Exhibit 10.4


 


Asia-Pacific Business Incentive Compensation Program


 


Purpose:


 


The
purpose of the Asia-Pacific Business Incentive Compensation Program (this “Plan”),
is to provide an equitable and competitive compensation opportunity to certain
key employees and consultants of Scientific Games Corporation, a Delaware
corporation (the “Company”), who are involved in the Company’s business
in China (and potentially other jurisdictions in the Asia-Pacific region) and
to promote the creation of long-term value for the Company’s stockholders by
directly linking Plan participants’ compensation under this Plan to the
appreciation in value of such business.


 


Definitions:


 


“Asia-Pacific
Business” means, from time to time, the business conducted by the Company
or any of its subsidiaries in China and, to the extent designated by the
Company, other jurisdictions in the Asia-Pacific region provided, however, that
any business conducted in China or, to the extent designated by the Company,
any other jurisdiction in the Asia-Pacific region by the Company or any of its
Subsidiaries (including any Asia-Pacific Joint Venture Business) that is
developed after the date the Committee adopts this Plan (e.g.,
new business in China for Global Draw Limited) shall be included in the definition
of Asia-Pacific Business only to the extent that the Committee reasonably
determines such business was developed substantially as a result of the efforts
of the Participants.  For the avoidance
of doubt, as of the date the Committee adopts this Plan, the Company has not
designated any jurisdictions in the Asia-Pacific region other than China for
purposes of determining the Asia-Pacific Business for purposes of this Plan.


 


“Asia-Pacific
Business Attributable EBITDA” means, for any period, (i) the consolidated
EBITDA of the Company and its Subsidiaries attributable to the Asia-Pacific
Business (excluding the Asia-Pacific Joint Venture Business) for such period
and (ii) without duplication, the Company’s (or any of its Subsidiary’s)
pro rata share of the EBITDA attributable to the Asia-Pacific Joint Venture
Business for such period.  For purposes
of this definition, “EBITDA” shall reflect all costs and expenses attributable
to the Asia-Pacific Business on a “fully loaded” basis, including, for the
avoidance of doubt, all costs and expenses of the Company and its Subsidiaries
allocable to the Asia-Pacific Business (including the Asia-Pacific Joint
Venture Business), including, without limitation, the compensation and benefits
costs of, and consulting or similar payments to, the Participants (including,
for the avoidance of doubt, the accrued costs of this Plan).  For the avoidance of doubt, such costs and
expenses on a “fully loaded” basis shall include all costs and expenses
attributable to the Asia-Pacific Business even if such costs and expenses are
included in the profit and loss statement of another (i.e.,
non-Asia-Pacific) business unit of the Company (e.g.,
costs and expenses of Global Draw Limited related to its activities in China).


 


“Asia-Pacific
Business Liquidity Event” means (i) an initial public offering on the
Hong Kong stock exchange (or other major international stock exchange) of at
least 20% of the Asia-Pacific Business (measured by reference to the fully
distributed equity value of the Asia-Pacific Business implied by such initial
public offering) that is approved by the Board of Directors of the Company or (ii) a
strategic investment pursuant to which a Person (other than, for the avoidance
of doubt, the Company or a 


 


1

















 


Subsidiary
thereof or a Joint Venture) acquires at least 20% of the Asia-Pacific Business
(measured by reference to the equity value of the Asia-Pacific Business implied
by such strategic investment) that is approved by the Board of Directors of the
Company.


 


“Asia-Pacific
Capital Expenditures” means, for any period, all expenditures by the
Company or any of its Subsidiaries (other than any such Subsidiaries operating
exclusively in China and/or the rest of the Asia-Pacific region comprising (in
whole or in part) the Asia-Pacific Business) that are attributable to, or for
the benefit of, the Asia-Pacific Business for (i) the acquisition or
leasing (pursuant to a capital lease) of fixed or capital assets or additions
to equipment (including replacements, capitalized repairs and improvements
during such period) that should be capitalized under GAAP on a consolidated
balance sheet of such Person and its Subsidiaries, (ii) the purchase or
development of computer software or systems to the extent such expenditures are
capitalized on the consolidated balance sheet of such Person and its
Subsidiaries in conformity with GAAP and (iii) deferred installation
costs.


 


“Asia-Pacific
Dividends” means, for any period, all cash dividends actually received by
the Company or any of its Subsidiaries (other than any such Subsidiaries
operating exclusively in China and/or the rest of the Asia-Pacific region
comprising (in whole or in part) the Asia-Pacific Business) (and, in the case
of a cash dividend received by a Subsidiary that is a Joint Venture, the
Company’s (or its applicable Subsidiary’s) pro rata share of such dividend)
from (i) the Company’s Subsidiaries operating exclusively in China and/or
the rest of the Asia-Pacific region comprising (in whole or in part) the
Asia-Pacific Business or (ii) Asia-Pacific Joint Venture Business.


 


“Asia-Pacific
Investments” means, for any period, all advances, loans, extensions of
credit (by way of guaranty or otherwise) or capital contributions to, or purchases
of any capital stock (or other equity interests), bonds, notes, debentures or
other debt securities of, or any assets constituting a business unit of, or
other investments in, any Person by the Company or any of its Subsidiaries
(other than any such Subsidiaries operating exclusively in China and/or the
rest of the Asia-Pacific region comprising (in whole or in part) the
Asia-Pacific Business) that are attributable to, or for the benefit of, the
Asia-Pacific Business.


 


“Asia-Pacific
Joint Venture Business” means, from time to time, the Company’s (or any of
its Subsidiary’s) share in the Asia-Pacific Joint Ventures.


 


“Asia-Pacific
Joint Ventures” means, from time to time, the Joint Ventures operating in
China and, to the extent designated by the Company, any other jurisdictions in
the Asia-Pacific region.


 


“Asia-Pacific
Net Indebtedness” means, as of the date of determination, the sum of (i) the
total Indebtedness of the Company’s Subsidiaries (excluding any Subsidiaries
that are Joint Ventures) operating in China and/or any other jurisdiction in
the Asia-Pacific region comprising (in whole or in part) the Asia-Pacific
Business as of such date less the total amount of cash and cash
equivalents held by such Subsidiaries (excluding any Subsidiaries that are
Joint Ventures) as of such date, and (ii) the Company’s (or its applicable
Subsidiary’s) pro rata portion of the total Indebtedness of the Asia-Pacific 


 


2

















 


Joint
Ventures as of such date less the Company’s (or its applicable
Subsidiary’s) pro rata portion of the total amount of cash and cash equivalents
held by the Asia-Pacific Joint Ventures as of such date.


 


“Committee”
means the Compensation Committee of the Board of Directors of the Company (or
the Board of Directors of the Company).


 


“Company
Attributable EBITDA” means (i) the actual consolidated EBITDA of the
Company and its Subsidiaries (excluding any Subsidiaries that are Joint
Ventures) for the fiscal year ended December 31, 2010 and (ii) without
duplication, the Company’s (or its applicable Subsidiaries’) pro rata share of
the EBITDA of the Joint Ventures (other than publicly traded Joint Ventures)
for the fiscal year ended December 31, 2010 (in each case, calculated
following the audit of the Company’s financial statements for such fiscal
year).


 


“Company
Net Indebtedness” means, as of the date of determination, the sum of (i) the
total Indebtedness of the Company and its wholly owned Subsidiaries as of such
date less the total amount of cash and cash equivalents held by the
Company and such wholly owned Subsidiaries as of such date, and (ii) the
Company’s (or its applicable Subsidiary’s) pro rata portion of the total
Indebtedness of the Joint Ventures (other than publicly traded Joint Ventures,
and other than Consorzio Lotterie Nazionali, Lotterie Nazionali S.r.l. or any
successor thereof) as of such date less the Company’s (or its applicable
Subsidiary’s) pro rata portion of the total amount of cash and cash equivalents
held by the Joint Ventures (other than publicly traded Joint Ventures, and
other than Consorzio Lotterie Nazionali, Lotterie Nazionali S.r.l. or any
successor thereof) as of such date.


 


“EBITDA”
means earnings before interest, taxes, depreciation and amortization.


 


“Final
Appreciation Amount” means (i) in the event no Asia-Pacific Business
Liquidity Event has been completed prior to the Final Trigger Date, the Final
Valuation less the Initial Valuation; or (ii) in the event one or
more Asia-Pacific Business Liquidity Events has been completed prior to the
Final Trigger Date, (A) the product of (1) the Final Asia-Pacific
Business Attributable EBITDA less the Initial Asia-Pacific Business
Attributable EBITDA and (2) the applicable Final Multiple plus (B) the
product of (1) the Initial Asia-Pacific Business Attributable EBITDA and (2) the
lesser of (a) the applicable Final Multiple less the Initial Multiple and (b) 5.1
plus (C) the total Asia-Pacific Dividends made during the Final
Measurement Period less (D) the aggregate of the Asia-Pacific
Capital Expenditures and the Asia-Pacific Investments made or incurred during
the Final Measurement Period less (E) the Asia-Pacific Net
Indebtedness as of the Final Trigger Date.


 


“Final
Asia-Pacific Business Attributable EBITDA” means the actual Asia-Pacific
Business Attributable EBITDA for the fiscal year ended December 31, 2014
(calculated following the audit of the Company’s financial statements for such
fiscal year).


 


“Final
Incentive Compensation Pool” means an amount equal to 7.5% of the Final Appreciation
Amount; provided, that, (i) in the event one or more Asia-Pacific
Liquidity Events have been completed prior to December 31, 2014, such
amount shall in no event exceed $50,000,000 and (ii) in the event no Asia-


 


3

















 


Pacific
Liquidity Event has been completed prior to December 31, 2014, such amount
shall in no event exceed $35,000,000.


 


“Final
Measurement Period” means the period from January 1, 2011 to the Final
Trigger Date.


 


“Final
Multiple” means (i) in the event no Asia-Pacific Business Liquidity
Event has been completed prior to the Final Trigger Date and (A) in the
event the Final Asia-Pacific Business Attributable EBITDA is less than or equal
to $45,000,000, the Initial Multiple, (B) in the event the Final
Asia-Pacific Business Attributable EBITDA is greater than $45,000,000 but is
less than or equal to $55,000,000, 7.25, (C) in the event the Final
Asia-Pacific Business Attributable EBITDA is greater than $55,000,000 but is
less than or equal to $57,500,000, 8.0, (D) in the event the Final
Asia-Pacific Business Attributable EBITDA is greater than $57,500,000 but is
less than or equal to $60,000,000, 8.35 and (E) in the event the Final
Asia-Pacific Business Attributable EBITDA is greater than $60,000,000, 8.35 in
respect of the portion of the Final Asia-Pacific Business Attributable EBITDA
up to and including $60,000,000 and 10.0 in respect of the portion of the Final
Asia-Pacific Business Attributable EBITDA that is greater than $60,000,000, (ii) in
the event an Asia-Pacific Business Liquidity Event contemplated by clause (ii) of
the definition thereof has been completed prior to December 31, 2014 but
no Asia-Pacific Business Liquidity Event contemplated by clause (i) of the
definition thereof has been completed prior to December 31, 2014, the
higher of (A) the applicable Final Multiple contemplated by clause (i) of
this definition and (B) the highest Liquidity Event Multiple applicable to
any such Asia-Pacific Liquidity Event or (iii) in the event an
Asia-Pacific Business Liquidity Event contemplated by clause (i) of the
definition thereof has been completed prior to December 31, 2014, (A) the
equity value of the Asia-Pacific Business (measured by reference to the
publicly traded stock price with respect to the Asia-Pacific Business as of December 31,
2014 (or, if such date is not a trading day, the immediately preceding trading
day)) plus the Asia Pacific Net Indebtedness as of December 31,
2014 divided by (B) the Final Asia-Pacific Business Attributable
EBITDA.


 


“Final
Trigger Date” means December 31, 2014.


 


“Final
Valuation” means an amount determined in good faith by the Committee equal
to the (i) the product of (A) the Final Asia-Pacific Business
Attributable EBITDA and (B) the applicable Final Multiple contemplated by
clause (i) of the definition thereof (for the avoidance of doubt,
calculated in accordance with clause (E) of the definition thereof in the
event the Final Asia-Pacific Business Attributable EBITDA exceeds $60,000,000) plus
(ii) the total Asia-Pacific Dividends made during the Final Measurement
Period less (iii) the aggregate of the Asia-Pacific Capital
Expenditures and the Asia-Pacific Investments made or incurred during the Final
Measurement Period less (iv) the Asia-Pacific Net Indebtedness as
of such date.


 


“GAAP”
means generally accepted accounting principles in the United States as in
effect from time to time.


 


“Indebtedness”
means, with respect to any Person, (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person for the deferred
purchase price of property or services (other 


 


4

















 


than
current trade payables incurred in the ordinary course of such Person’s
business), (iii) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (iv) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (v) all capital lease
obligations of such Person, (vi) all obligations of such Person,
contingent or otherwise, as an account party or applicant under or in respect
of acceptances, letters of credit, surety bonds or similar arrangements, (vii) the
liquidation value of all mandatorily redeemable preferred capital stock of such
Person, (viii) all guarantee or similar obligations of such person in
respect of obligations of the kind referred to in clauses (i) through (vii) above
and (ix) all obligations of the kind referred to in clauses (i) through
(viii) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any lien or other
encumbrance of whatever nature on property (including accounts and contract
rights) owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation. 
The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such person is a general
partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except
to the extent that the terms of such Indebtedness expressly provide that such
Person is not liable therefor.


 


“Initial
Asia-Pacific Business Attributable EBITDA” means the actual Asia-Pacific
Business Attributable EBITDA for the fiscal year ended December 31, 2010
(calculated following the audit of the Company’s financial statements for such
fiscal year).


 


“Initial
Multiple” means (i) the equity value of the Company less the
Company’s (or its applicable Subsidiary’s) pro rata portion of the equity value
of the publicly traded Joint Ventures (measured by reference to the publicly
traded stock price with respect to such Joint Ventures as of December 31,
2010 (or, if such date is not a trading day, the immediately preceding trading
day)) plus the Company Net Indebtedness, in each case, as of December 31,
2010 divided by (ii) the Company Attributable EBITDA.


 


“Initial
Valuation” means an amount equal (i) the product of (A) the
Initial Asia-Pacific Business Attributable EBITDA and (B) the Initial
Multiple less (ii) the amount of Asia-Pacific Net Indebtedness as
of December 31, 2010.


 


“Joint
Venture” means a Person (other than a wholly owned Subsidiary of the
Company) in which the Company or any of its Subsidiaries holds an equity
interest.


 


“Liquidity
Event Multiple” means, with respect to an Asia-Pacific Liquidity Event, the
(i) equity value of the Asia-Pacific Business implied by such Asia-Pacific
Liquidity Event plus the Asia-Pacific Net Indebtedness as of the date
such Asia-Pacific Liquidity Event is completed divided by (ii) the
Asia-Pacific Business Attributable EBITDA for the four quarters ended
immediately preceding such Asia-Pacific Liquidity Event.


 


5

















 


“Participants”
means any employee or consultant of the Company or any of its Subsidiaries that
from time to time is designated by the Committee as a participant in this
Plan.  The Committee agrees to consider
in good faith any proposal by the Participants’ Designee with respect to the
addition of new Participants (and an appropriate reallocation of the 7.5% set
forth in the definition of the Final Incentive Compensation Pool).  It shall be a condition to the designation of
any employee or consultant of the Company or any of its Subsidiaries as a
Participant that such employee or consultant devotes all or substantially all
of his or her business time working for the benefit of the Company (or its
applicable Subsidiary) in China and (to the extent applicable) other jurisdictions
in the Asia-Pacific region (except to the extent the Company requests such
employee or consultant to devote his or her business time elsewhere for the
Company).


 


“Participants’
Designee” means the Chief Executive Officer — Asia-Pacific Region of the
Company for so long as the individual currently serving in such position serves
in such position and, thereafter, a Participant designated by the Committee.


 


“Participant’s
Percentage” means the percentage of the Final Incentive Compensation Pool
to which a Participant is entitled, as determined from time to time by the
Committee.


 


“Person”
means an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.


 


“Subsidiary”
means, as to any Person, (i) a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency)
to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person or (ii) any other Person
the accounts of which are required to be consolidated with those of such Person
in such Person’s consolidated financial statements in accordance with GAAP if
prepared at the date of determination. 
Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries”
herein shall refer to a direct or indirect Subsidiary or Subsidiaries of the
Company.


 


Payouts:


 


Subject
to the terms and conditions of this Plan, within 70 days of the Final Trigger
Date (the “Final Payment Date”), the Company shall pay to each
Participant that is eligible hereunder for such payment an amount equal to such
Participant’s Percentage of the Final Incentive Compensation Pool (if any) (in
U.S. dollars)


 


Service
Requirement:


 


Notwithstanding
anything in this Plan or in any other agreement to the contrary, any payment to
a Participant under this Plan shall be conditioned on such Participant being an
employee (or consultant, as 


 


6

















 


the
case may be) of the Company (or its applicable Subsidiary) who devotes all or
substantially all of his or her business time working for the benefit of the
Company (or its applicable Subsidiary) in China and (to the extent applicable)
other jurisdictions in the Asia-Pacific region at all times during the Final
Measurement Period (except to the extent the Company requests such employee or
consultant to devote his or her business time elsewhere for the Company) and
being ready, willing and able to perform the duties contemplated by such
Participant’s employment agreement (or consulting agreement, as the case may
be), except in the event (i) Participant’s employment (or consultancy, as
the case may be) terminates due to Participant’s death, (ii) the Company
terminates Participant’s employment (or consultancy, as the case may be) due to
Participant’s Total Disability, (iii) the Company terminates Participant’s
employment (or consultancy, as the case may be) without Cause or (iv) in
the event the term of Participant’s employment agreement (or consulting
agreement, as the case may be) expires prior to the Payment Date and the
Company gives written notice to the Participant that it has determined not to
renew such agreement (provided that the Participant has not given written
notice to the Company that he has determined not to renew such agreement and
such Participant is otherwise ready, willing and able to renew such agreement
on the same terms contained in such agreement) (any termination event referred
to in clause (i), (ii), (iii) or (iv) above, a “Specified
Termination Event”).


 


Notwithstanding
anything in this Plan or in any other agreement to the contrary, in the event
the employment (or consultancy, as the case may be) of a Participant with the
Company (or its applicable Subsidiary) is terminated, such Participant shall
forfeit any right to payment or other rights under this Plan including, without
limitation, any payment otherwise payable on the Final Payment Date; provided,
however, in the case of such termination of such Participant due to a
Specified Termination Event, subject to the terms and conditions of this Plan,
the Company shall pay to such Participant on the Final Payment Date an amount
equal to the product of (i) such Participant’s Percentage of the Final
Incentive Compensation Pool (if any) and (ii) a fraction the numerator of
which is the actual number of days during the Final Measurement Period during
which such Participant was an employee (or consultant, as the case may be) of
the Company (or its applicable Subsidiary) and the denominator of which is
1,461,


 


For
purposes of this Plan, “Total Disability” shall mean Participant’s (i) becoming
eligible to receive benefits under any long-term disability insurance program
maintained by the Company or (ii) failure to perform the duties and
responsibilities contemplated under his employment agreement (or consulting
agreement, as the case may be) for a period of more than 180 days during any
consecutive 12-month period due to physical or mental incapacity or impairment.


 


For
purposes of this Plan, “Cause” shall mean:  (i) gross neglect by the Participant of,
or failure by or inability of the Participant to perform, the Participant’s
duties under his employment agreement (or consulting agreement, as the case may
be) (including failure by or inability of Participant to spend the time in the
Asia-Pacific region as may be contemplated by such Participant’s employment (or
consulting, as the case may be) agreement); (ii) conviction (including
conviction on a nolo contendere plea) or indictment of the Participant of, or
commission by the Participant of, any felony; (iii) conviction (including
conviction on a nolo contendere plea) or indictment of the Participant of, or
commission by the Participant of, any non-felony crime or offense involving the
property of the Company or any of its 


 


7

















 


subsidiaries
or affiliates or evidencing moral turpitude; (iv) willful misconduct by
the Participant in connection with the performance of the Participant’s duties
under his employment agreement (or consulting agreement, as the case may be); (v) intentional
breach by the Participant of any material provision of his employment agreement
(or consulting agreement, as the case may be); (vi) violation by the
Participant of a material provision of the Company’s Code of Business Conduct
(either the U.S. or China version); or (vii) any other willful or grossly
negligent conduct on the part of the Participant which would make the Executive’s
continued employment by (or consultancy with, as the case may be) the Company
materially prejudicial to the best interests of the Company.  Notwithstanding the foregoing, the
Participant shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to the Participant written notice setting
forth in reasonable detail the facts and circumstances claimed as the basis for
termination of Participant’s employment (or consultancy with, as the case may
be) and, with respect to clauses (i), (iv), (v), (vi) and (vii) hereof,
Executive shall have failed to fully cure such Cause within 30 days after
receiving such notice (it being understood that the circumstances of such Cause
may be such that such Cause is not fully curable).


 


Clawback:


 


Each
Participant acknowledges and agrees that, notwithstanding anything contained in
this Plan or any other agreement, plan or program, any payments contemplated
under this Plan 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.


 


Without
limiting the generality of the foregoing, such Participant acknowledges and
agrees that any payments received by such Participant shall be promptly repaid
to the Company in the event it is determined (pursuant to the dispute
resolution procedures below, if such repayment obligation is disputed) that
such Participant engaged in any conduct covered under the definition of “Cause”
above.


 


Limits
on Transferability:


 


Without
the prior written consent of the Company, no right or interest of a Participant
under this Plan shall be pledged, hypothecated or otherwise encumbered or
subject to any lien, obligation or liability of such Participant to any party,
or assigned or transferred by such Participant otherwise than by will or the
laws of descent and distribution or to a designated beneficiary upon the death
of a Participant.  A beneficiary,
transferee, or other person claiming any rights under this Plan from or through
any Participant shall be subject to all terms and conditions of this Plan (and
any related agreement) applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.


 


8

















 


Taxes:


 


The
Company and any Subsidiary thereof is authorized to withhold from any payment
under this Plan, or any payroll or other payment to a Participant, amounts of
withholding and other taxes due or potentially payable in connection with this
Plan, and to take such other action as the Committee may deem advisable to
enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to this Plan.


 


Limitation
on Rights Conferred under Plan:


 


Neither
this Plan nor any action taken hereunder shall be construed as (i) giving
any Participant the right to continue as a Participant or in the employ or
service of the Company or a Subsidiary thereof, (ii) interfering in any
way with the right of the Company or a Subsidiary to terminate any Participant’s
employment or service at any time or (iii) giving a Participant any claim
to be granted any award or payment under this Plan or to be treated uniformly
with other Participants and employees.


 


Amendments;
Waivers:


 


The
Committee may amend or terminate this Plan without the consent of any
Participant; provided that, without the consent of an affected Participant, no
such Committee action may materially and adversely affect the rights of such
Participant under this Plan (it being understood that any termination of this
Plan shall be treated as a Specified Termination Event for purposes of this
Plan for the then eligible Participants such that they will be eligible to
receive the applicable payment on the Final Payment Date).  For this purpose, actions that alter the
timing of federal income taxation of a Participant will not be deemed material
unless such action results in an income tax penalty on the Participant.  The Committee may waive any condition under
this Plan; provided that, without the consent of an affected Participant, no
such Committee action may materially and adversely affect the rights of such
Participant under this Plan.  Without
limiting the generality of the foregoing, the Committee may increase the
percentage contemplated in the definition of Final Incentive Compensation Pool
and correspondingly (i.e., on an
economically equivalent basis) lower the Participants’ Percentages (e.g., if the Committee increases the percentage set forth in
the definition of Final Incentive Compensation Pool to 8%, a Participant’s
Percentage that was 50% of the Final Incentive Compensation Pool at 7.5% may be
reduced to 46.875% of the Final Incentive Compensation Pool at 8%).


 


Administration;
Interpretation:


 


Except
as otherwise provided below, this Plan shall be administered by the
Committee.  The Committee shall have full
and final authority, in each case subject to and consistent with the provisions
of this Plan, to prescribe agreements with Participants to effectuate this Plan
(which need not be identical for each Participant) and rules and
regulations for the administration of this Plan, construe and interpret this
Plan (and any such agreements) and correct defects, supply omissions, or
reconcile inconsistencies in this Plan (and any such agreements), and to make
all other decisions and determinations as the Committee may deem necessary or
advisable for the administration of this Plan.


 


9

















 


Any
action of the Committee shall be final, conclusive and binding on all persons,
including the Company, its Subsidiaries, the Participants (as well as their
beneficiaries or other persons claiming rights from or through a Participant),
and stockholders.


 


The
Committee may act through subcommittees, in which case the subcommittee shall
be subject to and have authority under the charter applicable to the Committee,
and the acts of the subcommittee shall be deemed to be acts of the Committee
hereunder.  The express grant of any
specific power to the Committee, and the taking of any action by the Committee,
shall not be construed as limiting any power or authority of the Committee.  The Committee may delegate to officers or
managers of the Company or any Subsidiary or affiliate thereof the authority,
subject to such terms as the Committee shall determine, to perform such
functions, including administrative functions, related to this Plan.  The Committee may appoint agents to assist it
in administering this Plan.


 


Limitation
of Liability:


 


The
Committee and each member thereof, and any person acting pursuant to authority
delegated by the Committee, shall be entitled, in good faith, to rely or act
upon any report or other information furnished by any executive officer, other
officer or employee of the Company or a Subsidiary or affiliate thereof, the
Company’s independent auditors, consultants or any other agents assisting in
the administration of this Plan.


 


Members
of the Committee, any person acting pursuant to authority delegated by the
Committee, and any officer or employee of the Company or a Subsidiary or
affiliate thereof acting at the direction or on behalf of the Committee or a
delegee shall not be personally liable for any action or determination taken or
made in good faith with respect to this Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with
respect to any such action or determination.


 


Section 409A:


 


The
Company makes no representations or warranties regarding the tax implications
of a Participant’s rights, and the amounts to be paid to a Participant, under
this Plan, including, without limitation, under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and applicable
administrative guidance and regulations. 
Each Participant’s rights, and the amounts to be paid to a Participant,
under this Plan are intended to be exempt from Section 409A under the
short-term deferral exception contained in Treasury Regulation 1.409A-1(b)(4) and
the provisions of this Plan shall be interpreted consistent with such
intent.   To the extent that any amount
payable under this Plan constitutes “nonqualified deferred compensation” (as
defined in Section 409A and the regulations thereunder) and subject to Section 409A,
it shall be paid in a manner that will comply with Section 409A and the
provisions of this Plan related to such amount payable shall be interpreted
consistent with such intent. All references in this Plan to a Participant’s
termination of employment (or consulting, as the case may be) arrangement shall
mean his separation from service within the meaning of Section 409A and
Treasury regulations promulgated thereunder. 
In the event the terms of this Plan would subject a Participant to the
imposition of taxes and penalties under Section 409A, the Committee may
amend the terms of this Plan to 


 


10

















 


avoid
such Section 409A penalties, to the extent possible.  Notwithstanding any other provision in this
Plan, if as of the date on which a Participant’s employment (or consultancy, as
the case may be) terminates, the Participant is a “specified employee” within
the meaning of Section 409A and the regulations as determined by the
Committee, then to the extent any amount payable under this Plan that the
Committee reasonably determines would be nonqualified deferred compensation
within the meaning of Section 409A, that under the terms of this Plan
would be payable prior to the six-month anniversary of the Participant’s
effective date of termination, such payment shall be delayed until the earlier
to occur of (i) the six-month anniversary of such termination date and (ii) the
date of the Participant’s death.  Each
payment made under this Plan shall be designated as a “separate payment” within
the meaning of Section 409A.  For
the avoidance of doubt, any payment due under this Plan within a period
following an event shall be made on a date during such period as determined by
the Committee in its sole discretion.


 


Governing
Law; Dispute Resolution:


 


The
validity, construction and effect of this Plan, any rules and regulations
under this Plan, and any related agreement, shall be determined in accordance
with the laws of the State of New York without giving effect to principles of
conflicts of laws.


 


Each
Participant and the Company agree that, except for any claim that is
non-arbitrable under applicable law, final and binding arbitration as
contemplated below shall be the exclusive forum for any dispute or controversy
between them arising under or in connection with this Plan.  Judgment may be entered on the arbitrators’
award in any court having jurisdiction. 
For purposes of entering such judgment, each Participant and the Company
hereby consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the Southern District of New York; (ii) the
Supreme Court of the State of New York, New York County; or (iii) any
other court having jurisdiction.  Each
Participant and the Company hereby waive, to the fullest extent permitted by
applicable law, any objection which either may now or hereafter have to such
jurisdiction, venue and any defense of inconvenient forum.


 


Any
arbitration under this Plan shall be filed exclusively with, and administered
by, the American Arbitration Association in New York, New York before three (3) arbitrators,
in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association in effect at the time of
submission to arbitration.  Each
Participant and the Company agree that a judgment upon an award rendered by the
arbitrators may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by applicable law. 
The Company shall pay all costs uniquely attributable to arbitration,
including the administrative fees and costs of the arbitrators.  The applicable Participant and the Company
shall each pay its own costs and attorney fees, if any, unless the arbitrators rule otherwise.  Each Participant acknowledges and understands
that he is giving up no substantive rights, and these dispute resolution
provisions simply govern forum and administration of the applicable dispute.  The arbitrators shall apply the same
standards a court would apply to award any damages, and shall have the
authority to order the non-prevailing party to pay any attorney fees or costs
of the prevailing party.


 


BY
PARTICIPATING IN THIS PLAN, EACH PARTICIPANT ACKNOWLEDGES THAT THE RIGHT TO A
COURT TRIAL AND TRIAL BY JURY IS OF VALUE, AND KNOWINGLY AND 


 


11

















 


VOLUNTARILY
WAIVES THAT RIGHT FOR ANY DISPUTE SUBJECT TO THE TERMS OF THESE DISPUTE
RESOLUTION PROVISIONS.


 


12