EXHIBIT 10.1

SCIENTIFIC GAMES CORPORATION

INDUCEMENT STOCK OPTION GRANT AGREEMENT

FOR STEVEN WAYNE BEASON

THIS AGREEMENT, made as of the 8th day of August, 2005, between SCIENTIFIC GAMES
CORPORATION (the “Company”) and STEVEN WAYNE BEASON (the “Participant”).

WHEREAS, the Compensation Committee (the “Committee”) administers the Company’s
equity incentive compensation programs and is authorized to grant stock options
and other awards, including to newly hired employees; and

WHEREAS, the Participant was granted the option evidenced by this Agreement as
of the date hereof as an inducement to the Participant to become an employee of
the Company or a subsidiary of the Company as of that date;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows.

1.       GRANT OF OPTIONS. PURSUANT TO, AND SUBJECT TO, THE TERMS AND CONDITIONS
SET FORTH HEREIN, THE PARTICIPANT IS HEREBY GRANTED AN OPTION (THE “OPTION”) TO
PURCHASE 275,000 SHARES OF THE COMPANY’S CLASS A COMMON STOCK, $.01 PAR VALUE
PER SHARE (THE “COMMON STOCK”).  THE OPTION DOES NOT CONSTITUTE AN “INCENTIVE
STOCK OPTION” WITHIN THE MEANING OF SECTION 422 OF THE INTERNAL REVENUE CODE OF
1986.

2.       GRANT DATE.  THE GRANT DATE OF THE OPTION GRANTED HEREBY IS AUGUST 8,
2005.

3.       DEFINITIONS.  FOR PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS SHALL
BE DEFINED AS SET FORTH BELOW:

(A)     “BENEFICIARY” MEANS THE PERSON, PERSONS, TRUST, OR TRUSTS WHICH MAY BE
DESIGNATED BY THE PARTICIPANT IN A WRITTEN BENEFICIARY DESIGNATION FILED WITH
THE COMMITTEE TO RECEIVE THE BENEFITS SPECIFIED HEREUNDER UPON THE PARTICIPANT’S
DEATH. IF, UPON THE PARTICIPANT’S DEATH, THERE IS NO DESIGNATED BENEFICIARY OR
SURVIVING DESIGNATED BENEFICIARY, THEN THE TERM BENEFICIARY MEANS THE PERSON,
PERSONS, TRUST, OR TRUSTS ENTITLED BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION TO RECEIVE SUCH BENEFITS.

(B)     “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
FROM TIME TO TIME, INCLUDING RULES THEREUNDER AND SUCCESSOR PROVISIONS AND RULES
THERETO.

(C)     “FAIR MARKET VALUE” MEANS THE FAIR MARKET VALUE OF COMMON STOCK, AS
DETERMINED BY THE COMMITTEE OR UNDER PROCEDURES ESTABLISHED BY THE COMMITTEE.
UNLESS OTHERWISE DETERMINED BY THE COMMITTEE, THE FAIR MARKET VALUE OF COMMON
STOCK SHALL BE THE AVERAGE OF THE HIGH AND LOW SALES PRICES OF THE COMMON STOCK
ON A GIVEN DATE OR, IF THERE ARE NO SALES ON THAT DATE, ON THE LATEST PREVIOUS
DATE ON WHICH THERE WERE SALES, REPORTED FOR COMPOSITE TRANSACTIONS IN
SECURITIES LISTED ON THE PRINCIPAL TRADING MARKET ON WHICH THE COMMON STOCK IS
THEN LISTED.

4.       VESTING DATES. THIS OPTION SHALL VEST AND BECOME EXERCISABLE IN THE
FOLLOWING INSTALLMENTS:

 

Number of Shares

 

Dates

 

91,667

 

August 8, 2006

 

91,667

 

August 8, 2007

 

91,666

 

August 8, 2008 (the “Last Vesting Date”)

 

 

5.       EXERCISE PRICE. THE EXERCISE PRICE PER SHARE OF EACH SHARE WITH RESPECT
TO WHICH THIS OPTION IS GRANTED IS $29.18, WHICH IS NOT LESS THAN THE FAIR
MARKET VALUE OF A SHARE OF COMMON STOCK ON THE GRANT DATE.

6.       EXPIRATION DATE; EFFECT OF TERMINATION OF EMPLOYMENT.

(A)     SUBJECT TO THE PROVISIONS OF THIS AGREEMENT AND THE EMPLOYMENT AGREEMENT
BETWEEN THE PARTICIPANT AND SCIENTIFIC GAMES INTERNATIONAL, INC., A SUBSIDIARY
OF THE COMPANY, DATED AS OF AUGUST 8, 2005 (THE “EMPLOYMENT

 

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Agreement”), the Option granted hereby shall expire on August 8, 2015 (the
“Expiration Date”).

 

(B)     SUBJECT TO THE PROVISIONS OF THIS AGREEMENT AND THE EMPLOYMENT
AGREEMENT, IN THE EVENT THE EMPLOYMENT OF THE PARTICIPANT IS TERMINATED:

(I)                   FOR ANY REASON OTHER THAN FOR “CAUSE” (AS DEFINED IN THE
EMPLOYMENT AGREEMENT) OR DUE TO THE PARTICIPANT’S DEATH OR PERMANENT DISABILITY
(AS DEFINED IN THE COMPANY’S LONG-TERM DISABILITY PLAN), THE OPTION, TO THE
EXTENT THAT IT WAS EXERCISABLE IMMEDIATELY PRIOR TO THE TIME OF TERMINATION OF
EMPLOYMENT, SHALL REMAIN EXERCISABLE UNTIL THE EARLIER OF (X) THE CLOSE OF
BUSINESS ON THE 90TH DAY AFTER TERMINATION OF EMPLOYMENT AND (Y) THE EXPIRATION
DATE, AND THE OPTION, TO THE EXTENT THAT IT WAS NOT EXERCISABLE IMMEDIATELY
PRIOR TO THE TIME OF TERMINATION OF EMPLOYMENT, SHALL EXPIRE AT THE CLOSE OF
BUSINESS ON THE DATE OF TERMINATION OF EMPLOYMENT;

(II)                DUE TO THE PARTICIPANT’S DEATH OR DISABILITY, THE OPTION, TO
THE EXTENT THAT IT WAS EXERCISABLE IMMEDIATELY PRIOR TO DEATH OR TERMINATION OF
EMPLOYMENT, SHALL REMAIN EXERCISABLE BY THE PARTICIPANT OR THE PARTICIPANT’S
EXECUTOR OR ADMINISTRATOR OR BENEFICIARY (AS THE CASE MAY BE) UNTIL THE EARLIER
OF (X) THE FIRST ANNIVERSARY OF THE PARTICIPANT’S DEATH OR TERMINATION OF
EMPLOYMENT AND (Y) THE EXPIRATION DATE, AND THE OPTION, TO THE EXTENT THAT IT
WAS NOT EXERCISABLE IMMEDIATELY PRIOR TO DEATH OR TERMINATION OF EMPLOYMENT,
SHALL EXPIRE AT THE CLOSE OF BUSINESS ON THE DATE OF DEATH OR TERMINATION OF
EMPLOYMENT; OR

(III)             FOR “CAUSE,” THE OPTION SHALL EXPIRE AT THE COMMENCEMENT OF
BUSINESS ON THE DATE OF TERMINATION OF EMPLOYMENT.

7.       METHOD OF EXERCISE. THE OPTION SHALL BE EXERCISABLE IN WHOLE OR IN PART
BY DELIVERING NOTICE TO THE COMPANY’S PRINCIPAL OFFICE IN THE MANNER SPECIFIED
BY THE COMPANY. PAYMENT FOR SHARES OF COMMON STOCK PURCHASED UPON THE EXERCISE
OF THE OPTION SHALL BE MADE ON THE EFFECTIVE DATE OF SUCH EXERCISE EITHER: (I)
IN CASH, BY CERTIFIED CHECK, BANK CASHIER’S CHECK OR WIRE TRANSFER; OR (II) IN
SUCH OTHER FORM AS SHALL BE ACCEPTABLE TO THE COMMITTEE. CERTIFICATES FOR SHARES
OF COMMON STOCK PURCHASED UPON THE EXERCISE OF AN OPTION SHALL BE ISSUED IN THE
NAME OF THE PARTICIPANT OR HIS BENEFICIARY, AS THE CASE MAY BE, AND DELIVERED TO
THE PARTICIPANT OR HIS BENEFICIARY, AS THE CASE MAY BE, AS SOON AS PRACTICABLE
FOLLOWING THE EFFECTIVE DATE OF EXERCISE OF THE OPTION.

8.       ADMINISTRATION.

                (A)     AUTHORITY OF THE COMMITTEE.  THE COMMITTEE HAS FULL AND
FINAL AUTHORITY, IN EACH CASE SUBJECT TO AND CONSISTENT WITH THE PROVISIONS OF
THIS AGREEMENT, TO ADMINISTER THE OPTION, DETERMINE ALL MATTERS RELATING TO THE
OPTION, CONSTRUE AND INTERPRET THE OPTION AND THIS AGREEMENT AND CORRECT
DEFECTS, SUPPLY OMISSIONS, OR RECONCILE INCONSISTENCIES THEREIN, AND TO MAKE ALL
OTHER DECISIONS AND DETERMINATIONS AS THE COMMITTEE MAY DEEM NECESSARY OR
ADVISABLE FOR THE ADMINISTRATION OF THE OPTION.  THE COMMITTEE SHALL RETAIN FULL
POWER AND DISCRETION TO ACCELERATE, WAIVE OR MODIFY, AT ANY TIME, ANY TERM OR
CONDITION OF THE OPTION THAT IS NOT MANDATORY UNDER THIS AGREEMENT.

                (B)     LIMITATION OF LIABILITY.  THE COMMITTEE AND EACH MEMBER
THEREOF SHALL BE ENTITLED TO, IN GOOD FAITH, RELY OR ACT UPON ANY REPORT OR
OTHER INFORMATION FURNISHED TO HIM OR HER BY ANY EXECUTIVE OFFICER, OTHER
OFFICER OR EMPLOYEE OF THE COMPANY OR A SUBSIDIARY, THE COMPANY’S INDEPENDENT
AUDITORS, CONSULTANTS, OR ANY OTHER AGENTS ASSISTING IN THE ADMINISTRATION OF
THE OPTION OR THIS AGREEMENT.  MEMBERS OF THE COMMITTEE AND ANY OFFICER OR
EMPLOYEE OF THE COMPANY OR A SUBSIDIARY ACTING AT THE DIRECTION OR ON BEHALF OF
THE COMMITTEE SHALL NOT BE PERSONALLY LIABLE FOR ANY ACTION OR DETERMINATION
TAKEN OR MADE IN GOOD FAITH WITH RESPECT TO THE OPTION, AND SHALL, TO THE EXTENT
PERMITTED BY LAW, BE FULLY INDEMNIFIED AND PROTECTED BY THE COMPANY WITH RESPECT
TO ANY SUCH ACTION OR DETERMINATION.

9.       GENERAL PROVISIONS.

                (A)     COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS.  THE
COMPANY MAY, TO THE EXTENT DEEMED NECESSARY OR ADVISABLE BY THE COMMITTEE,
POSTPONE THE ISSUANCE OR DELIVERY OF COMMON STOCK OR PAYMENT OF OTHER BENEFITS
UNDER THE OPTION UNTIL COMPLETION OF SUCH REGISTRATION OR QUALIFICATION OF SUCH
COMMON STOCK OR OTHER REQUIRED ACTION UNDER ANY FEDERAL OR STATE LAW, RULE, OR
REGULATION, LISTING OR OTHER REQUIRED ACTION WITH RESPECT TO ANY STOCK EXCHANGE
OR AUTOMATED QUOTATION SYSTEM UPON WHICH THE COMMON STOCK OR OTHER SECURITIES OF
THE COMPANY ARE LISTED OR QUOTED, OR COMPLIANCE WITH ANY OTHER OBLIGATION OF THE
COMPANY, AS THE COMMITTEE MAY CONSIDER APPROPRIATE, AND MAY REQUIRE THE
PARTICIPANT TO MAKE SUCH REPRESENTATIONS, FURNISH SUCH INFORMATION AND COMPLY
WITH OR BE SUBJECT TO SUCH OTHER CONDITIONS AS THE COMPANY MAY CONSIDER
APPROPRIATE IN CONNECTION WITH THE ISSUANCE OR DELIVERY OF COMMON STOCK OR
PAYMENT OF OTHER BENEFITS IN COMPLIANCE WITH APPLICABLE LAWS, RULES, AND
REGULATIONS, LISTING REQUIREMENTS, OR OTHER OBLIGATIONS.

 

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                (B)     TRANSFERABILITY.  THE OPTION MAY NOT BE PLEDGED,
HYPOTHECATED OR OTHERWISE ENCUMBERED OR SUBJECT TO ANY LIEN, OBLIGATION OR
LIABILITY OF THE PARTICIPANT TO ANY PARTY, OR ASSIGNED OR TRANSFERRED BY THE
PARTICIPANT OTHERWISE THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION, AND
THE OPTION SHALL BE EXERCISED DURING THE LIFETIME OF THE PARTICIPANT ONLY BY THE
PARTICIPANT OR, IF THE PARTICIPANT IS INCAPACITATED, BY HIS GUARDIAN OR LEGAL
REPRESENTATIVE. IN THE EVENT THAT THE OPTION IS EXERCISED BY THE PARTICIPANT’S
GUARDIAN OR LEGAL REPRESENTATIVE, THE EXERCISE OF THE OPTION SHALL NOT BE
EFFECTIVE UNLESS AND UNTIL THE COMPANY HAS RECEIVED EVIDENCE SATISFACTORY TO IT
AS TO THE AUTHORITY OF SUCH GUARDIAN OR LEGAL REPRESENTATIVE. A BENEFICIARY OR
OTHER PERSON CLAIMING ANY RIGHTS UNDER THE AGREEMENT FROM OR THROUGH THE
PARTICIPANT SHALL BE SUBJECT TO ALL TERMS AND CONDITIONS OF THIS AGREEMENT
EXCEPT AS OTHERWISE DETERMINED BY THE COMMITTEE, AND TO ANY ADDITIONAL TERMS AND
CONDITIONS DEEMED NECESSARY OR APPROPRIATE BY THE COMMITTEE.

                (C)     ADJUSTMENTS.  IN THE EVENT THAT ANY DIVIDEND OR OTHER
DISTRIBUTION (WHETHER IN THE FORM OF CASH, COMMON STOCK, OR OTHER PROPERTY),
RECAPITALIZATION, FORWARD OR REVERSE SPLIT, REORGANIZATION, MERGER,
CONSOLIDATION, SPIN-OFF, COMBINATION, REPURCHASE, SHARE EXCHANGE, LIQUIDATION,
DISSOLUTION OR OTHER SIMILAR CORPORATE TRANSACTION OR EVENT AFFECTS THE COMMON
STOCK SUCH THAT AN ADJUSTMENT IS DETERMINED BY THE COMMITTEE TO BE APPROPRIATE
HEREUNDER THEN THE COMMITTEE SHALL, IN SUCH MANNER AS IT MAY DEEM EQUITABLE,
ADJUST ANY OR ALL OF (I) THE NUMBER AND KIND OF SHARES OF COMMON STOCK OR OTHER
SECURITIES SUBJECT TO OR DELIVERABLE IN RESPECT OF THE OUTSTANDING OPTION AND
(II) THE EXERCISE PRICE, GRANT PRICE OR PURCHASE PRICE RELATING TO THE OPTION,
AND/OR MAKE PROVISION FOR PAYMENT OF CASH OR OTHER PROPERTY IN RESPECT OF THE
OPTION.

                (D)     LIMITATION ON RIGHTS CONFERRED.  NEITHER THIS AGREEMENT
NOR ANY ACTION TAKEN HEREUNDER SHALL BE CONSTRUED AS (I) GIVING THE PARTICIPANT
THE RIGHT TO CONTINUE IN THE EMPLOY OR SERVICE OF THE COMPANY OR A SUBSIDIARY,
(II) INTERFERING IN ANY WAY WITH THE RIGHT OF THE COMPANY OR A SUBSIDIARY TO
TERMINATE THE PARTICIPANT’S EMPLOYMENT OR SERVICE AT ANY TIME, (III) GIVING THE
PARTICIPANT ANY CLAIM TO BE GRANTED ANY AWARD UNDER ANY OPTION OR BENEFIT PLAN
OR TO BE TREATED UNIFORMLY WITH OTHER PARTICIPANTS AND EMPLOYEES, OR
(IV) CONFERRING ON THE PARTICIPANT ANY OF THE RIGHTS OF A STOCKHOLDER OF THE
COMPANY UNLESS AND UNTIL THE PARTICIPANT IS DULY ISSUED OR TRANSFERRED SHARES OF
COMMON STOCK IN ACCORDANCE WITH THE TERMS OF THE OPTION.

                (E)     FRACTIONAL SHARES.  NO FRACTIONAL SHARES OF COMMON STOCK
SHALL BE ISSUED OR DELIVERED PURSUANT TO THE OPTION.  THE COMMITTEE SHALL
DETERMINE WHETHER CASH OR OTHER PROPERTY SHALL BE ISSUED OR PAID IN LIEU OF SUCH
FRACTIONAL SHARES OR WHETHER SUCH FRACTIONAL SHARES OR ANY RIGHTS THERETO SHALL
BE FORFEITED OR OTHERWISE ELIMINATED.

                10.     TAXES. THE COMPANY AND ANY SUBSIDIARY IS AUTHORIZED TO
WITHHOLD FROM THE OPTION, ANY PAYMENT RELATING TO THE OPTION, INCLUDING FROM A
DISTRIBUTION OF COMMON STOCK, OR ANY PAYROLL OR OTHER PAYMENT TO THE
PARTICIPANT, AMOUNTS OF WITHHOLDING AND OTHER TAXES DUE OR POTENTIALLY PAYABLE
IN CONNECTION WITH THE OPTION, AND TO TAKE SUCH OTHER ACTION AS THE COMMITTEE
MAY DEEM ADVISABLE TO ENABLE THE COMPANY AND THE PARTICIPANT TO SATISFY
OBLIGATIONS FOR THE PAYMENT OF WITHHOLDING TAXES AND OTHER TAX OBLIGATIONS
RELATING TO THE OPTION.  THIS AUTHORITY SHALL INCLUDE AUTHORITY TO WITHHOLD OR
RECEIVE COMMON STOCK OR OTHER PROPERTY AND TO MAKE CASH PAYMENTS IN RESPECT
THEREOF IN SATISFACTION OF A PARTICIPANT’S TAX OBLIGATIONS, EITHER ON A
MANDATORY OR ELECTIVE BASIS IN THE DISCRETION OF THE COMMITTEE.

                11.     SECURITIES MATTERS.  THE EXERCISE OF THE OPTION GRANTED
HEREBY SHALL BE EFFECTIVE ONLY AT SUCH TIME AS COUNSEL TO THE COMPANY SHALL HAVE
DETERMINED THAT THE ISSUANCE AND DELIVERY OF SHARES OF COMMON STOCK PURSUANT TO
SUCH EXERCISE IS IN COMPLIANCE WITH ALL APPLICABLE LAWS, REGULATIONS OF
GOVERNMENTAL AUTHORITY AND REQUIREMENTS OF ANY SECURITIES EXCHANGE ON WHICH
SHARES OF COMMON STOCK ARE TRADED. THE COMMITTEE MAY, IN ITS SOLE DISCRETION,
DEFER THE EFFECTIVENESS OF ANY EXERCISE OF THE OPTION IN ORDER TO ALLOW THE
ISSUANCE OF SHARES OF COMMON STOCK PURSUANT THERETO TO BE MADE PURSUANT TO
REGISTRATION OR AN EXEMPTION FROM REGISTRATION OR OTHER METHODS FOR COMPLIANCE
AVAILABLE UNDER FEDERAL OR STATE SECURITIES LAWS. THE COMMITTEE SHALL INFORM THE
PARTICIPANT IN WRITING OF ITS DECISION TO DEFER THE EFFECTIVENESS OF THE
EXERCISE OF THE OPTION. DURING THE PERIOD THAT THE EFFECTIVENESS OF THE EXERCISE
OF THE OPTION HAS BEEN DEFERRED, THE PARTICIPANT MAY, BY WRITTEN NOTICE,
WITHDRAW SUCH EXERCISE AND OBTAIN THE REFUND OF ANY AMOUNT PAID WITH RESPECT
THERETO.

                12.     DELAYS OR OMISSIONS. NO DELAY OR OMISSION TO EXERCISE
ANY RIGHT, POWER OR REMEDY ACCRUING TO ANY PARTY HERETO UPON ANY BREACH OR
DEFAULT OF ANY PARTY UNDER THIS AGREEMENT, SHALL IMPAIR ANY SUCH RIGHT, POWER OR
REMEDY OF SUCH PARTY, NOR SHALL IT BE CONSTRUED TO BE A WAIVER OF ANY SUCH
BREACH OR DEFAULT, OR AN ACQUIESCENCE THEREIN, OR OF OR IN ANY SIMILAR BREACH OR
DEFAULT THEREAFTER OCCURRING, NOR SHALL ANY WAIVER OF ANY SINGLE BREACH OR
DEFAULT BE DEEMED A WAIVER OF ANY OTHER BREACH OR DEFAULT THERETOFORE OR
THEREAFTER OCCURRING.  ANY WAIVER, PERMIT, CONSENT OR APPROVAL OF ANY KIND OR
CHARACTER ON THE PART OF ANY PARTY OF ANY BREACH OR DEFAULT UNDER THIS
AGREEMENT, OR ANY WAIVER ON THE PART OF ANY PARTY OF ANY PROVISIONS OR
CONDITIONS OF THIS AGREEMENT, MUST BE IN A WRITING SIGNED BY SUCH PARTY AND
SHALL BE EFFECTIVE ONLY TO THE EXTENT SPECIFICALLY SET FORTH IN SUCH WRITING.

                13.     INTEGRATION. THIS AGREEMENT, AND THE OTHER DOCUMENTS
REFERRED TO HEREIN OR DELIVERED PURSUANT HERETO WHICH FORM A PART HEREOF, AND
THE EMPLOYMENT AGREEMENT CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH
RESPECT TO ITS SUBJECT MATTER.  THERE ARE NO RESTRICTIONS, AGREEMENTS, PROMISES,
REPRESENTATIONS, WARRANTIES, COVENANTS OR UNDERTAKINGS WITH

 

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RESPECT TO THE SUBJECT MATTER HEREOF OTHER THAN THOSE EXPRESSLY SET FORTH HEREIN
AND IN THE EMPLOYMENT AGREEMENT.  THIS AGREEMENT AND THE EMPLOYMENT AGREEMENT
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN THE PARTIES WITH
RESPECT TO ITS SUBJECT MATTER.

                14.     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE PROVISIONS GOVERNING CONFLICT OF LAWS.

                15.     PARTICIPANT ACKNOWLEDGMENT.  THE PARTICIPANT HEREBY
ACKNOWLEDGES THAT ALL DECISIONS, DETERMINATIONS AND INTERPRETATIONS OF THE
COMMITTEE IN RESPECT OF THIS AGREEMENT AND THE OPTION SHALL BE FINAL AND
CONCLUSIVE.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
its duly authorized officer, and the Participant has signed this Agreement on
his own behalf, thereby representing that he has carefully read and understands
this Agreement, as of the day and year first written above.

 

 

SCIENTIFIC GAMES CORPORATION

 

 

 

 

 

By:

 

 

Martin E. Schloss

 

Vice President, General Counsel and Secretary

 

 

 

 

 

PARTICIPANT:

 

 

 

 

 

Steven Wayne Beason

 

 

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