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Exhibit 10.13    
    

 
 

SCIENTIFIC GAMES CORPORATION
  
    2003 Incentive Compensation Plan    
    

	Section
 
	 	 
	 	 
	 	Page

	1.	 	Purpose	 	1
	

2.	
 	

Definitions	
 	

1
	

3.	
 	

Administration	
 	

3
	 	 	(a)	 	Authority of the Committee	 	3
	 	 	(b)	 	Manner of Exercise of Committee Authority	 	3
	 	 	(c)	 	Limitation of Liability	 	4
	

4.	
 	

Shares Available Under the Plan	
 	

4
	 	 	(a)	 	Number of Shares Available for Delivery	 	4
	 	 	(b)	 	Share Counting Rules	 	4
	

5.	
 	

Eligibility; Per-Person Award Limitations	
 	

4
	 	 	(a)	 	Grants to Eligible Persons	 	4
	 	 	(b)	 	Annual Per-Person Award Limitations	 	4
	

6.	
 	

Specific Terms of Awards	
 	

5
	 	 	(a)	 	General	 	5
	 	 	(b)	 	Options	 	5
	 	 	(c)	 	Stock Appreciation Rights	 	6
	 	 	(d)	 	Restricted Stock	 	6
	 	 	(e)	 	Deferred Stock	 	7
	 	 	(f)	 	Bonus Stock and Awards in Lieu of Obligations	 	7
	 	 	(g)	 	Dividend Equivalents	 	7
	 	 	(h)	 	Other Stock-Based Awards	 	8
	

7.	
 	

Performance Awards, Including Annual Incentive Awards	
 	

8
	 	 	(a)	 	Performance Awards Generally	 	8
	 	 	(b)	 	Performance Awards Granted to Covered Employees	 	8
	 	 	(c)	 	Annual Incentive Awards Granted to Designated Covered Employees	 	9
	 	 	(d)	 	Exemptions from Section 16(b) Liability	 	10
	

8.	
 	

Certain Provisions Applicable to Awards	
 	

10
	 	 	(a)	 	Stand-Alone, Additional, Tandem, and Substitute Awards	 	10
	 	 	(b)	 	Term of Awards	 	10
	 	 	(c)	 	Form and Timing of Payment under Awards; Deferrals	 	11
	 	 	(d)	 	Additional Award Forfeiture Provisions	 	11
	 	 	(e)	 	Exemptions from Section 16(b) Liability	 	11
	

9.	
 	

Change in Control	
 	

11
	 	 	(a)	 	Effect of "Change in Control"	 	11
	 	 	(b)	 	Definition of "Change in Control"	 	12
	 	 	(c)	 	Definition of "Change in Control Price"	 	12
	

10.	
 	

General Provisions	
 	

12
	 	 	(a)	 	Compliance with Legal and Other Requirements	 	12
	 	 	(b)	 	Limits on Transferability; Beneficiaries	 	12
	 	 	 	 	 	 	 

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	 	 	(c)	 	Adjustments	 	13
	 	 	(d)	 	Taxes	 	13
	 	 	(e)	 	Changes to the Plan and Awards	 	13
	 	 	(f)	 	Limitation on Rights Conferred under Plan	 	14
	 	 	(g)	 	Unfunded Status of Awards; Creation of Trusts	 	14
	 	 	(h)	 	Certain Limitations Relating to Accounting Treatment of Awards	 	14
	 	 	(i)	 	Nonexclusivity of the Plan	 	14
	 	 	(j)	 	Payments in the Event of Forfeitures; Fractional Shares	 	14
	 	 	(k)	 	Awards to Participants Outside the United States	 	14
	 	 	(l)	 	Governing Law	 	15
	 	 	(m)	 	Preexisting Plan	 	15
	 	 	(n)	 	Plan Effective Date and Termination	 	15

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SCIENTIFIC GAMES CORPORATION
  
    2003 Incentive Compensation Plan    
    

        1.     Purpose.    The purpose of this 2003 Incentive Compensation Plan (the "Plan") is to assist Scientific Games
Corporation, a Delaware corporation (the "Company"), and its subsidiaries in attracting, retaining, motivating and rewarding executives, directors, employees, and other persons who provide services to
the Company and/or its subsidiaries, to provide for equitable and competitive compensation opportunities, to encourage long-term service, to recognize individual contributions and reward
achievement of Company goals, and promote the creation of long-term value for stockholders by closely aligning the interests of participants with those of stockholders. The Plan authorizes
stock-based and cash-based performance incentives for participants, to encourage such persons to expend their maximum efforts in the creation of stockholder value. The Plan is also
intended to qualify certain compensation awarded under the Plan for tax deductibility under Section 162(m) of the Internal Revenue Code to the extent deemed appropriate by the Committee which
administers the Plan. 

        2.     Definitions.    For purposes of the Plan, the following terms shall be defined as set forth below, in addition
to such terms defined in Section 1 hereof: 

        (a)   "Annual
Incentive Award"  means a type of Performance Award granted to a Participant under Section 7(c) representing a conditional right to receive
cash, Stock or other Awards or payments, as determined by the Committee, based on performance in a performance period of one fiscal year or a portion thereof. 

        (b)   "Award"  means
any award of an Option, SAR (including Limited SAR), Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, or Performance Award (including an Annual Incentive Award) together with any other right or interest granted to a Participant under the Plan. 

        (c)   "Beneficiary"  means
the person, persons, trust, or trusts which have been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the Plan upon such Participant's death or to which Awards or other rights are transferred if and to the extent permitted
under Section 10(b) hereof. If, upon a Participant's death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means person, persons, trust, or
trusts entitled by will or the laws of descent and distribution to receive such benefits. 

        (d)   "Beneficial
Owner"  shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to such Rule. 

        (e)   "Board"  means
the Company's Board of Directors. 

        (f)    "Change
in Control"  means Change in Control as defined with related terms in Section 9 of the Plan. 

        (g)   "Change
in Control Price"  means the amount calculated in accordance with Section 9(c) of the Plan. 

        (h)   "Code"  means
the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations
thereto. 

        (i)    "Committee"  means
a committee of two or more directors designated by the Board to administer the Plan; provided, however, that directors appointed as
members of the Committee shall not be employees of the Company or any subsidiary. In appointing members of the Committee, the Board will consider whether a member is or will be a Qualified Member, but
such members are not required to be Qualified Members at the time of appointment or during their term of service on the Committee. 

 

        (j)    "Covered
Employee"  means a person designated by the Committee as likely to be a "covered employee," as defined under Code Section 162(m), with
respect to a specified fiscal year or other performance period. 

        (k)   "Deferred
Stock"  means a conditional right, granted to a Participant under Section 6(e) hereof, to receive Stock, at the end of a specified deferral
period. 

        (l)    "Dividend
Equivalent"  means a conditional right, granted to a Participant under Section 6(g), to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments. 

        (m)  "Effective
Date"  means the date of approval of the Plan by stockholders of the Company. 

        (n)   "Eligible
Person"  means each executive officer and other officer or full-time employee of the Company or of any subsidiary, including each such
person who may also be a director of the Company, each non-employee director of the Company, each other person who provides substantial services to the Company and/or its subsidiaries and
who is designated as eligible by the Committee, and any person who has been offered employment by the Company or a subsidiary or affiliate, provided that such prospective employee may not receive any
payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary. An employee on leave of absence may be considered as still in the employ
of the Company or a subsidiary for purposes of eligibility for participation in the Plan. 

        (o)   "Exchange
Act"  means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules
thereto. 

        (p)   "Fair
Market Value"  means the fair market value of Stock, Awards, or other property as determined by the Committee or under procedures established by the
Committee. Unless otherwise determined by the Committee, the Fair Market Value of Stock shall be the average of the high and low sales prices of Stock on a given date or, if there are no sales on that
date, on the latest previous date on which there were sales, reported for composite transactions in securities listed on the principal trading market on which Stock is then listed. 

        (q)   "Incentive
Stock Option" or "ISO"  means any Option intended to be and designated as an incentive stock option within the meaning of Code Section 422
or any successor provision thereto that may be granted to Eligible Persons who are employees. 

        (r)   "Limited
SAR"  means a conditional right granted to a Participant under Section 6(c) hereof. 

        (s)   "Option"  means
a conditional right, granted to a Participant under Section 6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods. 

        (t)    "Other
Stock-Based Awards"  means Awards granted to a Participant under Section 6(h) hereof. 

        (u)   "Participant"  means
a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person. 

        (v)   "Performance
Award"  means a conditional right, granted to a Participant under Section 7, to receive cash, Stock or other Awards or payments, as
determined by the Committee, based upon performance criteria specified by the Committee. 

        (w)  "Preexisting
Plan"  mean the Company's 1997 Incentive Compensation Plan, as amended and restated. 

        (x)   "Qualified
Member"  means a member of the Committee who is a "non-employee director" within the meaning of Rule 16b-3(b)(3)
and an "outside director" within the meaning of Regulation 1.162-27(c) under Code Section 162(m). 

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        (y)   "Restricted
Stock"  means Stock granted to a Participant under Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture. 

        (z)   "Rule 16b-3"  means
Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act. 

        (aa)  "Stock"  means
the Company's Class A Common Stock, $.01 par value, and such other securities as may be substituted (or resubstituted) for Stock
pursuant to Section 10(c) hereof. 

        (bb)  "Stock
Appreciation Rights" or "SAR"  means a conditional right granted to a Participant under Section 6(c) hereof. 

3.    Administration.  

        (a)    Authority of the Committee.    Except as otherwise provided below, the Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants, grant Awards,
determine the type, number, and other terms and conditions of, and all other matters relating to, Awards, prescribe Award agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan and Award agreements and correct defects, supply omissions, or reconcile inconsistencies therein, and to make all other
decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan. The foregoing notwithstanding, the Board shall perform the functions of the Committee
for purposes of granting Awards under the Plan to non-employee directors, and may perform any function of the Committee under the Plan for any other purpose, including for the purpose of
ensuring that transactions under the Plan by Participants who are then subject to Section 16 of the Exchange Act in respect of the Company are exempt under Rule 16b-3. In any
case in which the Board is performing a function of the Committee under the Plan, each reference to the Committee herein shall be deemed to refer to the Board, except where the context otherwise
requires. Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its subsidiaries, Participants, Beneficiaries, transferees under
Section 10(b) hereof, or other persons claiming rights from or through a Participant, and stockholders. 

        (b)    Manner of Exercise of Committee Authority.    At any time that a member of the Committee is not a Qualified
Member, (i) any action of the Committee relating to an Award intended by the Committee to qualify as "performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder may be taken by a subcommittee, designated by the Committee or the Board, composed solely of two or more Qualified Members, and (ii) any action relating to an Award
granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Company may be taken either by such a subcommittee or by the Committee but with
each such member who is not a Qualified Member abstaining or recusing himself or herself from such action, provided that, upon such abstention or recusal, the Committee remains composed of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee
for purposes of the Plan. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company or any subsidiary or affiliate, or committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative functions, as the Committee may determine, to the fullest extent permitted under Section 157 of the Delaware General Corporation
Law. The Committee may appoint agents to assist it in administering the Plan. 

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        (c)    Limitation of Liability.    The Committee and each member thereof, and any person acting pursuant to authority
delegated by the Committee, shall be entitled, in good faith, to rely or act upon any report or other information furnished by any executive officer, other officer or employee of the Company or a
subsidiary or affiliate, the Company's independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee, any person acting pursuant to
authority delegated by the Committee, and any officer or employee of the Company or a subsidiary or affiliate acting at the direction or on behalf of the Committee or a delegee shall not be personally
liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination. 

4.    Shares Available Under the Plan.  

        (a)    Number of Shares Available for Delivery.    Subject to adjustment as provided in Section 10(c) hereof,
the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be 6.5 million plus the number of shares that, under the Preexisting Plan,
remain available at the Effective Date or thereafter would become available under the terms of the Preexisting Plan. Any shares of Stock delivered under the Plan shall consist of authorized and
unissued shares or treasury shares. 

        (b)    Share Counting Rules.    The Committee may adopt reasonable counting procedures to ensure appropriate counting,
avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award. Shares subject to an Award that is canceled, expired, forfeited, settled in cash or terminated without a delivery of shares to the Participant will
again be available for Awards, and shares withheld in payment of the exercise price or taxes relating to an Award and shares equal to the number surrendered in payment of any exercise price or taxes
relating to an Award shall be deemed to constitute shares not delivered to the Participant and shall be deemed to again be available for Awards under the Plan. For purposes of determining the number
of Shares that become available as of the Effective Date under the Preexisting Plan, the share counting rules of the Preexisting Plan will apply and the share counting rules of this Plan shall apply
with respect to Awards granted under this Plan with respect to such shares. In addition, in the case of any Award granted in substitution for an award of a company or business acquired by the Company
or a subsidiary or affiliate, shares issued or issuable in connection with such substitute Award shall not be counted against the number of shares reserved under the Plan, but shall be available under
the Plan by virtue of the Company's assumption of the plan or arrangement of the acquired company or business. This Section 4(b) shall apply to the number of shares reserved and available for
ISOs only to the extent consistent with applicable regulations relating to ISOs under the Code. 

5.    Eligibility; Per-Person Award Limitations.  

        (a)    Grants to Eligible Persons.    Awards may be granted under the Plan only to Eligible Persons. 

        (b)    Annual Per-Person Award Limitations.    In each calendar year during any part of which the Plan is
in effect, an Eligible Person may be granted Awards under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), and 6(h) (including Performance Awards under Section 7 based on Awards authorized
by each referenced subsection) relating to a number of shares of Stock up to his or her Annual Limit. A Participant's Annual Limit, in any year during any part of which the Participant is then
eligible under the Plan, shall equal 1.5 million shares plus the amount of the Participant's unused Annual Limit relating to the same type of Award as of the close of the previous year, subject
to adjustment as provided in Section 10(c). In the case of a cash-denominated Award for which the limitation set forth in the preceding sentence would not operate as an effective
limitation satisfying Treasury Regulation 1.162-27(e)(4) (including a cash Performance Award under Section 7), an Eligible Person 

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may
not be granted Awards authorizing the earning during any calendar year of an amount that exceeds the Participant's Annual Limit, which for this purpose shall equal $3 million plus the
amount of the Participant's unused cash Annual Limit as of the close of the previous year (this limitation is separate and not affected by the number of Awards granted during such calendar year
subject to the limitation in the preceding sentence). For this purpose, (i) "earning" means satisfying performance conditions so that an amount becomes payable, without regard to whether it is
to be paid currently or on a deferred basis or continues to be subject to any service requirement or other non-performance condition, and (ii) a Participant's Annual Limit is used
to the extent a cash amount or number of shares may be potentially earned or paid under an Award, regardless of whether such amount or shares are in fact earned or paid. 

6.    Specific Terms of Awards.  

        (a)    General.    Awards may be granted on the terms and conditions set forth in this Section 6. In addition,
the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant and terms permitting a Participant
to make elections
relating to his or her Award. The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan.
The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require
payment of consideration for an Award except as limited by the Plan. 

        (b)    Options.    The Committee is authorized to grant Options to Participants on the following terms and conditions: 

        (i)    Exercise Price.    The exercise price per share of Stock purchasable under an Option shall be determined by the
Committee, provided that such exercise price shall be not less than the Fair Market Value of a share of Stock on the date of grant of such Option except as provided under Section 6(f) or 8(a)
hereof. In addition, in connection with a merger, consolidation or reorganization of the Company or any of its subsidiaries, the Committee may grant Options with an exercise price per share less than
the market value of the Common Stock on the date of grant if such Options are granted in exchange for, or upon conversion of, options to purchase capital stock of any other entity which is a party to
such merger, consolidation or reorganization. 

        (ii)   Time and Method of Exercise.    The Committee shall determine the time or times at which or the circumstances
under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment (subject to Section 10(h)), including, without limitation, cash, Stock, other Awards or awards granted under other plans of the Company or
any subsidiary or affiliate, or other property (including through broker-assisted "cashless exercise" arrangements, to the extent permitted by applicable law), and the methods by or forms in which
Stock will be delivered or deemed to be delivered in satisfaction of Options to Participants (including deferred delivery of shares representing the Option "profit," at the election of the Participant
or as mandated by the Committee, with such deferred shares subject to any vesting, forfeiture or other terms as the Committee may specify). 

        (iii)    ISOs.    The terms of any ISO granted under the Plan shall comply in all respects with the
provisions of Code Section 422. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to ISOs (including any SAR in tandem therewith) shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any ISO under Code Section 422, unless the Participant has first 

5

 

consented
to the change that will result in such disqualification. ISOs may be granted only to employees of the Company or any of its subsidiaries. To the extent that the aggregate Fair Market Value
(determined as of the time the Option is granted) of the Stock with respect to which ISOs granted under this Plan and all other plans of the Company and any subsidiary are first exercisable by any
employee during any calendar year shall exceed the maximum limit (currently, $100,000), if any, imposed from time to time under Code Section 422, such Options shall be treated as Options that
are not ISOs. 

        (c)    Stock Appreciation Rights.    The Committee is authorized to grant SARs to Participants on the following terms
and conditions: 

        (i)    Right to Payment.    A SAR shall confer on the Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise (or, in the case of a "Limited SAR," the Fair Market Value determined by reference to the
Change in Control Price, as defined under Section 9(c) hereof) over (B) the grant price of the SAR as determined by the Committee. 

        (ii)   Other Terms.    The Committee shall determine at the date of grant or thereafter, the time or times at which
and the circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of
settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR. Limited SARs that may only be exercised in connection with a Change in Control or other event as specified by the
Committee may be granted on such terms, not inconsistent with this Section 6(c), as the Committee may determine. SARs and Limited SARs may be either freestanding or in tandem with other Awards. 

        (d)    Restricted Stock.    The Committee is authorized to grant Restricted Stock to Participants on the following
terms and conditions: 

        (i)    Grant and Restrictions.    Restricted Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such installments or otherwise, as the
Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or
other requirement imposed by the Committee). During the restricted period applicable to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock may not be sold, transferred,
pledged, hypothecated, margined, or otherwise encumbered by the Participant. 

        (ii)   Forfeiture.    Except as otherwise determined by the Committee, upon termination of employment during the
applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event
of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock. 

        (iii)    Certificates for Stock.    Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee shall determine. If certificates representing Restricted Stock are 

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registered
in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted
Stock, that the Company retain physical possession of the certificates, and/or that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock. 

        (iv)    Dividends and Splits.    As a condition to the grant of an Award of Restricted Stock, the
Committee may require that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards
under the Plan. Unless otherwise determined by the Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed. 

        (e)    Deferred Stock.    The Committee is authorized to grant Deferred Stock to Participants, which are rights to
receive Stock at the end of a specified deferral period, subject to the following terms and conditions: 

        (i)    Award and Restrictions.    Settlement of an Award of Deferred Stock shall occur upon expiration of the deferral
period specified for such Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Stock shall be subject to such restrictions (which
may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including
based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine. 

        (ii)   Forfeiture.    Except as otherwise determined by the Committee, upon termination of employment during the
applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award agreement evidencing the Deferred Stock), all Deferred Stock that is at that time subject
to deferral (other than a deferral at the election of the Participant) shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to Deferred Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of Deferred Stock. 

        (iii)    Dividend Equivalents.    Unless otherwise determined by the Committee at date of grant,
Dividend Equivalents on the specified number of shares of Stock covered by an Award of Deferred Stock shall be either (A) paid with respect to such Deferred Stock at the dividend payment date
in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Deferred Stock and the amount or value thereof
automatically deemed reinvested in additional Deferred Stock, other Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect. 

        (f)    Bonus Stock and Awards in Lieu of Obligations.    The Committee is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of obligations of the Company or a subsidiary or affiliate to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements,
subject to such terms as shall be determined by the Committee. 

        (g)    Dividend Equivalents.    The Committee is authorized to grant Dividend Equivalents to a Participant, entitling
the Participant to receive cash, Stock, other Awards, or other property equivalent to all or a portion of the dividends paid with respect to a specified number of shares of Stock. Dividend Equivalents
may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and 

7

 

subject
to restrictions on transferability, risks of forfeiture and such other terms as the Committee may specify. 

        (h)    Other Stock-Based Awards.    The Committee is authorized, subject to limitations under applicable law, to grant
to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be
consistent with the purposes of the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by
the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries. The Committee shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine. 

7.    Performance Awards, Including Annual Incentive Awards

        (a)    Performance Awards Generally.    The Committee is authorized to grant Performance Awards on the terms and
conditions specified in this Section 7. Performance Awards may be denominated as a cash amount, number of shares of Stock, or specified number of other Awards (or a combination) which may be
earned upon achievement or satisfaction of performance conditions specified by the Committee. In addition, the Committee may specify that any other Award shall constitute a Performance Award by
conditioning the right of a Participant to exercise the Award or have it settled, or the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the
Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to
reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Sections 7(b) and 7(c) in the case of a Performance Award intended to qualify as
"performance-based compensation" under Code Section 162(m). 

        (b)    Performance Awards Granted to Covered Employees.    If the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as a Covered Employee should qualify as "performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon achievement of a preestablished performance goal and other terms set forth in this Section 7(b). 

        (i)    Performance Goals Generally.    The performance goal for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 7(b). The performance goal
shall be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder (including Treasury Regulation 1.162-27 and successor
regulations thereto), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being "substantially uncertain." The
Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance goals may differ for Performance Awards granted to any one Participant or to different
Participants. 

        (ii)   Business Criteria.    One or more of the following business criteria for the Company, on a consolidated basis,
and/or for specified subsidiaries or affiliates or other business units or lines of business of the Company shall be used by the Committee in establishing performance goals for 

8

 

such
Performance Awards: (1) earnings per share (basic or fully diluted); (2) revenues; (3) earnings, before or after taxes, from operations (generally or specified operations),
before or after interest expense, depreciation, amortization, incentives, or extraordinary or special items; (4) cash flow, free cash flow, cash flow return on investment (discounted or
otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (5) return on net assets, return on assets, return on investment, return on capital, return on equity;
(6) economic value created; (7) operating margin or operating expense; (8) net income; (9) Stock price or total stockholder return; and (10) strategic business
criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction,
management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint
ventures. The targeted level or levels of performance with respect to such business criteria may be established at such levels and in such terms as the Committee may determine, in its discretion,
including in absolute terms, as a goal relative to performance in prior periods, or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies. 

        (iii)    Performance Period; Timing for Establishing Performance Goals; Per-Person
Limit.    Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to one year or more than one year,
as specified by the Committee. A performance goal shall be established not later than the earlier of (A) 90 days after the beginning of any performance period applicable to such
Performance Award or (B) the time 25% of such performance period has elapsed. In all cases, the maximum Performance Award of any Participant shall be subject to the limitation set forth in
Section 5(b). 

        (iv)  Performance Award Pool.    The Committee may establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of the Company in connection with Performance Awards. The amount of such Performance Award pool shall be based upon the achievement of a performance goal or
goals based on one or more of the business criteria set forth in Section 7(b)(ii) during the given performance period, as specified by the Committee in accordance with
Section 7(b)(i). The Committee may specify the amount of the Performance Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to such business criteria. 

        (v)   Settlement of Performance Awards; Other Terms.    Settlement of such Performance Awards shall be in cash,
Stock, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of a Performance Award subject to this Section 7(b). Any settlement
which changes the form of payment from that originally specified shall be implemented in a manner
such that the Performance Award and other related Awards do not, solely for that reason, fail to qualify as "performance-based compensation" for purposes of Code Section 162(m). The Committee
shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant or other event (including a Change in Control)
prior to the end of a performance period or settlement of such Performance Awards; any resulting payments need not qualify as performance-based compensation under Section 162(m) if the
authorization of such non-qualifying payments would not otherwise disqualify the Performance Award apart from the termination or change in control. 

        (c)    Annual Incentive Awards Granted to Designated Covered Employees.    The Committee may grant a Performance Award
in the form of an Annual Incentive Award to an Eligible Person who is 

9

 

designated
by the Committee as likely to be a Covered Employee. Such Annual Incentive Award will be intended to qualify as "performance-based compensation" for purposes of Code Section 162(m),
and therefore its grant, exercise and/or settlement shall be contingent upon achievement of preestablished performance goals and shall comply with the other requirements set forth in
Section 7(b). 

        (d)    Written Determinations.    Determinations by the Committee as to the establishment of performance goals, the
amount potentially payable in respect of Performance Awards, the level of actual achievement of the specified performance goals relating to Performance Awards and the amount of any final Performance
Award shall be recorded in writing in the case of Performance Awards intended to qualify under Section 162(m). Specifically, the Committee shall certify in writing, in a manner conforming to
applicable regulations under Section 162(m), prior to settlement of each such Award granted to a Covered Employee, that the performance objective relating to the Performance Award and other
material terms of the Award upon which settlement of the Award was conditioned have been satisfied. 

8.    Certain Provisions Applicable to Awards.  

        (a)    Stand-Alone, Additional, Tandem, and Substitute Awards.    Subject to Section 10(e), Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under
another plan of the Company, any subsidiary or affiliate, or any business entity to be acquired by the Company or a subsidiary or affiliate, or any other right of a Participant to receive payment from
the Company or any subsidiary or affiliate. Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of
such other Awards or awards. Subject to Section 10(h), the Committee may determine that, in granting a new Award, the in-the-money value of any surrendered Award or
award may be applied
to reduce the exercise price of any Option, grant price of any SAR, or purchase price of any other Award. 

        (b)    Term of Awards.    The term of each Award shall be for such period as may be determined by the Committee;
provided that in no event shall the term of any Option or SAR exceed a period of ten years (or, in the case of an ISO, such shorter term as may be required under Code Section 422). 

10

   
        (c)    Form and Timing of Payment under Awards; Deferrals.    Subject to the terms of the Plan and any applicable
Award agreement, payments to be made by the Company or a subsidiary upon the exercise of an Option or other Award or settlement of an Award may be made in Stock, other Awards, or other property, and
may be made in a single payment or transfer, in installments, or on a deferred basis. The settlement of any Award may be accelerated in the discretion of the Committee or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or deferred payments may be required by the Committee (subject to Section 10(e) of the Plan, including the consent
provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award agreement) or permitted at the election of the Participant on terms and conditions
established by the Committee. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock. Any payment deferred pursuant to this Section 8(c) shall represent only an unfunded,
unsecured promise by the Company to pay the amount credited thereto to the Participant in the future. 

        (d)    Additional Award Forfeiture Provisions.    The Committee may condition a Participant's right to receive a grant
of an Award, to exercise the Award, to retain Stock acquired in connection with an Award, or to retain the profit or gain realized by a Participant in connection with an Award, including cash received
upon sale of Stock acquired in connection with an Award, upon compliance by the Participant with specified conditions relating to non-competition, confidentiality of information relating
to the Company, non-solicitation of customers, suppliers, and employees of the Company, cooperation in litigation, non-disparagement of the Company and its officers, directors
and affiliates, and other restrictions upon or covenants of the Participant, including during specified periods following termination of employment or service to the Company. 

        (e)    Exemptions from Section 16(b) Liability.    With respect to a Participant who is then subject to the
reporting requirements of Section 16(a) of the Exchange Act in respect of the Company, the Committee shall implement transactions under the Plan and administer the Plan in a manner that will
ensure that each transaction with respect to such a Participant is exempt from liability under Rule 16b-3 or otherwise not subject to liability under Section 16(b), except
that this provision shall not limit sales by such a Participant, and such a Participant may elect to engage in other non-exempt transactions under the Plan. The Committee may authorize the
Company to repurchase any Award or shares of Stock deliverable or delivered in connection with any Award (subject to Section 10(h)) in order to avoid a Participant who is subject to
Section 16 of the Exchange Act incurring liability under Section 16(b). Unless otherwise specified by the Participant, equity securities or derivative securities acquired under the Plan
which are disposed of by a Participant shall be deemed to be disposed of in the order acquired by the Participant. 

9.    Change in Control.  

        (a)    Effect of "Change in Control."    In the event of a "Change in Control," the following provisions shall apply
unless otherwise provided in the Award agreement: 

        (i)    Any
Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested as of the time of the Change in Control; 

        (ii)   If
any optionee holds an Option immediately prior to a Change in Control that was not previously exercisable and vested in full throughout the 60-day period
preceding the Change in Control, he shall be entitled to elect, during the 60-day period following the Change in Control, in lieu of acquiring the shares of Stock covered by the portion of
the Option that was not vested and exercisable within such 60-day period, to receive, and the Company shall be obligated to pay, in cash the excess of the Change in Control Price over the
exercise price of such Option, multiplied by the number of shares of Stock covered by such portion of the Option; 

        (iii)  The
restrictions, deferral of settlement, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Awards shall be deemed
fully vested as of the time of the Change in Control, except to the extent of any waiver by the Participant and subject to applicable restrictions set forth in Section 10(a) hereof; and 

11

 

        (iv)  With
respect to any outstanding Award subject to achievement of performance goals and conditions under the Plan, such performance goals and other conditions will be
deemed to be met if and to the extent so provided by the Committee in the Award agreement relating to such Award. 

        (b)    Definition of "Change in Control."    A "Change in Control" shall mean the occurrence of any of the following: 

        (i)    when
any "person" as defined in Section 3(a)(9) of 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 and any employee benefit plan sponsored or maintained by the Company or any subsidiary (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% percent (or such greater percentage as the Committee may specify in connection with the grant of any Award) of the combined voting power of the Company's then-outstanding
securities; or 

        (ii)   the
occurrence of a transaction requiring stockholder approval for the acquisition of the Company by an entity other than the Company or a subsidiary by merger or
otherwise or for the purchase by an entity other than the Company or a subsidiary of substantially all of the assets of the Company. 

        (c)    Definition of "Change in Control Price."    The "Change in Control Price" means an amount in cash equal to the
higher of (i) the amount of cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any transaction triggering the Change in
Control, or (ii) the highest Fair Market Value per share at any time during the 60-day period preceding the Change in Control. 

10.    General Provisions.  

        (a)    Compliance with Legal and Other Requirements.    The Company may, to the extent deemed necessary or advisable
by the Committee, postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action
under any federal or state law, rule, or regulation, listing or other required action with respect to any stock exchange or automated quotation system upon which the Stock or other securities of the
Company are listed or quoted, or compliance with any other obligation of the Company, as the Committee may consider appropriate, and may require any Participant to make such representations, furnish
such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance
with applicable laws, rules, and regulations, listing requirements, or other obligations. The foregoing notwithstanding, in connection with a Change in Control, the Company shall take or cause to be
taken no action, and shall undertake or permit to arise no legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Stock or payment of benefits
under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in Control. 

        (b)    Limits on Transferability; Beneficiaries.    No Award or other right or interest of a Participant under the
Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party, or assigned or transferred by such Participant otherwise
than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of
the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than ISOs and SARs in tandem therewith) may be transferred to one or
more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such
transfers are permitted by the Committee pursuant to the express terms of an Award agreement (subject to any terms and conditions which the Committee may impose thereon). A Beneficiary, transferee, or
other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award agreement applicable to such Participant, except
as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee. 

12

 

        (c)    Adjustments.    In the event that any large, special and non-recurring dividend or other
distribution (whether in the form of cash or property other than Stock), recapitalization, forward or reverse split, Stock dividend, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Stock such that an adjustment is determined by the Committee to be
appropriate under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (A) the number and kind of shares of Stock which may be delivered in
connection with Awards granted thereafter, (B) the number and kind of shares of Stock by which annual per-person Award limitations are measured under Section 5(b),
(C) the number and kind of shares of Stock subject to or deliverable in respect of outstanding Awards and (D) the exercise price, grant price or purchase price relating to any Award or,
if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder of an outstanding Option (subject to Section 10(h)). In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards and performance goals and any hypothetical funding pool relating
thereto) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets)
affecting the Company, any subsidiary or affiliate or other business unit, or the financial statements of the Company or any subsidiary or affiliate, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee's assessment of the business strategy of the Company, any subsidiary or affiliate or
business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no
such adjustment shall be authorized or made if and to the extent that the existence of such authority (A) would cause Options, SARs, or Performance Awards granted under Section 7 to
Participants designated by the Committee as Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder to otherwise fail
to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder, or (B) would cause the Committee to be deemed to have authority to change the
targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs granted to Covered Employees and intended to qualify
as "performance-based compensation" under Code Section 162(m) and regulations thereunder. 

        (d)    Taxes.    The Company and any subsidiary is authorized to withhold from any Award granted, any payment relating
to an Award under the Plan, including from a distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection
with any Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant's
tax obligations, either on a mandatory or elective basis in the discretion of the Committee. 

        (e)    Changes to the Plan and Awards.    The Board may amend, alter, suspend, discontinue, or terminate the Plan or
the Committee's authority to grant Awards under the Plan without the consent of stockholders or Participants, except that any amendment or alteration to the Plan shall be subject to the approval of
the Company's stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any
stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously
granted and outstanding Award. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate any Award theretofore granted and any Award agreement
relating thereto; provided that the Committee shall have no authority to waive or modify any Award term after the Award has been granted to the extent the waived or modified term would be mandatory
under the Plan for any Award newly granted at the date of the waiver or modification; and provided further, that, without the consent of an affected Participant, no such Committee action may
materially and adversely affect the rights of such Participant under such Award. Without the prior approval of stockholders, the Committee will not amend or replace previously granted Options in a
transaction that constitutes a "repricing." For this purpose, a "repricing" means: (1) amending the terms of an Option after it is granted to lower its exercise price, except pursuant to
Section 10(c) hereof; (2) any other action that is treated as a repricing under generally accepted accounting principles; and 

13

 

(3) canceling
an Option at a time when its strike price is equal to or greater than the fair market value of the underlying Stock, in exchange for another Option, Restricted Stock, or other
equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction. A cancellation and exchange described in
clause (3) of the preceding sentence will be considered a repricing regardless of whether the Option, Restricted Stock or other equity is delivered simultaneously with the cancellation,
regardless of whether it is treated as a repricing under generally accepted accounting principles, and regardless of whether it is voluntary on the part of the Option holder. 

        (f)    Limitation on Rights Conferred under Plan.    Neither the Plan nor any action taken hereunder shall be
construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a subsidiary,
(ii) interfering in any way with the right of the Company or a subsidiary to terminate any Eligible Person's or Participant's employment or service at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and employees, or (iv) conferring on a Participant any of the rights of
a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award. 

        (g)    Unfunded Status of Awards; Creation of Trusts.    The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock,
other Awards or other property, or make other arrangements to meet the Company's obligations under the Plan. Such trusts or other arrangements shall be consistent with the "unfunded" status of the
Plan unless the Committee otherwise determines with the consent of each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest the proceeds in
alternative investments, subject to such terms and conditions as the Committee may specify and in accordance with applicable law. 

        (h)    Certain Limitations Relating to Accounting Treatment of Awards.    At any time that the Company is accounting
for stock-denominated Awards (other than SARs) under Accounting Principles Board Opinion 25
("APB 25"), the Company intends that, with respect to such Awards, the compensation measurement date for accounting purposes shall occur at the date of grant or the date performance conditions are met
if an Award is fully contingent on achievement of performance goals, unless the Committee specifically determines otherwise. Therefore, other provisions of the Plan notwithstanding, in order to
preserve this fundamental objective of the Plan, if any authority granted to the Committee hereunder or any provision of the Plan or an Award agreement would result, under APB 25, in "variable"
accounting or a measurement date other than the date of grant or the date such performance conditions are met with respect to such Awards, if the Committee was not specifically aware of such
accounting consequence at the time such Award was granted or provision otherwise became effective, such authority shall be limited and such provision shall be automatically modified and reformed to
the extent necessary to preserve the accounting treatment of the award intended by the Committee, subject to Section 10(e) of the Plan. 

        (i)    Nonexclusivity of the Plan.    Neither the adoption of the Plan by the Board nor its submission to the
stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under Code Section 162(m). 

        (j)    Payments in the Event of Forfeitures; Fractional Shares.    Unless otherwise determined by the Committee, in
the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 

        (k)    Awards to Participants Outside the United States.    The Committee may modify the terms of any Award under the
Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such
Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the
Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant's residence or 

14

 

employment
abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. An Award may be modified under this
Section 11(k) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual
liability under Section 16(b) for the Participant whose Award is modified. 

        (l)    Governing Law.    The validity, construction and effect of the Plan, any rules and regulations under the Plan,
and any Award agreement shall be determined in accordance with the Delaware General Corporation Law, the contract and other laws of the State of New York without giving effect to principles of
conflicts of laws, and applicable federal law. 

        (m)    Preexisting Plan.    Upon stockholder approval of the Plan as provided under Section 11(n), no further
grants of Awards will be made under the Preexisting Plan. 

        (n)    Plan Effective Date and Termination.    The Plan was adopted by the Board of Directors on April 24, 2003
and shall become effective upon its approval by the Company's stockholders by the affirmative vote of the holders of a majority of the voting securities of the Company entitled to be cast in person or
by proxy at the Company's 2003 annual meeting of stockholders.1 Unless earlier terminated by action of the Board of Directors, the Plan will remain in effect until such time as no Stock
remains available for delivery under the Plan and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan. 

	1
	The
Plan was approved by the Company's stockholders on June 23, 2003. 

15

QuickLinks

Exhibit 10.13

SCIENTIFIC GAMES CORPORATION 2003 Incentive Compensation Plan

SCIENTIFIC GAMES CORPORATION 2003 Incentive Compensation PlanQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.17    
    

 
 

Amended and Restated Employment Agreement, dated as of February 28, 2003, by and between the
  Company and A. Lorne Weil    

 
 

EMPLOYMENT AGREEMENT
  
    by and between
  
    SCIENTIFIC GAMES CORPORATION
  
    and
  
    A. LORNE WEIL
  
    as Amended and Restated
  as of February 28, 2003    

  

 
 

Table of Contents    
    

	 
	 	 
	 	 
	 	Page

	1.	 	Termination of Existing Employment Agreements	 	1
	2.	 	Employment; Term	 	1
	3.	 	Offices and Duties	 	1
	4.	 	Compensation	 	2
	5.	 	Benefits	 	4
	6.	 	Termination	 	6
	7.	 	Compensation Following Termination Prior to the End of the Term	 	9
	8.	 	Excise Tax Restoration Payment	 	13
	9.	 	Offsets; Withholding	 	15
	10.	 	Noncompetition; Nonsolicitation; Nondisclosure; etc	 	15
	 	 	10.1	 	Noncompetition; Nonsolicitation	 	15
	 	 	10.2	 	Proprietary Information	 	16
	 	 	10.3	 	Confidentiality and Surrender of Records	 	17
	 	 	10.4	 	Nondisparagement	 	17
	 	 	10.5	 	No Other Obligations	 	17
	 	 	10.6	 	Forfeiture of Outstanding Options	 	17
	 	 	10.7	 	Enforcement	 	18
	 	 	10.8	 	Cooperation with Regard to Litigation	 	18
	 	 	10.9	 	Survival	 	19
	 	 	10.10	 	Company	 	19
	11.	 	Insurance for the Company's Benefit	 	19
	12.	 	Indemnification	 	19
	13.	 	Notices	 	20
	14.	 	Assignability; Binding Effect	 	21
	15.	 	Complete Understanding; Amendment; Waiver	 	21
	16.	 	Severability	 	21
	17.	 	Survivability	 	22
	18.	 	Governing Law; Arbitration; Expenses; Interest; Counterparts	 	22
	 	 	18.1	 	Governing Law	 	22
	 	 	18.2	 	Arbitration	 	22
	 	 	18.3	 	Reimbursement of Expenses in Enforcing Rights	 	23
	 	 	18.4	 	Interest on Unpaid Amounts	 	23
	 	 	18.5	 	Counterparts	 	23
	19.	 	Reimbursement of Expenses of Executive in Negotiating Agreement	 	23
	20.	 	Titles and Captions	 	23

i

 
 

A. LORNE WEIL EMPLOYMENT AGREEMENT    
    
    As Amended and Restated as of February 28, 2003    
    

        This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 28th day of February, 2003 (the "Effective Date"), by and between SCIENTIFIC
GAMES CORPORATION, a Delaware corporation formerly known as Autotote Corporation (the "Company"), and A. Lorne Weil ("Executive"). 

W I T N E S S E T H: 

        WHEREAS, Executive has been employed by the Company pursuant to an Employment Agreement dated as of November 1, 1997 (the "Original
Agreement"), as amended by the letter agreement dated September 10, 1998, and the Amendment to Employment Agreement dated as of September 1, 2000, and as superseded by the Employment
Agreement dated November 1, 2000, as amended and restated by the Amended and Restated Employment Agreement dated November 1, 2000 (the "Old Agreement"); and 

        WHEREAS, the Company desires to continue to employ Executive with the Company, and Executive wishes to continue to serve the Company, in
the capacities and on the terms and conditions set forth in this Agreement; and 

        WHEREAS, the Company and Executive desire that this Agreement replace and supersede the Old 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 Old Agreement, are hereby terminated and superseded, except as provided in Sections 12 and 15. 

        2.    Employment; Term.    The Company hereby agrees to employ Executive, and Executive hereby accepts continued
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, 2007, and any period of extension thereof in accordance with this Section 2, subject to earlier termination in accordance with
Section 6. The Term shall be extended automatically without further action by either party by one additional year (added to the end of the Term) first on December 31, 2007 (extending the
Term to December 31, 2008) and then on each succeeding December 31 thereafter, unless either party shall have given written notice to the other party prior to the June 30
preceding the date upon which such extension would become effective electing not to further extend the Term, in which case Executive's employment shall terminate on the date upon which such extension
would otherwise have become effective, unless earlier terminated in accordance with Section 6; provided, however, that any termination pursuant to this Section 2 shall be subject to and
without limitation of or prejudice to Executive's rights with respect to (i) a termination for Good Reason pursuant to Section 6(e)(viii), or (ii) a termination without Cause
pursuant to Section 6(g), as applicable. 

        3.    Offices and Duties.    

        (a)    Offices.    During the Term, Executive shall serve as Chairman of the Board, President and Chief Executive
Officer of the Company and shall report solely to the Board of Directors of the Company (the "Board"). Executive agrees to serve during the Term as a member of the Board, and of any Board committee to
which the Board may elect him. 

        (b)    Duties.    Executive shall perform such duties and responsibilities and have such authority as are customary
for the chairman of the board, president and chief executive officer of a publicly held corporation of the size, type, and nature of the Company as they may exist from time to time, 

 

but
in no event shall such duties, responsibilities and authority be reduced from those of Executive at the Effective Date. 

        (c)    Commitment.    Executive shall devote his full business time and attention and best efforts to his positions
with the Company without commitment to other business endeavors, except that so long as such activities do not preclude or render unlawful Executive's employment by the Company or otherwise materially
inhibit the performance of his duties under this Agreement or materially impair the business of the Company or its subsidiaries, Executive (i) may make personal investments which are not in
conflict with his duties to the Company and manage personal and family financial and legal
affairs, (ii) may continue to serve on any board of directors on which he is known by the Board to be serving on the Effective Date, as specified in Schedule A hereto, (iii) may
undertake public speaking engagements, and (iv) may serve as a director of (or hold a similar position with) any other organization. 

        (d)    Rank.    Executive shall be the highest-ranking executive of the Company. 

        4.    Compensation.    

        (a)    Base Salary.    During the Term the Company shall pay Executive an annual base salary (the "Base Salary") at
the rate per annum for 2003 of $790,958, payable biweekly (except to the extent deferred under a deferred compensation plan) and subject to all withholdings that are legally required or are agreed to
by Executive. 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; provided, however, that if the rate of Base Salary as so increased at January 1, 2005 is less than
$1 million, Base Salary will be increased effective at that date to $1 million per annum, and shall thereafter be increased annually on each January 1 during the Term, commencing
January 1, 2006, by a percentage of such 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. In no event shall the Base Salary be reduced. 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 2003 for an increase to be made on January 1, 2004 or on December 31, 2003) 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. 

        (i)    Incentive Compensation.    Executive shall have the opportunity annually to earn incentive compensation in
amounts determined by the Compensation Committee of the Board (the "Committee") in accordance with the applicable plan(s) of the Company as in effect from time to time; provided, however, that
Executive shall have the opportunity to earn annually, beginning in 2003, up to the "Annual Incentive Amount" (as defined below) as incentive compensation pursuant to, and subject to the terms and
conditions of, the Company's Management Incentive Compensation Plan as in effect from time to time; provided, however, that (i) if no Management 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 the Annual Incentive Amount as incentive compensation, then
the Company shall provide such reasonable opportunity to Executive independently of such plan, (ii) Executive may in the discretion of the Committee or the Board receive additional 

2

 

incentive
compensation; (iii) subject to clause (iv) below, Executive's annual opportunity for incentive compensation shall be based on achievement of pre-set performance
goals, with the Compensation Committee to determine the nature of the performance goals, which may include quantitative and/or qualitative goals, and other award terms in its discretion; and
(iv) Executive's annual opportunity for incentive compensation shall, for each year, be on terms and conditions at least as favorable to Executive as the most favorable terms and conditions for
incentive compensation offered to any other employee of the Company for such year. The "Annual Incentive Amount" shall be $1 million in each of 2003, 2004 and 2005, and thereafter shall be
equal to the Base Salary in effect in the such year (after giving effect to the increase in Base Salary for such year provided in Section 4(a)) 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, except that the Company shall make available to
Executive an opportunity to defer receipt of the incentive compensation under a deferred compensation plan. 

        (c)    Executive Compensation Plans.    

        (i)    Executive
shall be entitled during the Term to participate, without discrimination or duplication, in the Company's supplemental executive retirement plan, subject to
Section 5(h) and other applicable terms of this Agreement, and all other executive compensation plans and programs which are made generally available by the Company to its other senior
executives (including, without limitation, any stock option plans, performance share plans, management incentive plans, deferred compensation plans, and supplemental retirement plans) 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 except to the extent otherwise
specifically provided herein or under the terms of any "Non-Ordinary-Course Grant or Award" (as hereafter defined) made to Executive after December 1, 2003, Executive shall be
eligible to participate in such executive compensation 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. 

        (ii)    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 (pursuant to which Executive has in
recent years received an annual grant of a number of stock options equal to 15% of his maximum annual cash incentive bonus potential), 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. 

        (iii)    The
foregoing notwithstanding, the following equity grants will be made to Executive in 2003 in addition to the Normal Course Awards for 2003: 

        (A)    Effective
February 28, 2003, Executive shall be granted, under the 1997 Incentive Compensation Plan, as amended, a performance-accelerated stock option to
purchase 600,000 shares of Class A Common Stock of the Company, at an exercise price of $5.13 per share (representing 100% of fair market value of a share of Class A Common Stock at the
date of grant), in the form and subject to the terms and conditions set forth in Exhibit A hereto ("PARSOP I"). 

3

 

        (B)    Effective
upon the approval of the proposed 2003 Incentive Compensation Plan (the "2003 ICP") by shareholders of the Company, Executive shall be granted, under the 2003
ICP, a performance-accelerated stock option to purchase 400,000 shares of Class A Common Stock of the Company, at an exercise price equal to 100% of fair market value of a share of
Class A Common Stock at the date of grant, in the form and subject to the terms and conditions set forth in Exhibit B hereto ("PARSOP II"). 

        (C)    If
the exercise price of PARSOP II exceeds $7.00 per share but is less than $8.00 per share, the Company will grant to Executive a number of shares of restricted stock
equal to (A) such exercise price minus $7.00 times (B) 400,000 divided by (C) such exercise price. The restrictions (i) relating to forfeiture of the restricted stock
granted under this Section 5(b)(ii) will lapse at the same times and in the same proportions as the forfeiture restrictions on the PARSOP II options lapse, and (ii) relating to
transferability of such restricted stock will lapse at the same times and in the same proportions as the transfer restrictions on the Profit Shares under PARSOP II lapse, including, in the case of the
restrictions referred to in each of the foregoing clauses (i) and (ii), the lapse of such restrictions on a performance-accelerated basis. Regular cash dividends on such restricted stock, if
any, will be paid on an unrestricted basis, but other dividends will result in adjustments determined by the Committee in a manner that preserves without enlarging the rights of the Company and
Executive. 

        (iv)    Except
to the extent otherwise specifically provided under the terms of any Non-Ordinary Course Grant or Award made to Executive after December 1,
2003, in determining grants or awards, any formula used by the Committee in calculating the number of options
(or any other equity -based awards granted to senior executives in lieu of options) to be granted for any such year shall take into account (to the extent relevant to the grant determination
methodology then in use), Executive's Annual Incentive Amount as determined in accordance with Section 4(b). 

        5.    Benefits.    

        (a)    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 his duties under this Agreement, on a timely basis upon submission by Executive of
vouchers therefor in accordance with the Company's standard procedures. 

        (b)    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, pension, retirement, profit sharing, stock ownership and other insurance,
benefit, fringe benefits and perquisite plans and programs which are made generally available by the Company to its other senior executives; 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. The Company, in its sole discretion, may at any time amend or terminate any such plans or programs; provided, however, that: 

        (i)    At
all times during the Term, such plans and programs in effect, in the aggregate, shall provide Executive with benefits and compensation substantially no less favorable
than is provided by the Company to Executive under such plans and programs as of the Effective Date; 

4

 

        (ii)    The
Company shall provide Executive with long-term disability insurance and benefits substantially no less favorable (including any required contributions
by Executive) than such insurance and benefits in effect on the Effective Date; and 

        (iii)    The
Company shall provide Executive with Company-paid group and individual term life insurance providing a death benefit no less than that provided under
Company-paid insurance in effect on the Effective Date. 

        (c)    Equity Investment Program.    If the Company adopts an equity investment program permitting executives to elect
to forego salary, annual incentive, other bonuses, annual option opportunities under
long-term incentive plans, or other specified compensation or benefits in exchange for a grant of stock options, restricted stock or other equity or non-equity awards or
benefits, Executive will be eligible to participate in such program on terms no less favorable than the terms of participation of any other employee of the Company. 

        (d)    Deferred Compensation.    Executive shall be entitled to participate in the Company's deferred compensation
plan in accordance with the terms of such plans and subject to the Company's right to at any time amend or terminate any such plan. 

        (e)    Vacation.    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. 

        (f)    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. All outstanding and unvested stock option grants made on or prior to December 1, 2003 shall become fully
vested and nonforfeitable, upon the failure (except solely by reason of Executive's own actions) of the Board or the Company to approve or effectively seek to implement, in all material respects, any
material strategic plan or initiative for the Company, that, in any such case, has been proposed in writing in good faith by Executive (provided that upon such vesting, the period of time afforded to
the Company, pursuant to Section 6(e), to otherwise cure the conduct alleged to constitute Good Reason within the meaning of such Section 6(e) shall be extended from thirty
(30) days to ninety (90) days). Except to the extent otherwise specifically provided under the terms of any Non-Ordinary Course Grant or Award made to Executive after
December 1, 2003, in addition to the provisions set forth in Section 7 hereof with respect to termination of Executive's employment, all
outstanding stock options and other equity-based awards held by Executive shall become fully vested and non-forfeitable upon: 

        (i)    the
occurrence of any of the events described in clauses (i) through (vii) of Section 6(e) and the Company's failure to cure such event within
thirty (30) days after its receipt of notice thereof from Executive; or 

        (ii)    the
date on which the "Incumbent Non-Designated Directors" (as hereafter defined), cease to constitute at least a majority of the members of the Board
(treating any vacancies that are filled within the 120 day time limit, and that otherwise meet the criteria, set forth in clause (C) below as though they were appointed immediately
before the terminating Board member's cessation of Board service). "Incumbent Non-Designated Directors" means those directors of the Company consisting of (A) the persons who, as of
December 1, 2003, constitute the five members of the Board other than the four members designated by or on behalf of holders of preferred stock of the Company, (B) the person, if any,
who becomes a director of the Company to fill the vacancy on the Board that exists as of December 1, 2003, if such person's appointment, election or nomination for election as a director of the 

5

 

Company
was not designated by a "Designating Party" (as hereafter defined), and was approved by a vote of at least a majority of the directors of the Company who are not "Designated Directors" (as
hereafter defined), and (C) any person who becomes a director of the Company to replace (or to fill, within 120 days of the replaced director's termination of Board service, a vacancy
created by the resignation or other termination of Board service of) one of the persons referred to in clauses (A) or (B) above or in this clause (C) and whose appointment,
election or nomination for election as a director of the Company was not designated by a Designating Party and was approved by a vote of at least a majority of the directors of the Company who are not
Designated Directors. A "Designated Director" means a member of the Board who was designated, appointed, elected or nominated for election by or on behalf of any Designating Party. A "Designating
Party" means (X) any holder or holders of preferred stock of the Company (or common stock into which preferred stock of the Company has been converted or exchanged), who has or have the right
or power to designate, appoint, elect or nominate for election one or more members of the Board, or (Y) any "person" or "group" (as such terms are used in Section 13 of the Securities
Exchange Act of 1934, as amended, and the rules thereunder) who has or acquires the right or power to designate, appoint, elect or nominate for election one or more members of the Board, whether by
ownership of securities, by contract or arrangement, by operation of law, or otherwise. 

        (g)    Commencement of Employment.    Executive shall be deemed to have commenced employment with the Company on
August 1, 1990, for purposes of calculating Executive's period of service under this Agreement except to the extent, if any, that any provision of this Agreement specifically credits Executive
with a longer period of service for purposes of such provision. 

        (h)    Retirement Benefit Under the SERP.    For purposes of computing the "Retirement Benefit" or equivalent payment
or benefit (the "Retirement Benefit") due to Executive under all supplemental executive retirement plans and substantially similar plans of the Company and affiliates (all such plans being referred to
herein collectively as the "SERP") in which Executive participates during the Term, or any payment or benefit under Section 7 of this Agreement in lieu of any SERP benefit or payment, any
contrary terms of such SERP and all other contrary provisions of this Agreement notwithstanding, the amount of the Retirement Benefit shall be $675,000 in the case of any termination of employment
qualifying for benefits during 2003. At each December 31 in the period 2003 to 2007, if Executive remains employed hereunder at that date, the Retirement Benefit will increase by $40,000 and
such increased amount shall be further increased as of such date by the percentage increase, if any, during the preceding twelve months in the Consumer Price Index for the Greater New York area. This
Retirement Benefit replaces any retirement benefit that may be otherwise calculated or payable under the terms of the SERP. 

        6.    Termination.    Executive's employment hereunder may be terminated prior to the end of the Term under the
following circumstances: 

        (a)    Death; Total Disability.    Executive's employment hereunder shall terminate upon Executive's death, and the
Company may terminate Executive's employment hereunder 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 6(a), Executive shall have returned to the full performance of his duties hereunder and shall have presented to the 

6

 

Company
a written certificate of Executive's good health by a physician selected by Executive and reasonably acceptable to the Company. 

        (b)    Retirement.    Executive may terminate his employment hereunder upon retirement at or after age 65 or at or
after age 55 following at least 10 years of full-time employment with the Company ("Normal Retirement") or prior to such age upon approval by the Committee ("Approved Early
Retirement"), in each case upon forty-five (45) days' prior written notice to the Company referring to this Section 6(b). 

        (c)    Termination by the Company for Cause.    The Company may terminate Executive's employment hereunder for Cause
at any time upon written notice to Executive referring to this Section 6(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 10.1(a) (other than the first sentence thereof), 10.1(b), 10.2 (other than the first and penultimate sentences thereof), 10.3, 10.4, or 10.8. For purposes
of this definition, "gross misconduct" shall mean (i) Executive's conviction in a court of law of a felony under applicable federal or state law that was committed while Executive was employed
by the Company, or (ii) Executive's willful and continued failure substantially to perform his material duties under this Agreement or any act or omission on the part of Executive not requested
or approved by the Board constituting willful malfeasance or gross negligence in the performance of Executive's 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 not in good faith and shall not include any act or failure to act resulting from any physical or
mental incapacity or impairment of Executive. Executive may not be terminated for Cause unless and until there shall have been delivered to him, within ninety (90) days after the Board
(A) had actual knowledge of conduct or an event
allegedly constituting Cause and (B) had reason to believe that such conduct or event could be grounds for termination for Cause, a copy of a resolution duly adopted by the Board by a vote of
Directors constituting a majority of the Board (excluding Executive) at a meeting of the Board which a quorum is present and which is called and held for such purpose (after giving Executive
reasonable notice of the specific grounds 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) finding that, in the good faith opinion of the Board, Executive was guilty of conduct constituting Cause (the "Cause Resolution"). 

7

  

        If,
within 30 days of Executive's receipt of notice of his termination for Cause, Executive in good faith files a claim in arbitration disputing the termination for Cause,
Executive shall, during the pendency of the arbitration, be considered a suspended employee of the Company and be entitled to receive compensation and benefits under this Agreement as if he had not
been terminated. If the arbitration panel finds that the Company had Cause to terminate Executive's employment, Executive shall, within 5 days of the arbitration award, repay any amounts
provided to him by the Company in respect of periods commencing after his termination, including but not limited to salary continuation and the value of all benefits provided to Executive in respect
of periods commencing after his termination, in excess of any amounts to which he was entitled under this Agreement upon a termination for Cause. If the arbitration panel finds that the Company did
not have Cause to terminate Executive's employment: (x) Executive's employment shall be deemed to have been terminated without Cause as of the date which is 90 days after the date of
notice of his termination for Cause; and (y) any amounts paid to Executive by the Company in respect of periods commencing after 90 days following the date of the notice of his
termination for Cause, including but not limited to salary continuation and the value of all benefits provided to Executive, shall be credited against amounts owed to Executive under
Section 7(c) of this Agreement. 

        (d)    Termination by the Company Without Cause.    The Company may terminate Executive's employment hereunder at any
time, without Cause, for any reason or no reason. 

        (e)    Termination by Executive for Good Reason.    Executive may terminate his employment hereunder for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean: without Executive's prior written consent, (i) a material change, adverse to Executive, in Executive's positions, titles or offices as
set forth in Section 3, or status rank, nature of responsibilities, or authority within the Company, or removal of Executive from, or failure to nominate, reappoint or reelect Executive as the
Chairman of the Board, or as a member of any Board committee on which he has served during the Term (except if required by a change in law, accounting rule, or the rules of any national securities
exchange or automated quotation system on which the Company's securities may be listed or quoted), including a failure of the Board or stockholders to take such actions (notwithstanding their legal
right to do so), except, in such case, in connection with the termination of Executive's employment for Cause, Total Disability, Normal Retirement or Approved Early Retirement, or death,
(ii) an assignment of any significant duties to Executive which are inconsistent with his positions or offices held under Section 3, (iii) a decrease in Base Salary or other
compensation or in any compensation opportunities or a material decrease in the aggregate benefits provided under this Agreement, (iv) any other failure by the Company to perform any material
obligation under, or breach by the Company of any material provision of, this Agreement, (v) a relocation of the Corporate Offices of the Company more than 35 miles from the latest location of
such offices prior to such relocation, (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, (vii) any attempt by the Company to terminate Executive for Cause which does not result in a valid termination for Cause, except where
(x) valid grounds for Cause exist but are corrected as permitted under Section 6(c) or (y) the Company, prior to 35 days after Executive's receipt of a copy of the Cause
Resolution, revokes the Cause Resolution, takes any and all other steps reasonably necessary to retract its allegations of Cause and fully restore Executive to active employment in accordance with the
terms of this Agreement, effective immediately prior to the adoption of the Cause Resolution, and pays (or reimburses Executive for) any costs and expenses reasonably incurred by Executive in
connection with such attempted termination, and (viii) the failure of the parties to agree in writing at the end of the Term (or any extension thereof) to the terms of Executive's continued
employment where only Executive, and not the Company, has given notice electing not to further extend the Term pursuant to the last sentence of Section 2. Executive shall not be considered to
have terminated for Good Reason unless Executive shall have provided 

8

 

the
Company with written notice of the specific reasons for such termination within ninety (90) days after he has actual knowledge of the event that is the basis for such termination and
(except in the case of a termination pursuant to clause (vii) or (viii) of the preceding sentence) affords the Company at least thirty (30) days to cure the alleged conduct. 

        (f)    Termination by Executive for Other than Good Reason.    Executive may terminate his employment hereunder for
any reason or no reason upon thirty (30) days' prior written notice to the Company referring to this Section 6(f); provided, however, that a termination of Executive's employment by
reason of death, Total Disability, Normal or Early Retirement, or Good Reason shall not constitute a termination by Executive for other than Good Reason pursuant to this Section 6(f). 

        (g)    Termination Upon the Company's Failure to Extend the Term.    An election by the Company not to extend the Term
pursuant to Section 2 hereof shall be deemed for all purposes of this Agreement (including, without limitation, for purposes of Sections 7(c) and 10.1(a) hereof) to be a termination of
Executive's employment hereunder by the Company without Cause as of the date of expiration of the Term. 

        7.    Compensation Following Termination Prior to the End of the Term.    In the event that Executive's employment
hereunder is terminated prior to the end of the Term, Executive shall be entitled only to the following compensation and benefits: 

        (a)    Termination by Reason of Death, Normal Retirement, or Approved Early Retirement.    In the event that
Executive's employment is terminated prior to the expiration of the Term by reason of Executive's death, pursuant to Section 6(a), or by reason of his Normal Retirement or Approved Early
Retirement pursuant to Section 6(b), the Company shall pay the following amounts, and make the following other benefits available, to Executive (or Executive's spouse or estate, as the case may
be): 

        (i)    Any
accrued but unpaid Base Salary (as determined pursuant to Section 4(a)) for services rendered to the date of termination; 

        (ii)    All
vested, nonforfeitable amounts owing or accrued at the date of termination under any compensation and benefit plans, programs, and arrangements, including those set
forth or referred to in Sections 4(b), 4(c), and 5 (including any earned and vested annual incentive compensation and long term incentive award but excluding any incentive compensation under
Section 4(b) for the year of termination), in which Executive theretofore participated, to be paid in accordance with the terms and conditions of such plans, programs, and arrangements (and
agreements and documents thereunder); 

        (iii)    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; 

        (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 1, 2003, and any such options which were
granted on or after November 1, 1997 (that is, the Effective Date of the Old Agreement) 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 

9

 

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 1,
2003, 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; 

        (vi)    Reasonable
business expenses and disbursements incurred by Executive prior to such termination will be reimbursed in accordance with Section 5(a); 

        (vii)    If
Executive's employment terminates due to his Normal Retirement or Approved Early Retirement, 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; 

        (viii)    Executive
shall be entitled to designate (and change, to the extent permitted under applicable law) a beneficiary or beneficiaries to receive any compensation or
benefits payable hereunder following Executive's death; 

        (ix)    Executive
shall be entitled to receive all payments and benefits to which Executive is entitled under the SERP computed in accordance with Section 5(h) hereof.
Such payments and benefits shall be payable in a lump sum or in equal installments, as determined by Executive in his discretion, in accordance with the terms and conditions of the SERP; provided,
however, that Executive shall not be entitled to receive payments in installments unless at least 12 months prior to the date of the termination of his employment, he elected to receive
payments in installment form under the SERP. Receipt by Executive of such payment(s) under this Section 7(a)(ix) shall be in full satisfaction of Executive's rights under the SERP. 

Except
to the extent otherwise specifically provided in the other Sections of this Agreement or under the terms of any Non-Ordinary Course Grant or Award made to Executive after
December 1, 2003, Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this
Section 7(a). 

        (b)    Termination by the Company for Cause; Termination by Executive for Other than Good Reason.    In the event that
Executive's employment is terminated by the Company for Cause pursuant to Section 6(c) or
by Executive for other than Good Reason pursuant to Section 6(f), the Company shall pay the following amounts, and make the following other benefits available, to Executive: 

        (i)    Any
accrued but unpaid Base Salary (as determined pursuant to Section 4(a)) for services rendered to the date of termination; 

        (ii)    All
vested nonforfeitable amounts owing or accrued at the date of termination under any compensation and benefit plans, programs, and arrangements, including those set
forth or referred to in Sections 4(b), 4(c), and 5 hereof (including any earned and vested annual 

10

 

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

        (iii)    All
stock options and deferred stock, restricted stock and other equity-based awards will be governed by the terms of the plans and programs under which the options or
awards were granted; 

        (iv)    Non-forfeitable
amounts credited to any deferral account of Executive under deferral arrangements referred to in Section 5(d) hereof at the date of
termination will be settled in accordance with the plans and programs under which the awards were granted or governing the deferral including, if so permitted by the plans or programs, Executive's
duly executed deferral election forms or the terms of any mandatory deferral; and 

        (v)    Reasonable
business expenses and disbursements incurred by Executive prior to such termination will be reimbursed, in accordance with Section 5(a). 

        (c)    Termination by Reason of Total Disability; Termination by the Company Without Cause; Termination by Executive For Good
Reason.    In the event that Executive's employment is terminated by reason of Total Disability pursuant to Section 6(a), or by the Company without Cause
pursuant to Section 6(d) or 6(g), or by Executive for Good Reason pursuant to Section 6(e), the Company shall pay the following amounts, and make the following other benefits available,
to Executive: 

        (i)    A
lump sum cash payment in an amount equal to three times the "Severance Base Amount" will be paid to Executive; provided, however, that Executive may elect to receive
the amount payable under this Section 7(c)(i) in equal monthly installments over the 36 months following termination, without interest, in lieu of receiving a lump sum cash
payment. For purposes of this Section 7(c)(i), the "Severance Base Amount" shall be $1.75 million in 2003 and shall be increased annually on each
January 1 in the period 2004 to 2007 by a percentage of the Severance Base Amount 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; 

        (ii)    The
unpaid portion of Base Salary at the rate payable, in accordance with Section 4(a) hereof, at the date of termination, pro rated through such date of
termination, will be paid; 

        (iii)    All
vested, nonforfeitable amounts owing or accrued at the date of termination under any compensation and benefit plans, programs, and arrangements, including those
set forth or referred to in Sections 4(b) and 5(a) and 5(c) hereof (including any earned and vested annual incentive compensation), in which Executive theretofore participated will be paid under the
terms and conditions of such plans, programs, and arrangements (and agreements and documents thereunder); 

        (iv)    In
lieu of any annual incentive compensation under Section 4(b) for the year in which Executive's employment terminated (unless otherwise payable under
(iii) above), Executive will be paid an amount equal to (X) the Severance Annual Incentive Amount (as defined below) multiplied by (Y) 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. For purposes of this Section 7(c)(iv), the
"Severance Annual Incentive Amount" shall be the greater of (1) the average annual incentive compensation paid to Executive for the three years immediately preceding the year of termination or
(2) the annual incentive compensation payable to Executive upon achievement of the maximum performance targets for the year of termination; 

11

 

        (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 made to Executive after December 1, 2003, and any such options which were
granted on or after November 1, 1997 or, if previously granted, were not "in the money" as of November 1, 1997 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; 

        (vi)    Except
to the extent otherwise specifically provided under the terms of any Non-Ordinary Course Grant or Award made to Executive after December 1,
2003, 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; 

        (vii)    Executive
shall be entitled to receive an amount equal to the amount accrued under any deferred compensation plan or agreement in effect at the date of termination in
which Executive is a participant or party, less required withholding taxes under Section 9, as promptly as practicable following such date of termination; the amount paid under this
Section 7(c)(vii) shall be equal to Executive's account balance on the date of the termination 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 date of the termination of Executive's employment,
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; if Executive elects to receive
payment under this Section 7(c)(vii), 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; 

        (viii)    Reasonable
business expenses and disbursements incurred by Executive prior to such termination will be reimbursed, in accordance with Section 5(a); 

        (ix)    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 5 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 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); 

12

 

        (x)    Executive
shall be entitled to receive all payments and benefits to which Executive is entitled under the SERP computed in accordance with Section 5(h) hereof.
Such payments and benefits shall be payable in a lump sum or in equal installments, as determined by Executive in his discretion, in accordance with the terms and conditions of the SERP; provided,
however, that Executive shall not be entitled to receive payments in installments unless at least 12 months prior to the date of the termination of his employment, he elected to receive
payments in installment form under the SERP. Receipt by Executive of such payment(s) under this Section 7(c)(x) shall be in full satisfaction of Executive's rights under the SERP;
provided, however, that if the Company terminates Executive's employment without Cause and does not provide Executive with at least 90 days' prior written notice of
such termination, the date of Executive's termination for all purposes of this Agreement except Section 7(c)(viii) shall be the 90th day after Executive received written notice from the
Company of the termination. 

Except
to the extent otherwise specifically provided in the other Sections of this Agreement or under the terms of any Non-Ordinary Course Grant or Award made to Executive after
December 1, 2003, Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this
Section 7(c). 

Notwithstanding
the foregoing, if a reduction in Base Salary or other level of compensation or benefit 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 or benefits under this Section 7(c). 

        (d)    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 5, any such benefits to be provided by the Company to Executive following the Term shall be correspondingly reduced. 

        (e)    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. 

        (f)    Release of Employment Claims.    Executive agrees, as a condition to receipt of any termination payments and
benefits provided for in Section 7 (other than compensation and benefits earned through the date of termination), that he 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). 

        (g)    Payment of Termination Benefits.    Amounts payable pursuant to Sections 7(a), 7(b) and 7(c) will, except to
the extent otherwise expressly provided therein, be paid as promptly as practicable after termination of Executive's employment, but in no event more than 30 days after such termination. 

        8.    Excise Tax Restoration Payment; Cash-Out of Certain Options.    

        (a)
In the event that any amount or benefit paid or distributed to or for the benefit of Executive pursuant to this Agreement, together with any amounts or benefits otherwise paid or
distributed to or for the benefit of the Executive by the Company (or, in either case, to be paid or distributed), but excluding amounts payable pursuant to this Section 8 (collectively, the
"Covered Payments"), are or become subject to the tax imposed under Section 4999 of the Internal Revenue 

13

 

Code
of 1986, as amended, or any similar tax that may hereafter be imposed, or any interest or penalties are or will be incurred by Executive with respect to such taxes (collectively, the "Excise
Tax"), the Company shall pay to Executive, or in the case of amounts required to be withheld and paid over to the applicable taxing authorities, directly to the applicable taxing authorities on behalf
of Executive, not later than the time specified in subsection (e) below, an additional cash amount (the "Excise Tax Restoration Payment") such that, after payment of all Federal, state and
local income tax, employment tax and Excise Tax on the Excise Tax Restoration Payment, and of all related interest and penalties thereon, Executive retains an amount of the Excise Tax Restoration
Payment equal to the amount of the Excise Tax. imposed on the Covered Payments. 

        (b)
All determinations required to be made under this Section 8, including whether and when an Excise Tax Restoration Payment is required and the amount of such Excise Tax
Restoration Payment and the assumptions to be utilized in arriving at the determination, shall be made by the independent auditors used by the Company immediately prior to the event which gave rise to
the obligation to pay the Excise Tax (the "Accounting Firm"), with the consent of Executive, such consent not to be unreasonably withheld, which shall provide detailed supporting calculations both to
the Company and Executive within 20 days after the receipt of notice from Executive or the Company that there has been an event that may require the making of an Excise Tax Restoration Payment.
All fees and expenses of the Accounting Firm shall be borne solely by the Company. 

        (c)
For purposes of determining the amount of the Excise Tax Restoration Payment, Executive shall be deemed to pay: 

        (i)    Federal
income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Excise Tax Restoration Payment is to be made,
and 

        (ii)    any
applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Excise Tax Restoration Payment is to
be made, net of the maximum reduction in Federal incomes taxes which could be obtained from the deduction of such state or local taxes if paid in such year. 

        (d)
In the event that the Excise Tax is later determined by the Accounting Firm or the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Excise
Tax Restoration Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Excise Tax Restoration Payment), the
Company shall make an additional Excise Tax Restoration Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) within not more than twenty
(20) days of such determination. In the event that the Excise Tax is subsequently determined by the Accounting Firm or pursuant to any proceeding or negotiations with the Internal Revenue
Service or private letter ruling obtained by the Company to be less than the amount taken into account hereunder in calculating the Excise Tax Restoration Payment, Executive shall repay to the
Company, within not more than twenty (20) days of such determination, the portion of such prior Excise Tax Restoration Payment that would not have been paid if such reduced Excise Tax had been
applied in initially calculating such Excise Tax Restoration Payment. Notwithstanding the foregoing, in the event any portion of the Excise Tax Restoration Payment to be refunded to the Company has
been paid to any Federal, state or local tax authority, repayment thereof shall not be required unless and until actual refund of such portion has been made to Executive by the Internal Revenue
Service or state or local tax authority, and interest payable to the Company shall not exceed interest received to Executive by such tax authority for the period it held such portion. Executive and
the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if Executive's good faith claim for refund or credit is denied. 

14

 

        (e)
The Excise Tax Restoration Payment (or portion thereof) provided for in subsection (a) above shall be paid by the Company not less than ninety days prior to the date specified
by the Accounting Firm for payment of the Excise Tax. 

        (f)
If an event occurs that would result in the Company becoming obligated to pay an Excise Tax Restoration Payment, and if Executive then holds all or any portion of any option granted
after November 1, 2003 (i.e., excluding, inter alia, PARSOP I and PARSOP II) that is not yet vested at the time of such event, and if by
the terms of such option the event will result in the option becoming vested, then, notwithstanding any other provision of this Agreement or term of any such option to the contrary, such portion of
the option will be immediately cancelled upon the occurrence of the event and the Company will pay to Executive in cash an amount equal to the fair market value of the shares subject to the cancelled
portion of the option on the date of the event, less the aggregate exercise price of the cancelled portion of the option. 

        9.    Offsets; Withholding.    Amounts required to be paid by the Company to Executive pursuant to this Agreement
shall not be subject to offset 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. The foregoing and other provisions
of this Agreement notwithstanding (but without limiting the terms of Section 8), all payments to be made to Executive under this Agreement, including under Section 7, or otherwise by the
Company will be subject to required withholding taxes and other legally required deductions. 

        10.    Noncompetition; Nonsolicitation; Nondisclosure; etc.    

        10.1    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
him 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
7), Executive agrees that during the Term (and any extensions thereof) and during the Covered Time (as defined in Section 10.1(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 business in which he has been directly engaged on behalf of the
Company, or which he has supervised as an executive thereof, during the last two years prior to such termination, or was engaged in by the Company with Executive's actual knowledge or planned by the
Company with Executive's actual knowledge at the time of such termination, in any geographic area in which such business was conducted or planned to be conducted (a "Competing Business"); provided,
however, that this Section 10.1(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; provided further that this Section 10.1(a) shall not apply if Executive terminates his employment for Good Reason pursuant to clause (i), (ii), (iii), (iv), (v), (vi),
or (vii) of Section 6(e) or if Executive's employment is terminated by the Company without Cause; 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 10.1(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 10.1(a). Nothing herein shall
require Executive to sell or otherwise dispose of any securities of any entity if the acquisition of such securities did not violate the terms of this Section 10.1(a) at the time of such
acquisition. 

15

 

        (b)    In
further consideration of the amounts that may hereafter be paid to Executive pursuant to this Agreement (including, without limitation, Sections 4, 5, and 7),
Executive agrees that during the Term (including any extensions thereof) and during the Covered Time he 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 10 of this Agreement to the Competitor, and (y) in the case of any
circumstance described in (i) or (ii) above occurring during the Covered Time, and in the case of any circumstance described in (iii) 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 10.1 may limit his 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, 5, and 7) is sufficient to justify such restrictions.
In consideration thereof and in light of Executive's education, skills and abilities, Executive agrees that he will not assert in any forum that such restrictions prevent him from earning a living or
otherwise should be held void or unenforceable. 

        (e)    For
purposes of this Section 10.1, "Covered Time" shall mean the period beginning on the date of termination of Executive's employment (the "Date of Termination")
and ending twenty-four months after the Date of Termination; provided, however, that if Executive terminates his employment for Good Reason pursuant to clause (viii) of
Section 6(e), "Covered Time" shall mean for purposes of Section 10.1(a) the period beginning on the Date of Termination and ending six months after the Date of Termination. 

        10.2    Proprietary Information.    Executive acknowledges that during the course of his employment with the Company
he will necessarily have access to and make use of proprietary information and confidential records of the Company. Executive covenants that he shall not during the Term or at any time thereafter,
directly or indirectly, use for his 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 or by rule, regulation, subpoena, order or other process or directive of any court, tribunal,
government or governmental agency or authority (collectively, "Governmental Act"). The term "proprietary information" means: (a) the software products, programs, applications, and processes
utilized by the Company; (b) 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; (c) 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 

16

 

but
not at the time offered generally to customers or vendors; (d) 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; (e) any information identified as confidential or proprietary in any line of
business engaged in by the Company; (f) any information that, to Executive's actual knowledge, the Company ordinarily maintains as confidential or proprietary; (g) any business plans,
budgets, advertising or marketing plans; (h) any information contained in any of the Company's written or oral policies and procedures or manuals; (i) 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; (j) any inventions, innovations or improvements covered by
this Agreement; and (k) 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 a 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.) 

        10.3    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 or Governmental Act, 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 he retain, and will deliver promptly to the Company, any of the same following termination of his 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 his control or accessible to him which contain any proprietary information. All confidential records shall be
and remain the sole property of the Company during the Term and thereafter. 

        10.4    Nondisparagement.    Executive shall not, during the Term and thereafter, disparage in any material respect
the Company, any affiliate of the Company, any of their respective businesses, any of their respective officers, directors or employees, or the reputation of any of the foregoing persons or entities.
Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements that are required by applicable law or Governmental Act 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. 

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

        10.6    Forfeiture of Outstanding Options.    The provisions of Section 7 notwithstanding, if Executive
willfully and materially fails to comply with any restrictive covenant under Section 10.1(a) (other than the first sentence thereof), 10.1(b), 10.2 (other than the first and penultimate
sentences thereof), 10.3, 10.4, or 10.8, all options to purchase Common Stock granted by the Company and then 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 

17

 

of
the time of such failure to comply or Executive's termination of employment. Notwithstanding the foregoing, Executive shall not forfeit any option (i) unless there shall have been delivered
to him, within ninety (90) days after the Board (A) had knowledge of conduct or an event allegedly constituting grounds for such forfeiture and (B) had reason to believe that such
conduct or event could be grounds for such forfeiture, a copy of a resolution duly adopted by the Board by a vote of Directors constituting a majority of the Board (excluding Executive) at a meeting
of the Board in which a quorum is present and which is called and held for such purpose (after giving Executive reasonable notice specifying the nature of the grounds for such forfeiture and not less
than 30 days to correct such grounds and affording Executive and his counsel the opportunity to be heard before the Board) finding that, in the good faith opinion of the Board, Executive has
engaged and continues to engage in conduct set forth in this Section 10.6 which constitutes grounds for forfeiture of Executive's options; and (ii) if, within 30 days following
his receipt of such resolution, Executive commences an arbitration proceeding in accordance with Section 18.2 disputing such grounds, in which case such forfeiture shall be tolled pending the
resolution of Executive's claim and shall not occur if the arbitration panel finds that the Company is not entitled to cause the forfeiture. 

        If
the arbitration panel finds that the Company is entitled to cause the forfeiture of Executive's options, Executive shall be required to forfeit such options immediately (subject to
the terms of the preceding paragraph). If any option is exercised after delivery of the Board's notice of forfeiture and if such forfeiture subsequently occurs pursuant to the foregoing terms of this
Section 10.6, 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. Any such
forfeiture shall apply to such options
notwithstanding any term or provision of any option agreement. If the Board or the arbitration panel finds that the Company is not entitled to cause a forfeiture for which a notice is given to
Executive, the Company shall pay (or reimburse, if already paid by Executive) all expenses actually incurred by Executive in connection with such attempted forfeiture. 

        10.7    Enforcement.    Executive acknowledges and agrees that, by virtue of his position, services and access to and
use of confidential records and proprietary information, any violation by him of any of the undertakings contained in this Section 10 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 10. The Company agrees and consents to the entry of an injunction or other equitable relief by a
court of competent jurisdiction restraining the Company from making any defamatory statements, whether orally or in writing, relating to alleged violations or threatened violations by Executive of any
undertaking contained in this Section 10. Executive and the Company each waive posting of any bond otherwise necessary to secure such injunction or other equitable relief. Rights and remedies
provided for in this Section 10 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.
Subject to Section 18.3, the Company shall bear all costs and expenses arising in connection with any enforcement pursuant to this Section 10.7. 

        10.8    Cooperation with Regard to Litigation.    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
(including following Executive's termination of employment for any reason), by making himself reasonably available to testify on behalf of the Company in any action, suit, or 

18

 

proceeding,
whether civil, criminal, administrative, or investigative, and reasonably to assist the Company in any such action, suit, or proceeding, by providing information and meeting and consulting
with the Board 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 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 it is appropriate that Executive be separately represented by his own counsel in such proceeding.
Without limiting the foregoing, after the expiration of this Agreement or the termination of Executive's employment by the Company for any reason, such cooperation and assistance shall not require
Executive to forgo or significantly interrupt any professional or personal commitment that he reasonably deems significant or to take any action (including, without limitation, travel to, attendance
at or preparation for any meeting, deposition or other proceeding or event of any type) that, in his reasonable judgment, could impair his ability to perform the responsibilities of, or could
jeopardize the continuation of, his then current employment, or would otherwise impose any undue burden on Executive. 

        10.9    Survival.    The provisions of this Section 10 shall survive the termination of the Term and any
termination or expiration of this Agreement. 

        10.10    Company.    For purposes of this Section 10, references to the "Company" shall include both the
Company and each subsidiary of the Company. 

        11.    Insurance for the Company's Benefit.    The Company may at any time and for the Company's own benefit (or for
the benefit of a lender to the Company) apply for and take out life, health, accident or other insurance covering Executive, either independently or together with others, in any amount which the
Company may deem to be in its best interests. The Company shall own all rights in such insurance and proceeds thereof and Executive shall not have any right, title or interest therein. Executive shall
assist the Company at the Company's expense in obtaining and maintaining any such insurance by submitting to reasonable and customary medical examinations and preparing, signing and delivering such
applications and other documents as reasonably may be required. 

        12.    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; provided, however, that Executive shall at all times have at least all rights to indemnification by the Company as are
provided in the Company's Certificate of Incorporation or By-Laws or pursuant to other agreements in effect on or immediately prior to the Effective Date, and the Company shall also
advance expenses for which indemnification may be ultimately claimed as such expenses are incurred to the fullest extent permitted under applicable law, 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). After
the Effective Date, the Company shall not amend its Certificate of Incorporation or By-Laws or any agreement in any manner which adversely affects the rights of Executive to
indemnification thereunder. 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 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 during the Term and for a period of six years thereafter on terms 

19

 

substantially
no less favorable than those in effect on the Effective Date. The indemnification rights made available to Executive pursuant to this Section 12 shall at all times be at least as
favorable to Executive as the indemnification rights made available at such times to any other employee of the Company. For purposes of this Section 12, references to the "Company" shall
include both the Company and each of its subsidiaries for which Executive has acted, acts or will in the future act in any capacity. The provisions of this Section 12 shall survive the
termination of the Term and any termination or expiration of this Agreement. 

        13.    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

25th Floor

New York, New York 10022

Attention: General Counsel	 	 
	 	 	 	 	 	 	 
	 	 	With a copy to:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Kramer Levin Naftalis & Frankel LLP

919 Third Avenue

New York, NY 10022

(212) 715-9100

Attention: Peter G. Smith, Esq.	 	 
	 	 	 	 	 	 	 
	 	 	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, Esq.	 	 

20

   
        If the parties by mutual written agreement supply each other with telecopier numbers for the purposes of providing notice by facsimile, such notice shall also be proper notice under this
Agreement and shall be deemed given on the next business day after the date on which successful and complete transmission is confirmed by the receiving facsimile machine or otherwise confirmed in
writing on behalf of the recipient. In the case of Federal Express or other similar overnight service, such notice or advice shall be effective on the next business day after it is sent, and, in the
cases of certified or registered mail, shall be effective 5 days after deposit into the mails by delivery to the U.S. Postal Service. 

        14.    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 its assets, or otherwise. This Agreement shall
be binding upon and inure to the benefit of Executive, his heirs, executors, administrators, and beneficiaries, and shall be binding upon and inure to the benefit of the Company and its successors and
assigns. 

        15.    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
(including the Old Agreement), except as provided in Section 12 and below in this Section 15, 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. Unless the context otherwise
requires, obligations of the Company and Executive under this Agreement at all relevant times prior to the Effective Date were governed by the terms of the Old Agreement (and predecessors thereto) as
in effect at that time and not by the terms of this Agreement. In this regard, the provisions of Section 4(b) of the Old Agreement relating to the change in the Company's fiscal year in 2000
shall apply in respect of compensation or benefits based on service or compensation affected by such change in fiscal year. 

        16.    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 tribunal pursuant to Section 18.2, 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 tribunal making 

21

 

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 arbitration proceeding, a court or tribunal 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 tribunal 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. To the extent that a
court or tribunal of competent jurisdiction determines that Executive willfully and materially breached Section 10.1(a) (other than the first sentence thereof), 10.1(b), 10.2 (other than the
first and penultimate sentences thereof), 10.3, 10.4, or 10.8, the Company's obligations to make payments hereunder shall immediately be limited to the amounts, if any, remaining to be paid pursuant
to Section 7(b) to the extent not theretofore paid, provided that the Company's obligations to make such greater payments shall immediately be reinstated in the event that the determination of
such court or tribunal is overturned or reversed by any higher court. 

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

        18.    Governing Law; Arbitration; Expenses; Interest; Counterparts.    

        18.1    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. 

        18.2    Arbitration.    Any dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in New York, New York by three arbitrators in accordance with the rules of the American Arbitration Association in effect at the time of submission to arbitration; provided,
however, that the Company shall be entitled to commence an action in any court of competent jurisdiction to enforce Section 10, in part or in its
entirety. Judgment may be entered on the arbitrators' award in any court having jurisdiction. For purposes of entering such judgment or seeking
enforcement of Section 10, 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) any of the courts of the State of New York or the State of Delaware; or (iii) any other court having jurisdiction. 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 and any defense of inconvenient forum. 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. Subject to Section 18.3, the
Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 18.2. Notwithstanding any provision in this Section 18, 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 Agreement, which, to the extent such amounts are paid by the
Company (or, in the case of a termination of Executive's employment by the Company without Cause, are so paid in respect of periods commencing 

22

 

after
90 days following the date of such termination) shall be credited against the total amounts otherwise finally determined to be owed to Executive pursuant to this Agreement. 

        18.3    Reimbursement of Expenses in Enforcing Rights.    All reasonable costs and expenses (including, without
limitation, reasonable fees and disbursements of counsel) incurred by Executive in seeking to interpret this Agreement or 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) as such costs and expenses are incurred. If any claim of Executive is found to be frivolous by a final,
nonappealable determination of the arbitration panel or court hearing the claim, Executive shall reimburse the Company within 30 days of such determination for all amounts paid by the Company
under this Section 18.3 in connection with the claim. 

        18.4    Interest on Unpaid Amounts.    Any amounts that have become payable pursuant to the terms of this Agreement or
any decision by arbitrators or judgment by a court of law pursuant to this Agreement but which are not timely paid shall bear interest at the prime rate in effect at the time such payment first
becomes payable, as quoted by the Company's principal bank. 

        18.5    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. 

        19.    Reimbursement of Expenses of Executive in Negotiating Agreement; Counterparts.    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. 

        20.    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. 

        IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date first above written. 

	

 	
 	

SCIENTIFIC GAMES CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name: Alan J. Zakon

Title: Chairman of the Executive Committee
	

 	
 	

 A. Lorne Weil

23

 
 

SCHEDULE A    
    

        No current outside directorships. 

 
 

Exhibit A    
    

 
 

SCIENTIFIC GAMES CORPORATION
  1997 INCENTIVE COMPENSATION PLAN, AS AMENDED
  
    PERFORMANCE-ACCELERATED STOCK OPTION GRANT AGREEMENT
  (PARSOP I)    
    

        THIS AGREEMENT, made as of the 28th day of February, 2003, between SCIENTIFIC GAMES CORPORATION (the "Company") and A. LORNE WEIL (the "Participant"). 

        WHEREAS,
the Compensation Committee (the "Committee") administers the Company's 1997 Incentive Compensation Plan, as amended (the "Plan"); and 

        WHEREAS,
the Committee granted the performance-accelerated stock option evidenced by this Agreement to Participant as of February 28, 2003; 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows: 

        1.     Grant of Option.    Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the
Committee hereby grants to Participant an option (the "Option") to purchase 600,000 shares of the Company's Class A Common Stock (the "Common Stock"). The Option is a non-qualified
stock option and does not constitute an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986. 

        2.     Grant Date.    The Grant Date of the Option is the date set forth in the first paragraph of this Agreement. 

        3.     Incorporation of Plan and Employment Agreement.    All terms, conditions and restrictions of the Plan are
incorporated and made part hereof as if stated herein. If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan as interpreted by
the Committee shall govern. Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan. In addition, this Agreement is subject to the
terms of the employment agreement between Participant and the Company, as amended and restated as of February 28, 2003 (the "Employment Agreement"), and capitalized terms used in
Section 7 and not otherwise defined in the Plan or this Agreement shall have the meaning given to such terms in the Employment Agreement. If there is any conflict between the terms of the
Employment Agreement and this Agreement, the terms of the Employment Agreement will govern, subject to the mandatory terms of the Plan. 

        4.     Vesting and Exercisability Date.    The Option shall become vested and exercisable as to all of the Option
shares on August 28, 2003; provided, however, that the Option shall become immediately vested and exercisable earlier upon the occurrence of any of the events specified in Section 7
hereof to the extent specified therein. 

        5.     Exercise Price.    The exercise price per share of each share with respect to which the Option is granted is
$5.13, which is equal to the fair market value of a share of Common Stock on the Grant Date determined in accordance with the Plan. The exercise price shall be subject to adjustment in accordance with
Section 9(c) of the Plan. 

        6.     Restrictions on Option Profit Shares.    "Profit Shares" resulting from the exercise of the Option will be
non-transferable to the extent and for the periods specified in this Section 6. 

        (a)   Profit Shares Defined.    For purposes of this Section 6, "Profit Shares" means, with respect to an
exercise of any portion of the Option on a given date, that number of the shares acquired upon such exercise equal to the difference between (i) the number of shares acquired upon such exercise
and (ii) the number of such shares having a Fair Market Value at the exercise date equal to the aggregate 

 

Option
exercise price paid, with the number of Profit Shares so calculated rounded down to the nearest whole share. 

        (b)   Lapse of Restriction on Transferability of Profit Shares.    All Profit Shares will be subject to the
"restriction on transferability" (as defined below) by Participant until the earliest of (i) November 28, 2009, (ii) lapse of the restriction on transferability in connection with
occurrence of any of the events specified in Section 7 hereof to the extent specified therein, and (iii) the Accelerated Lapse Date (as defined below). Profit Shares resulting from
exercise of the Option for the percentages specified below of the total number of shares subject to the Option will be released from the restriction on transferability on an accelerated basis if the
market price of the Common Stock hereafter reaches the "Market Price Targets" specified in the following table (subject to adjustment under Section 9(c) of the Plan), provided that such
accelerated lapse of the restriction on transferability will be effective on the date (the "Accelerated Lapse Date") that is the later of (y) the date on which the applicable Market Price
Target is reached or (z) the third anniversary of the Grant Date: 

	Restrictions Lapse on Profit

Shares Resulting from Exer-

cise of Following Percentages

Option
	 	"Market Price Target" Trigger-

ing Lapse of Restrictions

	20%	 	$  5.90
	40%	 	  6.78
	60%	 	  7.80
	80%	 	  8.97
	100%	 	10.32

For
purposes of this Agreement, the "Market Price Target" will be deemed to have been reached only if the closing price per share of the Company's Common Stock, in consolidated reporting for
securities listed on the principal exchange or quotation system on which Common Stock is then traded, is equal to or greater than the amount specified in the table above for ten trading days within
any period of 30 consecutive trading days, as reported by a reliable reporting service specified by the Committee. The number of Profit Shares resulting from exercises on different dates may vary, but
the Profit Shares with respect to which restrictions lapse are those resulting from exercise of the specified percentage of the total number of shares subject to the Option, in the order in which the
Option was exercised. 

For
purposes of this Agreement, the "restriction on transferability" means that the Profit Shares may not be sold, gifted, pledged, hypothecated, or otherwise transferred or disposed of by
Participant. Profit
Shares are not, however, forfeitable. The foregoing notwithstanding, the Committee may permit a transfer of Profit Shares for estate-planning purposes, in which case the restriction on transferability
will apply to such Profit Shares to the same extent as it would have applied to such Profit Shares in the hands of the Participant. 

        7.     Expiration Date; Effect of Certain Events. 

        (a)   Stated Expiration Date.    Subject to the provisions of the Plan and this Agreement (providing for earlier
expiration in certain circumstances), the Option shall expire on February 28, 2010 (the "Expiration Date"). 

        (b)   Terms Relating to Termination of Employment.    Subject to the provisions of the Plan, this Agreement and the
Employment Agreement, in the event the employment of Participant terminates: 

	(i)
	without
Cause by the Company, for Good Reason by Participant, as Good Reason is defined in Section 6(e)(i) through (vii) of the Employment Agreement (but not as
defined in clause (viii), an election by Participant not to renew the employment term under the Employment Agreement), or by reason of Total Disability, the Option shall vest and become
exercisable in full as of the date of the termination, shall remain exercisable until the 

2

 

Expiration
Date, and the restriction on transferability of Profit Shares under Section 6 hereof shall lapse; 

	(ii)
	due
to death, the Option shall vest and become exercisable in full as of the date of the termination, shall remain exercisable until the earlier of the third anniversary of such
event or the Expiration Date, and the restriction on transferability of Profit Shares under Section 6 hereof shall lapse;

	(iii)
	due
to retirement pursuant to Section 6(b) of the Employment Agreement, or for Good Reason by Participant as Good Reason is defined in Section 6(e)(viii) of the
Employment Agreement, the portion of the Option that is vested and exercisable as of the date of termination shall remain exercisable until the Expiration Date (subject, in the case of retirement, to
the terms of paragraph (e) of this Section 7), and the restriction on transferability of Profit Shares under Section 6 hereof shall remain in effect in accordance with
Section 6; and

	(iv)
	for
Cause, the Option (including any vested portion) shall expire at the close of business on the date of termination. 

        Except
as otherwise provided in this Section 7, any portion of the Option that is not vested and exercisable as of the date of termination shall expire at the close of business on
the date of termination, any portion that is vested and exercisable as of the date of termination shall remain exercisable until the Expiration Date, and the restriction on transferability of Profit
Shares under Section 6 hereof shall remain in effect in accordance with Section 6. 

        (c)   Terms Relating to Certain Other Events.    Upon the occurrence of any of the events referred to in
Section 5(f) of the Employment Agreement, (i) the Option shall vest and become exercisable in full as of the date of such event, shall remain exercisable during Participant's employment
and shall continue to be exercisable after termination of Participant's employment in accordance with the provisions of this Agreement, the Employment Agreement and the Plan that apply to such
termination of employment, but in no event beyond the Expiration Date, and (ii) the restriction on transferability of Profit Shares under Section 6 hereof shall lapse. The provisions of
the Plan providing for vesting and lapse of restrictions in respect of options and restricted stock (or awards generally) upon the occurrence of other events and circumstances shall apply to the
Option and the Profit Shares, including to the lapse of the restriction on transferability of the Profit Shares. 

        (d)   Forfeiture Upon Violation of Certain Covenants.    The Option shall be subject to early expiration in
accordance with the terms of Section 10.6 of the Employment Agreement. 

        (e)   Forfeiture Upon Retirement in Certain Circumstances.    In the event that the Participant terminates his
employment prior to December 31, 2007 by retirement pursuant to Section 6(b) of the Employment Agreement and at the effective time of such retirement one or more of the Market Price
Targets have not yet been reached and the restriction on transferability has not otherwise lapsed with respect to the entire Option, the portion of the Option set forth in the table in
Section 6(b) hereof for which the Market Price Targets have not yet been reached shall expire as of such effective time, and such expired portion shall not be exercisable in connection with or
after such retirement. For example, if at the time of such retirement the Market Price Target of $8.97 has not yet been reached and the restriction on transferability has not otherwise lapsed, 40% of
the Option shall expire. 

        8.     Method of Exercise.    The Option shall be exercisable in whole or in part by delivering written notice to the
Company's principal office to the attention of its General Counsel. Payment for shares of Common Stock purchased upon the exercise of the Option shall be made on the effective date of such exercise
either: (i) in cash, by certified check, bank cashier's check or wire transfer; (ii), by delivery of shares having a Fair Market Value equal to the exercise price, except no such delivery will
be permitted if and to the extent that the transaction would result in recognition of additional accounting expense by 

3

 

the
Company under applicable accounting rules, or (iii) in such other form as shall be acceptable to the Committee. Certificates for shares of Common Stock purchased upon the exercise of the
Option shall be issued in the name of Participant or his beneficiary, as the case may be, and delivered to Participant or his beneficiary, as the case may be, as soon as practicable following the
effective date on which the Option is exercised (or delivery may be effected in such other manner as may be agreed upon by the Company and Participant). 

        9.     Taxes.    In connection with any exercise of the Option, Participant shall pay or make arrangements satisfactory
to the Committee providing for payment of applicable withholding taxes resulting from such exercise. In connection with any exercise at a time that the Profit Shares would not be subject to a
restriction on transferability under Section 6, Participant may elect to have the Company withhold from the shares issuable upon exercise a number of shares having a Fair Market Value equal to
the mandatory amount required to be withheld to satisfy federal, state and local taxes and withholding amounts, subject to the terms of the Plan. 

        10.   Securities Matters.    The Committee may defer the effectiveness of any exercise of the Option to the extent
required for the issuance and delivery of shares of Common Stock pursuant to such exercise to comply with all applicable laws, regulations of governmental authority and the requirements of any
national securities exchange on which shares of Common Stock are then traded. The Committee shall inform Participant in writing of its decision to defer the effectiveness of the exercise of the
Option. The Company shall use its reasonable best efforts to complete any required registration, qualification and/or listing of such shares (or to satisfy the conditions for exemption from any such
requirements), and shall take all such other reasonable actions within its control, in order to permit the effectiveness of any exercise of the Option at the earliest practicable date. During the
period that the effectiveness of the exercise of the Option has been deferred, Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 

        11.   Transferability.    During the lifetime of Participant, the Option may be exercised only by Participant or, if
Participant is incapacitated, by Participant's guardian or legal representative. In the event that the Option is exercised by Participant's guardian or legal representative, the exercise of the Option
shall not be effective unless and until the Company has received evidence satisfactory to it as to the authority of such guardian or legal representative. The Option is not assignable or transferable
otherwise than by will or by the laws of descent and distribution, except as may be permitted under the terms of the Plan. 

        12.   Delays or Omissions.    No delay or omission to exercise any right, power or remedy accruing to any party
hereto, upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on
the part of any party of any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing. 

        13.   Governing Law.    This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware, without regard to the provisions governing conflict of laws. 

        14.   Adjustments.    The number and kind of shares purchasable under the Option, the exercise price, the specified
Market Price Targets, and other terms of the Option are subject to adjustment in accordance with Section 9(c) of the Plan. 

        15.   Participant Acknowledgment.    Participant hereby acknowledges receipt of a copy of the Plan. Participant
hereby acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan and this Agreement that are made in accordance with the Plan and this Agreement shall
be final and conclusive. 

[SIGNATURES
APPEAR ON NEXT PAGE] 

4

   
        IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and Participant has hereunto signed this Agreement on his own behalf,
thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above. 

	

 	
 	

SCIENTIFIC GAMES CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Martin E. Schloss

Vice President, General Counsel and Secretary
	

 	
 	

PARTICIPANT
	

 	
 	

 A. Lorne Weil

5

 
 

EXHIBIT B    
    

 
 

SCIENTIFIC GAMES CORPORATION
  2003 INCENTIVE COMPENSATION PLAN    
    
    PERFORMANCE-ACCELERATED STOCK OPTION GRANT AGREEMENT
  (PARSOP II)    
    

        THIS AGREEMENT, made as of
the                of                , between SCIENTIFIC GAMES CORPORATION (the
"Company") and A. LORNE WEIL (the "Participant"). 

        WHEREAS,
the Compensation Committee (the "Committee") administers the Company's 2003 Incentive Compensation Plan (the "Plan"); and 

        WHEREAS,
the Committee granted the performance-accelerated stock option evidenced by this Agreement to Participant as of                    , 2003; 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows: 

        1.  Grant of Option.    Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the
Committee
hereby grants to Participant an option (the "Option") to purchase 400,000 shares of the Company's Class A Common Stock (the "Common Stock"). The Option is a non-qualified stock
option and does not constitute an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986. 

        2.
Grant Date.    The Grant Date of the Option is the date set forth in the first paragraph of this Agreement. 

        3.  Incorporation of Plan and Employment Agreement.    All terms, conditions and restrictions of the Plan are
incorporated and
made part hereof as if stated herein. If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan as interpreted by the Committee
shall govern. Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan. In addition, this Agreement is subject to the terms of the
employment agreement between Participant and the Company, as amended and restated as of February 28, 2003 (the "Employment Agreement"), and capitalized terms used in Section 7 and not
otherwise defined in the Plan or this Agreement shall have the meaning given to such terms in the Employment Agreement. If there is any conflict between the terms of the Employment Agreement and this
Agreement, the terms of the Employment Agreement will govern, subject to the mandatory terms of the Plan. 

        4.
Vesting and Exercisability Date.    The Option shall become vested and exercisable as to all of the Option shares on
                        , 2003 [insert date 6 months after Grant Date but in no event later than
December 31,
2003]; provided, however, that the Option shall become immediately vested and exercisable earlier upon the occurrence of any of the events specified in
Section 7 hereof to the extent specified therein. 

        5.
Exercise Price.    The exercise price per share of each share with respect to which the Option is granted is $        ,
which is equal to the fair market value of a share of Common Stock on the Grant Date determined in accordance with the Plan. The exercise price shall be subject to adjustment in accordance with
Section 10(c) of the Plan. 

        6.  Restrictions on Option Profit Shares.    "Profit Shares" resulting from the exercise of the Option will be
non-transferable to the extent and for the periods specified in this Section 6. 

        (a)
Profit Shares Defined.    For purposes of this Section 6, "Profit Shares" means, with respect to an exercise of any
portion of the Option on a given date, that number of the shares acquired upon such exercise equal to the difference between (i) the number of shares acquired upon such exercise and
(ii) the number of such shares having a Fair Market Value at the exercise date equal 

 

to
the aggregate Option exercise price paid, with the number of Profit Shares so calculated rounded down to the nearest whole share. 

        (b)
Lapse of Restriction on Transferability of Profit Shares.    All Profit Shares will be subject to the "restriction on
transferability" (as defined below) by Participant until the earliest of (i)
                                 , 20    , [insert date 6 years
and 9 months after the Grant Date] (ii) lapse of the restriction on transferability in connection with occurrence of any of the events specified in
Section 7 hereof to the extent specified therein, and (iii) the Accelerated Lapse Date (as defined below). Profit Shares resulting from exercise of the Option for the percentages
specified below of the total number of shares subject to the Option will be released from the restriction on transferability on an accelerated basis if the market price of the Common Stock hereafter
reaches the "Market Price Targets" specified in the following table (subject to adjustment under Section 10(c) of the Plan), provided that such accelerated lapse of the restriction on
transferability will be effective on the date (the "Accelerated Lapse Date") that is the later of (y) the date on which the applicable Market Price Target is reached or (z) the third
anniversary of the Grant Date: 

	Restrictions Lapse on Profit Shares Resulting from Exercise of Following Percentages Option
	 	"Market Price Target" Triggering Lapse of Restrictions

	20%	 	$                    [exercise price plus 15%]
	40%	 	                      [previous hurdle plus 15%]

	60%	 	                      [previous hurdle plus 15%]

	80%	 	                      [previous hurdle plus 15%]

	100%	 	                      [previous hurdle plus 15%]

For
purposes of this Agreement, the "Market Price Target" will be deemed to have been reached only if the closing price per share of the Company's Common Stock, in consolidated reporting for
securities listed on the principal exchange or quotation system on which Common Stock is then traded, is equal to or greater than the amount specified in the table above for ten trading days within
any period of 30 consecutive trading days, as reported by a reliable reporting service specified by the Committee. The number of Profit Shares resulting from exercises on different dates may vary, but
the Profit Shares with respect to which restrictions lapse are those resulting from exercise of the specified percentage of the total number of shares subject to the Option, in the order in which the
Option was exercised. 

For
purposes of this Agreement, the "restriction on transferability" means that the Profit Shares may not be sold, gifted, pledged, hypothecated, or otherwise transferred or disposed of by
Participant. Profit Shares are not, however, forfeitable. The foregoing notwithstanding, the Committee may permit a transfer of Profit Shares for estate-planning purposes, in which case the
restriction on transferability
will apply to such Profit Shares to the same extent as it would have applied to such Profit Shares in the hands of the Participant. 

        7.
Expiration Date; Effect of Certain Events.  

        (a) Stated Expiration Date.    Subject to the provisions of the Plan and this Agreement (providing for
earlier expiration in certain circumstances), the Option shall expire on                        , 2010 [insert date 7 years after Grant
Date] (the "Expiration Date"). 

        (b)
Terms Relating to Termination of Employment.    Subject to the provisions of the Plan, this Agreement and the Employment
Agreement, in the event the employment of Participant terminates: 

	(i)
	without
Cause by the Company, for Good Reason by Participant, as Good Reason is defined in Section 6(e)(i) through (vii) of the Employment Agreement
(but not as defined in clause (viii), an election by Participant not to renew the employment term under the Employment Agreement), or by reason of Total Disability, the Option shall vest and
become exercisable in full as of the date of the termination, shall remain exercisable until the 

2

 

Expiration
Date, and the restriction on transferability of Profit Shares under Section 6 hereof shall lapse; 

	(ii)
	due
to death, the Option shall vest and become exercisable in full as of the date of the termination, shall remain exercisable until the earlier of the third
anniversary of such event or the Expiration Date, and the restriction on transferability of Profit Shares under Section 6 hereof shall lapse;

	(iii)
	due
to retirement pursuant to Section 6(b) of the Employment Agreement, or for Good Reason by Participant as Good Reason is defined in
Section 6(e)(viii) of the Employment Agreement, the portion of the Option that is vested and exercisable as of the date of termination shall remain exercisable until the Expiration Date
(subject, in the case of retirement, to the terms of paragraph (e) of this Section 7), and the restriction on transferability of Profit Shares under Section 6 hereof shall remain
in effect in accordance with Section 6; and

	(iv)
	for
Cause, the Option (including any vested portion) shall expire at the close of business on the date of termination. 

        Except
as otherwise provided in this Section 7, any portion of the Option that is not vested and exercisable as of the date of termination shall expire at the close of business on
the date of termination, any portion that is vested and exercisable as of the date of termination shall remain exercisable until the Expiration Date, and the restriction on transferability of Profit
Shares under Section 6 hereof shall remain in effect in accordance with Section 6. 

        (c)
Terms Relating to Certain Other Events.    Upon the occurrence of any of the events referred to in Section 5(f) of
the Employment Agreement, (i) the Option shall vest and become exercisable in full as of the date of such event, shall remain exercisable during Participant's employment and shall continue to
be exercisable after termination of Participant's employment in accordance with the provisions of this Agreement, the Employment Agreement and the Plan that apply to such termination of employment,
but in no event beyond the Expiration Date, and (ii) the restriction on transferability of Profit Shares under Section 6 hereof shall lapse. The provisions of the Plan providing for
vesting and lapse of restrictions in respect of options and restricted stock (or awards generally) upon the occurrence of other events and circumstances shall apply to the Option and the Profit
Shares, including to the lapse of the restriction on transferability of the Profit Shares. 

        (d)  Forfeiture Upon Violation of Certain Covenants.    The Option shall be subject to early expiration in
accordance with the
terms of Section 10.6 of the Employment Agreement. 

        (e)
Forfeiture Upon Retirement in Certain Circumstances.    In the event that the Participant terminates his employment prior to
December 31, 2007 by retirement pursuant to Section 6(b) of the Employment Agreement and at the effective time of such retirement one or more of the Market Price Targets have not yet
been reached and the restriction on transferability has not otherwise lapsed with respect to the entire Option, the portion of the Option set forth in the table in Section 6(b) hereof for which
the Market Price Targets have not yet been reached shall expire as of such effective time, and such expired portion shall not be exercisable in connection with or after such retirement. For example,
if at the time of such retirement the Market Price Target of $13.92 has not yet been reached and the restriction on transferability has not otherwise lapsed, 40% of the Option shall expire. 

        8.
Method of Exercise.    The Option shall be exercisable in whole or in part by delivering written notice to the Company's
principal office to the attention of its General Counsel. Payment for shares of Common Stock purchased upon the exercise of the Option shall be made on the effective date of such exercise either:
(i) in cash, by certified check, bank cashier's check or wire transfer; (ii), by delivery of shares having a Fair Market Value equal to the exercise price, except no such delivery will be
permitted if and to the extent that the transaction would result in recognition of additional accounting expense by 

3

 

the
Company under applicable accounting rules, or (iii) in such other form as shall be acceptable to the Committee. Certificates for shares of Common Stock purchased upon the exercise of the
Option shall be issued in the name of Participant or his beneficiary, as the case may be, and delivered to Participant or his beneficiary, as the case may be, as soon as practicable following the
effective date on which the Option is exercised (or delivery may be effected in such other manner as may be agreed upon by the Company and Participant). 

        9.
Taxes.    In connection with any exercise of the Option, Participant shall pay or make arrangements satisfactory to the
Committee providing for payment of applicable withholding taxes resulting from such exercise. In connection with any exercise at a time that the Profit Shares would not be subject to a restriction on
transferability under Section 6, Participant may elect to have the Company withhold from the shares issuable upon exercise a number of shares having a Fair Market Value equal to the mandatory
amount required to be withheld to satisfy federal, state and local taxes and withholding amounts, subject to the terms of the Plan. 

        10.  Securities Matters.    The Committee may defer the effectiveness of any exercise of the Option to the extent
required for
the issuance and delivery of shares of Common Stock pursuant to such exercise to comply with all applicable laws, regulations of governmental authority and the requirements of any national securities
exchange on which shares of Common Stock are then traded. The Committee shall inform Participant in writing of its decision to defer the effectiveness of the exercise of the Option. The Company shall
use its reasonable best efforts to complete any required registration, qualification and/or listing of such shares (or to satisfy the conditions for exemption from any such requirements), and shall
take all such other reasonable actions within its control, in order to permit the effectiveness of any exercise of the Option at the earliest practicable date. During the period that the effectiveness
of the exercise of the Option has been deferred, Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. 

        11.
Transferability.    During the lifetime of Participant, the Option may be exercised only by Participant or, if Participant
is incapacitated, by Participant's guardian or legal representative. In the event that the Option is exercised by Participant's guardian or legal representative, the exercise of the Option shall not
be effective unless and until the Company has received evidence satisfactory to it as to the authority of such guardian or legal representative. The Option is not assignable or transferable otherwise
than by will or by the laws of descent and distribution, except as may be permitted under the terms of the Plan. 

        12.
Delays or Omissions.    No delay or omission to exercise any right, power or remedy accruing to any party hereto, upon any
breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing. 

        13.
Governing Law.    This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of
Delaware, without regard to the provisions governing conflict of laws. 

        14.
Adjustments.    The number and kind of shares purchasable under the Option, the exercise price, the specified Market Price
Targets, and other terms of the Option are subject to adjustment in accordance with Section 10(c) of the Plan. 

4

 

        15.
Participant Acknowledgment.    Participant hereby acknowledges receipt of a copy of the Plan. Participant hereby
acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan and this Agreement that are made in accordance with the Plan and this Agreement shall be
final and conclusive. 

[SIGNATURES
APPEAR ON NEXT PAGE] 

5

   
        IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and Participant has hereunto signed this Agreement on his own behalf,
thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above. 

	

 	
 	

SCIENTIFIC GAMES CORPORATION
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Martin E. Schloss

Vice President, General Counsel and Secretary
	

 	
 	

PARTICIPANT
	

 	
 	

 A. Lorne Weil

6

QuickLinks

Exhibit 10.17

Amended and Restated Employment Agreement, dated as of February 28, 2003, by and between the Company and A. Lorne Weil

EMPLOYMENT AGREEMENT by and between SCIENTIFIC GAMES CORPORATION and A. LORNE WEIL as Amended and Restated as of February 28, 2003

Table of Contents

A. LORNE WEIL EMPLOYMENT AGREEMENT As Amended and Restated as of February 28, 2003

SCHEDULE A

Exhibit A

SCIENTIFIC GAMES CORPORATION 1997 INCENTIVE COMPENSATION PLAN, AS AMENDED PERFORMANCE-ACCELERATED STOCK OPTION GRANT AGREEMENT (PARSOP I)

EXHIBIT B

SCIENTIFIC GAMES CORPORATION 2003 INCENTIVE COMPENSATION PLAN PERFORMANCE-ACCELERATED STOCK OPTION GRANT AGREEMENT (PARSOP II)

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