Exhibit 10.47
Employment
Agreement
This Employment Agreement (the
“ Agreement ”) is made as of February 11,
2009 but effective as of January 1, 2009 (the “
Effective Date ”), by and between Scientific Games
Corporation, a Delaware corporation (the “ Company
”), and Stephen L. Gibbs (“ Employee
”).
WHEREAS, Employee has been employed
pursuant to an Employment Agreement dated as of March 1, 2007
as amended by an amendment dated as of December 30, 2008 (as
amended, the “ Prior Agreement ”);
and
WHEREAS, the Company and Employee
desire that this Agreement replace and supersede the Prior
Agreement;
NOW, THEREFORE, in consideration of
the premises and mutual benefits to be derived herefrom and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the Company and Employee, the
parties hereto agree as follows.
1.
Termination of Existing
Employment Agreements .
As of the Effective Date, all existing employment agreements
between the parties hereto, whether oral or written, including the
Prior Agreement, are hereby terminated and superseded by this
Agreement.
2.
Employment; Term
. The Company hereby agrees to
employ Employee, and Employee hereby accepts employment with the
Company, in accordance with and subject to the terms and conditions
set forth in this Agreement. This term of employment of
Employee under this Agreement (the “ Term ”)
shall be the period commencing on the Effective Date and ending on
February 28, 2011, as may be extended in accordance with this
Section 2 and subject to earlier termination in accordance
with Section 5 hereof. The Term shall be automatically
extended without further action by either party hereto by one
additional year (added to the end of the Term), and then on each
succeeding annual anniversary thereafter, unless either party
hereto shall have given written notice to the other party hereto
prior to the date which is ninety (90) days prior to the date upon
which such extension would otherwise have become effective electing
not to further extend the Term, in which case Employee’s
employment shall terminate on the date upon which such extension
would otherwise have become effective, unless terminated in
accordance with Section 5 hereof. It is also intended
that Employee’s previous term of employment with the Company
shall be included when calculating Employee’s tenure at the
Company for all purposes.
3.
Position and Duties
. During the Term,
Employee will serve as Vice President, Chief Accounting Officer and
Corporate Controller of the Company, and as an officer or director
of any subsidiary or affiliate of the Company if elected to any
such position by the stockholders or by the board of directors of
any such subsidiary or affiliate, as the case may be. In such
capacities, Employee shall perform such duties and shall have such
responsibilities as are normally associated with such positions and
as otherwise may be assigned to the Employee from time to time by
the Chief Executive Officer, Chief Operating Officer or Chief
Financial Officer of the Company or upon the authority of the Board
of Directors of the Company. Subject to
Section 5(e) hereof, Employee’s functions, duties
and responsibilities are subject to reasonable changes as the
Company may in good faith determine from time to time.
Employee hereby agrees to accept such employment and to serve the
Company and its subsidiaries and affiliates to the best of
Employee’s ability in such capacities, devoting substantially
all of Employee’s business time to such
employment.
4.
Compensation
.
(a)
Base Salary
. During the
Term, Employee will receive a base salary of two
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hundred seventy six thousand two hundred fifty
U.S. Dollars (US$276,250) per annum, paid in accordance with the
Company’s regular payroll practices and subject to such
deductions or amounts to be withheld as required by applicable law
and regulations or as may be agreed to by Employee. In the
event that the Company, in its sole discretion, from time to time
determines to increase Employee’s base salary, such increased
amount shall, from and after the effective date of such increase,
constitute the “ base salary ” of Employee for
purposes of this Agreement.
(b)
Incentive Compensation
. Employee shall have the
opportunity annually to earn incentive compensation in amounts
determined by the Compensation Committee of the Board of Directors
of the Company (the “ Compensation Committee ”)
in accordance with the applicable incentive compensation plan of
the Company as in effect from time to time (“ Incentive
Compensation ”). Under such plan, Employee shall
have the opportunity annually (beginning with respect to the 2009
performance period) to earn up to 43% of Employee’s base
salary as Incentive Compensation on the terms and subject to the
conditions of such plan.
(c)
Eligibility for Annual Equity
Awards . Employee
shall be eligible to receive an annual grant of stock options,
restricted stock units or other equity awards in the sole
discretion of the Compensation Committee and in accordance with the
applicable plans and programs for similarly situated employees of
the Company and subject to the Company’s right to at any time
amend or terminate any such plan or program, so long as any such
change does not adversely affect any accrued or vested interest of
Employee under any such plan or program.
(d)
Expense Reimbursement
. Subject to
Section 4(g) hereof, the Company shall reimburse Employee
for all reasonable and necessary travel, business entertainment and
other business expenses incurred by Employee in connection with the
performance of Employee’s duties under this Agreement, on a
timely basis upon timely submission by Employee of vouchers
therefor in accordance with the Company’s standard
procedures.
(e)
Health and Welfare
Benefits . Employee
shall be entitled to participate, without discrimination or
duplication, in any and all medical insurance, group health,
disability, life insurance, accidental death and dismemberment
insurance, 401(k) or other retirement, deferred compensation,
stock ownership and such other plans and programs which are made
generally available by the Company to similarly situated employees
in accordance with the terms of such plans and programs and subject
to the Company’s right to at any time amend or terminate any
such plan or program. Employee shall be entitled to paid
vacation, holidays, and any other time off in accordance with the
Company’s policies in effect from time to time.
(f)
Special Equity Award
. The Company shall grant to
Employee seven thousand five hundred (7,500) restricted stock units
under the Scientific Games Corporation 2003 Incentive Compensation
Plan, as amended and restated (the “ Plan ”),
pursuant to an equity award agreement (in the form to be provided
to Employee) to be entered into by and between the Company and
Employee (the “ Equity Award Agreement ”).
The Equity Award 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 this Agreement, the Equity Award Agreement or the
Plan.
(g)
Taxes and Internal Revenue Code
409A . Payment of
all compensation and benefits to Employee specified in this
Section 4 and in Section 5 of this Agreement shall be
subject to all legally required and customary withholdings.
The Company makes no representations regarding the tax implications
of the compensation and benefits to be paid to Employee under this
Agreement, including, without limitation, under Section 409A
of the Internal Revenue Code of 1986, as amended (the “
Code ”),
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and applicable administrative guidance and
regulations (“ Section 409A ”).
Section 409A governs plans and arrangements that provide
“nonqualified deferred compensation” (as defined under
the Code) which may include, among others, nonqualified retirement
plans, bonus plans, stock option plans, employment agreements and
severance agreements. The Company reserves the right to
provide compensation and benefits under any plan or arrangement in
amounts, at times and in a manner that minimizes taxes, interest or
penalties as a result of Section 409A. In addition, in
the event any benefits or amounts paid hereunder are deemed to be
subject to Section 409A, including payments under
Section 5 of this Agreement, Employee consents to the Company
adopting such conforming amendments as the Company deems necessary,
in its reasonable discretion, to comply with Section 409A
(including, but not limited to, delaying payment until six months
following termination of employment). Notwithstanding
anything herein to the contrary, if (i) at the time of
Employee’s “separation from service” (as defined
in Treas. Reg. Section 1.409A-1(h)) with the Company other
than as a result of Employee’s death, (ii) Employee is a
“specified employee” (as defined in
Section 409A(a)(2)(B)(i) of the Code), (iii) one or
more of the payments or benefits received or to be received by
Employee pursuant to this Agreement would constitute deferred
compensation subject to Section 409A, and (iv) the
deferral of the commencement of any such payments or benefits
otherwise payable hereunder as a result of such separation of
service is necessary in order to prevent any accelerated or
additional tax under Section 409A, then the Company will defer
the commencement of the payment of any such payments or benefits
hereunder to the extent necessary (without any reduction in such
payments or benefits ultimately paid or provided to Employee) until
the date that is six months following Employee’s separation
from service with the Company (or the earliest date as is permitted
under Section 409A). Any remaining payments or benefits
shall be made as otherwise scheduled hereunder. Furthermore,
to the extent any payments of money or other benefits due to
Employee hereunder could cause the application of an accelerated or
additional tax under Section 409A, such payments or other
benefits shall be deferred if deferral will make such payment or
other benefits compliant under Section 409A, or otherwise such
payments or other benefits shall be restructured, to the extent
possible, in a manner determined by the Company that does not cause
such an accelerated or additional tax. To the extent any
reimbursements or in-kind benefits due to Employee under this
Agreement constitute deferred compensation under Section 409A,
any such reimbursements or in-kind benefits shall be paid to
Employee in a manner consistent with Treas. Reg.
Section 1.409A-3(i)(1)(iv). Each payment made under this
Agreement shall be designated as a “separate payment”
within the meaning of Section 409A.
5.
Termination of
Employment .
Employee’s employment may be terminated at any time prior to
the end of the Term under the terms described in this
Section 5.
(a)
Termination by Employee for Other
than Good Reason .
Employee may terminate Employee’s employment
hereunder for any reason or no reason upon 60 days’ prior
written notice to the Company referring to this Section 5(a);
provided , however , that a termination by Employee
for “Good Reason” (as defined below) shall not
constitute a termination by Employee for other than Good Reason
pursuant to this Section 5(a). In the event Employee
terminates Employee’s employment for other than Good Reason,
Employee shall be entitled only to the following compensation and
benefits (collectively, the “ Standard Termination
Payments ”):
(i)
any accrued but unpaid base salary
for services rendered by Employee to the date of such termination,
payable in accordance with the Company’s regular payroll
practices and subject to such deductions or amounts to be withheld
as required by applicable law and regulations or as may be agreed
to by Employee;
(ii)
all vested non-forfeitable amounts
owing or accrued at the date of such termination under benefit
plans, programs and arrangements set forth or referred to in
Section 4
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hereof in which Employee theretofore
participated will be paid under the terms and conditions of such
plans, programs, and arrangements (and agreements and documents
thereunder);
(iii)
except as provided in
Section 6.6 hereof, all stock options, restricted stock units
and other equity awards will be governed by the terms of the plans
and programs under which such options, restricted stock units or
other awards were granted; and
(iv)
reasonable business expenses and
disbursements incurred by Employee prior to such termination will
be reimbursed in accordance with
Section 4(d) hereof.
(b)
Termination By Reason of
Death . If
Employee dies during the Term, the last beneficiary designated by
Employee by written notice to the Company (or, in the absence of
such designation, Employee’s estate) shall be entitled to the
following compensation and benefits:
(i)
the Standard Termination Payments;
and
(ii)
a lump sum payment equal to
Employee’s annual base salary, payable within 30 days of
death.
(c)
Termination By Reason of Total
Disability . The
Company may terminate Employee’s employment in the event of
Employee’s “Total Disability.” For purposes
of this Agreement, “ Total Disability ” shall
mean Employee’s (1) becoming eligible to receive
benefits under any long-term disability insurance program of the
Company or (2) failure to perform the duties and
responsibilities contemplated under this Agreement for a period of
more than 180 days during any consecutive 12-month period due to
physical or mental incapacity or impairment. In the event
that Employee’s employment is terminated by the Company by
reason of Total Disability, the Company shall pay the following
amounts, and make the following other benefits available, to
Employee:
(i)
the Standard Termination
Payments;
(ii)
an amount equal to the sum of
(A) Employee’s annual base salary and
(B) Employee’s “Severance Bonus Amount” (as
defined below), payable over a period of twelve (12) months after
such termination in accordance with Section 5(f) of this
Agreement; provided such amount shall be reduced by any
disability payments provided to Employee as a result of any
disability plan sponsored by the Company or its affiliates
providing benefits to Employee. For purposes of this
Agreement, “ Severance Bonus Amount ” shall
mean an amount equal to the highest annual Incentive
Compensation paid to Employee in respect of the two most recent
fiscal years of the Company but not more than the Employee’s
“target bonus” for the-then current fiscal
year;
(iii)
in lieu of any Incentive
Compensation for the year in which such termination occurs, payment
of an amount equal to (A) the highest annual Incentive
Compensation paid to Employee in respect of the two most recent
fiscal years of the Company but not more than Employee’s
“target bonus” for the year of termination, multiplied
by (B) a fraction the numerator of which is the number of days
Employee was employed in the year of such termination and the
denominator of which is the total number of days in the year of
such termination, payable as and when such Incentive Compensation
would otherwise have been payable under Section 4(b);
and
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(iv)
if Employee elects 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.
(d)
Termination by the Company for
Cause . The
Company may terminate the employment of Employee at any time for
“Cause.” For purposes of this Agreement,
“Cause” shall mean: (i) gross neglect by Employee
of Employee’s duties hereunder; (ii) Employee’s
conviction (including conviction on a nolo contendere plea) of a
felony or any non-felony crime or offense involving the property of
the Company or any of its subsidiaries or affiliates or evidencing
moral turpitude; (iii) willful misconduct by Employee in
connection with the performance of Employee’s duties
hereunder; (iv) intentional breach by Employee of any material
provision of this Agreement; (v) material violation by
Employee of a material provision of the Company’s Code of
Conduct; or (vi) any other willful or grossly negligent
conduct of Employee which would make the continued employment of
Employee by the Company materially prejudicial to the best
interests of the Company. In the event Employee’s
employment is terminated for “Cause,” Employee shall
not be entitled to receive any compensation or benefits under this
Agreement except for the Standard Termination Payments.
(e)
Termination by the Company
without Cause or by Employee for Good Reason
. The Company may
terminate Employee’s employment at any time without Cause,
for any reason or no reason, and Employee may terminate
Employee’s employment for “Good Reason.”
For purposes of this Agreement “ Good Reason ”
shall mean that without Employee’s prior written consent, any
of the following shall have occurred: (i) a material
change, adverse to Employee, in Employee’s positions, titles,
offices, or duties as provided in Section 3 hereof, except, in
such case, in connection with the termination of Employee’s
employment for Cause, Total Disability or death; (ii) an
assignment of any significant duties to Employee which are
materially inconsistent with Employee’s positions or offices
held under Section 3 hereof; (iii) a material decrease in
base salary or material decrease in Employee’s incentive
compensation opportunities provided under this Agreement; and
(iv) any other material failure by the Company to perform any
material obligation under, or material breach by the Company of any
material provision of, this Agreement; provided ,
however , that a termination by Employee for Good Reason
under any of clauses (i) — (iv) of this
Section 5(e) shall not be considered effective unless
Employee shall have provided the Company with written notice of the
specific reasons for such termination within thirty (30) days after
he has knowledge of the event or circumstance constituting Good
Reason and the Company shall have failed to cure the event or
condition allegedly constituting Good Reason within thirty (30)
days after such notice has been given to the Company. In the
event that Employee’s employment is terminated by the Company
without Cause or by Employee for Good Reason (and not, for the
avoidance of doubt, in the event of a termination pursuant to
Section 5(a), (b), (c) or (d) hereof), the Company
shall pay the following amounts, and make the following other
benefits available, to Employee.
(i)
the Standard Termination
Payments;
(ii)
an amount equal to the sum of
(A) Employee’s annual base salary and
(B) Employee’s Severance Bonus Amount, payable over a
period of twelve (12) months after such termination in accordance
with Section 5(f) of this Agreement;
(iii)
in lieu of any Incentive
Compensation for the year in which such termination occurs, payment
of an amount equal to (A) the highest annual Incentive
Compensation paid to Employee in respect of the two most recent
fiscal years of the Company but not more than the Employee’s
“target bonus” for the year of such termination,
multiplied by (B) a fraction the numerator of which is the
number of days Employee was employed in the year of such
termination and the denominator of which is the total number of
days in the year of such
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termination, payable as and when
such Incentive Compensation would otherwise have been payable under
Section 4(b); and
(iv)
if Employee elects 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.
(f)
Timing of Certain Payments under
Section 5 .
Payments pursuant to Sections 5(c)(ii) or
5(e)(ii) of this Agreement, if any, shall be payable in equal
installments in accordance with the Company’s standard
payroll practices over a period of twelve (12) months following the
date of termination (subject to such deductions or amounts to be
withheld as required by applicable law and regulations);
provided , however , that if and to the extent
necessary to prevent any acceleration or additional tax under
Section 409A, such payments shall be made as follows:
(i)
