Document:

Exhibit 10.45

 

October 6,
2008

 

Ira
H. Raphaelson

Vice
President, General Counsel & Secretary

Scientific
Games Corporation

750
Lexington Avenue

New
York, New York

 

Dear
Ira:

 

This
will confirm our understanding regarding certain amendments to the Employment and
Severance Benefits Agreement, dated December 15, 2005 (effective as of February 1,
2006), between you and Scientific Games Corporation (the “Company”), as amended
by the Letter Agreement, dated as of August 2, 2006, by and between you
and the Company (as amended hereby, the “Agreement”).  Except as expressly set forth herein, the
terms of the Agreement shall remain in full force and effect and are hereby
ratified and confirmed in all respects. 
Capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Agreement (except as otherwise modified
hereby).

 

Term.  The “Term”
set forth in Section 1 of the Agreement shall be extended to February 1,
2012 (as may be extended in accordance with Section 1  of
the Agreement and subject to earlier termination in accordance with the
Agreement).

 

Base
Salary.  Effective February 1, 2009, your “Base Salary”
shall be six hundred nineteen thousand five hundred US dollars (US$619,500) per
year, subject to increases thereof as may be determined from time to time in
the sole discretion of the Compensation Committee of the Company.

 

Termination
in connection with Change in Control. In the event your employment is terminated by
the Company without Cause or by you for Good Reason herein and such termination
occurs upon or within one year immediately following a “Change in Control” (as
defined below), you shall be entitled to (without duplication):

 

(1)                                 the Accrued
Obligations (as defined in Section 5(b) of the Agreement);

 

(2)                                 an amount equal to two times the sum of (a) your
annual Base Salary and (b) an amount equal to the highest Annual Bonus
paid to you in respect of the two most recent fiscal years of the Company but
not more than your Target Bonus for the then-current fiscal year, payable in a
lump sum in accordance with the provisions set forth under the caption “Timing
of Certain Payments” below;

 

(3)                                 except to the extent otherwise provided at
the time of grant under the terms of any equity award made to you, all stock
options, deferred stock, restricted stock and other equity-based awards held by
you at termination will become fully 

 

1

 

vested and non-forfeitable, and, in all other respects, all such
options and other awards shall be governed by the plans and programs and the
agreements and other documents pursuant to which the awards were granted;

 

(4)                                 no later than March 15 following the end
of the fiscal year in which such termination occurs, in lieu of the Annual
Bonus for the year in which such termination occurs, the pro rata portion of
any Annual Bonus which would have been payable to you had you remained in
employment with the Company during the entire year in which such termination
occurred (such pro rata calculation to be determined by multiplying a fraction,
the numerator of which is the number of whole months in such year prior to such
termination and the denominator of which is 12, times the Annual Bonus which
would have been payable to you had you remained employed with the Company);

 

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

 

Notwithstanding the foregoing, payments pursuant to
this Section shall be reduced by the amount necessary, if any, to ensure
that the aggregate compensation to be received by you in connection with such “Change
in Control” does not constitute a “parachute payment,” as such term is defined
in 26 U.S.C. § 280G.

 

For
purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred if: (i) any “person” as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as
used in sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) of the Exchange Act but excluding the
Company and any subsidiary or affiliate and any employee benefit plan sponsored
or maintained by the Company or any subsidiary or affiliate (including any
trustee of such plan acting as trustee) or any current shareholder of 20% or
more of the outstanding common stock, directly or indirectly, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing at least 40% of the combined voting power of the Company’s
then-outstanding securities; (ii) the stockholders of the Company approve
a merger, consolidation, recapitalization, or reorganization of SGC, or a
reverse stock split of any class of voting securities of the Company, or the
consummation of any such transaction if stockholder approval is not obtained,
other than any such transaction which would result in at least 60% of the total
voting power represented by the voting securities of the Company or the
surviving entity outstanding immediately after such transaction being
beneficially owned by persons who together beneficially owned at least 80% of
the combined voting power of the voting securities of the Company outstanding
immediately prior to such transaction; provided that, for purposes hereof, 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 or of any subsidiary of the Company or such
surviving entity; (iii) the stockholders of the Company approve a plan of
complete liquidation of the Company, 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 the Company sells all or substantially all of the
stock of the Company to any person or entity other than an affiliate of the
Company; or (iv) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board, together with any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (i),
(ii), or (iii) above) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at 

 

2

 

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 at
least a majority of the Board.

 

Termination Upon Expiration of
Agreement.  In the event that the
Agreement expires on or after February 1, 2012, you will receive the Accrued
Obligations and:

 

A.                                                              if not already paid to you and without
duplication, the non-equity portion of your incentive compensation for the completed
calendar year after which such expiration occurs, payable if, as and when such
bonuses are awarded in the ordinary course in such subsequent year, subject to
payroll deductions; provided, however, that if and to the extent
necessary to comply with Section 409A(a)(2)(B)(i) of the Code, and
applicable administrative guidance and regulations, such payment shall be made
in a lump sum on the date that is six months plus one day following the
applicable expiration date; and

 

B.                                                                except to the extent otherwise provided at
the time of grant under the terms of any equity award made to you, all stock
options, deferred stock, restricted stock and other equity-based awards held by
you, if such termination on or after February 1, 2012 not for Cause, will
become fully vested and non-forfeitable (provided that any such options will
cease being exercisable upon the earlier of (x) three (3) months
after the expiration date of the Agreement and (y) the scheduled
expiration date of such options), and, in all other respects, all such options
and other awards shall be governed by the plans and programs and the agreements
and other documents pursuant to which the awards were granted; provided,
however, that any performance based equity award in respect of which the
performance criteria has not been finally determined as having been met (or not
met), will either vest and be delivered upon such determination of such criteria
being satisfied or lapse in the event such criteria is not met.

 

Timing
of Certain Payments.  Unless otherwise contemplated in the
Agreement, all payments payable in connection with termination of your
employment under the Agreement shall be made as soon as practicable after the
Termination Date but in no event later than 30 days after the Termination Date;
provided, however, that if and to the extent necessary to comply with Section 409A(a)(2)(B)(i) of
the Code, and applicable administrative guidance and regulations, any such
payment shall be made in a lump sum on the date that is six months plus one day
following the Termination Date.

 

Non-Competition.  The period of non-competition set
forth in Section 15 of the Agreement shall be eighteen (18) months rather
than twelve (12) months.

 

Equity Award Grant.  The Company shall
grant you twenty-five thousand (25,000) restricted stock units under the
Scientific Games Corporation 2003 Incentive Compensation Plan, as amended and
restated (the “Plan”), and an individual equity agreement (in the form to be
provided to you) to be entered into by and between the Company and you (the “Equity
Agreement”).  The Equity Agreement shall
provide that the equity award shall vest with respect to twenty percent (20%)
of the shares of common stock subject to such award on each of the first five
anniversaries of the date of grant, subject to any applicable provisions
relating to accelerated vesting and forfeiture as described in the Agreement,
the Equity Agreement or the Plan.

 

3

 

Please indicate your
agreement to the foregoing by countersigning and returning an original signed
copy of this letter to me.

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Scientific
  Games Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ A. Lorne Weil

  
	
   

  	
  Name:

  	
  A.
  Lorne Weil

  
	
   

  	
  Title:

  	
  Chairman
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted
  and Agreed to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ira H. Raphaelson

  	
   

  
	
   

  	
  Ira H. Raphaelson

  	
   

  

 

4Exhibit 10.46

 

Amendment to Employment and
Severance Benefits Agreement

 

Amendment to Employment Agreement (this “Amendment”),
dated as of December 30, 2008, by and between Scientific Games Corporation,
a Delaware corporation (the “Company”), and Ira H. Raphaelson (“Executive”).

 

WHEREAS, Executive has been employed pursuant to an Employment and
Severance Benefits Agreement dated as of December 15, 2005 by and between the
Company and Executive (the “2005 Agreement”), as amended by a letter agreement
dated August 2, 2006 (the “August 2006 Amendment”) and as amended
further by a letter agreement dated October 6, 2008 (the “October 2008
Amendment” and, collectively with the 2005 Agreement and the August 2006
Amendment, the “Employment Agreement”); and

 

WHEREAS, the Company and Executive desire to
amend the Employment Agreement as set forth herein to bring the Employment
Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986 and the regulations and Treasury guidance thereunder; and

 

WHEREAS,
the amendments contemplated hereby are intended to bring the timing of, and
certain procedural aspects with respect to, certain payments under the
Employment Agreement into compliance with Section 409A but not to
otherwise affect Executive’s right to such payments.

 

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

 

1.             Section 8(b)(iii) of the Employment
Agreement is hereby amended to replace the initial clause “Commencing on the
six month anniversary of the Termination Date” with “Commencing on the first
payroll following the Termination Date”.

 

2.             The second sentence of Section 8(c) is
hereby amended to (a) delete the words commencing with “it will pay to
Executive” and ending with the word “provided” and replacing such words with “it
shall reimburse Executive on an after-tax basis for the costs he incurs in
obtaining the benefits that are reasonably comparable to the benefits the
Company would otherwise provide” and (b) delete the portion of the
sentence after the semicolon and substitute a period for the semicolon.

 

3.             Section 21 of the Employment Agreement
is hereby amended by inserting the following three sentences after the first
sentence thereof:

 

“The Company shall provide Executive with the
proposed form of release referred to in the immediately preceding sentence no
later than two days following the Termination Date.  The Executive shall have 21 days to consider
the release and if he executes the release, shall have seven (7) days
after execution of the release to revoke the release, and, absent such
revocation, the release shall become binding. 
Provided Executive does not revoke the release, payments contingent on
the release (if any) shall be paid no earlier than eight (8) days after
execution thereof in accordance with the applicable provisions herein.”

 

4.             Clause 2 of the provisions of the October 2008
Amendment under the caption “Termination in connection with Change in Control”
is hereby amended by deleting the end of such clause 2 commencing with “in a
lump sum” and replacing such portion of clause 2 with the following:

 

“in
equal monthly installments over a period of twenty-four (24) months commencing
with the 

 

1

 

first
payroll following the Termination Date;  provided,
however, to the extent that such amount is exempt from Section 409A
and/or if such Change in Control constitutes a change in ownership, change in
effective control or a change in ownership of a substantial portion of the
assets of the Company under Regulation Section 1.409A-3(i)(5), the
foregoing amount shall be paid in a lump sum in accordance with the provisions
set forth under the caption “Timing of Certain Payments” below;”

 

5.             The provisions of the October 2008 Amendment
under the caption “Timing of Certain Payments” are hereby amended to (a) delete
the portion of the provision after the semicolon and substitute a period for
the semicolon and (b) add the following sentences at the end of the
provision:

 

“The Company makes no representations regarding the
tax implications of the compensation and benefits to be paid to you under the
Agreement, including, without limit, under Section 409A and applicable
guidance and regulations thereunder.  Notwithstanding
anything herein to the contrary, if (i) at the time of your “separation
from service” (as defined in Treas. Reg. Section 1.409A-1(h)) with the
Company other than as a result of your death, (ii) you are a “specified
employee” (as defined in Section 409A(a)(2)(B)(i) of the Code), (iii) one
or more of the payments or benefits received or to be received by you pursuant
to the Agreement would constitute deferred compensation subject to Section 409A,
and (iv) the deferral of the commencement of any such payments or benefits
otherwise payable hereunder as a result of such separation of service is
necessary in order to prevent any accelerated or additional tax under Section 409A
of the Code, then the Company will defer the commencement of the payment of any
such payments or benefits hereunder to the extent necessary (without any
reduction in such payments or benefits ultimately paid or provided to you) until
the date that is six (6) months following your separation from service
with the Company (or the earliest date as is permitted under Section 409A
of the Code).  Any payment deferred
during such six-month period shall be thereafter immediately paid in a lump
sum.  Any remaining payments or benefits
shall be made as otherwise scheduled under the Agreement.  Furthermore, to the extent any other payments
of money or other benefits due to you hereunder could cause the application of
an accelerated or additional tax under Section 409A of the Code, such
payments or other benefits shall be deferred if deferral will make such payment
or other benefits compliant under Section 409A of the Code, or otherwise
such payment or other benefits shall be restructured, to the extent possible,
in a manner determined by the Company that does not cause such an accelerated
or additional tax.  To the extent any
reimbursements or in-kind benefits due to you under the Agreement constitute
deferred compensation under Section 409A of the Code, any such
reimbursements or in-kind benefits shall be paid to you in a manner consistent
with Treas. Reg. Section 1.409A-3(i)(1)(iv).  Any cash payment made on an after-tax basis
that involves a reimbursement of taxes, including any that may be required
under Section 8(c) of the Agreement, may be made as soon as the
Company receives the information necessary for such purpose but in no event
later than the end of the calendar year following the year other taxes are
remitted to the taxing authority.  Each
payment made under the Agreement shall be designated as a “separate payment”
within the meaning of Section 409A of the Code.”

 

6.             Employment
Agreement.  Except as set forth in this Amendment, all
other terms and conditions of the Employment Agreement shall remain unchanged
and in full force and effect.

 

7.             Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall for
all purposes be deemed to be an original and all of which shall constitute the
same instrument.

 

8.             Headings.  The
headings of the paragraphs herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any provision
of this Amendment.

 

2

 

IN WITNESS WHEREOF, each of
the parties hereto has caused this Amendment to be executed on its behalf as of
the date first above written.

 

 

	
   

  	
  SCIENTIFIC GAMES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DeWayne Laird

  
	
   

  	
  Name:

  	
  DeWayne Laird

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ira H. Raphaelson

  
	
   

  	
  Ira H. Raphaelson

  
				

 

3

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