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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement dated as of December 1, 1995 (as
amended and restated hereby, the "Employment Agreement" or the "Agreement") is
made by and between GTECH Corporation, having offices at 00 Xxxxxxxxxx Xxx, Xxxx
Xxxxxxxxx, Xxxxx Xxxxxx 00000 ("GTECH" or the "Company") and Xxxxxxxx X. Xxx,
having a residence address of 000 Xxxx Xxxxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxx
00000 (the "Employee").
BACKGROUND
The parties entered into a prior employment agreement dated as of November 1,
1993. The Employee's responsibilities have changed since the execution of the
prior employment agreement and the parties wish to amend and restate the prior
employment agreement to account for such changes, adjust the Employee's
compensation and to make other changes mutually agreeable to the parties.
NOW, THEREFORE, for the mutual consideration set forth herein, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree that the prior employment agreement is
hereby amended and restated as follows.
1. Employment.
The Company agrees to engage the Employee and the Employee agrees to
serve the Company as Vice President, Government Relations, with overall sales
and government relations responsibility for the Company's gaming products and
services in the United States and/or in such other capacity as the Company and
the Employee may mutually agree. For purposes of this Agreement, The Employee
shall report to the Chief Executive Officer or his designee.
2. Term.
This Agreement shall remain in effect indefinitely, but may be
terminated by either party without cause upon thirty days written notice to the
other party.
3. Base Compensation.
(a) As compensation for the services to be rendered by the Employee, the
Company shall pay the Employee a salary at an annualized rate of Two Hundred
Seventy-Five Thousand Dollars ($275,000.00), payable bi-weekly during the term
of this
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Employment Agreement. Said rate shall be effective as of November 1,
1994. Employee's base salary is subject to periodic review at least annually.
(b) The Employee shall be covered by all Company benefits as may be in
effect generally during the term hereof for Company executives or employees,
such as standard health, dental, life insurance, car allowance and 401K Plan
participation, and shall receive executive perquisites consistent in general
with those perquisites provided to other Company officers.
(c) The Employee shall be considered for a management bonus based upon
his contributions to the Company outside his normal position and
responsibilities.
(d) Any amounts owed to the Employee under this Section 3 due to the
retroactive application of this Agreement shall be paid to the Employee on or
before December 31, 1995.
4. Commissions.
(a) Effective February 25, 1995, the Employee shall receive commissions
during the term hereof for all contracts for Gaming Products and Services in the
States of Arizona, Colorado, Kansas, Oregon and Rhode Island at a rate equal to
one half of one percent (0.5%) of Net Revenue from the Company's Gaming Products
and Services for each such jurisdiction. Commissions shall be payable each
fiscal quarter on the fifteenth day following the close of the prior fiscal
quarter.
(b) In addition, effective February 25, 1995, the Employee shall
receive commissions on all Net Revenue from the Company's Gaming Products and
Services (including those Gaming Products and Services upon which commissions
are being earned pursuant to subsection (a) above) at a percentage of Net
Revenue dependent upon the opportunities which are won in the fiscal year (or
the termination hereof, if such termination does not occur at the end of a
fiscal year), as follows:
"Win Rate" Percentage of Net Revenue
-------------------------------------------
75-100% one tenth of one percent (0.1%)
50-74.99% seventy-five thousandths of one percent (0.075%)
25-49.99% sixty thousandths of one percent (0.060%)
24.99%
or less forty thousandths of one percent (0.040%)
For purposes of this Section 4, the "Win Rate" shall be a fraction, the
denominator of which is the number of wins and losses for the year in question
and the numerator of which is the
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number of wins. In order for an opportunity to be considered a "win" in any
fiscal year, one of the following must occur: (i) the Customer and the Company
shall enter into a written contract or (ii) the Customer either exercises an
extension in writing or fails to decline an extension when such extensions are
automatic unless declined. In order for an opportunity to be considered a "loss"
in such year, a party other than the Company is awarded the opportunity.
Anything other than a win or a loss is not included in the Win Rate calculation.
An extension which is ultimately exercised at terms less favorable to the
Company than provided for in its contract shall be considered a "win". An
opportunity which the Company ultimately declines to pursue shall be eliminated
from the calculation. The parties agree that Addendum 1 attached hereto
accurately shows the opportunities for the year ending February 29, 1996, and
accurately shows the wins and losses as of December 1, 1995. The parties shall
reach mutual agreement on an addendum for each new fiscal year prior to its
commencement. The parties shall amend this initial addendum or any future
addendum from time to time to reflect changes in opportunities. For each year,
this commission shall be paid quarterly on the fifteenth day following the close
of the prior fiscal quarter, based on an assumed Win Rate of 50-74.99%, with a
reconciliation at the end of each fiscal year based upon the actual Win Rate in
such year. In the event reconciliation shows the Company owing the Employee, it
shall pay within ten days after the reconciliation. In the event the
reconciliation shows the Employee owing the Company, the Employee shall pay the
Company within ten days after the reconciliation or, if consented to by the
Company, may direct the Company to deduct the difference from the quarterly
commission payments under this Subsection (b) until the difference is fully
paid.
(c) For purposes of this Section 4, "Net Revenue" shall be defined as
the invoice price (for sales) or the gross revenues (for goods or services
provided on a percentage basis) less any liquidated damages, refunds, returns,
taxes (excluding income taxes), discounts, or other allowances or price
adjustments made to the customer, and less packing, shipping and insurance
charges.
(d) For purposes of this Section 4, "Gaming Products and Services"
shall be defined by the mutual agreement of the parties.
(e) The Employee must be Vice President, Government Relations, with
overall sales and government relations responsibility for the Company's gaming
products and services in the United States, at the end of each fiscal quarter,
to receive commissions for such quarter; provided, however, that in the event of
a termination pursuant to Section 6, Employee shall be entitled to commissions
earned through the effective date of termination.
(f) Any amounts owed to the Employee under this Section 4 due
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to the retroactive application of this Agreement shall be paid to Employee on or
before January 5, 1996.
5. Reimbursement of Expenses and Support.
(a) The Employee shall be entitled to reimbursement for expenses incurred
by him in the performance of his duties subject to and in accordance with the
Company's standard policies and procedures on such matters, as they may vary
from time to time.
(b) The Company will make available to the Employee secretarial, technical
and other assistance and support in order to support the Company's marketing and
sales efforts. Further, the Company acknowledges that Employee's duties will
require extensive travel and entertainment activity and expense, and the Company
shall provide as it has in the past budgetary support for these activities. The
Company shall provide Employee with an air travel card for use in carrying out
his duties as herein described.
6. Termination.
(a) If (i) the Company terminates this Agreement other than for cause or
(ii) the Employee terminates this Agreement due to the Company reducing his
responsibilities and income potential, both cases being subject to the notice
provisions of Section 2, then the Company shall provide the Employee with
severance, to be paid within forty-five (45) days after such termination, in the
form of a lump sum amount equal to twelve (12) months base salary. Upon
termination under this Section 6(a), all obligations under this Agreement shall
immediately cease, terminate and be of no further force and effect, except
Employer's obligations under Sections 6(a) and 7 and Employee's obligations
under Sections 8 and 9.
(b) For purposes of this Agreement, "cause" shall be defined as follows:
(i) Employee's negligent performance of (provided such negligent performance
results in harm to GTECH) or refusal to perform his duties as expressly
required; (ii) the conviction of Employee of a felony or other crime involving
fraud, deceit, theft or dishonesty; (iii) unauthorized acts intended to result
in Employee's personal enrichment at the expense of the Company or its
reputation; (iv) any violation of Employee's duties or responsibilities to the
Company which constitutes willful misconduct or dereliction of duty or breach of
Section 8; (v) any other breach by Employee of any of the material terms of the
Agreement; or (vi) Employee's death. A termination under this Section 6(b) shall
be effective immediately upon written notice, except where such cause may be
curable, in which case termination shall be effective thirty days after such
notice if such cause has
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not been cured. Upon termination under this Section 6(b), all obligations under
this Agreement shall immediately cease, terminate, and be of no further force or
effect, except Employer's obligations under Section 7 and Employee's obligations
under Sections 8 and 9.
7. Indemnity.
The Company shall provide to the Employee indemnification from and
against any legal acts or decisions made by him in good faith while performing
services for the Company and attorneys fees and other related expenses
(including the payment of expenses where it is yet to be determined whether this
Section 7 is applicable, provided that the Employee undertakes to repay such
amounts if and to the extent that it is ultimately determined that he is not
entitled to indemnification), in all cases to the extent such indemnification is
provided generally to the Company's executive officers and is obtainable for the
Employee. Nothing herein is intended to expand the Employee's rights beyond
those set forth in that certain Indemnification Agreement between the parties
dated as of November 1, 1993.
8. Confidential Information and Noncompetition.
(a) Employee shall not knowingly use for his own benefit or disclose or
reveal to any unauthorized person, any trade secret or other confidential
information relating to the Company, or to any of the businesses operated by it,
including, without limitation, the terms of this Agreement, any customer lists,
customer needs, price and performance information, processes, specifications,
hardware, software, devices, supply sources and characteristics, business
opportunities, marketing, promotional pricing and financing techniques, or other
information relating to the business of the Company, and Employee confirms that
such information constitutes the exclusive property of the Company. Such
restriction on confidential information shall remain in effect until such time
as the confidential information is (i) generally available in the industry, (ii)
disclosed in published literature or (iii) obtained by Employee from a third
party without binder of secrecy. Employee agrees that he will return to the
Company any physical embodiment of such confidential information upon
termination of employment.
(b) During the term of Employee's employment hereunder and for a period of
twelve (12) months following termination of such employment (irrespective of the
reason for such termination) Employee (i) shall not engage or propose to engage,
directly or indirectly (which includes, without limitation, owning, managing,
operating, controlling, being employed by, giving financial
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assistance to, participating in or being connected in any material way with any
person or entity so engaged) in the business of providing for foreign, federal,
state (including the District of Columbia), provincial or local governments or
their licensees or assignees any of the following: (x) with respect to the
operation of on-line computerized systems used to conduct lottery games, games
of chance, including without limitation video games, pari-mutuel operations or
wagering, any computer equipment, on-line sales terminals or other equipment,
software or on-line system operations or maintenance services, or (y) instant
tickets for lottery games or wagering, and (ii) shall not compete with the
Company or any of its affiliates for any contract, contract proposal or
provision of services existing at the time of such termination of employment
which relates to any of the businesses described in clause (i) of this Section
or any other activities of the Company or any of its affiliates existing or,
provided Employee has knowledge of any contemplated activities, contemplated at
the time of such termination. During such period Employee shall not act to
induce any of the Company's customers, employees, consultants or other
individuals with a business relationship with the Company to take action which
could be disadvantageous to the Company.
(c) Employee was a shareholder, officer and director of Integrated
Strategies, Inc. ("ISGI") and Integrated Strategies of Georgia, Inc. ("ISGA")
(collectively, the "ISG Companies"). Employee has resigned as an officer and
director of each of the ISG Companies, and Employee is no longer a shareholder
or otherwise connected with ISGA, but Employee may continue as a shareholder and
provide general advice to ISGI during the term hereof, subject to the following
conditions: (i) Upon the Company's request, Employee shall disclose ISGI's
clients and the Employee's activities, if any, with respect to each such client;
(ii) Employee's performance of his duties with respect to ISGI shall not in any
way interfere or conflict with his duties hereunder; and (iii) ISGI shall not
take any action or be associated with any clients which would cause Employee to
violate Section 8(b). In the event the Company provides written notice to the
Employee of any breach of this subsection (c) and such breach is not cured
within ten days of Employee's receipt of such notice, the Company may terminate
this Agreement, and such termination may be regarded as termination for "cause",
the longer cure period of Section 6(b) notwithstanding. Employee's ownership, as
a passive investor, of less than (A) one percent of the issued and outstanding
stock or (B) $100,000 principal amount of any debt securities, of any
corporation or partnership shall not by itself be deemed to violate Section
8(b).
(d) Employee shall disclose to the Company, in writing, no less
frequently than monthly, all personal political contributions made by Employee
and any members of his immediate family.
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(e) Employee recognizes that the possible restrictions on his
activities which may occur as a result of his performance of his obligations
under this Section 8 are required for the reasonable protection of the Company
and its investments, and Employee expressly acknowledges that such restrictions
are fair and reasonable for that purpose. Employee further expressly
acknowledges that damages alone will be an inadequate remedy for any breach or
violation of any of the provisions of this Paragraph 8, and that the Company, in
addition to all other remedies hereunder, 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. If any of the
provisions of this Section 8 are held to be in any respect an unreasonable
restriction upon Employee 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.
9. Other Agreements. Compliance
(a) The Employee agrees to abide by the terms of the "Restrictive
Agreement - Employee/Applicant" and the "Conflict of Interest and Ethical
Conduct Policies and Procedures". In the event of a conflict between this
Agreement and the attached agreements, this Agreement shall control. As used in
this Section 9, "Company" shall include the Company and its subsidiaries and
affiliates.
(b) Employee agrees that he shall not make or authorize any payment
directly or indirectly to any person who is an official of any government or of
any instrumentality thereof for the purpose of inducing such official to (i) use
his influence with such government, or (ii) fail to perform his official
functions, in either case to assist the Company or Employee in obtaining or
retaining business for, or directing business to, any person, or to influence
legislation or regulations of any government or any instrumentality thereof.
Employee acknowledges that his activities under the Agreement are subject to the
laws of the United States of America and the States and the Country of Canada
and the Provinces (and their respective subdivisions), and Employee shall comply
fully with all such applicable laws.
10. Miscellaneous.
(a) This Agreement shall inure to the benefit of and be binding upon
the Company, its successors and assigns, including, without limitation, any
corporation which may acquire all or substantially all of the Company's assets,
stock and business or
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into which the Company may be consolidated or merged, and the Employee, his
heirs, executors, administrators and legal representatives. This Employment
Agreement is personal to the Employee and may not be assigned by him.
(b) This Agreement, including the attachments hereto, represents the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any prior agreements or understanding of the
parties in respect thereto. This Agreement may not be amended orally, but only
in writing signed by the parties hereto.
(c) Employee shall, upon reasonable notice, furnish such information
and proper assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which the Company is, or may
become, a party, at the Company's expense.
(d) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. 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 other
waiver of 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.
(e) If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement
not held so invalid, and each such other provision shall to the full extent
consistent with law continue in force and effect.
(f) The parties hereto agree that affiliates of the Company for which
services are or may be rendered hereunder are third party beneficiaries of this
Agreement.
(g) Employee represents to the Company (i) that there are no
restrictions, agreements or understandings whatsoever to which Employee is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (ii) that his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which he is a party or by which he is bound
and (iii) that he is free and able to execute this Agreement and to enter into
employment by the Company.
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(h) This Agreement has been executed and delivered in the State of
Rhode Island, and its validity, interpretation, performance, and enforcement
shall be governed by the laws of said State. With respect to any dispute which
may arise from this agreement, the parties hereby consent to the exclusive
jurisdiction of the courts of the State of Rhode Island and the federal courts
therein
IN WITNESS HEREOF, the parties hereto have executed this Amended and Restated
Employment Agreement as of the day and year first above written.
GTECH Corporation
by_______________________ ______________________________
Xxxxxxxx X. Xxx
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ADDENDUM I
GTECH Business Opportunity Summary FY 96
Status
------
Lottery Approval
Account Opportunities Award Date Lost Win Open
------- ------------- ---------- ---- --- ----
AZ Rev-System RFP 5/1/95 L
CA ITSS 11/1/95 O
CA ITVM Contract 10/25/95 W
DC System RFP 8/1/95 W
FL System RFP 1/15/96 O
GA Keno 11/1/95 O
ID Extension 9/1/95 W
IL Bingo Vision 12/1/95 O
IN Bingo Vision 9/1/95 W
KY System RFP 10/27/95 L
LA Extension 2/1/96 O
MA System RFP 2/1/96 O
MD System RFP 12/15/95 L
MI ITSS 10/1/95 W
NJ System RFP 11/14/95 O
NM Lottery 2/1/96 O
NY Keno 9/1/95 W
OH Extension 5/1/95 W
OH GVTs/Service 11/1/95 O
OR System RFP 12/1/95 O
RI ITSS 2/1/96 O
RI Video Lottery Ext 2/1/96 O
VT ITSS 2/1/96 O
WA System RFP 8/1/95 W
WI System RFP 1/1/96 O
WV ITVs 1/1/96 O
------------------ -------- --- --- ---
Total Lottery 26 3 8 15
Revised 12/19/95
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