EXHIBIT 10.26

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

Amendment to Employment Agreement (this “Amendment”), dated as of December 30,
2008, by and between Scientific Games Corporation, a Delaware corporation (the
“Company”), and Michael R. Chambrello (“Executive”).

 

WHEREAS, Executive has been employed pursuant to an Employment Agreement dated
as of July 1, 2005 by and between the Company and Executive (the “2005
Agreement”) as amended by a letter agreement dated August 2, 2006 (the
“August 2006 Amendment”) and a letter agreement dated May 8, 2008 (the “May 2008
Amendment” and, collectively with the 2005 Agreement and the August 2006
Amendment, 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 6(I) OF THE EMPLOYMENT AGREEMENT IS HEREBY AMENDED BY
INSERTING THE FOLLOWING NEW SENTENCE AFTER THE FIRST SENTENCE THEREOF:

 

“THE COMPANY SHALL (I) PROVIDE EXECUTIVE WITH THE PROPOSED FORM OF RELEASE
REFERRED TO IN THE IMMEDIATELY PRECEDING SENTENCE NO LATER THAN TWO (2) DAYS
FOLLOWING THE TERMINATION DATE, (II) THE EXECUTIVE SHALL HAVE 21 DAYS TO
CONSIDER THE RELEASE AND IF HE EXECUTES THE RELEASE, SHALL HAVE SEVEN DAYS AFTER
EXECUTION OF THE RELEASE TO REVOKE THE RELEASE, AND, ABSENT SUCH REVOCATION, THE
RELEASE SHALL BECOME BINDING, AND (III) PROVIDED EXECUTIVE DID NOT REVOKE THE
RELEASE,  PAYMENTS CONTINGENT ON THE RELEASE (IF ANY) SHALL BE PAID NO EARLIER
THAN THE EIGHT (8) DAYS AFTER EXECUTION IN ACCORDANCE WITH THE APPLICABLE
PROVISIONS HEREIN.”

 

2.             SECTION 6(J)(I) OF THE EMPLOYMENT AGREEMENT IS HEREBY AMENDED TO
(A) DELETE THE WORDS “A LUMP SUM PAYMENT EQUAL TO THE SUM OF” AND REPLACE SUCH
WORDS WITH “THE FOLLOWING AMOUNTS” AND (B) ADD THE FOLLOWING SENTENCES
IMMEDIATELY PRIOR TO THE LAST SENTENCE THEREOF:

 

“THE AMOUNTS REFERRED TO SECTION 6(J)(I)(A) AND (B) SHALL BE PAYABLE IN
ACCORDANCE WITH THE TIMING CONTEMPLATED BY SECTIONS 6(E)(II) AND (III),
RESPECTIVELY; PROVIDED, HOWEVER, THAT, TO THE EXTENT SUCH AMOUNTS ARE EXEMPT
FROM SECTION 409A AND/OR IF SUCH CHANGE IN CONTROL CONSTITUTES A CHANGE IN
OWNERSHIP, CHANGE IN EFFECTIVE CONTROL OR A CHANGE IN OWNERSHIP OF A SUBSTANTIAL
PORTION OF THE ASSETS OF THE COMPANY UNDER REGULATION
SECTION 1.409A-3(I)(5) (COLLECTIVELY, A “409A CHANGE IN CONTROL”), THE FOREGOING
AMOUNTS SHALL BE PAID IN A LUMP SUM AS SOON AS PRACTICABLE, BUT IN NO EVENT
LATER THAN 30 DAYS, AFTER SUCH TERMINATION.  THE AMOUNTS REFERRED TO
SECTION 6(J)(I)(C) AND (D) SHALL BE PAYABLE IN A LUMP SUM AS SOON AS
PRACTICABLE, BUT IN NO EVENT LATER THAN 30 DAYS, AFTER SUCH TERMINATION.

 

SECTION 6(J)(II) OF THE EMPLOYMENT AGREEMENT IS HEREBY AMENDED TO (I) DELETE THE
WORDS “A LUMP SUM PAYMENT EQUAL TO THE SUM OF” AND (II) ADD THE FOLLOWING
SENTENCES AT THE END THEREOF:

 

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“THE AMOUNTS REFERRED TO SECTION 6(J)(I)(A) AND (B) SHALL BE PAYABLE IN
ACCORDANCE WITH THE TIMING CONTEMPLATED BY SECTION 6(E)(II) AND (III),
RESPECTIVELY (EXCEPT THAT SUCH PAYMENTS SHALL BE TRIGGERED BY, AND FOLLOW, THE
CHANGE OF CONTROL AND NOT THE TERMINATION OF EXECUTIVE’S EMPLOYMENT); PROVIDED,
HOWEVER, THAT, TO THE EXTENT SUCH AMOUNTS ARE EXEMPT FROM SECTION 409A AND/OR IF
SUCH CHANGE IN CONTROL CONSTITUTES A 409A CHANGE IN CONTROL, THE FOREGOING
AMOUNTS SHALL BE PAID IN A LUMP SUM AS SOON AS PRACTICABLE, BUT IN NO EVENT
LATER THAN 30 DAYS, AFTER SUCH CHANGE OF CONTROL.  THE AMOUNTS REFERRED TO
SECTION 6(J)(I)(C) AND (D) SHALL BE PAYABLE IN A LUMP SUM AS SOON AS
PRACTICABLE, BUT IN NO EVENT LATER THAN 30 DAYS, AFTER SUCH CHANGE OF CONTROL.

 

3.             THE SECTION OF THE MAY 2008 AMENDMENT TITLED “TIMING OF CERTAIN
PAYMENTS UNDER SECTION 6” IS HEREBY AMENDED TO READ:

 

“PAYMENTS PURSUANT TO SEVERANCE PROVISIONS IN THE 2005 AGREEMENT, AS MODIFIED BY
THE MAY 2008 AMENDMENT, IF ANY, SHALL BE PAYABLE IN ACCORDANCE WITH THE PAYMENT
DETAILS DESCRIBED IN SECTION 6 IN THE 2005 AGREEMENT; PROVIDED, HOWEVER, THAT IF
NECESSARY TO COMPLY WITH SECTION 409A OF THE CODE, AND APPLICABLE ADMINISTRATIVE
GUIDANCE AND REGULATIONS, AND IF EXECUTIVE IS DEEMED ON THE DATE OF TERMINATION
TO BE A “SPECIFIED EMPLOYEE” WITHIN THE MEANING OF THAT TERM UNDER SECTION 409A
OF THE CODE, SUCH PAYMENTS SHALL BE MADE AS FOLLOWS: (1) NO PAYMENTS SHALL BE
MADE FOR A SIX-MONTHS PERIOD FOLLOWING THE DATE OF TERMINATION, (2) AN AMOUNT
EQUAL TO THE AGGREGATE SUM THAT WOULD HAVE BEEN OTHERWISE PAYABLE DURING THE
INITIAL SIX-MONTHS PERIOD SHALL BE PAID IN A LUMP SUM SIX MONTHS FOLLOWING THE
DATE OF TERMINATION, AND (3) DURING THE PERIOD BEGINNING SIX MONTHS FOLLOWING
THE DATE OF TERMINATION THROUGH THE REMAINDER OF THE TERMINATION PAYMENTS PERIOD
AS DETAILED IN SECTION 6 OF THE 2005 AGREEMENT, PAYMENTS OF THE REMAINING AMOUNT
(IF ANY) SHALL BE PAYABLE IN EQUAL INSTALLMENTS IN ACCORDANCE WITH THE COMPANY’S
STANDARD PAYROLL PRACTICES. IN ADDITION, NOTWITHSTANDING ANY OTHER PROVISION
WITH RESPECT TO THE TIMING OF PAYMENTS UNDER THIS AGREEMENT, IF NECESSARY TO
COMPLY WITH SECTION 409A OF THE CODE, AND APPLICABLE ADMINISTRATIVE GUIDANCE AND
REGULATIONS, AMOUNTS PAYABLE FOLLOWING TERMINATION OF EMPLOYMENT IN A LUMP SUM
SHALL INSTEAD BE PAID SIX MONTHS FOLLOWING THE DATE OF TERMINATION.”

 

4.             THE MAY 2008 AMENDMENT IS HEREBY AMENDED TO ADD THE FOLLOWING
LANGUAGE AT THE END THEREOF:

 

“NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, TO THE EXTENT ANY PAYMENTS OF
MONEY OR OTHER BENEFITS DUE TO EXECUTIVE HEREUNDER, INCLUDING BUT NOT LIMITED TO
THOSE PURSUANT SECTION 6(J)(I) AND (II), COULD CAUSE THE APPLICATION OF AN
ACCELERATED 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 PAYMENT 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 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.”

 

5.             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.

 

6.             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.

 

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7.             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 CORPORATION

 

 

 

 

 

By:

/s/ Ira H. Raphaelson

 

Name:

Ira H. Raphaelson

 

Title:

Vice President, General Counsel and Secretary

 

 

 

 

 

 

/s/ Michael R. Chambrello

 

Michael R. Chambrello

 

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