SGMS Scientific Games Corporation

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  May 7, 2019

6601 Bermuda Road, Las Vegas, NV 89119

(Address of registrant’s principal executive office)

(702) 897-7150

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instructions A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

o      Emerging growth company

o     If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Exchange Act:

EXPLANATORY NOTE

On May 7, 2019, SciPlay Corporation (“ SciPlay ”), a subsidiary of Scientific Games Corporation (the “ Company ”), closed its initial public offering of a minority interest in the Company’s social gaming business (the “ IPO ”), selling 22,000,000 shares of its Class A common stock, $.001 par value per share (“ SciPlay Stock ”), at an offering price of $16.00 per share, pursuant to SciPlay’s registration statement on Form S-1 (File No. 333-230727), as amended.

Simultaneously with the Company and Mr. Cottle entering into the Cottle Amendment, SciPlay and Mr. Cottle entered into an agreement (the “ Social Award Agreement ”) pursuant to which SciPlay granted Mr. Cottle an award of performance-conditioned restricted stock units (“ performance-conditioned RSUs ”) with respect to shares of SciPlay Stock, with a grant date value equal to approximately $12 million.  The performance-conditioned RSUs will vest based on 2020 fiscal year revenue and EBITDA metrics for SciPlay, with the performance-conditioned RSUs vesting in full if $720 million of revenue and $250 million of EBITDA are achieved for the 2020 fiscal year and forfeited in full if certain threshold goals are not met, and otherwise based on linear interpolation.  One-third of the performance-conditioned RSUs will vest based on achievement of the revenue metric and two-thirds will vest based on achievement of the EBITDA metric.  It is expected that revenue and EBITDA will be subject to certain customary adjustments.

The Social Award Agreement provides that, in the event Mr. Cottle’s employment with the Company and SciPlay is terminated without “Cause” or for “Good Reason” (each, as defined in the Social Award Agreement), Mr. Cottle would remain eligible to fully vest in the performance-conditioned RSUs, based on actual performance achieved.  In the event of a “change in control” of SciPlay (as defined in the SciPlay Long-Term Incentive Plan, which, as long as the Company remains a majority stockholder of SciPlay in respect of voting rights, includes a “change in control” of the Company, as defined in the Company’s 2003 Incentive Compensation Plan, as amended and restated), the performance-conditioned RSUs would vest based on the level of performance determined by the Compensation Committee of the Board of Directors of SciPlay (the “ SciPlay Compensation Committee ”), provided that, if Mr. Cottle’s employment with SciPlay had terminated without Cause or for Good Reason prior to such change in control, the performance-conditioned RSUs would vest at target (regardless of whether or not Mr. Cottle’s employment with the Company is terminated).

The SciPlay Compensation Committee will retain discretion to adjust the number of shares vesting in connection with the performance-conditioned RSUs in order to reflect changes in the price of SciPlay Stock between the date of the IPO and the date the performance-conditioned RSUs vest.

The foregoing description is qualified in its entirety by the text of the Cottle Amendment and the Social Award Agreement, copies of which are attached hereto as Exhibit 10.2 and Exhibit 10.3, respectively, and incorporated herein by reference.