Exhibit 10.15
SCIENTIFIC GAMES
CORPORATION
FROZEN SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
(as amended and restated
effective January 1, 2009)
Table of Contents
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Page
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ARTICLE I
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INTRODUCTION
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1
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1.1
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Purpose; Old Plan
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1
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1.2
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2005 Plan
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1
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1.3
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Complete Discontinuance of Plan
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1
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1.4
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Consolidated Plan Document and Roadmap
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2
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1.5
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Construction
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2
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1.6
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Amendments to Comply with Regulations
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2
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1.7
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Coordination with CEO Employment Agreement
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2
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ARTICLE II
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DEFINITIONS
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3
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2.1
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Beneficiary
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3
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2.2
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Board of Directors
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3
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2.3
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Change of Control
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3
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2.4
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Code
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4
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2.5
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Committee
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4
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2.6
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Company
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4
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2.7
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Disability
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4
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2.8
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ERISA
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4
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2.9
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Final Earnings
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4
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2.10
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Grandfathered Benefit
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4
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2.11
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Interest
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5
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2.12
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Member
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5
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2.13
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New Plan Benefit
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5
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2.14
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Old Plan
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5
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i
Table of Contents
(continued)
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Page
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2.15
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Old Plan Benefit
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5
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2.16
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Old Plan Discount Rate
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6
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2.17
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Plan
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6
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2.18
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Regulations
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6
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2.19
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Separation from Service
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6
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2.20
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Specified Employee
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7
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2.21
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Subsidiary
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7
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2.22
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Threatened Change of Control
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7
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2.23
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Total Frozen Benefit
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7
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2.24
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Trust
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7
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ARTICLE
III
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PAYMENT OF BENEFITS
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8
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3.1
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Old Plan Benefit Payable on Retirement
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8
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3.2
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New Plan Benefit Payable upon Separation from Service
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8
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3.3
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Disability
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8
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3.4
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Distributions to Specified Employees Based on Separation
from Service
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8
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3.5
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Death
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8
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3.6
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Beneficiaries
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9
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3.7
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Withholding for Taxes
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10
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3.8
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Acceleration Generally Prohibited
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10
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3.9
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Vesting
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10
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3.10
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Delay under Section 162(m)
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10
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ARTICLE IV
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PLAN ADMINISTRATION
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11
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4.1
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Committee
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11
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ii
Table of Contents
(continued)
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Page
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4.2
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Committee Authority
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11
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4.3
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Indemnification
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11
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4.4
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Change of Control
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11
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ARTICLE V
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CLAIMS PROCEDURE
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11
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5.1
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Administrator of Claims Procedure
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11
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5.2
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Claims
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12
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5.3
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Denial of Claims
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12
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5.4
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Appeal of Denial of Claims
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12
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5.5
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Appeal
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13
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5.6
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Written Decision on Appeal
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13
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5.7
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Resolution of Disputes
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13
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ARTICLE VI
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GENERAL
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14
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6.1
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Unsecured Creditor Status
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14
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6.2
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Source of Payment
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14
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6.3
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Effect of Plan on Compensation
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14
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6.4
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Nontransferable
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14
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6.5
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Amendment of Plan
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14
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6.6
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Prohibition against Acceleration
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15
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6.7
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No Employment Rights
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15
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6.8
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Binding Effect
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15
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6.9
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Governing Law
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15
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6.10
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Severability
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15
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6.11
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Titles
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16
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iii
Table of Contents
(continued)
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Page
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ARTICLE
VII
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GRANTOR TRUST
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16
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7.1
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Grantor Trust
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16
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7.2
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Situs of Assets
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17
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7.3
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Trust Agreement Governs
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17
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iv
SCIENTIFIC GAMES
CORPORATION
FROZEN SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN
ARTICLE I
INTRODUCTION
1.1 Purpose; Old Plan. In order to retain the services of and
provide rewards and incentives to members of a select group of management
employees who contribute to the success of Scientific Games Corporation (the Company),
the Company adopted a Supplemental Executive Retirement Plan (Plan) effective
September 7, 2000 to provide supplemental retirement benefits to select
members of management and highly compensated employees who became members
thereof. The Plan was thereafter amended
and restated effective November 1, 2003 (the Old Plan), and continued to
be administered in accordance with the terms of such restatement, without further
change, through December 31, 2004.
Effective as of the close of business on December 31, 2004, the
benefits payable under the Old Plan were limited in operation to benefits that
were earned and vested on that date within the meaning of regulations and
guidance issued under Section 409A of the Internal Revenue Code of 1986,
as amended (Section 409A).
1.2 2005 Plan. Effective January 1, 2005, a replacement
plan (the New Plan) was adopted in order to provide benefits substantially
similar to those provided under the Old Plan on terms intended to comply with Section 409A
and with regulations and other guidance thereunder applicable to deferrals
after December 31, 2004 (Regulations), without duplication of
benefits provided under the Old Plan. Members
of the Old Plan who had not both attained age fifty-five (55) and completed ten
(10) years of Service (as therein defined) on or before December 31,
2004 had no vested benefits under the Old Plan and shall, accordingly, receive
their supplemental retirement income benefits solely under such New Plan.
1.3 Complete
Discontinuance of Plan. No benefits
became payable under the Plan during the calendar year 2005. Pursuant to action of the Compensation
Committee of the Board of Directors taken December 15, 2005, the Plan was
amended permanently to terminate further benefit accruals thereunder (including
for this purpose any employment agreements previously treated as part of the
Plan) effective as of December 31, 2005 and to make related changes,
including (a) redefinition of the compensation taken into account in
determining the frozen Plan benefit as of December 31, 2005, (b) crediting
all Members with fifteen years of service for purposes of the benefit formula, (c) full
vesting of all Members, (d) provision for all benefits to be paid in the
form elected by them prior to December 31, 2004 under the Old Plan, namely
a single lump sum, (e) prohibition of all future benefit enhancements of
any type whatever (including those that might be based on a Change of Control
Termination), and (f) provision for all benefit increases resulting from
such Committee action to be provided under terms fully compliant with Section 409A,
including without limitation the requirement for a six-month delay in making of
distributions to Specified Employees on account of separation from service.
1.4 Consolidated Plan
Document and Roadmap. In order to
reflect and provide for the changes made above and comply with the final
regulations under Section 409A, the Plan is hereby amended and restated to
read as set forth below, effective as of January 1, 2009, except as
otherwise provided, and shall be known as the Scientific Games Corporation
Frozen Supplemental Executive Retirement Plan.
Although contained within a single document, the Plan set forth herein
comprises two separate plans for purposes of Section 409A, namely
(a) a plan providing
solely the Grandfathered Benefit (as defined in Section 2.10), which as
increased by interest at the Old Plan Discount Rate (as defined in Section 2.16),
provides for the Old Plan Benefit (as defined in Section 2.15), to be
payable on retirement under the terms of the Old Plan (as set forth in Section 3.1)
or on Disability or death, and
(b) a plan providing the New Plan
Benefit (as defined in Section 2.13), consisting of the Total Frozen Benefit
(as defined in Section 2.23), as increased by 4% interest under Section 2.11,
or, for a Member entitled to payment of an Old Plan Benefit, the portion of
such Total Frozen Benefit in excess of such Old Plan Benefit, to be payable in
either case on Separation from Service (as defined in Section 2.19),
Disability, death, or a specified payment date pursuant to Section 1.7, on
terms compliant with Section 409A and the Regulations.
1.5 Construction. This Plan shall be administered and
interpreted in accordance with Section 409A and the Regulations to the
extent subject thereto (i.e., except with respect to grandfathered benefits
payable in accordance with the Old Plan as described above). No provision hereof shall be construed in any
manner that would violate Section 409A or the Regulations, nor, to the
maximum extent permitted by law, shall any provision of the Plan inconsistent
with Section 409A or the Regulations be valid or given any effect whatever.
1.6 Amendments to
Comply with Regulations.
Notwithstanding any restriction on the general right to amend set forth
in Article VI, the Company reserves the right to make any and all such
amendments as it may deem necessary or advisable for compliance with Section 409A
and the Regulations.
1.7 Coordination with
Employment Agreements.
Notwithstanding any other provision of the Plan, (a) the entire
benefit accrued under the Plan by the Member serving as Chief Executive Officer
of the Company as of January 1, 2006, pursuant to an employment agreement
with the Company effective as of such date, shall be payable solely as a New
Plan Benefit (and no portion thereof shall constitute a Grandfathered Benefit
or Old Plan Benefit), and the date(s) of payment thereof, other than by
reason of Disability or death, shall be the specified dates of payment (within
the meaning of Section 409A) set forth in the applicable amendment to such
employment agreement executed on or before December 31, 2008 pursuant to
transition rules allowing substitution of a specified payment date for
termination of employment as the applicable payment event, and (b) the
portion of the benefit accrued under the Plan as of January 1, 2006 by any
other Member and not constituting a Grandfathered Benefit shall, in the event
that an agreement with such Member substitutes a specified payment date for
termination of employment as the date of payment for such benefit, be paid
solely at such specified payment date, without regard to the date of the Members
termination of employment.
2
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall
have the meanings specified below unless a different meaning is clearly
required by the context:
2.1 The term Beneficiary shall mean any person or persons entitled to
receive benefits under the Plan following a Members death pursuant to Sections
3.5 and 3.6.
2.2 The term Board of Directors shall mean the Board of Directors of
Scientific Games Corporation, or any duly authorized committee thereof.
2.3 The term Change of Control shall mean the occurrence of any of the
following:
(a) 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 and any employee benefit plan
sponsored or maintained by the Company or any subsidiary (including any trustee
of such plan acting as trustee), 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
Companys then outstanding securities;
(b) the stockholders of the
Company approve a merger, consolidation, recapitalization or reorganization of
the Company, or the consummation of any such transactions 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 prior to such
transaction being beneficially owned by persons who together beneficially owned
at least 80% of the combined voting power of the securities of the Company
outstanding immediately prior to such transaction; provided that, for purposes
of this paragraph (b), 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;
(c) the stockholders of the
Company approve a plan of complete liquidation of the Company or 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
(d) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors (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 paragraph (a), (b), or (c) of
this Section 2.3 ) whose election by the Board or nomination for election
by the Companys stockholders was approved
3
by a vote of at 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 a majority of the Board.
2.4 The term Code shall mean the Internal Revenue Code of 1986, as
amended, provided that references to Sections of the Code shall, if applicable,
include corresponding provisions of any subsequent Internal Revenue Code.
2.5 The term Committee shall mean the Compensation Committee of the
Board of Directors.
2.6 The term Company
shall mean Scientific Games Corporation, its successors and assigns, any
Subsidiary authorized by the Board to participate in this Plan with respect to
its employees (to the extent required or appropriate for such purpose), and any
organization into which the Company may be merged or consolidated or to which
all or substantially all of its assets may be transferred.
2.7 The term Disability
shall mean (a) with respect to the New Plan Benefit, any medically determinable
physical or mental impairment which can be expected to result in death or to
last for a continuous period of not less than twelve (12) months and which
renders the Member unable to engage in any substantial gainful activity or by
reason of which the Member receives income replacement benefits for a period of
not less than three months under an accident and health plan of the Company;
provided that notwithstanding the foregoing, a determination of total
disability by the Social Security Administration shall be conclusive proof of
Disability, and (b) with respect to the Old Plan Benefit, Total and Permanent
Disability as defined in the Old Plan (i.e., disability that entitles a Member
to disability benefits under the Companys long term disability plan in effect
at the time the Member becomes disabled or if the Company does not maintain a
long-term disability plan, inability of the Member to perform the usual and
customary duties of his occupation which is likely to be permanent or of long
duration).
2.8 The term ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended.
2.9 The term Final
Earnings shall mean the total of a Members annual rate of base
salary and maximum target bonus amount as of December 31, 2005, determined
without regard to any deduction of pre-tax contributions under Code Section
401(k) plans, flexible benefit (cafeteria) plans described in Code Section 125,
and qualified transportation fringes described in Code Section 132(f)(4), and
before deferrals of compensation under any elective deferred compensation
plans.
2.10 The term Grandfathered
Benefit shall (subject to Section 1.7) mean the present value as of
December 31, 2004 of the benefit earned and vested in respect of a Member on
such date under the Old Plan, calculated as the amount that the Member could
have received as a lump sum distribution if he voluntarily terminated his
employment with the Company without cause on December 31, 2004 and received
such distribution as soon as possible
4
thereafter. The benefit then earned and vested shall be
determined under the terms of the Old Plan, as modified by any employment
agreement in effect on October 3, 2004 providing for any different basis
for calculating such amount, and the present value thereof shall be determined
using the Old Plan Discount Rate.
2.11 The term Interest
shall mean interest at an annual rate of four percent (4%), credited and
compounded annually up to the day prior to the date of payment (or other
applicable date of reference).
2.12 The term Member
shall mean any individual who was a Member of the Old Plan on December 31,
2004.
2.13 The term New Plan
Benefit shall mean a Members Total Frozen Benefit increased by
Interest from January 1, 2006 as provided in Section 2.10; provided, however,
that
(a) If
the Member received a distribution of his Old Plan Benefit prior to payment of
his New Plan Benefit, (i) Interest shall be credited on the Members Total
Frozen Benefit from January 1, 2006 to the date as of which the Old Plan
Benefit was paid, (ii) the amount of Old Plan Benefit paid, as increased by
Interest similarly computed, shall be deducted from the Members Total Frozen
Benefit as of such date, and (iii) the remaining balance of the Members Total
Frozen Benefit (including such Interest) shall then be increased by Interest
under Section 2.11 to the applicable date provided therein, and
(b) If
distribution of a Members New Plan Benefit is to be made prior to distribution
of the Members Old Plan Benefit, the Members New Plan Benefit shall be the
amount of the Members Total Frozen Benefit as of December 31, 2005, increased
by Interest from January 1, 2006 under Section 2.11 to the applicable date
provided therein, reduced (but not below zero) by the amount of the Members
Grandfathered Benefit increased by interest to such date at the Old Plan
Discount Rate.
(c) Notwithstanding
anything herein go the contrary, a Members New Plan Benefit, including
associated calculations of Interest, shall be appropriately adjusted in the
event of any intervening distribution in respect of such New Plan Benefit made
on a specified payment date under Section 1.7, or under Section 3.8.
2.14 The term Old Plan
shall mean the Scientific Games Corporation Supplemental Executive Retirement
Plan originally established effective September 7, 2000, as amended and
restated effective November 1, 2003 and in effect thereafter in respect of
benefits earned and vested on December 31, 2004.
2.15 The term Old Plan
Benefit shall (subject to Section 1.7) mean a Members
Grandfathered Benefit (if any), increased by interest at the Old Plan Discount
Rate from December 31, 2004 to the last day of the month immediately preceding
the date scheduled for payment thereof under Section 3.1 (or other applicable
provision hereof). The amount of each
Members Old Plan Benefit as of December 31, 2004 is set forth in Schedule 1.
5
2.16 The term Old Plan Discount Rate shall mean the Discount Rate in
effect under Section 2.12 of the Old Plan on December 31, 2004,
namely, an interest rate equal to the average yield of a 30-year U.S. Treasury
security for the month prior to the month in which Termination of Employment
occurs, or in the event a 30-year U.S. Treasury security is unavailable at such
time, then the next longest long-term U. S. Treasury security then available.
Since 30-year Treasury securities were not then available, the interest rate
applicable under such provision is the rate on 20-year Treasury securities for November 2004
(the month before the deemed termination on December 31, 2004), which was
4.89%.
2.17 The term Plan shall mean and include each of:
(a) the Old Plan for periods
through December 31, 2004, and thereafter solely with respect to the Old
Plan Benefit, and
(b) a new plan
providing all benefits under the Scientific Games Corporation Frozen
Supplemental Executive Retirement Plan set forth herein other than those
provided under the Old Plan.
2.18 The term Regulations shall mean regulations and other guidance
issued by the Treasury or Internal Revenue Service under Section 409A.
2.19 The term Separation from Service shall mean separation from service
within the meaning of the Regulations, other than by reason of death,
determined by reference to the presumptive rule of Treasury Reg.
§ 1.409A-1(h)(l) (under which a reasonable expectation of a permanent
reduction in the level of services to no more than 20% of the average level
during the prior 36-month or other applicable period is presumed to result in a
separation from service), or, if the Member continues or is expected to perform
services as such an independent contractor, separation from service within the
meaning of the applicable provisions of Treasury Reg. § 1.409A-1(h). For purposes of the foregoing,
(a) Leaves, etc. A Members employment relationship shall be
treated as continuing while he or she is on military leave, sick leave, or
other bona fide leave of absence (such as temporary employment by the
government) if the period of such leave does not exceed six months, or if
longer, so long as the Members right to reemployment with the Company (or a
Subsidiary) is provided either by statute or by contract. If the period of leave exceeds six months and
the Members right to reemployment is not provided either by statute or by
contract, the employment relationship is deemed to terminate immediately
following such six-month period.
(b) Sale of a
division or other substantial assets.
Notwithstanding the first paragraph of this Section 2.19, a
separation from service shall not occur for purposes of this Plan to the extent
that the Committee determines otherwise in accordance with Treasury Reg.
§ 1.409A-1(h)(4).
(c) Transfers within
Controlled Group. A Member shall not be treated as terminating employment,
retiring or otherwise separating from service for purposes of the Plan
6
solely by reason of a transfer to employment between
the Company and a Subsidiary, or between two Subsidiaries.
(d) Sale of
Subsidiary. In
the event of a Subsidiary Change in Control Event, distribution shall be made
to each Member who continues to be employed by the affected Subsidiary
immediately following such event (and who had not previously incurred a
Separation from Service) as if the Member had thereupon incurred Separation
from Service, except that no six-month delay shall be required pursuant to Section 3.4. For this purpose, the term Subsidiary Change
in Control Event means a change in control event with respect to a Subsidiary
within the meaning of the Regulations, pursuant to which the Company ceases to
have direct or indirect ownership of at least fifty-one percent (51%) of the
value of the total equity or total combined voting power in respect of the
Subsidiary.
2.20 The term Specified Employee means specified employee as determined
pursuant to procedures adopted by the Company in accordance with the
Regulations for purposes of its nonqualified deferred compensation plans
subject to Section 409A.
2.21 The term Subsidiary shall mean a subsidiary or affiliate that is a
member of the same controlled group as the Company within the meaning of
section 414(b) or (c) of the Code.
2.22 The term Threatened Change of Control shall mean:
(a) 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 of Control as
defined in Section 2.3; or
(b) the
announcement by any person of an intention to take actions which might
reasonably result in a Change of Control as defined in Section 2.3.
2.23 The term Total Frozen Benefit shall mean the lump
sum present value on December 31, 2005, calculated using a discount rate
of four and one-half percent (4-1/2%) per annum, of a fixed annuity commencing January 1,
2006 and payable annually for fifteen (15) consecutive years in an annual amount equal to forty-five
percent (45%) of a Members Final Earnings, or if applicable, such other amount
as may be determined in accordance with an employment agreement between the
Member and the Company as in effect on December 31, 2005 (and without regard to any provision of such
an agreement providing for any adjustment after December 31, 2005), as set
forth in Schedule 1 established by the Committee (which shall be a part of this
Plan).
2.24 The term Trust shall mean any domestic trust established in
accordance with Article VII.
7
The words and phrases defined in this Article when
used in this Plan with an initial capital letter shall have the meanings
specified in this Article, unless a different meaning is clearly required by
the context. Any words herein used in
the masculine shall be read and construed in the feminine where they would so
apply. Words in the singular shall be
read and construed as though used in the plural in all cases where they would
so apply.
ARTICLE III
PAYMENT OF
BENEFITS
3.1 Old
Plan Benefit Payable on Retirement.
In the event that a Member had attained age fifty-five (55) and
completed at least ten (10) years of full-time employment with the Company
on December 31, 2004, the Member shall be entitled to receive payment of
his Old Plan Benefit on the first day of the month next following the
termination of the Members full-time employment (within the meaning of such
term under the Old Plan, and thus including a transfer to employment for which
the Member is not paid on a full-time basis), but without duplication of any
Disability Benefit under Section 3.3.
3.2 New
Plan Benefit Payable upon Separation from Service. In the event of a Separation from Service of
a Member (other than a Member entitled to a Disability benefit under Section 3.3),
the Member shall be entitled to receive, on or as soon as practicable after the
first day of the month next following such event, a single lump sum payment in
an amount equal to the Members New Plan Benefit, subject to Section 3.4
if the Member is a Specified Employee.
3.3 Disability. In the event of a Members Disability, the
Member shall be entitled to receive, on the first day of the month next
following such event, a single lump sum payment in an amount equal to the
Members New Plan Benefit plus the amount of his Old Plan Benefit (if the
Member was entitled to any such benefit and such benefit was not previously
paid and is not concurrently payable under Section 3.1).
3.4 Distributions
to Specified Employees Based on Separation from Service. If distribution of Members New Plan Benefit
becomes due under Section 3.2 and the Member is a Specified Employee as of
the date of his Separation from Service, such distribution shall be not be made
prior to the expiration of six months from the date of separation; provided,
however, that this Section 3.4 shall not preclude earlier distribution
under Section 3.5 in the event of the Members death prior to payment
hereunder.
3.5 Death.
(a) Death prior
to Benefit Commencement Date. In the
event of the death of a Member prior to the date on which payment in respect of
his New Plan Benefit is scheduled to commence under Sections 3.2 through 3.4
and/or his Old Plan Benefit is scheduled to commence under Section 3.1 (Benefit
Commencement Date), the Members Beneficiary shall be entitled to receive a
lump sum payment on the first day of the second month following such death in
an amount equal to the (i) Members New Plan Benefit, including where
applicable Interest from
8
the date of the Members death to the last day of the
month immediately preceding the date of payment to the Members Beneficiary,
plus (ii) if applicable, the Members Old Plan Benefit.
(b) Death
after Benefit Commencement Date. In
the event that a Member shall die on or after such Benefit Commencement Date
(as defined in Section 3.5(a)), and the payment due as of such Benefit
Commencement Date was not made because of administrative delays or any other
reason, such payment shall be made to the executor or personal representative
of the Members estate.
3.6 Beneficiaries.
(a) Beneficiary
Designation. A Member shall
designate a Beneficiary to receive benefits becoming due pursuant to Section 3.5(a) on
the Beneficiary Designation Form prescribed by the Committee. If more than one Beneficiary is named, the
share and/or precedence of each Beneficiary shall be indicated. A Member shall have the right to change the
Beneficiary by submitting to the Committee a new Beneficiary Designation Form.
(b) Proper
Beneficiary. If the Committee has
any doubt as to the proper Beneficiary to receive payments hereunder, the
Committee shall have the right to withhold such payments until the matter is
finally adjudicated. However, any
payment made by the Committee, in good faith and in accordance with this Plan,
shall fully discharge the Company from all further obligations with respect to
that payment.
(c) Minor
or Incompetent Beneficiary. In
making any payments to or for the benefit of any minor or an incompetent Beneficiary,
the Committee, in its sole and absolute discretion, may, but need not, make a
payment to a legal or natural guardian or other relative of a minor or court
appointed committee of such incompetent.
Alternatively, it may make a payment to any adult with whom the minor or
incompetent temporarily or permanently resides.
The receipt by a guardian, committee, relative or other person shall be
a complete discharge to the Company.
Neither the Company nor the Committee shall have any responsibility to
see to the proper application of any payments so made.
(d) No
Beneficiary Designation. If a Member
fails to designate a Beneficiary as provided in Section 3.6(a) above,
or if all designated Beneficiaries predecease the Member or die prior to
complete distribution of the Members benefits, then the Members designated
Beneficiary shall be deemed to be his surviving spouse. If the Member has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be payable
to the executor or personal representative of the Members estate.
(e) Old
Plan Designations. In the event that
a Member had a beneficiary designation in effect under Section 4.6(a) of
the Old Plan in effect on December 31, 2004, the beneficiary or
beneficiaries so designated shall be the Members Beneficiary under the Plan as
herein restated (with respect to both the Members Old Plan Benefit and New
Plan Benefit) unless and until the Member shall designate another Beneficiary
in accordance with Section 3.6(a) above.
9
3.7 Withholding
for Taxes. To the extent required by
the law in effect at the time payments are made, the Company shall withhold
from payments made hereunder any taxes required to be withheld by the federal
or any state or local government.
3.8 Acceleration
Generally Prohibited. No
acceleration of payments under the Plan shall be permitted except as authorized
by the Regulations. Without limiting the
generality of the foregoing, distribution of a Members New Plan Benefits may
be accelerated by the Committee in any of the following circumstances:
(a) Ethics
or conflict of interest requirements.
Distribution may be accelerated as may be necessary to comply with
ethics or conflict of interest requirements in accordance with Treasury Reg.
§ 1.409A-3(j)(4)(iii).
(b) Payment
of employment taxes. Distribution
may be accelerated in order to pay (i) the Federal Insurance Contributions
Act (FICA) tax imposed under section 3101, section 3121(a) and
section 3121(v)(2) of the Code on deferrals under the Plan (the FICA
Amount), (ii) Federal, state, local or foreign wage withholding taxes on
the FICA Amount, and (iii) additional wage withholding taxes attributable
to the pyramiding of wages subject to withholding and taxes. Acceleration shall be permitted under this
paragraph (b) only to the extent that Committee determines that such tax
obligations cannot be readily met from other sources, and the total payment
under this paragraph (b) shall not exceed the aggregate of the FICA Amount
and related income tax withholding.
3.9 Vesting. A Members right to his Old Plan Benefit (if
any) and New Plan Benefit shall be fully vested and nonforfeitable at all
times.
3.10 Delay
under Section 162(m). A payment
under the Plan may be delayed to the extent that the Company reasonably
anticipates that if the payment were made as scheduled, the Companys deduction
with respect to such payment would not be permitted by reason of section 162(m) of
the Code, provided that the payment is made either (a) during the Companys
first taxable year in which it is reasonably anticipated that the deduction of
such payment will not be barred by Code section 162(m) or (b) during
the period beginning with the date of the Members Separation from Service and
ending on the later of the last day of the taxable year of the Company in which
the Member separates from service or the 15th day of the third month following
such Separation from Service, and all similarly situated Members are treated on
a reasonably consistent basis, and provided further that where any payment
scheduled to be made on a specified payment date to a particular Member in a
taxable year is delayed in accordance with this Section 3.10, the delay in
payment will be treated as a subsequent deferral election unless all scheduled
payments to that Member that could be delayed under this Section 3.10 are
also delayed. Where the payment is
delayed to a date on or after Separation from Service, the payment will be
considered a payment upon a Separation from Service for purposes of the Plan,
including for purposes of Section 3.2. No election may be provided to the
Member with respect to the timing of the payment under this Section 3.10.
Interest shall continue to accrue in accordance with Section 2.10 during
the period of any such delay (including any period during which he Company is
determining whether such a delay is necessary or appropriate).
10
ARTICLE IV
PLAN
ADMINISTRATION
4.1 Committee. The Committee shall administer the Plan and
keep records of individual Member benefits.
4.2 Committee
Authority. The Committee shall have
the power and authority in its sole discretion to adopt rules relating to
the Plan, to interpret the Plan and such rules, and to make any other
determinations in the administration of the Plan, including without limitation
all determinations with respect to factual matters and questions of
construction, provided that no such rule shall change any express provision
of the Plan or provide for any increase in benefits hereunder. The Committee may employ such counsel,
accountants, actuaries, and other agents as it shall deem advisable. The Company shall pay the compensation of
such counsel, accountants, actuaries, and other agents and any other expenses
incurred by the Committee in the administration of the Plan.
4.3 Indemnification. The Company shall indemnify and save harmless
each member of the Committee, and each employee, director or officer of the
Company or of any of its subsidiaries, from and against any and all loss,
liability, claim, damage, cost and expense which may arise by reason of, or be
based upon, any matter connected with or related to the administration of the
Plan (including, but not limited to, any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or in settlement of any such claim whatsoever), unless
such person shall have acted in bad faith or been guilty of willful misconduct
in respect of his duties, actions or omissions in respect of the Plan.
4.4 Change
of Control. Notwithstanding any
provision of the Plan to the contrary, in the event of a Change of Control, the
trustee of the Trust created pursuant to Article VII shall assume and
succeed to all powers of the Committee hereunder as they apply to the
determination and payment of benefits (including, without limitation, the
amount and time and form of payment thereof) to or in respect of any Member or Beneficiary. However, a Member or Beneficiary may consent,
by written application, to the Committee retaining its authority to determine
the Plan benefits of such Member or Beneficiary.
ARTICLE V
CLAIMS PROCEDURE
5.1 Administrator
of Claims Procedure. The Committee
shall administer the claims procedure under this Plan.
(1) The business
address and telephone number of the Committee is:
11
Compensation
Committee
Scientific
Games Corporation
750
Lexington Avenue
New
York, New York 10022
(212)
754-2233
(2) The Company shall
have the right to change the address and telephone number of the
Committee. The Company shall give the
Members written notice of any change in the address and telephone number of the
Committee.
5.2 Claims. Benefits shall be paid in accordance with the
provisions of this Plan. The Member or
Beneficiary (hereinafter referred to as the Claimant) shall make a written
request for the benefits provided under this Plan. This written claim shall be mailed or
delivered to the Committee.
5.3 Denial
of Claims. If the claim is denied,
either wholly or partially, notice of the decision shall be delivered or mailed
to the Claimant within a reasonable time period not to exceed more than ninety
(90) days after the receipt of the claim by the Committee, or one hundred
eighty (180) days after the receipt of the claim if special circumstances
require an extension of time (in which event written notice of the extension
shall be furnished to the Claimant prior to the end of the initial 90-day
period, which indicates the special circumstances requiring an extension of
time and the date by which the Committee expects to render the determination on
review). The notice shall set forth the
following information in a manner calculated to be understood by Claimant:
(1) the specific
reasons for the denial;
(2) the specific
reference to pertinent plan provisions on which the denial is based;
(3) a description of
any additional material or information necessary for the Claimant to perfect
the claim and an explanation of why such material or information is necessary;
and
(4) a description of
the procedures to follow to appeal the determination, and the time limits
applicable thereto, including a statement of the Claimants right to bring a
civil suit under section 502(a) of ERISA following an adverse
determination on review and (if applicable) a description of the arbitration
procedure that may be substituted therefor pursuant to Section 5.7.
5.4 Appeal
of Denial of Claims. The claims
procedure under the Plan shall allow the Claimant a reasonable opportunity to
appeal a denied claim and to get a full and fair review of that decision from
the Committee based on the provisions of the governing plan documents.
12
(1) The Claimant shall
exercise his right of appeal by submitting a written request for a review of
the denied claim to the Committee within sixty (60) days after receipt by the
Claimant of the written notice of denial.
(2) The Claimant shall
have the following rights under this appeal procedure:
A. to
review and receive free copies of all documents, records and other information
relevant to the Claimants claim for benefits, including documents that were
created or received by the Committee during the appeals process; and
B. to
submit issues, comments, documents, records, and other information relating to
the claim.
5.5 Appeal. The decision on the review of the denied
claim shall be provided by the Committee no later than sixty (60) days after
the receipt of the request for review, or within ninety (120) days after the
receipt of the request for review if special circumstances require an extension
of time (in which event written notice of the extension shall be furnished to
the Claimant prior to the end of the initial 60-day period, which indicates the
special circumstances requiring an extension of time and the date by which the
Committee expects to render the determination on review).
5.6 Written
Decision on Appeal. The Committees
decision on review shall be made in writing in a manner calculated to be
understood by the Claimant and provided to the Claimant within the specified
time period. In the case of an adverse
determination, the decision on review shall contain (a) the specific
reasons for the decision, (b) specific reference to the provisions of the
Plan on which the decision is based, (c) a statement that the Claimant is
entitled to review and receive free copies of all documents, records and other
information relevant to the claim, and (d) a statement of the Claimants
right to bring an action under section 502(a) of ERISA, and (if
applicable) a description of the arbitration procedure that may be substituted
thereby pursuant to Section 5.7.
5.7 Resolution
of Disputes.
(a) Any
dispute arising out of this Plan prior to a Change of Control that remains
notwithstanding exhaustion of all procedures described above shall, if agreed
to by the Member or Beneficiary, as applicable, and the Committee, be
determined by arbitration under the rules of the American Arbitration
Association then in effect (in which case both parties shall be bound by the
arbitration award) or by litigation.
Whether the dispute is to be settled by arbitration or litigation, the
venue for the arbitration or litigation shall be New York.
(b) After
a Change of Control, all disputes shall be determined by the trustee of the
Trust in accordance with the claims procedures set forth in Sections 5.2
through 5.6 (except that powers and obligations of the Committee shall be
exercised by the trustee), and in accordance with the provisions of the
applicable trust agreement.
13
ARTICLE VI
GENERAL
6.1 Unsecured
Creditor Status. Nothing contained
in this Plan and no action taken pursuant to the provisions of this Plan shall
create or be construed to create a trust of any kind or a fiduciary
relationship between the Company and the Member, his spouse or any other
person. Any funds which may be invested
by the Company to insure itself against any and all financial losses which the
Company may incur under the provisions of this Plan shall continue for all
purposes to be a part of the general funds of the Company, and no person other
than the Company, shall, by virtue of the provisions of this Plan, have any
interest in such funds. To the extent
that any person acquires a right to receive payment from the Company under this
Plan, such right shall be no greater than the right of any general unsecured
creditor of the Company. Scientific
Games Corporation and any Subsidiary employing a Member shall be jointly and
severally liable for all amounts payable to such Member (or his Beneficiary)
under the Plan (and the term Company in this Section 6.1, Section 6.2
and Section 6.8(b) shall for such purpose include any such
Subsidiary). Amounts payable to a Member
employed solely by Scientific Games Corporation (or his Beneficiary) shall be
the sole obligation of Scientific Games Corporation.
6.2 Source
of Payment. All benefits under the
Plan shall be paid by the Company out of its general assets, and any rights of
a Member or Beneficiary under the Plan shall be mere unsecured contractual
rights. The Company and the Members
intend that any arrangements made to assist the Company to meet obligations
under the Plan shall be unfunded for tax purposes and for purposes of Title I
of ERISA, and no trust, security, escrow, or similar account shall be
established in connection with the Plan.
The Company shall, however, establish a rabbi trust as provided in Article VII
to assist in meeting its obligation to pay benefits under the Plan, and amounts
paid from any such rabbi trust shall discharge the obligations of the Company
hereunder to the extent of the payments.
Any trust so created shall be consistent with the terms of the model
trust described in Revenue Procedure 92-64 and Section 409A(b) of the
Code. No Member or Beneficiary shall
have a preferred claim on or beneficial ownership interest in the assets of
such rabbi trust.
6.3 Effect
of Plan on Compensation. This Plan
does not involve a reduction in salary for the Members or a foregoing of an
increase in future salary by the Members.
6.4 Nontransferable. Except as provided by the laws of descent and
distribution or provided by will or insofar as this provision may be contrary
to applicable law, no sale, transfer, alienation, assignment, pledge,
collateralization, or attachment of any benefits under this Plan shall be valid
or recognized by the Committee.
6.5 Amendment
of Plan. The Company reserves the
right at any time and from time to time, without the consent of Members, active
or retired, Beneficiaries or any person or persons claiming through them, by
action of its Board of Directors to terminate, modify or amend, in whole or in
part, any or all of the provisions of the Plan, including specifically the
right to make any such amendments effective retroactively; provided that no
such action shall
14
affect any of (a) the
amount of the Total Frozen Benefit of any Member or Beneficiary as of the date
of such action, (b) the rate for crediting Interest on the New Plan
Benefit component thereof, nor the Old Plan Discount Rate employed for
crediting interest on the Grandfathered Benefit, (c) the Old Plan Benefit
or New Plan Benefit subsequently payable upon any distribution event under the
Plan, or (d) the Members full vested and nonforfeitable rights therein,
nor adversely affect the rights provided to any Member or Beneficiary under any
provision of this Plan in the event of a Change of Control or after a Change of
Control has occurred unless such Member or Beneficiary has consented thereto in
writing, nor shall any such amendment or other action be valid or given any
effect whatever if and to the extent it is inconsistent with Section 409A
or the Regulations.
6.6 Prohibition
against Acceleration. In no event
shall any amendment or termination of the Plan result in (a) any
acceleration of the payment of a Members New Plan Benefit except as permitted
under the Regulations, or (b) in any material modification of the Old Plan
that would subject the Old Plan Benefit to Section 409A, unless the
affected Member consents thereto in writing and the Committee concludes upon
advice of counsel that such material modification would not result in any
retroactive violation of Section 409A, nor shall any purported such
amendment or termination in violation of such limitations be valid or be given
any affect whatever.
6.7 No
Employment Rights. Nothing contained
in this Plan shall be deemed to give any Member or employee the right to be
retained in the service of the Company or any Subsidiary or to interfere with
the right of the Company or any Subsidiary to discharge any Member or employee
at any time regardless of the effect which such discharge shall have upon him
as a Member of the Plan.
6.8 Binding
Effect.
(a) This
Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns and each Member and Beneficiary.
(b) The
Company shall not merge into, be acquired by, or consolidate with any other
company, or transfer substantially all of its assets to another company, unless
and until such other company agrees to assume all rights and obligations set
forth in this Plan.
6.9 Governing
Law. This Plan shall be governed by
the laws of New York without regard to the principles of conflict of laws
except where such laws are superseded by ERISA, in which ERISA shall control.
6.10 Severability. In case any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan and this Plan shall be construed and
enforced as if such illegal and invalid provisions had never been inserted
herein.
15
6.11 Titles. The titles to articles and headings of
sections of this Plan are for convenience of reference and in case of any
conflict the text of the Plan, rather than such titles and headings, shall
control.
ARTICLE VII
GRANTOR TRUST
7.1 Grantor
Trust.
(a) Inclusion
of Plan in Grantor Trust. Effective November 1,
2003, the Company established a Trust to assist in meeting the Companys
obligations under the Old Plan and made an initial deposit into a fund
established to hold the principal and earnings thereon and any additional
deposits to the Trust (the Fund). The
Trust is intended to qualify as a grantor trust, within the meaning of
subpart E, part I, subchapter J, chapter 1, subtitle A of the Code. Effective as of January 1, 2005, such
Trust, as it may be amended, shall continue for the purpose of assisting the
Company in meeting its obligations under both the Old Plan and new plan
components of the Plan.
(b) Discretionary
Deposits in Trust. Prior to a Change
of Control or Threatened Change of Control, the Company shall make such
additional deposits to the Trust as it, in its sole discretion, deems
desirable. Notwithstanding the
foregoing, the Company has no obligation to make such, or any, additional
deposits to the Trust prior to a Change of Control or Threatened Change of
Control.
(c) Contributions upon
Threatened Change of Control. Upon a
Threatened Change of Control, the Company shall, as soon as possible, but in no
event later than thirty (30) days following the occurrence of a Threatened
Change of Control nor later than the date of an actual Change of Control, make
a contribution to the Trust in an amount that is sufficient, when added to the
existing corpus of the Trust, to provide the Trust with net assets in an amount
not less than 100% of the amount of the Total Frozen Benefit of all then
Members (or their Beneficiaries), increased by Interest to the date that the
Threatened Change of Control occurred (the Change Date Plan Benefit), nor
more than 120% of such Change Date Plan Benefit. Any
additional contribution under this Section 7.1(c) shall become
irrevocable upon a subsequent actual Change of Control. In the event that a Change of Control
does not occur within one year of a Threatened Change of Control, the Company
shall have the right to recover any additional
contributions made under this Section 7.1(c), less a pro rata share of any
investment losses of the Trust, upon written request to the Trustee, to the
extent that the corpus of the Trust, exceeds the greater of (i) 100% of
the balance of the Total Frozen Benefit of all the Members (or their
Beneficiaries) increased by Interest to the date of payment pursuant to such
request, or (ii) the amount of Trust corpus that would exist had such
contribution not been made.
(d) Contributions
upon Change of Control. Upon a
Change of Control the Company shall, as soon possible but in no event later
than thirty (30) days following the occurrence of the Change of Control, make a
contribution to the Trust in an amount that is sufficient, when added to the
existing corpus of the Trust, to provide no less than 100%, but no
16
more than 120%, of the Total Frozen Benefit of all
then Members (or their Beneficiaries), increased by Interest to the date such
Change of Control occurs.
(e) Additional
Post-Change Contributions. In the
event of a Members termination of employment within the meaning of Section 3.1,
Separation from Service, Disability or death subsequent to a Change of Control,
the Company shall, as soon as possible, but in no event later than thirty (30)
days following such event, make a contribution to the Trust in such amount (if
any) as is necessary, when added to the existing corpus of the Trust, to
provide no less than 100% but no more than 120% of the Total Frozen Benefit of
all then Members (or their Beneficiaries), increased by Interest to the date
such distribution event occurs.
7.2 Situs
of Assets. At no time shall any
assets of the Trust be held or located outside of the United States, and such
Trust shall at all times comply with the requirements of section 409A(b) of
the Code.
7.3 Trust
Agreement Governs.
The provisions of the Trust
Agreement under the Trust shall govern following a Change of Control in the
event of any inconsistency between such provisions and the foregoing provisions
of the Plan.
17
IN WITNESS WHEREOF,
pursuant to action taken by the Compensation Committee of the Board on December 15,
2005, and thereafter on December 29, 2008, the undersigned has executed
this amended and restated Plan document on behalf of the Company (and each
Subsidiary) this 31st day of December, 2008.
|
Attest:
|
|
Scientific
Games Corporation
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jack B.
Sarno
|
|
By:
|
/s/ DeWayne E. Laird
|
|
Jack B. Sarno
|
|
Name:
|
DeWayne E. Laird
|
|
|
|
Title:
|
Vice President
|
|
|
|
|
|
18
Schedule 1
SCIENTIFIC GAMES CORPORATION
FROZEN SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Total Frozen Benefit as of December 31, 2005
|
|
|
Assumed
Years of Service
|
|
Final
Earnings
|
|
Annual Benefit
(15 Years)
|
|
Present Value
of Annual
Benefit (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weil
|
|
N/A
|
|
N/A
|
|
$
|
877,947
|
|
$
|
9,853,046
|
|
|
Huntley
|
|
15
|
|
$
|
750,150
|
|
$
|
337,567
|
|
$
|
3,788,461
|
|
|
Schloss(1)
|
|
15
|
|
$
|
750,150
|
|
$
|
337,567
|
|
$
|
3,788,461
|
|
|
Laird
|
|
15
|
|
$
|
529,380
|
|
$
|
238,221
|
|
$
|
2,675,513
|
|
(1) Based
on 4.50% discount rate
Old Plan Benefit (Grandfathered Benefit) as of December 31,
2004
|
|
|
Years of
Service at
12/31/04
|
|
Final Average
Compensation (as
defined in Plan
10/3/04-12/31/04)
|
|
Annual Benefit
(15 Years)
|
|
Present Value
of Annual
Benefit at
12/31/04 (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weil(2)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Huntley
|
|
15
|
|
$
|
486,586
|
|
218,964
|
|
$
|
2,401,731
|
|
|
Schloss
|
|
12
|
|
$
|
520,600
|
|
197,500
|
|
$
|
2,056,618
|
|
|
Laird(3)
|
|
8
|
|
N/A
|
|
N/A
|
|
N/A
|
|
(2) Based
on discount rate determined under plan document in effect October 3 December 31,
2004, namely 4.89%, comprising the interest rate for November 2004 on
20-year Treasury securities (as the longest maturity Treasury security then
existing in light of the Treasury discontinuance of 30-year maturities). Actual Old Plan benefit will be the present
value at 12/31/04 shown above, increased by interest at this same rate to the
last day of the month preceding the date scheduled for payment, per Section 2.15.
(1) Entire benefit
paid in 2007 pursuant to termination of employment/separation from service.
(2) Entire benefit payable under the New Plan.
(3) Not vested on 12/31/04, hence no
grandfathered benefit.