Exhibit 10.45


 


October 6,
2008


 


Ira
H. Raphaelson


Vice
President, General Counsel & Secretary


Scientific
Games Corporation


750
Lexington Avenue


New
York, New York


 


Dear
Ira:


 


This
will confirm our understanding regarding certain amendments to the Employment and
Severance Benefits Agreement, dated December 15, 2005 (effective as of February 1,
2006), between you and Scientific Games Corporation (the “Company”), as amended
by the Letter Agreement, dated as of August 2, 2006, by and between you
and the Company (as amended hereby, the “Agreement”).  Except as expressly set forth herein, the
terms of the Agreement shall remain in full force and effect and are hereby
ratified and confirmed in all respects. 
Capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Agreement (except as otherwise modified
hereby).


 


Term.  The “Term”
set forth in Section 1 of the Agreement shall be extended to February 1,
2012 (as may be extended in accordance with Section 1  of
the Agreement and subject to earlier termination in accordance with the
Agreement).


 


Base
Salary.  Effective February 1, 2009, your “Base Salary”
shall be six hundred nineteen thousand five hundred US dollars (US$619,500) per
year, subject to increases thereof as may be determined from time to time in
the sole discretion of the Compensation Committee of the Company.


 


Termination
in connection with Change in Control. In the event your employment is terminated by
the Company without Cause or by you for Good Reason herein and such termination
occurs upon or within one year immediately following a “Change in Control” (as
defined below), you shall be entitled to (without duplication):


 


(1)                                 the Accrued
Obligations (as defined in Section 5(b) of the Agreement);


 


(2)                                 an amount equal to two times the sum of (a) your
annual Base Salary and (b) an amount equal to the highest Annual Bonus
paid to you in respect of the two most recent fiscal years of the Company but
not more than your Target Bonus for the then-current fiscal year, payable in a
lump sum in accordance with the provisions set forth under the caption “Timing
of Certain Payments” below;


 


(3)                                 except to the extent otherwise provided at
the time of grant under the terms of any equity award made to you, all stock
options, deferred stock, restricted stock and other equity-based awards held by
you at termination will become fully 


 


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vested and non-forfeitable, and, in all other respects, all such
options and other awards shall be governed by the plans and programs and the
agreements and other documents pursuant to which the awards were granted;


 


(4)                                 no later than March 15 following the end
of the fiscal year in which such termination occurs, in lieu of the Annual
Bonus for the year in which such termination occurs, the pro rata portion of
any Annual Bonus which would have been payable to you had you remained in
employment with the Company during the entire year in which such termination
occurred (such pro rata calculation to be determined by multiplying a fraction,
the numerator of which is the number of whole months in such year prior to such
termination and the denominator of which is 12, times the Annual Bonus which
would have been payable to you had you remained employed with the Company);


 


(5)                                 if you elect 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.


 


Notwithstanding the foregoing, payments pursuant to
this Section shall be reduced by the amount necessary, if any, to ensure
that the aggregate compensation to be received by you in connection with such “Change
in Control” does not constitute a “parachute payment,” as such term is defined
in 26 U.S.C. § 280G.


 


For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if: (i) any “person” as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as
used in sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) of the Exchange Act but excluding the
Company and any subsidiary or affiliate and any employee benefit plan sponsored
or maintained by the Company or any subsidiary or affiliate (including any
trustee of such plan acting as trustee) or any current shareholder of 20% or
more of the outstanding common stock, directly or indirectly, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing at least 40% of the combined voting power of the Company’s
then-outstanding securities; (ii) the stockholders of the Company approve
a merger, consolidation, recapitalization, or reorganization of SGC, or a
reverse stock split of any class of voting securities of the Company, or the
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least 60% of the total
voting power represented by the voting securities of the Company or the
surviving entity outstanding immediately after such transaction being
beneficially owned by persons who together beneficially owned at least 80% of
the combined voting power of the voting securities of the Company outstanding
immediately prior to such transaction; provided that, for purposes hereof, such
continuity of ownership (and preservation of relative voting power) shall be
deemed to be satisfied if the failure to meet such 60% threshold is due solely
to the acquisition of voting securities by an employee benefit plan of the
Company or such surviving entity or of any subsidiary of the Company or such
surviving entity; (iii) the stockholders of the Company approve a plan of
complete liquidation of the Company, an agreement for the sale or disposition
by the Company of all or substantially all of its assets (or any transaction
having a similar effect), or the Company sells all or substantially all of the
stock of the Company to any person or entity other than an affiliate of the
Company; or (iv) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, together with any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (i),
(ii), or (iii) above) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at 


 


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least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority of the Board.


 


Termination Upon Expiration of
Agreement.  In the event that the
Agreement expires on or after February 1, 2012, you will receive the Accrued
Obligations and:


 


A.                                                              if not already paid to you and without
duplication, the non-equity portion of your incentive compensation for the completed
calendar year after which such expiration occurs, payable if, as and when such
bonuses are awarded in the ordinary course in such subsequent year, subject to
payroll deductions; provided, however, that if and to the extent
necessary to comply with Section 409A(a)(2)(B)(i) of the Code, and
applicable administrative guidance and regulations, such payment shall be made
in a lump sum on the date that is six months plus one day following the
applicable expiration date; and


 


B.                                                                except to the extent otherwise provided at
the time of grant under the terms of any equity award made to you, all stock
options, deferred stock, restricted stock and other equity-based awards held by
you, if such termination on or after February 1, 2012 not for Cause, will
become fully vested and non-forfeitable (provided that any such options will
cease being exercisable upon the earlier of (x) three (3) months
after the expiration date of the Agreement and (y) the scheduled
expiration date of such options), and, in all other respects, all such options
and other awards shall be governed by the plans and programs and the agreements
and other documents pursuant to which the awards were granted; provided,
however, that any performance based equity award in respect of which the
performance criteria has not been finally determined as having been met (or not
met), will either vest and be delivered upon such determination of such criteria
being satisfied or lapse in the event such criteria is not met.


 


Timing
of Certain Payments.  Unless otherwise contemplated in the
Agreement, all payments payable in connection with termination of your
employment under the Agreement shall be made as soon as practicable after the
Termination Date but in no event later than 30 days after the Termination Date;
provided, however, that if and to the extent necessary to comply with Section 409A(a)(2)(B)(i) of
the Code, and applicable administrative guidance and regulations, any such
payment shall be made in a lump sum on the date that is six months plus one day
following the Termination Date.


 


Non-Competition.  The period of non-competition set
forth in Section 15 of the Agreement shall be eighteen (18) months rather
than twelve (12) months.


 


Equity Award Grant.  The Company shall
grant you twenty-five thousand (25,000) restricted stock units under the
Scientific Games Corporation 2003 Incentive Compensation Plan, as amended and
restated (the “Plan”), and an individual equity agreement (in the form to be
provided to you) to be entered into by and between the Company and you (the “Equity
Agreement”).  The Equity 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 the Agreement,
the Equity Agreement or the Plan.


 


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Please indicate your
agreement to the foregoing by countersigning and returning an original signed
copy of this letter to me.


 


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Scientific
  Games Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ A. Lorne Weil

  
	
   

  	
  Name:

  	
  A.
  Lorne Weil

  
	
   

  	
  Title:

  	
  Chairman
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted
  and Agreed to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ira H. Raphaelson

  	
   

  
	
   

  	
  Ira H. Raphaelson

  	
   

  



 


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