPRISING THE PERIOD BETWEEN FEBRUARY 1,
2009 AND MARCH 2, 2009 (SUBJECT TO DEDUCTIONS OR AMOUNTS TO BE WITHHELD AS
REQUIRED BY APPLICABLE LAW AND REGULATIONS), EXCEPT TO THE EXTENT OTHERWISE
PROVIDED IN THE APPLICABLE BENEFIT PLANS, PROGRAMS OR ARRANGEMENTS.

 

(B)                                 NOTWITHSTANDING ANYTHING IN THE SUPERSEDING
AGREEMENT TO THE CONTRARY, THE AMOUNT REFERRED TO IN SECTION 2(B)(II) OF THE
SUPERSEDING AGREEMENT IN RESPECT OF UNUSED VACATION AS OF FEBRUARY 1, 2009 SHALL
BE PAID ON A SPECIFIED PAYMENT DATE (WITHIN THE MEANING OF THE TREASURY
REGULATIONS UNDER IRC SECTION 409A) COMPRISING THE PERIOD BETWEEN FEBRUARY 1,
2009 AND MARCH 2, 2009 (SUBJECT TO DEDUCTIONS OR AMOUNTS TO BE WITHHELD AS
REQUIRED BY APPLICABLE LAW AND REGULATIONS).

 

(C)                                  NOTWITHSTANDING ANYTHING IN THE SUPERSEDING
AGREEMENT TO THE CONTRARY, THE AMOUNT REFERRED TO IN SECTION 2(B)(V) OF THE
SUPERSEDING AGREEMENT ($2,881,806.25, WHICH REPRESENTS THE VALUE OF EXECUTIVE’S
SERP BENEFIT ON DECEMBER 31, 2004 INCREASED BY INTEREST AT AN ANNUAL RATE OF
4.89% FROM JANUARY 1, 2005 TO THE PAYMENT DATE, WHICH AMOUNT IS GRANDFATHERED
UNDER IRC SECTION 409A) SHALL BE PAID ON THE SPECIFIED PAYMENT DATE (WITHIN THE
MEANING OF THE TREASURY REGULATIONS UNDER IRC SECTION 409A) OF FEBRUARY 2, 2009
(SUBJECT TO DEDUCTIONS OR AMOUNTS TO BE WITHHELD AS REQUIRED BY APPLICABLE LAW
AND REGULATIONS).

 

(D)                                 NOTWITHSTANDING ANYTHING IN THE SUPERSEDING
AGREEMENT TO THE CONTRARY, THE AMOUNT REFERRED TO IN SECTION 2(B)(VI) OF THE
SUPERSEDING AGREEMENT (WHICH SHALL BE THE CORRECTED AMOUNT OF $1,422,458.01,
WHICH REPRESENTS THE EXCESS OF THE TOTAL VALUE OF EXECUTIVE’S SERP BENEFIT OVER
THE AMOUNT PAYABLE UNDER SECTION 2(B)(V) OF THE SUPERSEDING AGREEMENT,
CALCULATED AS PROVIDED IN SECTION 2.13(A) OF THE SERP) SHALL BE PAID ON THE
SPECIFIED PAYMENT DATE (WITHIN THE MEANING OF THE TREASURY REGULATIONS UNDER IRC
SECTION 409A) OF AUGUST 3, 2009 (SUBJECT TO DEDUCTIONS OR AMOUNTS TO BE WITHHELD
AS REQUIRED BY APPLICABLE LAW AND REGULATIONS).  THE TOTAL VALUE OF EXECUTIVE’S
SERP BENEFIT IS BASED ON THE PRIOR VALUATION OF $3,788,461 AS OF DECEMBER 31,
2005, INCREASED BY INTEREST AT AN ANNUAL RATE OF 4% CREDITED AND COMPOUNDED
ANNUALLY FROM DECEMBER 31, 2005 TO THE PAYMENT DATE.

 

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(E)                                  NOTWITHSTANDING ANYTHING IN THE SUPERSEDING
AGREEMENT TO THE CONTRARY, (I) 50% OF THE AMOUNT REFERRED TO IN
SECTION 2(B)(VII) OF THE SUPERSEDING AGREEMENT SHALL BE PAID ON A SPECIFIED
PAYMENT DATE (WITHIN THE MEANING OF THE TREASURY REGULATIONS UNDER IRC
SECTION 409A) COMPRISING THE PERIOD BETWEEN AUGUST 1, 2009 AND AUGUST 14, 2009
(SUBJECT TO DEDUCTIONS OR AMOUNTS TO BE WITHHELD AS REQUIRED BY APPLICABLE LAW
AND REGULATIONS) AND (II) THE REMAINING 50% OF THE AMOUNT REFERRED TO IN
SECTION 2(B)(VII) OF THE SUPERSEDING AGREEMENT WILL BE PAID IN INSTALLMENTS ON
SPECIFIED PAYMENT DATES (WITHIN THE MEANING OF THE TREASURY REGULATIONS UNDER
IRC SECTION 409A) COMPRISING EACH PAY DATE UNDER THE COMPANY’S REGULAR PAYROLL
PRACTICES OVER THE SIX-MONTH PERIOD BEGINNING AUGUST 1, 2009.

 

5.                                      FOR THE AVOIDANCE OF DOUBT, FOLLOWING
THE END OF EXECUTIVE’S TERM OF EMPLOYMENT ON FEBRUARY 1, 2009, EXECUTIVE SHALL
NOT BE ENTITLED TO ANY OF THE PAYMENTS AND OTHER BENEFITS CONTEMPLATED BY
SECTION 5 OF THE ORIGINAL AGREEMENT OR SECTION 2 OF THE SUPERSEDING AGREEMENT
OTHER THAN THE PAYMENTS AND BENEFITS CONTEMPLATED BY SECTION 2(B) OF THE
SUPERSEDING AGREEMENT (AS AMENDED HEREBY).

 

6.                                      EMPLOYMENT AGREEMENT.  EXCEPT AS SET
FORTH IN THIS AMENDMENT, ALL OTHER TERMS AND CONDITIONS OF THE EMPLOYMENT
AGREEMENT SHALL REMAIN UNCHANGED AND IN FULL FORCE AND EFFECT.

 

7.                                      COUNTERPARTS.  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.

 

8.                                      HEADINGS.  THE HEADINGS OF THE
PARAGRAPHS HEREIN ARE INCLUDED SOLELY FOR CONVENIENCE OF REFERENCE AND SHALL NOT
CONTROL THE MEANING OR INTERPRETATION OF ANY PROVISION OF THIS AMENDMENT.

 

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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 INTERNATIONAL, INC.

 

 

 

 

 

By:

/s/ Ira H. Raphaelson

 

Name:

Ira H. Raphaelson

 

Title:

Vice President, General Counsel and Secretary

 

 

 

 

 

 

/s/ William J. Huntley

 

William J. Huntley

 

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