Document:

Exhibit 10.2

 

This EMPLOYMENT AGREEMENT
(this “Agreement”) is made on August 2, 2006 but as of January 1, 2006 (the “Effective
Date”), by and between SCIENTIFIC GAMES CORPORATION, a Delaware corporation
(the “Company” or “SGC”), and Robert Becker (“Executive”).

W I T N E S S E T
H

WHEREAS, Executive has been employed pursuant to an
agreement with the Company which has been modified from time to time by the
Board of Directors (the “Original Agreement”); and

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

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

1.             Termination of
Existing Employment Agreements.  As
of the Effective Date, all existing employment agreements between the parties,
whether oral or written, including the Original Agreement, are hereby
terminated and superseded.  As part of
the termination of the Original Agreement, amounts paid to Executive during
2006 as transportation allowances are eliminated as of the Effective Date and
shall be deducted from the lump sum catch-up payment of base salary payable
under Section 4 as a result of the increase in Executive’s base salary rate
which will be implemented as of August 1, 2006.

2.             Employment; Term.
The Company hereby agrees to employ Executive, and Executive hereby accepts
employment with the Company, in accordance with and subject to the terms and
conditions set forth herein. The term of employment of Executive under this
Agreement (the “Term”) shall be the period commencing on the Effective Date and
ending on December 31, 2008, as may be extended in accordance with this Section
and subject to earlier termination in accordance with Section 5. The Term
shall be extended automatically without further action by either party by one
additional year (added to the end of the Term), and then on each succeeding
annual anniversary thereafter, unless either party shall have given written
notice to the other party at least ninety (90) days prior to the date upon
which such extension would otherwise have become effective electing not to
further extend the Term, 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 5. It is also
intended that Executive’s previous term of employment with the Company shall be
included when calculating Executive’s tenure at the Company for all purposes.

3.             Offices and Duties. During
the Term, the Executive will serve as Vice President and Treasurer of the
Company, and as an officer or director of any subsidiary or affiliate of the
Company if elected to any such position by the shareholders or by the Board of
Directors of the Company or any subsidiary or affiliate, as the case may be. In
such capacities, the Executive shall perform such duties and shall have such
responsibilities as are normally associated with

 

such positions and as otherwise may be assigned to the
Executive from time to time by the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer or upon the authority of the Board of
Directors of the Company. Subject to Section 5(e), Executive’s functions,
duties and responsibilities are subject to reasonable changes as the Company
may in good faith determine. The Executive hereby agrees to accept such
employment and to serve the Company to the best of the Executive’s ability in
such capacities, devoting substantially all of the Executive’s business time to
such employment.

4.             Compensation; Benefits

(a)           Base Salary.  During the Term the
Company shall pay Executive a base salary (the “Base Salary”) at the initial
rate of three hundred and eleven thousand dollars ($311,000) per annum, payable
in accordance with the Company’s regular payroll policies and subject to all
withholdings that are legally required or are agreed to by Executive. In the
event that the Company, in its sole discretion, from time to time determines to
increase the Base Salary, such increased amount shall, from and after the
effective date of the increase, constitute the “Base Salary” for purposes of
this Agreement.

(b)           Incentive Compensation.  Executive shall have the
opportunity annually to earn incentive compensation in amounts determined by
the Compensation Committee of the Board of Directors of SGC (the “Compensation
Committee”) in accordance with the applicable incentive compensation plan of
the Company as in effect from time to time (“Incentive Compensation”). Under
such plan, Executive shall have the opportunity to earn up to 50% of Base
Salary as Incentive Compensation at Target Opportunity (“Target Bonus”) and up
to 100% of Base Salary as Incentive Compensation at Maximum Opportunity.

(c)           Eligibility for Annual Equity Awards. 
Executive shall be eligible to receive an annual grant of stock options or
other equity awards, in the sole discretion of the Compensation Committee, in
accordance with the applicable plans and programs for senior executives of the
Company and subject to the Company’s right to at any time amend or terminate
any such plan or program, so long as any such change does not adversely affect
any accrued or vested interest under any such plan or program.

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

(e)           Health and Welfare Benefits.   Executive shall be entitled to
participate, without discrimination or duplication, in any and all medical
insurance, group health, disability, life, accidental death, dismemberment
insurance, 401(k) or other retirement, deferred compensation, profit sharing,
stock ownership and such other plans and programs which are made generally
available by the Company to its other senior executives in accordance with the
terms of such plans and programs and subject to the Company’s right to at any
time amend or

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terminate any such plan or program. 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)            Taxes and Internal Revenue Code 409A.  The Company makes no representations
regarding the tax implications of the compensation and benefits to be paid to
Executive under this Agreement, including, without limitation, under Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
applicable administrative guidance and regulations.  Internal Revenue Code Section 409A governs
plans and arrangements that provide “nonqualified deferred compensation” (as
defined under the Code) which may include, among others, nonqualified
retirement plans, bonus plans, stock option plans, employment agreements and
severance agreements.  The Company
reserves the right to provide compensation and benefits under any plan or
arrangement in amounts, at times and in a manner that minimizes taxes, interest
or penalties as a result of Section 409A. In addition, in the event any
benefits or amounts paid hereunder are deemed to be subject to
Section 409A, including payments under Section 5 of this Agreement,
Executive consents to the Company adopting such conforming amendments as the
Company deems necessary, in its reasonable discretion, to comply with
Section 409A (including, but not limited to, delaying payment until six
months following termination of employment).

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

(a)           Termination
by Executive for Other than Good Reason.  Executive may terminate
his employment hereunder for any reason or no reason upon 60 days’ prior
written notice to the Company referring to this Section 5(a); provided,
however, that a termination of Executive’s employment for “Good Reason” (as
defined below) shall not constitute a termination by Executive for other than
Good Reason pursuant to this Section 5(a). In the event the Executive
terminates his employment for other than Good Reason, the Executive shall be
entitled only to the following compensation and benefits (collectively, the “Standard
Termination Payments”):

(i)            Any accrued but unpaid
Base Salary (as determined pursuant to Section 4(a)) for services rendered
to the date of termination paid to Executive in accordance with regular payroll
policies;

(ii)           All vested
nonforfeitable amounts owing or accrued at the date of termination under
benefit plans, programs, and arrangements set forth or referred to in
Section 4 hereof in which Executive theretofore participated will be paid
under the terms and conditions of such plans, programs, and arrangements (and
agreements and documents thereunder);

(iii)          Except as provided in
Section 6.6, all stock options and other equity awards will be governed by
the terms of the plans and programs under which the options or other awards
were granted; and

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

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

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

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

(c)           Termination
By Reason of Total Disability. 
Executive and the Company agree that Executive may not reasonably be
expected to be able to perform his duties and the essential functions of his
office in the event of the Executive’s “Total Disability.” For purposes of this
Agreement, “Total Disability” shall mean Executive’s (a) becoming eligible
to receive benefits under any long-term disability insurance program or
(b) 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. In the
event that Executive’s employment is terminated by reason of Total Disability,
the Company shall pay the following amounts, and make the following other
benefits available, to Executive:

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

(ii)           An amount equal to the
sum of (A) Executive’s annual Base Salary and (B) Executive’s “Severance Bonus
Amount” (as defined below) payable over a period of twelve (12) months after
termination in accordance with Section 5(f) of this Agreement, provided such
amount shall be reduced by any disability payments provided to Executive as a
result of any disability plan sponsored by the Company or its affiliates
providing benefits to Executive. For purposes of this Agreement, “Severance
Bonus Amount” shall mean  an amount
equal to the highest annual Incentive Compensation paid to Executive in
respect of the two most recent fiscal years of the Company but not more than
the Executive’s Target Bonus for the-then current fiscal year;

(iii)          In lieu of any Incentive
Compensation for the year in which such termination of employment occurs,
payment of an amount equal to (A) the highest annual Incentive
Compensation paid to Executive in respect of the two most recent fiscal years
of the Company but not more than Executive’s Target Bonus for the year of
termination, multiplied by (B) a fraction the numerator of which is the
number of days Executive was employed in the year of termination and the
denominator of which is the total number of days in the year of termination,
payable as and when such Incentive Compensation would otherwise have been
payable under Section 4(b); and

(iv)          If Executive elects to
continue medical coverage under the Company’s group health plan in accordance
with COBRA, the Company shall pay the monthly premiums for such coverage for a
period of twelve (12) months.

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(d)           Termination by the Company for Cause.
 The Company may terminate Executive’s
employment hereunder for “Cause” upon written notice to Executive referring to
this Section 5(d). For purposes of this Agreement, the term “Cause” shall
mean (i) gross neglect by the Executive of the Executive’s duties
hereunder; (ii) conviction (including conviction on a nolo contendere
plea) of the Executive of any felony; (iii) conviction (including
conviction on a nolo contendere plea) of the Executive of any non-felony crime
or offense involving the property of the Company or any of its subsidiaries or
affiliates or evidencing moral turpitude; (iv) willful misconduct by the
Executive in connection with the performance of the Executive’s duties
hereunder; (v) intentional breach by the Executive of any material
provision of this Agreement; (vi) material violation of material provision of
the Company’s Code of Conduct; or (vii) any other willful or grossly negligent
conduct on the part of the Executive which would make the Executive’s continued
employment by the Company materially prejudicial to the best interests of the
Company; provided, however, that a termination by the Company under Sections
5(d)(i), 5(d)(v), 5(d)(vi) or 5(d)(vii), if curable, shall be effective only
if, within 21 days following delivery of a written notice by the Company to
Executive that the Company is terminating Executive’s employment for Cause and
setting forth in reasonable detail the facts and circumstances allegedly
constituting Cause, Executive has failed to cure the circumstances giving rise
to Cause.   In the event that
Executive’s employment is terminated by the Company for Cause, the Executive
shall be entitled to receive only the Standard Termination Payments (as defined
in Section 5(a)).

(e)           Termination by the Company Without Cause or by
Executive for Good Reason.  The Company may terminate
Executive’s employment hereunder at any time, without Cause, for any reason or
no reason, and Executive may terminate his employment hereunder for “Good
Reason” (as defined below) if the Company has failed to cure the event or
condition constituting Good Reason within thirty days after Executive gives
written notice to the Company setting forth in reasonable detail the facts and
circumstances allegedly constituting Good Reason and specifically referencing
this Section 5(e). For purposes of this Agreement, “Good Reason” shall
mean that without Executive’s prior written consent, any of the following shall
have occurred within ninety days prior to the delivery of such notice: 
(i) a material change, adverse to Executive, in Executive’s positions,
titles, offices, or duties as provided in Section 3, except, in such case,
in connection with the termination of Executive’s employment for Cause, Total
Disability or death; (ii) an assignment of any significant duties to
Executive which are inconsistent with Executive’s positions or offices held
under Section 3; (iii) a decrease in Base Salary or material decrease
in Executive’s incentive compensation opportunities provided under this
Agreement; and (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. In the event that Executive’s employment is terminated by
the Company without Cause or by Executive for Good Reason, the Company shall
pay the following amounts, and make the following other benefits available, to
Executive:

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

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(ii)           An amount equal to the
sum of (A) Executive’s annual Base Salary and (B) Executive’s Severance Bonus
Amount payable over a period of twelve (12) months after termination in
accordance with Section 5(f) of this Agreement;

(iii)          Except to the extent otherwise provided at the
time of grant under the terms of any equity award made to Executive, all stock
options, deferred stock, restricted stock and other equity-based awards held by
Executive at termination will become fully vested and non-forfeitable, and, in
all other respects, all such options and other awards shall be governed by the
plans and programs and the agreements and other documents pursuant to which the
awards were granted;

(iv)          In lieu of any Incentive Compensation for the
year in which such termination of employment occurs, payment of an amount equal
to (A) the highest annual Incentive Compensation paid to Executive in
respect of the two most recent fiscal years of the Company but not more than
the Executive’s Target Bonus for the year of termination, multiplied by
(B) a fraction the numerator of which is the number of days Executive was
employed in the year of termination and the denominator of which is the total
number of days in the year of termination, payable as and when such Incentive
Compensation would otherwise have been payable under Section 4(b);

(v)           If
Executive elects to continue medical coverage under the Company’s group health
plan in accordance with COBRA, the Company shall pay the monthly premiums for
such coverage for a period of twelve (12) months; and

(vi)          Reasonable closing costs incurred by Executive
for the sale of Executive’s residence in New York shall be reimbursed on an
after-tax basis following receipt of proof of such costs, provided however,
that such sale occurs within six months of termination of employment.

(f)            Timing of
Certain Payments Under Section 5. 
Payments pursuant to Sections 5(c)(ii) or 5(e)(ii) of this Agreement, if
any, shall be payable in equal installments in accordance with the Company’s
standard payroll practices over a period of twelve (12) months following the
date of termination; provided, however, that if necessary to comply with
Section 409A of the Code, and applicable administrative guidance and
regulations, such payments shall be made as follows:  (1) no payments shall be made for a six-month
period following the date of termination, (2) an amount equal to the aggregate
sum that would have been otherwise payable during the initial six-month period
shall be paid in a lump sum six months following the date of termination, and
(3) during the period beginning six months following the date of termination
through the remainder of the twelve-month period, payment of the remaining
amount due shall be payable in equal installments in accordance with the
Company’s standard payroll practices. In addition, notwithstanding any other
provision with respect to the timing of payments under this Agreement, if
necessary to comply with Section 409A of the Code, and applicable
administrative guidance and regulations, amounts payable following termination
of employment in a lump sum, including pursuant to Sections 5(c)(iii), 5(e)(iv)
and 5(e)(vi) of this Agreement, shall instead be paid six months following the
date of termination.  

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(g)           No Obligation to Mitigate.  The Executive shall have no
obligation to mitigate damages pursuant to this Section 5, but shall be
obligated to promptly advise the Company regarding any compensation earned or
any payments that will become due with respect to services provided to another
employer during any period of continued payments pursuant to this Section 5.
The Company’s obligation to make continued insurance or disability payments to
the Executive shall be reduced by any compensation earned by the Executive by
another employer or insurer during the year following the Executive’s
separation from employment (without regard to when such compensation is paid).

(h)           Set-Off.  To the fullest extent permitted by law, any
amounts otherwise due the Executive hereunder (including, without limitation,
any payments pursuant to this Section 5) shall be subject to set-off with
respect to any amounts the Executive otherwise owes the Company or any
subsidiary or affiliate thereof.

(i)            No Other Benefits or Compensation. 
Except as may be provided under this Agreement, under any other written
agreement between Executive and the Company, or under the terms of any plan or
policy applicable to Executive, Executive shall have no right to receive any
other compensation from the Company, or to participate in any other plan,
arrangement or benefit provided by the Company, with respect to any future
period after such termination or resignation.

(j)            Release of Employment Claims; Compliance with Section 6. 
Executive agrees, as a condition to receipt of any termination payments and
benefits provided for in Section 5 (other than the Standard Termination
Payments), that Executive will execute a general release agreement, in a form
reasonably satisfactory to the Company, releasing any and all claims arising
out of Executive’s employment (other than enforcement of this Agreement). 
The Company’s obligation to make any termination payments and benefits provided
for in Section 5 (other than the Standard Termination Payments) shall
immediately cease if Executive willfully and materially breaches
Section 6.1, 6.2 , 6.3, 6.4, or 6.8.

6.             Noncompetition; Nonsolicitation; Nondisclosure; etc.

6.1           Noncompetition;
Nonsolicitation .

(a) Executive
acknowledges the highly competitive nature of the Company’s business and that
access to the Company’s confidential records and proprietary information
renders Executive special and unique within the Company’s industry. In
consideration of the amounts that may hereafter be paid to Executive pursuant
to this Agreement (including, without limitation, Sections 4 and 5), Executive
agrees that during the Term (including any extensions thereof) and during the
Covered Time (as defined in Section 6.1(e)), Executive, alone or with others,
will not, directly or indirectly, engage (as owner, investor, partner,
stockholder, employer, employee, consultant, advisor, director or otherwise) in
any Competing Business. For purposes of this Section 6, “Competing Business”
shall mean any business: (i) involving design and production of instant
lottery tickets and the management of related marketing and distribution
programs; manufacture, sale, operation or management of on-line lottery systems
(Lotto-type games); development and commercialization of licensed and other
proprietary game entertainment for all lottery product channels; provision of
wagering (whether pari-mutuel

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(pooled) or otherwise) or venue management services
for racetracks and off-track betting facilities; production of prepaid cellular
phone cards; or any other business in which the Company or its affiliates is
then or was within the previous twelve (12) months engaged or in which the
Company, to Executive’s knowledge, intends to engage during the Term or the
Covered Time (as defined below); (ii) in which the Executive was engaged
or involved (whether in an executive or supervisory capacity or otherwise) on
behalf of the Company or with respect to which the Executive has obtained proprietary
or confidential information; and (iii) which was conducted anywhere in the
United States or in any other geographic area in which such business was
conducted or planned to be conducted by the Company.

(b)           In further
consideration of the amounts that may hereafter be paid to Executive pursuant
to this Agreement (including, without limitation, Sections 3, 4 and 5),
Executive agrees that during the Term (including any extensions thereof) and
during the Covered Time Executive shall not, directly or indirectly, (i)
solicit or attempt to induce any of the employees, agents, consultants or
representatives of the Company to terminate his, her, or its relationship with
the Company; (ii) solicit or attempt to induce any of the employees, agents,
consultants or representatives of the Company to become employees, agents,
consultants or representatives of any other person or entity; (iii) solicit or
attempt to induce any customer, vendor or distributor of the Company to curtail
or cancel any business with the Company; or (iv) hire any person who, to
Executive’s actual knowledge, is, or was within 180 days prior to such hiring,
an employee of the Company.

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

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

(e)           For purposes of this
Section 6.1, “Covered Time” shall mean the period beginning on the date of
termination of Executive’s employment (the “Date of Termination”) and ending
twelve (12) months after the Date of Termination.

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6.2           Proprietary Information; Inventions.

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

(b)           Executive agrees that
all process­es, technologies and inventions (collectively, “Inven­tions”),
including new contributions, improvements, ideas and discov­eries, whether
patentable or not, conceived, developed, invented or made by Executive during
the Term (and during any employment by the Company prior to the Term) shall
belong to the Company, provided that such Inventions grew out of the Executive’s
work with the Company or any of its subsidiaries or affiliates, are related in
any manner to the business (commercial or experimental) of the Company or any
of its subsidiaries or affiliates or are conceived or made on the Company’s
time or with the use of the Com­pany’s facilities or materials. Executive shall
further:  (i) promptly disclose such
Inventions to the Company; (ii) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the United
States and foreign countries; (iii) sign all papers necessary to carry out the
foregoing; and (iv) give testimony in support of the Executive’s inventorship.
If any Invention is described in a patent appli­cation or is disclosed to third
parties, directly or indirectly, by the Executive within

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two years after the termination of the Executive’s
employment by the Company, it is to be pre­sumed that the Invention was con­ceived
or made during the Term. Executive agrees that Execu­tive will not assert any
rights to any Invention as having been made or acquired by Executive prior to
the date of this Agreement, except for Inventions, if any, disclosed in Exhibit
A to this Agreement.

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

6.4           Nondisparagement.  Executive shall not, during the Term and
thereafter, disparage in any material respect the Company, any 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, regulation or legal process.

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

6.6           Forfeiture
of Outstanding Options. The provisions of Section 5 notwithstanding, if
Executive willfully and materially fails to comply with Section 6.1, 6.2, 6.3,
6.4, or 6.8, all options (whether granted prior to, contemporaneous with, or
subsequent to this Agreement) to purchase common stock granted by the Company
and held by Executive or a transferee of Executive shall be immediately
forfeited and cancelled.

6.7           Enforcement.  Executive
acknowledges and agrees that, by virtue of Executive’s position, services and
access to and use of confidential records and proprietary information, any
violation by Executive of any of the undertakings contained in this Section 6
would cause the Company immediate, substantial and irreparable injury for which
it has no adequate remedy at law. Accordingly, Executive agrees and consents to
the entry of an injunction or other equitable relief by a court of competent
jurisdiction restraining any violation or threatened violation of any
undertaking contained in this Section 6. Executive waives posting

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of any bond otherwise necessary to secure such
injunction or other equitable relief. Rights and remedies provided for in this
Section 6 are cumulative and shall be in addition to rights and remedies
otherwise available to the parties hereunder or under any other agreement or
applicable law.

6.8           Cooperation
with Regard to Litigation.  Executive agrees to cooperate reasonably with
the Company, during the Term and thereafter (including following Executive’s
termination of employment for any reason), by being available to testify on
behalf of the Company in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative. In addition, except to the extent
that Executive has or intends to assert in good faith an interest or position
adverse to or inconsistent with the interest or position of the Company,
Executive agrees to cooperate reasonably with the Company, during the Term and
thereafter (including following Executive’s termination of employment for any
reason), 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 reasonable expenses actually
incurred in connection with Executive’s cooperation and assistance including,
without limitation, reasonable fees and disbursements of counsel, if any,
chosen by Executive if Executive reasonably determines in good faith, on the
advice of counsel, that the Company’s counsel may not ethically represent
Executive in connection with such action, suit or proceeding due to actual or
potential conflicts of interests.

6.9           Survival.  The provisions of this Section 6 shall
survive the termination of the Term and any termination or expiration of this
Agreement.

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

7.             Code of Conduct.  Executive acknowledges that he has read the
Company’s Code of Conduct and agrees to abide by such Code, as amended or
supplemented from time to time, and other policies applicable to employees and
executives of the Company.

8.             Indemnification.  During the Term of this Agreement and all
periods after the expiration of this Agreement or termination of Executive’s
employment for any reason, the Company shall indemnify Executive to the full extent
permitted under the Company’s Certificate of Incorporation or By-Laws and
pursuant to any other agreements or policies in effect from time to time. To
the extent permitted under the Company’s Certificate of Incorporation and
By-Laws and applicable law, the Company shall advance expenses for which
indemnification may be claimed as such expenses are incurred, subject to any
requirement that Executive provide an undertaking to repay such advances if it
is ultimately determined that Executive is not entitled to indemnification;
provided, however, that any determination required to be made with respect to
whether Executive’s conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law
and the Company’s Certificate of Incorporation, By-Laws, or other agreement,
shall be made by independent counsel mutually acceptable to Executive and the
Company (except to the extent otherwise required by law). Any provision
contained herein notwithstanding, this Agreement shall not limit or reduce, and
the

 11
 

 

Company hereby agrees to provide to Executive, any and
all rights to indemnification Executive would otherwise have, to the full
extent permitted under applicable law. In addition, the Company will maintain
directors’ and officers’ liability insurance in effect and covering acts and
omissions of Executive. For purposes of this Section 8, references to the “Company”
shall include both the Company and each of its subsidiaries and/or affiliates
for which Executive has acted, acts or will in the future act in any capacity.
The provisions of this Section 8 shall survive the termination of the Term and
any termination or expiration of this Agreement.

9.             Assignability; Binding Effect.  Neither this Agreement nor the rights or
obligations hereunder of the parties hereto shall be transferable or assignable
by Executive, except in accordance with the laws of descent and distribution
and as specified below. The Company may assign this Agreement and the Company’s
rights and obligations hereunder, and shall assign this Agreement and such
rights and obligations, to any Successor (as hereinafter defined) which, by
operation of law or otherwise, continues to carry on substantially the business
of the Company (or a business unit of the Company for which Executive provided
services) 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 those
relating to a particular business unit of the Company to which Executive
provides services, or otherwise. The Company may also assign this Agreement and
the Company’s rights and obligations hereunder to any affiliate of the Company,
provided that upon any such assignment the Company shall remain liable for the
obligations to Executive hereunder. This Agreement shall be binding upon and
inure to the benefit of Executive, Executive’s heirs, executors,
administrators, and beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.

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

11.           Severability.  If
any provision of this Agreement or the application of any such provision to any
person or circumstances shall be determined by any court of competent
jurisdiction 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

 12
 

 

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 making
such determination shall reduce the scope, duration and/or area of such
provision (and shall substitute appropriate provisions for any such invalid or
unenforceable provisions) in order to make such provision enforceable to the
fullest extent permitted by law and/or shall delete specific words and phrases,
and such modified provision shall then be enforceable and shall be enforced.
The parties hereto recognize that if, in any judicial proceeding, a court 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
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.

12.           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.

13.           Governing Law; Arbitration.

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

(b)           Arbitration.  The Executive and the Company agree that,
except for claims for Workers’ Compensation, Unemployment Compensation, and any
other claim that is non-arbitrable under applicable law, final and binding
arbitration shall be the exclusive forum for any dispute or controversy between
them, including, without limitation, disputes arising under or in connection
with this Agreement, Executive’s employment, and/or termination of employment,
with the Company; provided, however, that the Company shall be entitled to
commence an action in any court of competent jurisdiction for injunctive relief
in connection with any alleged actual or threatened violation of any provision
of Section 6. Judgment may be entered on the arbitrators’ award in any court
having jurisdiction. For purposes of entering such judgment or seeking
injunctive relief with regard to Section 6, the Company and Executive hereby
consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the Southern District of New York; (ii) the
Supreme Court of the State of New York, New York County; or (iii) any other
court having jurisdiction; provided, that damages for any alleged violation of
Section 6, as well as any claim, counterclaim or crossclaim brought by the
Executive or any third-party in response to, or in connection with any court
action commenced by the Company seeking said injunctive relief shall remain
exclusively subject to final and binding arbitration as provided for herein.
The Company and Executive hereby waive, to the fullest extent permitted by
applicable law, any objection which either may now or hereafter have to such
jurisdiction, venue and any defense of inconvenient forum.  Thus, except for the claims carved out above,
this Agreement includes all common-law and statutory claims (whether arising

 13
 

 

under federal state or local law), including, but not
limited to, any claim for breach of contract, fraud, fraud in the inducement,
unpaid wages, wrongful termination, and gender, age, national origin, sexual
orientation, marital status, disability, or any other  protected status.

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

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

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

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

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

To the Company:

Scientific Games
Corporation

750 Lexington
Avenue

New York, N.Y.
10022

 14
 

 

Attention: General Counsel

To Executive:

Robert
Becker

7
Hialeah Court

Wilmington,
DE 19808

 

 

[Remainder of Page Intentionally Left Blank]

 15
 

 

IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement on August 2, 2006, to be deemed effective as of the date first above
written.

 

 

	
   

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  DeWayne Laird

  
	
   

  	
  Title:

  	
  Vice President & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Robert Becker

  
						

 

 16
 

 

 

EXHIBIT A

LIST OF PRE-EXISTING INVENTIONS OF EXECUTIVE

 17Exhibit 10.3

This EMPLOYMENT AGREEMENT (this “Agreement”) is made
on August 2, 2006 but as of January 1, 2006 (the “Effective Date”), by and
between SCIENTIFIC GAMES CORPORATION, a Delaware corporation (the “Company” or “SGC”),
and Sally Conkright (“Executive”).

W I T N E S S E T
H :

WHEREAS, Executive
has been employed pursuant to a letter agreement with the Company dated
September 30, 2002, as been modified from time to time by the Board of
Directors (the “Original Agreement”); and

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

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

1.             Termination of Existing Employment
Agreements.  As of the Effective
Date, all existing employment agreements between the parties, whether oral or
written, including the Original Agreement, are hereby terminated and
superseded.  As part of the termination
of the Original Agreement, amounts paid to Executive during 2006 as
transportation allowances are eliminated as of the Effective Date and shall be
deducted from the lump sum catch-up payment of base salary payable under
Section 4 as a result of the increase in Executive’s base salary rate which
will be implemented as of August 1, 2006.

2.             Employment; Term. The Company hereby
agrees to employ Executive, and Executive hereby accepts employment with the
Company, in accordance with and subject to the terms and conditions set forth
herein. The term of employment of Executive under this Agreement (the “Term”)
shall be the period commencing on the Effective Date and ending on December 31,
2008, as may be extended in accordance with this Section and subject to earlier
termination in accordance with Section 5. The Term shall be extended
automatically without further action by either party by one additional year
(added to the end of the Term), and then on each succeeding annual anniversary
thereafter, unless either party shall have given written notice to the other
party at least ninety (90) days prior to the date upon which such extension
would otherwise have become effective electing not to further extend the Term,
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 5. It is also intended that your previous term
of employment with the Company shall be included when calculating your tenure
at the Company for all purposes.

3.             Offices and Duties. During the Term,
the Executive will serve as Vice President of Administration and Chief Human
Resources Officer for the Company, and as an officer or director of any
subsidiary or affiliate of the Company if elected to any such position by the
shareholders or by the Board of Directors of the Company or any subsidiary or
affiliate, as the case may be. In such capacities, the Executive shall perform
such duties and shall have such

 

responsibilities
as are normally associated with such positions and as otherwise may be assigned
to the Executive from time to time by the Chief Executive Officer, the Chief
Operating Officer or upon the authority of the Board of Directors of the
Company. Subject to Section 5(e), Executive’s functions, duties and
responsibilities are subject to reasonable changes as the Company may in good
faith determine. The Executive hereby agrees to accept such employment and to
serve the Company to the best of her ability in such capacities, devoting
substantially all of her business time to such employment.

4.             Compensation; Benefits

(a)           Base Salary.  During the Term the
Company shall pay Executive a base salary (the “Base Salary”) at the initial
rate of four hundred and twenty-two thousand dollars ($422,000) per annum,
payable in accordance with the Company’s regular payroll policies and subject
to all withholdings that are legally required or are agreed to by Executive. In
the event that the Company, in its sole discretion, from time to time
determines to increase the Base Salary, such increased amount shall, from and
after the effective date of the increase, constitute the “Base Salary” for
purposes of this Agreement.

(b)           Incentive Compensation.  Executive shall have the
opportunity annually to earn incentive compensation in amounts determined by
the Compensation Committee of the Board of Directors of SGC (the “Compensation
Committee”) in accordance with the applicable incentive compensation plan of
the Company as in effect from time to time (“Incentive Compensation”). Under
such plan, Executive shall have the opportunity to earn up to 66.7% of Base
Salary as Incentive Compensation at Target Opportunity (“Target Bonus”) and up
to 133% of Base Salary as Incentive Compensation at Maximum Opportunity.

(c)           Eligibility for Annual Equity Awards. 
Executive shall be eligible to receive an annual grant of stock options or
other equity awards, in the sole discretion of the Compensation Committee, in
accordance with the applicable plans and programs for senior executives of the
Company and subject to the Company’s right to at any time amend or terminate
any such plan or program, so long as any such change does not adversely affect
any accrued or vested interest under any such plan or program.

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

(e)           Health and Welfare Benefits.   Executive shall be entitled to
participate, without discrimination or duplication, in any and all medical
insurance, group health, disability, life, accidental death, dismemberment
insurance, 401(k) or other retirement, deferred compensation, profit sharing,
stock ownership and such other plans and programs which are made generally
available by the Company to its other senior executives in accordance with the
terms of such plans and programs and subject to the Company’s right to at any
time amend or

 2
 

 

terminate any such
plan or program. 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)            Taxes and Internal Revenue Code 409A.  The Company makes no representations
regarding the tax implications of the compensation and benefits to be paid to
Executive under this Agreement, including, without limitation, under Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
applicable administrative guidance and regulations.  Internal Revenue Code Section 409A governs
plans and arrangements that provide “nonqualified deferred compensation” (as
defined under the Code) which may include, among others, nonqualified
retirement plans, bonus plans, stock option plans, employment agreements and severance
agreements.  The Company reserves the
right to provide compensation and benefits under any plan or arrangement in
amounts, at times and in a manner that minimizes taxes, interest or penalties
as a result of Section 409A. In addition, in the event any benefits or amounts
paid hereunder are deemed to be subject to Section 409A, including
payments under Section 5 of this Agreement, Executive consents to the Company
adopting such conforming amendments as the Company deems necessary, in its
reasonable discretion, to comply with Section 409A (including, but not
limited to, delaying payment until six months following termination of
employment).

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

(a)           Termination
by Executive for Other than Good Reason.  Executive may terminate
her employment hereunder for any reason or no reason upon 60 days’ prior
written notice to the Company referring to this Section 5(a); provided,
however, that a termination of Executive’s employment for “Good Reason” (as
defined below) shall not constitute a termination by Executive for other than
Good Reason pursuant to this Section 5(a). In the event the Executive
terminates her employment for other than Good Reason, the Executive shall be
entitled only to the following compensation and benefits (collectively, the “Standard
Termination Payments”):

(i)            Any accrued but unpaid
Base Salary (as determined pursuant to Section 4(a)) for services rendered
to the date of termination paid to Executive in accordance with regular payroll
policies;

(ii)           All vested
nonforfeitable amounts owing or accrued at the date of termination under
benefit plans, programs, and arrangements set forth or referred to in Section 4
hereof in which Executive theretofore participated will be paid under the terms
and conditions of such plans, programs, and arrangements (and agreements and
documents thereunder);

(iii)          Except as provided in
Section 6.6, all stock options and other equity awards will be governed by
the terms of the plans and programs under which the options or other awards
were granted; and

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

 3
 

 

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

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

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

(c)           Termination
By Reason of Total Disability. 
Executive and the Company agree that Executive may not reasonably be
expected to be able to perform her duties and the essential functions of her
office in the event of the Executive’s “Total Disability.” For purposes of this
Agreement, “Total Disability” shall mean Executive’s (a) becoming eligible
to receive benefits under any long-term disability insurance program or
(b) 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. In the
event that Executive’s employment is terminated by reason of Total Disability,
the Company shall pay the following amounts, and make the following other
benefits available, to Executive:

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

(ii)           An amount equal to the
sum of (A) Executive’s annual Base Salary and (B) Executive’s “Severance Bonus
Amount” (as defined below) payable over a period of twelve (12) months after
termination in accordance with Section 5(g) of this Agreement, provided such
amount shall be reduced by any disability payments provided to Executive as a
result of any disability plan sponsored by the Company or its affiliates providing
benefits to Executive. For purposes of this Agreement, “Severance Bonus
Amount” shall mean an amount equal to the highest annual Incentive
Compensation paid to Executive in respect of the two most recent fiscal years
of the Company but not more than the Executive’s Target Bonus for the-then
current fiscal year;

(iii)          In lieu of any Incentive
Compensation for the year in which such termination of employment occurs,
payment of an amount equal to (A) the highest annual Incentive
Compensation paid to Executive in respect of the two most recent fiscal years
of the Company but not more than Executive’s Target Bonus for the year of
termination, multiplied by (B) a fraction the numerator of which is the
number of days Executive was employed in the year of termination and the
denominator of which is the total number of days in the year of termination,
payable as and when such Incentive Compensation would otherwise have been
payable under Section 4(b); and

(iv)          If Executive elects to
continue medical coverage under the Company’s group health plan in accordance
with COBRA, the Company shall pay the monthly premiums for such coverage for a
period of eighteen (18) months.

 4
 

 

(d)           Termination
by the Company for Cause.  The Company may terminate Executive’s
employment hereunder for “Cause” upon written notice to Executive referring to
this Section 5(d). For purposes of this Agreement, the term “Cause” shall
mean (i) gross neglect by the Executive of the Executive’s duties
hereunder; (ii) conviction (including conviction on a nolo contendere
plea) of the Executive of any felony; (iii) conviction (including
conviction on a nolo contendere plea) of the Executive of any non-felony crime
or offense involving the property of the Company or any of its subsidiaries or
affiliates or evidencing moral turpitude; (iv) willful misconduct by the
Executive in connection with the performance of the Executive’s duties
hereunder; (v) intentional breach by the Executive of any material
provision of this Agreement; (vi) material violation of material provision of
the Company’s Code of Conduct; or (vii) any other willful or grossly negligent
conduct on the part of the Executive which would make the Executive’s continued
employment by the Company materially prejudicial to the best interests of the
Company; provided, however, that a termination by the Company under Sections
5(d)(i), 5(d)(v), 5(d)(vi) or 5(d)(vii), if curable, shall be effective only
if, within 21 days following delivery of a written notice by the Company to
Executive that the Company is terminating Executive’s employment for Cause and
setting forth in reasonable detail the facts and circumstances allegedly
constituting Cause, Executive has failed to cure the circumstances giving rise
to Cause.   In the event that Executive’s
employment is terminated by the Company for Cause, the Executive shall be
entitled to receive only the Standard Termination Payments (as defined in
Section 5(a)).

(e)           Termination by the Company Without Cause or by
Executive for Good Reason.  The Company may terminate Executive’s
employment hereunder at any time, without Cause, for any reason or no reason,
and Executive may terminate her employment hereunder for “Good Reason” (as
defined below) if the Company has failed to cure the event or condition
constituting Good Reason within thirty days after Executive gives written
notice to the Company setting forth in reasonable detail the facts and
circumstances allegedly constituting Good Reason and specifically referencing
this Section 5(e). For purposes of this Agreement, “Good Reason” shall
mean that without Executive’s prior written consent, any of the following shall
have occurred within ninety days prior to the delivery of such notice: 
(i) a material change, adverse to Executive, in Executive’s positions,
titles, offices, or duties as provided in Section 3, except, in such case,
in connection with the termination of Executive’s employment for Cause, Total
Disability or death; (ii) an assignment of any significant duties to
Executive which are inconsistent with Executive’s positions or offices held
under Section 3; (iii) a decrease in Base Salary or material decrease
in Executive’s incentive compensation opportunities provided under this
Agreement; and (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. In the event that Executive’s employment is terminated by
the Company without Cause or by Executive for Good Reason, the Company shall
pay the following amounts, and make the following other benefits available, to
Executive:

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

 5
 

 

(ii)           An amount equal to the
sum of (A) Executive’s annual Base Salary and (B) Executive’s Severance Bonus
Amount payable over a period of twelve (12) months after termination in
accordance with Section 5(g) of this Agreement;

(iii)
         Except to
the extent otherwise provided at the time of grant under the terms of any
equity award made to Executive, all stock options, deferred stock, restricted
stock and other equity-based awards held by Executive at termination will
become fully vested and non-forfeitable, and, in all other respects, all such
options and other awards shall be governed by the plans and programs and the
agreements and other documents pursuant to which the awards were granted;

(iv)          In lieu of any Incentive
Compensation for the year in which such termination of employment occurs,
payment of an amount equal to (A) the highest annual Incentive
Compensation paid to Executive in respect of the two most recent fiscal years
of the Company but not more than the Executive’s Target Bonus for the year of
termination, multiplied by (B) a fraction the numerator of which is the
number of days Executive was employed in the year of termination and the
denominator of which is the total number of days in the year of termination,
payable as and when such Incentive Compensation would otherwise have been
payable under Section 4(b); and

(v)
          If
Executive elects to continue medical coverage under the Company’s group health
plan in accordance with COBRA, the Company shall pay the monthly premiums for
such coverage for a period of eighteen (18) months.

(f)            Change in Control.  In the event Executive’s
employment is terminated by the Company without Cause or by Executive for Good
Reason under Section 5(e) and such termination occurs upon or within one year
immediately following a “Change in Control” (as defined below), Executive shall
be entitled to the payments described in Section 5(e) above except that the aggregate
amount payable under 5(e)(ii) shall be multiplied by two (i.e., Base Salary
plus Severance Bonus Amount multiplied by two) and such amount, as well as the
amount payable under 5(e)(iv), shall be paid in a lump sum in accordance with
Section 5(g) of this Agreement. Notwithstanding the foregoing, payments
pursuant to this Section 5(f) shall be reduced by the amount necessary, if any,
to ensure that the aggregate compensation to be received by the Executive in
connection with such “Change in Control” does not constitute a “parachute
payment,” as such term is defined in 26 U.S.C. § 280G.

For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if: (i) any “person” as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and as used in sections
13(d) and 14(d) thereof, including a “group” as defined in Section 13 (d) of
the Exchange Act but excluding SGC and any subsidiary or affiliate and any
employee benefit plan sponsored or maintained by SGC or any subsidiary or
affiliate (including any trustee of such plan acting as trustee) or any current
shareholder of 20% or more of the outstanding common stock, directly or
indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of securities of SGC representing at least 40% of the combined
voting power of SGC’s then-outstanding securities; (ii) the stockholders of SGC
approve a merger, consolidation, recapitalization, or reorganization of

 6
 

 

SGC, or a reverse
stock split of any class of voting securities of SGC, or the consummation of
any such transaction if stockholder approval is not obtained, other than any
such transaction which would result in at least 60% of the total voting power
represented by the voting securities of SGC or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons who
together beneficially owned at least 80% of the combined voting power of the
voting securities of SGC outstanding immediately prior to such transaction;
provided that, for purposes of this Section 5(f), such continuity of ownership
(and preservation of relative voting power) shall be deemed to be satisfied if
the failure to meet such 60% threshold is due solely to the acquisition of
voting securities by an employee benefit plan of SGC or such surviving entity
or of any subsidiary of SGC or such surviving entity; (iii) the stockholders of
SGC or the Company, as applicable, approve a plan of complete liquidation of
SGC or the Company, an agreement for the sale or disposition by SGC or the
Company of all or substantially all of its assets (or any transaction having a
similar effect), or SGC sells all or substantially all of the stock of the
Company to any person or entity other than an affiliate of SGC; or (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board, together with any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Subsection (i), (ii), or (iii)
hereof) whose election by the Board of Directors of SGC or nomination for
election by SGC’s stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the “Continuing Directors”), cease for any reason to
constitute at least a majority of the Board of Directors of SGC.

(g)           Timing of Certain Payments Under Section 5.  Payments
pursuant to Sections 5(c)(ii) or 5(e)(ii) of this Agreement, if any, shall be
payable in equal installments in accordance with the Company’s standard payroll
practices over a period of twelve (12) months following the date of
termination; provided, however, that if necessary to comply with Section 409A
of the Code, and applicable administrative guidance and regulations, such
payments shall be made as follows:  (1)
no payments shall be made for a six-month period following the date of
termination, (2) an amount equal to the aggregate sum that would have been
otherwise payable during the initial six-month period shall be paid in a lump
sum six months following the date of termination, and (3) during the period
beginning six months following the date of termination through the remainder of
the twelve-month period, payment of the remaining amount due shall be payable
in equal installments in accordance with the Company’s standard payroll practices.
If the lump sum amounts described in Section 5(f) of this Agreement become
payable, Executive shall receive payment within thirty (30) days of
termination; provided, however, that if necessary to comply with Section 409A
of the Code, and applicable administrative guidance and regulations, such
payment shall instead be made in a lump sum six months following the date of
termination.  In addition,
notwithstanding any other provision with respect to the timing of payments
under this Agreement, including pursuant to Sections 5(c)(iii) or 5(e)(iv) of
this Agreement, if necessary to comply with Section 409A of the Code, and
applicable administrative guidance and regulations, such payments shall instead
be made in a lump sum six months following the date of termination. 

 7
 

 

(h)           No Obligation to Mitigate.  The Executive shall have no
obligation to mitigate damages pursuant to this Section 5, but shall be
obligated to promptly advise the Company regarding any compensation earned or
any payments that will become due with respect to services provided during any
period of continued payments pursuant to this Section 5. The Company’s
obligation to make continued payments to the Executive shall be reduced by any
compensation earned by the Executive during the severance period (without
regard to when such compensation is paid).

(i)            Set-Off.  To the fullest extent permitted by law, any
amounts otherwise due the Executive hereunder (including, without limitation,
any payments pursuant to this Section 5) shall be subject to set-off with
respect to any amounts the Executive otherwise owes the Company or any
subsidiary or affiliate thereof.

(j)            No Other Benefits or Compensation. 
Except as may be provided under this Agreement, under any other written
agreement between Executive and the Company, or under the terms of any plan or
policy applicable to Executive, Executive shall have no right to receive any
other compensation from the Company, or to participate in any other plan,
arrangement or benefit provided by the Company, with respect to any future
period after such termination or resignation.

(k)           Release
of Employment Claims; Compliance with Section 6. 
Executive agrees, as a condition to receipt of any termination payments and
benefits provided for in Section 5 (other than the Standard Termination
Payments), that Executive will execute a general release agreement, in a form
reasonably satisfactory to the Company, releasing any and all claims arising
out of Executive’s employment (other than enforcement of this Agreement) and Executive
will not in the future seek employment at the Company.  The Company’s
obligation to make any termination payments and benefits provided for in
Section 5 (other than the Standard Termination Payments) shall immediately
cease if Executive willfully and materially breaches Section 6.1, 6.2 ,
6.3, 6.4, or 6.8.

6.             Noncompetition;
Nonsolicitation; Nondisclosure; etc.

6.1           Noncompetition; Nonsolicitation .

(a) Executive acknowledges the highly
competitive nature of the Company’s business and that access to the Company’s
confidential records and proprietary information renders Executive special and
unique within the Company’s industry. In consideration of the amounts that may
hereafter be paid to Executive pursuant to this Agreement (including, without
limitation, Sections 4 and 5), Executive agrees that during the Term (including
any extensions thereof) and during the Covered Time (as defined in Section
6.1(e)), Executive, alone or with others, will not, directly or indirectly,
engage (as owner, investor, partner, stockholder, employer, employee,
consultant, advisor, director or otherwise) in any Competing Business. For
purposes of this Section 6, “Competing Business” shall mean any business:
(i) involving design and production of instant lottery tickets and the
management of related marketing and distribution programs; manufacture, sale,
operation or management of on-line lottery systems (Lotto-type games);
development and commercialization of licensed and other proprietary game
entertainment for all lottery product channels; provision of wagering (whether
pari-mutuel

 8
 

 

(pooled) or otherwise) or venue management services for racetracks and
off-track betting facilities; production of prepaid cellular phone cards; or
any other business in which the Company or its affiliates is then or was within
the previous eighteen (18) months engaged or in which the Company, to Executive’s
knowledge, intends to engage during the Term or the Covered Time (as defined
below); (ii) in which the Executive was engaged or involved (whether in an
executive or supervisory capacity or otherwise) on behalf of the Company or
with respect to which the Executive has obtained proprietary or confidential
information; and (iii) which was conducted anywhere in the United States or in
any other geographic area in which such business was conducted or planned to be
conducted by the Company.

(b)           In further consideration of the amounts that
may hereafter be paid to Executive pursuant to this Agreement (including,
without limitation, Sections 3, 4 and 5), Executive agrees that during the Term
(including any extensions thereof) and during the Covered Time Executive shall
not, directly or indirectly, (i) solicit or attempt to induce any of the
employees, agents, consultants or representatives of the Company to terminate
her, her, or its relationship with the Company; (ii) solicit or attempt to
induce any of the employees, agents, consultants or representatives of the
Company to become employees, agents, consultants or representatives of any
other person or entity; (iii) solicit or attempt to induce any customer, vendor
or distributor of the Company to curtail or cancel any business with the
Company; or (iv) hire any person who, to Executive’s actual knowledge, is, or
was within 180 days prior to such hiring, an employee of the Company.

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

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

(e)           For purposes of this Section 6.1, “Covered
Time” shall mean the period beginning on the date of termination of Executive’s
employment (the “Date of Termination”) and ending eighteen (18) months after
the Date of Termination.

 9
 

 

6.2           Proprietary Information; Inventions.

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

(b)           Executive agrees that all processes,
technologies and inventions (collectively, “Inventions”), including new
contributions, improvements, ideas and discoveries, whether patentable or not,
conceived, developed, invented or made by Executive during the Term (and during
any employment by the Company prior to the Term) shall belong to the Company,
provided that such Inventions grew out of the Executive’s work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the business
(commercial or experimental) of the Company or any of its subsidiaries or
affiliates or are conceived or made on the Company’s time or with the use of
the Company’s facilities or materials. Executive shall further:  (i) promptly disclose such Inventions to
the Company; (ii) assign to the Company, without additional compensation, all
patent and other rights to such Inventions for the United States and foreign
countries; (iii) sign all papers necessary to carry out the foregoing; and (iv)
give testimony in support of the Executive’s inventorship. If any Invention is
described in a patent application or is disclosed to third parties, directly or
indirectly, by the Executive within

 10
 

 

two years after the termination of the Executive’s employment by the
Company, it is to be presumed that the Invention was conceived or made during
the Term. Executive agrees that Executive will not assert any rights to any
Invention as having been made or acquired by Executive prior to the date of
this Agreement, except for Inventions, if any, disclosed in Exhibit A to
this Agreement.

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

6.4           Nondisparagement.  Executive shall not, during the Term and
thereafter, disparage in any material respect the Company, any 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, regulation or legal process.

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

6.6           Forfeiture
of Outstanding Options. The provisions of Section 5 notwithstanding, if
Executive willfully and materially fails to comply with Section 6.1, 6.2, 6.3,
6.4, or 6.8, all options (whether granted prior to, contemporaneous with, or
subsequent to this Agreement) to purchase common stock granted by the Company
and held by Executive or a transferee of Executive shall be immediately forfeited
and cancelled.

6.7           Enforcement.  Executive
acknowledges and agrees that, by virtue of Executive’s position, services and
access to and use of confidential records and proprietary information, any
violation by Executive of any of the undertakings contained in this Section 6
would cause the Company immediate, substantial and irreparable injury for which
it has no adequate remedy at law. Accordingly, Executive agrees and consents to
the entry of an injunction or other equitable relief by a court of competent
jurisdiction restraining any violation or threatened violation of any
undertaking contained in this Section 6. Executive waives posting

 11
 

 

of any bond otherwise necessary to secure
such injunction or other equitable relief. Rights and remedies provided for in
this Section 6 are cumulative and shall be in addition to rights and remedies
otherwise available to the parties hereunder or under any other agreement or
applicable law.

6.8           Cooperation
with Regard to Litigation.  Executive agrees to cooperate reasonably with
the Company, during the Term and thereafter (including following Executive’s
termination of employment for any reason), by being available to testify on
behalf of the Company in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative. In addition, except to the extent
that Executive has or intends to assert in good faith an interest or position
adverse to or inconsistent with the interest or position of the Company,
Executive agrees to cooperate reasonably with the Company, during the Term and
thereafter (including following Executive’s termination of employment for any
reason), 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 reasonable expenses actually
incurred in connection with Executive’s cooperation and assistance including,
without limitation, reasonable fees and disbursements of counsel, if any,
chosen by Executive if Executive reasonably determines in good faith, on the
advice of counsel, that the Company’s counsel may not ethically represent
Executive in connection with such action, suit or proceeding due to actual or
potential conflicts of interests.

6.9           Survival.  The provisions of this Section 6 shall
survive the termination of the Term and any termination or expiration of this
Agreement.

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

7.             Code of Conduct.  Executive acknowledges that he has read the
Company’s Code of Conduct and agrees to abide by such Code, as amended or
supplemented from time to time, and other policies applicable to employees and
executives of the Company.

8.             Indemnification.  During the Term of this Agreement and all
periods after the expiration of this Agreement or termination of Executive’s
employment for any reason, the Company shall indemnify Executive to the full
extent permitted under the Company’s Certificate of Incorporation or By-Laws
and pursuant to any other agreements or policies in effect from time to time.
To the extent permitted under the Company’s Certificate of Incorporation and
By-Laws and applicable law, the Company shall advance expenses for which
indemnification may be claimed as such expenses are incurred, subject to any
requirement that Executive provide an undertaking to repay such advances if it
is ultimately determined that Executive is not entitled to indemnification;
provided, however, that any determination required to be made with respect to
whether Executive’s conduct complies with the standards required to be met as a
condition of indemnification or advancement of expenses under applicable law
and the Company’s Certificate of Incorporation, By-Laws, or other agreement,
shall be made by independent counsel mutually acceptable to Executive and the
Company (except to the extent otherwise required by law). Any provision
contained herein notwithstanding, this Agreement shall not limit or reduce, and
the

 12
 

 

Company hereby
agrees to provide to Executive, any and all rights to indemnification Executive
would otherwise have, to the full extent permitted under applicable law. In
addition, the Company will maintain directors’ and officers’ liability
insurance in effect and covering acts and omissions of Executive. For purposes
of this Section 8, references to the “Company” shall include both the Company
and each of its subsidiaries and/or affiliates for which Executive has acted,
acts or will in the future act in any capacity. The provisions of this Section
8 shall survive the termination of the Term and any termination or expiration
of this Agreement.

9.             Assignability; Binding Effect.  Neither this Agreement nor the rights or
obligations hereunder of the parties hereto shall be transferable or assignable
by Executive, except in accordance with the laws of descent and distribution
and as specified below. The Company may assign this Agreement and the Company’s
rights and obligations hereunder, and shall assign this Agreement and such
rights and obligations, to any Successor (as hereinafter defined) which, by
operation of law or otherwise, continues to carry on substantially the business
of the Company (or a business unit of the Company for which Executive provided
services) 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 those
relating to a particular business unit of the Company to which Executive
provides services, or otherwise. The Company may also assign this Agreement and
the Company’s rights and obligations hereunder to any affiliate of the Company,
provided that upon any such assignment the Company shall remain liable for the
obligations to Executive hereunder. This Agreement shall be binding upon and
inure to the benefit of Executive, Executive’s heirs, executors,
administrators, and beneficiaries, and shall be binding upon and inure to the
benefit of the Company and its successors and assigns.

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

11.           Severability.  If
any provision of this Agreement or the application of any such provision to any
person or circumstances shall be determined by any court of competent
jurisdiction 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

 13
 

 

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 making such determination shall reduce the scope,
duration and/or area of such provision (and shall substitute appropriate
provisions for any such invalid or unenforceable provisions) in order to make
such provision enforceable to the fullest extent permitted by law and/or shall
delete specific words and phrases, and such modified provision shall then be
enforceable and shall be enforced. The parties hereto recognize that if, in any
judicial proceeding, a court 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 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.

12.           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.

13.           Governing Law; Arbitration.

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

(b)           Arbitration.  The Executive and the Company agree that,
except for claims for Workers’ Compensation, Unemployment Compensation, and any
other claim that is non-arbitrable under applicable law, final and binding
arbitration shall be the exclusive forum for any dispute or controversy between
them, including, without limitation, disputes arising under or in connection
with this Agreement, Executive’s employment, and/or termination of employment,
with the Company; provided, however, that the Company shall be entitled to
commence an action in any court of competent jurisdiction for injunctive relief
in connection with any alleged actual or threatened violation of any provision
of Section 6. Judgment may be entered on the arbitrators’ award in any court
having jurisdiction. For purposes of entering such judgment or seeking
injunctive relief with regard to Section 6, the Company and Executive hereby
consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the Southern District of New York; (ii) the
Supreme Court of the State of New York, New York County; or (iii) any other
court having jurisdiction; provided, that damages for any alleged violation of
Section 6, as well as any claim, counterclaim or crossclaim brought by the
Executive or any third-party in response to, or in connection with any court
action commenced by the Company seeking said injunctive relief shall remain
exclusively subject to final and binding arbitration as provided for herein.
The Company and Executive hereby waive, to the fullest extent permitted by
applicable law, any objection which either may now or hereafter have to such
jurisdiction, venue and any defense of inconvenient forum.  Thus, except for the claims carved out above,
this Agreement includes all common-law and statutory claims (whether arising

 14
 

 

under federal state or local law), including, but not limited to, any
claim for breach of contract, fraud, fraud in the inducement, unpaid wages,
wrongful termination, and gender, age, national origin, sexual orientation,
marital status, disability, or any other protected status.

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

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

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

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

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

To
the Company:

Scientific Games Corporation

750 Lexington Avenue

New York, N.Y. 10022

 15
 

 

Attention: General
Counsel

To Executive:

Sally Conkright

33 Pier 7

Charlestown, MA 02129

[Remainder of Page Intentionally Left Blank]

 16
 

 

IN WITNESS WHEREOF, each of the parties hereto has
duly executed this Agreement on August 2, 2006, to be deemed effective as of
the date first above written.

	
   

  	
   

  
	
  

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ira H. Raphaelson

  
	
   

  	
  Title:

  	
  Vice President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Sally Conkright

  

 

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EXHIBIT A

LIST OF
PRE-EXISTING INVENTIONS OF EXECUTIVE

 18

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