EMPLOYMENT AGREEMENT
Exhibit 10.1
[Execution Copy]
THIS EMPLOYMENT AGREEMENT dated as of May 8, 2006 (this “Agreement”), by and amongst
Lottomatica S.p.A., an Italian corporation (the “Company”), GTECH Corporation, a Delaware
corporation (“GTECH”), an indirect wholly-owned subsidiary of the Company, and XXXXXXXX XXXXXXX
X’XXXXXX (“Executive”).
WHEREAS, Executive is currently an executive officer employed by GTECH Holdings Corporation, a
Delaware corporation and GTECH Corporation;
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as of January 10,
2006, the Company is acquiring 100% of the outstanding capital stock of GTECH Holdings Corporation,
effective as of the date hereof (the “Merger”), and
WHEREAS, the Company desires GTECH to employ Executive as an executive officer of GTECH, and
Executive agrees to be employed by GTECH as an executive officer of GTECH, subject to the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained,
the parties hereto, intending to be legally bound, 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%.
“Annual Cash Compensation” means the most recent annualized Base Salary paid or payable to
Executive plus the average Performance Bonus paid or payable to Executive by the Company or GTECH
for the three most recent completed fiscal years of employment. For the purposes of calculating
Annual Cash Compensation, Base Salary shall include any elective salary reductions made by
Executive and contributed by the Company on Executive’s behalf to the Company’s retirement plans.
“Board” means the Board of Directors of GTECH.
“Cause” means any of the following:
| (i) | any grossly negligent and/or willful failure by Executive to substantially perform her duties; | ||
| (ii) | Executive’s engaging in serious misconduct which is injurious to GTECH or its affiliates or breaching any of GTECH’s ethics and compliance policies (unless, in its sole discretion, the Board determines that the breach is immaterial, inadvertent and subject to cure under Section 8(b) hereof |
| without harm to GTECH or its affiliates) as from time to time implemented by GTECH; | |||
| (iii) | any material breach by Executive of the terms of Sections 10, 11 or 14(a) hereof, | ||
| (iv) | Executive’s having been convicted of, or pleading nolo contendere to, a crime that constitutes a felony or is a gaming or gambling-related offense; or | ||
| (v) | Executive’s use of illegal drugs or abuse of other controlled substances or her habitual intoxication. |
“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 Investor, 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 (i) 30% or more of the combined voting power of the Company’s then outstanding securities and (ii) a greater percentage of the combined voting power of the Company’s then outstanding securities than Investor; | ||
| (ii) | the stockholders of the Company or GTECH shall approve a definitive agreement (1) for the merger or other business combination of the Company or GTECH with or into another corporation if (A) in the case of a merger or other business combination of the Company only, 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 or GTECH, as the case may be, immediately prior to the effective date of such merger, together with Investor, the Company and any of their respective affiliates, beneficially own, directly or indirectly, less than 50% 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 GTECH to an entity, person or group of entities or persons that are not at least 50% beneficially owned, directly or indirectly, by the Company, GTECH and/or the Investor and/or any of its affiliates; or | ||
| (iii) | the purchase of 30% or more of the Shares 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 Investor, the Company, any of its Affiliates, or any employee benefit plan of the Company or any of its Affiliates, unless Investor and its Affiliates |
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| beneficially own a greater percentage of the combined voting power of the Company’s then outstanding securities than such “person” or “group.” |
“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 Executive’s employment with GTECH is terminated by GTECH
prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by
Executive 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.
“Committee” means the Remuneration Committee of the Board.
“Disability” means the inability (as determined by the Board in its sole discretion after
affording Executive a reasonable opportunity to present her case) of Executive to render her
agreed-upon, full-time services to GTECH due to physical and/or mental infirmity.
“Effective Date” means the date on which the Merger is consummated.
“Expiration Date” means the latest date upon which stock options granted to Executive would be
exercisable under its grant terms if Executive had remained employed with GTECH through such date.
“Family” means Executive’s spouse and dependant children.
“Good Reason” means any of the following events (subject to the notice and cure provisions of
Section 8(c) hereof):
| (i) | the assignment to Executive of duties and/or responsibilities that are materially inconsistent with those associated with Executive’s position as stated in Sections 4(a) and 4(b) hereof, excluding any interim relieving of Executive’s duties pursuant to Section 8(b); | ||
| (ii) | The Company’s or GTECH’s failure to pay Executive any amounts otherwise vested and due hereunder or under any plan or policy of the Company or GTECH; or | ||
| (iii) | any material breach of this Agreement by GTECH or the Company. |
“Investor” shall mean Xx Xxxxxxxx, S.p.A. and its affiliates.
“Performance Bonus” means the actual amount of a performance bonus recommended by the
Committee and approved by the Board to Executive with respect to the relevant fiscal year in
accordance with Section 5(b) hereof.
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“Prorated Performance Bonus” means the portion of the Performance Bonus, if any, that is
payable with respect to a fiscal year which becomes due after a termination of this Agreement under
Sections 5(c) or 9(b) hereof. The Prorated Performance Bonus will be calculated as follows: the
Committee shall (a) determine the Performance Bonus to which Executive would have been entitled,
had Executive been employed for the entire fiscal year, in accordance with Section 5(b)(i) hereof,
(b) divide that amount by 52 to produce a Weekly Amount; and (c) multiply the Weekly Amount by the
number of weeks during the relevant fiscal year that Executive was employed by GTECH.
“Retirement” means Executive’s termination of her employment when the sum of Executive’s age
and years of continuous full-time employment with GTECH or any of its affiliates total to 65 or
more, provided that Executive may not retire prior to the 5 year anniversary of the Effective Date.
“Retirement Factor” means the sum of Executive’s age and years of continuous full-time
employment with GTECH or any affiliate at the time of Executive’s Retirement.
“Securities Act” means the Securities Act of 1933, as amended.
“Senior Executives” means such executives of GTECH as constitute, from time-to-time, the
“executive officers” of GTECH.
“Shares” means ordinary shares of the Company.
2. Employment of Executive.
GTECH hereby agrees to employ Executive, and Executive agrees to be employed by GTECH, to
render services to GTECH 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.
3. Term.
The term of Executive’s engagement hereunder shall commence on the Effective Date, and shall
continue for a term of five (5) 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 5(c) or 9 hereof.
4. Position, Duties and Place of Employment.
(a) Position and Duties. During the Term, Executive shall be retained and shall serve
as the Senior Vice President, Chief Marketing Officer of GTECH, and in furtherance of her duties as
described herein, Executive also agrees to serve, if elected, as a director and/or officer of any
subsidiary or affiliate of GTECH, including but not limited to GTECH.
(b) During the Term, Executive shall have the authority and power to perform such duties
consistent with her position as the Senior Vice President, Chief Marketing Officer, of GTECH.
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(c) Executive shall not be required without her consent to undertake responsibilities not
commensurate with her position. Executive shall comply fully and promptly with the various
policies, procedures and rules governing employees promulgated and/or as amended from time to time
by GTECH and any applicable subsidiary or affiliate of GTECH (including, without limitation,
GTECH’s Regulations for the Management of Confidential Information and GTECH’s Internal Rules
Governing Intra-Group Transactions and Transactions with Other Related Parties) and with any
applicable disclosure and other requirements of any governmental authority and of any other entity
with which GTECH, its subsidiaries and affiliates are doing or propose to do business. Except for
illness, vacations, and holidays in accordance with then-current GTECH policy, and (subject to the
approval of the Chief Executive Officer of GTECH) reasonable leaves of absence, Executive shall
devote her full business time, attention, skill, undivided loyalty and best efforts to the faithful
performance of her duties hereunder; provided, however, that Executive may, as long as such
activities do not interfere with the performance of Executive’s responsibilities: (i) with the
prior approval of the Chief Executive Officer of GTECH, serve (and retain any compensation with
respect to such service) on corporate, civic and charitable boards and committees and (ii) deliver
lectures and fulfill speaking engagements.
(d) Principal Place of Employment. Executive’s principal place of employment shall be
located within the State of Rhode Island. Notwithstanding the foregoing, Executive understands
that she may be required to spend substantial time in Italy during the Term.
5. Compensation and Reimbursement of Expenses
(a) Base Salary. For the services rendered by Executive in her capacity as the Senior
Vice President, Chief Marketing Officer of GTECH during the Term, GTECH shall pay or cause to be
paid to Executive as compensation a salary at an annual rate of US $300,000, payable in equal
installments not less frequently than monthly through GTECH’s standard payroll practices.
Executive hereby expressly waives any and all of her rights to any further fees or payments for the
offices as a director and/or officer of its subsidiaries and affiliates which may be held by him
during the Term, and agrees to confirm such waiver before the appropriate corporate bodies of each
such company upon request of the Board .
(b) Performance Bonus.
(i) With respect to each fiscal year of GTECH during the Term, Executive shall be eligible to
earn a Performance Bonus at the discretion of the Board or the Committee. The amount of the
Performance Bonus, if any, for a given fiscal year shall be determined by the Board or the
Committee in accordance with the performance metrics and business objectives included in GTECH
annual bonus plan for Senior Executives, as approved annually in the discretion of the Board or the
Committee. Under the Plan, Executive’s performance will be measured against an established set of
targets for each fiscal year, and depending upon performance against those targets, Executive will
be eligible to receive a bonus
in the range of 0% to 120% of Base Salary. The annual target Performance Bonus will be 60% of
Base Salary.
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(ii) Bonus payments for GTECH are normally made in April or May of each year for the preceding
fiscal year ending in December, subject to the provisions of Section 409A of the Code.
(iii) Nothing contained in this Agreement constitutes a guarantee that the Board will award
Executive a Performance Bonus for any given fiscal year.
(c) Change of Control.
(i) In the event Executive’s employment is terminated by GTECH for any reason other than
Cause, or in the event Executive resigns for Good Reason within eighteen months after either (A)
the effectiveness of the Merger or (B) the Change of Control Date, GTECH will pay Executive, as
liquidated damages, a lump sum cash payment in lieu of the severance payments provided under
Section 9(b) hereof, payable within ten (10) days of Executive’s termination, equal to two and
ninety-nine hundredths (2.99) times the sum of (A) Executive’s current annual Base Salary in effect
at the date of termination (including in base salary for this purpose any elective salary
reductions made by Executive and contributed by GTECH on Executive’s behalf to GTECH’s retirement
plan, any non-qualified plan, or a plan meeting the requirements of Section 125 of the Code), plus
(B) the average Performance Bonus paid or payable to Executive from GTECH for the three (3) most
recent full fiscal years of GTECH, plus (C) the maximum amount allowable under the GTECH Executive
Perquisite Program or any substitute or replacement program adopted by GTECH during the most recent
calendar year of GTECH. In addition, GTECH shall pay Executive within 10 days after such
termination (i) her Base Salary accrued through the date of such termination at the rate in effect
immediately prior to such date; (ii) any accrued but unpaid Performance Bonus under Section 5(b)
hereof for the prior fiscal year; (iii) any Prorated Performance Bonus up to the date of such
termination calculated by reference to Executive’s target Performance Bonus, as determined by the
Committee for the current fiscal year; and (iv) any other amounts to which Executive is entitled
under the terms of Sections 5 and 6 hereof up to the date of such termination. The payment of any
Performance Bonus or Prorated Performance Bonus after such termination shall be made in cash,
notwithstanding the provisions of Section 5(b)(i) hereof.
(ii) In the event of a termination described in Section 5(c)(i) above, Executive, together
with Executive’s dependents and beneficiaries, will become fully vested in and continue following
Executive’s termination to participate fully in, at no additional cost to Executive, all life
insurance plans, accident and health plans and other welfare plans, maintained or sponsored by
GTECH immediately prior to the termination, at the same level and subject to terms at least as
favorable to Executive as in effect immediately prior to termination (or the full value thereof in
cash) from GTECH, until the third anniversary of termination. Executive will also become fully
vested in all non-qualified retirement plans, and within thirty (30) days of Executive’s
termination of employment, GTECH shall pay to Executive the sum of (i) all benefits accrued under
the any non-qualified plans and (ii) an amount equal to 2.99 times the average benefit accrued
and/or Company or GTECH contributions made to the retirement plans and the non-qualified plans over
the last three fiscal years prior to termination. Additionally, to
the extent Executive is not fully vested in all Company or GTECH qualified retirement plans,
Executive shall receive a payment equal to any unvested portion of such retirement plans. In
addition, in the event of a Change in Control (other than the Merger) prior to the Executive’s
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termination of employment, any Shares not yet issued and transferred to Executive pursuant to
Sections 6(c) or 6(d) hereof shall be promptly issued and transferred to Executive whether or not
she has satisfied the performance and employment requirements set forth therein and any and all
Cash-Based Awards (as defined in Section 6(e) hereof) and stock options granted to Executive that
have not yet become vested and exercisable shall become vested and exercisable.
(iii) Anything in this Agreement to the contrary notwithstanding and except as set forth
below, in the event it shall be determined that any payment or distribution by the Company or GTECH
to or for the benefit of Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a “Payment”) would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise-Tax”), whether in connection with the Merger or
any Change in Control, then Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed on the Payments. GTECH shall pay to Executive any Gross-Up Payments required as a
result of Excise Taxes payable by Executive arising from the Merger.
(iv) All determinations required to be made under this Section 5(c), including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made by Ernst & Young LLP or such other
nationally recognized certified public accounting firm as may be designated by Executive (the
“Accounting Firm”) which shall provide detailed supporting calculations both to GTECH and Executive
within 15 business days of the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by GTECH. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change in Control,
Executive shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by GTECH. Any
Gross-Up Payment, as determined pursuant to this Section 5(c), shall be paid by GTECH to Executive
within five days of the receipt of the Accounting Firm’s determination. Subject to the remainder of
this Section 5(c), any determination by the Accounting Firm shall be binding upon GTECH and
Executive. As a result of the uncertainty in the application of Section 280G and Section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by GTECH should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event that
GTECH exhausts its remedies and Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by GTECH to or for the benefit of
Executive (so as to fully extinguish Executive’s tax liability for the Payments including all
interest and penalties).
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(v) Executive shall notify GTECH in writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by GTECH of the Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten business days after Executive is informed in
writing of such claim and shall apprise GTECH of the nature of such claim and the date on which
such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of
the 30-day period following the date on which Executive gives such notice to GTECH (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If GTECH
notifies Executive in writing prior to the expiration of such period that it desires to contest
such claim, Executive shall:
(A) give GTECH any information reasonably requested by GTECH relating
to such claim,
(B) take such action in connection with contesting such claim as GTECH
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by GTECH,
(C) cooperate with GTECH in good faith in order effectively to contest
such claim, and
(D) permit GTECH to participate in any proceedings relating to such
claim;
provided, however, that GTECH shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), GTECH
shall control all proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either direct Executive to
pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as GTECH shall determine;
provided, however, that if GTECH directs Executive to pay such claim and xxx for a refund, GTECH
shall advance the amount of such payment to Executive, on an interest-free basis and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided that any extension
of the statute of limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, GTECH’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
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(vi) If, after the receipt by Executive of an amount advanced by GTECH pursuant to Section
5(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall
(subject to GTECH’s complying with the requirements of Section 5(c)) promptly pay to GTECH the
amount of such refund (together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of an amount advanced by GTECH pursuant to Section
5(c), a determination is made that Executive shall not be entitled to any refund with respect to
such claim and GTECH does not notify Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
(d) Reimbursement of Expenses. Consistent with GTECH’s established policies, GTECH
shall pay or reimburse Executive for all reasonable and necessary travel and other expenses of
Executive incurred by Executive in performing her duties hereunder upon receipt of appropriate
written substantiation of such expenses.
(e) Housing. If deemed necessary by the Chief Executive Officer of the Company for
the performance of Executive’s duties hereunder, the Company shall make available to Executive at
no cost to Executive rental or other short-term housing near the Company’s Rome headquarters.
6. Benefits.
(a) Benefits. Except as otherwise expressly provided herein, Executive shall be
entitled to receive, during the Term, benefits substantially similar to the level of benefits
provided generally to Senior Executives under any benefit plan, program or arrangement of GTECH in
effect, subject to Executive’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.
(b) Stock Options. Executive shall receive the following stock options in accordance
with the following terms and conditions:
(i) Executive shall be eligible for consideration by the Committee for annual grants of stock
options under the Company’s stock option or equity compensation plans existing on the date of this
Agreement or established hereafter (each being referred to as a “Long Term Incentive Plan”), in the
sole discretion of the Committee.
(ii) All grants of stock options under this Agreement are subject to and conditioned upon the
Company obtaining all necessary shareholder approvals, if any, which Company shall use all
reasonable efforts to obtain.
(c) Grant of Shares. Not less than 35% of the calculated value of annual long term
incentive awards under a Long Term Incentive Plan shall be provided to Executive in the form of an
award of fully-vested Shares. The foregoing awards of fully-vested Shares will be subject to all
the terms of the applicable Long Term Incentive Plan. It is intended that the foregoing awards of
Shares will be valued on the dates of grant of such awards, but will provide
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that such Shares will
only be issued and transferred to the Executive upon the future achievement of certain target
performance goals to be determined by the Company consistent with its equity compensation policies
for Senior Executives, and provided that the Executive is continuously employed by GTECH.
Notwithstanding the foregoing, the Company may grant the foregoing Shares on such other basis as is
consistent with its Share grants to other Senior Executives of the Company.
(d) Award of Shares. Executive shall be eligible for a 2007 long-term incentive award
at such time as such awards are made for other Senior Executives. The value of such award on the
date of grant will be split 65% stock options and 35% Shares using traditional Black Scholes option
pricing. Such award shall be made under the terms of a Long Term Incentive Plan. The Company will
grant the Executive a retention equity award of 12,500 fully-vested Shares (the “Non-Performance
Shares”) in five (5) annual installments to be issued and transferred to the Executive on the
respective anniversaries of the Effective Date as set forth on the schedule below, provided that
the Executive will not be entitled to the issuance and transfer of such Shares on any such date
unless the Executive is continuously employed by GTECH up to and including each such date
| Year | Number of Shares to be Issued | |||
1 |
2,500 | |||
2 |
2,500 | |||
3 |
2,500 | |||
4 |
2,500 | |||
5 |
2,500 | |||
(e) Cash-Based Awards. The Company reserves the right to substitute, in its
discretion, awards payable in cash for the stock option and Share awards described in Sections
6(b), (c) and (d) above. Such cash awards (i) shall be in the form of stock appreciation rights
(in the case of stock option grants) or restricted share units (in the case of Share awards) of
equal value as the stock options or Share awards they are being substituted for, (ii) shall have
vesting schedules no less advantageous to Executive as the stock options or Share awards they are
being substituted for, and (iii) shall provide for payment of such restricted share unit awards to
Executive immediately upon vesting. Any award granted pursuant to this Section 6(e) shall
hereinafter be referred to as a Cash-Based Award.
(f) Dividend Equivalent Awards. With respect to the award of Shares pursuant to
Section 6(c) and (d) above, the Executive will be entitled to an award of additional Shares equal
to the value of any dividends or other distributions declared by the Company with respect to such
Shares between the effective date of the grants applicable to such Shares and the transfer of such
Shares to the Executive in accordance with the provisions of Sections 5(c), 6(c), 6(d), 9(c) and
9(d) hereof. All Shares issued pursuant to this Section 6(f) shall be (i) valued at
the price per ordinary share as of the close of business on the effective date of such
dividend or distribution and (ii) will only be issued and transferred to the Executive when and if
the Shares for which the dividend or distribution was made are issued and transferred to Executive
pursuant to Sections 5(c), 6(c), 6(d), 9(c) or 9(d) hereof.
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(g) Certain Specific Benefits and Arrangements. Without limiting the generality of
subsection (a) above (except as may otherwise be specified in Appendix A hereto), Executive
shall be entitled to the specific benefits and arrangements set forth in Appendix A hereto.
(h) Indemnification. GTECH shall defend and hold Executive, to the extent Executive is
a defendant, target or witness, harmless to the fullest extent permitted by applicable law and the
organizational documents of GTECH 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 GTECH or any parent, subsidiary or affiliate of
GTECH, or of any other person or enterprise at GTECH’s request. To the extent permitted by law and
by the organizational documents of GTECH, expenses incurred by Executive in defending a claim,
action, suit or investigation or criminal proceeding shall be paid by GTECH in advance of the final
disposition thereof upon the receipt by GTECH 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. This Section 6(h) shall not apply to a non-derivative action commenced by
GTECH against Executive.
7. Benefits Payable During Term Upon Disability.
(a) Disability Benefits. In the event of Disability of Executive during the Term of
her employment hereunder, GTECH shall continue to pay Executive the compensation and extend to him
the benefits provided in Sections 5 and 6 hereof during the period of Disability, subject to
Section 9(e) hereof and to the extent permitted by applicable law, provided that in the event of
Executive’s Disability for an aggregate period of time exceeding 150 calendar days in any 12
consecutive month period during the Term, GTECH, at its election, may terminate the Term of
Executive’s employment, and Executive shall receive the compensation as set forth in Section 9(b)
hereof.
(b) Services During Disability. During the Term, notwithstanding any Disability,
Executive shall, to the extent that she is physically and mentally able to do so, furnish
information and assistance to GTECH, and, in addition, upon the reasonable request in writing of
the Chief Executive Officer of GTECH, or a senior executive officer designated by the Chief
Executive Officer of GTECH, from time to time, she shall make himself available to GTECH and its
subsidiaries and affiliates to undertake reasonable assignments consistent with her position and
her physical and mental health.
8. Termination of Employment.
(a) Expiration and Earlier Termination. Executive’s Term of employment shall
terminate upon expiration of the Term and shall be subject to earlier termination:
(i) upon the death of Executive;
(ii) at the election of GTECH in the event of
Executive’s Disability (as provided in Section 7(a) hereof);
(iii) upon discharge of Executive by GTECH for
Cause;
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(iv) upon discharge of Executive without Cause or
upon resignation of Executive with or without Good Reason; and
(v) upon the Retirement of Executive.
(b) Certain Obligations of GTECH. GTECH shall give Executive not less than 60 days’
prior written notice of any intended termination of Executive’s employment by GTECH for Cause
(other than for the reasons set forth in clauses (ii) and (iv) of the definition of Cause in
Section 1 hereof). In the event of such a proposed termination for Cause, such notice shall specify
the grounds for such termination, and GTECH shall only be entitled to terminate Executive for such
Cause if Executive shall have failed to cure the grounds for such termination within said 60-day
notice period and Executive 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
Executive is afforded the opportunity to address the Board, GTECH may relieve Executive of her
duties on an interim basis. GTECH may immediately terminate Executive’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. In addition, GTECH may immediately terminate
Executive’s employment without Cause by written notice to Executive.
(c) Certain Obligations of Executive. Executive shall give GTECH not less than 60
days’ prior written notice of any intended termination by Executive of Executive’s employment,
including Retirement. In the event of a proposed resignation for Good Reason, such notice shall
specify the grounds for such resignation, and Executive shall only be entitled to terminate her
employment for Good Reason if GTECH shall have failed to correct the specified grounds within said
60-day notice period and, upon cure thereof by GTECH, such event shall no longer constitute Good
Reason. Executive shall not be entitled to terminate for Good Reason unless she has given notice to
GTECH of her intention to so terminate within 60 days following the occurrence of the event alleged
to constitute such Good Reason. In the event of Retirement, Executive must have met the minimum
established threshold index of 65 and must have completed five years of continuous service from and
after the Effective Date. Notwithstanding the foregoing, in the event that Executive has given
GTECH notice of her intention to resign or retire, the Board may elect to have such resignation or
Retirement become effective immediately or at such other date, not later than the effective date
specified in the notice, as the Board may determine.
(d) Resignation. Upon termination of the Term for any reason, Executive (unless
otherwise requested by a majority of the independent directors of the Board) concurrently shall
resign any directorships and officer or employee positions which she holds with GTECH, its
subsidiaries and affiliates.
9. Compensation, Benefits, etc. Upon, and Effects of, Termination.
(a) Discharge for Cause and Resignation for Other than Good Reason. If the Term of
Executive’s employment is terminated by reason of her discharge for Cause or resignation for other
than Good Reason, GTECH shall pay or cause to be paid to Executive or her estate, as the case may
be, at the time such payment is due (i) her Base Salary accrued
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through the effective date of such
termination at the rate in effect immediately prior to such termination; (ii) any accrued but
unpaid Performance Bonus under Section 5(b) hereof for the prior fiscal year (to be paid at the
same time Senior Executives receive performance bonuses for that fiscal year as set forth in
Section 5(b)(i) hereof); and (iii) any other amounts to which Executive is entitled under the terms
of Sections 5 and 6 hereof up to the effective date of such termination. In the event of such
termination of employment for Cause or resignation for other than Good Reason under this Section
9(a), all unvested stock options and any rights to any Shares awarded but not yet issued and
transferred pursuant to Section 6(c) or (d) hereof, as they are scheduled to vest or be issued and
transferred in accordance with the applicable Share award and stock option agreements, shall be
forfeited by Executive and any vested stock options shall remain exercisable for a period of three
(3) months after termination.
(b) Disability, Death, Discharge Without Cause and Resignation for Good Reason. If the
Term of Executive’s employment is terminated by GTECH by reason of her Disability as provided in
Section 7(a) hereof, by reason of her death, by GTECH without Cause or by reason of Executive’s
resignation for Good Reason, GTECH shall pay to Executive or her estate, as the case may be, the
following: (i) her Base Salary accrued through the effective date of such termination at the rate
in effect immediately prior to such termination; (ii) an amount equal to eighteen (18) months of
Annual Cash Compensation; (iii) any accrued but unpaid Performance Bonus under Section 5(b) hereof
for the prior fiscal year; (iv) a Prorated Performance Bonus, if any, payable with respect to the
fiscal year of termination; and (v) any other amounts to which Executive is entitled under the
terms of Sections 5 and 6 hereof up to the effective date of such termination. The payments
required under this Section 9(b) shall be made by GTECH after such termination as follows: the Base
Salary component of Annual Cash Compensation shall be paid in equal bi-weekly installments over
eighteen (18) months, the Performance Bonus component of Annual Cash Compensation shall be paid
within 14 days, and the Prorated Performance Bonus, if any, payable with respect to the fiscal year
of termination shall be paid at the same time Senior Executives are paid performance bonuses for
the respective fiscal year. Any such Prorated Performance Bonus shall be paid in cash,
notwithstanding the provisions of Section 5(b)(i) hereof. In the event of Executive’s death,
Executive’s estate shall have 18 months from the date of Executive’s death to exercise all vested
stock options then held by Executive (or their Expiration Dates, if sooner).
(c) Retirement. If this Agreement is terminated as a result of Executive’s
Retirement, any vested stock options then held by Executive shall remain exercisable after
Retirement until their respective Expiration Dates. If this Agreement is terminated as a result of
Executive’s Retirement, Executive and her Family shall continue to be covered under or entitled to
any and all medical insurance or other medical benefits that the Executive was covered under or
entitled to at the time of such retirement (or provided substantially equivalent benefits or
coverage) at no additional expense for a period of 5 years from such retirement (subject to the
limitation that such benefits will cease in any event at the end of the month of the Executive’s
65th birthday). If Executive achieves a Retirement Factor of 65 and retires from GTECH, 50%
of any Shares awarded but not yet issued and transferred to Executive on the date of her retirement
pursuant to Sections 5(c), 6(c) or 6(d) hereof will be promptly issued and transferred to Executive
whether or not the Executive has satisfied any performance or employment requirements set forth in
Sections 6(c) or 6(d) hereof and the Executive’s right to 50% of the Shares awarded but not yet
issued and transferred to Executive will expire as of the effective date
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of Retirement. If this
Agreement is terminated as a result of Executive’s Retirement upon achieving a Retirement Factor of
75, (i) Executive and her Family shall continue to be covered under or entitled to any and all
medical insurance or other medical benefits that the Executive was covered under or entitled to at
the time of such retirement (or provided substantially equivalent benefits or coverage) at no
additional expense for a period of 10 years from such retirement (subject to the limitation that
such benefits will cease in any event at the end of the month of the Executive’s 65th birthday) and
(ii) 100% of any Shares awarded but not yet issued and transferred to Executive on the date of her
retirement pursuant to Sections 5(c), 6(c) or 6(d) hereof will be promptly issued and transferred
to Executive whether or not the Executive has satisfied any performance or employment requirements
set forth in Sections 6(c) or 6(d) hereof. Retirement with a Retirement Factor between 65 and 75
will result in (i) a six-month increase in the period of continued medical coverage for each 1
Retirement Factor point increase (subject to the limitation that such benefits will cease at the
end of the month of the Executive’s 65th birthday) and (ii) a 5% increase in the number of Shares
to be issued and transferred for each 1 Retirement Factor point increase (e.g., a
Retirement Factor of 67 will result in continued medical coverage for a period of 6 years (subject
to the limitation that such benefits will cease at the end of the month of the Executive’s 65th
birthday) and 60% of any Shares awarded but not yet issued and transferred to Executive to be
promptly issued and transferred to Executive).
(d) Effect of Termination Under Section 9(b). In the event this Agreement is
terminated in accordance with Section 9(b) hereof, GTECH shall continue, for a period of eighteen
(18) months following such termination, the benefits described in Sections 2, 4 and 6 of
Appendix A, and shall continue the medical benefits described in Section 3 of Appendix
A for the remainder of the Term, as if the Agreement had not been terminated, and shall
continue such medical coverage for an additional period of eighteen (18) months after the
expiration of the Term (the “Continued Medical Benefits”). Notwithstanding the foregoing, in the
event of a termination on account of death or Disability, Executive and her Family shall continue
to be covered under or entitled to any and all medical insurance or other medical benefits that the
Executive was covered under or entitled to at the time of the Executive’s termination on account of
death or Disability (or provided substantially equivalent benefits of coverage) at no additional
expense for a period of ten years from the Executive’s termination on account of death or
Disability (subject to the limitation that such benefits will cease in any event at the end of the
month of the Executive’s 65th birthday). In addition, in the event that this Agreement is
terminated in accordance with Section 9(b) hereof, (i) Executive shall become fully vested in all
non-qualified retirement plans, and in all benefits accrued under all other employee benefit plan
(other than qualified retirement plans), (ii) any Non-Performance Shares awarded but not yet issued
and transferred to Executive pursuant to Sections 5(c) or 6(d) hereof on the date of her
termination of employment shall be promptly issued and transferred to Executive irrespective of
satisfaction of any employment requirements set forth in Sections 6(d) hereof, (iii) any Cash-Based
Awards issued in substitution of awards of Non-Performance Shares that have not vested
as of her date of termination of employment will become fully vested and (iv) Executive shall
have eighteen (18) months from the date of the termination of her employment (or until their
Expiration Dates, if sooner) to exercise any vested stock options then held by Executive.
Additionally, to the extent Executive is not fully vested in all Company or GTECH qualified
retirement plans, Executive shall receive a payment equal to any unvested portion of such
retirement plans. Executive also shall be entitled, to the extent not inconsistent with this
Agreement, to receive such additional benefits, if any, as she may be entitled to under the
--14--
express
terms of the applicable benefit plans (other than bonus and severance plans) of GTECH, its
subsidiaries and affiliates, and to whatever medical coverage, if any, as is required to be
provided by applicable law.
(e) Reductions, Forfeitures, etc. Notwithstanding the foregoing: (i) any payments or
benefits required to be paid or provided to Executive pursuant to Section 7(a) in the event of
Executive’s Disability shall be reduced to the extent that comparable payments or benefits are
received by Executive during such period under GTECH’s disability plan, as in effect from time to
time, (ii) without limiting any other rights GTECH may have, any payments or benefits required to
be paid or provided to Executive under this Agreement shall be forfeited to GTECH by Executive if
Executive shall breach any of her obligations under Sections 10(b) or 11 hereof, except as may
otherwise be required by applicable law, and (iii) except as otherwise provided above, 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 Executive’s employment had not been terminated.
(f) Full Settlement. In the event of the termination of Executive’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 GTECH, 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 GTECH, its subsidiaries and affiliates to Executive for
compensation and benefits and shall also constitute full and complete settlement of any claim under
law or in equity that Executive might otherwise assert against GTECH, its subsidiaries or
affiliates, for compensation and benefits. Executive has no duty to mitigate respecting other
employment after the termination of this Agreement and shall be entitled to receive the amounts
described in this Section 9 irrespective of whether Executive obtains other employment immediately
following such termination.
(g) Release. The receipt of the benefits described in Section 5(c) or Section 9
hereof shall be conditioned upon the execution and non-revocation by Executive of GTECH’s standard
general release of claims and covenant not to xxx for Senior Executives located in the United
States.
10. Certain Obligations of Executive.
Executive further covenants for the benefit of GTECH as follows and expressly agrees that the
provisions of Sections 10 and 11 are material obligations to GTECH and the breach of those
provisions will constitute material breaches of this Agreement. As used in Sections 10 and 11, the
term “GTECH” shall include Lottomatica S.p.A., GTECH Holdings Corporation, GTECH Corporation and
their subsidiaries and affiliates.
(a) Assistance in Litigation. During the Term, and for a period of three years
thereafter subject to reasonable accommodation of Executive’s then business schedule, Executive,
upon reasonable notice, shall furnish such information and proper assistance to GTECH as may
reasonably be required in connection with any litigation in which GTECH is, or may become, a party
or in connection with any investigation or review by any governmental agency to which GTECH is, or
may become, a subject. GTECH shall compensate Executive at a
--15--
reasonable hourly rate, plus reimburse
all expenses incurred consistent with GTECH policy, for any such assistance provided by Executive
after the Term.
(b) Confidential Information. Executive shall not knowingly use for her own benefit
or disclose or reveal to any person, during or after the Term, any trade secret or other
confidential information relating to GTECH, 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 GTECH; 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 after the Term from a third party without binder of secrecy. Executive agrees that,
except as otherwise agreed by GTECH, she will return to GTECH, promptly upon the request of the
Chief Executive Officer of GTECH or any senior executive officer designated by the Chief Executive
Officer of GTECH, 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 GTECH and shall permit GTECH an opportunity to oppose such process, it being understood that
Executive’s compliance with legal process, after GTECH’s reasonable opportunity to oppose such
process, does not constitute a violation of this Section 10(b).
(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 conceive,
create, organize, prepare or produce during the period of her employment with GTECH and which
relate to the business of GTECH, and all rights, title and interest in and to any patents, patent
applications, copyright registrations and copyright applications resulting therefrom, shall be
owned by GTECH, and Executive agrees to execute instruments or documents, to provide evidence and
testimony, and to otherwise assist GTECH in establishing, enforcing and maintaining such rights,
title and interest of GTECH during and after the Term.
(d) Authorization. Executive does hereby irrevocably constitute, authorize, empower
and appoint GTECH, 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 GTECH’s name, to take and do such action, and to make, sign, execute, acknowledge and deliver
any and all instruments or documents which GTECH, from time to time, may deem desirable or
necessary to vest in GTECH, its successors and assigns, any of the rights, title or interest
granted pursuant to Section 10(c) above for the use and benefit of GTECH, its successors and
assigns.
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11. Non-Competition.
(a) During the Term and for eighteen (18) months following termination of Executive’s
employment (irrespective of the reason for such termination), Executive 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 Company Business
anywhere in the world, including without limitation in any business which competes or proposes to
compete with any Company Business anywhere in the world; provided, that 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
so engaged shall not by itself be deemed to constitute such engagement by Executive. As used
herein, the term “Company Business” shall mean (i) the manufacturing, distribution, and sale of
lottery or gaming machines or (ii) any other business engaged in by GTECH or any of its
subsidiaries or affiliates, including the Company, during the Term, provided, that such term shall
not include any business that is (a) principally engaged in the provision of non-gaming or
non-gaming-related transaction processing services or (b) engaged in the business of non-gaming or
non-gaming-related transaction processing services and not principally engaged in any business
competitive with any other business described in clauses (i) or (ii) above.
(b) Further, for a period of eighteen (18) months following termination of Executive’s
employment (irrespective of the reason for such termination), Executive shall not (i) disturb or
interfere with any business relationship between GTECH and any of its customers, suppliers or other
business associates, or (ii) solicit or cause to be solicited any officer, employee or customer of
GTECH to terminate such person’s relationship with GTECH or to take other action which is
materially injurious to GTECH.
12. Tax Withholding.
GTECH 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 Appendices hereto, contains the entire understanding between the
parties hereto or between Executive and GTECH, with respect, to the matters covered herein and
supersedes 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.
14. General Provisions.
(a) Certain Representations and Warranties of Executive. Executive represents to
GTECH that (i) the execution and performance of this Agreement by Executive and her employment
hereunder 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
--17--
authority to which she is a party or by which she is bound; (ii) the employment and other personal
background information provided by Executive to GTECH is true and correct in all material respects;
(iii) to the best of Executive’s knowledge, there is no factor relating to him or her Family not
previously disclosed in writing to GTECH which could reasonably be expected, if she were a senior
executive officer or director of GTECH, to disqualify GTECH or its subsidiaries or affiliates from,
or materially jeopardize their chances of, obtaining lottery contracts or other contracts in, or
any licenses or governmental permits for, the businesses in which they are engaged or propose to
engage; and (iv) Executive has been represented by counsel selected by Executive or has had
adequate opportunity to select such counsel, in connection with the execution and delivery of this
Agreement.
(b) Representations and Agreements. Executive represents and agrees that: (a) (i) the
offer and sale of Shares and stock options therefor pursuant hereto have not been and will not be
registered under the Securities Act, and it is the intention of the parties hereto that the offer
and sale of such securities be exempt from registration under the Securities Act and the rules and
regulations promulgated thereunder; (ii) the reliance of the Company on such exemption is
predicated upon such Executive’s representations and agreements set forth herein; (iii) the Shares
and stock options therefor (and any part thereof or participation or interest therein) being
acquired pursuant hereto cannot be sold, transferred, assigned, exchanged, pledged, encumbered or
otherwise disposed of (including, without limitation, in connection with any hedging activities)
unless they are registered under the Securities Act or an exemption from registration (including
Regulation S under the Securities Act) is available, and the Company has no obligation to so
register any such Shares or stock options; (iv) the purchase of Shares and stock options
therefor pursuant hereto does not entitle Executive to participate in any other equity program of the
Company, whether now existing or hereafter established; (v) Executive is not purchasing Shares or
stock options therefor as a result of any general solicitation or general advertising; and (vi) the
Company is relying on the representations and agreements contained herein in engaging in the offer
and sale of the Shares and stock options therefor, would not engage in such transactions in the
absence of the representations and agreements contained herein and any obligation of the Company
herein to offer or sell Shares or stock options therefor is conditioned upon the accuracy of such
representations; (b) Executive is acquiring the Shares and stock options therefor being acquired
pursuant hereto for investment for Executive’s own account and not with a view to the distribution
thereof, and Executive does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of (including,
without limitation, in connection with any hedging activities) any of the Shares or stock options
therefor (or any part thereof or participation or interest therein) to such person or to any third
person; (c) Executive will not directly or indirectly, sell, transfer, assign, exchange, pledge,
encumber or otherwise dispose of (including, without limitation, in connection with any hedging
activities) any Shares or stock options therefor (or any part thereof or participation or interest
therein) being acquired pursuant hereto except in accordance with this Agreement and applicable law
and Executive will not effect any sale, transfer, assignment, exchange, pledge, encumbrance or
disposition of any Shares other than on the Milan Stock Exchange or in compliance with any
applicable exemption available under the Securities Act; (d) Executive has, or Executive together
with Executive’s advisers, if any, have, such knowledge and experience in financial and business
matters that Executive is, or Executive together with Executive’s advisers, if any, are, and will be
capable of evaluating the merits and risks relating to Executive’s purchase of Shares and stock
options
--18--
therefor pursuant hereto; (e) Executive has been given the opportunity to obtain
information and documents relating to the Company and to ask questions of and receive answers from
representatives of the Company concerning the Company and Executive’s investment in the Shares and
stock options therefor; (f) Executive’s decision to invest in the Company has been based upon
independent investigations made by Executive and Executive’s advisers, if any; (g) Executive is
able to bear the economic risk of a total loss of Executive’s investment in the Company; (h)
Executive has adequate means of providing for Executive’s current needs and foreseeable personal
contingencies and has no need for Executive’s investment in the Shares or stock options therefor to
be liquid; (i) Executive is an “accredited investor” within the meaning of either Rule 501(a)(5) or
(a)(6) promulgated under the Securities Act; (j) this Agreement has been duly executed and
delivered by Executive, and constitutes a legal, valid and binding obligation of Executive,
enforceable in accordance with its terms, subject to limitations in bankruptcy and to other
equitable limitations; and (k) Executive will promptly advise the Company if any of the foregoing
representations cease to be true during the term hereof. The Company agrees that the offer and
sale of Shares by Executive on the Milan Stock Exchange shall be considered an “offshore
transaction” for purposes of Rule 904(a)(1) promulgated under the Securities Act (as such rule is
in effect as of the date hereof).
(c) Non-Assignability and Inurement. Neither this Agreement nor any rights or interest
hereunder shall be assignable by Executive, her beneficiaries, or legal representatives without
GTECH’s prior written consent (it being understood that all payments to which Executive is entitled
hereunder shall inure to the benefit of her estate or legal heirs).
(d) Binding Agreement. This Agreement shall be binding upon, and accrue to the
benefit of, Executive, GTECH and the Company and their respective heirs, executors, administrators,
successors and permitted assigns, including, in the case of GTECH or the Company, any person or
entity acquiring all or substantially all of GTECH’s or the Company’s assets.
(e) Amendment of Agreement. This Agreement may not be modified or amended except by
an instrument in writing signed by the parties hereto.
(f) Remedies. Executive acknowledges and agrees that the possible restrictions on her
activities which may occur as a result of her performance of her obligations under Sections 10 and
11 hereof are required for the reasonable protection of GTECH, its subsidiaries and affiliates, and
Executive expressly acknowledges and agrees that such restrictions are fair and reasonable for that
purpose. Executive 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 GTECH, 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 state or federal court in Rhode Island, which courts shall
have exclusive jurisdiction with respect to any such action. 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.
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(g) 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.
(h) 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.
(i) 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 Executive, addressed to the address set forth on the signature
page of this Agreement; if to GTECH or to the Company, addressed to Lottomatica S.p.A., Xxxxx xxx
Xxxxx Xxxxxx x.00/X, 00000 Xxxx, Xxxxx and directed to the attention of the Chief Executive Officer
of 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.
(j) 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.
(k) 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.
(l) 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.
(m) Governing Law; Forum. 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. In the event of any dispute
hereunder, the prevailing party shall be entitled to recover all costs, including reasonable
attorneys’ fees, incurred in adjudicating such dispute. The parties submit to the sole and
exclusive jurisdiction and venue of the state and federal courts located in Rhode Island and waive
any and all objections to such jurisdiction or venue.
(n) Joint and Several Liability. Notwithstanding any other provision of this
Agreement, each of the Company and GTECH, and their successors and assigns, shall be jointly and
severally liable for all obligations of any of them to Executive hereunder. In the event that a
substantial portion of the assets of the Company or GTECH are transferred to any other direct or
--20--
indirect subsidiary or other affiliate of the Company or GTECH, whether in one transaction or
a series of transactions, the Company or GTECH, 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.
(o) Conflicts. To the extent there is any conflict between the terms of this
Agreement and (i) any stock option agreement or Share award agreement respecting acceleration,
vesting or exercisability of stock options or Shares during Executive’s employment or thereafter or
(ii) any other agreement, plan or document to which Executive and GTECH are parties or that governs
any benefits received by Executive, the provisions of this Agreement or those such agreements,
plans or documents that are more beneficial to Executive shall prevail and supersede any
conflicting provisions.
15. Section 409A. To the extent applicable, it is intended that this Agreement comply
with the provisions of Section 409A of the Code, and this Agreement shall be construed and applied
in a manner consistent with this intent. In the event that the benefits or payments under this
Agreement are determined by GTECH to be in the nature of nonqualified deferred compensation
payments, GTECH and Executive hereby agree to take such actions and to make such changes to the
benefits or payments hereunder as may be mutually agreed between the parties to ensure that such
benefits or payments comply with the applicable provisions of Section 409A of the Code and the
official guidance issued thereunder, provided that in the event of any such change to the benefits
or payments hereunder, the value or types of payments or benefits under this Agreement shall be
appropriately adjusted so that the aggregate present value of the payments and benefits hereunder
after such change are economically equivalent to the aggregate present value that existed prior to
such change.
16. . Consummation of Merger. Notwithstanding anything else in this Agreement to the
contrary, no provision of this Agreement shall be effective until following the consummation of the
Merger. In the event that the Merger is cancelled prior to its consummation, this Agreement shall
be deemed null and void.
(Signatures on Next Page)
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IN WITNESS WHEREOF, Lottomatica S.p.A. and GTECH Corporation 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.
| LOTTOMATICA S.p.A. | ||||||
Attest:
|
By: | |||||
| Name: | ||||||
| Title: | ||||||
| GTECH CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| XXXXXXXX XXXXXXX X’XXXXXX | ||||||
| Witness: | ||||||
| Address: | 00 Xxxx Xxx Xxxx, #000 | |||||
| Xxxxxxxxxx, XX 00000 | ||||||
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APPENDIX A
Summary of Certain Benefits and Arrangements
1. Vacation. Executive shall be entitled to a paid vacation of four weeks per year
provided that if Executive is eligible for “Retirement” as defined in Section 1, Executive shall be
entitled to a paid vacation of five weeks per year.
2. Life Insurance. Executive shall receive life insurance coverage in accordance with
GTECH’s policy in a manner comparable to Senior Executives.
3. Medical. During the Term, the cost of Executive’s annual physical examination shall
be borne by GTECH. In addition, GTECH shall provide Executive and her Family with medical insurance
in a manner comparable to Senior Executives as may be modified from time to time and on the
following additional terms:
(a) Such medical insurance shall be provided to Executive and her Family during the Term and
such medical insurance shall continue to be provided to Executive and her Family after the
expiration of the Term to the extent expressly provided in Sections 5(c), 9(c) and 9(d).
(b) Executive may participate at her own cost in GTECH’s retirement health plan provided she
satisfies the eligibility requirements of such plan and that such plan continues to be made
available by GTECH.
(c) Notwithstanding the foregoing, GTECH shall not be obliged to continue medical insurance
for Executive after expiration of the Term (except to the extent expressly provided in Section
9(d)) if and, to the extent Executive qualifies for medical insurance benefits with Family coverage
from a successor employer,
4. Annual Executive Perquisite Compensation Contribution. GTECH shall make a $70,000
annual contribution to Executive for each year of the Term, payable annually no later than January
15 of the following year.
5. 401(k) Plan. Executive shall be entitled to participate in GTECH’s 401(k) or
similar retirement plan in a manner similar to other Senior Executives.
6. Executive Tax Preparation. Executive shall be entitled to tax preparation and
financial planning services, at GTECH’s expense, up to a maximum annual expense of $5,000.00.
7. Language Training. If determined by the Chief Executive Officer of GTECH to be
necessary for performance of Executive’s responsibilities hereunder, GTECH shall provide Executive
with Italian language training.
APPENDIX B
Investment Control Agreement
