EMPLOYMENT AGREEMENT

by and between

SCIENTIFIC GAMES CORPORATION

and

RICHARD M. WEIL

dated as of

January 1, 2003



Table of Contents

 
   
   
  Page
1. Termination of Existing Employment Agreements 1
2. Employment; Term 1
3. Offices and Duties 1
4. Compensation 2
5. Benefits 2
6. Termination 3
7. Compensation Following Termination Prior to the End of the Term 5
8. Excise Tax Restoration Payment 13
9. Offsets; Withholding 13
10. Noncompetition; Nonsolicitation; Nondisclosure; etc 13
  10.1 Noncompetition; Nonsolicitation. 13
  10.2 Proprietary Information 15
  10.3 Confidentiality and Surrender of Records 15
  10.4 Nondisparagement 15
  10.5 No Other Obligations 16
  10.6 Forfeiture of Outstanding Options 16
  10.7 Enforcement 16
  10.8 Cooperation with Regard to Litigation 17
  10.9 Survival 17
  10.10 Company 17
11. Insurance for the Company's Benefit 17
12. Indemnification 17
13. Notices 18
14. Assignability; Binding Effect 18
15. Complete Understanding; Amendment; Waiver 19
16. Severability 19
17. Survivability 19
18. Governing Law; Arbitration; Expenses; Interest 20
  18.1 Governing Law 20
  18.2 Arbitration 20
  18.3 Reimbursement of Expenses in Enforcing Rights 20
  18.4 Interest on Unpaid Amounts 20
19. Reimbursement of Expenses of Executive in Negotiating Agreement 20
20. Titles and Captions 20

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EMPLOYMENT AGREEMENT

        This EMPLOYMENT AGREEMENT (this "Agreement") is made as of January 1, 2003 (the "Effective Date"), by and between SCIENTIFIC GAMES CORPORATION, a Delaware corporation formerly known as Autotote Corporation (the "Company"), and Richard M. Weil ("Executive").

W I T N E S S E T H:

        WHEREAS, Executive has been employed by the Company, as memorialized in a letter agreement, dated January 9, 2003 (the "Letter Agreement"); and

        WHEREAS, the Company desires to continue to employ Executive with the Company, and Executive wishes to continue to serve the Company, in the capacities and on the terms and conditions set forth in this Agreement; and

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

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

        1.    Termination of Existing Employment Agreements.    As of the Effective Date, all existing employment agreements between the parties, whether oral or written, including the Letter Agreement, are hereby terminated, except as provided in Section 12.

        2.    Employment; Term.    The Company hereby agrees to employ Executive, and Executive hereby accepts continued employment with the Company, in accordance with and subject to the terms and conditions set forth herein. The term of employment of Executive under this Agreement (the "Term") shall be the period commencing on the Effective Date and ending on December 31, 2004, and any period of extension thereof in accordance with this Section 2, subject to earlier termination in accordance with Section 6. The Term shall be extended automatically without further action by either party by one additional year (added to the end of the Term) first on December 31, 2004 (extending the Term to December 31, 2005) and then on each succeeding December 31 thereafter, unless either party shall have given written notice to the other party prior to the September 30 preceding the date upon which such extension would become effective electing not to further extend the Term, in which case Executive's employment shall terminate on the date upon which such extension would otherwise have become effective, unless earlier terminated in accordance with Section 6; provided, however, that any termination pursuant to this Section 2 shall be subject to and without limitation of or prejudice to Executive's rights with respect to (i) a termination for Good Reason pursuant to Section 6(e)(viii), or (ii) a termination without Cause pursuant to Section 6(g), as applicable.

        3.    Offices and Duties.    


        4.    Compensation.    

        5.    Benefits.    

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        6.    Termination.    Executive's employment hereunder may be terminated prior to the end of the Term under the following circumstances:

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        If, within 30 days of Executive's receipt of notice of his termination for Cause, Executive in good faith files a claim in an arbitration disputing the termination for Cause, Executive shall, during the pendency of the arbitration, be considered a suspended employee of the Company and be entitled to receive benefits under Section 5 of this Agreement as if he had not been terminated. If the arbitration panel finds that the Company did not have Cause to terminate Executive's employment: (x) Executive's employment shall be deemed to have been terminated without Cause as of the date of notice of his termination for Cause; and (y) any amounts paid to Executive by the Company, including but not limited to the value of all benefits provided to Executive, shall be credited against amounts owed to Executive under Section 7(c) or 7(d) of this Agreement.

        If, within 30 days of Executive's receipt of notice of his termination for Cause, Executive in good faith files a claim in arbitration disputing the termination for Cause, Executive shall, during the pendency of the arbitration, be considered a suspended employee of the Company and be entitled to receive compensation and benefits under this Agreement as if he had not been terminated. If the arbitration panel finds that the Company had Cause to terminate Executive's employment, Executive shall, within 5 days of the arbitration award, repay any amounts provided to him by the Company in respect of periods commencing after his termination, including but not limited to salary continuation and the value of all benefits provided to Executive in respect of periods commencing after his termination, in excess of any amounts to which he was entitled under this Agreement upon a termination for Cause. If the arbitration panel finds that the Company did not have Cause to terminate Executive's employment: (x) Executive's employment shall be deemed to have been terminated without Cause as of the date which is 90 days after the date of notice of his termination for Cause; and (y) any amounts paid to Executive by the Company in respect of periods commencing after 90 days following the date of the notice of his termination for Cause, including but not limited to salary continuation and

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the value of all benefits provided to Executive, shall be credited against amounts owed to Executive under Section 7(c) or 7(d) of this Agreement.

        7.    Compensation Following Termination Prior to the End of the Term.    In the event that Executive's employment hereunder is terminated prior to the end of the Term, Executive shall be entitled only to the following compensation and benefits:

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Provided, however, that Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this Section 7(a).

Amounts payable under (i), (ii), (iii), and (vi) above will be paid as promptly as practicable after termination of Executive's employment; provided, however, that, to the extent that the Company would not be entitled to deduct any such payments (other than those under (i) above) under Internal Revenue Code Section 162(m), such payments shall be made at the earliest time that the payments would be deductible by the Company without limitation under Section 162 (m) (unless this provision is waived by the Company).

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Amounts payable under (i), (ii), and (v) above will be paid as promptly as practicable after termination of Executive's employment; provided, however, that, to the extent that the Company would not be entitled to deduct any such payments under Internal Revenue Code Section 162(m), such payments shall be made at the earliest time that the payments would be deductible by the Company without limitation under Section 162(m) (unless this provision is waived by the Company).

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Provided, however, that Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this Section 7(c). Except as otherwise expressly provided above, amounts payable under this Section 7(c), will be paid as promptly as practicable after termination of Executive's employment, and in no event more than 30 days after such termination.

Notwithstanding the foregoing, if a reduction in Base Salary or other level of compensation or benefit was a basis for Executive's termination for Good Reason, the Base Salary or other level of compensation in effect before such reduction shall be used to calculate payments or benefits under this Section 7(c).

For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if:

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10


For purposes of this Agreement, a termination by the Company without Cause in "anticipation of a Change in Control" shall mean a termination of Executive's employment by the Company without Cause after a Threatened Change in Control if a Change in Control actually occurs (i) within two years after such termination, unless relevant facts and circumstances clearly demonstrate that the possibility of a Change in Control would occur was remote as of the date of such termination, or (ii) within six months after such termination.

For purposes of this Agreement, the term "Threatened Change in Control" shall mean (x) 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 in Control; or (y) the announcement by any person of an intention to take actions which might reasonably result in a Change in Control.

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Provided, however, that Executive will be entitled to the benefit of any terms of plans or agreements applicable to Executive which are more favorable than those specified in this Section 7(d). Except as otherwise expressly provided above, amounts payable under this Section 7(d), will be paid as promptly as practicable after termination of Executive's employment, and in no event more than 30 days after such termination.

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        8.    Excise Tax Restoration Payment.    Notwithstanding anything to the contrary in this Agreement, in the event that any payment or distribution of any type to or for the benefit of Executive made by the Company, by any of its affiliates, by any person who acquires ownership or effective control or ownership of a substantial portion of the Company's assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code")) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of an employment agreement or otherwise (the "Total Payments"), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the "Excise Tax"), then Executive shall be entitled to receive an additional payment (an "Excise Tax Restoration Payment") in an amount that shall fund the payment by Executive of any Excise Tax on the Total Payments as well as all income taxes imposed on the Excise Tax Restoration Payment, any Excise Tax imposed on the Excise Tax Restoration Payment and any interest or penalties imposed with respect to taxes on the Excise Tax Restoration or any Excise Tax.

        9.    Offsets; Withholding.    Amounts required to be paid by the Company to Executive pursuant to this Agreement shall not be subject to offset except for any amounts that are owed to the Company by Executive due to his receipt of funds as a result of his fraudulent activity. The foregoing and other provisions of this Agreement notwithstanding (but without limiting the terms of Section 8), all payments to be made to Executive under this Agreement, including under Section 7, or otherwise by the Company will be subject to required withholding taxes and other legally required deductions.

        10.    Noncompetition; Nonsolicitation; Nondisclosure; etc.    

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14


15


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        10.9    Survival.    The provisions of this Section 10 shall survive the termination of the Term and any termination or expiration of this Agreement.

        10.10    Company.    For purposes of this Section 10, references to the "Company" shall include both the Company and each subsidiary of the Company.

        11.    Insurance for the Company's Benefit.    The Company may at any time and for the Company's own benefit (or for the benefit of a lender to the Company) apply for and take out life, health, accident or other insurance covering Executive, either independently or together with others, in any amount which the Company may deem to be in its best interests. The Company shall own all rights in such insurance and proceeds thereof and Executive shall not have any right, title or interest therein. Executive shall assist the Company at the Company's expense in obtaining and maintaining any such insurance by submitting to reasonable and customary medical examinations and preparing, signing and delivering such applications and other documents as reasonably may be required.

        12.    Indemnification.    During the Term of this Agreement and all periods after the expiration of this Agreement or termination of Executive's employment for any reason, the Company shall indemnify Executive to the full extent permitted under the Company's Certificate of Incorporation or By-Laws and pursuant to any other agreements or policies in effect from time to time; provided, however, that Executive shall at all times have at least all rights to indemnification by the Company as are provided in the Company's Certificate of Incorporation or By-Laws or pursuant to other agreements in effect on or immediately prior to the Effective Date, and the Company shall also advance expenses for which indemnification may be ultimately claimed as such expenses are incurred to the fullest extent permitted under applicable law, subject to any requirement that Executive provide an undertaking to repay such advances if it is ultimately determined that Executive is not entitled to indemnification; provided, however, that any determination required to be made with respect to whether Executive's conduct complies with the standards required to be met as a condition of indemnification or advancement of expenses under applicable law and the Company's Certificate of Incorporation, By-Laws, or other agreement, shall be made by independent counsel mutually acceptable to Executive and the Company (except to the extent otherwise required by law). After the Effective Date, the Company shall not amend its Certificate of Incorporation or By-Laws or any agreement in any manner which adversely affects the rights of Executive to indemnification thereunder. Any provision contained herein notwithstanding, this Agreement shall not limit or reduce, and the Company hereby agrees to provide to Executive, any and all rights to indemnification to the full extent permitted under applicable law. In addition, the Company will maintain directors' and officers' liability insurance in effect and covering

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acts and omissions of Executive during the Term and for a period of six years thereafter on terms substantially no less favorable than those in effect on the Effective Date. For purposes of this Section 12, references to the "Company" shall include both the Company and each of its subsidiaries for which Executive has acted, acts or will in the future act in any capacity. The provisions of this Section 12 shall survive the termination of the Term and any termination or expiration of this Agreement.

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

If the parties by mutual written agreement supply each other with telecopier numbers for the purposes of providing notice by facsimile, such notice shall also be proper notice under this Agreement and shall be deemed given on the next business day after the date on which successful and complete transmission is confirmed by the receiving facsimile machine or otherwise confirmed in writing on behalf of the recipient. In the case of Federal Express or other similar overnight service, such notice or advice shall be effective on the next business day after it is sent, and, in the cases of certified or registered mail, shall be effective 5 days after deposit into the mails by delivery to the U.S. Postal Service.

        14.    Assignability; Binding Effect.    Neither this Agreement nor the rights or obligations hereunder of the parties hereto shall be transferable or assignable by Executive, except in accordance with the laws of descent and distribution and as specified below. The Company may assign this Agreement and the Company's rights and obligations hereunder, and shall assign this Agreement and such rights and obligations, to any Successor (as hereinafter defined) which, by operation of law or otherwise, continues to carry on substantially the business of the Company prior to the event of succession, and the Company shall, as a condition of the succession, require such Successor to agree in writing to assume the Company's obligations and be bound by this Agreement. For purposes of this Agreement, "Successor" shall mean any person that succeeds to, or has the practical ability to control, the Company's business directly or indirectly, by merger or consolidation, by purchase or ownership of voting securities of the Company or all or substantially all of its assets, or otherwise. The Company may

18



also assign this Agreement and the Company's rights and obligations hereunder to any affiliate of the Company, provided that upon any such assignment the Company shall remain liable for the obligations to Executive hereunder. This Agreement shall be binding upon and inure to the benefit of Executive, his heirs, executors, administrators, and beneficiaries, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.

        15.    Complete Understanding; Amendment; Waiver.    This Agreement constitutes the complete understanding between the parties with respect to the employment of Executive and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof (including the Letter Agreement), except as provided in Section 12, and no statement, representation, warranty or covenant has been made by either party with respect thereto except as expressly set forth herein. This Agreement shall not be modified, amended or terminated except by a written instrument signed by each of the parties. Any waiver of any term or provision hereof, or of the application of any such term or provision to any circumstances, shall be in writing signed by the party charged with giving such waiver. Waiver by either party of any breach hereunder by the other party shall not operate as a waiver of any other breach, whether similar to or different from the breach waived. No delay by either party in the exercise of any rights or remedies shall operate as a waiver thereof, and no single or partial exercise by either party of any such right or remedy shall preclude other or further exercise thereof.

        16.    Severability.    If any provision of this Agreement or the application of any such provision to any person or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law. If any provision of this Agreement, or any part thereof, is held to be invalid or unenforceable because of the scope or duration of or the area covered by such provision, the parties hereto agree that the court making such determination shall reduce the scope, duration and/or area of such provision (and shall substitute appropriate provisions for any such invalid or unenforceable provisions) in order to make such provision enforceable to the fullest extent permitted by law and/or shall delete specific words and phrases, and such modified provision shall then be enforceable and shall be enforced. The parties hereto recognize that if, in any judicial proceeding, a court shall refuse to enforce any of the separate covenants contained in this Agreement, then that invalid or unenforceable covenant contained in this Agreement shall be deemed eliminated from these provisions to the extent necessary to permit the remaining separate covenants to be enforced. In the event that any court determines that the time period or the area, or both, are unreasonable and that any of the covenants is to that extent invalid or unenforceable, the parties hereto agree that such covenants will remain in full force and effect, first, for the greatest time period, and second, in the greatest geographical area that would not render them unenforceable. To the extent that a court of competent jurisdiction determines that Executive willfully and materially breached Section 10.1(a) (other than the first sentence thereof), 10.1(b), 10.2 (other than the first and penultimate sentences thereof), 10.3, 10.4, or 10.8, the Company's obligations to make payments hereunder shall immediately be limited to the amounts, if any, remaining to be paid pursuant to Section 7(b) to the extent not theretofore paid, provided that the Company's obligations to make such greater payments shall immediately be reinstated in the event that the determination of such court is overturned or reversed by any higher court.

        17.    Survivability.    The provisions of this Agreement which by their terms call for performance subsequent to termination of Executive's employment hereunder, or of this Agreement, shall so survive such termination, whether or not such provisions expressly state that they shall so survive.

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        18.    Governing Law; Arbitration; Expenses; Interest.    

        19.    Reimbursement of Expenses of Executive in Negotiating Agreement.    All reasonable costs and expenses (including, without limitation, reasonable fees and disbursements of counsel) incurred by Executive in connection with the negotiation, preparation, execution, or delivery of this Agreement shall be paid on behalf of Executive (or, if already paid by Executive, reimbursed to Executive) promptly by the Company.

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

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        IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on November 12, 2003, to be deemed effective as of the date first above written.

 SCIENTIFIC GAMES CORPORATION

 

By:


Name: A. Lorne Weil
Title: Chairman and Chief Executive Officer

 

 


Richard M. Weil

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Source: OneCLE Business Contracts.