Exhibit 10.47


 


Employment Agreement


 


This
Employment Agreement (the “Agreement”) is made as of February 11,
2009 but effective as of January 1, 2009 (the “Effective Date”), by
and between Scientific Games Corporation, a Delaware corporation (the “Company”),
and Stephen L. Gibbs (“Employee”).


 


WHEREAS,
Employee has been employed pursuant to an Employment Agreement dated as of March 1,
2007 as amended by an amendment dated as of December 30, 2008 (as amended,
the “Prior Agreement”); and


 


WHEREAS,
the Company and Employee desire that this Agreement replace and supersede the
Prior Agreement;


 


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


 


1.                    Termination of Existing Employment Agreements. As of the Effective Date, all existing
employment agreements between the parties hereto, whether oral or written, including
the Prior Agreement, are hereby terminated and superseded by this Agreement.


 


2.                    Employment; Term.  The
Company hereby agrees to employ Employee, and Employee hereby accepts
employment with the Company, in accordance with and subject to the terms and
conditions set forth in this Agreement. 
This term of employment of Employee under this Agreement (the “Term”)
shall be the period commencing on the Effective Date and ending on February 28,
2011, as may be extended in accordance with this Section 2 and subject to
earlier termination in accordance with Section 5 hereof.  The Term shall be automatically extended
without further action by either party hereto by one additional year (added to
the end of the Term), and then on each succeeding annual anniversary
thereafter, unless either party hereto shall have given written notice to the
other party hereto prior to the date which is ninety (90) days prior to the
date upon which such extension would otherwise have become effective electing
not to further extend the Term, in which case Employee’s employment shall
terminate on the date upon which such extension would otherwise have become
effective, unless terminated in accordance with Section 5 hereof.  It is also intended that Employee’s previous
term of employment with the Company shall be included when calculating Employee’s
tenure at the Company for all purposes.


 


3.                    Position and Duties.  During the Term,  Employee will serve as Vice President, Chief Accounting
Officer and Corporate Controller of the Company, and as an officer or director
of any subsidiary or affiliate of the Company if elected to any such position
by the stockholders or by the board of directors of any such subsidiary or
affiliate, as the case may be.  In such
capacities, Employee shall perform such duties and shall have such
responsibilities as are normally associated with such positions and as
otherwise may be assigned to the Employee from time to time by the Chief
Executive Officer, Chief Operating Officer or Chief Financial Officer of the Company
or upon the authority of the Board of Directors of the Company.  Subject to Section 5(e) hereof,
Employee’s functions, duties and responsibilities are subject to reasonable
changes as the Company may in good faith determine from time to time.  Employee hereby agrees to accept such
employment and to serve the Company and its subsidiaries and affiliates to the
best of Employee’s ability in such capacities, devoting substantially all of
Employee’s business time to such employment.


 


4.                    Compensation.


 


(a)                                Base
Salary.  During
the Term,  Employee will receive a base salary of
two


 


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hundred seventy six thousand two hundred fifty U.S.
Dollars (US$276,250) per annum, paid in accordance with the Company’s regular
payroll practices and subject to such deductions or amounts to be withheld as
required by applicable law and regulations or as may be agreed to by
Employee.  In the event that the Company,
in its sole discretion, from time to time determines to increase Employee’s
base salary, such increased amount shall, from and after the effective date of
such increase, constitute the “base salary” of Employee for purposes of
this Agreement.


 


(b)                               Incentive Compensation.  Employee shall have
the opportunity annually to earn incentive compensation in amounts determined
by the Compensation Committee of the Board of Directors of the Company (the “Compensation
Committee”) in accordance with the applicable incentive compensation plan
of the Company as in effect from time to time (“Incentive Compensation”).  Under such plan, Employee shall have the
opportunity annually (beginning with respect to the 2009 performance period) to
earn up to 43% of Employee’s base salary as Incentive Compensation on the terms
and subject to the conditions of such plan.


 


(c)                                Eligibility for Annual Equity Awards.  Employee shall be eligible to receive an annual grant
of stock options, restricted stock units or other equity awards in the sole
discretion of the Compensation Committee and in accordance with the applicable
plans and programs for similarly situated employees of the Company and subject
to the Company’s right to at any time amend or terminate any such plan or
program, so long as any such change does not adversely affect any accrued or
vested interest of Employee under any such plan or program.


 


(d)                               Expense Reimbursement.  Subject to Section 4(g) hereof, the
Company shall reimburse Employee for all reasonable and necessary travel,
business entertainment and other business expenses incurred by Employee in
connection with the performance of Employee’s duties under this Agreement, on a
timely basis upon timely submission by Employee of vouchers therefor in
accordance with the Company’s standard procedures.


 


(e)                                Health
and Welfare Benefits.  Employee
shall be entitled to participate, without discrimination or duplication, in any
and all medical insurance, group health, disability, life insurance, accidental
death and dismemberment insurance, 401(k) or other retirement, deferred
compensation, stock ownership and such other plans and programs which are made
generally available by the Company to similarly situated employees in
accordance with the terms of such plans and programs and subject to the Company’s
right to at any time amend or terminate any such plan or program.  Employee shall be entitled to paid vacation,
holidays, and any other time off in accordance with the Company’s policies in
effect from time to time.


 


(f)                                  Special
Equity Award.  The Company
shall grant to Employee seven thousand five hundred (7,500) restricted stock
units under the Scientific Games Corporation 2003 Incentive Compensation Plan,
as amended and restated (the “Plan”), pursuant to an equity award
agreement (in the form to be provided to Employee) to be entered into by and
between the Company and Employee (the “Equity Award Agreement”).  The Equity Award 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 this Agreement, the Equity
Award Agreement or the Plan.


 


(g)                               Taxes and
Internal Revenue Code 409A.  Payment of all compensation and benefits to
Employee specified in this Section 4 and in Section 5 of this
Agreement shall be subject to all legally required and customary
withholdings.  The Company makes no
representations regarding the tax implications of the compensation and benefits
to be paid to Employee under this Agreement, including, without limitation,
under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),


 


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and applicable administrative guidance and regulations
(“Section 409A”).  Section 409A
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.  The Company
reserves the right to provide compensation and benefits under any plan or
arrangement in amounts, at times and in a manner that minimizes taxes, interest
or penalties as a result of Section 409A. 
In addition, in the event any benefits or amounts paid hereunder are
deemed to be subject to Section 409A, including payments under Section 5
of this Agreement, Employee consents to the Company adopting such conforming
amendments as the Company deems necessary, in its reasonable discretion, to
comply with Section 409A (including, but not limited to, delaying payment
until six months following termination of employment).  Notwithstanding anything herein to the
contrary, if (i) at the time of Employee’s “separation from service” (as
defined in Treas. Reg. Section 1.409A-1(h)) with the Company other than as
a result of Employee’s death, (ii) Employee is a “specified employee” (as
defined in Section 409A(a)(2)(B)(i) of the Code), (iii) one or
more of the payments or benefits received or to be received by Employee
pursuant to this Agreement would constitute deferred compensation subject to Section 409A,
and (iv) the deferral of the commencement of any such payments or benefits
otherwise payable hereunder as a result of such separation of service is
necessary in order to prevent any accelerated or additional tax under Section 409A,
then the Company will defer the commencement of the payment of any such
payments or benefits hereunder to the extent necessary (without any reduction
in such payments or benefits ultimately paid or provided to Employee) until the
date that is six months following Employee’s separation from service with the
Company (or the earliest date as is permitted under Section 409A).  Any remaining payments or benefits shall be
made as otherwise scheduled hereunder. 
Furthermore, to the extent any payments of money or other benefits due
to Employee hereunder could cause the application of an accelerated or additional
tax under Section 409A, such payments or other benefits shall be deferred
if deferral will make such payment or other benefits compliant under Section 409A,
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
an accelerated or additional tax.  To the
extent any reimbursements or in-kind benefits due to Employee under this
Agreement constitute deferred compensation under Section 409A, any such
reimbursements or in-kind benefits shall be paid to Employee 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.


 


5.                                     Termination of Employment. 
Employee’s employment may be terminated at any time prior to the end of
the Term under the terms described in this Section 5.


 


(a)                                Termination
by Employee for Other than Good Reason.  Employee may terminate Employee’s
employment hereunder for any reason or no reason upon 60 days’ prior written
notice to the Company referring to this Section 5(a); provided, however,
that a termination by Employee for “Good Reason” (as defined below) shall not
constitute a termination by Employee for other than Good Reason pursuant to
this Section 5(a).  In the event
Employee terminates Employee’s employment for other than Good Reason, Employee
shall be entitled only to the following compensation and benefits
(collectively, the “Standard Termination Payments”):


 


(i)                           any
accrued but unpaid base salary for services rendered by Employee to the date of
such termination, payable in accordance with the Company’s regular payroll
practices and subject to such deductions or amounts to be withheld as required
by applicable law and regulations or as may be agreed to by Employee;


 


(ii)                        all vested
non-forfeitable amounts owing or accrued at the date of such termination under
benefit plans, programs and arrangements set forth or referred to in Section 4


 


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hereof in which Employee
theretofore participated will be paid under the terms and conditions of such
plans, programs, and arrangements (and agreements and documents thereunder);


 


(iii)                     except as
provided in Section 6.6 hereof, all stock options, restricted stock units
and other equity awards will be governed by the terms of the plans and programs
under which such options, restricted stock units or other awards were granted;
and


 


(iv)                    reasonable
business expenses and disbursements incurred by Employee prior to such termination
will be reimbursed in accordance with Section 4(d) hereof.


 


(b)                               Termination
By Reason of Death.  If Employee dies during the Term,
the last beneficiary designated by Employee by written notice to the Company
(or, in the absence of such designation, Employee’s estate) shall be entitled
to the following compensation and benefits:


 


(i)                                     the
Standard Termination Payments; and


 


(ii)                                  a lump sum
payment equal to Employee’s annual base salary, payable within 30 days of
death.


 


(c)                                Termination By Reason of Total Disability. 
The Company may terminate Employee’s employment  in
the event of Employee’s “Total Disability.”  For purposes of this
Agreement, “Total Disability” shall mean Employee’s (1) becoming
eligible to receive benefits under any long-term disability insurance program
of the Company or (2) failure to perform the duties and responsibilities
contemplated under this Agreement for a period of more than 180 days during any
consecutive 12-month period due to physical or mental incapacity or
impairment.  In the event that Employee’s
employment is terminated by the Company by reason of Total Disability, the
Company shall pay the following amounts, and make the following other benefits
available, to Employee:


 


(i)                                     the
Standard Termination Payments;


 


(ii)                                  an amount
equal to the sum of (A) Employee’s annual base salary and (B) Employee’s
“Severance Bonus Amount” (as defined below), payable over a period of twelve
(12) months after such termination in accordance with Section 5(f) of
this Agreement; provided such amount shall be reduced by any disability
payments provided to Employee as a result of any disability plan sponsored by
the Company or its affiliates providing benefits to Employee.  For purposes of this Agreement, “Severance
Bonus Amount” shall mean  an amount equal to the highest annual
Incentive Compensation paid to Employee in respect of the two most recent
fiscal years of the Company but not more than the Employee’s “target bonus” for
the-then current fiscal year;


 


(iii)                               in lieu of
any Incentive Compensation for the year in which such termination occurs,
payment of an amount equal to (A) the highest annual Incentive
Compensation paid to Employee in respect of the two most recent fiscal years of
the Company but not more than Employee’s “target bonus” for the year of
termination, multiplied by (B) a fraction the numerator of which is the
number of days Employee was employed in the year of such termination and the
denominator of which is the total number of days in the year of such
termination, payable as and when such Incentive Compensation would otherwise
have been payable under Section 4(b); and


 


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(iv)                              if
Employee elects 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.


 


(d)                               Termination
by the Company for Cause.  The Company may terminate the
employment of Employee at any time for “Cause.” 
For purposes of this Agreement, “Cause” shall mean: (i) gross
neglect by Employee of Employee’s duties hereunder; (ii) Employee’s
conviction (including conviction on a nolo
contendere plea) of a felony or any non-felony crime or offense
involving the property of the Company or any of its subsidiaries or affiliates
or evidencing moral turpitude; (iii) willful misconduct by Employee in
connection with the performance of Employee’s duties hereunder; (iv) intentional
breach by Employee of any material provision of this Agreement; (v) material
violation by Employee of a material provision of the Company’s Code of Conduct;
or (vi) any other willful or grossly negligent conduct of Employee which
would make the continued employment of Employee by the Company materially
prejudicial to the best interests of the Company.  In the event Employee’s employment is
terminated for “Cause,” Employee shall not be entitled to receive any
compensation or benefits under this Agreement except for the Standard
Termination Payments.


 


(e)                                Termination
by the Company without Cause or by Employee for Good Reason.  The Company may
terminate Employee’s employment at any time without Cause, for any reason or no
reason, and Employee may terminate Employee’s employment for “Good Reason.”  For purposes of this Agreement “Good
Reason” shall mean that without Employee’s prior written consent, any of
the following shall have occurred:  (i) a
material change, adverse to Employee, in Employee’s positions, titles, offices,
or duties as provided in Section 3 hereof, except, in such case, in
connection with the termination of Employee’s employment for Cause, Total
Disability or death; (ii) an assignment of any significant duties to
Employee which are materially inconsistent with Employee’s positions or offices
held under Section 3 hereof; (iii) a material decrease in base salary
or material decrease in Employee’s incentive compensation opportunities
provided under this Agreement; and (iv) any other material failure by the
Company to perform any material obligation under, or material breach by the
Company of any material provision of, this Agreement; provided, however,
that a termination by Employee for Good Reason under any of clauses (i) — (iv) of
this Section 5(e) shall not be considered effective unless Employee
shall have provided the Company with written notice of the specific reasons for
such termination within thirty (30) days after he has knowledge of the event or
circumstance constituting Good Reason and the Company shall have failed to cure
the event or condition allegedly constituting Good Reason within thirty (30)
days after such notice has been given to the Company.  In the event that Employee’s employment is
terminated by the Company without Cause or by Employee for Good Reason (and
not, for the avoidance of doubt, in the event of a termination pursuant to Section 5(a),
(b), (c) or (d) hereof), the Company shall pay the following amounts,
and make the following other benefits available, to Employee.


 


(i)                                     the
Standard Termination Payments;


 


(ii)                                  an amount
equal to the sum of (A) Employee’s annual base salary and (B) Employee’s
Severance Bonus Amount, payable over a period of twelve (12) months after such
termination in accordance with Section 5(f) of this Agreement;


 


(iii)                               in lieu of
any Incentive Compensation for the year in which such termination occurs,
payment of an amount equal to (A) the highest annual Incentive
Compensation paid to Employee in respect of the two most recent fiscal years of
the Company but not more than the Employee’s “target bonus” for the year of
such termination, multiplied by (B) a fraction the numerator of which is
the number of days Employee was employed in the year of such termination and
the denominator of which is the total number of days in the year of such


 


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termination, payable as and when
such Incentive Compensation would otherwise have been payable under Section 4(b);
and


 


(iv)                              if
Employee elects 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.


 


(f)                                  Timing of
Certain Payments under Section 5.  Payments pursuant to Sections 5(c)(ii) or
5(e)(ii) of this Agreement, if any, shall be payable in equal installments
in accordance with the Company’s standard payroll practices over a period of
twelve (12) months following the date of termination (subject to such
deductions or amounts to be withheld as required by applicable law and
regulations); provided, however, that if and to the extent
necessary to prevent any acceleration or additional tax under Section 409A,
such payments shall be made as follows:  (i) no payments shall be
made for a six-month period following the date of Employee’s separation of
service (as defined in Section 409A(a)(2)(B)(i) of the Code) with the
Company, (ii) an amount equal to the aggregate sum that would have been
otherwise payable during the initial six-month period shall be paid in a lump
sum six (6) months following the date of Employee’s separation of service
with the Company (subject to such deductions or amounts to be withheld as
required by applicable law and regulations), and (iii) during the period
beginning six (6) months following Employee’s separation of service with
the Company through the remainder of the twelve-month period, payment of the
remaining amount due shall be payable in equal installments in accordance with
the Company’s standard payroll practices (subject to such deductions or amounts
to be withheld as required by applicable law and regulations).   In addition, notwithstanding any other
provision with respect to the timing of payments under this Agreement, if and
to the extent necessary to comply with Section 409A, amounts payable
following termination of employment in a lump sum, including pursuant to
Sections 5(c)(iii) and 5(e)(iii) of this Agreement, shall instead be
paid six (6) months following the date of Employee’s separation of service
(subject to such deductions or amounts to be withheld as required by applicable
law and regulations).


 


(g)                               No Obligation to Mitigate.  Employee
shall have no obligation to mitigate damages pursuant to this Section 5,
but shall be obligated to promptly advise the Company regarding any
compensation earned or any payments that will become due with respect to
services provided to another employer during any period of continued payments
pursuant to this Section 5. The Company’s obligation to make continued
payments to Employee shall be reduced by any compensation earned by the
Employee during the severance period (without regard to when such compensation
is paid).


 


(h)                               Set-Off.  To the fullest extent permitted by law and
provided an acceleration of income or the imposition of an additional tax under
Section 409A would not result, any amounts otherwise due the Employee
hereunder (including, without limitation, any payments pursuant to this Section 5)
shall be subject to set-off with respect to any amounts the Employee otherwise
owes the Company or any subsidiary or affiliate thereof.


 


(i)                                   No Other Benefits or Compensation.  Except as may be provided under this Agreement, under
any other written agreement between Employee and the Company, or under the
terms of any plan or policy applicable to Employee, Employee shall have no
right to receive any other compensation from the Company, or to participate in
any other plan, arrangement or benefit provided by the Company, with respect to
any future period after such termination or resignation.


 


(j)                                   Release of Employment Claims; Compliance with Section 6. 
Employee agrees, as a condition to receipt of any termination payments and
benefits provided for in this Section 5 (other than the Standard
Termination Payments), that Employee will execute a general release agreement,
in a form reasonably satisfactory to the Company, releasing any and all claims
arising out of Employee’s


 


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employment (other than enforcement of this Agreement). 
The Company shall provide Employee with the proposed form of release referred
to in the immediately preceding sentence no later than two (2) days
following the date of termination. 
Employee shall have 21 days to consider the release and if he executes
the release, shall have seven (7) days after execution of the release to
revoke the release, and, absent such revocation, the release shall become
binding.  Provided Employee does not
revoke the release, payments contingent on the release (if any) shall be paid
no earlier than eight (8) days after execution thereof in accordance with
the applicable provisions herein.  The
Company’s obligation to make any termination payments and benefits provided for
in this Section 5 (other than the Standard Termination Payments) shall
immediately cease if Employee willfully and materially breaches Section 6.1,
6.2 , 6.3, 6.4, or 6.8 hereof.


 


6.                                     Noncompetition; Non-solicitation;
Nondisclosure; etc.


 


6.1                             Noncompetition;
Non-solicitation.


 


(a)                                Employee
acknowledges the highly competitive nature of the Company’s business and that
access to the Company’s confidential records and proprietary information
renders Employee special and unique within the Company’s industry. In
consideration of the amounts that may hereafter be paid to Employee pursuant to
this Agreement (including, without limitation, Sections 4 and 5 hereof),
Employee agrees that during the Term (including any extensions thereof) and
during the Covered Time (as defined in Section 6.1(e) hereof),
Employee, alone or with others, will not, directly or indirectly, engage (as
owner, investor, partner, stockholder, employer, employee, consultant, advisor,
director or otherwise) in any Competing Business. For purposes of this Section 6,
“Competing Business” shall mean any business: (i) involving design
and production of instant lottery tickets and the management of related
marketing and distribution programs; manufacture, sale, operation or management
of on-line lottery systems (Lotto-type games), video gaming, including fixed
odds or server-based betting terminals and video lottery terminals; development
and commercialization of licensed and other proprietary game entertainment for
all lottery product channels; provision of wagering (whether pari-mutuel
(pooled) or otherwise) or venue management services for racetracks and
off-track betting facilities; production of prepaid cellular phone cards; or
any other business in which the Company or its affiliates is then or was within
the previous twelve (12) months engaged or in which the Company, to Employee’s
knowledge, intends to engage during the Term or the Covered Time (as defined
below); (ii) in which the Employee was engaged or involved (whether in an
executive or supervisory capacity or otherwise) on behalf of the Company or
with respect to which the Employee has obtained proprietary or confidential information;
and (iii) which was conducted anywhere in the United States or in any
other geographic area in which such business was conducted or planned to be
conducted by the Company.


 


(b)                               In further
consideration of the amounts that may hereafter be paid to Employee pursuant to
this Agreement (including, without limitation, Sections 4 and 5 hereof),
Employee agrees that, during the Term (including any extensions thereof) and
during the Covered Time, Employee shall not, directly or indirectly:  (i) solicit or attempt to induce any of
the employees, agents, consultants or representatives of the Company to
terminate his, her, or its relationship with the Company; (ii) solicit or
attempt to induce any of the employees, agents, consultants or representatives
of the Company to become employees, agents, consultants or representatives of
any other person or entity; (iii) solicit or attempt to induce any
customer, vendor or distributor of the Company to curtail or cancel any
business with the Company; or (iv) hire any person who, to Employee’s
actual knowledge, is, or was within 180 days prior to such hiring, an employee
of the Company.


 


(c)                                During the
Term (including any extensions thereof) and during the Covered Time, Employee
agrees that upon the earlier of Employee’s (i) negotiating with any
Competitor (as defined below) concerning the possible employment of Employee by
the Competitor, (ii) responding to (other


 


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than for the purpose of declining) an offer of employment
from a Competitor, or (iii) becoming employed by a Competitor, (A) Employee
will provide copies of Section 6 of this Agreement to the Competitor, and (B) in
the case of any circumstance described in (iii) above occurring during the
Covered Time, and in the case of any circumstance described in (i) or (ii) above
occurring during the Term or during the Covered Time, Employee will promptly
provide notice to the Company of such circumstances. Employee further agrees
that the Company may provide notice to a Competitor of Employee’s obligations
under this Agreement. For purposes of this Agreement, “Competitor” shall
mean any person or entity (other than the Company, its subsidiaries or
affiliates) that engages, directly or indirectly, in the United States in any
Competing Business.


 


(d)                               Employee
understands that the restrictions in this Section 6.1 may limit Employee’s
ability to earn a livelihood in a business similar to the business of the
Company but nevertheless agrees and acknowledges that the consideration
provided under this Agreement (including, without limitation, Sections 4 and 5
hereof) is sufficient to justify such restrictions. In consideration thereof
and in light of Employee’s education, skills and abilities, Employee agrees
that Employee will not assert in any forum that such restrictions prevent
Employee from earning a living or otherwise should be held void or
unenforceable.


 


(e)                                For
purposes of this Section 6.1, “Covered Time” shall mean the period
beginning on the date of termination of Employee’s employment (the “Date of
Termination”) and ending twelve (12) months after the Date of Termination.


 


6.2                               Proprietary
Information; Inventions.


 


(a)                                Employee
acknowledges that, during the course of Employee’s employment with the Company,
Employee necessarily will have (and during any employment by the Company prior
to the Term has had) access to and make use of proprietary information and
confidential records of the Company. 
Employee covenants that Employee shall not during the Term or at any
time thereafter, directly or indirectly, use for Employee’s own purpose or for
the benefit of any person or entity other than the Company, nor otherwise
disclose to any person or entity, any such proprietary information, unless and
to the extent such disclosure has been authorized in writing by the Company or
is otherwise required by law.  The term “proprietary
information” means:  (i) the
software products, programs, applications, and processes utilized by the
Company; (ii) the name and/or address of any customer or vendor of the
Company or any information concerning the transactions or relations of any
customer or vendor of the Company with the Company; (iii) any information
concerning any product, technology, or procedure employed by the Company but
not generally known to its customers or vendors or competitors, or under
development by or being tested by the Company but not at the time offered
generally to customers or vendors; (iv) any information relating to the
Company’s computer software, computer systems, pricing or marketing methods,
sales margins, cost of goods, cost of material, capital structure, operating
results, borrowing arrangements or business plans; (v) any information
identified as confidential or proprietary in any line of business engaged in by
the Company; (vi) any information that, to Employee’s actual knowledge,
the Company ordinarily maintains as confidential or proprietary; (vii) any
business plans, budgets, advertising or marketing plans; (viii) any
information contained in any of the Company’s written or oral policies and
procedures or manuals; (ix) any information belonging to customers,
vendors or any other person or entity which the Company, to Employee’s actual
knowledge, has agreed to hold in confidence; and (x) all written, graphic,
electronic data and other material containing any of the foregoing. Employee
acknowledges that information that is not novel or copyrighted or patented may
nonetheless be proprietary information. 
The term “proprietary information” shall not include information
generally known or available to the public or generally known or available to
the industry or information that becomes available to Employee on an
unrestricted, non-confidential basis from a source other than the Company or
its directors, officers, employees, or agents (without breach of any obligation
of


 


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confidentiality
of which Employee has actual knowledge at the time of the relevant disclosure
by Employee).


 


(b)                               Employee
agrees that all processes, technologies and inventions (collectively, “Inventions”),
including new contributions, improvements, ideas and discoveries, whether
patentable or not, conceived, developed, invented or made by Employee during
the Term (and during any employment by the Company prior to the Term) shall
belong to the Company, provided that such Inventions grew out of the Employee’s
work with the Company or any of its subsidiaries or affiliates, are related in
any manner to the business (commercial or experimental) of the Company or any
of its subsidiaries or affiliates or are conceived or made on the Company’s
time or with the use of the Company’s facilities or materials. Employee shall
further:  (i) promptly disclose such Inventions to the Company; (ii) assign
to the Company, without additional compensation, all patent and other rights to
such Inventions for the United States and foreign countries; (iii) sign
all papers necessary to carry out the foregoing; and (iv) give testimony
in support of the Employee’s inventorship. 
If any Invention is described in a patent application or is disclosed to
third parties, directly or indirectly, by the Employee within two (2) years
after the termination of the Employee’s employment with the Company, it is to
be presumed that the Invention was conceived or made during the Term.  Employee agrees that Employee will not assert
any rights to any Invention as having been made or acquired by Employee prior
to the date of this Agreement, except for Inventions, if any, disclosed in Exhibit A
to this Agreement.


 


6.3                               Confidentiality
and Surrender of Records.   Employee
shall not, during the Term or at any time thereafter (irrespective of the
circumstances under which Employee’s employment by the Company terminates),
except to the extent required by law, directly or indirectly publish, make
known or in any fashion disclose any confidential records to, or permit any
inspection or copying of confidential records by, any person or entity other
than in the course of such person’s or entity’s employment or retention by the
Company, nor shall Employee retain, and will deliver promptly to the Company,
any of the same following termination of Employee’s employment hereunder for
any reason or upon request by the Company. 
For purposes hereof, “confidential records” means those portions
of correspondence, memoranda, files, manuals, books, lists, financial,
operating or marketing records, magnetic tape, or electronic or other media or
equipment of any kind in Employee’s possession or under Employee’s control or
accessible to Employee which contain any proprietary information.  All confidential records shall be and remain
the sole property of the Company during the Term and thereafter.


 


6.4                               Non-disparagement. 
Employee shall not, during the Term and thereafter, disparage in any material
respect the Company, any affiliate of the Company, any of their respective
businesses, any of their respective officers, directors or employees, or the
reputation of any of the foregoing persons or entities.  Notwithstanding the foregoing, nothing in
this Agreement shall preclude Employee from making truthful statements that are
required by applicable law, regulation or legal process.


 


6.5                               No
Other Obligations.  Employee represents that Employee is not precluded
or limited in Employee’s ability to undertake or perform the duties described
herein by any contract, agreement or restrictive covenant.  Employee covenants that Employee shall not
employ the trade secrets or proprietary information of any other person in
connection with Employee’s employment by the Company without such person’s
authorization.


 


6.6                               Forfeiture
of Outstanding Options.  The
provisions of Section 5 hereof notwithstanding, if Employee willfully and
materially fails to comply with Section 6.1, 6.2, 6.3, 6.4, or 6.8 hereof,
all options to purchase common stock, restricted stock units and other
equity-based awards granted by the Company (whether prior to, contemporaneous
with, or subsequent to the Effective Date) and held by Employee or a transferee
of Employee shall be immediately forfeited and cancelled.


 


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6.7                               Enforcement. 
Employee acknowledges and agrees that, by virtue of Employee’s position,
services and access to and use of confidential records and proprietary
information, any violation by Employee of any of the undertakings contained in
this Section 6 would cause the Company immediate, substantial and
irreparable injury for which it has no adequate remedy at law.  Accordingly, Employee agrees and consents to
the entry of an injunction or other equitable relief by a court of competent
jurisdiction restraining any violation or threatened violation of any
undertaking contained in this Section 6. 
Employee waives posting of any bond otherwise necessary to secure such
injunction or other equitable relief. 
Rights and remedies provided for in this Section 6 are cumulative
and shall be in addition to rights and remedies otherwise available to the
parties hereunder or under any other agreement or applicable law.


 


6.8                               Cooperation
with Regard to Litigation.  Employee agrees to cooperate reasonably
with the Company, during the Term and thereafter (including following Employee’s
termination of employment for any reason), by being available to testify on
behalf of the Company in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative. 
In addition, except to the extent that Employee has or intends to assert
in good faith an interest or position adverse to or inconsistent with the
interest or position of the Company, Employee agrees to cooperate reasonably
with the Company, during the Term and thereafter (including following Employee’s
termination of employment for any reason), to assist the Company in any such
action, suit, or proceeding by providing information and meeting and consulting
with the Board of Directors of the Company or its representatives or counsel,
or representatives or counsel to the Company, in each case, as reasonably
requested by the Company.  The Company
agrees to pay (or reimburse, if already paid by Employee) all reasonable
expenses actually incurred in connection with Employee’s cooperation and
assistance including, without limitation, reasonable fees and disbursements of
counsel, if any, chosen by Employee if Employee reasonably determines in good
faith, on the advice of counsel, that the Company’s counsel may not ethically
represent Employee in connection with such action, suit or proceeding due to
actual or potential conflicts of interests.


 


6.9                               Survival. 
The provisions of this Section 6 shall survive the termination of the Term
and any termination or expiration of this Agreement.


 


6.10                        Company. 
For purposes of this Section 6, references to the “Company” shall
include the Company and each subsidiary and/or affiliate of the Company.


 


7.                                     Code of Conduct. 
Employee acknowledges that he has read the Company’s Code of Conduct and
agrees to abide by such Code, as amended or supplemented from time to time, and
other policies applicable to employees and executives of the Company.


 


8.                                     Indemnification.  The Company shall indemnify Employee
to the full extent permitted under the Company’s Certificate of Incorporation
or By-Laws and pursuant to any other agreements or policies in effect from time
to time in connection with any action, suit or proceeding to which the Employee
may be made a party by reason of the Employee being an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company.


 


9.                                     Assignability;
Binding Effect. 
Neither this Agreement nor the rights or obligations hereunder of the parties
hereto shall be transferable or assignable by Employee, except in accordance
with the laws of descent and distribution and as specified below.  The Company may assign this Agreement and the
Company’s rights and obligations hereunder, and shall assign this Agreement and
such rights and obligations, to any Successor (as hereinafter defined) which,
by operation of law or otherwise, continues to carry on substantially the
business of the Company (or a business unit of the Company for which Employee
provided services) prior to the event of succession, and the Company shall, as
a condition of the succession, require such Successor to agree in writing to
assume the Company’s obligations and be


 


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bound by this Agreement.  For purposes of this Agreement, “Successor”
shall mean any person that succeeds to, or has the practical ability to
control, the Company’s business directly or indirectly, by merger or
consolidation, by purchase or ownership of voting securities of the Company or
all or substantially all of its assets or those relating to a particular
business unit of the Company to which Employee provides services, or
otherwise.  The Company may also assign
this Agreement and the Company’s rights and obligations hereunder to any
affiliate of the Company, provided that upon any such assignment the Company
shall remain liable for the obligations to Employee hereunder.  This Agreement shall be binding upon and inure
to the benefit of Employee, Employee’s heirs, executors, administrators, and
beneficiaries, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.


 


10.                                 Complete Understanding; Amendment; Waiver.  This Agreement constitutes the
complete understanding between the parties hereto with respect to the
employment of Employee and supersedes all other prior agreements and
understandings, both written and oral, between the parties hereto with respect
to the subject matter hereof, and no statement, representation, warranty or
covenant has been made by either party hereto with respect thereto except as
expressly set forth herein.  Except as
contemplated by Section 4(g) hereof, this Agreement shall not be
modified, amended or terminated except by a written instrument signed by each
of the parties hereto.  Any waiver of any
term or provision hereof, or of the application of any such term or provision
to any circumstances, shall be in writing signed by the party hereto charged
with giving such waiver.  Waiver by either
party hereto of any breach hereunder by the other party hereto shall not
operate as a waiver of any other breach, whether similar to or different from
the breach waived.  No delay by either
party hereto in the exercise of any rights or remedies shall operate as a
waiver thereof, and no single or partial exercise by either party hereto of any
such right or remedy shall preclude other or further exercise thereof.


 


11.                                 Severability.  If any provision of this Agreement or the
application of any such provision to any person or circumstances shall be
determined by any court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Agreement, or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid or unenforceable, shall not be
affected thereby, and each provision hereof shall be enforced to the fullest
extent permitted by law.  If any
provision of this Agreement, or any part thereof, is held to be invalid or
unenforceable because of the scope or duration of or the area covered by such
provision, the parties hereto agree that the court making such determination
shall reduce the scope, duration and/or area of such provision (and shall
substitute appropriate provisions for any such invalid or unenforceable
provisions) in order to make such provision enforceable to the fullest extent
permitted by law and/or shall delete specific words and phrases, and such
modified provision shall then be enforceable and shall be enforced.  The parties hereto recognize that if, in any
judicial proceeding, a court shall refuse to enforce any of the separate
covenants contained in this Agreement, then that invalid or unenforceable
covenant contained in this Agreement shall be deemed eliminated from these
provisions to the extent necessary to permit the remaining separate covenants
to be enforced.  In the event that any
court determines that the time period or the area, or both, are unreasonable
and that any of the covenants is to that extent invalid or unenforceable, the
parties hereto agree that such covenants will remain in full force and effect,
first, for the greatest time period, and second, in the greatest geographical
area that would not render them unenforceable.


 


12.                                 Survivability.  The provisions of this Agreement
which by their terms call for performance subsequent to termination of Employee’s
employment hereunder, or of this Agreement, shall so survive such termination,
whether or not such provisions expressly state that they shall so survive.


 


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13.                                 Governing Law; Arbitration.


 


(a)                                  Governing Law. 
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York applicable to agreements made and to be wholly
performed within that State, without regard to its conflict of laws provisions.


 


(b)                                 Arbitration.


 


(i)                                     The Employee and the Company agree that, except for claims
for Workers’ Compensation, Unemployment Compensation, and any other claim that
is non-arbitrable under applicable law, final and binding arbitration shall be
the exclusive forum for any dispute or controversy between them, including,
without limitation, disputes arising under or in connection with this
Agreement, Employee’s employment, and/or termination of employment, with the
Company; provided, however, that the Company shall be entitled to
commence an action in any court of competent jurisdiction for injunctive relief
in connection with any alleged actual or threatened violation of any provision
of Section 6 hereof.  Judgment may
be entered on the arbitrators’ award in any court having jurisdiction.  For purposes of entering such judgment or
seeking injunctive relief with regard to Section 6 hereof, the Company and
Employee hereby consent to the jurisdiction of any or all of the following
courts: (i) the United States District Court for the Southern District of
New York; (ii) the Supreme Court of the State of New York, New York
County; or (iii) any other court having jurisdiction; provided that
damages for any alleged violation of Section 6 hereof, as well as any
claim, counterclaim or cross-claim brought by the Employee or any third-party
in response to, or in connection with any court action commenced by the Company
seeking said injunctive relief shall remain exclusively subject to final and
binding arbitration as provided for herein. 
The Company and Employee hereby waive, to the fullest extent permitted
by applicable law, any objection which either may now or hereafter have to such
jurisdiction, venue and any defense of inconvenient forum.   Thus, except for the claims carved out above,
this Agreement includes all common-law and statutory claims (whether arising
under federal state or local law), including, but not limited to, any claim for
breach of contract, fraud, fraud in the inducement, unpaid wages, wrongful
termination, and gender, age, national origin, sexual orientation, marital
status, disability, or any other  protected status.


 


(ii)                                  Any arbitration under this Agreement shall be filed
exclusively with the American Arbitration Association in New York, New York
before three arbitrators, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect at the time of submission to arbitration.  The Company and Employee
hereby agree that a judgment upon an award rendered by the arbitrators may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  The Company shall pay all costs uniquely attributable to
arbitration, including the administrative fees and costs of the
arbitrators.  Each party shall pay that party’s own costs and attorney
fees, if any, unless the arbitrators rule otherwise.  The Employee
understands that he is giving up no substantive rights, and this Agreement
simply governs forum.  The arbitrators shall apply the same standards a
court would apply to award any damages, attorney fees or costs.  The
Employee shall not be required to pay any fee or cost that he would not
otherwise be required to pay in a court action, unless so ordered by the
arbitrators.


 


(c)                                  WAIVER OF JURY TRIAL.  BY
SIGNING THIS AGREEMENT, EXECUTIVE AND THE COMPANY ACKNOWLEDGE THAT THE RIGHT TO
A COURT TRIAL AND TRIAL BY JURY IS OF VALUE, AND KNOWINGLY AND VOLUNTARILY
WAIVE THAT RIGHT FOR ANY DISPUTE SUBJECT TO THE TERMS OF THIS ARBITRATION
PROVISION.


 


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14.                                 Titles and Captions.  All paragraph titles or captions in
this Agreement are for convenience only and in no way define, limit, extend or
describe the scope or intent of any provision hereof.


 


15.                                 Joint Drafting.  In recognition of the fact that the
parties hereto had an equal opportunity to negotiate the language of, and
draft, this Agreement, the parties acknowledge and agree that there is no
single drafter of this Agreement and, therefore, the general rule that
ambiguities are to be construed against the drafter is, and shall be,
inapplicable.  If any language in this Agreement is found or claimed to be
ambiguous, each party hereto shall have the same opportunity to present
evidence as to the actual intent of the parties hereto with respect to any such
ambiguous language without any inference or presumption being drawn against any
party hereto.


 


16.                                 Notices.  All
notices and other communications to be given or to otherwise be made to any
party to this Agreement shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by certified mail or by a
recognized national courier service, postage or charges prepaid, (a) to
Scientific Games Corporation, Attn General Counsel, at 750 Lexington Avenue,
25th Floor, New York, NY 10022, (b) to the Employee, at the last
address shown in the Company’s records, or (c) to such other replacement
address as may be designated in writing by the addressee to the addressor.


 


[Remainder of Page Intentionally
Left Blank]


 


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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement on February 11, 2009, to be deemed effective as of Effective
Date above written.


 


 


	
   

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DeWayne E. Laird

  
	
   

  	
  Name:

  	
  DeWayne E. Laird

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Stephen L. Gibbs

  
	
   

  	
  Name: Stephen L. Gibbs

  
				



 


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