Document:

Exhibit 10.3

 

Employment Agreement

 

This
Employment Agreement (the “Agreement”) is made as of November 29,
2010, by and between Scientific Games Corporation, a Delaware corporation (the “Company”),
and David L. Kennedy (“Executive”).

 

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

 

1.                    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 in this
Agreement.  This term of employment of
Executive under this Agreement (the “Term”) shall be the period
commencing on the date hereof and ending on December 31, 2013, subject to
earlier termination in accordance with Section 4 hereof.

 

2.                    Position and Duties.  During the Term,  Executive will serve as Executive Vice Chairman of the
Company and, subject to annual nomination by the Board of Directors of the
Company (the “Board”) and election by the Company’s stockholders, the
Board and as an officer or director of any subsidiary or affiliate of the
Company if elected to any such position by the stockholders or by the board of
directors of any such subsidiary or affiliate, as the case may be.  In such capacities, Executive shall perform
such duties and shall have such responsibilities as are normally associated
with such positions, including without limitation primary responsibility for
overseeing the operational and financial performance of the Company and
managing with and as directed by the Chief Executive Officer of the Company the
Company’s business unit leaders, and as otherwise may be assigned to Executive
from time to time by the Chief Executive Officer of the Company or upon the
authority of the Board.  Unless otherwise
determined by the Board, Executive will report to the Chief Executive Officer
of the Company.  Subject to Section 4(e) hereof,
Executive’s functions, duties and responsibilities are subject to reasonable
changes as the Company may in good faith determine from time to time.  Executive hereby agrees to accept such
employment and to serve the Company and its subsidiaries and affiliates to the
best of Executive’s ability in such capacities, devoting substantially all of
Executive’s business time to such employment; provided, however,
that Executive shall be entitled to devote reasonable time to (i) manage
his personal investments and otherwise attend to personal affairs, including
family financial and legal affairs, (ii) teach, lecture or perform other
public-service activities, and (iii) serve on the boards of directors of
up to three public corporations or other entities with the approval of the
Company (it being understood that Executive’s service as Vice Chairman and
executive officer of, and a member of the boards of directors of, Revlon Inc.
and Revlon Consumer Products Corp. is hereby approved), each in a manner that
does not materially conflict or unreasonably interfere with his
responsibilities hereunder. Unless otherwise determined by the Board, Executive
will work from the Company’s offices in Alpharetta, Georgia.

 

3.                    Compensation.

 

(a)                                  Base Salary.  During
the Term,  Executive will receive a base salary
of one million U.S. Dollars (US$1,000,000) per annum (pro-rated for any partial
year), payable in accordance with the Company’s regular payroll practices and
subject to such deductions or amounts to be withheld as required by applicable
law and regulations or as may be agreed to by Executive.  In the event that the Company, in its sole
discretion, from time to time determines to increase Executive’s base salary,
such increased amount shall, from and after the effective date of such
increase, constitute the “base salary” of Executive for purposes of this
Agreement.

 

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(b)                                 Incentive Compensation. 
Executive shall have the opportunity annually to earn incentive compensation in
amounts determined by the Compensation Committee of the Board (the “Compensation
Committee”) in accordance with the applicable incentive compensation plan
of the Company as in effect from time to time (“Incentive Compensation”).  Under such plan, Executive shall have the
opportunity annually (beginning with respect to the 2011 performance period) to
earn up to 100% of Executive’s base salary as Incentive Compensation at “target
opportunity” (“Target Bonus”) and up to 200% of Executive’s base salary
as Incentive Compensation at “maximum opportunity” on the terms and subject to
the conditions of such plan (any such Incentive Compensation to be subject to
such deductions or amounts to be withheld as required by applicable law and
regulations or as may be agreed to by Executive).

 

(c)                                  Eligibility for Annual Equity Awards. 
Executive shall be eligible to receive an annual grant of stock options,
restricted stock units or other equity awards with a value up to 155% of
Executive’s base salary in the sole discretion of the Compensation Committee
and in accordance with the applicable plans and programs for senior executives
of the Company and subject to the Company’s right to at any time amend or
terminate any such plan or program, so long as any such change does not
adversely affect any accrued or vested interest of Executive under any such
plan or program.

 

(d)                                 Expense Reimbursement.  Subject to
Section 3(f) hereof, 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 timely submission by
Executive of vouchers therefor in accordance with the Company’s standard
procedures.

 

(e)                                  Health and Welfare Benefits.  Executive has advised the
Company that he receives certain benefits from a former employer.  Accordingly, Executive will not participate
in any medical insurance, group health, disability, life insurance, accidental
death and dismemberment insurance, or other retirement plan or program that is
made available to employees by the Company. 
However, Executive shall be entitled to participate, without
discrimination or duplication, in any 401(k), deferred compensation or stock
ownership plan or program that is made generally available by the Company to
other senior executives in accordance with the terms of such plans and programs
and subject to the Company’s right to at any time amend or terminate any such plan
or program.  Executive shall be entitled
to four (4) weeks of paid vacation per annum, holidays consistent with the
Company’s policies, 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.  Payment of all compensation and
benefits to Executive specified in this Section 3 and in Section 4 of
this Agreement shall be subject to all legally required and customary
withholdings.  The Company makes no
representations regarding the tax implications of the compensation and benefits
to be paid to Executive under this Agreement, including, without limitation,
under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and applicable administrative guidance and regulations (“Section 409A”).  Section 409A governs plans and
arrangements that provide “nonqualified deferred compensation” (as defined
under the Code) which may include, among others, nonqualified retirement plans,
bonus plans, stock option plans, employment agreements and severance
agreements.  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 4 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 (6) months
following termination of employment). 
Notwithstanding anything herein to the contrary, if (i) at the time
of Executive’s “separation from service” (as defined in Treas. Reg. 

 

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Section 1.409A-1(h))
with the Company other than as a result of Executive’s death, (ii) Executive
is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of
the Code), (iii) one or more of the payments or benefits received or to be
received by Executive pursuant to this Agreement would constitute deferred
compensation subject to Section 409A, and (iv) the deferral of the
commencement of any such payments or benefits otherwise payable hereunder as a
result of such separation of service is necessary in order to prevent any
accelerated or additional tax under Section 409A, then the Company will
defer the commencement of the payment of any such payments or benefits
hereunder to the extent necessary (without any reduction in such payments or
benefits ultimately paid or provided to Executive) until the date that is six (6) months
following Executive’s separation from service with the Company (or the earliest
date as is permitted under Section 409A). 
Any remaining payments or benefits shall be made as otherwise scheduled
hereunder.  Furthermore, to the extent
any payments of money or other benefits due to Executive hereunder could cause
the application of an accelerated or additional tax under Section 409A,
such payments or other benefits shall be deferred if deferral will make such
payment or other benefits compliant under Section 409A, or otherwise such
payments or other benefits shall be restructured, to the extent possible, in a
manner determined by the Company that does not cause such an accelerated or
additional tax.  To the extent any
reimbursements or in-kind benefits due to Executive under this Agreement constitute
deferred compensation under Section 409A, any such reimbursements or
in-kind benefits shall be paid to Executive in a manner consistent with Treas.
Reg. Section 1.409A-3(i)(1)(iv). 
Each payment made under this Agreement shall be designated as a “separate
payment” within the meaning of Section 409A.

 

4.                                       Termination of Employment.  Executive’s employment may be terminated at
any time prior to the end of the Term under the terms described in this Section 4.

 

(a)                                  Termination by Executive for Other than Good Reason.  Executive
may terminate Executive’s employment hereunder for any reason or no reason upon
60 days’ prior written notice to the Company referring to this Section 4(a);
provided, however, that a termination by Executive for “Good
Reason” (as defined below) shall not constitute a termination by Executive for
other than Good Reason pursuant to this Section 4(a).  In the event Executive terminates Executive’s
employment for other than Good Reason, Executive shall be entitled only to the
following compensation and benefits (collectively, the “Standard Termination
Payments”):

 

(i)                           any accrued but unpaid base salary for services rendered by Executive to
the date of such termination, payable in accordance with the Company’s regular
payroll practices and subject to such deductions or amounts to be withheld as
required by applicable law and regulations or as may be agreed to by Executive;

 

(ii)                        all vested non-forfeitable amounts owing or accrued at the date of such
termination under benefit plans, programs and arrangements set forth or
referred to in Section 3(e) 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 5.6 hereof, all stock options,
restricted stock units and other equity-based awards will be governed by the
terms of the plans and programs under which such options, restricted stock
units 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 3(d) hereof.

 

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

 

(i)                                     the Standard Termination Payments; and

 

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

 

(c)                                  Termination By Reason of
Total Disability.  The Company may
terminate Executive’s employment  in the event
of Executive’s “Total Disability.”  For purposes of this Agreement, “Total
Disability” shall mean Executive’s (1) becoming eligible to receive
benefits under any long-term disability insurance program of the Company or
(2) 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 the Company by reason of Total Disability, the Company shall pay
the following amounts, and make the following other benefits available, to
Executive:

 

(i)                                     the Standard Termination Payments;

 

(ii)                                  an amount equal to the sum of (A) Executive’s annual base salary
and (B) Executive’s “Severance Bonus Amount” (as defined below), payable
over a period of twelve (12) months after such termination in accordance with Section 4(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 or
maintained by the Company or its affiliates providing benefits to
Executive.  For purposes of this
Agreement, “Severance Bonus Amount” shall mean an amount equal
to the highest annual Incentive Compensation paid to Executive in respect
of the two (2) most recent fiscal years of the Company but not more than
Executive’s Target Bonus for the-then current fiscal year (provided if
Executive was not employed by the Company during the prior fiscal year, the
Severance Bonus Amount shall be Executive’s Target Bonus for the then current
fiscal year); and

 

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

 

(d)                                 Termination by the Company for Cause.  The
Company may terminate the employment of Executive at any time for “Cause.”  For purposes of this Agreement, “Cause”
shall mean: (i) gross neglect by Executive of Executive’s duties
hereunder; (ii) Executive’s conviction (including conviction on a nolo contendere plea) of a felony or
any non-felony crime or offense involving the property of the Company or any of
its subsidiaries or affiliates or evidencing moral turpitude; (iii) willful
misconduct by Executive in connection with the performance of Executive’s
duties hereunder; (iv) intentional breach by Executive of any material
provision of this Agreement; (v) material violation by Executive of a
material provision of the Company’s Code of Conduct; or (vi) any other
willful or grossly negligent conduct of Executive that would make the continued
employment of Executive by the Company materially prejudicial to the best
interests of the Company.  In the event
Executive’s employment is terminated for “Cause,” Executive shall not be
entitled to receive any compensation or benefits under this 

 

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Agreement except for the
Standard Termination Payments.  For
purposes of this Agreement, an act or failure to act on Executive’s part shall
be considered “willful” if it was done or omitted to be done by Executive
knowingly, purposefully and not in good faith.

 

(e)                                  Termination by the Company without Cause or by
Executive for Good Reason.  The Company may
terminate Executive’s employment at any time without Cause, for any reason or
no reason, and Executive may terminate Executive’s employment for “Good Reason.”  For purposes of this Agreement “Good
Reason” shall mean that, without Executive’s prior written consent, any of
the following shall have occurred:  (i) a
material change, adverse to Executive, in Executive’s positions, titles,
offices, or duties as provided in Section 2 hereof, except, in such case,
in connection with the termination of Executive’s employment for Cause or due
to Total Disability, death or expiration of the Term; (ii) an assignment
of any significant duties to Executive which are materially inconsistent with
Executive’s positions or offices held under Section 2 hereof; (iii) a
material decrease in base salary or material decrease in Executive’s incentive
compensation opportunities provided under this Agreement; (iv) change the location
of Executive’s office from the existing location in Alpharetta, Georgia to a
place not within forty (40) miles of the existing location in Alpharetta,
Georgia; (v) any other material failure by the Company to perform any
material obligation under, or material breach by the Company of any material
provision of, this Agreement; provided, however, that a
termination by Executive for Good Reason under any of clauses (i) through (v) of
this Section 4(e) shall not be considered effective unless Executive
shall have provided the Company with written notice of the specific reasons for
such termination within thirty (30) days after he has knowledge of the event or
circumstance constituting Good Reason and the Company shall have failed to cure
the event or condition allegedly constituting Good Reason within thirty (30)
days after such notice has been given to the Company.  In the event that Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason (and
not, for the avoidance of doubt, in the event of a termination pursuant to Section 4(a),
(b), (c) or (d) hereof or due to the expiration of the Term), the
Company shall pay the following amounts, and make the following other benefits
available, to Executive.

 

(i)                                     the Standard Termination Payments;

 

(ii)                                  an amount equal to (A) two (2) multiplied by (B) the sum
of (1) Executive’s annual base salary and (2) Executive’s Severance
Bonus Amount, such amount payable over a period of twenty-four (24) months
after such termination in accordance with Section 4(f) of this
Agreement;

 

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

 

(iv)                              subject to Section 5.6 hereof and except to the extent otherwise
provided at the time of grant under the terms of any equity award made to
Executive, all stock options, restricted stock units and other equity-based
awards held by Executive at such termination will become fully vested and
non-forfeitable, and, in all other respects, all such 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.

 

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(f)                                    Timing of Certain Payments under Section 4.  Payments
pursuant to Sections 4(c)(ii) and 4(e)(ii), if any, shall be payable in
equal installments in accordance with the Company’s standard payroll practices
over the applicable period of months contemplated by such Sections following
the date of termination (subject to such deductions or amounts to be withheld
as required by applicable law and regulations); provided, however,
that if and to the extent necessary to prevent any acceleration or additional
tax under Section 409A, such payments shall be made as follows:  (i) no payments shall be made for a
six-month period following the date of Executive’s separation of service (as
defined in Section 409A(a)(2)(B)(i) of the Code) with the Company; (ii) an
amount equal to the aggregate sum that would have been otherwise payable during
the initial six-month period shall be paid in a lump sum six (6) months
following the date of Executive’s separation of service with the Company
(subject to such deductions or amounts to be withheld as required by applicable
law and regulations); and (iii) during the period beginning six (6) months
following Executive’s separation of service with the Company through the
remainder of the applicable period, payment of the remaining amount due shall
be payable in equal installments in accordance with the Company’s standard
payroll practices (subject to such deductions or amounts to be withheld as
required by applicable law and regulations). 
In addition, notwithstanding any other provision with respect to the
timing of payments under this Agreement, if and to the extent necessary to
comply with Section 409A, amounts payable following termination of
employment in a lump sum, including pursuant to Sections 4(c)(iii) and
4(e)(iii) of this Agreement, shall instead be paid six (6) months
following the date of Executive’s separation of service (subject to such
deductions or amounts to be withheld as required by applicable law and
regulations).

 

(g)                                 No Obligation to Mitigate.  Executive
shall have no obligation to mitigate damages pursuant to this Section 4,
but shall be obligated to promptly advise the Company regarding obtaining other
employment providing health insurance benefits with respect to services
provided to another employer during any period of continued payments pursuant
to this Section 4.  The Company’s
obligation to make continued insurance payments to or on behalf of Executive
shall be reduced by any insurance coverage obtained by Executive during the
severance period through employment by another entity (without regard to when
such coverage is paid).

 

(h)                                 Set-Off.  To the fullest extent permitted by law and
provided an acceleration of income or the imposition of an additional tax under
Section 409A would not result, any amounts otherwise due to Executive
hereunder (including, without limitation, any payments pursuant to this Section 4)
shall be subject to set-off with respect to any amounts 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 5.  Executive agrees, as a
condition to receipt of any termination payments and benefits provided for in
this Section 4 (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 shall provide Executive with the
proposed form of release referred to in the immediately preceding sentence no
later than two (2) days following the date of termination.  Executive shall have 21 days to consider the
release and, if he executes the release, shall have seven (7) days after
execution of the release to revoke the release, and, absent such revocation,
the release shall become binding. 
Provided Executive does not revoke the release, payments contingent on
the release (if any) shall be paid no earlier than eight (8) days after
execution thereof in 

 

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accordance with the
applicable provisions herein.  The
Company’s obligation to make any termination payments and benefits provided for
in this Section 4 (other than the Standard Termination Payments) shall
immediately cease if Executive willfully and materially breaches Section 5.1,
5.2, 5.3, 5.4, or 5.8 hereof.

 

5.                                       Noncompetition; Non-solicitation; Nondisclosure; etc.

 

5.1 Noncompetition;
Non-solicitation.

 

(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 3 and 4
hereof), Executive agrees that during the Term (including any extensions
thereof) and during the Covered Time (as defined in Section 5.1(e) hereof),
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 5,
“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), video gaming, including fixed odds
or server-based betting terminals and video lottery terminals; development and
commercialization of licensed and other proprietary game entertainment for all
lottery product channels; provision of wagering (whether pari-mutuel (pooled)
or otherwise) or venue management services for racetracks and off-track betting
facilities; production of prepaid cellular phone cards; or any other business
in which the Company 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; (ii) in which
Executive was engaged or involved (whether in an executive or supervisory
capacity or otherwise) on behalf of the Company or with respect to which
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.  Nothing in this Section 5
is intended to preclude the unknowing ownership or trading of securities in a
competing business through a mutual fund by Executive.  Moreover, the acquisition of up to 2% of the
outstanding equity, debt securities, or other equity interests or any person,
corporation, partnership, or other business entity for passive investment
purposes shall not, in and of itself, be construed as engaging in a Competing
Business.

 

(b)                                 In further consideration of the amounts that may hereafter be paid to
Executive pursuant to this Agreement (including, without limitation, Sections 3
and 4 hereof), 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, (A) Executive will provide copies of Section 5
of this Agreement to the Competitor, and

 

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(B) 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 person or
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 5.1 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 3 and 4 hereof) 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 5.1, “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.

 

5.2       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, or affiliation with, 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 person or entity,
any such proprietary information, unless and to the extent 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, Executives, or agents (without breach
of any obligation of confidentiality of which Executive has actual knowledge at
the time of the relevant disclosure by Executive).  Notwithstanding the foregoing and Section 5.3
hereof, Executive may disclose 

 

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or use proprietary information or confidential
records solely to the extent (A) such disclosure or use may be required or
appropriate in the performance of his duties as a director or employee of the
Company, (B) required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) with
apparent jurisdiction to order him to divulge, disclose or make accessible such
information (provided that in such case Executive shall first give the Company
prompt written notice of any such legal requirement, disclose no more
information than is so required and cooperate fully with all efforts by the
Company to obtain a protective order or similar confidentiality treatment for
such information), (C) such information or records becomes generally known
to the public or trade without his violation of this Agreement, or (D) disclosed
to Executive’s spouse, attorney and/or his personal tax and financial advisors
to the extent reasonably necessary to advance Executive’s tax, financial and
other personal planning (each an “Exempt Person”); provided, however,
that any disclosure or use of any proprietary information or confidential
records by an Exempt Person shall be deemed to be a breach of this
Section 5.2 or Section 5.3 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, or
affiliation with, the Company prior to the Term) shall belong to the Company,
provided that such Inventions grew out of 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 Executive’s
inventorship.  If any Invention is
described in a patent application or is disclosed to third parties, directly or
indirectly, by Executive within two (2) years after the termination of
Executive’s employment with 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.

 

5.3  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 to the extent 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 person or entity other than in the course of such person’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.

 

5.4  Non-disparagement.  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.

 

9

 

5.5 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.

 

5.6 Forfeiture of Outstanding Equity Awards; “Clawback”
Policies.  The
provisions of Section 4 hereof notwithstanding, if Executive willfully and
materially fails to comply with Section 5.1, 5.2, 5.3, 5.4, or 5.8 hereof,
all options to purchase common stock, restricted stock units and other
equity-based awards granted by the Company (whether prior to, contemporaneous
with, or subsequent to the date hereof) and held by Executive or a transferee
of Executive shall be immediately forfeited and cancelled.  Executive acknowledges and agrees that,
notwithstanding anything contained in this Agreement or any other agreement,
plan or program, any incentive-based compensation or benefits contemplated
under this Agreement (including Incentive Compensation and equity-based awards)
shall be subject to recovery by the Company under any compensation recovery or “clawback”
policy, generally applicable to senior executives of the Company, that the
Company may adopt from time to time, including without limitation any policy
which the Company may be required to adopt under Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and
regulations of the Securities and Exchange Commission thereunder or the
requirements of any national securities exchange on which the Company’s common
stock may be listed.

 

5.7 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 5 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 5.  Executive waives
posting of any bond otherwise necessary to secure such injunction or other
equitable relief.  Rights and remedies
provided for in this Section 5 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.

 

5.8 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.

 

5.9 Survival.  The provisions of this Section 5
shall survive the termination of the Term and any termination or expiration of
this Agreement.

 

5.10 Company.  For purposes of this Section 5,
references to the “Company” shall 

 

10

 

include the Company and
each subsidiary and/or affiliate of the Company.

 

6.                                       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.

 

7.                                       Indemnification. 
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 in connection with any
action, suit or proceeding to which Executive may be made a party by reason of
Executive being an officer, director or employee of the Company or of any
subsidiary or affiliate of the Company.

 

8.                                       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.  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.

 

9.                                       Complete Understanding; Amendment; Waiver. 
This Agreement constitutes the complete understanding between the parties
hereto with respect to the employment of Executive and supersedes all other
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof, and no statement,
representation, warranty or covenant has been made by either party hereto with
respect thereto except as expressly set forth herein.  Except as contemplated by Section 3(f) hereof,
this Agreement shall not be modified, amended or terminated except by a written
instrument signed by each of the parties hereto.  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 hereto charged with giving such waiver.  Waiver by either party hereto of any breach
hereunder by the other party hereto shall not operate as a waiver of any other
breach, whether similar to or different from the breach waived.  No delay by either party hereto in the
exercise of any rights or remedies shall operate as a waiver thereof, and no
single or partial exercise by either party hereto of any such right or remedy
shall preclude other or further exercise thereof.

 

10.                                 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 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 

 

11

 

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.

 

11.                                 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.

 

12.                                 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.

 

(i)                                     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 5
hereof.  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 5 hereof, 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 5 hereof, as well as any
claim, counterclaim or cross-claim brought by Executive or any third-party in response
to, or in connection with any court action commenced by the Company seeking
said injunctive relief shall remain exclusively subject to final and binding
arbitration as provided for herein.  The
Company and Executive hereby waive, to the fullest extent permitted by
applicable law, any objection which either may now or hereafter have to such
jurisdiction, 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 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.

 

(ii)                                  Any arbitration under this Agreement shall be filed exclusively with,
and administered by, 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 

 

12

 

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.  Executive understands that he is giving up no
substantive rights, and this Agreement simply governs forum.  The
arbitrators shall apply the same standards a court would apply to award any
damages, attorney fees or costs. 
Executive shall not be required to pay any fee or cost that he would not
otherwise be required to pay in a court action, unless so ordered by the
arbitrators.

 

(c)                                  WAIVER OF JURY TRIAL.  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.

 

13.                                 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.

 

14.                                 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 hereto shall have the same opportunity to
present evidence as to the actual intent of the parties hereto with respect to
any such ambiguous language without any inference or presumption being drawn
against any party hereto.

 

15.                                 Notices.  All notices and other communications
to be given or to otherwise be made to any party to this Agreement shall be
deemed to be sufficient if contained in a written instrument delivered in
person or duly sent by certified mail or by a recognized national courier
service, postage or charges prepaid, (a) to Scientific Games Corporation,
Attn General Counsel, at 750 Lexington Avenue, 25th Floor, New York, NY
10022, (b) to Executive, at the last address shown in the Company’s
records, or (c) to such other replacement address as may be designated in
writing by the addressee to the addressor.

 

13

 

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

 

 

	
   

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Jeffrey S. Lipkin

  
	
   

  	
  Name:

  	
  Jeffrey S. Lipkin  

  
	
   

  	
  Title:

  	
  Senior Vice President and Chief
  Financial  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David L. Kennedy  

  
	
   

  	
  Name: David L. Kennedy

  

 

14

 

Exhibit A

 

Inventions

 

None

 

15Exhibit 10.4

 

Asia-Pacific Business Incentive Compensation Program

 

Purpose:

 

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

 

Definitions:

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

“Final
Trigger Date” means December 31, 2014.

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

Payouts:

 

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

 

Service
Requirement:

 

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

 

6

 

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

 

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

 

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

 

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

 

7

 

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

 

Clawback:

 

Each
Participant acknowledges and agrees that, notwithstanding anything contained in
this Plan or any other agreement, plan or program, any payments contemplated
under this Plan shall be subject to recovery by the Company under any
compensation recovery or “clawback” policy, generally applicable to senior
executives of the Company, that the Company may adopt from time to time,
including without limitation any policy which the Company may be required to
adopt under Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the rules and regulations of the Securities and
Exchange Commission thereunder or the requirements of any national securities
exchange on which the Company’s common stock may be listed.

 

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

 

Limits
on Transferability:

 

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

 

8

 

Taxes:

 

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

 

Limitation
on Rights Conferred under Plan:

 

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

 

Amendments;
Waivers:

 

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

 

Administration;
Interpretation:

 

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

 

9

 

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

 

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

 

Limitation
of Liability:

 

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

 

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

 

Section 409A:

 

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

 

10

 

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

 

Governing
Law; Dispute Resolution:

 

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

 

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

 

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

 

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

 

11

 

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

 

12

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