Exhibit 10.3
EMPLOYMENT AND SEVERANCE BENEFITS
AGREEMENT
[The following Employment and Severance Benefits
Agreement between Scientific Games International, Inc. and Steven
M. Saferin was entered into as of November 19, 2002, effective
January 17, 2003. Mr. Saferin became an executive officer of
Scientific Games Corporation on June 14, 2005 and, at such date,
had a base salary rate of $350,000 per annum, which has been
increased over time from the initial rate of $250,000 stated in the
Agreement.]
This Agreement is made and entered
into as of 19 th day of November, 2002, by and
between SCIENTIFIC GAMES INTERNATIONAL, INC., a Delaware
corporation (hereinafter called the “ Company
”), and STEVEN M. SAFERIN (hereinafter called “
Executive ”).
W I T N E S S E T
H:
WHEREAS, at the date of consummation
of the tender offer (“ Commencement Date ”)
contemplated under that certain Agreement and Plan of Merger dated
November 19, 2002 (the “ Merger Agreement
”), by and among the Company, Blue Suede Acquisition Co. and
MDI Entertainment, Inc. (“ MDI ”), MDI
shall become a majority-owned direct subsidiary of the
Company;
WHEREAS, at the effective date of
the Merger contemplated under the Merger Agreement, MDI shall
become a wholly owned direct subsidiary of the Company;
and
WHEREAS, the Company desires to
obtain, and the Executive desires to provide, the services of
Executive to the Company beginning at the Commencement
Date.
NOW, THEREFORE, in consideration of
the mutual covenants and obligations hereinafter set forth, the
parties hereto, intending to be legally bound, hereby agree as
follows:
1.
EMPLOYMENT;
TERM .
As of the Commencement Date, upon
the terms and conditions set forth herein, the Company hereby
employs Executive and Executive hereby accepts employment with the
Company in the position of Senior Vice President-MDI for the
Company and President and Chief Executive Officer of MDI. The
term of Executive’s employment is subject to termination by
the Company at any time without cause upon sixty (60) days’
written notice, subject to Executive’s right to receive the
applicable payments and other severance benefits from and to the
extent described herein. Except as otherwise provided herein,
Executive may terminate his employment with the Company upon sixty
(60) days’ prior written notice or such shorter period as the
Company may allow. If Executive terminates this Agreement
voluntarily, except pursuant to Section 9 , he shall
not be entitled to any severance pay or severance benefits, but
shall be entitled to all other consideration, compensation and
reimbursement otherwise due to him under the terms of this
Agreement but only through the date of such termination.
Subject to Section 24 hereof, the term of this
Agreement shall be from the Commencement Date through
December 31, 2005. The parties agree that a failure to
renew this Agreement for a term beyond December 31, 2005 by
either party shall not act as or constitute an early termination of
this Agreement, with or without cause, or a constructive
termination by either party and shall not give rise to any rights
to severance or other compensation hereunder. The Company’s
obligations to provide Executive with remuneration, salary or any
other benefits described herein shall cease, in the case of
a
non-renewal, as of December 31, 2005,
except as to (i) payments due hereunder at December 31,
2005 or becoming due thereafter for periods ending on or before
December 31, 2005, and (ii) payments that may become due
pursuant to the indemnification obligations under
Section 5(a) of this Agreement.
2.
DUTIES
.
(a)
In his position
as Senior Vice President-MDI and, so long as the Company maintains
the separate corporate existence of MDI (or otherwise maintains MDI
as a distinct operating division), in his position as President and
Chief Executive Officer of MDI, Executive shall manage and oversee
the day-to-day operations of MDI, subject to the direction of the
Board of Directors of the Company and MDI, respectively. In
his position as Senior Vice President-MDI for the Company,
Executive shall also have direct reporting authority to the Chief
Executive Officer of Scientific Games Corporation, the parent of
the Company (“ Parent ”) and the Company.
Executive also shall report to such officer of the Company as shall
be designated by the Chief Executive Officer of the Company.
During the term of this Agreement, but only so long as the Company
maintains the separate corporate existence of MDI, the Company
shall nominate and cause Executive to be elected as a member of the
Board of Directors of MDI. Executive shall participate
directly in and be responsible for the timely creation,
modification and amendment of all operating and financial plans,
budgets and projections, and marketing strategies relating to MDI
or its business (collectively, the “ Business Plans
”), subject to the review and approval of such Business Plans
by the Board of Directors of MDI and the Chairman of the
Company.
(b)
During the term
of this Agreement, Executive also shall perform such other duties
and shall have such other responsibilities with the Company and MDI
as are normally associated with the positions set forth in
Section 1 and as otherwise may be reasonably assigned
to the Executive from time to time by or upon the authority of the
Board of Directors of MDI or the Chairman of the
Company.
(c)
Executive
acknowledges that, as an officer of the Company, he may, from time
to time, be assigned other duties and responsibilities by the
Company consistent with his seniority and position as an officer of
the Company so long as such duties and responsibilities would not,
without Executive’s consent which shall not unreasonably be
refused, (i) materially increase Executive’s workload
without a commensurate reduction in his workload with respect to
the business operations of MDI, and (ii) materially and
significantly change his overall responsibilities with the
Company. Subject to the foregoing and
Section 9(a) , Executive’s functions, duties and
responsibilities are subject to reasonable changes as the Company
may in good faith determine.
(d)
In addition to
his other express duties set forth in this Agreement, throughout
the term of his employment under this Agreement, Executive shall,
in all capacities: (i) diligently perform such duties and
fulfill such responsibilities as are normally associated with such
positions and with such other positions as otherwise may be
assigned to the Executive from time to time in accordance with this
Agreement; (ii) serve the Company and MDI to the best of his
ability in the capacities described hereunder or assumed pursuant
hereto and devote all of his
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business effort, time,
attention, energy, and skill to the duties of employment hereunder
(subject to (A) the policies of the Company with respect to
vacations and absences due to illness, government services,
sabbaticals, etc. and (B) Executive’s right to make and
supervise investments on a personal or family basis (including
trusts, funds and investment entities in which Executive or members
of his family have an interest) so long as these activities do not
result in any material deviation from Executive’s duty to
devote his full business effort, time, attention, energy and skill
to his duties or materially interfere with the performance of his
duties hereunder or violate any noncompetition or other fiduciary
obligations Executive has to Company or any of its Affiliates);
(iii) faithfully, loyally, and industriously perform his
duties; (iv) diligently follow and implement all lawful
management policies and decisions of the Company, MDI, Parent and
any other Affiliates of Company that are made known to him or are
otherwise generally disseminated to employees or executive officers
of the Company; (v) comply with all of the policies,
procedures and regulations of the Company, MDI, and Parent that are
generally applicable to and generally disseminated to employees,
executive officers or management of the Company, as well as all
applicable law and regulations; (vi) comply with all
reasonable and lawful requests and instructions made by the
Company, MDI or Parent; (vii) provide such explanations,
information and assistance as the Company, MDI or Parent may
reasonably require; and (viii) travel for business purposes to
the extent reasonably necessary or appropriate in the performance
of his duties. Executive acknowledges that he has received
and familiarized himself with the policies and procedures of the
Company and its Parent as set forth in the Standard Operating
Procedures Manual for the Company (the “ Company
Manual ”).
(e)
Executive
acknowledges that Parent has determined that, as of the
Commencement Date, Executive will not be an “Executive
Officer” of Parent for purposes of Section 16(b) of
the Securities Exchange Act. Executive further acknowledges
that such determination is subject to review from time to time by
Parent and that such status is subject to change either as a result
of changes in Parent, the Company or MDI, or in the
Executive’s duties with any of them or in applicable
rules and regulations.
3.
SITUS OF
EXECUTIVE AND MDI .
Executive shall render his services hereunder
initially from offices located in Fort Worth, Texas until his
relocation to Atlanta, Georgia or its proximate vicinity (including
Alpharetta, Georgia). Until the operations of MDI are
relocated from Fort Worth, Texas to the Company’s
headquarters in Alpharetta, Georgia, MDI shall provide such
resources as are reasonably necessary to support Executive in
performing his duties consistent with his residence and MDI’s
operations in Fort Worth, Texas. Executive acknowledges that
MDI and its operations shall be relocated to the Company’s
headquarters in Alpharetta, Georgia as promptly as is commercially
practicable. Upon the relocation of Executive’s primary
residence or the operations of MDI to Atlanta, Georgia or proximate
vicinity (including Alpharetta, Georgia), Executive shall be
provided with an executive office at the Company’s
headquarters in Alpharetta, Georgia.
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4.
COMPENSATION
.
As compensation to the Executive for
performance of the services required hereunder and as consideration
for his execution and delivery of this Agreement, the Company shall
pay or provide, as applicable, to him or cause to be paid or
provided, as applicable, to him, and the Executive agrees to
accept, the following salary and other compensation and
benefits:
(a)
Salary
. The
Executive shall receive an initial base salary, payable in
accordance with the Company’s normal procedures, which need
not be made more frequently than in equal monthly installments, at
the rate of $250,000 per annum, hereinafter referred to as “
Base Salary ”). The Executive’s Base
Salary shall be reviewed periodically and may be increased by the
Company from time to time and the Executive’s Base Salary
shall be increased each year by an amount equal to the percentage
increases in base salary generally provided to the executive
officers of the Company.
(b)
Benefit
Plans . The Executive shall
be offered and shall be permitted to participate in disability,
medical, dental, hospitalization, health, life and accident
insurance plans upon terms and conditions and at coverage levels
and coverage scope (including spouses and dependents) substantially
equivalent, taken as a whole, to those from time to time then
generally available to executive officers of the Company. The
Executive also shall be entitled during the term of his employment
under this Agreement and thereafter to participate in any
retirement, savings or other plans of the Company (or any similar
plans of Parent in which executives of the Company generally are
eligible to participate) upon terms and conditions substantially
equivalent, taken as a whole, from time to time generally available
to all executive officers of the Company.
(c)
Bonus
Plans . Executive shall be
eligible for calendar year 2003 and thereafter to be considered for
annual performance bonuses of up to 50% of his Base Salary based on
the attainment of performance objectives established by the Board
of Directors of the Company and Executive’s contributions to
the attainment of those objectives. Such bonuses, if any,
shall be awarded and payable in accordance with the Company’s
management incentive plans applicable to executive officers of the
Company. The criteria for such bonus shall be based upon
substantially the same criteria as annual cash bonuses generally
awarded to executive officers of the Company, which may take into
account intrinsic differences in job duties and
responsibilities. Any actual bonus award shall be in such
amount and payable in such manner, and otherwise be on such terms,
as are determined by the Board of Directors of the Company in good
faith. The Company agrees that after the Closing of the
Offer, Executive is entitled to receive a bonus of $125,000 for
services provided to MDI in 2002 prior to, and in connection with,
the Offer. The Company agrees that such bonus shall be
payable by the Company following the Closing of the Offer,
contingent upon the Closing of the Offer. Such bonus shall be
inclusive of all bonuses Executive shall be entitled to receive,
with respect to 2002, from MDI or the Company and its
Affiliates. Executive agrees such bonus will be reduced by
the amount of any other bonus from either MDI or the Company paid
after the date of this Agreement in or with respect to the year
2002. Executive represents and warrants that he has not and will
not receive any other bonus from MDI for 2002.
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(d)
Reimbursement
of Expenses . The Company shall
pay, or reimburse Executive in accordance with the Company’s
prevailing corporate policy, for reasonable business travel,
continuing education, and other expenses incurred by Executive in
performing his duties under this Agreement in accordance with and
subject to corporate policy and applicable Internal Revenue Service
regulations.
(e)
Stock
Options . Executive shall be
eligible to be considered for an annual grant of stock options
entitling the Executive to purchase shares of Parent common
stock. The criteria for such awards shall be based upon
substantially the same criteria as option grants generally awarded
to executive officers of Parent, which may take into account
intrinsic differences in job duties and
responsibilities.
(f)
Transportation
Allowance . The Executive shall
be entitled to a transportation allowance on the basis of
substantially the same criteria as is generally employed with
respect to executive officers of the Company. The Company
shall furnish an annual transportation allowance in an amount equal
to that furnished to executive officers of the Company, which
amount is $16,536 as of the date of this Agreement. Such
initial transportation allowance shall be increased annually in the
same amount of increase as is generally granted to all executive
officers of the Company. The transportation allowance shall
be payable in equal monthly installments and pro rated for any
partial year.
(g)
Vacation
. Executive
shall be entitled to vacation time and to days off for religious
and personal reasons in accordance with the Company’s policy
for its executive officers based on credited years of service as
set forth in the Company Manual, after giving effect to
Executive’s employment with MDI as provided in
Section 3(i) ;
(h)
Relocation
Assistance . In connection with
Executive’s relocation of his residence to Atlanta, Georgia
or the proximate vicinity, including Alpharetta, Georgia (“
Atlanta Metropolitan Area”) , the Company will, for
such relocation, reimburse Executive for the following, which
Executive acknowledges may be taxable to Executive:
(i)
usual and
customary expenses incurred if Executive sells his home himself or
through a broker; however, reimbursement for the broker’s
commission (if Executive utilizes the services of a broker) may not
exceed six (6) percent of the sales proceeds;
(ii)
difference
between the cost basis of Executive’s current Fort Worth,
Texas home (including documented improvements) and the actual sales
price of such home not to exceed $50,000; provided, however, that
this subsection (ii) shall only apply with respect to a
sale made within one (1) year of the Commencement Date and so
long as Executive has used his reasonable best efforts to sell his
home at prevailing market prices;
(iii)
reasonable
expenses incurred in moving furniture, normal household goods and
personal belongings to the new location and incidental expenses
related to the move;
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(iv)
reasonable
expenses (including travel and hotel) while house-hunting,
including four trips to the new location with Executive’s
spouse and children;
(v)
reasonable and
customary closing costs incurred in buying Executive’s new
home; and
(vi)
reasonable
temporary living expenses incurred while awaiting occupancy in
Executive’s new dwelling.
(i)
Tenure
Considerations . For purposes of
determining Executive’s rights and entitlements under any
provision of this Section 4 , his tenure with and
service to MDI or its subsidiaries during all periods prior to the
Commencement Date shall be given full consideration and weight from
and to the extent generally permitted by the terms of any benefit
plan and applicable law; provided , however , that no
such tenure or service need be recognized with respect to any
employee benefit plan if it would result in any disqualification of
any employee benefit plan, result in any determination that any
employee benefit plan is “top heavy” or result in any
other material adverse effect on any employee benefit plan or the
participants therein.
(j)
Stock
Options . The Company will
recommend to the Compensation Committee of Parent that Executive be
granted, as of the Commencement Date, options to acquire 100,000
shares of the Class A Common Stock of Parent; such options to
be awarded pursuant to a stock option award agreement of Parent
containing the same terms as are generally applicable to other
executive officers of the Company.
(k)
No Additional
Compensation for Services in Multiple Capacities
. The
remuneration and benefits set forth in this Section 4
shall be the only compensation payable to Executive with respect to
his employment hereunder, and Executive shall not be entitled to
receive any compensation in addition to that set forth in this
Section 4 for any services rendered by him in any
capacity to the Company or any Affiliate of the Company unless
agreed to in writing by the Company or such Affiliate of the
Company. The Company may change, or discontinue any such
benefits; provided , however , that so long as any
benefit is made available to corporate officers or employees
generally, such benefit will be extended to Executive on
substantially the same terms such benefit is made available to
other executive officers or employees as a whole.
5.
INDEMNITY,
PROFESSIONAL AND OFFICERS LIABILITY INSURANCE
.
(a)
Indemnity
. The
Company agrees to indemnify and save harmless Executive from all
liability and costs incurred (including reasonable attorney’s
fees and disbursements) as a consequence of claims by third
parties, whether or not derivatively on behalf of the Company,
resulting from or growing out of (i) Executive’s status
as, or as a result of his having been an officer or director of the
Company or any Affiliate of Parent, in each case, from and after
the date hereof, or (ii) the performance bonds issued prior to
the date of this Agreement and set forth on
Schedule “A” hereto (the “
Performance Bonds ”) in each case, to the full extent
permitted by law. Executive represents and warrants that no
claim or demand has been asserted or, to his knowledge, has been
threatened to be asserted with respect to such Performance
Bonds.
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In no event shall the terms,
provisions and conditions of the indemnity provided for hereunder
be less than the same as those presently provided for under the
Articles of Incorporation and By-Laws of the Company to the extent
permitted by law. Said terms, provisions and conditions of
indemnity shall remain an independent, contractual obligation of
the Company to Executive from and after the date hereof regardless
of how the Company might hereafter amend or change its Articles of
Incorporation or By-Laws to provide for different terms, conditions
and provisions of indemnity for other officers and directors of the
Company. In the event the Company should amend its Articles
of Incorporation or By-Laws to provide for different terms,
conditions and provisions of indemnity after the effective date
hereof, Executive shall be notified in writing of the change.
Executive shall thereafter have thirty (30) days to elect in
writing to accept the changed conditions of indemnity as a
modification to the Company’s contractual obligation
hereunder or to continue under the terms of indemnity as provided
for herein. The Company’s agreement to provide
indemnity hereunder shall survive the termination of this contract
regardless of the cause of termination. Subject to applicable law,
the Company shall advance, promptly as incurred, reasonable fees
and disbursements of counsel for Executive in defending Executive
against any claims for which the Company would be so required to
indemnify Executive; provided (i) Executive shall
otherwise comply with such mandatory requirements of Delaware law
as may be required for such indemnification, and
(ii) Executive shall cause his counsel to cooperate fully in
good faith with such requests as the Company or its counsel may
reasonably make in order to endeavor to minimize such legal fees,
but consistent with providing an adequate defense of
Executive.
(b)
Officers and
Directors’ Liability Insurance . The Company agrees
to provide, or cause Parent to provide, at no expense to the
Executive, insurance insuring Executive in his capacity as an
officer and/or director of the Company (and/or as an officer or
director of any controlled Affiliates of the Parent for which
Executive serves in such capacities) as a consequence of claims
arising out of Executive’s service as an officer and/or
director of the Company and/or as an officer or director of any
Affiliates of Parent for which Executive serves in such capacities
as may be specified from time to time, in each case, from and after
the date of this Agreement in such form and amount substantially
equal to that presently maintained by Parent for or covering
executive officers of the Company or in such other form and amount
as Parent may, from time to time, determine are reasonable and
appropriate. It is expressly agreed that this obligation to
provide insurance is not intended to require insurance for, or
intended to cover, prior acts at MDI which are the subject of a
separate obligation under the terms of the Merger
Agreement.
6.
TERMINATION OF
EMPLOYMENT BY COMPANY FOR CAUSE .
(a)
The Company may
terminate Executive’s employment at any t
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