Exhibit 10.1


 


This EMPLOYMENT AGREEMENT (this “Agreement”) is made
as of January 1, 2006 (the “Effective Date”), by and between SCIENTIFIC GAMES
CORPORATION, a Delaware corporation (the “Company”), and A. Lorne Weil (“Executive”).


W I T N E S S E T H :


WHEREAS, Executive has been employed pursuant to an
Amended and Restated Employment Agreement with the Company, dated as of
February 28, 2003 (the “Original Agreement”); and


WHEREAS, the Company and Executive desire that this
Agreement replace and supersede the Original Agreement;


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terminated and superseded.


2.             Employment;
Term.  The Company hereby agrees to employ
Executive, and Executive hereby accepts employment with the Company, in
accordance with and subject to the terms and conditions set forth herein.  The term of employment of Executive under
this Agreement (the “Term”) shall be the period commencing on the Effective
Date and ending on December 31, 2009, as may be extended in accordance with
this Section and subject to earlier termination in accordance with Section
5.  The Term shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term), and then on each succeeding annual anniversary
thereafter (each such initial and
succeeding year-long extension (if any), an “Extension Term”), unless either party shall have given written
notice to the other party at least ninety (90) days prior to the date upon
which such extension would otherwise have become effective electing not to
further extend the Term (a “Nonrenewal Notice”), in which case Executive’s
employment shall terminate on the date of expiration of the then current Term
(whether it be the initial Term or the then current Extension Term), unless
earlier terminated in accordance with Section 5.  In the event that Executive’s employment
terminates because either party shall have given timely a Nonrenewal Notice to
the other party, in accordance with the preceding sentence, then,
notwithstanding anything to the contrary set forth herein, Executive shall upon
such termination be entitled to receive the compensation and benefits set forth
in Section 5(d) as if Executive’s employment had been terminated by the Company
without Cause, or by Executive for Good Reason, as of the date of expiration of
the Term (including, as the case may be, the date of expiration of the
Extension Term during which the Nonrenewal Notice is given).  Except
to the extent (if any) that the context specifically requires otherwise,









 



references to the Term
hereafter in this Agreement shall include the initial Term and any Extension
Term.  It is intended that Executive’s
previous term of employment with the Company shall be included when calculating
Executive’s tenure at the Company for all purposes; it being understood that for all such purposes Executive’s
tenure at the Company commenced on August 1, 1990.


3.             Offices
and Duties.


a.                                       From January 1, 2006 through December 31,
2007, Executive will serve as Chief Executive Officer of the Company and as
Chairman of the Board of Directors of the Company (the “Board of Directors”),
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.


b.                                      From and after January 1, 2008, Executive
shall continue to serve as both Chief Executive Officer and Chairman of the
Board of Directors, unless notice within the time frames in the following
sentence is provided by either Executive or the Company to the other
party.  Executive will relinquish the
role of Chief Executive Officer of the Company (but will continue to be
employed as and serve in the capacity of Chairman of the Board of Directors and
shall continue to receive the compensation and benefits provided for herein) if
(i) for the period January 1, 2008 to December 31, 2008, notice is provided by
either party to the other party no later than September 1, 2007, or (ii) for
the period January 1, 2009 to December 31, 2009, notice is provided by either
party to the other party no later than September 1, 2008, or (iii) for each
Extension Term, if any, notice is provided by either party to the other party
no later than September 1 in the calendar year immediately preceding the
commencement of such Extension Term. 
Receipt or giving of such notice and subsequent change in position shall
not constitute “Cause” or “Good Reason” within the meaning of Section 5 of this
Agreement.


c.                                       In such capacities, 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 of Directors.  Subject
to Section 5(d) and to Executive’s right to continue to receive the
compensation and benefits provided for herein, Executive’s functions, duties
and responsibilities are subject to reasonable changes as the Board of 



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Directors may in good faith
determine after consultation with Executive.


d.                                      Executive hereby agrees to accept such
employment and to serve the Company to the best of his ability in such
capacities, devoting substantially all of his business time to such employment;
provided, however, that Executive shall be entitled to (i) manage his personal
investments and otherwise attend to personal affairs, including family
financial and legal affairs, and (ii) serve on the boards of directors of up to
three entities, each in a manner that does not conflict or unreasonably
interfere with his responsibilities hereunder.


4.             Compensation;
Benefits.


(a)           Base
Salary.  During the Term
the Company shall pay Executive a base salary (the “Base Salary”) at the
initial rate of one million five hundred thousand dollars ($1,500,000.00) per
annum, payable biweekly (except to the extent deferred under a deferred
compensation plan).  The first payment of
Base Salary following the execution and delivery by the parties of this
Agreement shall be in an amount equal to the difference between (i) the
aggregate amount of Base Salary that Executive is entitled to have received at
a base salary rate of one million five hundred thousand dollars ($1,500,000.00)
per annum for all pay periods in 2006 up to and including the pay period
covered by such first payment date, and (ii) the aggregate amount of Base
Salary that Executive has received for such pay periods referred to in clause
(i).  The Base Salary shall be increased
annually on each January 1 during the Term by a percentage of the Base Salary
then in effect equal to the percentage increase, if any, during the preceding
twelve months in the Consumer Price Index for the Greater New York Area.  For purposes of this Agreement, the
percentage increase, if any, during the preceding twelve months in the Consumer
Price Index for the Greater New York area will be computed by dividing (i) the
difference between (A) the Consumer Price Index—All Urban Consumers, New
York-Northern New Jersey-Long Island, NY-NJ-CT-PA, All Items (1982-84=100),
published by the U.S. Department of Labor Bureau of Labor Statistics (the “CPI”)
for the month of December in the calendar year most recently ended prior to, or
ending on, the date as of which the relevant increase is to be made (e.g., December 2007 for an increase to be
made on January 1, 2008) and (B) the CPI for the month of December in the
calendar year immediately preceding the year referred to in clause (i)(A) by
(ii) the CPI referred to in clause (i)(B); provided, however, that if such
computation yields a negative number, such percentage increase shall be deemed
to be zero.  Without limiting the
foregoing, in the event that the Company, in its sole discretion, from time to
time determines to increase the Base Salary, such increased amount shall, from
and after the effective date of the increase, constitute the “Base Salary” for
purposes of this Agreement.



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(b)           Incentive
Compensation.  Executive
shall have the opportunity annually to be paid incentive compensation in
amounts determined by the Compensation Committee of the Board of Directors of
the Company (the “Compensation Committee”) in accordance with the applicable
incentive compensation plan of the Company as in effect from time to time.
Under such plan, Executive shall have the opportunity to earn a target bonus
(the “Target Bonus”) up to 100% of Base Salary as incentive compensation at
Target Opportunity and a maximum bonus up to 200% of Base Salary as incentive
compensation at Maximum Opportunity.  “Target
Opportunity” and “Maximum Opportunity” shall have the meaning ascribed to them
in the applicable incentive compensation plan. 
Notwithstanding the foregoing, if no incentive compensation plan is in
effect at any relevant time, or if such plan, as in effect at any relevant
time, does not provide a reasonable opportunity for Executive to earn annually
incentive compensation in the amounts described in the foregoing provisions of
this Section 4(b), then the Company shall provide such reasonable opportunity
to Executive independently of such plan. 
Any incentive compensation payable to Executive shall be paid in
accordance with the Company’s usual practices with respect to payment of
incentive compensation to its other senior executives (regardless of whether,
at such time, the Company has an incentive compensation plan in effect), except
that the Company shall make available to Executive an opportunity to defer
receipt of the incentive compensation under a deferred compensation plan.


(c)           Eligibility
for Annual Equity Awards  and
Participation in Executive Compensation Plans.  Executive shall be eligible to receive an
annual grant of stock options or other equity awards, in the sole discretion of
the Compensation Committee, 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.  Executive
shall be eligible to participate in such plans and programs, and in other
executive compensation plans and programs which are made generally available by
the Company to its other senior executives (in accordance with the terms of
such plans and programs and subject to the Company’s right to at any time amend
or terminate any such plan or program) in each case on terms no less favorable
to Executive than the most favorable terms of participation of any other
executive of the Company.  For the
avoidance of doubt, Executive’s participation in any such equity award plan or
program shall be deemed to be on terms no less favorable to Executive than the
most favorable terms of participation of any other executive of the Company if
the absolute number or amount of stock options, restricted stock units, or
other equity awards awarded to Executive is at least equal to the highest
absolute number or amount of stock options, restricted stock units or other
equity award awarded to any other executive of the Company in respect of the
same period (regardless of the percentage of Executive’s Base Salary, incentive
compensation or any other compensation or benefit represented by such award).



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(d)           Incentive
Equity Awards.


(i)            The Company shall grant to Executive (A) as
a sign-on bonus thirty days following the parties’ execution of this Agreement
(the “2006 RSU Grant”), 235,000 restricted stock units; and (B) thereafter on
June 30, 2007 (the “2007 RSU Grant” and collectively with the 2006 RSU Grant,
the “Special RSU Grants” and each individually, a “Special RSU Grant”) (the
respective date each Special RSU Grant is made, the “Grant Date” thereof)
restricted stock units in a number equal to (x) $8 million divided by (y) the
average closing price per share of the Company’s common stock for the 30-day
period preceding the Grant Date of the 2007 RSU Grant (such closing prices, in
each case, as reported in the Wall Street Journal for those dates during such
30-day period on which the principal national stock exchange or quotation
system on which the Company’s stock is traded is open for business).  Each Special RSU 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 a restricted stock unit agreement in the form attached
hereto as Exhibit A to be entered into with respect to such Special RSU
Grant by and between the Company and Executive (each, an “RSU Agreement”),
provided, however, that the parties hereby agree, and the RSU Agreements shall
respectively provide, that the 2006 RSU Grant shall vest with respect to
twenty-five percent (25%) of the shares of common stock subject to the 2006 RSU
Grant on December 31, 2006 and each subsequent December 31st through December 31, 2009, and that the 2007
RSU Grant shall vest with respect to one third (1/3) of the shares of common
stock subject to the 2007 RSU Grant on December 31, 2007 and each subsequent
December 31st through December 31, 2009, subject to certain
provisions relating to accelerated vesting and forfeiture as described in this
Agreement, the applicable RSU Agreement and the Equity Plan; provided, however,
that, notwithstanding anything to the contrary set forth in the Equity Plan, in
the RSU Agreements, in this Agreement or in any other Company plan or policy,
it is hereby agreed that this Agreement (or any written amendment hereto signed
by Executive and the Company that expressly states that it supersedes this
proviso) and the RSU Agreement in the form of Exhibit A hereto contain
the only provisions regarding forfeiture that shall apply to the Special RSU
Grants.  In each case, the applicable RSU
Agreement shall provide that delivery to Executive of shares of Company common
stock subject to vested restricted stock units under the applicable Special RSU
Grant shall occur on earliest date on which such shares may be so delivered
without becoming subject to taxes, interest or penalties as a result of Section
409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”)
and applicable administrative guidance and regulations, and without affecting
any compensation deduction applicable thereto as a result of Section 162(m) of
the Code but in no event shall such shares be delivered (x) later than six
months plus one day after the date of termination of Executive’s employment
(the date of termination of Executive’s employment, regardless of the ground or
reason therefor, being referred to in this Agreement as the “Termination Date”),
nor (y) sooner than five (5) days after the Termination Date.



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(ii)           Notwithstanding anything to the contrary set
forth in this Agreement, in the RSU Agreements or in the Equity Plan (but
without limiting any rights or entitlements of Executive in addition to the
following that may be provided elsewhere in this Agreement, the RSU Agreements
or the Equity Plan), in the event of any Change in Control described in clause (B)
or (C) of Section 5(e)(iii), or any Change in Control described in Clause (A)
of Section 5(e)(iii) pursuant to which holders of the Company’s common stock
generally are entitled to receive cash and/or non-cash consideration for all or
substantially all of their shares: 
(A) if such Change in Control occurs before the 2007 RSU Grant has
otherwise been made to Executive, then (x) the 2007 RSU Grant shall be
granted (or if not granted, shall be deemed to have been granted) to Executive
on the “Change in Control Reference Date” (as defined below) and the Change in
Control Reference Date shall be the Grant Date of the 2007 RSU Grant, provided
that (y) the number of restricted stock units included in the 2007 RSU Grant
shall be the number determined using the Change in Control Reference Date as
the Grant Date of the 2007 RSU Grant, or such lesser number of restricted stock
units, if any, as may be determined by dividing (I) $8 million by (II) the
consideration per share (including the fair value per share of any non-cash
consideration as specified by the governing legal documents in connection with
such Change in Control or otherwise determined in good faith by the Board of
Directors) to be received by holders of the Company’s common stock generally
for their shares pursuant to such Change in Control transaction; (B) if such
Change in Control occurs before all restricted stock units included in the
Special RSU Grants (including those granted or deemed granted pursuant to
clause (A) of this paragraph 4(d)(ii) and including those subject to the
2006 RSU Grant, whether or not such Change in Control occurs prior to the Grant
Date of the 2006 RSU Grant) have vested (except by reason of forfeiture
pursuant to the terms of Section 5(j) of this Agreement or the terms of Section
5(a) or 5(c) of this Agreement and the applicable RSU Agreement), then all such
unvested restricted stock units shall fully vest and become non-forfeitable as
of the Change in Control Reference Date; (C) any and all shares of the Company’s
common stock underlying vested restricted stock units included in the Special
RSU Grants (including those granted or deemed granted pursuant to clause (A) of
this paragraph 4(d)(ii) and those vested pursuant to clause (B) of this
paragraph 4(d)(ii)) that have not otherwise been delivered as of the time of
the Change in Control shall be deemed to have been delivered to Executive at
the latest date and time that shall entitle Executive to receive for such
shares, in the manner described in clause (D) below, the consideration payable
to holders of the Company’s common stock generally for their shares pursuant to
such Change in Control transaction (provided, for the avoidance of doubt, that
no such shares shall be deemed to have been delivered to Executive if such
Change in Control transaction is not consummated and holders of the Company’s
common stock generally receive no such consideration for their shares pursuant
thereto); and (D) Executive shall be entitled to receive for shares of the
Company’s common stock underlying vested restricted stock units included in the
Special RSU Grants (including those granted or deemed granted pursuant to
clause (A) of this paragraph 4(d)(ii) and those vested pursuant to clause (B)
of this paragraph 4(d)(ii)), at substantially the same time and as to



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the same percentage of common stock held, any
consideration payable to holders of the Company’s common stock generally for
their shares pursuant to such Change in Control transaction, as if Executive
held, as of the Change in Control Reference Date, all shares of the Company’s
common stock underlying all the vested restricted stock units included in the
Special RSU Grants (including those granted or deemed granted pursuant to
clause (A) of this paragraph 4(d)(ii)) and those vested pursuant to clause
(B) of this paragraph 4(d)(ii)).  The “Change
in Control Reference Date” shall mean the date of, and the time immediately
prior to the time of, the Change in Control, or such earlier date and/or time
as shall entitle Executive to receive pursuant to such Change in Control
transaction, at substantially the same time and as to the same percentage of
common stock held, any consideration payable to holders of the Company’s common
stock generally for their shares, as the holder of the common stock underlying
all the vested restricted stock units included in the Special RSU Grants
(including those granted or deemed granted pursuant to clause (A) of this
paragraph 4(d)(ii) and those vested pursuant to clause (B) of this paragraph
4(d)(ii)).  For purposes of this
paragraph 4(d)(ii), references to common stock underlying restricted stock
units shall include securities substituted or resubstituted therefor in
accordance with the terms of the RSU Agreements and the Equity Plan.


(iii)          Notwithstanding anything to the contrary set
forth in this Agreement, in the RSU Agreements or in the Equity Plan, in the
event that Executive’s employment is terminated by reason of Executive’s death
or Total Disability, or by the Company without Cause, or by Executive for Good
Reason (including, without limitation, a deemed termination by the Company
without Cause due to a Failed Termination for Cause (as defined in Section 5(c)
hereof) pursuant to Section 5(c) hereof): 
(A) if such termination of employment occurs before the 2007 RSU Grant
has otherwise been made to Executive, then (x) the 2007 RSU Grant shall be
granted (or if not granted, shall be deemed to have been granted) to Executive
on the day immediately preceding the Termination Date, and such day shall be
the Grant Date of the 2007 RSU Grant; and (y) the number of restricted
stock units included in the 2007 RSU Grant shall be the number determined using
the day immediately preceding the Termination Date as the Grant Date of the
2007 RSU Grant; and (B) if such termination of employment occurs before all
restricted stock units included in the Special RSU Grants (including those
granted or deemed granted pursuant to clause (A) of this paragraph 4(d)(iii)
and including those subject to the 2006 RSU Grant, whether or not such termination
occurs prior to the Grant Date of the 2006 RSU Grant) have vested (except by
reason of forfeiture pursuant to the terms of Section 5(j) of this Agreement),
then all such vested restricted stock units shall fully vest and become
non-forfeitable as of the Termination Date and Executive shall be entitled to
the benefits thereof, as provided in Section 5(b) (in the case of termination
by reason of Executive’s death) or 5(d) (in the case of termination by reason
of Executive’s Total Disability, by the Company without Cause, or by Executive
for Good Reason).



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


(f)            Use of
Company Aircraft. 
Executive shall have use of the Company’s “Flight Options” fractional
ownership aircraft, or any substitute or replacement private aircraft wholly or
partially owned, or leased, chartered by the Company or otherwise made
available by the Company to any executive officers of the Company (collectively,
the “Company Plane”) for personal use, provided that such personal use shall
not interfere with the business use of the Company Plane.  Family members and/or other guests may
accompany Executive on Company Plane flights, whether such flights are for personal
use, business use or a combination thereof, as seating permits.  When using the Company Plane for a flight
that is exclusively for personal use, Executive shall reimburse the Company for
the out-of-pocket cost to the Company of such flight as invoiced by Flight
Options LLC or a successor owner, charterer, lessor or servicer of the Company
Plane, as the case may be (the “Invoiced Amount”).  When using the Company Plane on a flight that
has a bona fide business-related purpose (whether or not such business-related
purpose is the sole purpose of such flight), Executive shall reimburse the
Company for any personal use in respect of such flight in an amount that is
computed in accordance with the provisions of section 274(e) of the Code and
regulations promulgated thereunder and any applicable interpretations by the
U.S. Internal Revenue Service (the “IRS Amount”); provided, however, that if
the IRS Amount is greater than the Invoiced Amount for such flight, then
Executive shall reimburse the Company for the Invoiced Amount, instead of the
IRS Amount, for such flight.


(g)           Health
and Welfare Benefits  Executive
shall be entitled to participate, without discrimination or duplication, in any
and all medical insurance, group health, disability, life, accidental death,
dismemberment insurance, 401(k) or other retirement, deferred compensation,
profit sharing, stock ownership and such other plans and programs which are
made generally available by the Company to its other senior executives in
accordance with the terms of such plans and programs and subject to the Company’s
right to at any time amend or terminate any such plan or program; provided,
however, that Executive shall be eligible to participate in such insurance,
benefit, fringe benefit and perquisite plans and programs on terms and
conditions at least as favorable to Executive as the most favorable terms and
conditions offered to any other employee of the Company.  Executive shall be entitled to paid vacation,
holidays, and any other time off in accordance with the Company’s policies in
effect from time to time.


(h)           Residual
SERP Benefit.  Executive’s
aggregate retirement benefit under the Company’s Supplemental Executive
Retirement Plan, as amended, restated and



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finally terminated as of December 31, 2005 (“SERP”)
had a value equal to $9,853,046 (representing the lump sum present value of his
SERP benefit as of December 31, 2005) which will accrue interest at a rate of
four percent (4%) per annum, compounded annually, for the period from December
31, 2005 through the date of distribution (the “SERP Benefit”).  Executive shall receive his aggregate SERP
Benefit in a lump sum payment on the date that is six months plus one day after
the Termination Date.  Notwithstanding
anything to the contrary contained in the SERP, in any other plan or policy of
the Company or in this Agreement, it is hereby acknowledged and agreed that the
SERP Benefit is and shall remain a fully vested and nonforfeitable benefit and
shall be payable to Executive, in the manner provided above, following any
termination of his employment by the Company regardless of the reason or
grounds for such termination of employment.


(i)            Taxes.  Payment of all compensation and benefits to
Executive specified in this Section 4 and in Section 5 of this Agreement shall
be subject to all legally required and customary withholdings.  The Company makes no representations
regarding the tax implications of the compensation and benefits to be paid to
Executive under this Agreement, including, without limitation, under Section
409A of the Code and applicable administrative guidance and regulations.  Internal Revenue Code Section 409A governs
plans and arrangements that provide “nonqualified deferred compensation” (as
defined under the Code) which may include, among others, nonqualified
retirement plans, bonus plans, stock option plans, employment agreements and
severance agreements.  The Company
reserves the right (but is not required) to provide compensation and benefits
under any plan or arrangement in amounts, at times and in a manner that
minimizes taxes, interest or penalties as a result of Section 409A. In
addition, in the event any benefits or amounts paid hereunder are deemed to be
subject to Section 409A, including payments under Section 5 of this Agreement, Executive
consents to the Company adopting such conforming amendments as the Company or
Executive deems necessary, in its or his reasonable discretion, to comply with
Section 409A (including, but not limited to, delaying payment until six months
following termination of employment)


(j)            Registration. 
The Company will use its best efforts to file with the Securities and
Exchange Commission and thereafter maintain the effectiveness of one or more
registration statements registering under the Securities Act of 1933, as
amended, the offer and sale of shares by the Company to Executive pursuant to
stock options or other equity-based awards granted to Executive under Company
plans and this Agreement.


5.             Termination
of Employment.  Executive’s employment
hereunder may be terminated prior to the end of the Term under the following
circumstances:


(a)           Termination
by Executive for Other than Good Reason. 
Executive may terminate his employment hereunder for any
reason or no reason upon 45 days’ prior written notice to the Company referring
to this Section 5(a); provided, however, that a termination of Executive’s
employment for “Good Reason” shall not constitute a



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termination by Executive for other than Good Reason
pursuant to this Section 5(a).  In the
event Executive terminates his employment for other than Good Reason, Executive
shall be entitled only to the following compensation and benefits:


(i)            Any accrued but unpaid Base Salary (as
determined pursuant to Section 4(a)) for services rendered to the Termination
Date, payable on the next regular payday following the Termination Date;


(ii)           All vested nonforfeitable amounts owing or
accrued at the Termination Date under compensation and benefit plans, programs,
and arrangements set forth or referred to in Section 4 hereof in which
Executive theretofore participated (including, without limitation, any earned
and vested annual incentive compensation and the SERP benefit) will be paid
under the terms and conditions of such plans, programs, and arrangements (and
agreements and documents thereunder);


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


(iv)          In lieu of any incentive compensation under
Section 4(b) for the year of termination, an amount equal to the amount of
annual incentive compensation payable to Executive assuming achievement of the
maximum performance targets for such year, multiplied by a fraction the
numerator of which is the number of days Executive was employed in the year of
termination and the denominator of which is the total number of days in the
year of termination.  Such amount shall
be payable in a lump sum in accordance with Section 5(f) of this Agreement;


(v)           Stock options held by Executive at termination,
if not then vested and exercisable, will become fully vested and exercisable at
the date of such termination, except to the extent otherwise specifically
provided under the terms of any “Non-Ordinary Course Grant or Award” (as
defined below) made to Executive after December 31, 2005, and any such options
shall remain exercisable until the earlier of three years after the date of
such termination or the scheduled expiration date, and, in other respects, all
such options shall be governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted;


(vi)          Except to the extent otherwise specifically
provided under the terms of any Non-Ordinary Course Grant or Award made to
Executive after December 31, 2005 (including, without limitation, the RSU
Agreements governing the 2006 RSU Grant and the 2007 RSU Grant), all deferred
stock, restricted stock and other equity-based awards will become fully vested
and non-forfeitable, and all restrictions and conditions with respect to such
awards shall lapse, and all such awards and arrangements will be settled in
accordance with the plans and programs under which the awards were granted or
governing such arrangements including, if so permitted by the plans or
programs, Executive’s duly executed deferral election forms or the terms of any



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mandatory deferral under such plans or programs;
provided, however, if necessary to comply with Section 409A(a)(2)(B)(i) of the
Code, and applicable administrative guidance and regulations, such settlement
shall be made on the date that is six months plus one day following the
Termination Date; and


(vii)         Executive may elect continued participation
after termination in the Company’s health and medical coverage for himself and
his spouse and dependent children after such coverage would otherwise end until
such time as Executive becomes eligible for Medicare; provided, however, that
in the event of such election, Executive shall pay the Company each year an
amount equal to the then-current annual COBRA premium being paid (or payable)
by any other former employee of the Company.


For purposes of this Agreement, a “Non-Ordinary-Course Grant or Award”
shall mean any grant or award conferring the right to acquire equity-based
securities of the Company, other than
a “Normal Course Award”, and a “Normal Course Award” shall mean and be limited
to a grant or award to acquire equity-based securities of the Company made
under the annual equity incentive program of the Company’s management incentive
compensation program, or under any amended, replacement or supplemental plan or
program that is established to take the place of, modify, or supplement such
equity incentive program (as the same may be hereafter amended, replaced or
supplemented), or to reinstitute such a plan or program, in order to carry out
the Company’s regular program of equity grants to senior executives generally.


(b)           Termination
by Reason of Death.  If
Executive dies during the Term, the Company shall pay to the last beneficiary
designated by Executive by written notice to the Company or, failing such
designation, to Executive’s estate, the following amounts:


(i)            The payments and benefits referred to in
clauses (i) through (iii), inclusive, of Section 5(a) (collectively, the “Standard
Termination Payments”);


(ii)           A lump sum payment equal to (A) Executive’s
annual Base Salary, plus (B) the highest annual incentive compensation paid to
Executive in respect of the two most recent fiscal years of the Company but not
more than Executive’s Target Bonus for the year of termination, payable within
30 days of the Termination Date;


(iii)           Stock options held by Executive at
termination, if not then vested and exercisable, will become fully vested and
exercisable at the date of such termination, except to the extent otherwise
specifically provided under the terms of any Non-Ordinary Course Grant or Award
made to Executive after December 31, 2005, and any such options shall remain
exercisable until the earlier of three years after the date of such termination
or the scheduled expiration date, and, in other respects, all such options
shall be governed by the plans and programs and the agreements and other
documents pursuant to which such options were granted; and



 11
 






 



(iv)          Except to the extent otherwise specifically
provided under the terms of any Non-Ordinary Course Grant or Award made to
Executive after December 31, 2005, all deferred stock, restricted stock and
other equity-based awards will become fully vested and non-forfeitable, and all
restrictions and conditions with respect to such awards shall lapse, and all
such awards and arrangements will be settled in accordance with the plans and
programs under which the awards were granted or governing such arrangements
including, if so permitted by the plans or programs, Executive’s duly executed
deferral election forms or the terms of any mandatory deferral under such plans
or programs.


(c)           Termination
by the Company for Cause. 
The Company may terminate Executive’s employment hereunder for Cause by
giving a Cause Termination Notice (as defined below) in accordance with and
subject to the provisions of this Section 5(c). 
For purposes of this Agreement, the term “Cause” shall mean Executive’s
gross misconduct (as defined herein) or willful and material breach of Section
6.1(a) (other than the first sentence thereof), 6.1(b), 6.2 (other than the
first and penultimate sentences thereof) or 6.3.  “Gross misconduct” shall mean (i) Executive’s
conviction (including conviction on a nolo contendere plea) in a court of law of
a felony, or (ii) Executive’s willful and continued failure substantially to
perform his material duties under this Agreement.  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 him knowingly, purposefully and not in good faith and
shall not include, without limitation, any act or failure to act resulting from
any disagreement or difference of views between Executive and one or more
directors or officers of the Company or any of its affiliates with respect to
any matter(s) relating to the business, affairs or operations of the Company
and/or any of its affiliates (including, without limitation, with respect to
any management, business or operational matter, strategy, plan, proposal,
initiative or decision, any issue regarding the hiring, firing, appointment or
removal of any director, officer, employee, agent, consultant, advisor or
contractor, any proposed transaction, venture, affiliation or alliance, or any
change in business, structure, organization, management or operations).  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 of Directors by a vote of Directors
constituting a majority of the Board of Directors (excluding Executive) at a
meeting of the Board of Directors 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, 30 days to correct such grounds, and affording Executive and
his counsel the opportunity to be heard before the Board of Directors) finding
that, in



 12
 






 



the good faith opinion of the Board of Directors,
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 Executive of a written notice of termination for Cause referring to
this Section 5(c), 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 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 of Directors 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
Termination Date 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 of Directors (excluding Executive) or, if a majority of
the Board of Directors cannot reasonably be convened promptly in person or by
telephone, by a majority of the Executive Committee of the Board of Directors
(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 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(c) until the expiration of
the 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(c), Executive shall, within 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 (A) does not exceed the amount in (B), the Company may
reduce any amounts owed to Executive by the amount in (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



 13
 






 



Date”) which is 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(d) 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(d) 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.


In the event that Executive’s employment is terminated by the Company
for Cause in accordance with this Section 5(c), Executive shall be entitled to
receive only the following payments and benefits:


(i)            The Standard Termination Payments (as
defined in Section 5(b)(i)); and


(ii)           Except as provided in Section 6.6, all stock
options and other equity awards will be governed by the terms of the plans and
programs under which the options or other awards were granted (the “Basic
Equity Award Benefit”);


The
Company hereby acknowledges and agrees that, as of the date on which this
Agreement is executed by the Company, the Company is not aware of grounds for
terminating Executive for Cause.


(d)           Termination
By Reason of Total Disability; Termination by the Company Without Cause or by
Executive for Good Reason. 
The Company may terminate Executive’s employment (x) by reason of “Total
Disability” (as defined below) or (y) at any time, without Cause, for any
reason or no reason, and Executive may terminate his employment hereunder for “Good
Reason” (as defined below).  Executive
and the Company agree that Executive may not reasonably be expected to be able
to perform his duties and the essential functions of his office in the event of
Executive’s “Total Disability.” For purposes of this Agreement, “Total
Disability” shall mean Executive’s 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(d), 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



 14
 






 



reasonably acceptable to the Company.  For purposes of this Agreement, “Good Reason”
shall mean that without Executive’s prior written consent, any of the following
shall have occurred, within sixty (60) days after Executive first had actual
knowledge of the most recent conduct or event comprising an element of the
alleged ground for termination for Good Reason (it not being necessary that all
elements comprising the alleged ground for termination for Good Reason have
occurred within such sixty (60) day period),: 
(I) a material change, adverse to Executive, in Executive’s positions,
titles, offices, or duties as provided in Section 3, except, in such case, in
connection with the termination of Executive’s employment for Cause, Total
Disability or death; (II) an assignment of any significant duties to Executive
which are materially inconsistent with Executive’s positions or offices held
under Section 3; (III) a decrease in Base Salary or material decrease in
Executive’s compensation opportunities or in the aggregate benefits provided
under this Agreement; (IV) any other material failure by the Company to perform
any material obligation under, or material breach by the Company of any
material provision of, this Agreement; (V) a relocation of the principal
executive offices of the Company more than 35 miles from their existing
location in New York, NY, or a change in the location of Executive’s office to
a location other than the Company’s principal executive offices; or (VI) any
failure to secure the agreement of any successor corporation or other entity to
the Company to fully assume the Company’s obligations under this Agreement in a
form reasonably acceptable to Executive; provided, however, that a termination
by Executive for Good Reason under any of clauses (I) — (VI) of this Section
5(d) shall be effective only if, within thirty (30) days following delivery of
a written notice by Executive to the Company that Executive is terminating his
employment for Good Reason and setting forth in reasonable detail the facts and
circumstances allegedly constituting Good Reason, the Company has failed to
cure the circumstances giving rise to Good Reason.  In the event that Executive’s employment is
terminated (A) by reason of Total Disability, (B) by the Company without Cause
or (C) by Executive for Good Reason (as to (B) and (C), including, without
limitation, a deemed termination by the Company without Cause or by Executive
for Good Reason pursuant to the delivery of a Nonrenewal Notice in accordance
with Section 2 hereof; and as to (B), including, without limitation, a deemed
termination by the Company without Cause due to a Failed Termination for Cause
pursuant to Section 5(c) hereof), the Company shall pay the following amounts,
and make the following other benefits available, to Executive (such payments
and benefits, the “Section 5(d) Payments and Benefits”):


(i)            The Standard Termination Payments (as
defined in Section 5(b)(i));


(ii)           If such termination occurs on or prior to
December 31, 2008, an amount equal to the sum of (A) the Base Salary that would
have been payable to Executive through December 31, 2009 had Executive’s
employment not terminated and (B) Executive’s “Severance Bonus Amount” (as
defined below), or, alternatively, if such termination occurs subsequent to
December 31, 2008, an amount equal to the sum of (A)



 15
 






 



Executive’s annual Base Salary as of the Termination
Date and (B) Executive’s “Severance Bonus Amount” (as defined below), provided
in each case that such amount shall be reduced by any disability payment
provided to Executive as a result of any disability plan sponsored by the
Company or its affiliates providing benefits to Executive.  Such amount shall be payable in a lump sum in
accordance with Section 5(f) of this Agreement. 
For purposes of this Agreement, “Severance Bonus Amount” shall mean (i)
if such termination occurs on or prior to December 31, 2008, an amount equal to
(1) a fraction the numerator of which is the number of calendar months during
the period from and including the calendar month in which the Termination Date
occurs to and including December 2009 and the denominator of which is 12,
multiplied by (2) the highest annual incentive compensation paid to Executive
in respect of the two most recent fiscal years of the Company (but not more
than Executive’s Target Bonus for the year of termination), or, alternatively,
(ii) if such termination occurs subsequent to December 31, 2008, an amount
equal to the highest annual incentive compensation paid to Executive in respect
of the two most recent fiscal years of the Company but not more than Executive’s
Target Bonus for the year of termination;


(iii)          In lieu of any incentive compensation for the
year in which such termination of employment occurs (but in addition to and not
in lieu of the Severance Bonus Amount), payment of an amount equal to (A) the
highest annual incentive compensation paid to Executive in respect of the two
most recent fiscal years of the Company but not more than Executive’s Target
Bonus for the year of termination, multiplied by (B) a fraction the numerator
of which is the number of days Executive was employed in the year of
termination and the denominator of which is the total number of days in the
year of termination.  Such amount shall
be payable in a lump sum in accordance with Section 5(f) of this Agreement;


(iv)          Stock options held by Executive at
termination, if not then vested and exercisable, will become fully vested and
exercisable at the date of such termination, except to the extent otherwise
specifically provided under the terms of any Non-Ordinary Course Grant or Award
made to Executive after December 31, 2005, and any such options shall remain
exercisable until the scheduled expiration date, and, in other respects, all
such options shall be governed by the plans and programs and the agreements and
other documents pursuant to which such options were granted;


(v)           Except to the extent otherwise specifically
provided under the terms of any Non-Ordinary Course Grant or Award made to
Executive after December 31, 2005, all deferred stock, restricted stock and
other equity-based awards will become fully vested and non-forfeitable, all
restrictions and conditions with respect to such awards shall lapse, and all
such awards and arrangements shall be settled upon such termination, without
regard to any stated period of deferral or other restrictions or conditions
remaining in respect of such awards; provided, however, if necessary to comply
with Section 409A(a)(2)(B)(i) of the Code, and applicable administrative



 16
 






 



guidance and regulations, such settlement shall be
made six months plus one day following the Termination Date;


(vi)          Executive shall be entitled to receive an
amount equal to the amount accrued under any deferred compensation plan or
agreement in effect at the Termination Date in which Executive is a participant
or party, less required withholding taxes under Section 4(i); such amount to be
paid in a lump sum in accordance with Section 5(f) hereof and to be equal to Executive’s
account balance on the Termination Date of Executive’s employment if the
deferred compensation amount is in the form of an account balance or, if the
deferred compensation amount is not in the form of an account balance, the
present value of the deferred compensation on the Termination Date calculated
using a discount rate (the “Discount Rate”) equal to the yield, at the time of
determination, for U.S. Treasury securities having a maturity of thirty years;
provided, however, that if Executive elects to receive payment under this
Section 5(d)(vi), Executive shall forfeit all rights under any such deferred
compensation plan or agreement, and such deferred compensation plan or
agreement shall have no force and effect with respect to Executive; and


(vii)         For (A) a period of 3 years after such
termination other than due to Total Disability or (B) the period from
termination due to Total Disability until Executive attains age 65, Executive
shall continue to participate in all employee and executive benefit plans,
programs, and arrangements under Section 4(g) of this Agreement providing
health, medical, disability and life insurance benefits in which Executive was
participating immediately prior to termination, the terms of which allow
Executive’s continued participation, as if Executive had continued in
employment with the Company during such period or, if such plans, programs, or
arrangements do not allow Executive’s continued participation, Executive shall
receive in a lump sum a cash payment equivalent on an after-tax basis to the
value of the additional benefits Executive would have received under such
plans, programs, and arrangements in which Executive was participating
immediately prior to termination, as if Executive had received credit under
such plans, programs, and arrangements for service and age with the Company
during such period following Executive’s termination as provided in clause (A)
or (B) above (as applicable), with such benefits payable by the Company at the
same times and in the same manner as such benefits would have been received by
Executive under such plans (it being understood that the value of any
insurance-provided benefits will be based on the premium cost to Executive,
which shall not exceed the highest risk premium charged by a carrier having an
investment grade or better credit rating).


Notwithstanding
the foregoing, if a reduction in Base Salary or other level of compensation was
a basis for Executive’s termination for Good Reason, the Base Salary or other
level of compensation in effect before such reduction shall be used to
calculate payments under this Section 5(d). 
For the avoidance of doubt, nothing in this paragraph is intended to
broaden the definition of Good Reason contained above.



 17














 


(e)           Termination
in Connection with Change in Control.


(i)            In the event Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason and the
termination occurs upon or within two years immediately following a Change in Control,
this Section 5(e) and not Section 5(d) shall apply, and Executive (A) shall
receive the “Section 5(d) Payments and Benefits” (as defined above) and, for
the avoidance of doubt, shall have such rights, if any, in respect of the
Special RSU Grants as may be provided pursuant to Section 4(d)(ii) or 4(d)(iii)
hereof, and (B) shall receive the “Change in Control Payment.”  The “Change in Control Payment” shall mean an
amount payable in a lump sum in accordance with Section 5(f) of the Agreement
equal to the sum of (x) the Base Salary and (y) the highest annual incentive
compensation paid to Executive in respect of the two most recent fiscal years
of the Company but not more than Executive’s Target Bonus for the year of
termination.


(ii)           In the event Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason and the
termination occurs “In Anticipation of a Change in Control” and the Change in
Control actually occurs within six (6) months after the termination, unless the
relevant facts and circumstances clearly demonstrate that the possibility that
such Change in Control would occur was remote as of the date of such
termination, Executive shall receive the amounts and benefits provided for in
Section 5(e)(i), less any amounts paid to Executive pursuant to Section 5(d).


(iii)          A “Change in Control” shall be deemed to have
occurred if:  (A) 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), 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; (B) 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(e)(iii)(B), such continuity of ownership (and preservation of
relative voting power) shall be deemed to be satisfied if the failure to



 18
 






 



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; (C) the stockholders of the Company approve a plan of complete
liquidation of the Company or 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
(D) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors, 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 Subsection
(A), (B), or (C) hereof) whose election by the Board of Directors 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 of Directors.


(iv)          For purposes of this Section 5(e) a
termination shall be considered “In Anticipation of a Change in Control” (A) if
the termination occurs after:  (1) the
issuance of a proxy statement by the Company with respect to an election of
directors for which there is proposed one or more directors who are not
recommended by the Board of Directors or its nominating committee where the
election of such proposed director or directors would result in a Change in
Control or (2) the announcement by any person of an intention to take actions
which might reasonably result in a Change in Control; and (B) the Change in
Control actually occurs within six (6) months after the termination unless the
relevant facts and circumstances clearly demonstrate that the possibility that
a Change in Control was remote as of the date of such termination.


(f)            Timing
of Certain Payments Under Section 5.  Unless otherwise expressly provided in this
Section 5(f) or in the other provisions of this Agreement, all payments
pursuant to this Section 5 shall be made as soon as practicable after the
Termination Date but in no event later than 30 days after the Termination Date;
provided, however, that if necessary to comply with Section 409A(a)(2)(B)(i) of
the Code, and applicable administrative guidance and regulations, a payment
pursuant to Section 5(a)(iv), 5(d)(ii), 5(d)(iii), 5(d)(vi), 5(d)(vii) or
5(e)(i) shall be made in a lump sum on the date that is six months plus one day
following the Termination Date.


(g)           No
Obligation to Mitigate.  Executive
shall not be required to seek other employment or otherwise to mitigate
Executive’s damages upon any termination of employment; provided, however,
that, to the extent Executive receives from a subsequent employer health or
other insurance benefits substantially similar to the benefits referred to in
Section 4, any such benefits to be provided by the Company to Executive
following the termination of his employment shall be correspondingly reduced.



 19
 






 



(h)           Set-Off.  Amounts required to be paid by the Company to
Executive pursuant to this Agreement shall not be subject to offset with
respect to any amounts Executive otherwise owes the Company except for any
amounts that are owed to the Company by Executive due to his receipt of funds
as a result of his fraudulent activity.


(i)            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.


(j)            Release
of Employment Claims; Compliance with Section 6. 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
and the Basic Equity Award Benefit (as defined in Section 5(c)(ii)), 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) and Executive
will not in the future seek employment at the Company or any of its
subsidiaries or affiliates.  The Company’s
obligation to make any termination payments and benefits provided for in this
Section 5 (other than the Standard Termination Payments and the Basic Equity
Award Benefit, all of which shall be paid by the Company) shall immediately
cease 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 of Directors, attaching a copy of
a resolution duly adopted by the Board of Directors by a vote of Directors
constituting a majority of the Board of Directors (excluding Executive) at a
meeting of the Board of Directors at which a quorum is physically present in
person, in which resolution the Board of Directors sets forth such breach in
reasonable detail and expressly elects the remedy provided in this Section
5(j), 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
5(j) 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). 
During the pendency of any court or arbitration proceeding regarding
such a determination, the Company shall pay into escrow with a third-party bank
or trust company the amount of any payments or benefits provided for in this
Section 5 (other than the Standard Termination Payments and the Basic Equity
Award Benefit) pursuant to an escrow agreement in form reasonably acceptable to
Executive which provides that the amount of such payments or benefits (together
with interest earned thereon), upon the conclusion of such proceeding, shall be
returned to the Company if Executive is determined by such proceeding to have
willfully and materially breached any of such Sections and otherwise shall be
paid to Executive.  If a court of
competent jurisdiction or



 20
 






 



arbitral tribunal does not find that Executive
willfully and materially breached one of the Sections referred to above, then
the Company shall pay (or reimburse, if already paid by Executive) all
reasonable expenses actually incurred by Executive in connection with
contesting such alleged breach.


6.             Noncompetition;
Nonsolicitation; Nondisclosure; etc.


6.1           Noncompetition;
Nonsolicitation.


(a)           Executive acknowledges the highly
competitive nature of the Company’s business and that access to the Company’s
confidential records and proprietary information renders Executive special and
unique within the Company’s industry.  In
consideration of the amounts that may hereafter be paid to Executive pursuant
to this Agreement (including, without limitation, Sections 4 and 5), Executive
agrees that during the Term (including any extensions thereof) and during the
Covered Time (as defined in Section 6.1(e)), Executive, alone or with others,
will not, directly or indirectly, engage (as owner, investor, partner, stockholder,
employer, employee, consultant, advisor, director or otherwise) in any
Competing Business.  For purposes of this
Section 6, “Competing Business” shall mean any business (i) involving design
and production of instant lottery tickets and the management of related
marketing and distribution programs; manufacture, sale, operation or management
of on-line lottery systems (Lotto-type games); involving development and
commercialization of licensed and other proprietary game entertainment for all
lottery product channels; involving provision of wagering (whether pari-mutuel
(pooled) or otherwise) or venue management services for racetracks and
off-track betting facilities; production of prepaid cellular phone cards; or
any other business in which the Company is then or was within the previous
twenty-four months engaged or in which the Company, to Executive’s actual
knowledge, intends to engage during the Term or the Covered Time; and (ii)
which Competing Business is conducted or planned to be conducted anywhere in
the United States or in any other geographic area in which such business was
conducted or planned to be conducted by the Company; provided, further, that
this Section 6.1(a) shall not restrict Executive from engaging in (and the term
“Competing Business” shall not include) any business in which the Company no
longer engages or plans to engage; and provided further that activities of the
Company, or activities engaged in by Executive for or on behalf of the Company,
are not restricted by this Section 6.1.(a) and shall not constitute a “Competing
Business.”  Ownership of (i) the
securities of any entity for which a Competing Business represents less than
10% of net sales or net income (as determined in accordance with generally
accepted accounting principles) for the most recent fiscal year (or if such
entity has not completed a fiscal year, net sales or net income projected for
its first fiscal year) or (ii) not more than two percent of the equity
securities of any company having securities listed on an exchange or regularly
traded in the over-the-counter market shall not, of itself, be deemed
inconsistent with this Section 6.1(a). 
Nothing herein shall require Executive to sell or otherwise dispose of
any securities of



 21
 






 



any entity if the acquisition of such securities did
not violate the terms of this Section 6.1(a) at the time of such acquisition.


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


(c)           During the Term (including any extensions
thereof) and during the Covered Time, Executive agrees that upon the earlier of
Executive’s (i) negotiating with any Competitor (as defined below) concerning
the possible employment of Executive by the Competitor, (ii) responding to
(other than for the purpose of declining) an offer of employment from a
Competitor, or (iii) becoming employed by a Competitor, (x) Executive will
provide copies of Section 6 of this Agreement to the Competitor, and (y) in the
case of any circumstance described in (iii) above occurring during the Covered
Time, and in the case of any circumstance described in (i) or (ii) above
occurring during the Term or during the Covered Time, Executive will promptly
provide notice to the Company of such circumstances.  Executive further agrees that the Company may
provide notice to a Competitor of Executive’s obligations under this Agreement.
For purposes of this Agreement, “Competitor” shall mean any entity (other than
the Company) that engages, directly or indirectly, in the United States in any
Competing Business.


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


(e)           For purposes of this Section 6.1, “Covered
Time” shall mean the period beginning on the Termination Date and ending
twenty-four (24) months after the Termination Date.



 22
 






 



6.2           Proprietary
Information; Inventions.


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


(b)           Executive agrees that all processes, technologies
and inventions (collectively, “Inventions”), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by Executive during the Term (and during any
employment by the Company prior to the Term) shall belong to the Company,
provided that such Inventions grew out of Executive’s work with the Company,
are related in any manner to the business



 23
 






 



(commercial or experimental) of the Company or are
conceived or made on the Company’s time or with the use of the Company’s
facilities or materials. Executive shall further:  (i) promptly disclose such Inventions to the
Company; (ii) assign to the Company, without additional compensation, all
patent and other rights to such Inventions for the United States and foreign
countries; (iii) sign all papers necessary to carry out the foregoing; and (iv)
give testimony in support of Executive’s inventorship.  If any Invention is described in a patent
application or is disclosed to third parties, directly or indirectly, by
Executive within two years after the termination of Executive’s employment by
the Company, it is to be presumed that the Invention was conceived or made
during the Term. Executive agrees that Executive will not assert any rights to
any Invention as having been made or acquired by Executive prior to the date of
this Agreement, except for Inventions, if any, disclosed in Exhibit B to
this Agreement.


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


6.4           Nondisparagement.  Executive shall not, during the
Term and thereafter, disparage in any material respect the Company, any of the
Company’s businesses, any of the Company’s officers, directors or employees, or
the reputation of any of the foregoing persons or entities.  Notwithstanding the provisions of Sections
5(j) and 6.6, a breach of this Section 6.4 occurring more than two (2) years
after the Termination Date shall not constitute grounds for cessation of
payments and benefits pursuant to Section 5(j) or for forfeiture of options
pursuant to Section 6.6 (provided that the Company may pursue any other
available rights and remedies with respect to such breach).  After the expiration of the Term and the
Covered Time, the foregoing prohibition shall continue to apply as to
circumstances and matters arising during or relating to the period of Executive’s
employment by the Company and the Covered Time, but shall not apply to circumstances
or matters newly arising after the Covered Time.  Notwithstanding the foregoing, nothing in
this Agreement shall preclude Executive from making what he reasonably believes
in good faith to be truthful statements that are



 24
 






 



required by applicable law, regulation or legal
process or in connection with any investigation by the Company or any
governmental authority or are reasonably required to describe the conduct,
decisions, or policies of the Company or any of its affiliates, or their
respective businesses, officers, directors or employees.


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


6.6           Forfeiture of
Outstanding Options.  The provisions of Section 5 notwithstanding,
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 of Directors, attaching a copy of a
resolution duly adopted by the Board of Directors by a vote of Directors
constituting a majority of the Board of Directors (excluding Executive) at a
meeting of the Board of Directors at which a quorum is physically present in
person, in which resolution the Board of Directors 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 options (whether granted prior to,
contemporaneously with, or subsequent to this Agreement) to purchase common
stock granted by the Company and held by Executive or a transferee of Executive
shall be immediately forfeited and thereupon such options 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 options in accordance with the foregoing terms of this Section 6.6,
Executive shall be required to forfeit such options 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, Executive shall pay to the Company an amount equal to the difference
between the aggregate sale price of the shares sold and 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.



 25
 






 



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


6.8           Cooperation
with Regard to Litigation.  Executive agrees to cooperate reasonably with
the Company, during the Term and thereafter, by being available to testify on
behalf of the Company in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative.  In
addition, except to the extent that Executive has or intends to assert in good
faith an interest or position adverse to or inconsistent with the interest or
position of the Company, Executive agrees to cooperate reasonably with the
Company, during the Term and thereafter to assist the Company in any such
action, suit, or proceeding by providing information and meeting and consulting
with the Board of Directors or its representatives or counsel, or representatives
or counsel to the Company, in each case, as reasonably requested by the
Company.  The Company agrees to pay (or
reimburse, if already paid by Executive) all reasonable expenses actually
incurred in connection with Executive’s cooperation and assistance including,
without limitation, reasonable fees and disbursements of counsel, if any,
chosen by Executive if Executive reasonably determines in good faith, on the
advice of counsel, that the Company’s counsel may not ethically represent
Executive in connection with such action, suit or proceeding due to actual or
potential conflicts of interests. 
Notwithstanding the provisions of Sections 5(j) and 6.6, a breach of
this Section 6.6 occurring more than seven (7) years after the Termination Date
shall not constitute grounds for cessation of payments and benefits pursuant to
Section 5(j) or forfeiture of options pursuant to Section 6.6 (provided that
the Company may pursue any other available rights and remedies with respect to
such breach).


6.9           Survival.  The provisions
of this Section 6 shall survive the termination of Executive’s employment.


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


7.             Code
of Conduct.  Executive acknowledges that he
has read the Company’s “Code of Business Conduct for Directors, Officers and
Employees (as revised and adopted by the Board of Directors, February 23, 2006)”
and agrees to



 26
 






 



conduct himself in accordance
with it, as it may be amended or supplemented from time to time, it being
understood that any termination of employment of Executive shall occur pursuant
to and in accordance with Section 5 of this Agreement.


8.             Indemnification.  During the Term of this Agreement and all
periods after the expiration of this Agreement or termination of Executive’s
employment for any reason, the Company shall indemnify Executive to the full
extent permitted under the Company’s Certificate of Incorporation or By-Laws
and pursuant to any other agreements or policies in effect from time to time.
To the extent permitted under the Company’s Certificate of Incorporation and
By-Laws and applicable law, the Company shall advance expenses for which
indemnification may be claimed as such expenses are incurred, subject to any
requirement that Executive provide an undertaking to repay such advances if it
is ultimately determined that Executive is not entitled to indemnification;
provided, however, that any determination required to be made with respect to
whether Executive’s conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law
and the Company’s Certificate of Incorporation, By-Laws, or other agreement,
shall be made by independent counsel mutually acceptable to Executive and the
Company (except to the extent otherwise required by law).  Any provision contained herein
notwithstanding, this Agreement shall not limit or reduce, and the Company
hereby agrees to provide to Executive, any and all rights to indemnification
Executive would otherwise have, to the full extent permitted under applicable
law.  In addition, the Company will
maintain directors’ and officers’ liability insurance in effect and covering
acts and omissions of Executive. For purposes of this Section 8, references to
the “Company” shall include both the Company and each of its subsidiaries
and/or affiliates for which Executive has acted, acts or will in the future act
in any capacity.  The provisions of this
Section 8 shall survive the termination of Executive’s employment.


9.             Assignability;
Binding Effect.  Neither this Agreement nor the
rights or obligations hereunder of the parties hereto shall be transferable or
assignable by Executive, except in accordance with the laws of descent and
distribution and as specified below.  The
Company may assign this Agreement and the Company’s rights and obligations
hereunder, and shall assign this Agreement and such rights and obligations, to
any Successor (as hereinafter defined) which, by operation of law or otherwise,
continues to carry on substantially the business of the Company prior to the
event of succession, and the Company shall, as a condition of the succession,
require such Successor to agree in writing to assume the Company’s obligations
and be bound by this Agreement.  For
purposes of this Agreement, “Successor” shall mean any person that succeeds to,
or has the practical ability to control, the Company’s business directly or
indirectly, by merger or consolidation, by purchase or ownership of voting
securities of the Company or all or substantially all of the Company’s assets,
or otherwise.  The Company may also
assign this Agreement and the Company’s rights and obligations hereunder to any
subsidiary or affiliate of the Company, provided that upon any such assignment
the Company shall



 27
 






 



remain liable for the
obligations to Executive hereunder.  This
Agreement shall be binding upon and inure to the benefit of Executive,
Executive’s heirs, executors, administrators, and beneficiaries, and shall be
binding upon and inure to the benefit of the Company and its successors and
assigns.


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


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



 28
 






 



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


13.           Governing
Law; Arbitration.


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


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


(c)           Notwithstanding any provision in this
Section 13, Executive shall be entitled to seek in any court of competent jurisdiction
specific performance of Executive’s right (which is hereby acknowledged and
agreed to by the Company) to be paid all compensation, benefits and other
amounts required to be paid during the pendency of any dispute or controversy
arising under or in connection with this



 29
 






 



Agreement, which, to the extent such amounts are paid
by the Company shall be credited against the total amounts otherwise finally
determined to be owed to Executive pursuant to this Agreement.


(d)           All reasonable costs and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by Executive in seeking to enforce rights pursuant to this Agreement
shall be paid by the Company on behalf of Executive (or, if already paid by
Executive, reimbursed to Executive by the Company) to the extent that Executive
prevails in enforcing such rights before a court of competent jurisdiction or
arbitral tribunal.


(e)           Any arbitration under this Agreement shall
be filed exclusively with the American Arbitration Association in New York, New
York before three arbitrators, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association in
effect at the time of submission to arbitration.  The Company and Executive hereby agree that a
judgment upon an award rendered by the arbitrators may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  The Company shall pay all costs
uniquely attributable to arbitration, including the administrative fees and
costs of the arbitrators.  Subject to
Section 13(d) hereof, each party shall pay that party’s own costs and attorney
fees, if any.  Executive understands that
he is giving up no substantive rights, and this Agreement simply governs forum.  The arbitrators shall apply the same
standards a court would apply to award any damages, attorney fees or
costs.  Executive shall not be required
to pay any fee or cost that he would not otherwise be required to pay in a
court action, unless so ordered by the arbitrators.


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


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


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



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16.           Reimbursement
of Expenses of Executive in Negotiating Agreement.  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 Agreement shall be paid on behalf of Executive (or, if already
paid by Executive, reimbursed to Executive) promptly by the Company.


17.           Notices.  Whenever under this Agreement it becomes
necessary to give notice, such notice shall be in writing, signed by the party
or parties giving or making the same, and shall be served on the person or
persons for whom it is intended or who should be advised or notified, by
Federal Express or other similar overnight service or by certified or
registered mail, return receipt requested, postage prepaid and addressed to
such party at the address set forth below or at such other address as may be
designated by such party by like notice:


To the Company:


Scientific
Games Corporation


750
Lexington Avenue


New
York, N.Y. 10022


Attention: General Counsel


To Executive:


A.
Lorne Weil


51
East 90th Street


Penthouse
B


New York, New York 10128


With a copy to:


Hogan
& Hartson L.L.P.


875
Third Avenue


New
York, New York 10022


Attention: Andrew J. Trubin


18.           Counterparts.  This Agreement 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
Agreement.  Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.



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IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on
August 8, 2006, to be deemed effective as of the date first above written.


 


 


	
  

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: A. Lorne
  Weil

  



 



 32
 






 



EXHIBIT B


LIST OF PRE-EXISTING INVENTIONS OF EXECUTIVE



 33