Exhibit 10.27
September 10, 1998
Mr. A. Xxxxx Xxxx
Autotote Corporation
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Your Employment Agreement dated as of November 1, 1997
Dear Lorne:
This will confirm our understanding regarding certain provisions of your
Employment Agreement with Autotote Corporation dated as of November 1, 1997 (the
"Agreement").
We have agreed that the definition of "change in control" in your Agreement
should mirror the definition used in other similar Company documents, including
the "Change in Control Agreements," which the Company entered into with various
of its executives as of November 1, 1997. In order to accomplish this, Section
8(b)(ii) of your Agreement is hereby amended to read in its entirety as follows:
"A Change in Control shall be deemed to have occurred if: the
stockholders of the Company approve a merger, consolidation,
recapitalization, or reorganization of the Company, or a reverse stock
split of any class of voting securities of the Company, or the consummation
of any such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 60% of the total voting
power represented by the voting securities of the Company or the surviving
entity outstanding immediately after such transaction being beneficially
owned by persons who together beneficially owned at least 80% of the
combined voting power of the voting securities of the Company outstanding
immediately prior to such transaction; provided that, for purposes of this
paragraph (ii), such continuity of ownership (and preservation of relative
voting power) shall be deemed to be satisfied if the failure to meet such
60% threshold is due solely to the acquisition of voting securities by an
employee benefit plan of the Company or such surviving entity or of any
subsidiary of the Company or such surviving entity;"
The term Change in Control used hereinafter will have the meaning ascribed to it
in the Agreement, as amended by the foregoing.
We have also agreed that, in the event the Company terminates your
employment without Cause (as defined in the Agreement) or you terminate your
employment for Good Reason (as defined in the Agreement) prior to or more than
two years after a Change in Control, you will be entitled to receive, among
other forms of compensation, an amount equal to two times the sum of (x) your
then current annual base salary and (y) the annual incentive compensation
payable upon achievement of target level of performance, for the year in which
the termination occurs. Accordingly, assuming the annual incentive compensation
payable to you upon achievement of target level of performance is equal to 100%
of your annual base salary (as is currently the case), for the purpose of
illustration, and not by way of limitation, if your base salary were $475,000
per annum at the date of your termination, your severance would be equal to two
times the sum of (x) $475,000 plus (y) $475,000, or $1.9 million.
In order to accomplish the aforesaid compensation arrangements, the first
two sentences of Section 7(b)(i)(A) of the Agreement are hereby amended to read
as follows:
"Cash in an aggregate amount equal to two times the sum of (x)
Executive's then-current annual base salary at the rate payable under
Section 4(a) immediately prior to termination plus (y) the Severance Annual
Incentive Amount (as defined below), which amount shall be reduced pro rata
to the extent the number of full months remaining until Executive attains
age 65 is less than 24 months, shall be paid to Executive. For purposes of
this Section 7(b)(i)(A) and Section 7(b)(i)(D), the `Severance Annual
Incentive Amount' shall be the annual incentive compensation payable to
Executive upon achievement of the target level of performance for the year
of termination."
Further, I refer to Section 7(b)(ii)(A) of the Agreement, which relates to
compensation payable to you in the event your employment is terminated
simultaneous with or within two years after a Change in Control. This Section
provides that in such an event you will receive a lump sum cash payment equal to
three times the sum of (x) your then current annual base salary plus (y) the
"Severance Annual Incentive Amount" which is defined in this Section as the
greater of (i) the average annual incentive compensation paid to you for the
three years immediately preceding the year of termination or (ii) the annual
incentive compensation payable to you upon achievement of the target level of
performance for the year of termination. Therefore, assuming your Severance
Annual Incentive Amount for the year in question is 100% of your then current
base salary, and if such amount exceeds the average annual incentive
compensation paid to you during the immediately preceding three years, you would
receive an amount equal to three times (x) $475,000 plus (y) $475,000, or $2.85
million.
In the event of any conflict between the terms of this letter and the terms
of the Agreement, the terms of this letter shall be controlling. This letter
shall be effective immediately.
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Please indicate your agreement to the foregoing by countersigning and
returning the copy of this letter furnished to you.
Very truly yours,
Xxxx Xxxxx
Chairman of the Executive Committee
Accepted and Agreed to:
By:
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A. Xxxxx Xxxx
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