Document:

1997 Incentive
Compensation Plan

 

 

Exhibit 10.14

 

1997 Incentive
Compensation Plan

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Purpose 

  	
  3

  
	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  3

  
	
   

  	
   

  
	
  3.

  	
  Administration

  	
  5

  
	
   

  	
  (a)

  	
  Authority of the
  Committee

  	
  5

  
	
   

  	
  (b)

  	
  Manner of Exercise of
  Committee Authority

  	
  5

  
	
   

  	
  (c)

  	
  Limitation of Liability

  	
  6

  
	
   

  	
   

  
	
  4.

  	
  Limitations on Plan
  Awards.

  	
  6

  
	
   

  	
  (a)

  	
  Overall Number of
  Shares Available for Delivery

  	
  6

  
	
  (b)

  	
  Application of
  Limitation to Grants of Awards

  	
  6

  
	
  (c)

  	
  Availability of Shares
  Not Delivered under Awards

  	
  7

  
	
   

  	
   

  
	
  5.

  	
  Eligibility; Per-Person
  Award Limitations

  	
  7

  
	
   

  	
   

  
	
  6.

  	
  Specific Terms of
  Awards

  	
  7

  
	
   

  	
  (a)

  	
  General

  	
  7

  
	
  (b)

  (c)

  (d)

  (e)

  	
  Options

  	
  7

  
	
  Stock Appreciation
  Rights

  	
  8

  
	
  Restricted Stock

  	
  8

  
	
  Deferred Stock

  	
  9

  
	
   

  	
  (f)

  (g)

  (h)

  	
  Bonus Stock and Awards
  in Lieu of Obligations

  	
  10

  
	
  Dividend Equivalents

  	
  10

  
	
  Other Stock-Based
  Awards

  	
  10

  
	
  (i)

  	
  Performance Goals
  Applicable to Designated Covered Employees

  	
  11

  
	
   

  	
   

  
	
  7.

  	
  Certain Provisions
  Applicable to Awards

  	
  12

  
	
  (a)

  (b)

  (c)

  (d)

  	
  Stand-Alone,
  Additional, Tandem, and Substitute Awards

  	
  12

  
	
  Term of Awards

  	
  12

  
	
  Form and Timing of
  Payment under Awards; Deferrals

  	
  13

  
	
  Exemptions from Section
  16(b) Liability

  	
  13

  
	
   

  	
   

  
	
  8.

  	
  Change in Control

  	
  13

  
	
  (a)

  (b)

  (c)

  	
  Effect of “Change in
  Control”

  	
  13

  
	
  Definition of “Change
  in Control”

  	
  14

  
	
  Definition of “Change
  in Control Price”

  	
  14

  
	
   

  	
   

  
	
  9.

  	
  General Provisions

  	
  14

  
	
  (a)

  (b)

  (c)

  (d)

  (e)

  (f)

  (g)

  (h)

  (i)

  (j)

  (k)

  	
  Compliance with Legal
  and Other Requirements

  	
  14

  
	
  Limits on
  Transferability; Beneficiaries

  	
  15

  
	
  Adjustments

  	
  15

  
	
  Taxes

  	
  16

  
	
  Changes to the Plan and
  Awards

  	
  16

  
	
  Limitation on Rights
  Conferred under Plan

  	
  16

  
	
  Unfunded Status of
  Awards; Creation of Trusts

  	
  17

  
	
  Nonexclusivity of the
  Plan

  	
  17

  
	
  Payments in the Event
  of Forfeitures; Fractional Shares

  	
  17

  
	
  Governing Law

  	
  17

  
	
  Plan Effective Date

  	
  17

  

 

2

 

SCIENTIFIC GAMES CORPORATION

 

1997 Incentive Compensation Plan

As Amended and Restated, Effective as
of April 27, 2001

 

1.         Purpose. 
The purpose of this 1997 Incentive Compensation Plan (the “Plan”) is to
assist Scientific Games Corporation (formerly known as Autotote Corporation), a
Delaware corporation (the “Company”), and its subsidiaries in attracting,
retaining, and rewarding executives, directors, employees, and other persons
who provide services to the Company and/or its subsidiaries, enabling such
persons to acquire or increase a proprietary interest in the Company in order
to strengthen the mutuality of interests between such persons and the Company’s
stockholders, and providing such persons with performance incentives to expend
their maximum efforts in the creation of stockholder value. The Plan is also
intended to qualify certain compensation awarded under the Plan for tax
deductibility under Code Section 162(m) (as hereafter defined) to the
extent deemed appropriate by the Committee which administers the Plan.

 

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

 

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

 

(b)       “Beneficiary” means the person, persons,
trust, or trusts which have been designated by a Participant in his or her most
recent written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s death or to which
Awards or other rights are transferred if and to the extent permitted under
Section 9(b) hereof.  If, upon a
Participant’s death, there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means person, persons, trust, or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.

 

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

 

(d)       “Board” means the Company’s Board of
Directors.

 

(e)       “Change in Control” means Change in
Control as defined with related terms in Section 8 of the Plan.

 

(f)        “Change in Control Price” means the
amount calculated in accordance with Section 8(c) of the Plan.

 

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

 

3

 

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

 

(i)        “Covered Employee” means an Eligible
Person who is a “covered employee” within the meaning of Code Section 162(m).

 

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

 

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

 

(l)        “Effective Date” means the date of
approval of the Plan by stockholders of the Company.

 

(m)      “Eligible Person” means each executive
officer and other officer or employee of the Company or of any subsidiary,
including each such person who may also be a director of the Company, each
non-employee director of the Company, and each other person who provides
substantial services to the Company and/or its subsidiaries and who is
designated as eligible by the Committee. 
An employee on leave of absence may be considered as still in the employ
of the Company or a subsidiary for purposes of eligibility for participation in
the Plan.

 

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

 

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

 

(p)       “Incentive Stock Option” or “ISO” means
any Option intended to be and designated as an incentive stock option within
the meaning of Code Section 422 or any successor provision thereto.

 

(q)       “Limited SAR” means a right granted to a
Participant under Section 6(c) hereof.

 

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

 

4

 

(s)       “Other Stock-Based Awards” means Awards
granted to a Participant under Section 6(h) hereof.

 

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

 

(u)       “Qualified Member” means a member of the
Committee who is a “Non-Employee Director” within the meaning of Rule
16b-3(b)(3) and an “outside director” within the meaning of Regulation 1.162-27
under Code Section 162(m).

 

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

 

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

 

(x)        “Stock” means the Company’s Class A
Common Stock, $.01 par value, and such other securities as may be substituted
(or resubstituted) for Stock pursuant to Section 9(c) hereof.

 

(y)       “Stock Appreciation Rights” or “SAR”
means a right granted to a Participant under Section 6(c) hereof.

 

3.         Administration.

 

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

 

(b)       Manner of Exercise of Committee Authority.  At any time that a member of the Committee
is not a Qualified Member, any action of the Committee relating to

5

 

an Award granted or to be
granted to a Participant who is then subject to Section 16 of the Exchange Act
in respect of the Company, or relating to an Award intended by the Committee to
qualify as “performance-based compensation” within the meaning of Code Section
162(m) and regulations thereunder, may be taken either (i) by a subcommittee,
designated by the Committee, composed solely of two or more Qualified Members,
or (ii) by the Committee but with each such member who is not a Qualified
Member abstaining or recusing himself or herself from such action; provided,
however, that, upon such abstention or recusal, the Committee remains composed
of two or more Qualified Members.  Such
action, authorized by such a subcommittee or by the Committee upon the
abstention or recusal of such non-Qualified Member(s), shall be the action of
the Committee for purposes of the Plan. 
Any action of the Committee shall be final, conclusive and binding on
all persons, including the Company, its subsidi­aries, Participants,
Beneficiaries, transferees under Section 9(b) hereof, or other persons
claiming rights from or through a Participant, and stockholders.  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 committees thereof, the authority,
subject to such terms as the Committee shall determine, to perform such
functions, including administrative functions, as the Committee may determine,
to the extent that such delegation will not result in the loss of an exemption
under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16
of the Exchange Act in respect of the Company and will not cause Awards
intended to qualify as “performance-based compensation” under Code Section
162(m) to fail to so qualify.  The
Committee may appoint agents to assist it in administering the Plan.

 

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

 

4.         Limitations on Plan Awards.

 

(a)       Overall Number of Shares Available for Delivery.  Subject to adjustment as provided in
Section 9(c) hereof, the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be 5.4
million.  Any shares of Stock delivered
under the Plan shall consist of authorized and unissued shares or treasury
shares.

 

(b)       Application of Limitation to Grants of Awards.  No Award may be granted if the number of
shares of Stock to which such Award relates, when added to the number of shares
of Stock to which other then-outstanding Awards relate and the number of shares
of Stock issued or delivered upon settlement of previously granted Awards,
exceeds the number of shares of Stock reserved for issuance under this Section
4.  The Committee may adopt reasonable
counting procedures to ensure

 

6

 

appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of shares previously counted in
connection with an Award.

 

(c)       Availability of Shares Not Delivered under Awards.  Shares of Stock subject to an Award under
the Plan that is canceled, expired, forfeited, settled in cash, or otherwise
terminated without a delivery of shares to the Participant, including
(i) the number of shares withheld in payment of any exercise or purchase
price of an Award or taxes relating to Awards, and (ii) the number of
shares surrendered in payment of any exercise or purchase price of an Award or
taxes relating to any Award, will again be available for Awards under the Plan,
except that if any such shares could not again be available for Awards to a
particular Participant under any applicable law or regulation, such shares
shall be available exclusively for Awards to Participants who are not subject
to such limitation.

 

5.         Eligibility; Per-Person Award Limitations.  Awards may be granted under the Plan only to
Eligible Persons.  In each fiscal year
during any part of which the Plan is in effect, an Eligible Person who is an
employee of the Company or any of its subsidiaries may not be granted Awards
relating to more than one million shares of Stock, subject to adjustment as
provided in Sec­tion 9(c), under each of Sections 6(b), 6(c), 6(d),
6(e), 6(f), 6(g), and 6(h).

 

6.         Specific Terms of Awards.

 

(a)       General. 
Awards may be granted on the terms and conditions set forth in this
Section 6.  In addition, the
Committee may impose on any Award or the exercise thereof, at the date of grant
or thereafter (subject to Section 9(e)), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award.  The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award
that is not mandatory under the Plan. 
Except as expressly provided by the Committee (including for purposes of
complying with requirements of the Delaware General Corporation Law relating to
lawful consideration for issuance of shares), no consideration other than
services will be required for the grant (but not the exercise) of any Award.

 

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

 

(i)        Exercise Price.  The exercise price per share of Stock purchasable under an Option
shall be determined by the Committee, provided that such exercise price shall
be not less than the Fair Market Value of a share of Stock on the date of grant
of such Option except as provided under Section 7(a) hereof.

 

(ii)       Time and Method of Exercise.  The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance

 

7

 

goals and/or
future service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including, without
limitation, cash, Stock, other Awards or awards granted under other plans of
the Company or any subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants.

 

(iii)      ISOs. 
The terms of any ISO granted under the Plan shall comply in all respects
with the provisions of Code Section 422. 
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify either the Plan or any ISO
under Code Section 422, unless the Participant has first requested the change
that will result in such disqualification. 
ISOs may be granted only to employees of the Company or any of its
subsidiaries. To the extent that the aggregate Fair Market Value (determined as
of the time the Option is granted) of the Stock with respect to which ISOs
granted under this Plan and all other plans of the Company and any subsidiary
are first exercisable by any employee during any calendar year shall exceed the
maximum limit (currently, $100,000), if any, imposed from time to time under
Code Section 422, such Options shall be treated as Options that are not ISOs.

 

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

 

(i)        Right to Payment.  A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Stock on the date of exercise (or, in the
case of a “Limited SAR,” the Fair Market Value determined by reference to the
Change in Control Price, as defined under Section 8(c) hereof) over (B) the
grant price of the SAR as determined by the Committee.

 

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

 

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

 

(i)        Grant and Restrictions.  Restricted Stock shall be subject to such

 

8

 

restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination
at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or
otherwise, as the Committee may determine at the date of grant or thereafter.
Except to the extent restricted under the terms of the Plan and any Award
agreement relating to the Restricted Stock, a Participant granted Restricted
Stock shall have all of the rights of a stockholder, including the right to
vote the Restricted Stock and the right to receive dividends thereon (subject
to any mandatory reinvestment or other requirement imposed by the
Committee).  During the restricted
period applicable to the Restricted Stock, subject to Section 9(b) below,
the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined, or otherwise encumbered by the Participant.

 

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

 

(iii)      Certificates for Stock.  Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee may require
that such certificates bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock, that the
Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank, relating
to the Restricted Stock.

 

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

 

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

 

(i)        Award and Restrictions.  Settlement of an Award of Deferred Stock
shall occur upon expiration of the deferral period specified for such Deferred
Stock by the Committee (or, if permitted by the Committee, as elected by the

 

9

 

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

 

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

 

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

 

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

 

(g)       Dividend Equivalents.  The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic
payments.  Dividend Equivalents may be
awarded on a free-standing basis or in connection with another Award.  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment vehicles,
and subject to such restrictions on transferability and risks of forfeiture, as
the Committee may specify.

 

(h)       Other Stock-Based Awards.  The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock,

 

10

 

purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee, and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified subsidiaries. 
The Committee shall determine the terms and conditions of such
Awards.  Stock delivered pursuant to an
Award in the nature of a purchase right granted under this Section 6(h) shall
be purchased for such consideration, paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards, or
other property, as the Committee shall determine.

 

(i)        Performance  Goals Applicable to Designated Covered
Employees.  If the Committee
determines that an Award described in Sections 6(d), 6(e) or 6(h) to be granted
to an Eligible Person who is designated by the Committee as likely to be a
Covered Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant, exercise, and/or settlement of such
Award shall be contingent upon achievement of preestablished performance goals
and other terms set forth in this Section 6(i).

 

(i)        Performance Goals Generally.  The performance goals for such Awards shall
consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 6(i). 
Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder (including Regulation
1.162-27 and successor regulations thereto), including the requirement that the
level or levels of performance targeted by the Committee result in the
achievement of performance goals being “substantially uncertain.”  The Committee may determine that such Awards
shall be granted, exercised, and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise, and/or settlement of such Awards.  Performance goals may differ for Awards
granted to any one Participant or to different Participants.

 

(ii)       Business Criteria.  One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Awards: (1) earnings per
share; (2) revenues; (3) cash flow; (4) cash flow return on investment; (5)
return on net assets, return on assets, return on investment, return on
capital, return on equity; (6) economic value added; (7) operating margin; (8)
net income; pretax earnings; pretax earnings before interest, depreciation and
amortization; pretax operating earnings after interest expense and before
incentives, service fees, and extraordinary or special items; operating
earnings; (9) total stockholder return; and (10) any of the above goals as
compared to the performance of a published or special index deemed applicable
by the Committee including, but not limited to, the Standard & Poor’s 500
Stock Index or a group of comparator companies.

 

(iii)      Performance Period; Timing for Establishing
Performance Goals. 
Achievement of performance goals in respect of such Awards shall be

 

11

 

measured over a
performance period of up to ten years, as specified by the Committee.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Awards, or at such other
date as may be required or permitted for “perforfmance-based compensation”
under Code Section 162(m).

 

(iv)      Other Terms.  The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Awards, but may not
exercise discretion to increase any such amount payable to a Covered Employee
in respect of an Award subject to this Section 6(i).  All determinations by the Committee as to the establishment of
performance goals, and the achievement of performance goals relating to Awards
subject to this Section 6(i), shall be made in writing in the case of any Award
intended to qualify under Code Section 162(m). The Committee may not
delegate any responsibility relating to such Awards, and the Board shall not
perform such functions at any time that the Committee is composed solely of
Qualified Members.  Because the
Committee cannot determine with certainty whether a given Participant will be a
Covered Employee with respect to a fiscal year that has not yet been completed,
the term Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of an Award, as likely to be a Covered
Employee with respect to that fiscal year. If any provision of the Plan as in
effect on the date of adoption or any agreements relating to Awards that are
designated as intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

 

7.         Certain Provisions Applicable to Awards.

 

(a)       Stand-Alone, Additional, Tandem, and Substitute
Awards.  Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any subsidiary,
or any business entity to be acquired by the Company or a subsidiary, or any
other right of a Participant to receive payment from the Company or any
subsidiary.  Such additional, tandem,
and substitute or exchange Awards may be granted at any time.  If an Award is granted in substitution or
exchange for another Award or award, the Committee shall re­quire the surrender
of such other Award or award in consider­ation for the grant of the new
Award.  In addition, Awards may be
granted in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any subsidiary, in which the value of Stock
subject to the Award is equivalent in value to the cash compensation (for
example, Deferred Stock or Restricted Stock), or in which the exercise price,
grant price, or purchase price of the Award in the nature of a right that may
be exercised is equal to the Fair Market Value of the underlying Stock minus
the value of the cash compensation surrendered (for example, Options granted
with an exercise price “discounted” by the amount of the cash compensation
surrendered).

 

(b)       Term of Awards.  The term of each Award shall be for such period as may be
determined by the Committee; provided that in no event shall the term of any

 

12

 

Option or SAR
exceed a period of ten years (or, in the case of an ISO, such shorter term
as may be required under Code Section 422).

 

(c)       Form and Timing of Payment under Awards; Deferrals.  Subject to the terms of the Plan and any
applicable Award agreement, payments to be made by the Company or a subsidiary
upon the exercise of an Option or other Award or settlement of an Award may be
made in Stock, other Awards, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis.  The settlement of any Award may be accelerated
in the discretion of the Committee or upon occurrence of one or more specified
events (in addition to a Change in Control). 
Installment or deferred payments may be required by the Committee
(subject to Section 9(e) of the Plan, including the consent provisions
thereof in the case of any deferral of an outstanding Award not provided for in
the original Award agreement) or permitted at the election of the Participant
on terms and conditions established by the Committee.  Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect
of installment or deferred payments denominated in Stock.

 

(d)       Exemptions from Section 16(b) Liability.  It is the intent of the Company that the
grant of any Awards to or other transaction by a Participant who is subject to
Section 16 of the Exchange Act shall be exempt under Rule 16b-3 (except
for transactions which a Participant has been advised in advance are
non-exempt). Accordingly, if any provision of this Plan or any Award agreement
does not comply with the requirements of Rule 16b-3 as then applicable to
any such transaction, such provision shall be construed or deemed amended to
the extent necessary to conform to the applicable requirements of Rule 16b-3 so
that such Participant shall avoid liability under Section 16(b).

 

 

8.         Change in Control.

 

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

 

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

 

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

 

(iii)      The restrictions, deferral of settlement,
and forfeiture conditions applicable to any other Award granted under the Plan
shall lapse and such

 

13

 

Awards shall be
deemed fully vested as of the time of the Change in Control, except to the
extent of any waiver by the Participant and subject to applicable restrictions
set forth in Section 9(a) hereof; and

 

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

 

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

 

(i)        when any “person” as defined in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of the Exchange Act but
excluding the Company and any 
subsidiary and any employee benefit plan sponsored or maintained by the
Company or any subsidiary (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act) of securities of the Company representing at
least 40% percent (or such greater percentage as the Committee may specify in
connection with the grant of any Award) of the combined voting power of the
Company’s then-outstanding securities; or

 

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

 

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

 

9.         General Provisions.

 

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

 

14

 

postponement of
the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to
the extent that such postponement  or
other condition would represent a greater burden on a Participant than existed
on the 90th day preceding the Change in Control.

 

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

 

(c)       Adjustments.  In the event that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, forward or
reverse split, reorganization, merger, consolidation, spin–off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an
adjustment is determined by the Committee to be appropriate under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and kind of shares of Stock which may be delivered
in connection with Awards granted thereafter, (ii) the number and kind of
shares of Stock by which annual per-person Award limitations are measured under
Section 5 hereof, (iii) the number and kind of shares of Stock
subject to or deliverable in respect of outstanding Awards and (iv) the
exercise price, grant price or purchase price relating to any Award and/or make
provision for payment of cash or other property in respect of any outstanding
Award.  In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including performance goals) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence, as well as acquisitions and dispositions of businesses and
assets) affecting the Company, any subsidiary or any business unit, or the
financial statements of the Company or any subsidiary, or in response to
changes in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee’s assessment of
the business strategy of the Company, any subsidiary or business unit thereof,
performance of comparable organizations, economic and business conditions,
personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and
to the extent that such authority or the making of such adjustment would cause
Options, SARs, or Awards granted

 

15

 

under
Section 6(i) hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as “performance-based compensation” under
Code Section 162(m) and regulations thereunder to otherwise fail to qualify as
“performance-based compensation” under Code Section 162(m) and regulations
thereunder.

 

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

 

(e)       Changes to the Plan and Awards.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee’s authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting next following such
Board action if such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to the
Plan to stockholders for approval; provided that, without the consent of an
affected Participant, no such Board action may materially and adversely affect
the rights of such Participant under any previously granted and outstanding
Award.  The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue, or terminate
any Award theretofore granted and any Award agreement relating thereto, except
as otherwise provided in the 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 such Award.  Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee may modify
or adjust the right so that pooling of interest accounting shall be available,
including the substitution of Stock having a Fair Market Value equal to the
cash otherwise payable hereunder for the right which caused the transaction to
be ineligible for pooling of interest accounting.

 

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

 

16

 

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

 

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

 

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

 

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

 

(k)       Plan Effective Date.  The Plan became Effective on August 13,
1997.

 

17Exhibit  10.17

 

SCIENTIFIC GAMES
CORPORATION

SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN

 

 

INTRODUCTION

 

Scientific Games
Corporation (formerly known as “Autotote Corporation”) desires to retain the
services of and provide rewards and incentives to members of a select group of
management employees who contribute to the success of Scientific Games
Corporation.

 

In order to
achieve this objective, Scientific Games Corporation has adopted the following
Supplemental Executive Retirement Plan (the “Plan”) to provide supplemental
retirement benefits to select members of management and highly compensated
employees who become Members of the Plan.

 

ARTICLE
I

 

TITLE
AND EFFECTIVE DATE

 

1.1           Plan
Title.  This Plan shall be known as
the Scientific Games Corporation Supplemental Executive Retirement Plan
(hereinafter referred to as the “Plan”).

 

1.2           Effective
Date.  The Effective Date of this
Plan shall be September 7, 2000.

 

ARTICLE
II 

 

DEFINITIONS

 

As used herein,
the following words and phrases shall have the meanings specified below unless
a different meaning is clearly required by the context:

 

2.1           The
term “Beneficiary”
shall mean any person or persons entitled under Section 4.6 to receive a Death
Benefit.

 

2.2           The
term “Benefit
Commencement
Date” shall mean the date on which benefits commence to be payable
to a Member or Beneficiary under the Plan.

 

2.3           The
term “Board
of Directors” shall mean the Board of Directors of Scientific Games
Corporation, or any duly authorized committee thereof.

 

2.4           The
term “Change
of Control” shall mean the occurrence of any of the following:

 

(a)           any “person” as defined in section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and as used in sections 13(d) and 14(d) thereof, including a “group” as
defined in section 13(d) of the Exchange Act 

 

2

 

but excluding the Company and any subsidiary and any
employee benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee), directly or indirectly,
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act) of securities of the Company representing at least 40% of the combined
voting power of the Company’s then outstanding securities;

 

the stockholders
of the Company approve a merger, consolidation, recapitalization or
reorganization of the Company, or the consummation of any such transactions if
stockholder approval is not obtained, other than any such transaction which
would result in at least 60% of the total voting power represented by the
voting securities of the Company or the surviving entity outstanding
immediately prior to such transaction being beneficially owned by persons who
together beneficially owned at least 80% of the combined voting power of the
securities of the Company outstanding immediately prior to such transaction;
provided that, for purposes of this paragraph (b), such continuity of ownership
(and preservation of relative voting power) shall be deemed to be satisfied if
the failure to meet such 60% threshold is due solely to the acquisition of
voting securities by an employee benefit plan of the Company or such surviving
entity;

 

the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially
all of its assets (or any transaction having a similar effect); or

 

during any period
of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors (the “Board”), together with any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in paragraph (a), (b), or
(c) of this Section) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board.

 

2.5           The
term “Change
of Control Termination” shall mean either of:

 

(a)           an involuntary Termination of
Employment of a Member, or Constructive Discharge of a Member, upon or within
twenty-four (24) months immediately following a Change of Control; or

 

(b)           a Termination of Employment of a
Member in anticipation of a Change of Control, which shall mean a Termination
of Employment after a Threatened Change of Control if a Change of Control
actually occurs (i) within two (2) years after such Termination of Employment,
unless the relevant facts and circumstances clearly demonstrate that the
possibility that a Change of Control would occur was remote as of the date of
such Termination of Employment, or (ii) within six (6) months after such
Termination of Employment.

 

3

 

2.6           The
term “Company”
shall mean Scientific Games Corporation (formerly Autotote Corporation), its
successors and assigns, any subsidiary or affiliated organizations authorized
by the Board to participate in this Plan with respect to their Members, and
subject to the provisions of Article VII, any organization into which the
Company may be merged or consolidated or to which all or substantially all of
its assets may be transferred.

 

2.7           The
term “Compensation”
shall mean the total base salary, incentive
compensation and bonuses paid in any calendar year, determined before deduction
of pre-tax contributions under Section 401(k) plans, flexible benefit
(cafeteria) plans described in Code Section 125, and qualified transportation
fringes described in Code Section 132(f)(4), and before deferrals of
compensation under any elective deferred compensation plans, but excluding any
such deferred compensation actually paid in a later year, and excluding
compensation received under any stock option, stock purchase, restricted stock,
phantom stock or other stock compensation plan or arrangement.

 

2.8           The
term “Code”
shall mean the Internal Revenue Code of 1986, as amended, provided that
references to Sections of the Code shall, if applicable, include corresponding
provisions of any subsequent Internal Revenue Code.

 

2.9           The
term “Committee”
shall mean the Compensation Committee of the Board of Directors.

 

2.10         The
term “Constructive
Discharge” with respect to any Member shall mean any of the
following occurring within twenty-four (24) months immediately following a
Change of Control:

 

(a)           a reduction of such Member’s
compensation or benefits, or change that, based on the relevant facts and
circumstances, is reasonably expected to result in a future reduction in such
Member’s compensation or benefits;

 

(b)           a reduction or adverse change in, or
a change which is inconsistent with, such Member’s responsibilities, duties,
authority, reporting, power, functions, title, working conditions or status
immediately prior to the Change of Control;

 

(c)           a reassignment to another geographic
location outside of the New York City area;

 

(d)           a breach by the Company of any
employment agreement with such Member;

 

(e)           the Company requiring such Member to
render material services wholly inconsistent with the services rendered by such
Member immediately prior to the Change of Control; or

 

(f)            any other action by the Company
which materially interferes with such Member’s ability to carry out his
responsibilities as they existed immediately prior to the Change of Control or
under any such employment agreement.

 

4

 

2.11         The
term “Death
Benefit” shall mean a Pre-Retirement Age Death Benefit, a Retirement
Age Death Benefit or a Post Retirement Death Benefit, whichever is applicable.

 

2.12         The
term “Discount
Rate” shall mean an interest rate equal to the average yield of a
30-year U.S. Treasury security for the month prior to the month in which
Termination of Employment occurs, or in the event a 30-year U.S. Treasury
security is unavailable at such time, then the next longest long-term U. S.
Treasury security then available.

 

2.13         The
term “Final
Average Compensation” shall mean the average annual Compensation
paid to the Member by the Company for the three highest consecutive calendar
years in the last ten consecutive calendar years immediately preceding or
including his Termination Date (i.e., inclusive of the calendar year in which
his Termination Date occurs), including any such years before he became a
Member, but excluding any calendar year beginning after an individual is
removed from Membership pursuant to Section 3.1.

 

2.14         The
term “Member”
shall mean any individual who is part of a select group of management or highly
compensated employees who has become a Member in accordance with and subject to
the provisions of Section 3.1.  A Member
shall also mean a retired or terminated Member who is (or Member whose
Beneficiary is) is receiving payments under the terms of this Plan.

 

2.15         The
term “Plan”
shall mean the Scientific Games Corporation Supplemental Executive Retirement
Plan set forth herein, as it may be from time to time amended.

 

2.16         The
term “Pre-Retirement
Age Death Benefit” shall be an amount equal to the present value as
of the Termination Date (calculated using the Discount Rate) of the Retirement
Benefit which would have been payable to the Member under the terms of this
Plan on the date the Member would have attained Retirement Age, computed based
on his actual Service not in excess of fifteen (15) years, but assuming in all
events no less than ten (10) years of Service.

 

2.17         The
term “Post-Retirement
Death Benefit” shall mean any and all Retirement Benefits payable
pursuant to Section 4.5(c) hereunder.

 

2.18         The
term “Retirement”
shall mean a Member’s Termination of Employment with the Company on any date
coinciding with or following the Member’s Retirement Age for any reason other
than death.

 

2.19         The
term “Retirement
Age” shall mean a Member’s attainment of the age of fifty-five (55)
and ten (10) years of Service.

 

2.20         The
term “Retirement
Age Death Benefit” shall mean an amount equal to the Retirement
Benefit which would have been payable to the Member under the terms 

 

5

 

of
this Plan upon the Member’s Retirement, in the same manner and at the same time
it would have been paid to the Member but for his death prior to his
Retirement.

 

2.21         The
term “Retirement
Benefit” shall mean a benefit payable to a Member upon his
Retirement consisting of a single annual payment for fifteen (15) consecutive
years in an annual amount equal to three percent (3%) of the product of (i) a
Member’s Final Average Compensation and (ii) that Member’s years of Service up
to a maximum of 15 years, less any amounts deducted by the Committee pursuant
to Section 4.3 hereof.

 

2.22         The
term “Retirement
Date” shall mean the first day of the month coinciding with or
immediately following a Member’s Retirement.

 

2.23         The
term “Service”
shall mean the period of full time employment of a Member with the Company,
including all such periods of employment both before and after the adoption of
this Plan and before and after the employee becomes a Member, but excluding any
period after an individual is removed from membership under Section 3.1.

 

2.24         The
term “Termination
Date” shall mean the first day of the month next following the
Member’s Termination of Employment.

 

2.25         The
term “Termination
of Employment” shall mean the termination of a Member’s Service
whether by voluntary or involuntary separation, transfer to less than full-time
employment, Retirement, Total and Permanent Disability, or death.

 

2.26         The
term
“Threatened Change of Control” shall mean:

 

(a)           the issuance of a proxy statement by
the Company with respect to an election of directors for which there is
proposed one or more directors who are not recommended by the Board of
Directors of the Company or its nominating committee, where the election of
such proposed director or directors would result in a Change of Control as
defined in Section 2.4(d); or

 

(b)           the announcement by any person of an
intention to take actions which might reasonably result in a Change of Control
as defined in Section 2.4.

 

2.27         The
term “Total
and Permanent Disability” shall mean disability that entitles a
Member to disability benefits under the Company’s long term disability plan in
effect at the time the Member becomes disabled.  If the Company does not maintain a long-term disability plan,
then Total and Permanent Disability shall mean inability of the Member to
perform the usual and customary duties of his occupation which is likely to be
permanent or of long duration.

 

2.28         The
term “Trust”
shall mean any trust established hereunder in accordance with Article VIII.

 

The words and phrases
defined in this Article when used in this Plan with an initial capital letter
shall have the meanings specified in this Article, unless a different meaning
is clearly required by the context.  Any
words herein used in the masculine shall be read and construed in the feminine
where 

 

6

 

they would so apply. 
Words in the singular shall be read and construed as though used in the
plural in all cases where they would so apply.

 

ARTICLE
III

 

DESIGNATION
OF MEMBERS

 

3.1           Designation
of Members.  The Members shall be
those key employees of the Company designated on an individual basis from time
to time by the Committee in its sole discretion as Members in the Plan. The
Committee may remove any such individual from Membership at any time, and upon
such removal, no further benefits shall accrue under the Plan to such
Member.  However, such removal shall not
deprive an individual of benefits previously accrued unless the removal is on
account of the Member’s conviction of a felonious act against the Company (or
guilty plea to such an act), in which event the Member shall forfeit all
benefits under the Plan, and any benefits that have become payable to or in
respect of the Member shall cease.

 

3.2           Continued
Employment.  The payment of benefits
to the Member under this Plan is conditioned upon the continuous employment of
the Member by the Company (including periods of disability and authorized
leaves of absence) from the date of the Member’s participation in the Plan
until the Member’s Retirement, Total and Permanent Disability, or death,
whichever occurs first.

 

ARTICLE IV

 

RETIREMENT,
DISABILITY AND DEATH BENEFITS

 

4.1           Retirement
Benefit.  Except as otherwise
elected by the Member pursuant to Section 4.2, the Retirement Benefit shall be
paid to a Member on the Member’s Retirement Date and on each succeeding
anniversary thereof until a total of fifteen (15) annual payments have been
made in the aggregate.

 

4.2           Member
Payment Election.  A Member may
elect to have his Retirement Benefit paid in equal installments for a period of
five (5) or ten (10) years or in a single lump sum, in an amount equal to the
present value of the Retirement Benefit otherwise payable under Section 4.1,
calculated using the Discount Rate. A Member’s election shall be made no later
than twelve months prior to the Member’s Retirement Date, except in the case of
(a) an initial election made within thirty (30) days of the date he is notified
that he has been designated as a Member (or within thirty (30) days after the
date of execution of this Plan indicated on the signature page hereof in the
case of the initial Members subject to this Plan as of such date of execution)
or (b) an election made following a Threatened Change of Control by a Member
whose Termination of Employment qualifies as a Change of Control Termination.  In the case of a Termination of Employment
in anticipation of a Change of Control as described in Section 2.5(b), the
Committee shall have discretion, after taking into account all relevant
circumstances, to determine whether such termination should be treated as a
Change of Control Termination for this purpose prior to the occurrence of an
actual Change of Control. Any such election shall be made on the Election and
Beneficiary Designation Form provided 

 

7

 

by
the Company for such purpose.  Each
Member shall complete and submit to the Committee such forms, including the
Election of Form of Payment and Beneficiary Designation Form, as shall be
required by the Committee for the administration of this Plan.

 

4.3           Reservation
of Right to Offset. The Committee expressly reserves the right, in its sole
discretion, to offset a portion or all of the Retirement Benefit, as the case
may be, by any other retirement benefits not in existence as of the effective
date of this Plan. If such other benefits are payable at a different time or a
different form than under this Plan the Committee shall, in applying such
offset, convert them into a benefit of equivalent actuarial value in the form
payable under this Plan, based on the Discount Rate and such mortality or other
assumptions as it shall determine to be applicable and appropriate in its
discretion.

 

4.4           Accelerated
Vesting on Disability.  If a Member
experiences a Termination of Employment due to a Total and Permanent Disability
while employed by the Company and prior to his Retirement Date, the Member
shall be entitled to receive the same benefit as the Pre-Retirement Age Death
Benefit that the Member’s Beneficiary would have received had the Member died
at the date of his Termination of Employment. 
Such benefit shall be payable in whichever form permitted under Section
4.1 or 4.2 would apply on the Member’s Retirement, provided, however, that the
Committee may modify the form so payable if it determines that such
modification best serves the interests of the Member.

 

4.5           Death
Benefit.

 

(a)           Pre–Retirement Age Death
Benefit.  In the event of the death
of a Member prior to his attainment of the Retirement Age, the Member’s
Beneficiary shall be entitled to receive a Pre–Retirement Age Death
Benefit.

 

(b)           Retirement Age Death Benefit.  In the event of the death of a Member prior
to his Retirement Date but after attaining the age of fifty-five (55) and
having completed ten (10) years of Service, the Member’s Beneficiary shall be
entitled to receive a Retirement Age Death Benefit.

 

(c)           Post-Retirement Death Benefit.  In the event of the death of a Member
subsequent to his Benefit Commencement Date but prior to the completion of the
Member’s Retirement Benefit payments, the installments shall continue and be paid
to the Member’s Beneficiary in the same manner and to the same extent as if the
Member had survived.  The Company
reserves the right to commute and pay the Post-Retirement Benefit in a lump sum
as calculated using the Discount Rate that would apply if the date of death
were a Termination of Employment.

 

4.6           Beneficiaries.

 

(a)           Beneficiary Designation.  A Member shall designate a Beneficiary to
receive benefits under the Plan on the Beneficiary Designation Form provided by
the Committee.  If more than one
Beneficiary is named, the share and/or precedence of each 

 

8

 

Beneficiary shall be
indicated.  A Member shall have the
right to change the Beneficiary by submitting to the Committee a new
Beneficiary Designation Form.

 

(b)           Proper Beneficiary.  If the Committee has any doubt as to the
proper Beneficiary to receive payments hereunder, the Committee shall have the
right to withhold such payments until the matter is finally adjudicated.  However, any payment made by the Committee,
in good faith and in accordance with this Plan, shall fully discharge the
Company from all further obligations with respect to that payment.

 

(c)           Minor or Incompetent Beneficiary.  In making any payments to or for the benefit
of any minor or an incompetent Beneficiary, the Committee, in its sole and
absolute discretion, may, but need not, make a payment to a legal or natural
guardian or other relative of a minor or court appointed committee of such
incompetent.  Alternatively, it may make
a payment to any adult with whom the minor or incompetent temporarily or
permanently resides.  The receipt by a
guardian, committee, relative or other person shall be a complete discharge to
the Company.  Neither the Company nor
the Committee shall have any responsibility to see to the proper application of
any payments so made.

 

(d)           No Beneficiary Designation.  If a Member fails to designate a Beneficiary
as provided in Section 4.6(a) above, or if all designated Beneficiaries
predecease the Member or die prior to complete distribution of the Member’s
benefits, then the Member’s designated Beneficiary shall be deemed to be his or
her surviving spouse.  If the Member has
no surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of the
Member’s estate.

 

4.7           Withholding
for Taxes.  To the extent required
by the law in effect at the time payments are made, the Company shall withhold
from payments made hereunder any taxes required to be withheld by the federal
or any state or local government.

 

ARTICLE
V

 

PLAN
ADMINISTRATION

 

5.1           Committee.  The Compensation Committee of the Board of
Directors (the “Committee”) shall administer the Plan and keep records of
individual Member benefits.

 

5.2           Committee
Authority.  The Committee shall have
the power and authority in its sole discretion to adopt rules relating to the
Plan, to interpret the Plan and such rules, and to  make any other determinations in the administration of the Plan,
including without limitation all determinations with respect to factual matters
and questions of construction.  Subject
to the terms of the Plan, the Committee shall have exclusive jurisdiction (i)
to determine the eligibility for, and form and method of any benefit payments,
(ii) to establish the timing of benefit distributions, (iii) to settle claims
according to the provisions in Article VI, and (iv) to remove Members from
participation in the Plan.  The Committee
may employ such counsel, accountants, actuaries, and other 

 

9

 

agents
as it shall deem advisable.  The Company
shall pay the compensation of such counsel, accountants, actuaries, and other
agents and any other expenses incurred by the Committee in the administration
of the Plan.

 

5.3           Indemnification.
The Company shall indemnify and save harmless each member of the Committee, and
each employee, director or officer of the Company or of any of its
subsidiaries, from and against any and all loss, liability, claim, damage, cost
and expense which may arise by reason of, or be based upon, any matter
connected with or related to the administration of the Plan (including, but not
limited to, any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or in
settlement of any such claim whatsoever), unless such person shall have acted
in bad faith or been guilty of willful misconduct in respect of his duties,
actions or omissions in respect of the Plan.

 

5.4           Change
of Control.  In the event of a
Change of Control, the trustee of the Trust created pursuant to Article VIII
shall, upon application by any Member (or Beneficiary), assume and succeed to
all powers of the Committee hereunder as they apply to the determination and
payment of benefits to or in respect of such Member (or Beneficiary) upon his
termination of employment.

 

10

 

ARTICLE
VI

 

CLAIMS
PROCEDURE

 

6.1           Administrator
of Claims Procedure.  The Committee
shall administer the claims procedure under this Plan.

 

A.  The business address and telephone number of
the Committee is:

 

Compensation Committee

Scientific Games
Corporation

750 Lexington Avenue

New York, New York  10022

(212) 754-2233

 

B.  The Company shall have the right to change
the address and telephone number of the Committee.  The Company shall give the Members written notice of any change
in the address and telephone number of the Committee.

 

6.2           Claims.  Benefits shall be paid in accordance with
the provisions of this Plan.  The Member
or Beneficiary (hereinafter referred to as the “Claimant”) shall make a written
request for the benefits provided under this Plan.  This written claim shall be mailed or delivered to the Committee.

 

6.3           Denial
of Claims.  If the claim is denied,
either wholly or partially, notice of the decision shall be delivered or mailed
to the Claimant within a reasonable time period not to exceed more than 90 days
after the receipt of the claim by the Committee. The notice shall set forth the
following information in a manner calculated to be understood by Claimant:

 

A.  the specific reasons for the denial;

 

B.  the specific reference to pertinent plan
provisions on which the denial is based;

 

C.
 a description of any additional
material or information necessary for the Claimant to perfect the claim and an
explanation of why such material or information is necessary; and

 

D.  a description of the claims review procedure
under this Plan and the time limits applicable thereto, including a statement
of the Claimant’s right to bring a civil suit under section 502(a) of the
Employee Retirement Income Security Act of 1974 (“ERISA”) following an adverse
determination on review and (if applicable) a description of the arbitration
procedure that may be substituted therefor pursuant to Section 6.7.

 

11

 

                6.4           Appeal of Denial of Claims.  The claims procedure under the Plan shall
allow the Claimant a reasonable opportunity to appeal a denied claim and to get
a full and fair review of that decision from the Committee based on the
provisions of the governing plan documents.

 

A.  The Claimant shall exercise his right of
appeal by submitting a written request for a review of the denied claim to the
Committee within sixty (60) days after receipt by the Claimant of the written
notice of denial.

 

B.  The Claimant shall have the following rights
under this appeal procedure:

 

(1)  to review and receive free copies of all documents,
records and other information relevant to the Claimant’s claim for benefits,
including documents that were created or received by the Committee during the
appeals process;

 

(2)  to submit issues, comments, documents,
records, and other information relating to the claim; and

 

(3)  to request an extension of time to make a
written submission of issues and comments.

 

6.5           Appeal.  The decision on the review of the denied
claim shall be provided by the Committee no later than forty-five (45) days
after the receipt of the request for review, or within ninety (90) days after
the receipt of the request for review if special circumstances require an
extension of time (in which event written notice of the extension shall be
furnished the Claimant prior to the end of the initial 45-day period, which
indicates the special circumstances requiring an extension of time and the date
by which the Committee expects to render the determination on review).

 

6.6           Written
Decision on Appeal.  The Committee’s
decision on review shall be made in writing in a manner calculated to be
understood by the Claimant and provided to the Claimant within the specified
time period.  In the case of an adverse
determination, the decision on review shall contain (a) the specific reasons
for the decision, (b) specific reference to the provisions of the Plan on which
the decision is based, (c) a statement that the Claimant is entitled to review
and receive free copies of all documents, records and other information
relevant to the claim, and (d) a statement of the Claimant’s right to bring an
action under section 502(a) of ERISA, and (if applicable) a description of the
arbitration procedure that may be substituted thereby pursuant to Section 6.7.

 

6.7           Resolution
of Disputes. Any dispute arising out of this Plan prior to a Change of
Control that remains notwithstanding exhaustion of all procedures described
above shall, at the Committee’s election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
both parties shall be bound by the arbitration award) or by litigation.  Whether the dispute is to be settled by
arbitration or litigation, the venue for the arbitration or litigation shall be
New York. 

 

 

12

 

After
a Change of Control, all disputes shall be determined by the trustee of the
Trust in accordance with the applicable trust agreement.

 

ARTICLE
VII

 

GENERAL

 

7.1           Unsecured
Creditor Status.  Nothing contained
in this Plan and no action taken pursuant to the provisions of this Plan shall
create or be construed to create a trust of any kind or a fiduciary
relationship between the Company and the Member, his spouse or any other
person.  Any funds which may be invested
by the Company to insure itself against any and all financial losses which the
Company may incur under the provisions of this Plan shall continue for all
purposes to be a part of the general funds of the Company, and no person other
than the Company, shall, by virtue of the provisions of this Plan, have any
interest in such funds.  To the extent
that any person acquires a right to receive payment from the Company under this
Plan, such right shall be no greater than the right of any general unsecured
creditor of the Company. Scientific Games Corporation and any subsidiary
employing a Member shall be jointly and severally liable for all amounts
payable to such Member (or his Beneficiary) under the Plan. Amounts payable to
a Member employed solely by Scientific Games Corporation (or his Beneficiary)
shall be the sole obligation of Scientific Games Corporation.

 

7.2           Source
of Payment.  All benefits under the
Plan shall be paid by the Company out of its general assets, and any rights of
a Member or Beneficiary under the Plan shall be mere unsecured contractual
rights.  The Company and the Members
intend that any arrangements made to assist the Company to meet obligations
under the Plan shall be unfunded for tax purposes and for purposes of Title I
of ERISA, and no trust, security, escrow, or similar account shall be
established in connection with the Plan. 
The Company may, however, in its discretion, and to the extent provided
in Article VIII shall establish a “rabbi trust” to assist in meeting its
obligation to pay benefits under the Plan, and amounts paid from any such rabbi
trust shall discharge the obligations of the Company hereunder to the extent of
the payments.  No Member or Beneficiary
shall have a preferred claim on or beneficial ownership interest in the assets
of such rabbi trust.

 

7.3           Effect
of Plan on Compensation.  This Plan
does not involve a reduction in salary for the Members or a foregoing of an
increase in future salary by the Members.

 

7.4           Nontransferable.  Except as provided by the laws of descent
and distribution or provided by will or insofar as this provision may be
contrary to applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization, or attachment of any benefits under this Plan shall be valid
or recognized by the Committee.

 

7.5           Amendment
of Plan.  The Company, by action of
the Board of Directors, reserves the right at any time and from time to time,
without the consent of Members, active or retired, Beneficiaries or any person
or persons claiming through them, by action of its Board of Directors to
terminate, modify or amend, in whole or in part, any or all of the provisions
of the Plan, including specifically the right to make any such amendments 

 

13

 

effective
retroactively; provided that no such action shall reduce accrued benefits of
any Member or Beneficiary hereunder, or adversely affect the right of Members
to vest in their benefits previously accrued under the terms of the Plan in
effect prior to amendment, adversely affect the rights provided to any Member
or Beneficiary under any provision of this Plan in the event of a Change of
Control or a Threatened Change of Control unless such Member or Beneficiary has
consented thereto in writing, or change (directly or indirectly) any provision
of Article VIII after a Change of Control has occurred or adopt any other
provision inconsistent therewith.

 

7.6           No
Employment Rights.  Nothing
contained in this Plan shall be deemed to give any Member or employee the right
to be retained in the service of the Company or to interfere with the right of
the Company to discharge any Member or employee at any time regardless of the
effect which such discharge shall have upon him as a Member of the Plan.

 

7.7           Binding
Effect.  This Plan shall be binding
upon and inure to the benefit of the Company, its successors and assigns and
each Member and Beneficiary.  The
Company shall not merge into, be acquired by, or consolidate with any other
company unless and until such other company agrees to assume all rights and
obligations set forth in this Plan.

 

7.8           Governing
Law.  This Plan shall be governed by
the laws of New York without regard to the principles of conflict of laws
except where such laws are superseded by ERISA, in which ERISA shall control.

 

7.9             Severability.  In case any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan and this Plan shall be construed and
enforced as if such illegal and invalid provisions had never been inserted
herein.

 

7.10         Titles.  The titles to articles and headings of
sections of this Plan are for convenience of reference and in case of any
conflict the text of the Plan, rather than such titles and headings, shall
control.

 

ARTICLE
VIII

 

PROVISIONS
RELATING TO

A CHANGE OF CONTROL

 

8.1           Effect
on Vesting and Benefits.  In the
event of a Change of Control Termination, a Member shall have a fully vested
and nonforfeitable right to a Retirement Benefit calculated based on his Service
and Final Average Compensation as of the date of such termination, whether or
not he has attained his Retirement Age. 
In addition, if the Member shall have at least ten (10) Years of Service
at the time of his Change of Control Termination, his Retirement Benefit shall
be calculated as if he had fifteen (15) Years of Service.

 

14

 

8.2           Time
and Form of Payment.  The time and
form of payment of the benefits of a Member upon and after his Change of
Control Termination shall be determined in accordance with the provisions of
Sections 4.1 and 4.2 and any election made by the Member in accordance with
Section 4.2.  In the event that the
Change of Control Termination shall occur before the Member’s Retirement Age,
he may elect, at any time after the Threatened Change of Control, to receive
payment of his Retirement Benefit (in whichever such form he may elect as above
described) commencing either on the Member’s attainment of his Retirement Age,
or on the date of the Member’s Change of Control Termination.  In the event that he elects to receive
payment on or commencing on his Change of Control Termination, the amount of
such benefit shall be adjusted to its present value at that date by applying
the Discount Rate to the benefit that would have been payable had he elected to
receive it at his Retirement Age.

 

8.3           Termination
in Anticipation of Change of Control. 
In the event of a Termination of Employment in anticipation of a Change
of Control as described in Section 2.5(b) with respect to a Member who has not
then attained his Retirement Age (and was therefore not yet vested in his
benefits under the Plan), his right to such benefits as well as any additional
benefits to which he then becomes entitled pursuant to Section 8.1 shall become
vested upon the occurrence of an actual Change of Control as described in
Section 2.5(b) (but without retroactive effect).  In the event that the Member had attained his Retirement Age at the
date of such Change of Control Termination and began to receive benefits
hereunder prior to the occurrence of a Change of Control, and he is entitled to
additional benefits under Section 8.1 upon the occurrence of an actual Change
of Control, such additional benefits shall become payable retroactively to the
date of his Termination of Employment, including interest on unpaid amounts at
the Discount Rate. Without limiting the generality of the foregoing, if
benefits previously were paid in a lump sum, the Member’s additional benefits
under Section 8.1 shall be paid as an additional lump sum payment; if the
Member’s benefits previously began in installments, the additional benefit that
would have been included in the first installment shall be paid as soon as
practicable after the Change of Control, and subsequent installments shall be
increased to reflect the additional benefits in respect thereof.  In the event that a Member dies after his
Termination of Employment in anticipation of a Change of Control Termination
and prior to the actual occurrence of a Change of Control, the benefits or
additional benefits that would have become payable under the foregoing
provisions of this Section 8.3 in the event he had survived to the date of such
Change of Control shall be payable to his Beneficiary.

 

8.4           Establishment
of Trust.

 

(a)           Upon a Threatened Change of Control,
the Company shall, as soon as possible, but in no event later than thirty (30)
days following the occurrence of the Threatened Change of Control nor later
than the date of an actual Change of Control, establish a Trust in accordance
with a trust agreement substantially in the form as attached hereto as Exhibit
A, but with such changes (if any) as the Committee shall approve, and make a
contribution to the Trust in an amount that is sufficient to fund the Trust in
an amount equal to no less than 100% but no more than 120% of the present value
of the benefits to which Members or their Beneficiaries would be entitled under
the 

 

 

15

 

Plan in the event of a
Change of Control Termination as of the date on which the Threatened Change of
Control occurred.

 

(b)           Upon a Change of Control, the Company
shall, as soon as possible, but in no event later than thirty (30) days
following the occurrence of a Change of Control, make an irrevocable
contribution to the Trust in an amount that is sufficient to fund the Trust in
an amount equal to no less than 100%, but no more than 120%, of the present
value of the benefits to which Members or their Beneficiaries would be entitled
pursuant to the Plan in the event of their Change of Control Termination as of
the date of the Change of Control.  The
Company shall also fund an expense reserve for the trustee in an amount equal
to $125,000.00, multiplied by the sum of 100% plus the aggregate percentage
increase, if any, in the Consumer Price Index for Urban Consumers (All-Item
Figures) [New York, NY - Northern NJ - LI - NY - NJ - CT - PA ] (or any
comparable successor index) published by the Bureau of Labor Statistics of the United States
Department of Labor from January 2001 (as of which the index is 184.9)
through the January immediately preceding the Change of Control.

 

(c)           In the event of a Member’s Retirement
or Change of Control Termination subsequent to a Change of Control, the Company
shall, as soon as possible, but in no event later than thirty (30) days
following such Retirement or Change of Control Termination, make an irrevocable
contribution to the Trust in an amount that is sufficient to fund the Trust in
an amount equal to no less than 100% but no more than 120% of the present value
of the excess, if any, of the value of the benefits to which such Member is
entitled by reason of such Retirement or Change of Control Termination over the
present value of the benefits of such Member previously taken into account
pursuant to Section 8.4(b).

 

(d)           For purposes of determining the
amount required to be contributed to the Trust under Section 8.4(a), (b) or
(c), the present value of the benefit to which a Member is entitled on any date
(the “Determination Date”) shall be determined by reference to:  (a) if such benefit is then in pay status
under the Plan, the benefit then in pay status; (b) if such benefit is not then
in pay status under the Plan, but would be immediately payable in the event of
the Member’s termination of employment with the Company on the Determination
Date, the benefit to which the Member would be immediately payable on such
termination; and (c) if the Member would not be entitled to immediate payment
under the Plan in the event of his or her Termination of Employment with the
Company on the Determination Date, the benefit to which the Member would become
entitled on termination of employment at his Retirement Age.  If the Determination Date is not a date of
Termination of Employment, such present value shall be determined based on the
Discount Rate determined under Section 2.12 by treating the Determination Date
as a date of Termination of Employment.

 

8.5           Trust
Agreement Governs.

 

The provisions of the Trust Agreement under the Trust
shall govern following a Change of Control in the event of any inconsistency
between such provisions and the foregoing provisions of the Plan.

 

16

 

IN WITNESS WHEREOF, the Board has duly adopted this
Plan and caused it to be executed by the Company this ____ day of  ___________, 2001, but to be effective
September 7, 2000.

 

 

	
  Attest:

  	
  Scientific
  Games Corporation

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

17

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