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EXHIBIT 10.3
AGREEMENT
THIS AGREEMENT, dated as of August 9, 2000 (the "Effective Date"), by and
between GTECH HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and
W. XXXXX XXXXXX ("Chairman").
WHEREAS, the Company desires to retain the services of Chairman on the
terms and conditions provided in this Agreement; and
WHEREAS, Chairman, understanding and accepting the terms and conditions
of employment set forth herein, desires to render such services on such terms
and conditions.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby covenant and agree as
follows:
1. DEFINITIONS. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the following meanings:
"ACT" means the Securities Exchange Act of 1934, as amended to date.
"AFFILIATE" shall mean any joint venture or other entity in which the
Company or any of its subsidiaries has an equity interest of at least 20%.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means any of the following:
(i) any willful failure by Chairman to substantially perform
his duties;
(ii) Chairman's engaging in serious misconduct which is
injurious to the Company;
(iii) any material breach by Chairman of the terms of this
Agreement, including, without limitation, Sections 10, 11
and 14(a) hereof;
(iv) Chairman's having been convicted of, or pleading nolo
contendere to, a crime that constitutes a felony or is a
gambling-related offense; or
(v) Chairman's abuse of illegal drugs or other controlled
substances or his habitual intoxication.
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"CHANGE IN CONTROL" means the happening of any of the following:
(i) any "person," including a "group" (as such terms are used
in Sections 13(d) and 14(d) of the Act, but excluding the Company, any of its
Affiliates, or any employee benefit plan of the Company or any of its
Affiliates) is or becomes the "beneficial owner" (as defined in Rule 13(d)(3)
under the Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(ii) the stockholders of the Company shall approve a definitive
agreement (1) for the merger or other business combination of the Company with
or into another corporation if (A) a majority of the directors of the surviving
corporation were not directors of the Company immediately prior to the effective
date of such merger or (B) the stockholders of the Company immediately prior to
the effective date of such merger own less than 30% of the combined voting power
in the then outstanding securities in such surviving corporation or (2) for the
sale or other disposition of all or substantially all of the assets of the
Company; or
(iii) the purchase of 30% or more of the Stock pursuant to any
tender or exchange offer made by any "person," including a "group" (as such
terms are used in Sections 13(d) and 14(d) of the Act), other than the Company,
any of its Affiliates, or any employee benefit plan of the Company or any of its
Affiliates.
"CHANGE OF CONTROL DATE" means the date on which a Change in Control
occurs, provided however that if a Change in Control occurs and if Chairman's
employment with the Company is terminated prior to the date on which the Change
in Control occurs, and if it is reasonably demonstrated by Chairman that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or (ii) otherwise
arose in connection with or in anticipation of a Change in Control, then the
"Change of Control Date" shall mean the date immediately prior to the date of
such termination.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Company.
"DISABILITY" means the inability (as determined by the Board in its sole
discretion after affording Chairman a reasonable opportunity to present his
case) of Chairman to render his agreed-upon, full-time services to the Company
due to physical and/or mental infirmity.
"GOOD REASON" means any of the following events:
(i) the Assignment to Chairman of duties, responsibilities
and/or reporting relationship that are materially inconsistent with those
associated with Chairman's position as stated in Sections 4(a) and 4(b) hereof,
excluding any interim relieving of Chairman's duties pursuant to Section 8(b);
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(ii) the Company's failure to pay Chairman any amounts otherwise
vested and due hereunder or under any plan or policy of the Company;
(iii) a reduction in the compensation or benefits payable to
Chairman hereunder (including without limitation any compensation provided for
in the appendices hereto), or a material adverse change in the terms or
conditions on which such compensation or benefits are payable;
(iv) a reduction in the title of Chairman without Chairman's
consent (unless the shareholders fail to elect Chairmen as a director at the
next annual meeting) or in the authorities, duties or responsibilities of
Chairman;
(v) if Chairman's principal place of employment by the Company
is relocated more than 50 miles from West Greenwich, Rhode Island; or
(vi) any material breach of this Agreement by the Company.
2. RETENTION OF CHAIRMAN.
The Company hereby agrees to retain Chairman, and Chairman agrees to be
retained by the Company, to render services to the Company and its subsidiaries,
affiliates and divisions for the period, at the rate of compensation and upon
the other terms and conditions set forth in this Agreement. The Company agrees
to use its best efforts to obtain Chairman's election as a director by the
shareholders at the next annual meeting of the shareholders and at each annual
meeting of shareholders thereafter during the Term of this Agreement.
3. TERM.
(a) The term of Chairman's engagement hereunder shall commence
on Effective Date, and shall continue for a term of two years (the "Term"). The
Term is subject to earlier termination as hereinafter provided in Section 8
hereof, and the compensation, benefits, etc., if any, payable upon termination
shall be as set forth in Section 9 hereof.
(b) Notwithstanding anything to the contrary stated herein,
this Agreement shall terminate in the event of a Change of Control effective on
the Change of Control Date. The termination of this Agreement in such
circumstances shall not be deemed to be the expiration or termination of the
Term within the meaning of this Agreement and Chairman shall have no right to
any compensation or benefit under Section 9 hereof by virtue of such Change of
Control.
4. POSITION AND DUTIES.
(a) Position. During the Term, Chairman shall be retained and
shall serve as Chairman of the Board. During the Term, Chairman also agrees to
serve, if elected, as a director
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of any subsidiary or Affiliate of the Company.
(b) Duties. During the Term, Chairman shall have the authority
and power to perform such duties consistent with his position as Chairman as
designated by the Board, and shall report only to the Board or any committees
thereof at the request of the Board. Chairman shall not be required without his
consent to undertake responsibilities not commensurate with his position.
Chairman shall comply fully and promptly with the various policies, procedures
and rules governing employees promulgated and/or as amended from time to time by
the Company and any applicable subsidiary or Affiliate of the Company
(including, without limitation, the Company's Ethical Conduct and Conflicts of
Interest Policy and Government Relations Policy) and with any applicable
disclosure and other requirements of any governmental authority and of any other
entity with which the Company, its subsidiaries and Affiliates are doing or
propose to do business. Except for illness, vacations, and holidays in
accordance with then-current Company policy, and (subject to the approval of the
Board) reasonable leaves of absence, Chairman shall devote his full business
time, attention, skill, undivided loyalty and best efforts to the faithful
performance of his duties hereunder; provided, however, that Chairman may (i)
with the approval of the Board, serve on corporate, civic and charitable boards
and committees, (ii) deliver lectures and fulfill speaking engagements, and
(iii) manage personal investments, so long as such activities do not interfere
with the performance of Chairman's responsibilities.
(c) Principal Place of Employment. Chairman's principal place
of employment shall be at the Company's principal offices (currently located in
West Greenwich, Rhode Island) or at such other location as the Company hereafter
reasonably may require. Chairman agrees to reside within reasonable daily
commuting distance by car of such offices.
5. COMPENSATION AND REIMBURSEMENT OF EXPENSES.
(a) Base Salary. For all services rendered by Chairman in all
capacities with the Company, its subsidiaries and Affiliates during the Term,
the Company shall pay or cause to be paid to Chairman as compensation a salary
at an annual rate of $300,000 (the "Base Salary"), payable in equal installments
not less frequently than monthly. Chairman may defer some or all of the Base
Salary at his discretion.
(b) Incentive Bonus. Chairman shall not be eligible to earn any
incentive bonus.
(c) Change of Control. In the event a Change of Control occurs,
the Company shall pay Chairman the amount of one million dollars ($1,000,000) on
the Change of Control Date. Chairman shall not be eligible to enter into any
Change of Control agreement and shall receive no other compensation in the event
of a Change of Control.
(d) Reimbursement of Expenses. Consistent with the Company's
established policies, the Company shall pay or reimburse Chairman for all
reasonable and necessary travel and other expenses of Chairman incurred by
Chairman in performing his duties hereunder upon
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receipt of written substantiation of such expenses.
(e) Tax Gross-Up. To the extent Chairman incurs any Rhode
Island income tax liability for any deferred income payments he receives from
previous employers, the Company shall pay to Chairman an amount in cash equal to
the sum of such Rhode Island state income taxes payable by Chairman plus a
gross-up amount necessary to offset any and all applicable federal, state and
local excise, income or other taxes incurred by Chairman by reason of the
Company's payment of the amount of such Rhode Island income taxes incurred by
reason of the gross-up payments made pursuant to this Section 5(e).
6. BENEFITS.
(a) Other Arrangements. The payments provided in Section 5
hereof are in addition to any benefits to which Chairman may be, or may become,
entitled under any benefit plan, program or arrangement (excluding any increase
in salaries, generally) of the Company for which senior executives are or may
become eligible.
(b) Benefits. Except as otherwise expressly provided herein,
Chairman shall be entitled to receive, during the Term, benefits substantially
similar to the level of benefits provided generally to current senior executives
of the Company (i.e. those who serve on the Company's Corporate Leadership
Council) (hereinafter "Senior Executives") under any such benefit plan, program
or arrangement, subject to Chairman's meeting the eligibility requirements of
such plans, programs or arrangements, and in the case of benefit plans, programs
or arrangements providing for discretionary grants or awards, to the discretion
of the Board or applicable Committee.
(c) Stock Options. Chairman shall receive the following stock
options in accordance with the following terms and conditions:
(i) On the Effective Date, the Company shall grant to
Chairman options to purchase 100,000 shares of Common Stock under the Company's
1997 Stock Option Plan (the "1997 Plan").
(ii) The Company shall grant to Chairman options to
purchase 50,000 shares of Common Stock under the 1997 Plan or any successor plan
to the 1997 Plan (alternatively, the "Stock Option Plan"), on each of the
following dates: November 15, 2000, February 15, 2001, May 15, 2001, August 15,
2001, November 15, 2001, February 15, 2002, May 15, 2002 and the second
anniversary of the Effective Date; provided, however, that on each of those
dates the Chairman is still retained under this Agreement and the Term has not
been terminated in accordance with Sections 3(b) or 8 of this Agreement.
(iii) In the event Chairman locates and hires before the
expiration of the Term a Chief Executive Officer for the Company, the Company
shall grant to Chairman options to purchase 100,000 shares of Common Stock under
the Stock Option Plan on the
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effective date of the Chief Executive Officer's employment agreement.
All grants of options under this Agreement are subject to and
conditioned upon the Company obtaining all necessary shareholder approvals,
which Company shall use all reasonable efforts to obtain. Each time Chairman
receives a grant of stock options pursuant to this Section 6(c), he shall be
asked to enter into the Company's standard Non-Qualified Stock Option Agreement
(the "Option Agreement") which shall set forth the terms and conditions
governing the grant and exercise of the Options including such terms as are set
forth in this Section 6(c) and which Option Agreement shall be substantially
similar to the Option Agreement attached hereto as Appendix D. The terms and
provisions of the options provided for in this subsection (c) shall be
essentially as set forth in Appendix A hereto. The Company shall use its best
efforts to file, and cause to be effective under the Securities Act of 1933, as
amended, a registration statement on Form S-8 (or a comparable form) with
respect to the shares (or other rights) of equity issued as provided for or
referenced in this Agreement or, if applicable, issuable upon exercise of rights
so provided or referenced. The Company will also use its best efforts to ensure
that each grant provided for under Appendix A or referenced above shall meet the
requirements for exemption under Rule 16b-3 under the Act.
(d) Restricted Stock. On the Effective Date, the Company shall
grant to Chairman 100,000 shares of Restricted Stock (the "Restricted Shares")
under the Company's 2000 Restricted Stock Plan (the "Restricted Stock Plan").
The Restricted Shares shall vest immediately and may be transferred in
accordance with the terms and conditions of the Restricted Stock Plan. The
Company shall pay to Chairman an amount is cash equal to the sum of such federal
and state income taxes and any federal medicare taxes payable by Chairman as a
result of the granting of the Restricted Shares plus a gross-up amount necessary
to offset any and all applicable federal, state and local excise, income or
other taxes incurred by Chairman by reason of the Company's payment of the
amount of such taxes incurred by reason of the gross-up payments made pursuant
to this Section 5(e); provided, however, that the Chairman shall not receive any
payment from the Company respecting any tax liability incurred at any time
thereafter, including without limitation any tax liability associated with the
transfer of the Restricted Shares by Chairman.
(e) Certain Specific Benefits and Arrangements. Without
limiting the generality of subsection (a) and (b) above (except as may otherwise
be specified in Appendix B hereto), Chairman shall be entitled to the specific
benefits and arrangements set forth in Appendix B hereto.
(f) Citicorp Non-competition Indemnification. Attached hereto
as Appendix C is a copy of his non-competition agreement between Chairman and
Citicorp. The Company shall indemnify and hold harmless Chairman for any claims,
demands or causes of action arising out of said agreement and asserted by
Citicorp against Chairman as a result of his retention by the Company as
Chairman under this Agreement, including without limitation reimbursing Chairman
for all costs of defense, including reasonable attorneys' fees, and including
any losses of deferred compensation from Citicorp sustained by Chairman as a
result of this Agreement.
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(g) Indemnification. The Company shall defend and hold Chairman
harmless to the fullest extent permitted by applicable law in connection with
any claim, action, suit, investigation or proceeding arising out of or relating
to performance by Chairman of services for, or action of Chairman as a director,
officer or employee of the Company or any parent, subsidiary or Affiliate of the
Company, or of any other person or enterprise at the Company's request. Expenses
incurred by Chairman in defending a claim, action, suit or investigation or
criminal proceeding shall be paid by the Company in advance of the final
disposition thereof upon the receipt by the Company of an undertaking by or on
behalf of Chairman to repay said amount unless it shall ultimately be determined
that Chairman is entitled to be indemnified hereunder; provided, however, that
this shall not apply to a non-derivative action commenced by the Company against
Chairman.
7. BENEFITS PAYABLE DURING TERM UPON DISABILITY.
(a) Disability Benefits. In the event of Disability of Chairman
during the Term of his employment hereunder, the Company shall continue to pay
Chairman the compensation and extend to him the benefits provided in Sections 5
and 6 hereof during the period of Disability, subject to Section 9(c) hereof and
to the extent permitted by applicable law, provided that in the event of
Chairman's Disability for an aggregate period of time exceeding 150 calendar
days in any 12 consecutive month period during the Term, the Company, at its
election, may terminate the Term of Chairman's employment.
(b) Services During Disability. During the Term,
notwithstanding any Disability, Chairman shall, to the extent that he is
physically and mentally able to do so, furnish information and assistance to the
Company, and, in addition, upon the reasonable request in writing on behalf of
the Board, or a senior executive officer designated by the Board, from time to
time, he shall make himself available to the Company, its subsidiaries and
Affiliates to undertake reasonable assignments consistent with his position and
his physical and mental health.
8. TERMINATION OF EMPLOYMENT.
(a) Expiration and Earlier Termination. Chairman's Term of
employment shall terminate upon expiration of the Term and shall be subject to
earlier termination:
(i) upon the death of Chairman;
(ii) at the election of the Company in the event of
Chairman's Disability (as provided in Section 7(a)
hereof);
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(iii) upon discharge of Chairman by the Company for Cause;
(iv) upon discharge of Chairman without Cause or
resignation of Chairman; or
(v) as provided in Section 3(b) hereof, in the event of
a Change of Control.
(b) Certain Obligations of the Company. The Company shall give
the Chairman not less than 60 days prior written notice of any intended
termination of Chairman's employment by the Company for Cause (other than for
the reasons set forth in clauses (ii) and (iv) of the definition of Cause in
Section 1 hereof) or without Cause. In the event of a proposed termination for
Cause, such notice shall specify the grounds for such termination, and the
Company shall only be entitled to terminate the Chairman for such Cause if the
Chairman shall have failed to cure the grounds for such termination within said
60-day notice period and Chairman shall have been afforded an opportunity to
address the Board, with legal counsel, to argue against such termination.
However, after giving such notice and before Chairman is afforded the
opportunity to address the Board, the Company may relieve Chairman of his duties
on an interim basis. The Company may immediately terminate Chairman's employment
by written notice in the event of the occurrence of any of the events set forth
in clauses (ii) and (iv) of the definition of Cause in Section 1 hereof.
(c) Certain Obligations of Chairman. Chairman shall give the
Company not less than 60 days prior written notice of any intended termination
by Chairman of Chairman's employment. In the event of a proposed resignation for
Good Reason, such notice shall specify the grounds for such resignation, and
Chairman shall only be entitled to terminate his employment for Good Reason if
the Company shall have failed to correct the specified grounds within said
60-day notice period. Chairman shall not be entitled to terminate for Good
Reason unless he has given notice to the Company of his intention so to
terminate within 60 days following the occurrence of the event alleged to
constitute such Good Reason. After Chairman provides such notice to the Company,
the Company shall have 30 days from the date of such notice to effect a cure of
the condition constituting Good Reason, and, upon cure thereof by the Company,
such event shall no longer constitute Good Reason. Notwithstanding the
foregoing, in the event that Chairman has given the Company notice of his
intention to resign, the Board may elect to have such resignation become
effective immediately or at such other date, not later than the effective date
specified in the notice, as the Board may determine.
(d) Upon termination of this Agreement by the Board or
resignation by the Chairman, Chairman (unless otherwise requested by the Board)
concurrently shall resign any directorships which he holds with the Company, its
subsidiaries and Affiliates. Nothing contained herein shall require Chairman to
resign any directorships which he holds with the Company, its subsidiaries and
Affiliates at the natural expiration of the Term.
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9. COMPENSATION, BENEFITS, ETC. UPON, AND EFFECTS OF, TERMINATION.
(a) Death, Discharge for Cause and Resignation for Other than
Good Reason. If the Term of Chairman's employment is terminated by reason of his
death, discharge for cause or resignation for other than Good Reason, the
Company shall pay or cause to be paid to Chairman or his estate, as the case may
be, at the time such payment is due (i) his Base Salary accrued through the
effective date of such termination at the rate in effect immediately prior to
such termination and (ii) any other amounts to which Chairman is entitled under
the terms of Sections 5 and 6 hereof up to the effective date of such
termination.
(b) Disability, Discharge Without Cause and Resignation for
Good Reason. If the Term of Chairman's employment is terminated by the Company
by reason of his Disability as provided in Section 7(a) hereof, by the Company
without Cause or by reason of Chairman's resignation for Good Reason, the
Company shall pay to Chairman the remaining amount of the Base Salary owed to
Chairman for the balance of the natural expiration of the Term as if the Term
had not been terminated.
(c) Chairman also shall be entitled, to the extent not
inconsistent with this Agreement, to receive such additional benefits, if any,
as he may be entitled to under the express terms of the applicable benefit plans
(other than bonus and severance plans) of the Company, its subsidiaries and
Affiliates, and to whatever medical coverage, if any, as is required to be
provided by applicable law.
(d) Reductions, Forfeitures, etc. Notwithstanding the
foregoing: (i) any payments or benefits required to be paid or provided to
Chairman pursuant to Section 7(a) in the event of Chairman's Disability shall be
reduced to the extent that comparable payments or benefits are received by
Chairman during such period under the Company's disability plan, as in effect
from time to time, (ii) without limiting any other rights the Company may have,
any payments or benefits required to be paid or provided to Chairman under this
Agreement shall be forfeited to the Company by Chairman if Chairman shall breach
any of his obligations under Sections 10(b) or 11 hereof, except as may
otherwise be required by applicable law, and (iii) the payments and benefits
required by this Section 9 shall be made or provided at such times as they would
have been paid or provided if Chairman's employment had not been terminated.
(e) Full Settlement. In the event of the termination of
Chairman's employment, the payments and other benefits provided for by this
Agreement (and as otherwise provided under the express terms of any compensation
or benefit plans of the Company, its subsidiaries or Affiliates, to the extent
not inconsistent with this Agreement, or as may otherwise be required by
applicable law) shall constitute the entire obligation of the Company, its
subsidiaries and Affiliates to Chairman for compensation and benefits and shall
also constitute full and complete settlement of any claim under law or in equity
that the Chairman might otherwise assert against the Company, its subsidiaries
or Affiliates, for compensation and benefits.
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10. CERTAIN OBLIGATIONS OF CHAIRMAN.
Chairman further covenants with the Company as follows and
expressly agrees that the provisions of Sections 10 and 11 are material
obligations to the Company and the breach of those provisions will constitute
material breaches of this Agreement. As used in Sections 10 and 11, the term the
"Company" shall include GTECH Holdings Corporation and its subsidiaries and
Affiliates.
(a) Assistance in Litigation. During the Term, and for a period
of three years thereafter subject to reasonable accommodation of Chairman's then
business schedule, Chairman, upon reasonable notice, shall furnish such
information and proper assistance to the Company as may reasonably be required
in connection with any litigation in which the Company is, or may become, a
party or in connection with any investigation or review by any governmental
agency of which the Company is or may become a subject. The Company shall
compensate Chairman at a reasonable hourly rate, plus reimburse all expenses
incurred, for any assistance provided by Chairman after the Term.
(b) Confidential Information. Chairman shall not knowingly use
for his own benefit or disclose or reveal to any unauthorized person, during or
after the Term, any trade secret or other confidential information relating to
the Company, including any customer lists, customer needs, price and performance
information, processes, specifications, hardware, software, firmware, programs,
devices, supply sources and characteristics, business opportunities, marketing,
promotional, pricing and financing techniques, and other information relating to
the business of the Company; provided that such restriction on confidential
information shall not apply to information which is (i) proven to be generally
available in the industry, (ii) disclosed in published literature or (iii)
obtained by Chairman after the Term from a third party without binder of
secrecy. Chairman agrees that, except as otherwise agreed by the Company, he
will return to the Company, promptly upon the request of the Board or any
executive officer designated by the Board, any physical embodiment of such
confidential information.
(c) Proprietary Creations. All rights, title and interest in
and to any ideas, inventions, technology, processes, know-how, works, hardware,
software, firmware, programs, devices, trade secrets, trade names, trademarks or
service marks, which Chairman may conceive, create, organize, prepare or product
during the period of his employment with the Company and which relate to the
business of the Company, and all rights, title and interest in and to any
patents, patent applications, copyright registrations and copyright applications
resulting therefrom, shall be owned by the Company, and Chairman agrees to
execute instruments or documents, to provide evidence and testimony, and to
otherwise assist the Company in establishing, enforcing and maintaining such
rights, title and interest of the Company during and after the Term.
(d) Authorization. Chairman does hereby irrevocably constitute,
authorize, empower and appoint the Company, or any of its officers, such
Chairman's true and lawful
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attorney (with full power of substitution and delegation) in Chairman's name,
and in Chairman's place and stead, or in the Company's name, to take and do such
action, and to make, sign, execute, acknowledge and deliver any and all
instruments or documents which the Company, from time to time, may deem
desirable or necessary to vest in the Company, its successors and assigns, any
of the rights, title or interest granted pursuant to clause (ii) above for the
use and benefit of the Company, its successors and assigns.
11. NON-COMPETITION.
(a) During the Term and for two years following termination of
Chairman's employment (irrespective of the reason for such termination),
Chairman shall not engage or propose to engage, directly or indirectly (which
includes owning, managing, operating, controlling, being employed by, acting as
a consultant to, giving financial assistance to, participating in or being
connected in any material way with any business or person so engaged) in any
Lottery Business anywhere in the world, including without limitation in any
business which competes or proposes to compete with any Lottery Business in
which the Company was engaged or proposed to be engaged anywhere in the world;
provided, that Chairman's ownership as a passive investor of less than one
percent of the issued and outstanding stock or equity, or $100,000 principal
amount of any debt securities, of any corporation, partnership or other entity
so engaged shall not by itself be deemed to constitute such engagement by
Chairman. As used herein, the "Lottery Business" shall mean the provision of
products or services of every nature relating to the operation of all manner of
lotteries however and wherever conducted. For the duration of the
non-competition provision following the Term, Company shall pay Chairman the
total amount of Three Hundred Thousand Dollars ($300,000), prorated not less
frequently than monthly.
(b) Further, for a period of two years following termination of
Chairman's employment (irrespective of the reason for such termination),
Chairman shall not (i) disturb or interfere with any business relationship
between the Company and any of its customers, suppliers or other business
associates, or (ii) solicit or cause to be solicited any officer, employee or
customer of the Company to terminate such person's relationship with the Company
or to take other action contrary to the best interests of the Company.
12. TAX WITHHOLDING.
The Company may withhold from any benefits payable under this
agreement all Federal, State, City, or other taxes as shall be required pursuant
to any law or governmental regulations or ruling.
13. EFFECT OF PRIOR AGREEMENTS.
This Agreement, including the Exhibit and Appendices hereto,
contains the entire understanding between the parties hereto with respect, to
the matters covered herein and supersedes any prior agreement, condition,
practice, custom, usage and obligation with respect to
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such matters insofar as any such prior agreement, condition, practice, custom,
usage or obligation might have given rise to any enforceable right.
14. GENERAL PROVISIONS.
(a) Certain Representations and Warranties of Chairman.
Chairman represents to the Company that (i) the execution and performance of
this Agreement by Chairman and his employment hereunder does not and will not
constitute a breach of any contract, agreement, obligation or understanding,
oral or written, to which he is a party or by which he is bound (with the
possible exception of the relationship disclosed to the Company in Addendum C);
(ii) the employment and other personal background information provided by
Chairman to Company is true and correct in all material respects and (iii) to
the best of Chairman's knowledge, there is no factor relating to him or his
family not previously disclosed in writing to the Company which could reasonably
be expected, if he were a senior executive officer or director of the Company,
to disqualify the Company, its subsidiaries or Affiliates from, or materially
jeopardize their chances of, obtaining lottery contracts or other contracts in
the businesses in which they are engaged or propose to engage.
(b) Non-assignability. Neither this Agreement nor any rights
or interest hereunder shall be assignable by Chairman, his beneficiaries, or
legal representatives without the Company's prior written consent.
(c) Binding Agreement. This Agreement shall be binding upon,
and accrue to the benefit of, Chairman and the Company and their respective
heirs, executors, administrator, successors and permitted assigns, including, in
the case of the Company, any person or entity acquiring all or substantially all
of the Company's assets.
(d) Amendment of Agreement. This Agreement may not be modified
or amended except by an instrument in writing signed by the parties hereto.
(e) Remedies. Chairman acknowledges and agrees that the
possible restrictions on his activities which may occur as a result of his
performance of his obligations under Sections 10 and 11 hereof are required for
the reasonable protection of the Company, its subsidiaries and Affiliates, and
Chairman expressly acknowledges and agrees that such restrictions are fair and
reasonable for that purpose. Chairman further expressly acknowledges and agrees
that damages alone will be an inadequate remedy for any breach or violation by
him of this Agreement and that the Company, its subsidiaries and Affiliates, in
addition to all other remedies at law or in equity, shall be entitled as a
matter of right to injunctive relief, including specific performance, with
respect to any such breach or violation, in any court of competent jurisdiction
including, without limitation, any state or federal court in Rhode Island. If
any of the provisions of such Sections are held to be in any respect an
unreasonable or unlawful restriction upon Chairman, then they shall be deemed to
extend only over the maximum period of time, geographic area, and/or range of
activities as to which they may be enforceable.
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(f) Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel.
(g) Severability. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not so held invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect.
(h) Notices. For the purposes of this Agreement, notice and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when hand delivered or mailed by United
States certified or registered express mail, return receipt requested, postage
prepaid, if to Chairman, addressed to the address set forth on the signature
page of this Agreement; if to the Company, addressed to GTECH Holdings
Corporation, 00 Xxxxxxxxxx Xxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxx 00000 and directed
to the attention of the Board with a copy to the Secretary of the Company; if to
a member of the Board, addressed to each member at his respective address on
file with the Secretary of the Company with a copy to the Company, or to such
other address as either party may have furnished to the others in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
(i) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(j) Indulgences, Etc. Neither the failure nor any delay on the
part of either party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
(k) Headings. The headings of Sections and paragraphs herein
are included solely for convenience of reference and shall not control the
meaning or interpretation of any of the provisions of this Agreement.
(l) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Rhode Island, regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
(m) Joint and Several Liability. Notwithstanding any other
provision of this Agreement, each of the Company and subsidiary, and their
successors and assigns, shall be jointly and severally liable for all
obligations or any of them to Chairman hereunder. In the event
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that a substantial portion of the assets of the Company or the subsidiary are
transferred to any other direct or indirect subsidiary or other Affiliate of the
Company, whether in one transaction or a series of transactions, the Company or
the subsidiary, as applicable, shall cause (prior to or concurrently with each
transfer) the transferee to become a signatory to this Agreement and to become
jointly and severally liable for all obligations or any of them to Chairman
hereunder.
IN WITNESS WHEREOF, GTECH Holdings Corporation has caused this
Agreement to be executed by their duly authorized officers, and Chairman has
signed this Agreement, all as of the day and year first above written.
GTECH HOLDINGS CORPORATION
Attest: /s/ [SIG] By: /s/ [SIG]
---------------------- ---------------------------------
Name: Name:
Title: Title:
Witness: CHAIRMAN
/s/ [SIG] /s/ W. XXXXX XXXXXX
-------------------------- -----------------------------------
W. Xxxxx Xxxxxx
Address:
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APPENDIX A
SUMMARY OF TERMS OF STOCK OPTIONS
The stock options to be granted under Section 6(c) of the Agreement are
to be granted pursuant to the 1997 Plan, in the case of stock options granted on
the Effective Date, and the 1997 Plan or any successor plan, in the case of all
other stock option grants, and will be subject to the respective terms and
conditions of the applicable Stock Option Plan and the terms and conditions of
the Option Agreement. The following is a summary of the provisions of the stock
options provided for in Section 6(c) of this Agreement:
Nature of Options - Nonqualified unless otherwise
determined by the Committee.
Exercisability - Options shall become exercisable (i.e.
vest) two years from the dates of
grant of the particular option or at
the expiration of the Term under
Section 3(a) of this Agreement,
whichever is earlier, subject to
possible acceleration under the terms
of the applicable Stock Option Plan.
If Chairman so elects, the
Compensation Committee of the Board
hereby agrees to exercise its
discretion under Section 5(d) of the
1997 Plan to accept a note from the
Company on behalf of Chairman as
payment of the purchase price;
provided, however, that the term of
such note shall not exceed 5 years,
shall require the payment of interest
at the then prime rate, and shall
contain such other reasonable terms as
the Company and Chairman agree upon in
good faith. In the event of a Change
of Control as set forth in Section
3(b) of the Agreement, his outstanding
options, whether or not they have
vested on the Change of Control Date,
shall accelerate and become vested in
full on the Change of Control Date and
shall remain exercisable for a period
of one year. In the event of the
Termination of this Agreement as a
result of Chairman's death or
Disability or his resignation for Good
Reason, his outstanding options shall
accelerate and
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become vested in full on the
termination date and shall remain
exercisable for a period of one year.
Option Price - Fair market value at the date of the
grant of the particular option.
Term - Ten years from the date of grant of
the particular option, subject to
earlier termination in certain
circumstances under the terms of the
applicable Stock Option Plan.
Termination of Employment - In the event Chairman's employment is
terminated, his outstanding options
(i.e. options which have been granted
but have not been exercised or
terminated and have not expired), to
the extent they are vested as of the
date of termination or accelerate and
vest under this Agreement or the
Applicable Stock Option Plan as a
result of the termination, shall
remain exercisable for a period of one
year; provided, however, that if
Chairman remains as a director of the
Company then all options shall remain
exercisable in a manner comparable to
the exercisability of options afforded
to the then directors of the Company.
Notwithstanding the foregoing, (i)
with respect to Chairman's options, if
any, which may be incentive stock
options under the Code, the
exercisability period following
termination of employment shall not
exceed that permitted by the Code,
(ii) the period of exercisability of
options following termination of
employment specified above is subject
to possible reduction in certain
circumstances under the terms of the
applicable Stock Option Plan, and
(iii) in no event shall any option be
exercisable after the expiration of
its term. Except as expressly provide
above, upon termination of Chairman's
employment, his options, whether
vested or unvested, shall immediately
terminate and be of no further force
and effect.
00
XXXXXXXX X
SUMMARY OF CERTAIN BENEFITS AND ARRANGEMENTS
1. Relocation & Related Matters.
(a) Relocation Expenses. The Company shall reimburse Chairman
for all relocation costs incurred by him in moving from Florida to Rhode Island,
in accordance with Company policy and in a manner similar to relocation benefits
provided to Senior Executives.
(b) Housing. The Company shall provide at its expense Chairman
and his family with suitable housing in Rhode Island during the Term. The
current expectation of the parties is that Chairman and his family will reside
in the condominium leased by the Company in East Greenwich. In the event said
condominium becomes unavailable, the Company shall provide comparable
alternative housing.
(c) Purchase of Home. In the event Chairman purchases a
residence in Rhode Island, the obligation of the Company to provide housing
shall expire and Company shall reimburse Chairman for all transaction costs
(i.e. closing costs, moving expenses, etc.) incurred by Chairman in acquiring
and relocating to said residence, but Chairman shall remain responsible for the
purchase price of said residence and all finance charges associated with the
purchase, including points and other interest charges.
2. Vacation. During the Term, Chairman shall be entitled to a
paid vacation of four weeks per year commencing to accrue on the date of
Chairman's employment hereunder.
3. Automobile. During the Term, the Company shall make
available to Chairman for his own use a passenger automobile in accordance with
the Company's automobile policy, as Chairman may select.
4. Life Insurance. During the Term (and thereafter as and to
the extent expressly provided in the Agreement), Chairman shall receive life
insurance coverage in accordance with the Company's policy in a manner
comparable to Senior Executives.
5. Medical. During the Term (and thereafter as and to the
extent expressly provided in the Agreement), the Company shall bear the cost of
all medical expenses reasonably incurred by Chairman and his family (family
eligibility to be determined in accordance with the Company's general policies
concerning medical coverage), including hospitalization (private room), dental,
optical and choice of physicians. Further, during the Term, the cost of
Chairman's annual physical examination also shall be borne by the Company.
6. Legal Fees. The Company shall reimburse Chairman for all
legal fees incurred by him in the negotiation and preparation of this Agreement.
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7. Perquisite Plan. During the Term, Chairman shall be
entitled to participate in the Company's Executive Perquisites Plan in a manner
similar to Senior Executives, provided that the amount available to Chairman
under the Plan for fiscal year 2001 shall be pro rated based upon the portion of
the year he was retained by the Company. Benefits specifically numbered above in
this Appendix B shall not be deemed to be provided under the Plan or subject to
the Plan's cap.
8. Deferred Compensation; 401(k); SERP. During the Term,
Chairman shall be entitled to participate in the Company's 401(k) retirement
plan, deferred compensation plan and Supplemental Retirement Plan for Senior
Executives Plan ("SERP") in a manner similar to Senior Executives.
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APPENDIX C OMITTED