EXHIBIT 10.2
SEPARATION AGREEMENT
AND RELEASE
This SEPARATION AGREEMENT AND RELEASE (the "Agreement") is made as of
April 15, 2005, by and among GTECH Holdings Corporation ("Holdings"), GTECH
Corporation ("GTECH") and Xxxxx X. Xxxxxxx ("Executive"). Holdings, GTECH and
their respective direct and indirect subsidiaries and affiliates and any of
their respective officers, directors or employees are herein collectively called
the "Company".
WITNESSETH:
WHEREAS, Executive has been employed by the Company since 1999, most
recently as Executive Vice President and Chief Executive Officer; and
WHEREAS, the Company and Executive desire to set forth the terms and
conditions for a mutually agreeable separation from the Company; and
WHEREAS, the Company and Executive were parties to the following: a letter
agreement dated January 22, 1999 (the "January 1999 Letter Agreement"); a letter
agreement dated November 22, 1999 (the "November 1999 Letter Agreement"); a
letter agreement dated September 18, 2001 (the "2001 Letter Agreement"); a
letter agreement dated September 10, 2002 (the "2002 Letter Agreement"); a
separation agreement dated February 1, 1999 (the "Separation Agreement"); a
Change of Control Agreement dated April 14, 1999 (the "Change of Control
Agreement"); the "Code" (defined in Section 8 hereof); a Restrictive Agreement
dated January 25, 1999 (the "Restrictive Agreement")' and
WHEREAS, the Company and Executive also were parties to various stock
option agreements, restricted stock agreements, and amendments thereto (such
stock option agreements, restricted stock agreements and amendments being
sometimes referred to herein collectively as the "Stock Compensation
Agreements", and the January 1999 Letter Agreement, the November 1999 Letter
Agreement, the 2001 Letter Agreement, the 2002 Letter Agreement, the Separation
Agreement, the Change of Control Agreement, the Code, the Restrictive Agreement
and the Stock Compensation Agreements being sometimes referred to herein
collectively as the "Executive's Employment Related Agreements"); and
WHEREAS, the Company and Executive desire to execute this Agreement
respecting the terms and conditions of Executive's separation from the Company;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Termination of Employment. It is hereby agreed that Executive's
employment with the Company will terminate effective May 15, 2005 (the
"Termination Date") and that Executive will be deemed to have resigned
voluntarily from such employment as of the Termination Date. It is also hereby
agreed that Executive shall no longer serve as an
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officer and/or director of Holdings and all direct and indirect subsidiaries and
other affiliates of Holdings. Executive agrees to sign letters of resignation
for each of the positions he holds as a director or officer of all Holdings
subsidiaries and affiliates.
2. Release by Executive. Except as specifically provided in this Agreement
or the Stock Agreements, Executive hereby IRREVOCABLY AND UNCONDITIONALLY
RELEASES, ACQUITS, FOREVER FULLY DISCHARGES AND COVENANTS NOT TO XXX OR
OTHERWISE PARTICIPATE IN ANY ACTION AGAINST the Company, and its predecessors,
successors and assigns, and the current and former directors, officers,
employees, agents, attorneys, representatives, predecessors, and insurers and
reinsurers of said corporations, firms, associations, partnerships and entities,
and their guardians, successors, assigns, heirs, executors and administrators
(all of which persons and entities are hereinafter collectively referred to as
"Executive Releasees"), from or regarding any and all claims, counterclaims,
actions, causes of action, cross-claims, complaints, grievances, promises,
liabilities, obligations, agreements, damages, rights, debts, demands,
controversies, costs, losses, and expenses (including, without limitation,
attorneys' fees, court costs and expenses) of whatever nature or kind, in law or
in equity, or otherwise, whether now known or unknown, which the Executive now
has or may ever have had prior to the "Effective Date" (as defined in Section 12
hereof) against all or any of the Executive Releasees. Without limiting the
foregoing, except as provided in this Agreement, the release and covenant not to
xxx set forth in the immediately preceding sentence applies to all claims under
any municipal, local, state or federal law, common or statutory, for any actions
or omissions, whether known or unknown, that arise from, relate to, or are in
any way connected with claims of breach of contract and wrongful termination and
claims arising under the Federal Age Discrimination in Employment Act, and any
other federal, state or local laws prohibiting employment discrimination or
claims growing out of any legal restrictions on the Company's right to terminate
its employees. This release and covenant not to xxx applies to all claims
relating to Executive's employment by the Company including all claims based on
the Executive's Employment Related Agreements. This release and covenant not to
xxx also applies to all common law claims including breach of contract, fraud,
negligence, negligent misrepresentation, and any other tort or contract claim,
and EXCEPT AS PROVIDED IN AND SUBJECT TO THE LIMITATIONS SET FORTH HEREIN, THIS
IS A FULL, COMPLETE AND GENERAL RELEASE. Executive further represents and
warrants that he has not heretofore assigned any claims that he may have against
the Executive Releasees to any other person or entity. Notwithstanding any of
the foregoing, the Company acknowledges that Executive may be subject to civil
process (including subpoenas issued by legal authorities) that may require him
to provide testimony regarding his employment with the Company.
3. Payments. (a) In furtherance of the Company's obligations to Executive
under the Separation Agreement, the Company shall continue Executive's base
salary as of the Termination Date ($490,000), subject to all applicable
deductions (including those contemplated by Section 7 below), for a period which
shall end twelve (12) months from the Termination Date. Said base salary shall
be payable bi-monthly on the Company's usual dates for salary payments
commencing on the first such date after the Termination
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Date. In consideration of the Executive's entering into this Agreement, the
Company shall also: a) continue payment of Executive's base salary as of the
Termination Date for an additional twelve (12) months beyond the period set
forth in the immediately preceding sentence, subject to all applicable
deductions (including those contemplated by Section 7 below), payable bi-monthly
as aforesaid; and b) make a one-time lump sum cash payment to Executive within
five business days after the Effective Date (as defined in Section 12) of
$250,000, subject to all applicable deductions (including those contemplated by
Section 7 below).
(b) This payment and the other benefits and payments provided for in this
Agreement constitute the entire obligation of the Company, represent full and
complete satisfaction by the Company of all obligations under the Executive's
Employment Related Agreements, and constitute full and complete settlement of
any claim under law or equity that Executive might otherwise assert against the
Company for compensation, benefits or remuneration of any form, on otherwise.
4. Benefits and Stock Awards. From and after the Termination Date, and
except as specifically set forth herein. Executive shall not be eligible for any
Company benefits or perquisites, and shall no longer be eligible to participate
in any Company benefit program or plan, except as expressly set forth below:
(a) The Company shall for a period of twenty four (24) months following
the Termination Date, or until Executive's earlier death, and subject to
continued employee contributions at levels equal to those existing as of the
Termination Date, continue to provide Executive with basic life, accidental
death and disability insurance coverage ("Life Insurance Coverage") and health
insurance (medical, dental and vision) coverage ("Health Insurance Coverage") in
effect as of the Termination Date. Thereafter, the Company will respect
Executive's rights, if any, to continued coverage at his own expense under the
Consolidated Omnibus Budget Reconciliation Act (COBRA) or other applicable laws.
In lieu of the foregoing, Executive may elect to participate in the Company's
retirement benefits program, as more fully set forth in Exhibit B.
(b) In the event that Executive commences other employment with a
successor employer ("new employment") during the period in which the Company is
obligated to continue Life Insurance Coverage or Health Insurance Coverage under
subsection (a) above, the Company may offset such obligations by any coverage
which Executive receives during the applicable continuation period from a
successor employer, so long as the aggregate coverage (from the Company and the
successor employer) is substantially and financially comparable to the benefits
and coverage provided by the Company as of the Termination Date; provided that
nothing contained herein shall limit any continuation of coverage required by
law. Executive shall notify the Company promptly of his new employment and shall
provide only such information as shall be required to determine the appropriate
coverage in accordance with this subsection.
(c) Executive's account under Company's 401(k) plan shall be treated in
accordance with that plan.
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(d) (i) The Company shall defend and hold Executive 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
Executive of services for, or action of Executive as a director, officer or
employee of the Company prior to the Termination Date. Expenses incurred by
Executive in defending such 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
Executive to repay said amount unless it shall ultimately be determined that
Executive is entitled to be indemnified hereunder.
(ii) The Company shall also maintain such director and officer liability
insurance coverage for Executive for any claims that may be made against
Executive with respect to his service as a director or officer of the
company for claims arising out of conduct on or before the Termination
Date.
(e) Executive hereby represents and confirms that he has executed and is
bound by the provision of each of the Amendments to Restricted Stock Agreements
dated as of August 5, 2003 (the "Amendments, copies of each of which, under
cover letter from the Company and as executed on behalf of the Company, are
attached as Exhibit A hereto, relating to restricted stock grants made to
Executive on April 19, 2001, April 4, 2002, September 11, 2002 and April 15,
2003. Executive's entitlement to any vested stock options and restricted stock
shall be exercised in accordance with the applicable Stock Option Plans, Stock
Option Agreements and Restricted Stock Agreements, including any amendments
thereto. All unvested stock options will be forfeited as of the Termination
Date.
(f) The Company shall pay the Executive's tax preparation fees for
calendar years 2004 and 2005, provided such amount does not exceed $10,000.00 in
the aggregate.
(g) The Company shall pay to Executive his accrued but unused vacation
pay, if any, in the first pay period following the Termination Date.
(h) Executive shall be solely responsible for the maintenance or
disposition of his any real property or personal property owned or leased by him
in Rhode Island or elsewhere.
5. Certain Obligations of Executive. Executive further covenants with the
Company as follows and expressly agrees that the provisions of Sections 5 and 6
are material obligations of the Executive and the breach of these provisions by
the Executive will constitute material breaches of this Agreement.
(a) Assistance in Litigation and Licensing Matters. For a period of two
years from the Effective Date, subject to reasonable accommodation of
Executive's then business schedule, and upon reasonable notice, Executive 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
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investigation or review by any governmental agency of which the Company is or
may become a subject, or in connection with any licensing, including without
limitation gaming licenses, that the Company may seek to obtain. The Company
shall reimburse Executive, upon the Company's review of actual receipts, for
reasonable expenses incurred by him in providing such assistance. In the event
that Executive is required to provide assistance beyond the twenty four (24)
month period commencing on the Termination Date, the Company shall compensate
Executive with a per diem allowance of $1,000 per day, for each such day of
assistance, and reimburse Executive, upon the Company's review of actual
receipts, for reasonable expenses incurred by him in providing such assistance.
(b) Confidential Information. Executive shall not knowingly use for his
own benefit or disclose or reveal to any unauthorized person, at any time, 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 Executive from a third party without binder of secrecy. Executive
agrees that, except as otherwise agreed by the Company, he will return to the
Company, promptly upon request of any executive officer designated by the Board,
any physical embodiment of such confidential information. In the event Executive
is requested by any legal process to disclose confidential information,
Executive shall immediately inform the Company and shall permit the Company an
opportunity to oppose such process, it being understood that Executive's
compliance with legal process, after the Company's reasonable opportunity to
oppose such process, does not constitute a violation of this covenant.
(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 Executive may have conceived, created, organized, prepared or
produced 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 Executive 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 at any time.
(d) Authorization. Executive does hereby irrevocably constitute,
authorize, empower and appoint the Company, or any of its officers, such
Executive's true and lawful attorney (with full power of substitution and
delegation) in Executive's name, and in Executive'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
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Company, its successors and assigns, any of the rights, title or interest
granted pursuant to Section 5(c) above for the use and benefit of the Company,
its successors and assigns.
6. Non-Competition. (a) For two years following the Effective Date (the
"Non-Compete Period"), Executive shall not engage or propose to engage
(collectively referred to as "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
business or service in which the Company is Engaged at any time during the
Non-Compete Period. Without in any way limiting the foregoing and in addition to
the foregoing, during the Non-Compete Period, the Executive shall not Engage in
the "Lottery and Gaming Business" (as defined in this Section 6) anywhere in the
world (including without limitation in any business which competes or proposes
to compete with any Lottery and Gaming Business in which the Company is Engaged
anywhere in the world). Anything herein to the contrary notwithstanding,
Executive'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 shall not by itself
be deemed to violate this non-competition provision. As used herein, the
"Lottery and Gaming Business" shall mean the provision of products or services
of every nature relating to the operations of all manner of lotteries, games of
chance and parimutuel wagering however and whenever conducted, including an
ancillary business of transaction processing of governmental or commercial
products or services.
(b) Further, for a period of two years following the Effective Date,
Executive 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 which is injurious to the Company.
(c) Executive agrees that he will not at any time make or cause to be made
any derogatory or disparaging comments regarding the Company, its business, or
its present or past directors, officers or employees.
(d) Unless Executive is otherwise notified in writing, any contact or
communication with the Company by the Executive shall be made through the Senior
Vice President and General Counsel of the Company.
7. Tax Withholding. The Company may withhold from any benefits or payments
payable under this Agreement all federal, state, city, or other taxes as shall
be required pursuant to any law or governmental regulations or ruling.
8. Conflict of Interest. Executive acknowledges and agrees to continue to
be bound by the provisions of the GTECH Code of Conduct (the "Code"). To the
extent that any provision in the Code conflicts with a provision of this
Agreement, the provision in this Agreement shall be binding.
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9. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties hereto with respect to the matters covered
herein and supercedes any prior agreement, condition, practice, custom, usage
and obligation with respect to such matters insofar as any such prior agreement,
condition, practice, custom, usage or obligation might have given rise to any
enforceable right. Anything herein to the contrary notwithstanding, the Change
of Control Agreement is hereby terminated and is of no further force or effect.
10. Advice of Counsel. Executive understands that various State of Rhode
Island and Federal laws prohibit employment discrimination based on age, sex,
race, color, national origin, religion, handicap or veteran status. These laws
are enforced through the Equal Employment Opportunity Commission (EEOC),
Department of Labor and state human rights agencies. Executive acknowledges that
he has been advised by the Company to discuss this Agreement with his attorney
and has been encouraged to take this Agreement home for up to twenty-one days so
that he can thoroughly review and understand the effect of this Agreement before
acting on it.
11. General Provisions. (a) Certain Representations and Warranties of
Executive and the Company. Executive represents to the Company that the
execution and performance of this Agreement by Executive does not and will not
constitute a breach of or violate any contract, agreement, obligation or
understanding, oral or written, or order of any court or governmental authority
to which he is a party or by which he is bound.
(b) Non-assignability and Inurement. Neither this Agreement nor any rights
or interest hereunder shall be assignable by Executive, his beneficiaries, or
legal representatives without the Company's prior written consent (it being
understood that all payments to which Executive is entitled hereunder shall
inure to the benefit of his estate or legal heirs).
(c) Binding Agreement. This Agreement shall be binding upon, and accrue to
the benefit of, Executive and the Company and their respective heirs, executors,
administrators, 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 or the surviving entity if there is a change in control of the
Company.
(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. Each of the Executive and the Company acknowledges and
agrees that the possible restrictions on each of their activities which may
occur as a result of each of their performance of the obligations under Sections
5 or 6 hereof are required for the reasonable protection of the Company.
Executive expressly acknowledges and agrees that such restrictions are fair and
reasonable for that purpose. The Executive further expressly acknowledges and
agrees that damages alone will be an inadequate remedy for any breach or
violation by the Executive of this Agreement and that the Company, in addition
to all other remedies at law or in equity, shall be entitled as a matter of
right to
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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 Executive, 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. Executive further acknowledges and agrees that, without
limiting any other rights the Company may have, any of the payments and benefits
required to be provided to Executive under this Agreement shall be forfeited to
the Company if Executive breaches any of his obligations to the Company under
Sections 5 or 6 hereof.
(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 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 mail, return receipt requested, postage prepaid, if to
Executive, addressed to the address set forth on the signature page of this
Agreement with a copy to 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-0000; if to the
Company, addressed to GTECH Holdings Corporation, 00 Xxxxxxxxxx Xxx, Xxxx
Xxxxxxxxx, Xxxxx Xxxxxx 00000 and directed to the attention of the President and
Chief Executive Officer of the Company with a copy to the Company's Senior Vice
President and General Counsel at the same address or to such other address as
either party may have furnished to the other 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 by facsimile and 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.
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(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 in the United States of
America, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. In the event of any dispute hereunder,
the prevailing party shall be entitled to recover from the non-prevailing party
all costs, including reasonable attorneys' fees, incurred in adjudicating such
dispute.
(m) Joint and Several Liability. Notwithstanding any other provision of
this Agreement, each of Holdings and GTECH, and their successors and assigns,
shall be jointly and severally liable for all obligations or any of them to
Executive hereunder. In the event that a substantial portion of the assets of
either company are transferred to any other direct or indirect subsidiary or
other affiliate of the Company, whether in one transaction or a series of
transactions, such company, 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
Executive hereunder.
(n) Costs. Each party to this Agreement shall be responsible for its own
costs and expenses incurred in the preparation and negotiation hereof
(including, without limitation, the fees and disbursements of its counsel).
12. Revocation; Effective Date. Executive may revoke his agreement to the
terms hereof at any time during the seven-day period immediately following the
date of his signature below ("Revocation Period") by delivering written notice
of his revocation to the Company. This Agreement shall become effective upon
expiration of the Revocation Period (the "Effective Date").
13. No Admission. The execution of this Agreement does not represent and
shall not be construed as an admission of a violation of any statute or law or
breach of any duty or obligation by either the Company or the Executive.
IN WITNESS WHEREOF, Holdings and GTECH have caused this Agreement to be
executed by their duly authorized officers and Executive has signed this
Agreement, all as of the day and year first above written.
GTECH HOLDINGS CORPORATION
By:
________________________________________
Xxxxxx X. XxXxxxx
Senior Vice President and General Counsel
GTECH CORPORATION
By:
________________________________________
Xxxxxx X. XxXxxxx
Senior Vice President and General Counsel
________________________________________
Xxxxx X. Xxxxxxx
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