Document:

Exhibit 10.3

 

 

 

May 8,
2008

 

Michael
Chambrello

President &
Chief Operating Officer

Scientific
Games Corporation

750
Lexington Avenue

25th
Floor

New
York, New York 10022

 

                Re:          Contract Extension & Modification

 

Dear
Mr. Chambrello:

 

It
is my pleasure to confirm Scientific Games Corporation’s (“SGC” or “Company”)
desire and your agreement to extend the term of your contract of July 1,
2005 as already modified by letter of August 2, 2006 (the “2005 Agreement”),
through December 31, 2010 on the terms and conditions outlined therein
except to the extent modified herein (the “2008 Extension”):

 

Section 3a
(Base Salary).  Notwithstanding
anything to the contrary in Section 3a of the 2005 Agreement, your Base
Salary will be $915,630 for 2008.

 

Section 3b
(Incentive Compensation).  Notwithstanding
anything to the contrary in Section 3b of the 2005 Agreement, you will
participate in the MICP at a 100% target bonus level with a 200% maximum
opportunity for 2008 and thereafter.

 

Section 3d
(Eligibility for Annual Equity Award Incentive)(LTI)  Notwithstanding anything to the contrary in Section 3d
of the 2005 Agreement, you will be eligible at a 150% level for annual equity
awards for 2008 and thereafter.

 

Conforming & Sign-on Grant: To conform the transition of
your sign-on equity grants from the 2005 Agreement when the Company adjusted
the vesting schedule from three to five years and as a sign-on bonus for
entering into this 2008 Extension, but subject to the approval of the Company’s
stockholders of an amendment to the Company’s 2003 Incentive Compensation Plan,
as amended and restated (the “Equity Plan”) (or a new equity compensation plan)
that provides for a sufficient increase in the number of shares of common stock
of the Company available for equity awards, promptly upon such 

 

 

 

 

1

 

 

Shareholder approval, the Company shall grant to you an additional
12,000 restricted stock units (RSUs) vesting upon shareholder approval of
sufficient shares to support the grant and an additional 48,000 restricted
stock units (RSUs) under the Equity Plan and individual equity agreements to be
entered into by and between the Company and Executive (the “Equity Agreements”).  The equity agreements for the 48,000 RSUs
shall provide that the equity awards (performance based) shall vest with
respect to twenty percent (20%) of the shares of common stock subject to such
award on each of the first five anniversaries of the grant date, subject to
certain provisions relating to accelerated vesting and forfeiture as described
in the 2005 Agreement, the 2008 Extension, the Equity Agreements or the Equity
Plan.

 

Section 5(d)(i) (Termination by Executive for Good
Reason).  The following sub-Section 5(d)(i) of
the 2005 Agreement will be deemed amended to read: (i) a material change,
adverse to the Executive’s positions, titles, offices, or duties as provided in
Section 2 or to the Executive’s responsibilities or authorities, including
the Executive’s functional independence or operational prerogatives as of date
of extended term, except, in such case, in connection with the termination of
Executive’s employment for Cause, Total Disability or death;

 

Section 6 (Equity Acceleration Upon Certain Events of
Termination). The following shall apply as additional severance
benefit under each of Sections 6(b), 6(c), 6(e), and 6(j) of the 2005
Agreement as modified herein:

 

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

 

Provided, however, that all severance benefits under the 2005 Agreement
including those as modified by the 2008 Extension will be additionally subject
to the following provisions:

 

Taxes and Internal Revenue Code 409A.  The Company makes no representations
regarding the tax implications of the compensation and benefits to be paid to
Executive under this Agreement, including, without limitation, under Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable
administrative guidance and regulations. 
Internal Revenue Code Section 409A governs plans and arrangements
that provide “nonqualified deferred compensation” (as defined under the Code)
which may include, among others, nonqualified retirement plans, bonus plans,
stock option plans, employment agreements and severance agreements.  The Company reserves the right to provide
compensation and benefits under any plan or arrangement in amounts, at times
and in a manner that minimizes taxes, interest or penalties as a result of Section 409A.
In addition, in the event any benefits or amounts paid hereunder are deemed to
be 

 

 

 

2

 

 

subject to Section 409A, including payments under Section 5
of the 2005 Agreement as modified by the 2008 Extension, Executive consents to
the Company adopting such conforming amendments as the Company deems necessary,
in its reasonable discretion, to comply with Section 409A (including, but
not limited to, delaying payment until six months following termination of
employment).

 

Timing of Certain Payments
Under Section 6.  Payments pursuant to the
severance provisions in the 2005 Agreement, as modified by the 2008 Extension,
if any, shall be payable in equal installments in accordance with the Company’s
standard payroll practices over a period of twelve (12) months following the
date of termination; provided, however, that if necessary to comply with Section 409A
of the Code, and applicable administrative guidance and regulations, such
payments shall be made as follows:  (1) no
payments shall be made for a six-month period following the date of
termination, (2) an amount equal to the aggregate sum that would have been
otherwise payable during the initial six-month period shall be paid in a lump
sum six months following the date of termination, and (3) during the
period beginning six months following the date of termination through the
remainder of the twelve-month period, payment of the remaining amount due shall
be payable in equal installments in accordance with the Company’s standard
payroll practices. In addition, notwithstanding any other provision with
respect to the timing of payments under this Agreement, if necessary to comply
with Section 409A of the Code, and applicable administrative guidance and
regulations, amounts payable following termination of employment in a lump sum
shall instead be paid six months following the date of termination.

 

If this agreement comports with your understanding, please acknowledge
it by signing and dating one original and returning it to me, retaining the
other original for your files.

 

	
  Very
  Truly Yours,

  
	
   

  
	
   

  
	
  /s/
  Ira H. Raphaelson

  	
   

  
	
  Ira
  H. Raphaelson

  
	
   

  
	
   

  
	
   

  
	
  Acknowledged &
  Agreed:

  
	
   

  
	
   

  
	
  /s/
  Michael Chambrello

  	
   

  
	
  Michael
  Chambrello

  
	
   

  
	
  May 8,
  2008

  

 

 

 

 

3ex41.htm

    INVESTMENT
LETTER

    

    CAPITAL
EQUITY FINANCE, INC.

    5775
Blue Lagoon Drive

    Suite
100

    Miami,
Florida 33126

    

    October
29, 2007

    

    NOTICE

    

    Any
sale in Florida made pursuant to Florida Statute § 517.061 pertaining to
transactions exempt from registration is voidable by the purchaser in such sale
within three (3) days after the first tender of consideration is made by such
purchaser to the issuer, an agent of the issuer, or an escrow
agent.

    

    Ladies
and Gentlemen:

    

    You have
informed the undersigned (the “Purchaser”) that CAPITAL EQUITY FINANCE, INC, a
Florida corporation that has no assets and no business other than to seek a
merger with a private operating business (the “Company” or “you”), wishes to
raise a maximum of Thirty Thousand Dollars ($30,000) to pay for administrative,
accounting, and legal expenses from various accredited investors by selling the
Company’s Common Stock, $0.001 par value (the “Shares”), at a price of Two and
One-Half Cents ($0.025) per Share.

    

    I
understand that you will rely on the following information to confirm that I am
an “Accredited Investor”, as defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities Act”), and that I am
qualified to be a Purchaser.

    

    In
connection with and as consideration for the receipt of ____________ Shares for
a total price of $______________ by the undersigned Purchaser, the Purchaser
hereby represents, warrants, covenants and agrees as set forth
below.

    

    1.           Purchase
Entirely for Own Account. The Shares are being acquired for investment purposes
only, for the Purchaser's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares or any portion thereof. Further, the Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to all or any portion of the Shares.

    

    2.           No
Securities Act Registration. The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a specific exemption or
specific exemptions from the registration provisions of the Securities Act which
depend upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed herein.

    
      
        Initials____

         

      

      
        -1-

        
          

        

      

      
         

      

    

    

    3.           Restricted
Securities. The Purchaser acknowledges that, because the Shares have been issued
to a founder of, or early investor in, a shell company or blank check company,
the Shares must be held by the Purchaser indefinitely unless subsequently
registered under the Securities Act, or unless the federal securities laws are
amended to reduce applicable holding periods and/or to eliminate founder
securities resale restrictions.  Therefore, the provision of Rule 144
promulgated under the Securities Act that permits the limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions is not available for the resale of the Shares under current
law.

    

    4.           No
Market for Shares.  The Purchaser is fully aware that there is no
public market where the Shares may be resold, that the Shares are illiquid, and
that the Purchaser must hold the Shares indefinitely.

    

    5.           No
Representations by the Company.  The Purchaser represents to the
Company that the Company has not made any representations or promises, material
or otherwise, concerning the Company, its business model, the target of any
proposed acquisition, the Company’s prospects for a merger, its financial
condition, or the backgrounds of any individual involved in the Company or in
selling the Shares, as an inducement to purchase the Shares.

    

    6.           Information.  The
Purchaser is aware that all information about the Company is either set forth in
this Investment Letter or in the Company’s Form 10-SB, as amended, filed by the
Company with the U.S. Securities & Exchange Commission (“SEC”) at
www.sec.gov (by following the link to “Filing and Forms (EDGAR),” then “Search
for Company Filings”, then “Companies & Other Filers” and then entering the
words “Capital Equity Finance”), and in other disclosure documents filed by the
Company with the SEC from time to time.

    

    7.           Accredited
and Sophisticated Investor. The Purchaser represents and warrants that: (a)
either alone or with the Purchaser's professional advisor or advisors, he or she
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of acquiring the Shares, (c) is able
to bear the economic risk of the investment in the Shares, including a complete
loss of the investment, and (c) (a) is an accredited investor as defined in Rule
501(a) of Regulation D of the Securities and Exchange Commission; and, because
Purchaser:

     

    (CHECK
ALL BOXES BELOW THAT APPLY TO YOUR CIRCUMSTANCES)

     

    INDIVIDUALS

     

    ____                      (a)           is
an individual with a net worth, or a joint net worth together with his or her
spouse, in excess of $1,000,000.  (In calculating net worth, you may
include equity in personal property and real estate, including your principal
residence, cash, short-term investments, stock and securities.  Equity
in personal property and real estate should be based on the fair market value of
such property minus debt secured by such property.)

    

    ____                      (b)           is
an individual that had an individual income in excess of $200,000 in each of the
prior two years and reasonably expects an income in excess of $200,000 in the
current year; or

    

    ____                      (c)           is
an individual that had with his/her spouse joint income in excess of $300,000 in
each of the prior two years and reasonably expects joint income in excess of
$300,000 in the current year.

    

    ____                      (d)           is
a director or executive officer of Capital Equity Finance, Inc. or its
subsidiaries.

    
      
        Initials____

         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    ENTITIES

     

    

    ____                      (e)           is
an entity all of whose equity owners meet one of the tests set forth in (a)
through (d) above.

    

    ____                      (f)           is
an entity, and one or more of the following statements is applicable (check the
applicable boxes):

    

    ____                      (i)           The
Purchaser (or, in the case of a trust, the Purchaser trustee) is a bank or
savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A),
respectively, of the Securities Act acting either in its individual or fiduciary
capacity.

    

    ____                      (ii)           The
Purchaser is an insurance company as defined in Section 2(13) of the Securities
Act.

    

    ____                      (iii)           The
Purchaser is an investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section 2(a)(48) of that
Act.

    

    ____                      (iv)           The
Purchaser is a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

    

    ____                      (v)           The
Purchaser is an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974 and either (check one
or more, as applicable):

    

    
      	
               
      

            	
              ____

            	
              (a)

            	
              the
      investment decision is made by a plan fiduciary, as defined in Section
      3(21) of such Act, which is either a bank, savings and loan association,
      insurance company, or registered investment adviser;
  or

            

    

    

    
      	
               
      

            	
              ____

            	
              (b)

            	
              the
      employee benefit plan has total assets in excess of $5,000,000;
      or

            

    

    
      

      
        	
                 
      

              	
                ____

              	
                (c)

              	
                      
                  the
      plan is a self-directed plan with investment decisions made solely by
      persons who are “Accredited Investors” as defined under the 1933
      Act.

                

              

      

       

    

    ____                      (vi)           The
Purchaser is a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.

    

    ____                      (vii)           The
Purchaser has total assets in excess of $5,000,000, was not formed for the
specific purpose of purchasing the Shares and is one or more of
the following (check one or more, as appropriate):

    
      
        Initials____

         

      

      
        -3-

        
          

        

      

      
         

      

    

    
      

      
        	
                 
      

              	
                ____

              	
                (a)

              	
                an
      organization described in Section 501(c)(3) of the Internal Revenue Code;
      or

              

      

      
        

        
          	
                   
      

                	
                  ____

                	
                  (b)

                	
                  a
      corporation; or

                

        

        
          

          
            	
                     
      

                  	
                    ____

                  	
                    (c)

                  	
                    a
      Massachusetts or similar business trust;
or

                  

          

          
            

            
              	
                       
      

                    	
                      ____

                    	
                      (d)

                    	
                      a
      partnership; or

                    

            

             

          

        

      

    

    
      	
               
      

            	
              ____

            	
              (e)

            	
              a
      plan established by a state, its political subdivisions, or any agency or
      instrumentality of a state or its political subdivisions, for the benefit
      of its employees.

            

    

    

    ____                      (viii)                      The
Purchaser is a trust with total assets exceeding $5,000,000, which was not
formed for the specific purpose of purchasing the Shares and whose purchase is
directed by a person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
investment in the Shares.

    

    8.           Opportunity
to Ask Questions. No offering memorandum or prospectus is being distributed in
connection with this offer. Therefore, the Purchaser has had an opportunity to
ask questions of, and receive answers from, the Company or its representatives
concerning the terms of the Purchaser's investment in the Shares; all such
questions have been answered to the full satisfaction of the Purchaser, and the
Purchaser has had the opportunity to request and obtain any additional
information the Purchaser deemed necessary to verify or supplement the
information contained therein.

    

    9.           Investment
Risks. The Purchaser recognizes that an investment in the Shares and the
investment in any shell corporation involves substantial risks, and the
Purchaser is fully aware of and understands all of the risk factors related to
the acquisition of the Shares. The Purchaser has determined that the acquisition
of the Shares is consistent with the Purchaser's investment objectives. The
Purchaser is able to bear the economic risks of an investment in the Shares, and
at the present time could afford a complete loss of such
investment.

    

    10.           Limitation
on Manner of Offering. The Shares were not offered to the Purchaser by any means
of general solicitation or general advertising.

    

    11.           Tax
and Other Matters. The Purchaser is not relying on the Company with respect to
tax and other economic considerations involved in the acquisition of the Shares.
The Purchaser has carefully considered and has, to the extent the Purchaser
believes such discussion necessary, discussed with the Purchaser's professional,
legal, tax, accounting and financial advisors the suitability of an investment
in the Shares for the Purchaser's particular tax and financial situation and the
Purchaser has determined that the Shares are a suitable investment for
him.

    

    
      
        Initials____

         

      

      
        -4-

        
          

        

      

      
         

      

    

    12.           Restrictive
Legends. The Purchaser understands that the Shares shall bear one or more of the
following restrictive legends:

    

    (a)
“THESE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”) OR THE SECURITIES LAWS OF ANY
STATE.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION UNDER THE ACT AND SUCH LAWS IS NOT REQUIRED.”

    

    (b) Any
legend required by applicable state law.

    

    13.           Registration
Rights.  As promptly as practicable after the effective date of a
merger between the Company and a private entity, the Company agrees to file a
Registration Statement to register the resale of all of the Shares, provided
that, in the opinion of the Company, if the Shares would become eligible for
trading under Rule 144 during the six-month period following the merger pursuant
to change in existing law, then the Company shall not be required to file a
registration statement for the Shares.

    

    14.           Price
Protection. The
Company agrees that it will issue additional Common Stock to the Purchaser, if
at any time between the date the Shares are Purchased by Purchaser through the
date of a merger between the Company and a private entity, the Company sells its
Common Stock to a purchaser for less than $0.025 per share, provided that the
Purchaser has not sold, transferred or assigned its interest in the Shares on or
before the merger event, then the Company shall automatically issue to the
Purchaser herein such additional Shares to equal the difference in value between
the reduced price per share paid by the new purchaser multiplied by the quantity
of the Purchaser’s Shares acquired pursuant to this Agreement.

    

    15.           Successors.
The representations and warranties contained herein shall be binding upon the
heirs, executors, administrators, personal representatives and other successors
of the Purchaser and shall inure to the benefit of and be enforceable by the
Company.

    

    16.           Address.
The address, telephone number and facsimile number set forth at the end of this
Investment Letter are the Purchaser's true and correct address.

    

    17.           Counsel.
The Purchaser has had the opportunity to discuss this Investment Letter with
counsel of its selection, and the Purchaser has availed itself of the
opportunity to do so to the extent he or she desires. The Purchaser is not
relying upon the advice of the Company or counsel to the Company to advise the
Purchaser in connection with the risks and merits of consummating the
transactions contemplated by this Investment Letter.

    

    18.           Governing
Law. The terms of this Investment Letter shall be governed by and construed in
accordance with the laws of the State of Florida applicable to contracts made
and to be performed entirely within Florida.

     

    
      
        Initials____

         

      

      
        -5-

        
          

        

      

      
         

      

    

    19.           Entire
Agreement.  This Investment Letter sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-à-vis each other on the subject matter hereof.  Any
previous agreements or understandings among the parties regarding the subject
matter hereof are merged into and superseded by this Investment
Letter.

     

    SHAREHOLDER

    

    _______________________________                    _______________________________

    (Signature)                                                                           (Signature
of Spouse)

    

    _______________________________                     _______________________________

    (Print
Name)                                                                           (Print
Name)

    

    _______________________________                  
________________________________

    (Dated)                                                                                       
 (Dated)

    

    Mailing
Address:                 _______________________

    _______________________

    _______________________

    

    Telephone:                           _______________________

    

    Tax ID
Number:                  _______________________

    

    

    Number of
Shares:____________________

    

    Purchase
Price: $_____________________

     

    

    

    We Accept
the above Investment.

    

    CAPITAL
EQUITY FINANCE, INC.

    

    

    By:_________________________________

    Luz M.
Weigel

    President

    

    

    
      
        Initials____

         

      

      
        -6-

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