Exhibit 10.7
SUPERSEDING
EMPLOYMENT, SEPARATION, AND
GENERAL RELEASE AGREEMENT
This Superseding Employment,
Separation, Non-Competition and General Release Agreement (this
“Agreement”) is made and entered into as of the 1st day
of July, 2008 (“Effective Date”), by and between
SCIENTIFIC GAMES INTERNATIONAL, INC., a Delaware corporation (the
“Company”), which is a subsidiary of SCIENTIFIC GAMES
CORPORATION, a Delaware corporation (“SGC”), and
William J. Huntley (“Executive”).
W I T N E S S E T H
WHEREAS, Executive has been employed
pursuant to various agreements most recently superseded by an
Employment Agreement with the Company entered into as of
August 1, 2006 and now in effect (“Employment
Agreement”);
WHEREAS, the Company and Executive
desire that this Agreement modify and supersede the Employment
Agreement to the extent specifically provided for
herein;
WHEREAS, the Company and Executive
agreed that he would begin transitioning some of his management
responsibilities in 2007 without prejudice to his rights under the
Employment Agreement;
WHEREAS, the Company and Executive
wish to modify the terms of Executive’s Employment Agreement
so that the Company may retain the benefit of Executive’s
historic knowledge of and perspective on matters at the Company and
that Executive may obtain certain benefits not presently available
under the Employment Agreement; and
WHEREAS , Executive and the
Company wish to settle and resolve all potential disputes, actions,
lawsuits, charges and claims that the Executive has or may have
against the Company and that the Company may have against him to
the fullest extent permitted by law and without any admission of
liability or wrongdoing on either part.
NOW THEREFORE, in consideration of
the recitals and the mutual promises, covenants and agreements set
forth herein, the parties covenant and agree as follows:
1.
Term. This Agreement shall consist of two periods as
follows:
a.
a transition period beginning July 1, 2008 and ending
February 1, 2009 (“Transition Period”);
and
b.
a severance period following the conclusion of the Transition
Period (“Severance Period”).
2.
Consideration to Executive . Except for any payments or benefits
Executive may receive during the Initial Period pursuant to his
participation in the Company’s benefit plans, programs and
arrangements, including group insurance benefits, 401(k) plan,
stock ownership plans, and
such other plans and programs
generally provided to employees, and subject to the terms and
conditions set forth therein, Executive acknowledges and agrees
that the payments described in this Agreement fulfill any and all
of the Company’s obligations to him under any contract,
bonus, incentive compensation, severance or separation plan or any
other plan or arrangement, and Executive specifically acknowledges
and agrees that he is entitled to no other compensation payments or
benefits from the Company of any kind or nature whatsoever, except
as otherwise expressly provided in this Agreement.
Notwithstanding the foregoing, Executive is not waiving or
releasing any claims to any vested benefits.
In consideration of the covenants
undertaken herein by Executive, and for other good and valuable
consideration, receipt of which is hereby acknowledged, and in full
and complete consideration for Executive’s promises,
covenants and agreements set forth in this Agreement, the Company
shall provide the following:
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a.
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During the Transition
Period:
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i.
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Base Salary
. Executive’s Base Salary
shall continue during the Initial Period at the rate of Five
Hundred and Fifty Thousand Dollars ($550,000) per annum, 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;
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ii.
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Incentive
Compensation . Executive will remain eligible for incentive
compensation at the rate set forth in Paragraph 4(b) of the
Employment Agreement as determined by the Compensation Committee of
the Board of Directors and paid in accordance with the procedures
under such program no later than March 31, 2009 which, for the
avoidance of doubt, includes the cash component of
Executive’s 2008 bonus;
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iii.
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Equity, Health and Welfare
Benefits . Executive shall be entitled to participate in
the MICP and in all medical insurance, group health, disability,
life, 401(k) and other benefits and plans as generally
provided by the Company to its executive employees; and
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iv.
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Expense
Reimbursement . The
Company shall reimburse Executive for reasonable business expenses
associated with travel under this Agreement attendant to requests
for same and in accordance with the policies and procedures of the
Company.
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b.
Separation Benefits. At 11:59 pm.on February 1, 2009,
Executive’s employment shall terminate and he shall be
entitled to receive the following “Separation Benefits”
which monies will be paid within thirty (30) days of termination of
employment unless specifically required to be paid at a later time
as set forth below to comply with Internal Revenue Code, as
amended (“IRC”) Section 409A, and subject to
such deductions or amounts to be withheld as required by applicable
law and regulations:
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i.
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any accrued but unpaid Base Salary
for services rendered to the date of termination will be paid in
accordance with the Company’s regular payroll
policies;
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ii.
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all vested nonforfeitable amounts
owing or accrued at the date of termination under the
Company’s benefit plans, programs and arrangements in which
Executive theretofore participated will be paid under the terms and
conditions of such plans, programs and arrangements (and agreements
and documents thereunder), including but not limited to unused
vacation;
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iii.
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reasonable business expenses
incurred by Executive prior to termination of employment shall be
reimbursed in accordance with the Company’s standard policies
and procedures; provided, however, that Executive must submit
vouchers for any such expenses in accordance with the
Company’s standard procedures within ten (10) business
days of his last day of employment;
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iv.
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all outstanding equity interests
(restricted stock units and options) which have been granted to
Executive shall immediately be vested, deliverable and exercisable
in accordance with and otherwise governed by SGC’s stock
option plans, including exercise within ninety (90) days of
vesting;
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v.
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$2,881,806.25 representing the value
of the SERP on December 31, 2004, which sum is grandfathered
under IRS Section 409A, subject to applicable tax
withholding;
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vi.
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six months and one day after date of
Executive’s termination of employment, an additional sum of
$1,556,365.09,representing the difference between: (i) the
value of the SERP on February 1, 2009; and (ii) the
amount paid to Executive under Section 2(b)(v) above. The
valuation of the SERP as of the date of termination shall be based
upon prior valuation of $3,788,461 as of December 31, 2005,
adjusted from that date by an amount calculated at 4% simple,
annual interest through February 1, 2009; and
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vii.
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the sum of nine hundred and thirty
thousand five hundred dollars ($930,500.00) consisting
of:
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1.
one year Base Salary of
$550,000;
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2.
a severance bonus amount of
$368,500;
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3.
an amount of $12,000 to enable
Executive to purchase such insurance as he deems appropriate,
including continued coverage under COBRA;
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which amounts will be paid as
follows: (a) one-half of the aggregate amount, or
$465,215, shall be paid in a lump sum approximately six months
after Executive’s last day of employment in conformity with
the requirements of IRC Section 409A; and (b) the
remaining one-half, or $465,215, shall thereafter be paid in equal
bi-weekly installments over a period of six months beginning
six
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3
months after termination of
Executive’s employment.
c.
Effect of Executive’s Total Disability or Death.
In the event of Executive’s termination during the
Initial Period or the Extended Transition Period by reason of
“total disability” (as defined in the Employment
Agreement), Executive will receive all amounts not previously paid
to Executive but which would have been otherwise payable to
Executive under this Section 2 of this Agreement as if he had
not suffered a total disability, but reduced by any disability
payments provided to Executive as a result of any disability plan
sponsored by the Company or its affiliates providing disability
benefits to the Executive. In the event of
Executive’s death prior to the end of the Term of this
Agreement, his estate shall receive all amounts not previously paid
to Executive but which would have been otherwise payable to
Executive under this Section 2 of this Agreement as if he had
not died prior to the expiration of the Term of this
Agreement..
d.
Effect of Termination For Cause by the Company. The
Company may terminate this Agreement during the Initial Period or
the Extended Transition Period for “Cause” as defined
in the Employment Agreement or Executive’s gross neglect of
Executive’s duties under Section 3 of this Agreement.
In the event such a termination occurs during the Initial
Period, Executive will receive the amounts specified in
Section 2(b) except those in 2(b)(iv) and
2(b)(vii) of this Agreement and no additional payments shall
be made under this Agreement.
3. Duties and
Title. During the Transition Period, Executive
will no longer serve as an executive officer of the Company or as
an executive officer or Board Member of its subsidiaries and
affiliates and will transition those responsibilities to other
person(s) designated by the CEO, Chairman or Board of
Directors of SGC. Executive will execute such documents and
take such other action as may be necessary to effectuate his
resignation or removal from such positions in a manner consistent
with the requirements of the various jurisdictions in which he
holds office; provided that such resignations from office shall not
be deemed to be a termination of this Agreement. Executive
will continue to have use of office space, computer,
telecommunications equipment, and secretary in order to perform
special oversight responsibilities as assigned by the CEO, Chairman
or or Board of Directors of SGC.
4.
Executive’s Release of the Company and Covenant Not to
Sue .
a. In consideration of the promises
made by the Company as set forth in this Agreement, which Executive
acknowledges and agrees are not otherwise owed to him, Executive,
on behalf of himself, his agents, assignees, attorneys, heirs,
executors, administrators and anyone else claiming by or through
him, releases and waives all claims, charges, complaints, liens,
demands, causes of action, obligations, damages, liabilities or the
like (including without limitation attorneys’ fees and costs)
(collectively, “Claims”) that Executive had, now has or
may claim to have against the Company and its
parent(s) (including without limitation SGC), affiliates,
subsidiaries and members, predecessors, successors or assigns, and
any of its or their past or present shareholders; and any of its or
their past or present directors, executives, officers, employees,
members, insurers, attorneys, consultants, agents, benefit plans
and trustees, fiduciaries, and administrators of those plans
(collectively, the “Released Parties”) as of the date
of execution of this Agreement, whether now known or unknown,
including without limitation in
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respect of all matters relating to
or in any way arising out of any aspect of Executive’s
employment with the Company and future separation from employment
with the Company, or treatment of Executive by the Company while in
the Company’s employ, including without limitation all claims
under any applicable law, including but not limited to all U.S.
local, state or federal law of/for salary and other wages,
incentive compensati
