Exhibit 10.22


 


EMPLOYMENT AND SEVERANCE BENEFITS AGREEMENT


 


This Agreement is made and
entered into as of 15th day of December, 2005, by and between SCIENTIFIC GAMES
CORPORATION, a Delaware corporation (hereinafter called the “Company”), and Mr.
Ira H. Raphaelson (hereinafter called “Executive”).


 


W I T N E S S E T H:


 


WHEREAS, the Company desires to
retain and the Executive desires to provide services to the Company as set
forth herein.


 


NOW, THEREFORE, in
consideration of the mutual covenants and obligations hereinafter set forth,
the parties hereto, intending to be legally bound, hereby agree as follows:


 


1.             EMPLOYMENT; TERM. The
Company agrees to employ the Executive and the Executive agrees to accept
employment with the Company commencing as of February 1, 2006 (the “Commencement
Date”) in the position of Vice President and General Counsel for the Company
and its subsidiaries upon the terms and conditions hereinafter set forth. The
term of Executive’s employment is subject to termination by the Company at any
time without Cause (as defined in Section 5(a) hereof) upon sixty (60) days’
written notice, subject to Executive’s right to receive the applicable
severance benefits described herein. Except as otherwise provided herein
(including Section 8 hereof), Executive may terminate his employment with the
Company upon sixty (60) days’ prior written notice or such shorter period as
the Company may allow. Except as otherwise provided herein, no severance
benefits shall be due in the event of Executive’s voluntary termination of
employment hereunder. The term of this Agreement shall be for three (3) years
following the Commencement Date (the “Term”); provided, however, that the Term
shall be extended automatically without further action by either party by one
additional year (added to the end of the Term), and then on each succeeding
annual anniversary thereafter, unless either party shall have given written
notice to the other party prior to the date which is one hundred twenty (120)
days prior to the date upon which such extension would otherwise have become
effective electing not to further extend the Term, in which case Executive’s
employment shall terminate on the date upon which such extension would
otherwise have become effective, unless earlier terminated pursuant to the
terms of the agreement.


 


2.             DUTIES. During the
Term, the Executive will serve as Vice President and General Counsel of the
Company, and as an officer of such subsidiaries and affiliates of the Company
as the Board of Directors of the Company (the “Board”) shall determine. In such
capacities, the Executive shall perform such duties and shall have such
responsibilities as are normally associated with such positions and as
otherwise may be assigned to the Executive from time to time by or upon the
authority of the Board. Subject to Section 8(a), Executive’s functions, duties
and responsibilities are subject to reasonable changes as the Company may in
good faith determine. The Executive hereby agrees to accept such employment and
to serve the Company to the best of his ability in such capacities, devoting
substantially all of his business time to such employment.


 


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3.             COMPENSATION.


 


(a)           As compensation to the Executive for performance of
the services required hereunder and as consideration for his execution and
delivery of this Agreement, the Company shall pay or provide, as applicable, to
him and the Executive agrees to accept, the following salary and other
compensation and benefits:


 


(i)            Base Salary.  Effective as
of the Commencement Date, the Company shall pay to the Executive an initial
base salary, payable in equal installments not less frequently than monthly, at
the rate of $450,000 per annum (such annual salary, increased from time to time
at the sole discretion of the Compensation Committee of the Board (the “Compensation
Committee”) is hereinafter referred to as “Base Salary”);


 


(ii)           Annual Bonus.  Commencing with
the fiscal year of the Company (“Fiscal Year”) in which the Commencement Date occurs,
the Executive shall have the opportunity to earn a bonus for each Fiscal Year
(an “Annual Bonus”) as recommended by the Compensation Committee and in
accordance with the Company’s Management Incentive Compensation Program or any
successor incentive compensation plan from time to time maintained by the
Company for senior executive officers (the “Bonus Plan”).  The target amount of each annual bonus shall
be equal to sixty six percent (66%) of Base Salary upon attainment of certain “target”
performance goals as determined by the Compensation Committee (the “Target
Bonus”) and the maximum amount of any such Annual Bonus in any Fiscal Year
shall be one hundred thirty three percent (133%) of Base Salary (the “Maximum
Bonus”);


 


(iii)          Stock Options.  The Company
shall grant to the Executive an option to purchase 200,000 shares of Company
common stock as of the Commencement Date (the “Grant Date”) at an exercise
price equal to the fair market value of Company common stock on the Grant Date
(the “Stock Option”).  Such Stock Option
shall be granted under and subject to the terms and conditions of the Company’s
2003 Incentive Compensation Plan, as Amended and Restated (the “Equity Plan”)
and the individual stock option agreement to be entered into by and between the
Company and the Executive (the “Stock Option Agreement”).  The Stock Option Agreement shall provide that
the Stock Option shall vest with respect to twenty percent (20%) of the shares
of common stock subject to such Stock Option on each of the first five
anniversaries of the Grant Date, subject to certain provisions relating to
accelerated vesting and forfeiture as described in this Agreement, the Stock
Option Agreement or the Equity Plan.  For
each year during the Term, the Company shall grant to the Executive an option
to purchase additional shares of common stock pursuant to the Bonus Plan.


 


(iv)          Restricted Stock Units.  The Company shall grant to the Executive on
the Grant Date 95,795 restricted stock units (the “RSU Grant”).  Such Restricted Stock Units shall be granted
under and subject to the terms and conditions of the Equity Plan and the
individual restricted stock unit agreement to


 


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be
entered into by and between the Company and the Executive (the “RSU Agreement”).  The RSU Agreement shall provide that the RSU
Grant shall vest and shares of Company common stock shall become deliverable
with respect to twenty percent (20%) of the shares of common stock subject to
the RSU Grant on each of the first five anniversaries of the Grant Date,
subject to certain provisions relating to accelerated vesting and forfeiture as
described in this Agreement, the RSU Agreement and the Equity Plan.  For each year during the Term, the Company
shall grant to the Executive additional restricted stock units pursuant to the
Bonus Plan.


 


(b)           Welfare and Fringe Benefits.  The Executive shall be offered and shall be
permitted to participate in disability, medical, hospitalization, health, life
and accident insurance plans and other fringe benefit plans upon terms and
conditions and at coverage levels substantially equivalent, taken as a whole,
to those currently provided to similarly situated executives of the Company.


 


(c)           Retirement Benefits.  The Executive shall be entitled during the
Term and thereafter to participate in any retirement, savings or other plans of
the Company as and to the same extent as is generally available to the
similarly situated executives of the Company.


 


(d)           Housing and Transportation Allowance.  The Executive shall be entitled to receive a
monthly transportation and housing allowance of $6,000 for expenses related to
transportation and an apartment used by the Executive in New York City.


 


(e)           Vacation.  The Executive
shall receive four (4) weeks of paid vacation annually, subject to the terms of
the Company’s vacation policies as they relate to  executive officers from time to time.


 


4.             INDEMNITY,
PROFESSIONAL AND OFFICERS LIABILITY INSURANCE.


 


(a)           Indemnity. The Company agrees to indemnify and hold harmless
Executive from all liability and costs incurred (including reasonable attorney’s
fees and disbursements) as a consequence of claims by third parties, whether or
not derivatively on behalf of the Company resulting from or growing out of
Executive’s status as or as a result of his having been an officer or director
of (or counsel to) the Company or any affiliate thereof, to the full extent
permitted by law. In no event shall the terms, provisions and conditions of the
indemnity provided for hereunder be less than the same as those presently
provided for under the Certificate of Incorporation and By-Laws of the Company.
Said terms, provisions and conditions of indemnity shall remain an independent,
contractual obligation of the Company to Executive from and after the date
hereof regardless of how the Company might hereafter amend or change its
Certificate of Incorporation or By-Laws to provide for different terms,
conditions and provisions of indemnity for other officers and directors of the
Company. In the event the Company should amend its Certificate of Incorporation
or Bylaws to provide for different terms, conditions and provisions of
indemnity after the effective date hereof, Executive shall be


 


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notified
in writing of the change. Executive shall thereafter have thirty (30) days to
elect in writing to accept the changed conditions of indemnity as a
modification to the Company’s contractual obligation hereunder or to continue
under the terms of indemnity as provided for herein. The Company’s agreement to
provide indemnity hereunder shall survive the termination of this contract
regardless of the cause of termination. The Company shall advance promptly as
incurred reasonable fees and disbursements of counsel for Executive in
defending Executive against any claims for which the Company would be so
required to indemnify Executive provided (i) Executive shall otherwise comply
with such mandatory requirements of Delaware law as may be required for such
indemnification and (ii) Executive shall cause his counsel to cooperate fully
in good faith with such requests as the Company or its counsel may reasonably
make in order to endeavor to keep such legal fees at a minimum level consistent
with an adequate defense of Executive.


 


(b)           Officers and Directors’ Liability Insurance. The Company agrees to provide, at
no expense to the Executive, insurance insuring Executive in his capacity as an
officer and/or director of the Company and its affiliates in such form and amount
substantially equal to that presently maintained by the Company for or covering
its executive officers and directors or in such other form and amount as
Executive and Company may, from time to time, in good faith agree are
reasonable and appropriate for executive officers and directors of corporations
substantially similar in size to the Company.


 


5.             TERMINATION OF
EMPLOYMENT BY COMPANY FOR CAUSE.


 


(a)           Termination of Employment. 
The Company may terminate Executive’s employment at any time for “Cause”
but only after written Notice of Termination (as defined below) as approved by
the Chief Executive Officer of the Company specifying the cause of such action
shall be rendered to Executive. For purposes of this Agreement, “Cause” shall
mean: conviction of a felony, material violation of material provision of the
Company’s Code of Ethics, commission of an act or acts of dishonesty on the
part of Executive when such acts are intended to result, directly or
indirectly, in substantial wrongful gain or substantial wrongful personal
enrichment of Executive at the expense of the Company; or the engaging by
Executive in willful misconduct materially injurious to the Company with
respect to which (x) Executive knew or reasonably should have known that such
conduct would result in material financial injury to the Company, (y) such
conduct actually results in material financial injury to the Company, and (z)
such damage is not cured (if the same is reasonably susceptible to cure) within
a reasonable time following receipt by Executive of written notice thereof from
the Company referring to this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive written notice (a) setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive’s employment (the “Statement of Cause”), and
(b) stating that as a result, Executive is being terminated for Cause and the
specific termination provision in this Agreement being relied upon
(collectively with the Statement of Cause, a “Notice of Termination”). For
purposes of this Agreement, no such purported termination shall be effective
without Notice of Termination.


 


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(b)           Payment upon Termination. 
Following the Executive’s date of termination of employment (the “Termination
Date”) for Cause, the Executive shall not be entitled to receive any additional
compensation or benefits under this Agreement except as follows.  Accordingly, the Executive shall be entitled
to receive


 


(i)        payment of any earned but unpaid Base Salary,


 


(ii)       any earned, but unpaid, Annual Bonus for any Fiscal
Year that ended prior to the Fiscal Year in which the Termination Date occurs,


 


(iii)      the cash equivalent of any accrued, but unused,
vacation; and


 


(iv)      Any vested and accrued employee benefits, subject to
the terms of the applicable employee benefit plans.


 


The payments and benefits described in (i),
(ii), (iii) and (iv) shall be referred to in this Agreement as the “Accrued
Obligations”. In all events, the amounts payable under subparagraphs 5(b)(i),
(ii) and (iii) shall be paid within thirty (30) days following the Termination
Date irrespective of the reason for termination of employment.


 


Any unvested equity awards shall be forfeited
as of the Termination Date.  Any vested
stock options shall terminate as of the Termination Date. The Executive shall
not be entitled to receive any severance pay in the event of termination
pursuant to this Section 5 for Cause.


 


6.             TERMINATION OF
EMPLOYMENT IN THE EVENT OF EXECUTIVE’S DISABILITY.


 


(a)           Termination of Employment. 
Executive and the Company agree that Executive may not reasonably be
expected to be able to perform his duties and the essential functions of his
office if Executive shall have been permanently disabled (as defined below) or
absent from his duties with the Company, or not otherwise be performing the
duties of his office due to physical or mental illness constituting a
disability.  For purposes of this
Agreement, “Disability” shall mean that the Executive (i) is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, or (ii)
is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Company or an affiliate of the Company.


 


(b)           Payment Upon Termination. 
If, within thirty (30) days after written notice of intent to terminate
is given by the Company, Executive shall not have returned to the full time
performance of his duties, Executive’s employment shall be terminated for “Disability,”
in which event Executive shall not be entitled to receive severance benefits


 


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under
this Agreement and Executive shall be compensated pursuant to the provisions of
this Section 6 as follows: (i) Executive shall be entitled to receive payment
of all Accrued Obligations, (ii) Executive’s Base Salary shall continue at the
level as provided in Section 3(a) for a period of twelve (12) months from the
date of the Notice of Termination. All disability, life and medical insurance
provided by the Company prior to termination shall continue for a period of
twelve (12) months following the Termination Date. In addition, all outstanding
stock options held by the Executive, whether vested or unvested, shall become
vested and exercisable as of the Termination Date and shall remain exercisable
until the earlier of the expiration of the original term of the stock option or
three months following the Termination Date. 
All restricted stock units shall become vested and shares of Company
common stock shall become deliverable to the Executive as of the Termination
Date.  All bonuses that vested prior to
or that will vest upon termination, together with that portion of any Target
Bonus (whether or not vested) for the then-current Fiscal Year prorated to the
Termination Date (based upon performance against target through the applicable
measurement date) shall become payable to the Executive within ten business
days following the Termination Date. Payments of Base Salary under this Section
6 shall be reduced by any disability payments provided Executive as a result of
any Company-sponsored disability plan providing benefits to Executive, if the
payments to Executive hereunder and thereunder would exceed one hundred percent
(100%) of Executive’s Base Salary. Executive’s employment shall not be
terminable under this Section 6 if Executive is absent from his duties upon a
bona fide leave of absence granted by the Company other than pursuant to
physical or mental illness.


 


7.             TERMINATION OF
EMPLOYMENT IN THE EVENT OF DEATH DURING EMPLOYMENT.


 


(a)           Termination and Payment. 
If the Executive dies during the term of this Agreement, the Company
shall pay to the last beneficiary designated by the Executive by written notice
to the Company or, failing such designation, to Executive’s estate, all Accrued
Obligations, plus a lump sum death benefit equal to six (6) months of Executive’s
Base Salary. The Executive’s estate shall also be entitled to receive a pro
rata portion of the Executive’s Target Bonus for the year of termination of
employment through the date of death. In addition, all outstanding stock
options held by the Executive, whether vested or unvested, shall become vested
and exercisable as of the date of death and shall remain exercisable until the
earlier of the expiration of the original term of the stock option or the first
anniversary of the date of death.  All
restricted stock units shall become vested and shares of Company common stock
shall become deliverable to the Executive as of the date of death.


 


(b)           Designation of Beneficiary. 
The Executive shall have the right to name, from time to time, any one
person as beneficiary hereunder or, with the consent of the Board, he may make
other forms of designation of beneficiary or beneficiaries. The Executive’s
designated beneficiary or personal representative, as the case may be, shall
accept the payments provided for in this Section 7 in full discharge and
release of the Company of and from any further obligations under this Agreement
(other than to pay compensation or benefits which accrued prior to the date of
such termination).


 


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8.             TERMINATION
OF EMPLOYMENT WITHOUT CAUSE OR IN CONNECTION WITH CONSTRUCTIVE TERMINATION.


 


(a)           Termination of Employment. 
Should the Company (i) change the location of Executive’s office or of
the Company’s principal executive offices from the existing location in New
York, NY to a place not within forty (40) miles of the existing location in New
York, NY, or change the location of Executive’s office to a location other than
the location of the Company’s principal executive office, (ii) fail to appoint
or reappoint Executive to the office and position Executive holds by virtue of
this Agreement or such other position held immediately prior to any Notice of
Termination (or to a higher or equivalent office and position to which
Executive agrees in writing, such agreement not to be unreasonably withheld)
(provided, a notice not to extend under Section 1 hereof shall not be deemed
such a failure), (iii) make any reduction in Executive’s Base Salary, (iv) fail
to obtain the express written assumption of this Agreement by any successor of
the Company or any assignee of all or substantially all of its assets at or
prior to such succession or assignment (such succession or assignment not
relieving the Company of any liability hereunder), (v) breach this Agreement in
any material respect which is not cured within fifteen (15) days after written
notice from Executive to the Company, Executive shall be entitled to terminate
his employment, effective immediately, and receive severance benefits under
this Agreement as set forth in the remainder of this Section 8 upon the giving
of written notice of termination from Executive to the Company (unless in any
case referred to in the preceding clauses (i) through (v), the Company shall at
such time have grounds to terminate Executive for Cause and shall have
delivered to Executive a copy of the Statement of Cause contemplated by Section
5 hereof, except that such written notice is not accompanied by a Notice of
Termination.)


 


(b)           Payment Upon Termination. 
The Company shall pay to Executive as severance benefits under this
Section 8:


 


(i)            All Accrued Obligations within thirty days following
the Termination Date (except to the extent that any Accrued Obligation
constitutes the provision of a benefit that, by its terms, cannot be paid or
performed within such thirty (30) day period);


 


(ii)           No later than March 15 following the end of the Fiscal
Year in which the Termination Date occurs, the pro rata portion of any Annual
Bonus which would have been payable to Executive had Executive remained in
employment with the Company during the entire year in which the Termination
Date occurred (Pro rata calculations under Section 6, Section 7 and Section 8
of this Agreement shall be determined by multiplying a fraction, the numerator
of which is the number of whole months in such year prior to the Termination
Date and the denominator of which is twelve, times the Annual Bonus which would
have been payable to Executive had the Executive remained employed with the
Company; and


 


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(iii)          Commencing on the six-month anniversary of the
Termination Date, a sum each month for a period of twenty-four months, equal to
the highest amount of monthly Base Salary in effect at any time during the term
of this Agreement.


 


(iv)          All outstanding stock options held by the Executive,
whether vested or unvested, shall become vested and exercisable as of the
Termination Date and shall remain exercisable until the earlier of the
expiration of the original term of the stock option or three months following
the Termination Date.  All restricted
stock units shall become vested and shares of Company common stock shall become
deliverable to the Executive as of the Termination Date.


 


(c)           As a further severance benefit, the Company, at its
expense, shall maintain in full force and effect, for Executive’s continued
benefit until the earliest of (i) twenty-four months following the Termination
Date (the “Severance Payment Period”), (ii) eighteen months after Executive’s
Termination Date if at such time Executive is uninsurable under the Company’s
life, accident, medical and dental insurance plans, or (iii) the date Executive
becomes entitled to participate in similar plans, programs or arrangements
provided by Executive’s subsequent employer: all life, accident, medical and
dental insurance benefit plans and programs or arrangements in which Executive
was entitled to participate immediately prior to the Termination Date provided
that Executive’s continued participation is possible under the general terms
and provisions of such plans and programs. In the event that Executive’s
participation in such plan or program is legally or contractually barred, the
Company shall arrange to provide Executive for a period of not less than the
Severance Period (eighteen (18) months if the reason Executive’s participation
is barred is that Executive is uninsurable) following Executive’s Termination
Date, with benefits substantially similar to those which Executive would have
been entitled to receive under such plans and programs or, if the Company is
barred from doing so, it will pay to Executive in a lump sum an amount of cash
equal on an after-tax basis to the cost to Executive of obtaining the benefits
to be provided to Executive under this Section 8(c) (but which the Company is
unable to provide or cause to be provided) for the period specified; provided,
however, that any such lump sum amount shall not be paid to the Executive prior
to the six-month anniversary of the Termination Date. The cost of such benefits
shall be based on the cost to Executive of obtaining such benefits from one or
more fiscally sound providers whose reputation and stature are substantially
similar to the Company’s applicable benefit providers immediately prior to
Executive’s Termination Date. At the end of the period of coverage, Executive
shall have the option to have assigned to Executive at no cost to Executive and
with no apportionment of prepaid premiums (but without the necessity of the
incurrence by the Company of any additional out-of-pocket transfer cost which
Executive declines to reimburse), any assignable insurance policy owned by the
Company and relating specifically to Executive.


 


9.             LEGAL FEES,
MITIGATION OF DAMAGES. The Company shall reimburse such costs, legal fees and
expenses as may be reasonably incurred by Executive in contesting or disputing
any such termination, or in seeking to obtain or enforce any right or benefit
provided by this Agreement if Executive is successful in any material respect
in connection with enforcing


 


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any of
Executive’s rights or the Company’s obligations under this Agreement in such
dispute. Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Agreement be reduced by
any compensation earned by Executive as the result of employment by another
employer after the Date of Termination, or otherwise.


 


10.           SUCCESSORS;
BINDING AGREEMENT.


 


(a)           The Company will require any successor (whether direct
or indirect, by purchaser, merger, consolidation or otherwise) to the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement shall constitute a material breach of this
Agreement and shall entitle Executive to compensation from the Company in the
same amount and on the same terms as Executive would be entitled hereunder if
such succession had not occurred, except that for purposes of implementing the
foregoing, the date of which any such succession becomes effective shall be
deemed the Date of Termination, As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which executes and delivers the agreement provided for in
this Section 10 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.


 


(b)           This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to Executive
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee of, if there be no such designee, to Executive’s estate.


 


11.           NOTICE. 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 the Company at 750
Lexington Avenue, New York, NY 10022, (b) to the Executive, at the address set
forth on the last page of this Agreement, or (c) to such other replacement
address as may be designated in writing by the addressee to the addressor.


 


12.           MISCELLANEOUS. To the
extent that any applicable state or federal law, rule or regulation confers
upon Executive any greater benefit or right than that set forth in this
Agreement, such law, rule or regulation shall control in lieu of the provisions
hereof relating to such benefit or right.


 


13.           VALIDITY; SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If any provision of this Agreement
is held to be illegal, invalid, or unenforceable under present or future laws
effective, such


 


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provision
shall be fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid, or unenforceable provision had never comprised a part
hereof; and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and still be legal, valid or
enforceable. It is acknowledged that any payment which may be made by the
Company to Executive under this Agreement is in the nature of employment and/or
severance and not a penalty payment. Should the obligation to make any payment
hereunder be held to be void or voidable as a penalty by a final non-appealable
judgment, this Agreement shall be deemed to provide an obligation on the part
of the Executive to render such consulting services as the Company may
reasonably request during the period of and in exchange for such payments as
would otherwise have been made by the Company as severance benefits and the
parties agree such payments shall constitute reasonable compensation for the
value of Executive’s services during such period.


 


14.           CONFIDENTIALITY. During
the term of his employment under this Agreement, and thereafter, the Executive
will not use or disclose, furnish or make accessible to anyone any Confidential
Information (as such term is hereinafter defined):


 


(a)           as used in this Agreement, the term “Confidential
Information” shall mean trade secrets, confidential or proprietary information,
and all other knowledge, know-how, information, documents or materials, owned,
developed or possessed by Company, whether in tangible or intangible form,
pertaining to the business of the Company, the confidentiality of which the
Company takes reasonable measures to protect, including, but not limited to,
the Company’s research and development operations, products (including prices,
costs, sales or content), processes, techniques, machinery, contracts,
financial information or measures, business methods, future business plans,
data bases, computer programs, designs, models, operating procedures, knowledge
of the organization, and other information owned, developed or possessed by the
Company; provided, however, that Confidential Information shall not include
information that is or shall become generally known to the public or the trade
without violation of this Section 14.


 


(b)           Notwithstanding anything to the contrary contained in
this Section 14, in the event that the Executive is required to disclose any
Confidential Information by court order or decree or in compliance with the
rules and regulations of a governmental agency or in compliance with law, the
Executive will provide the Company with prompt notice of such required
disclosure so that the Company may seek an appropriate protective order and/or
waive the Executive’s compliance with the provisions of this Section 14. If, in
the absence of a protective order or the receipt of a waiver hereunder, the
Executive is advised by his counsel that such disclosure is necessary to comply
with such court order, decree, rule, regulation or law, he may disclose such
information without liability hereunder.


 


15.           NONCOMPETITION.  During the Executive’s employment with the
Company and during the one year period commencing on the Termination Date, the
Executive shall not,


 


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directly or
indirectly, whether as owner, consultant, employee, partner, venturer, agent,
through stock ownership, investment of capital, lending of money or property,
rendering of services, or otherwise, compete with the Company or any of its
affiliates or subsidiaries in any business in which any of them is engaged
while the Executive is employed with Company (such businesses are hereinafter
referred to as the “Business”),
or assist, become interested in or be connected with any corporation, firm,
partnership, joint venture, sole proprietorship or other entity which so
competes with the Business.  During the
one year period commencing on the Termination Date, the restrictions imposed by
this Section 15 shall not apply to any business in which the Company or its
affiliates and subsidiaries were not engaged at the time of termination of the
Executive’s employment hereunder or to any geographic area in which the Company
or its affiliates and subsidiaries were not engaged in the Business at the time
of termination.


 


16.           NONSOLICITATION.


 


(a)           Nonsolicitation of Customers and Suppliers. 
During the Executive’s employment with the Company and during the one
year period commencing on the Termination Date, the Executive shall not,
directly or indirectly, influence or attempt to influence customers or
suppliers of the Company or any of its subsidiaries or their affiliates to
divert their business to any business, individual, partner, firm, corporation
or other entity that is then a direct competitor of the Company or its
subsidiaries or their affiliates (each such competitor, a “Competitor of the Company”); provided,
however, that if the Executive is employed by customers or suppliers of the
Company following his termination of employment and such employment does not
violate Section 15 hereof, the normal execution of his duties in connection
with such employment shall not constitute a violation of this Section 16.


 


(b)           Nonsolicitation of Employees.


 


(i)            The Executive recognizes that he will possess
confidential information about other employees of the Company and its
subsidiaries or their affiliates relating to their education, experience,
skills, abilities, compensation and benefits, and interpersonal relationships
with customers of the Company and its subsidiaries or their affiliates.


 


(ii)           The Executive recognizes that the information he will
possess about these other employees is not generally known, is of substantial
value to the Company and its subsidiaries in developing their business and in
securing and retaining customers, and will be acquired by him because of his
business position with the Company and its subsidiaries.


 


(iii)          The Executive agrees that during the Executive’s
employment with the Company and during the two (2) year period commencing on
the Termination Date he will not, directly or indirectly, solicit or recruit
any employee of the Company or its subsidiaries or their affiliates for the
purpose of being employed by him or by any Competitor of the Company on whose
behalf he is acting as an agent, representative or employee and that he will
not convey any such


 


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confidential
information or trade secrets about other employees of the Company and its
subsidiaries or their affiliates to any other person.


 


17.           INTELLECTUAL PROPERTY.


 


(a)           The Executive 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 him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive’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. 
The Executive 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 Executive’s
inventorship.


 


(b)           If any Invention is described in a patent application
or is disclosed to third parties, directly or indirectly, by the Executive
within two years after the termination of the Executive’s employment with the
Company, it is to be presumed that the Invention was conceived or made during
the Term.


 


(c)           The Executive agrees that the Executive will not
assert any rights to any Invention as having been made or acquired by the
Executive prior to the date of this Agreement, except for Inventions, if any,
disclosed to the Company in writing prior to the date hereof.


 


18.           The Company shall be
the sole owner of all the products and proceeds of the Executive’s services
hereunder, including, but not limited to, all materials, ideas, concepts,
formats, suggestions, developments, arrangements, packages, programs and other
intellectual properties that the Executive may acquire, obtain, develop or
create in connection with and during the Term, free and clear of any claims by
the Executive (or anyone claiming under the Executive) of any kind or character
whatsoever (other than the Executive’s right to receive payments
hereunder).  The Executive shall, at the
request of the Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary or desirable to
evidence, establish, maintain, perfect, protect, enforce or defend its right,
title or interest in or to any such properties.


 


19.           DEDUCTIONS AND
WITHHOLDING. The Executive agrees that the Company and/or its subsidiaries or
affiliated companies shall withhold from any and all compensation required to
be paid to the Executive pursuant to this Agreement all Federal, state, local
and/or other taxes which the Company determines are required to be withheld in
accordance with applicable statutes and/or regulations from time to time in
effect.


 


20.           ENTIRE AGREEMENT;
GOVERNING LAW; AMENDMENT; WAIVER. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements


 


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or
understandings, whether written or oral, with respect to the subject matter
hereof, including any prior severance benefit agreement. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation construction and
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principals thereof, and any
applicable federal laws of the United States of America. No terms, conditions,
warranties, other than those contained herein, and no amendments or modifications
hereto shall be binding unless made in writing and signed by the parties
hereto. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Executive and the Chief Executive Officer of the Company or such employee of
the Company as may be specifically designated by the Board of Directors of the
Company. No waiver by either party hereto at any time of any breach by the
other part hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.


 


21.           RELEASE OF CLAIMS.  Notwithstanding anything to the contrary in
this Agreement, the Executive agrees, as a condition to receipt of the payments
and benefits provided for upon termination of employment, other than payment of
any Accrued Obligations, that he will execute and not revoke a release agreement,
in a form acceptable to the Company, releasing any and all claims arising out
of or relating to the Executive’s employment with the Company and the
termination thereof (other than enforcement of this Agreement and the Executive’s
rights under any of the Company’s incentive compensation and employee benefit
plans and programs to which he is entitled under this Agreement).


 


22.           BINDING EFFECT. This
Agreement shall extend to and be binding upon and inure to the benefit of the
parties hereto, their respective successors and assigns; provided, however,
that neither party shall have the right to assign, transfer or convey this
Agreement.


 


23.           TITLES. Titles of the
headings herein are used solely for convenience and shall not be used for
interpretation or construing any work, section clause, paragraph, or provision
of this Agreement.


 


24.           COUNTERPARTS. This
Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.


 


25.           ENFORCEMENT. The
provisions of this Agreement may be enforced by all legal and equitable
remedies available to the parties including specific performance and
injunction. Nothing herein shall be construed as prohibiting either party from
pursuing any other remedies available to it, including recovery of damages.


 


26.           CONSTRUCTION. Each of
the parties has agreed to the use of the particular language of the provisions
of this Agreement and all attached exhibits, and any questions of


 


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doubtful
interpretation shall not be resolved solely by any rule or interpretation
against the draftsman but rather in accordance with the fair meaning thereof.


 


***** SIGNATURES BEGIN ON FOLLOWING PAGE *****


 


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IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date and year first written
above.


 


 


	
   

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATTEST:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ira H.
  Raphaelson

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10820
  Tuckahoe Way, North Potomac, MD, 20878

  	
   

  



 


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