Exhibit 10.1


 


Amendment
to Employment Agreement


 


This
Amendment to Employment Agreement (this “Amendment”) is made as of December 2,
2010 between Scientific Games Corporation, a Delaware corporation (the “Company”),
and A. Lorne Weil (“Executive”).


 


WHEREAS,
Executive has been employed pursuant to an Employment Agreement effective as of
January 1, 2006 between the parties hereto (the “2006 Agreement”)
as clarified by a letter agreement dated as of August 2, 2007 between the
parties hereto regarding amounts payable under the Company’s Elective Deferred
Compensation Plan (the “EDCP Payment Letter”) and as amended by the
Amendment dated as of May 1, 2008 between the parties hereto (the “May 2008
Amendment”), the Amendment dated as of December 30, 2008 between the
parties hereto (the “December 2008 Amendment”), and the Amendment
dated as of May 29, 2009 between the parties hereto (the “May 2009
Amendment” and together with the 2006 Agreement, the EDCP Payment Letter,
the May 2008 Amendment and the December 2008 Amendment, the “Agreement”);


 


WHEREAS,
Executive had previously relinquished the position of Chief Executive Officer
while continuing in the position of Chairman of the Board of Directors of the
Company pursuant to the Agreement;


 


WHEREAS,
in connection with certain management changes, the Company and Executive have
agreed that Executive shall now resume the position of Chief Executive Officer
and serve in that capacity, and, to the extent elected by the Board of
Directors of the Company and until his successor has been duly elected and
qualified (or until his earlier resignation or removal), serve as the Chairman
of the Board of Directors of the Company, pursuant to the terms of the
Agreement as amended by this Amendment;


 


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


 


1.             Agreement
Remains In Effect; Definitions. 
Except as specifically provided herein, all terms of the Agreement shall
remain in effect. References to “this Agreement,” “herein,” “hereof,” “hereby”
and words of similar import in the 2006 Agreement shall refer to the 2006
Agreement as amended by this Amendment and the May 2009 Amendment, the December 2008
Amendment, the May 2008 Amendment, and the EDCP Payment Letter, all of
which shall be read together as a single agreement. References in the Agreement
to Sections, Subsections, paragraphs and clauses thereof shall refer to those
Sections, Subsections, paragraphs and clauses as the same are amended by the
terms of this Amendment.  As amended by
this Amendment, the May 2009 Amendment, the December 2008 Amendment,
the May 2008 Amendment and the EDCP Payment Letter, the 2006 Agreement is
hereby ratified, confirmed and continued by the parties hereto. Capitalized
terms that are used but not defined in this Amendment shall have the meanings
given to them in the Agreement (as amended by this Amendment).


 


2.             Amendment
to Section 2 of Agreement. 
The second sentence of Section 2 of the Agreement is hereby amended
by replacing “December 31, 2013” with “December 31, 2015” and the
fourth sentence of Section 2 is hereby deleted in its entirety.


 


3.             Amendments
to Section 3 of Agreement.  Section 3 of the Agreement is hereby
amended and restated in its entirety to read as follows:


 


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“3.          Offices and Duties


 


a.                                       From and after November 29,
2010, during the Term, Executive will serve as Chief Executive Officer of the
Company and as an officer or director of any subsidiary or affiliate of the
Company if elected or appointed to any such position by the shareholders or by
the board of directors of such subsidiary or affiliate, as the case may
be.  To the extent, if any, that
Executive may be elected by the Board of Directors of the Company (the “Board”)
at any time or from time to time to serve as Chairman of the Board and until
his successor has been duly elected and qualified (or until his earlier
resignation or removal), Executive will serve in that capacity pursuant to this
Agreement without additional compensation.


 


b.                                       In his capacity as Chief
Executive Officer, Executive shall perform such duties and shall have such
responsibilities as are normally associated with such positions and as
otherwise may be assigned to Executive from time to time by the Board.


 


c.                                       Executive hereby agrees to
accept such employment and to serve the Company to the best of his ability,
devoting substantially all of his business time to such employment; provided,
however, that Executive shall be entitled to (A) manage his
personal investments and otherwise attend to personal affairs, including family
financial and legal affairs, (B) serve on the boards of directors of not
more than three (3) other companies (two of which may be Sportech plc and
Avantair, Inc.) in addition to the Company and its subsidiaries and
affiliates, each in a manner that does not conflict or unreasonably interfere
with his responsibilities hereunder, and (C) in addition to the activities
referred to in clauses (A) and (B) above, serve on other boards of
directors and engage in other personal activities in compliance with Section 6
to the extent approved by the Board from time to time.”


 


4.             Amendments
to Section 4 of Agreement. 
Section 4 of the Agreement is hereby amended as follows:


 


(a)           The
following sentence hereby amends and replaces the second-to-the-last sentence
of Section 4(a) of the Agreement in its entirety:


 


“Notwithstanding
the foregoing, (a) the Base Salary for the month of December 2010
shall be at the rate of one million five hundred thousand dollars
($1,500,000.00) per annum and the Base Salary for 2011 shall be one million
five hundred thousand dollars ($1,500,000.00), (b) the Base Salary for
2012 shall be equal to the product of (I) one million five hundred
thousand dollars ($1,500,000.00) multiplied by (II) the sum of 1 plus a
fraction the numerator of which is the difference between the CPI for December 2011
and the CPI for December 2010 and the denominator of which is the CPI for December 2010
(provided, that if such fraction is zero or a negative number, the Base Salary
for 2012 shall be the amount set forth in (I) of this clause (b)); (c) the
Base Salary for 2013 shall be equal to the product of (I) one million five
hundred thousand dollars ($1,500,000.00) multiplied by (II) the sum of 1
plus a fraction the numerator of which is the difference between the CPI for December 2012
and the CPI for December 2010 and the denominator of which is the CPI for December 2010
(provided, that if such fraction is zero or a negative number, the Base Salary
for 2013 shall be the same as the Base Salary for 2012); (d) the Base
Salary for 2014 shall be equal to the product of (I) one million five
hundred thousand dollars ($1,500,000.00) multiplied by (II) the sum of 1
plus a fraction the numerator of which is the difference between the CPI for December 2013
and the CPI for December 2010 and the 


 


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denominator
of which is the CPI for December 2010 (provided, that if such fraction is
zero or a negative number, the Base Salary for 2014 shall be the same as the
Base Salary for 2013); (e) the Base Salary for 2015 shall be equal to the
product of (I) one million five hundred thousand dollars ($1,500,000.00)
multiplied by (II) the sum of 1 plus a fraction the numerator of which is
the difference between the CPI for December 2014 and the CPI for December 2010
and the denominator of which is the CPI for December 2010 (provided, that
if such fraction is zero or a negative number, the Base Salary for 2015 shall
be the same as the Base Salary for 2014); and (f) if the Term is extended
past December 31, 2015 pursuant to Section 2 hereof, the Base Salary
for each such one-year extension term, unless otherwise agreed in writing by
Executive and the Company, shall be (I) one million five hundred dollars
($1,500,000.00) multiplied by (II) the sum of 1 plus a fraction the
numerator of which is the difference between the CPI for December of the
year immediately preceding such extension term and the CPI for December 2010
and the denominator of which is the CPI for December 2010 (provided, that
if such fraction is zero or a negative number, the Base Salary for such
extension term shall be the same as the Base Salary for the year immediately
preceding such extension term).”


 


(b)           Section 4(b) of
the Agreement is hereby amended and restated to read in its entirety as
follows:


 


“(b)         Incentive
Compensation.  Executive
shall have the opportunity annually to earn incentive compensation in amounts
determined by the Compensation Committee of the Board (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, Executive shall have the
opportunity annually to earn up to 100% of Executive’s Base Salary as Incentive
Compensation at “target opportunity” (“Target Bonus”) and up to 200% of
Executive’s Base Salary as Incentive Compensation at “maximum opportunity” on
the terms and subject to the conditions of such plan (any such Incentive
Compensation to be subject to such deductions or amounts to be withheld as
required by applicable law and regulations or as may be agreed to by
Executive).  “Target opportunity” and “maximum
opportunity” shall have the respective meanings ascribed to them in the
applicable incentive compensation plan.”


 


(c)           Section 4(c) of
the Agreement is hereby amended and restated to read in its entirety as
follows:


 


“(c)         Eligibility
for Annual Equity Awards and Participation in Executive Compensation Plans.  Executive shall be eligible to receive an
annual grant of stock options, restricted stock units (“RSUs”) or other
equity awards with a value of up to 200% of Executive’s Base Salary, in the
sole discretion of the Compensation Committee and in accordance with the
applicable plans and programs for senior executives 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 under any such plan or program; provided, however,
that (i) Executive shall not be entitled to any such equity awards during
2011 and 2012 and (ii) that any such annual equity awards made to
Executive during 2013, 2014 and 2015 (and during any extension terms of this
Agreement) shall, unless otherwise expressly agreed in writing by the Company
and Executive, be awarded either (A) entirely in the form of stock
options, (B) entirely in the form of RSUs or (C) in the form of any
combination of stock options and RSUs, as Executive may specify with respect to
any such year by written notice to the Compensation Committee no later than December 31st of the year immediately preceding the year of
such award.”


 


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(d)           Section 4(d) of
the Agreement is hereby amended and restated to read in its entirety as follows
(it being understood that that the provisions with respect to the Special RSUs
(as defined in the 2006 Agreement) set forth in Section 7 of the May 2008
Amendment, as amended by Section 7 of the May 2009 Amendment, shall
continue in effect in accordance with their terms):


 


“(d)         Incentive
Equity Awards.


 


(i)            The Company shall grant to Executive
as of December 2, 2010 (A)(1) stock options to purchase one million
(1,000,000) shares of the Company’s common stock at an exercise price equal to
$9.00 per share (which options shall expire on December 1, 2020) (the “Time
Vesting 2010 Option Grant”), consisting of (x) stock options to
purchase eight hundred thousand (800,000) shares of the Company’s common stock,
which shall vest and become exercisable with respect to two hundred fifty
thousand (250,000) of such shares on each of December 31, 2011, December 31,
2012 and December 31, 2013 and with respect to fifty thousand (50,000) of
such shares on December 31, 2014, and (y) stock options to purchase
two hundred thousand (200,000) shares of the Company’s common stock (the “Later
Time Vesting Options”), which shall vest and become exercisable on December 31,
2014, and (2) one million (1,000,000) RSUs (the “Time Vesting 2010 RSU
Grant” and together with the Time Vesting 2010 Option Grant, the “Time
Vesting 2010 Grant”), consisting of (x) five hundred thousand
(500,000) RSUs which shall vest with respect to two hundred fifty thousand
(250,000) of the shares subject to such grant on each of December 31, 2011
and December 31, 2012, and (y) five hundred thousand (500,000) RSUs
(the “Later Time Vesting RSUs”), which shall vest with respect to two
hundred fifty thousand (250,000) of the shares subject to such grant on each of
December 31, 2013 and December 31, 2014, and (B)(1) stock
options to purchase one million (1,000,000) shares of the Company’s common
stock at a price equal to $8.06 per share (representing the average of the high
and low sales price of the Company’s common stock on the trading day
immediately prior to the date of grant) (which shall expire as to unvested
options on March 15, 2016 and as to vested options on December 1,
2020) (the “Performance Vesting 2010 Option Grant”), and (2) one
million (1,000,000) RSUs (the “Performance Vesting 2010 RSU Grant” and
together with the Performance Vesting 2010 Option Grant, the “Performance
Vesting 2010 Grant”; the Time Vesting 2010 Grant, together with the
Performance Vesting 2010 Grant, the “2010 Grant”), which Performance
Vesting 2010 Option Grant shall vest and become exercisable with respect to
twenty percent (20%) of the shares subject to such Performance Vesting 2010
Option Grant, and which Performance Vesting 2010 RSU Grant shall vest with
respect to twenty percent (20%) of the shares subject to such Performance
Vesting 2010 RSU Grant, if, as and when certain “Adjusted EBITDA” targets are
achieved in accordance with clause (iii) below.  The stock options and RSUs comprising the
2010 Grant shall be granted under and subject to the terms and conditions of
the Company’s 2003 Incentive Compensation Plan, as amended and restated, or an
applicable successor plan (in either case, the “Equity Plan”), and one
or more award agreements to be entered into by and between the Company and
Executive (each, an “Equity Agreement”) reflecting the terms set forth
herein and other customary Company terms and conditions not inconsistent with
the terms herein.  Stock options included
in the Performance Vesting 2010 Option Grant shall expire on March 15,
2016 to the extent such options remain unvested on such date.  RSUs included in the Performance Vesting 2010
RSU Grant shall be forfeited on March 15, 2016 to the extent such RSUs
remain unvested on such date.  Delivery
to Executive of shares of Company common stock in respect of vested RSUs under
the Performance Vesting 2010 RSU Grant shall occur on March 15, 2016 (and
the applicable Equity Agreement shall so provide).  Notwithstanding anything herein or in the
Equity Agreement to the contrary, any unvested portion of the Performance
Vesting 2010 Grant will not accelerate and will be forfeited upon termination
of Executive’s employment with the Company under Section 5 hereof or
otherwise (including as a result of expiration of the Term on December 31,
2015); provided, 


 


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however, that in the event of any such termination pursuant to Section 5(b),
Section 5(c), Section 5(e) or Section 5(f) or by
virtue of the expiration of the Agreement on December 31, 2015 between December 31
of a particular year and a potential vesting date with respect to the Performance
Vesting 2010 Grant (i.e., March 15
of the following year), any unvested portion of the Performance Vesting 2010
Grant will not be forfeited unless and until the determination has been made by
such March 15 (in accordance with the vesting provisions applicable to
such unvested portion) that any unvested portion of the Performance Vesting
2010 Grant does not vest on such March 15 (and, to the extent that such
unvested portion of the Performance Vesting 2010 Grant does not vest on such March 15,
such vested portion shall be forfeited).


 


(ii)           For purposes of this Section 4(d) and
the Performance Vesting 2010 Grant, “Adjusted EBITDA” shall mean
earnings before interest, taxes, depreciation and amortization of the Company
and its subsidiaries on a consolidated basis determined by the Compensation
Committee, in a manner consistent with any determination of this or any similar
metric applicable for awards or bonuses to other senior executives of the
Company or for purposes of the Company’s Management Incentive Compensation
Program (“MICP”) generally, adjusted (without duplication) (x) to
add back to Adjusted EBITDA in each fiscal year an amount reflected in “equity
in earnings of joint ventures” on the Company’s consolidated statement of
operations for such year attributable to the amortization by Lotterie Nazionali
S.r.l. of upfront payments associated with the tender process for the
concession awarded in May 2010 by the Monopoli di Stato to operate the
Gratta e Vinci instant ticket lottery in Italy and (y) to exclude from
Adjusted EBITDA in each fiscal year except 2015 any “pro forma adjustment” to
the extent such “pro forma adjustment” might otherwise have been included in
the calculation of Adjusted EBITDA to reflect projected cost savings or
additional costs in connection with the combination of any business or assets
acquired pursuant to a “Material Acquisition” (as such term is defined as of December 1,
2010 in the Company’s credit agreement) with the operations of the Company, as
further adjusted at the discretion of the Compensation Committee or the Board,
including any adjustments to this or any similar metric made for MICP purposes.


 


(iii)          Vesting of the Performance Vesting
2010 Option Grant and the Performance Vesting 2010 RSU Grant shall be subject
to the Adjusted EBITDA being equal to or greater than the levels set forth
below (the “Adjusted EBITDA Targets”):


 


·                              For 2011:                $315 million


 


·                              For 2012:                $354 million


 


·                              For 2013:                $399 million


 


·                              For 2014:                $448 million


 


·                              For 2015:                $504 million


 


Stock
options included in the Performance Vesting 2010 Grant shall vest and become
exercisable, and RSUs included in the Performance Vesting 2010 Grant shall vest
at the rate of 20% per year if, as and when the Adjusted EBITDA for a
particular year equals or exceeds the Adjusted EBITDA Target applicable for
such year (as indicated above), with the actual vesting date to be March 15
of the following year (assuming such Adjusted EBITDA Target is met).  In each case, unvested portions of the
Performance Vesting 2010 Grant will carry forward to following years and will
vest if, as and when future Adjusted EBITDA Targets are achieved, as provided
below.  If the Adjusted EBITDA Target for
any particular 20% increment is first achieved in a year later 


 


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than
the year specified above, but the higher Adjusted EBITDA Target for that later
year is not achieved, then one-half of the earlier 20% increment will vest, and
the remainder of that earlier 20% increment will vest in the first subsequent
year (if any) for which the entire specified Adjusted EBITDA Target for such
subsequent year is fully achieved.  For
example, if Adjusted EBITDA of $315 million were first achieved in 2012 rather
than 2011 but Adjusted EBITDA of $354 million were not achieved as targeted in
2012, one-half of the first 20% of the total award (i.e.,
10%) would vest, while the other half of that first 20% increment, and the
second 20% increment, would not vest. 
However, if Adjusted EBITDA of $354 million were achieved as targeted in
2012, both the first and second 20% increments, or a total of 40% of the total
award, would vest.  Finally, for 2015
only, any remaining unvested percentage increments from prior years (but not
the last 20% increment) will vest to the extent that the Adjusted EBITDA
Targets for such prior years are achieved in 2015, whether or not the Adjusted
EBITDA Target for 2015 itself is achieved. 
For example, if the Adjusted EBITDA Target of $448 million for 2014 is
first achieved in 2015, but the Adjusted EBITDA Target of $504 million for 2015
is not achieved, then any remaining unvested percentage increments based on
Adjusted EBITDA Targets of $448 million or less, for a cumulative total of 80%,
will vest, and the last 20% increment will remain unvested.  If the Adjusted EBITDA Target of $399 million
for 2013 is achieved in 2015, but neither the Adjusted EBITDA Target of $448
million for 2014 nor the Adjusted EBITDA Target of $504 million for 2015 is
achieved in 2015, then any remaining unvested percentage increments based on
Adjusted EBITDA Targets of $399 million or less, for a cumulative total of 60%,
will vest, and the last 40% increment will remain unvested.


 


(iv)          In the event that the aggregate
consideration paid by the Company (which for purposes of this Section 4(d) shall
include consideration in whatever form and include any contingent consideration
assuming that such contingent consideration has been paid) in connection with
new Investments (as currently defined as of December 1, 2010 in the
Company’s credit agreement) consummated in 2011 or any subsequent year does not
exceed an annual rate of $75 million per year, the incremental Adjusted EBITDA
generated by the Company as a result of the consummation of such Investments
will be counted in full toward achievement of Adjusted EBITDA Targets, without
duplication.  For example, if the Company
acquires Company A for $75 million as a result of which the Company generates
$25 million of incremental Adjusted EBITDA, the full $25 million of incremental
Adjusted EBITDA would count toward achievement of Adjusted EBITDA Targets.  In the event that the aggregate consideration
paid by the Company for new Investments consummated in any calendar year after
2010 is less than or equal to (A) in 2011, $75 million, or (B) in any
subsequent year, the sum of $75 million plus the excess (if any) of (x) the
product of $75 million multiplied by the number of full calendar years that
have elapsed from and including 2011 over (y) the cumulative aggregate
consideration paid by the Company for new Investments consummated in and after
2011 (the “Acquisition Threshold”), the Investments in such year shall
be subject to this clause (iv).  In the
event that the aggregate consideration paid by the Company for new Investments
consummated in any calendar year after 2010 exceeds the Acquisition Threshold
applicable to such year, Investments in such year shall be subject to
clause (v) below.  For example, if
the Company makes Investments in 2011 for $65 million, then incremental
Adjusted EBITDA generated by the Company as a result of the consummation of
Investments in 2012 for aggregate consideration of up to $85 million would
count toward achievement of Adjusted EBITDA Targets.


 


(v)           In the event that the aggregate
consideration paid by the Company in connection with new Investments in 2011 or
any subsequent year exceeds the Acquisition Threshold applicable for such year,
then for purposes of determining the achievement of Adjusted EBITDA Targets,
the Adjusted EBITDA of the Company, which will include the incremental Adjusted
EBITDA generated by the Company as a result of the consummation of any such 


 


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Investments,
shall be reduced during each applicable year (including the year in which each
such Investment was consummated) by: (A) the interest cost (“Cost of
Debt”) for such year on proceeds of debt of the Company or its subsidiaries
incurred or deemed used to make each such Investment (“Acquisition Debt”);
provided, however, that, in any year subsequent to the year such
Investment was consummated, the principal amount of such Acquisition Debt shall
be deemed to be repaid and to the extent deemed to have been so repaid in part
in any prior year or years shall be deemed to be further repaid (and,
accordingly, such Cost of Debt will be appropriately reduced) in an amount
equal to the deemed free cash flow of the business subject to or comprising (in
whole or in part) such Investment (with such deemed free cash flow being
defined as (x) the earnings before interest, taxes, depreciation and
amortization of the business subject to or comprising (in whole or in part)
such Investment for the last four complete fiscal quarters prior to the
consummation of such Investment (“Target EBITDA”), less (y) the
Cost of Debt for such Investment in the immediately preceding year, less
(z) an amount equal to the aggregate Capital Expenditures (as such term is
defined as of December 1, 2010 in the Company’s credit agreement, without
regard to the proviso therein) of such business during the last four complete
fiscal quarters prior to the consummation of such Investment, subject to
appropriate adjustment in the reasonable discretion of the Compensation
Committee to the extent that the amount thereof varies materially from the
historical rate of Capital Expenditures of such business); (B) a “deemed”
annual interest cost on equity used as consideration to make such Investment (“Cost
of Equity”) as reasonably determined by the Compensation Committee; and (C) an
amount equal to the aggregate Capital Expenditures of such business during the
last four complete fiscal quarters prior to the consummation of such Investment
(“Acquisition Capital Expenditures”). 
For purposes of this Section 4(d)(v), Cost of Debt shall be (1) in
the case of an Investment financed, in whole or in material part, from the
proceeds of new indebtedness incurred for such purpose, an amount equal to the
cash consideration in such Investment multiplied by the stated interest rate on
such indebtedness, and (2) otherwise, an amount equal to such cash
consideration multiplied by the weighted average interest rate for all of the
indebtedness of the Company and its consolidated subsidiaries from time to
time.  For example, if the Company makes
an Investment for $100 million (including $60 million of Acquisition Debt and
$40 million of equity consideration) to acquire a business which generated $25
million of Target EBITDA, but the Cost of Debt for such year is $3 million, the
Cost of Equity used as consideration for such year is $2 million, and the
aggregate amount of Capital Expenditures are $5 million, then the Target EBITDA
counted toward achievement of Adjusted EBITDA Targets would be reduced by $10
million (i.e., $3 million plus $2 million plus $5
million), but in that year $17 million of deemed free cash flow (i.e., Target
EBITDA of $25 million less $3 million Cost of Debt less $5 million of Capital
Expenditures) will be deemed to have been applied to repay the Acquisition
Debt, so that in the following year the deemed Cost of Debt shall be
appropriately reduced.  For example, if
the Acquisition Debt were $60 million, bearing interest at 5%, such deemed
repayment of $17 million would reduce such $60 million of Acquisition Debt to
$43 million, and for the following year the Cost of Debt would be $2.15 million
(i.e., 5% of $43 million), and if deemed
free cash flow in the following year were $20 million, the Acquisition Debt
would then be further reduced to $23 million.


 


(vi)          Notwithstanding anything contained in
this Agreement or in any Equity Agreement to the contrary, (A) the stock
options comprising the Performance Vesting 2010 Option Grant shall not be
exercisable except to the extent that sufficient shares (as reasonably
determined by the Compensation Committee in light of outstanding awards) are
available under the applicable Equity Plan for the delivery of the shares
issuable upon exercise of such stock options and (B) the RSUs comprising
the Performance Vesting 2010 Grant shall be forfeited to the extent that
sufficient shares (as reasonably determined by the Compensation Committee in 


 


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light
of outstanding awards) are not available under the applicable Equity Plan for
the delivery of the shares subject to such RSUs on the scheduled delivery
date(s).


 


(vii)         All stock options and RSUs included in
the Time Vesting 2010 Grant shall vest immediately upon any Change in Control
(as defined in Section 5(f) hereof).


 


(viii)        In the event and to the extent that
sufficient shares (as reasonably determined by the Compensation Committee in
light of outstanding awards) are not available under the applicable Equity Plan
for the delivery of the shares issuable upon exercise of the Later Time Vesting
Options at the time of exercise of such Later Time Vesting Options, then the
Company shall elect to settle such exercise in an immediate lump sum cash
payment.  In the event and to the extent
that sufficient shares (as reasonably determined by the Compensation Committee
in light of outstanding awards) are not available under the applicable Equity
Plan for the delivery of the shares subject to RSUs with respect to the Later
Time Vesting RSUs on the scheduled delivery date(s), then the Company shall
settle such delivery in an immediate lump sum cash payment.”


 


5.             Amendments
to Section 5 of the Agreement. 
Section 5 of the Agreement is hereby amended and restated in its
entirety as follows:


 


“5.           Termination
of Employment.  Executive’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 Executive for Other than Good Reason.  Executive may
terminate Executive’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 Executive for “Good Reason” (as defined
below) shall not constitute a termination by Executive for other than Good
Reason pursuant to this Section 5(a). 
In the event Executive terminates Executive’s employment for other than
Good Reason, Executive 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 Executive 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 Executive;


 


(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(g) hereof
in which Executive theretofore participated will be paid under the terms and
conditions of such plans, programs, and arrangements (and agreements and
documents thereunder) (except with respect to the payments contemplated by Section 11
of the May 2008 Amendment, the payment of which will be governed by Section 11
of the May 2008 Amendment);


 


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


 


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that subject to Section 6.6 hereof, all RSUs
that were granted in 2010 to Executive prior to December 2, 2010 that
remain unvested at such termination will become fully vested and
non-forfeitable; and


 


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


 


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


 


(i)            the
Standard Termination Payments; and


 


(ii)           a
lump sum payment equal to Executive’s Base Salary, payable within 30 days of
death.


 


(c)           Termination By Reason of
Total Disability.  The Company may terminate Executive’s
employment  in the event of Executive’s “Total
Disability.”  For purposes of this Agreement, “Total
Disability” shall mean Executive (i) becoming eligible to receive
benefits under any long-term disability insurance program of the Company or
(ii) 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 as
determined by a physician or physicians selected by the Company and reasonably
acceptable to Executive, unless, within 30 days after Executive has received
written notice from the Company of a proposed termination due to such failure
(as determined in accordance with the foregoing provisions of this sentence),
which notice shall include a copy of the findings of such physician or
physicians and shall refer to this Section 5(c), Executive shall have
returned to the full performance of his duties hereunder and shall have presented
to the Company a written certificate of Executive’s good health by a physician
selected by Executive and reasonably acceptable to the Company.  In the event that Executive’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
Executive:


 


(i)            the
Standard Termination Payments;


 


(ii)           an
amount equal to the sum of (A) Executive’s Base Salary and (B) Executive’s
“Severance Bonus Amount” (as defined below), payable over a period of twelve
(12) months after such termination in accordance with Section 5(g) of
this Agreement; provided such amount shall be reduced by any disability
payments provided to Executive as a result of any disability plan sponsored or
maintained by the Company or its affiliates providing benefits to
Executive.  For purposes of this
Agreement, “Severance Bonus Amount” shall mean an amount equal
to the highest annual Incentive Compensation paid to Executive in respect 


 


9

















 


of the two (2) most recent fiscal years of the Company but not more
than Executive’s Target Bonus for the-then current fiscal year;


 


(iii)          no
later than March 15 following the end of the year in which such termination
pursuant to this Section 5(c) occurs, in lieu of any Incentive
Compensation for the year in which such termination occurs, payment of a lump
sum amount equal to (A) the Incentive Compensation which would have been
payable to Executive had Executive remained in employment with the Company
during the entire year in which such termination occurred, multiplied by
(B) a fraction the numerator of which is the number of days Executive was
employed in the year in which such termination occurs and the denominator of
which is the total number of days in the year in which such termination occurs;


 


(iv)          if
Executive 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 Executive at any time for “Cause.”  For purposes of this Agreement, “Cause”
shall mean: (i) gross neglect by Executive of Executive’s duties
hereunder; (ii) Executive’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 Executive in connection with the performance of Executive’s
duties hereunder; (iv) intentional breach by Executive of any material
provision of this Agreement; (v) material violation by Executive of a
material provision of the Company’s Code of Conduct; or (vi) any other
willful or grossly negligent conduct of Executive that would make the continued
employment of Executive by the Company materially prejudicial to the best
interests of the Company.  In the event
Executive’s employment is terminated for Cause, Executive shall not be entitled
to receive any compensation or benefits under this Agreement except for the
Standard Termination Payments (excluding the benefits described in the proviso
in Section 5(a)(iii)).  For purposes
of this Agreement, an act or failure to act on Executive’s part shall be
considered “willful” if it was done or omitted to be done by Executive
knowingly, purposefully and not in good faith.


 


Executive may not be terminated for Cause unless and until there shall
have been delivered to him, within ninety (90) days after the Company first had
actual knowledge of the most recent conduct or event comprising an element of
the alleged ground for termination for Cause (it not being necessary that all
elements comprising the alleged ground for termination for Cause have occurred
within such ninety (90) day period), a copy of a resolution duly adopted by the
Board by a vote of directors constituting a majority of the Board (excluding
Executive) at a meeting of the Board at which a quorum is physically present in
person and which is called and held for such purpose (after giving Executive
reasonable notice of the specific grounds for such termination including a
reasonably detailed statement of the facts and circumstances claimed as the
basis for such termination and, except if a felony conviction is the grounds
for termination, thirty (30) days to correct such grounds, and affording Executive
and his counsel the opportunity to be heard before the Board) finding that, in
the good faith opinion of the Board, Executive was guilty of conduct
constituting Cause (the “Cause Resolution”).  The Company’s
delivery of the Cause Resolution to Executive shall be accompanied or followed
by delivery by the Company to


 


10
















 


Executive of a written notice of termination for Cause referring to this
Section 5(d), stating the grounds for such termination (which shall be the
same grounds as set forth in the Cause Resolution) and specifying the effective
date of such termination for Cause, which date shall be no earlier than
thirty-one (31) days after the date on which Executive receives such written
notice of termination for Cause (the “Cause Termination Notice”),
provided that at any time prior to the effective date of such termination, the
Board may, in accordance with the next sentence, relieve Executive of all or a
portion of his duties and treat him as a suspended employee of the Company, and
until the effective date of such termination Executive shall be entitled to
continue to receive all compensation and benefits under this Agreement as if he
had not been suspended or given notice of termination (and such suspension for
the avoidance of doubt shall not constitute “Good Reason” for purposes of this
Agreement).  Any such suspension shall be effected either (i) pursuant
to the Cause Resolution or (ii) pursuant to a resolution otherwise
approved (which approval need not be by meeting on formal notice) either by a
majority of the Board (excluding Executive) or, if a majority of the Board
cannot reasonably be convened promptly in person or by telephone, by a majority
of the Executive and Finance Committee of the Board (excluding Executive), in
each case determining, in the good faith opinion of the participants, that
Executive was guilty of conduct constituting Cause and that prompt suspension
of Executive is reasonably required in the best interests of the Company, which
resolution is confirmed within ten (10) days by a Cause Resolution. 
Notwithstanding any such suspension, Executive shall be afforded such
opportunity as may be reasonable under the circumstances to correct grounds for
termination as contemplated by the fifth sentence of this Section 5(d) until
the expiration of the thirty (30) day period provided therein.


 


If
Executive disputes the Company’s allegation of Cause by initiating arbitration
pursuant to Section 13 of this Agreement and the arbitration panel finds
that the Company properly terminated Executive’s employment for Cause in
accordance with the provisions of this Section 5(d), Executive shall,
within thirty (30) days of the arbitration award, repay the amount (if any) by
which (A) the amounts provided to him by the Company in respect of periods
commencing after the termination date of his employment set forth in the Cause
Termination Notice, including but not limited to salary continuation and the
value of all benefits provided to Executive in respect of periods commencing
after his termination date, exceed (B) the amounts to which he is entitled
under this Agreement upon a termination for Cause.  If the amount in
clause (A) does not exceed the amount in clause (B), the Company may
reduce any amounts owed to Executive by the amount in clause (A).  If the
arbitration panel does not find that the Company properly terminated Executive’s
employment for Cause in accordance with the provisions of this Section 5(c) (a
“Failed Termination for Cause”), then (x) Executive’s employment
shall be deemed to have been terminated by the Company without Cause as of the
date (the “Deemed Termination Date”) which is thirty-one (31) days after
the date on which the Cause Resolution and the Cause Termination Notice were
delivered to Executive; (y) the Company shall provide Executive with the
payments and benefits set forth in Section 5(e) hereof as if the
Company had terminated Executive without Cause as of the Deemed Termination
Date, provided that any amounts previously paid to Executive by the Company as
a suspended employee in respect of periods commencing on or after the Deemed
Termination Date shall be credited against amounts owed to Executive under Section 5(e) hereof;
and (z) the Company shall pay (or reimburse, if already paid by Executive)
all reasonable expenses actually incurred by Executive in connection with
contesting such Failed Termination for Cause.


 


(e)           Termination by the Company without Cause or by Executive for Good
Reason.  The Company may terminate
Executive’s employment at any time without Cause, for any reason or no reason,
and Executive may terminate Executive’s employment for “Good Reason.”  For 


 


11

















 


purposes of this Agreement, “Good Reason”
shall mean that, without Executive’s prior written consent, any of the
following shall have occurred:  (i) a
material change, adverse to Executive, in Executive’s positions, titles,
offices, or duties as provided in Section 3 hereof, except, in such case,
in connection with the termination of Executive’s employment for Cause or due
to Total Disability, death or expiration of the Term (or Extended Term); (ii) an
assignment of any significant duties to Executive which are materially
inconsistent with Executive’s positions or offices held under Section 3
hereof; (iii) a material decrease in Executive’s Base Salary or material
decrease in Executive’s Incentive Compensation opportunities provided under
this Agreement; (iv) change the location of Executive’s office from the
existing location in New York, New York to a place not within forty (40) miles
of the existing location in New York, New York; (v) 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 Executive for Good Reason under any of
clauses (i) through (v) of this Section 5(e) shall not be
considered effective unless Executive shall have provided the Company with
written notice of the specific reasons for such termination within sixty (60)
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. 
Notwithstanding anything in this Agreement to the contrary, the removal
of or the failure of the Board to elect Executive as Chairman of the Board (or
Executive otherwise ceasing to serve as Chairman of the Board) shall not be
deemed “Good Reason” under this Agreement. In the event that Executive’s
employment is terminated by the Company without Cause or by Executive 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 or due to the
expiration of the Term (or Extended Term)), the Company shall pay the following
amounts, and make the following other benefits available, to Executive.


 


(i)            the
Standard Termination Payments;


 


(ii)           an
amount equal to (A) two (2) multiplied by (B) the sum of (1) Executive’s
Base Salary and (2) Executive’s Severance Bonus Amount, such amount
payable over a period of twenty-four (24) months after such termination in
accordance with Section 5(g) of this Agreement;


 


(iii)          no
later than March 15 following the end of the year in which such termination
pursuant to this Section 5(e) occurs, in lieu of any Incentive
Compensation for the year in which such termination occurs, payment of a lump
sum amount equal to (A) the Incentive Compensation which would have been
payable to Executive had Executive remained in employment with the Company
during the entire year in which such termination occurred, multiplied by
(B) a fraction the numerator of which is the number of days Executive was
employed in the year in which such termination occurs and the denominator of
which is the total number of days in the year in which such termination occurs;


 


(iv)          subject
to Section 6.6 hereof and except to the extent otherwise provided at the
time of grant under the terms of any equity award made to Executive and except
for the stock options and RSUs comprising the Performance Vesting 2010 Grant,
all stock options, RSUs and other equity-based awards held by Executive at such
termination will become fully vested and non-forfeitable, and, in all other
respects, all such stock options and other awards shall be 


 


12

















 


governed by the plans and programs and the
agreements and other documents pursuant to which the awards were granted; and


 


(v)           if
Executive 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)            Termination by the Company without Cause or by Executive for Good
Reason  in connection with a Change in Control.  In the event Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason
pursuant to Section 5(e) hereof and such termination occurs upon, or
within one (1) year immediately following, a “Change in Control” (as
defined below), Executive shall be entitled (without duplication) to the
payments and benefits described in Section 5(e) hereof, except that,
solely in the case of an amount otherwise payable under Section 5(e)(ii) hereof,
the multiplier referred to in Section 5(e)(ii)(A) hereof shall be
three (3) (instead of two (2)) and such amount shall be payable over a
period of thirty-six (36) months after termination in accordance with Section 5(g) of
this Agreement; provided, however, to the extent that such amount
under Section 5(e)(ii) is exempt from Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and applicable
administrative guidance and regulations (“Section 409A”) and/or if
such Change in Control constitutes a change in ownership, change in effective
control or a change in ownership of a substantial portion of the assets of the
Company under Regulation Section 1.409A-3(i)(5), such amount otherwise
payable under Section 5(e)(ii) hereof shall be paid in a lump sum in
accordance with Section 5(g) of this Agreement.  Notwithstanding
the foregoing provisions of this Section 5(f), if any payment or right
accruing under this Agreement (without application of this subsection), either
alone or together with other payments or rights accruing to Executive from the
Company or its affiliates (the “Total Payments”) would constitute a “parachute
payment” as defined in 26 U.S.C. § 280G of the Code and regulations thereunder, such payment or right
shall be reduced to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under this Agreement being
subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code, provided that
Executive may elect by written notice to the Company that no such reduction
occur if after reduction for any applicable federal excise tax imposed by
Section 4999 of the Code and federal income tax imposed by the Code, the
Total Payments accruing to Executive would be greater than the amount of the
Total Payments as reduced (if applicable) pursuant to this
subsection after reduction for federal income taxes.  Executive shall
cooperate in good faith with the Company in providing the necessary information
for making a determination of the applicability of Section 280G.  The reduction of Total Payments, if
applicable, shall be effected in the following order (unless Executive, to the
extent permitted by Section 409A, elects another method of reduction by written
notice to the Company prior to the Section 280G event): (i) any cash
severance payments; (ii) any other cash amounts payable to Executive; (iii) any
benefits valued as parachute payments; (iv) acceleration of vesting of any
stock options for which the exercise price exceeds the then fair market value
of the underlying stock, in order of the stock option tranches with the largest
Section 280G parachute value; (v) acceleration of vesting of any
equity award that is not a stock option; and (vi) acceleration of vesting
of any stock options for which the exercise price is less then the fair market
value of the underlying stock in such manner as would net Executive the largest
remaining spread value if the options were all exercised as of the Section 280G
event.


 


13

















 


For purposes of this Agreement, a “Change in Control” shall be
deemed to have occurred if: (i) any “person” as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and as used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) of the Exchange Act but excluding the
Company and any subsidiary or affiliate and any employee benefit plan sponsored
or maintained by the Company or any subsidiary or affiliate (including any
trustee of such plan acting as trustee) or any current stockholder of 20% or
more of the outstanding common stock, directly or indirectly, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of
the Company representing at least 40% of the combined voting power of the
Company’s then-outstanding securities; (ii) the stockholders of the
Company approve a merger, consolidation, recapitalization, or reorganization of
the Company, or a reverse stock split of any class of voting securities of the
Company, or the consummation of any such transaction if stockholder approval is
not obtained, other than any such transaction which would result in at least
60% of the total voting power represented by the voting securities of the
Company or the surviving entity outstanding immediately after such transaction
being beneficially owned by persons who together beneficially owned at least
80% of the combined voting power of the voting securities of the Company
outstanding immediately prior to such transaction; provided that, for
purposes of this Section 5(f), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the
failure to meet such 60% threshold is due solely to the acquisition of voting
securities by an employee benefit plan of the Company or such surviving entity
or of any subsidiary of the Company or such surviving entity; (iii) the
stockholders of the Company approve a plan of complete liquidation of the
Company, an agreement for the sale or disposition by the Company of all or
substantially all of its assets (or any transaction having a similar effect),
or the Company sells all or substantially all of the stock of the Company to any
person or entity other than an affiliate of the Company; or (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board, together with any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (ii) or (iii) above)
whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority of the Board.


 


(g)           Timing of Certain Payments under Section 5.  Payments pursuant to
Sections 5(c)(ii), 5(e)(ii) and 5(f), if any, shall be payable in equal
installments in accordance with the Company’s standard payroll practices over
the applicable period of months contemplated by such Sections 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 Executive’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 Executive’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 Executive’s separation of service with the Company through the
remainder of the applicable 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, 


 


14

















 


if and to the extent necessary to comply with Section 409A,
amounts payable following termination of employment in a lump sum, shall
instead be paid six (6) months following the date of Executive’s
separation of service (subject to such deductions or amounts to be withheld as
required by applicable law and regulations).


 


(h)           No Obligation to Mitigate.  Executive shall have no
obligation to mitigate damages pursuant to this Section 5, but shall be
obligated to promptly advise the Company regarding obtaining other employment
providing health insurance benefits 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
insurance payments to or on behalf of Executive shall be reduced by any
insurance coverage obtained by Executive during the severance period through
employment by another entity (without regard to when such coverage is paid).


 


(i)            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 to Executive hereunder (including, without limitation,
any payments pursuant to this Section 5) shall be subject to set-off with
respect to any amounts Executive otherwise owes the Company or any subsidiary
or affiliate thereof.


 


(j)            No Other Benefits or
Compensation. 
Except as may be provided under this Agreement, under any other written
agreement between Executive and the Company, or under the terms of any plan or
policy applicable to Executive, Executive 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.


 


(k)           Release of Employment Claims; Compliance with Section 5.  Executive agrees, as a condition to receipt
of any termination payments and benefits provided for in this Section 5
(other than the Standard Termination Payments (excluding the benefits described
in the proviso in Section 5(a)(iii) hereof), that Executive will
execute a general release agreement, in a form reasonably satisfactory to the
Company, releasing any and all claims arising out of Executive’s employment
(other than enforcement of this Agreement). 
The Company shall provide Executive with the proposed form of release
referred to in the immediately preceding sentence no later than two (2) days
following the date of termination. 
Executive 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.  In the event Executive 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 (excluding
the benefits described in Section 5(a)(iii) hereof)) shall immediately
cease if Executive willfully and materially breaches Section 6.1, 6.2,
6.3, 6.4, or 6.8 hereof.”


 


6.             Amendments
to Section 6.6 of Agreement. 
Section 6.6 of the Agreement is hereby amended and restated in its
entirety as follows:


 


15

















 


“6.6         Forfeiture
of Outstanding Equity Awards; Clawback.  Notwithstanding the provisions of Section 5,
if a court of competent jurisdiction or an arbitral tribunal determines that
Executive (x) willfully and materially breached Sections 6.1, 6.2, 6.3,
6.4 or 6.8 and (y) failed to cure such breach within thirty (30) days
after his receipt of written notice from the Board, attaching a copy of a
resolution duly adopted by the Board by a vote of directors constituting a majority
of the Board (excluding Executive) at a meeting of the Board at which a quorum
is physically present in person, in which resolution the Board sets forth such
breach in reasonable detail and expressly elects the remedy provided in this Section 6.6,
and which notice is delivered to Executive within ninety (90) days after the
Company first had knowledge of such breach (the foregoing, collectively, a “Section 6.6
Notice of Breach”) (and which cure by Executive, in the case of a breach of
Section 6.4, may be effected, without limitation, by correction or
retraction of the disparaging statements), then all stock options, RSUs and
other equity-based awards (whether granted prior to, contemporaneously with, or
subsequent to this Agreement) granted by the Company and held by Executive or a
transferee of Executive shall be immediately forfeited and thereupon such stock
options, RSUs and other equity-based awards shall be cancelled, such forfeiture
to be effective at the later of the time of such failure to comply or Executive’s
termination of employment.  If a court of
competent jurisdiction or arbitral tribunal finds that the Company is entitled
to cause the forfeiture of Executive’s stock options, RSUs and other
equity-based awards in accordance with the foregoing terms of this Section 6.6,
Executive shall be required to forfeit such stock options, RSUs and other
equity-based awards immediately.  If any
option is exercised after delivery of the Section 6.6 Notice of Breach and
if such forfeiture subsequently occurs pursuant to the foregoing terms of this Section 6.6,
Executive shall be required to return to the Company all shares acquired upon
such exercise; provided  further that if Executive has sold any
shares he acquired upon such exercise or upon vesting of RSUs or other
equity-based awards, Executive shall pay to the Company an amount equal to the
aggregate sale price of the shares sold (less, in the case of stock options,
the aggregate exercise price paid by Executive for such shares).  If a court of competent jurisdiction or
arbitral tribunal does not find that the Company is entitled to cause such
forfeiture in accordance with the foregoing terms of this Section 6.6, the
Company shall pay (or reimburse, if already paid by Executive) all reasonable
expenses actually incurred by Executive in connection with contesting such
attempted forfeiture.  Executive
acknowledges and agrees that, notwithstanding anything contained in this
Agreement or any other agreement, plan or program, any incentive-based
compensation or benefits contemplated under this Agreement (including Incentive
Compensation and equity-based awards) shall be subject to recovery by the
Company under any compensation recovery or “clawback” policy, generally
applicable to senior executives of the Company, that the Company may adopt from
time to time, including without limitation any policy which the Company may be
required to adopt under Section 954 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act and the rules and regulations of the Securities
and Exchange Commission thereunder or the requirements of any national
securities exchange on which the Company’s common stock may be listed.”


 


7.             Section 409A.  The Company makes no representations or
warranties regarding the tax implications of the compensation and benefits to
be paid to Executive under the Agreement (including this Amendment), including,
without limitation, under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), 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.  It
is the intention of the parties hereto that payments under the Agreement
(including this Amendment) be interpreted to be exempt from or in compliance
with Section 409A and accordingly, to the maximum extent permitted, the
Agreement (including this Amendment) shall be interpreted to be exempt from or
in 


 


16

















 


compliance with Section 409A.  To the extent any payments of money or other
benefits due to Executive under the Agreement (including this Amendment) could
cause the application of an acceleration 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 acceleration or
additional tax.  All references in the Agreement
(including this Amendment) to Executive’s termination of employment shall mean
his separation from service within the meaning of Section 409A. Payments
pursuant to Section 5 of the Agreement (as amended by this Amendment), if
any, shall be payable in accordance with the payment details described in Section 5
of the Agreement (as amended by this Amendment); provided, however,
that if necessary to comply with Section 409A, and if Executive is deemed
on the date of termination to be a “specified employee” within the meaning of
that term 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
termination, (ii) an amount equal to the aggregate sum that would have
been otherwise payable during the initial six-months period shall be paid in a
lump sum six (6) months plus one (1) day following the date of
termination, and (iii) during the period beginning six months following
the date of termination through the remainder of the termination payments
period as detailed in Section 5 of the Agreement (as amended by this
Amendment), payments of the remaining amount (if any) shall be payable in equal
installments in accordance with the Company’s standard payroll practices. In
addition, notwithstanding any other provision with respect to the timing of
payments under the Agreement (including this Amendment), if necessary to comply
with Section 409A, amounts payable following termination of employment in
a lump sum shall instead be paid six (6) months plus one (1) day
following the date of termination.  With
respect to any reimbursements under the Agreement (including this Amendment),
such reimbursement shall be made on or before the last day of Executive’s
taxable year following the taxable year in which the expense was incurred by
Executive.  The amount of any expenses
eligible for reimbursement or the amount of any in-kind benefits provided, as
the case may be, under the Agreement (including this Amendment) during any
calendar year shall not affect the amount of expenses eligible for
reimbursement or the amount of any in-kind benefits provided during any other
calendar year.  The right to
reimbursement or to any in-kind benefit pursuant to the Agreement (including
this Amendment) shall not be subject to liquidation or exchange for any other
benefit.  For the avoidance of doubt, any
payment due under the Agreement (including this Amendment) within a period
following Executive’s termination of employment, death, Total Disability or
other event shall be made on a date during such period as determined by the
Company in its sole discretion.  Each
payment made under the Agreement (including this Amendment) shall be designated
as a “separate payment” within the meaning of Section 409A.


 


8.             Governing
Law.  This Amendment 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 or where the parties are
located at the time a dispute arises.


 


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


 


10.           Reimbursement
of Expenses of Executive in Negotiating Amendment.  All reasonable costs and expenses (including,
without limitation, reasonable fees and disbursements of counsel) incurred by
Executive in connection with the negotiation, preparation, execution, or
delivery of this Amendment shall be paid on behalf of Executive (or, if already
paid by Executive, reimbursed to Executive) promptly by the Company in an
amount up to $10,000.


 


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11.           Counterparts.  This Amendment may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Amendment
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Amendment.


 


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IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment on
December 2, 2010, to be deemed effective as of the date first above
written.


 


 


	
   

  	
  SCIENTIFIC
  GAMES CORPORATION 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffrey S. Lipkin

  
	
   

  	
  Name:

  	
  Jeffrey
  S. Lipkin

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  A. Lorne Weil

  
	
   

  	
  Name:
   A. Lorne Weil