Exhibit 10.3
SEVERANCE AGREEMENT AND RELEASE
This SEVERANCE AGREEMENT AND RELEASE ("Agreement") is made as of this 21st day
of December, 2001, by and among GTECH Holdings Corporation, GTECH Corporation,
together with their respective direct and indirect subsidiaries and affiliates
and any of their respective officers, directors or employees (collectively
"GTECH" or the "Company") and Xx. Xxxx-Xxxxxx Xxxxxxxx ("Xx. Xxxxxxxx").
WITNESSETH:
WHEREAS, Xx. Xxxxxxxx has been employed by GTECH since August, 1998, as
Senior Vice President of Worldwide Sales and Business Development; and
WHEREAS, GTECH has sought for its own convenience that Xx. Xxxxxxxx and
GTECH sever their relationship; and
WHEREAS, the parties wish to set forth their agreement respecting the
terms and conditions thereof.
NOW, THEREFORE, the parties hereby agree as follows:
1. Termination of Employment. It is hereby agreed that Xx. Xxxxxxxx'
employment terminates effective May 2, 2002 (the "Separation Date").
2. Continuation of Base Salary. (a) In furtherance of GTECH's obligations
to Xx. Xxxxxxxx under the Separation Agreement, GTECH shall continue Xx.
Xxxxxxxx' base salary as of the Separation Date (annualized at $285,500.00),
subject to all applicable deductions, for a period that shall end ten (10)
months from the Separation Date.
(b) These payments and the other benefits provided for in this Agreement
constitute the entire obligation of GTECH, represent full and complete
satisfaction by GTECH of all obligations under the Separation Agreement and any
severance policy, and constitute full and complete settlement of any claim under
law or equity that Xx. Xxxxxxxx might otherwise assert against GTECH for
compensation, benefits or remuneration of any form.
3. Benefits. From and after the Separation Date, Xx. Xxxxxxxx shall not
be eligible for any GTECH benefits or perquisites, and shall no longer be
eligible to participate in any GTECH benefit program or plan, except as
expressly set forth below:
a. GTECH shall (i) for a period of ten (10) months following the
Separation Date, or until Xx. Xxxxxxxx' earlier death, and subject to continued
employee contributions at levels equal to those existing as of the Separation
Date, continue to provide Xx. Xxxxxxxx with the life insurance policy in effect
as of the Separation Date ("Life Insurance Coverage"), and (ii) for a period of
ten (10) months
following the Separation Date, and subject to continued employee contributions
at levels equal to those existing as of the Separation Date, continue to provide
the health insurance currently provided to Xx. Xxxxxxxx as of the Separation
Date. Thereafter, GTECH will respect Xx. Xxxxxxxx'x rights, if any, to continued
coverage at his own expense under the Consolidated Omnibus Budget Reconciliation
Act (COBRA).
b. GTECH shall pay to Xx. Xxxxxxxx his accrued but unused vacation pay
during the pay period following the Separation Date.
c. In the event that profit sharing is awarded, Xx. Xxxxxxxx shall be
eligible for a contribution under the 2000 Supplemental Retirement Plan for FYE
2002 and through the severance period. If profit sharing is not awarded, there
will be no Supplemental Retirement Plan payment.
d. Xx. Xxxxxxxx shall have full use of his Perquisite Account for calendar
year 2002, and shall be eligible for consideration for a CMIP bonus at 90% of
base salary with no requirement to take any portion of the bonus in restricted
stock. Xx. Xxxxxxxx will be automatically entitled to such CMIP bonus in the
event that GTECH distributes or commits to distribute such bonus to any of the
other senior vice presidents employed by GTECH for all or a portion of fiscal
year 2002.
e. GTECH shall continue to provide Xx. Xxxxxxxx with his current car
allowance, of $1,250.00 per month, subject to all applicable deductions, for a
period of ten (10) months from the Separation Date.
f. Xx. Xxxxxxxx shall be entitled to an Annual Executive Physical
Examination for calendar year 2001, and an Annual Executive Physical for
calendar year 2002, both of which must be taken prior to May 2, 2002; and shall
be entitled to Executive Tax Preparation fees in calendar years 2002 and 2003,
provided such amount does not exceed $5,000.00 per year.
g. Within 30 days of the Separation Date, GTECH agrees to buy back Xx.
Xxxxxxxx'x house, including furniture and accessories purchased prior to August
28, 2001, or furniture and accessories purchased after August 28, 2001, where
Xx. Xxxxxxxx had entered into a binding agreement to purchase such furniture and
accessories prior to August 28, 2001. Xx. Xxxxxxxx may also complete, and will
be reimbursed by GTECH for, any improvements and fixtures which have already
been planned or initiated, with materials and workmanship of a quality
comparable to the materials and workmanship of the house on the date hereof. The
buyback is at the option of Xx. Xxxxxxxx and will be based on the actual
purchase prices, which must be documented by contemporaneous receipts and
closing documents. The closing will take place no later than thirty (30) days
from the date on which Xx. Xxxxxxxx gives GTECH notice that he wishes to
exercise such option.
h. Xx. Xxxxxxxx will be entitled to continue making contributions, up
to the maximum allowable amount, to GTECH's 401(k) retirement plan through
May 2, 2002, with contemporaneous maximum matching contributions by GTECH, in
accordance with Xx. Xxxxxxxx' and GTECH's past practice.
4. Continuing Obligations. Xx. Xxxxxxxx further covenants with GTECH as
follows:
a. For a period of three years after the Separation Date, Xx. Xxxxxxxx,
upon reasonable notice, shall furnish such information and proper assistance to
the Company as may reasonably be required in connection with any third party
claims, investigations, litigation or similar proceedings that may involve the
Company with respect to the period of Xx. Xxxxxxxx' employment with the Company.
If such information or assistance is required, Xx. Xxxxxxxx shall be reimbursed
by the Company upon presentation of actual receipts for any and all reasonable
expenses incurred by him in providing such information and assistance and shall
be compensated by the Company at a reasonable hourly rate to be agreed upon by
the parties for the time he spends providing such information and assistance.
b. Xx. Xxxxxxxx shall not knowingly use for his own benefit or disclose or
reveal to any unauthorized person any trade secret or other confidential
information relating to the Company, 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, or other information relating to the business of the Company,
provided that such restriction on additional information shall not apply to
information which is (i) proven to be generally available in the industry, (ii)
disclosed in published literature, (iii) obtained by Xx. Xxxxxxxx after the
Separation Date from a third party without binder of secrecy, or (iv) required
to be disclosed by Xx. Xxxxxxxx by court order or other process of law, provided
however, that Xx. Xxxxxxxx shall to the extent the circumstances allow, provide
the Company with prior written notice of such requirement and with the
opportunity to assist in opposing such court order or other process of law. Xx.
Xxxxxxxx agrees that, except as otherwise agreed by the Company, he will return
to the Company, promptly upon request, any physical embodiment of such
confidential information.
c. 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 Xx.
Xxxxxxxx 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, are owned by the Company, and Xx. Xxxxxxxx agrees to execute
instruments or documents, provide evidence and testimony, and to otherwise
assist the Company in establishing, enforcing and maintaining such rights, title
and interest of the Company.
d. At GTECH's request, Xx. Xxxxxxxx will continue to serve as a member of
the Board of Directors of GTECH and/or the subsidiaries and affiliates of GTECH
listed on the attached schedule (collectively, the "GTECH Boards"), until the
earlier of: (i) May 2, 2002; or (ii) the date on which the shareholders or
members of the Boards of Directors of such corporations, as applicable, elect or
appoint his successor. GTECH will use all reasonable efforts to locate and
caused to be elected or appointed, as applicable, a replacement for Xx. Xxxxxxxx
on such boards as soon as practicable.
5. Release.
5.1 Release by Xx. Xxxxxxxx. Xx. Xxxxxxxx acknowledges that the payments
and benefits
provided in paragraphs 2 and 3 of this Agreement are greater than any to which
he may have otherwise been entitled under any existing Company separation,
benefit or compensation policy. In consideration of the foregoing, Xx. Xxxxxxxx
hereby releases and forever discharges GTECH, its present and former directors,
officers, employees, agents, subsidiaries, shareholders, successors and assigns
from any and all liabilities, causes of action, debts, claims and demands
(including without limitation claims and demands for monetary payment) both in
law and in equity, known or unknown, fixed or contingent, which he may have or
claim to have based upon or in any way related to employment (as an officer,
director or employee), rights or entitlements related thereto or termination of
such employment by GTECH and hereby covenants not to file a lawsuit, judicial
action or court complaint to assert such claims. This includes but is not
limited to claims of breach of contract and wrongful termination and claims
arising under the federal Age Discrimination in Employment Act of 1967, as
amended, and any other federal, state or local laws prohibiting employment
discrimination, or claims growing out of any legal restrictions on GTECH's right
to terminate its employees. This Release does not limit Xx. Xxxxxxxx'x right to
file, cooperate with or participate in an age discrimination proceeding before a
state or federal fair employment practices agency provided Xx. Xxxxxxxx does not
recover any monetary benefits in such proceeding.
5.2 Indemnification by GTECH. In consideration of the release provided for
in Section 5.1 hereof, and the agreement by Xx. Xxxxxxxx pursuant to Section
4.d, above, to continue to serve as a member of the GTECH Boards, GTECH agrees
to indemnify Xx. Xxxxxxxx, at a minimum to the fullest extent permissible under
Delaware corporate law, and to hold Xx. Xxxxxxxx harmless from and against, any
and all claims, demands, actions, causes of action, liabilities, damages, losses
and expenses (including fees and expenses of counsel) of any kind or nature
whatsoever that Xx. Xxxxxxxx may sustain or suffer: (i) as a result of a breach
of any representation, warranty or covenant made by GTECH in this agreement; or
(ii) by reason of any claim, action or other proceeding asserted or instituted
against Xx. Xxxxxxxx (a) in his capacity as or because of his status as a member
of any of the GTECH Boards, or (b) in connection with his employment by GTECH,
or his status as an employee of GTECH, specifically excluding, however, any
conduct of Xx. Xxxxxxxx at issue in any such claim, action or proceeding which
is proved to have been outside the scope, as applicable, of his fiduciary duty
as a director of any of the GTECH Boards or the scope of his employment as an
employee of GTECH.
6. Advice of Counsel. Xx. Xxxxxxxx understands that various State and Federal
laws prohibit employment discrimination based on age, sex, race, color, national
origin, religion, disability or veteran status. These laws are enforced through
the Equal Employment Opportunity Commission (EEOC), Department of Labor and
state human rights agencies. Xx. Xxxxxxxx acknowledges that he has been advised
by GTECH 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.
7. Non-Competition and Other Restrictions. Xx. Xxxxxxxx further covenants
with GTECH as follows and expressly agrees that all payments and benefits due
to him under this Agreement are subject to his compliance with the following
provisions.
a. For ten (10) months after the Separation Date, Xx. Xxxxxxxx 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 the Lottery and Gaming
Business (as defined below). As used herein, the "Lottery and Gaming Business"
shall mean the provision of products or services of every nature relating to the
operation of all manner of lotteries, games of chance and parimutuel wagering
however and wherever conducted, excluding, however, the products and services
currently provided by Oberthur Gaming Technologies ("OGT"), formerly known as
BABN Technologies, and excluding also the products and services of Jenosys
Technologies Inc. ("Jenosys"). Xx. Xxxxxxxx shall not be deemed to have violated
this Section 7(a) merely by virtue of employment by a non-competitive division
or subsidiary of a business entity or consolidated group that includes one or
more divisions or subsidiaries that does in fact compete with a business carried
on by GTECH, nor shall he be precluded from: (i) involvement in any internet
business as long as the business is not the Lottery and Gaming Business; or (ii)
employment in any capacity by and/or service on the Board of Directors of,
Jenosys and/or OGT (except as otherwise limited by this section), or any
business providing products or services like those currently provided by OGT.
Xx. Xxxxxxxx'x 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 engaged in the
Lottery and Gaming Business shall not by itself be deemed to constitute
engagement by Xx. Xxxxxxxx.
b. Further, for a period of ten (10) months after the Separation Date, Xx.
Xxxxxxxx shall not (i) disturb or interfere with any business relationship
between the Company and any of its employees, dealers, customers, suppliers or
other business associates, or (ii) solicit or cause to be solicited any officer,
employee, customer or shareholder of the Company to terminate such person's
relationship with the Company.
c. Xx. Xxxxxxxx recognizes that the possible restrictions on Xx.
Xxxxxxxx'x activities which may occur as a result of his performance of his
obligations under this Section 7 and Section 4 are required for the reasonable
protection of GTECH and its investments, and Xx. Xxxxxxxx expressly acknowledges
that such restrictions are fair and reasonable for that purpose. Xx. Xxxxxxxx
further expressly acknowledges that damages alone will be an inadequate remedy
for any breach or violation of any of the provisions of this Section 7 and
Section 4, and that GTECH, in addition to all other remedies hereunder and at
law or equity, shall be entitled, as a matter of right, to injunctive relief,
including specific performance, with respect to any such breach or violation, in
any court of competent jurisdiction. If any of the provisions of this Section 7
are held to be in any respect an unreasonable restriction upon Xx. Xxxxxxxx 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.
8. Return of Property. Xx. Xxxxxxxx shall return to GTECH by the
Separation Date any GTECH property in his possession, custody or control.
9. Comments. Xx. Xxxxxxxx shall at no time make or cause to be made any
derogatory or disparaging comments regarding GTECH, its business, or its
present or past directors, officers or
employees.
10. Tax Withholding. The Company may withhold from any compensation or
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.
11. 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 GTECH or Xx. Xxxxxxxx.
12. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid and
unenforceable provisions were omitted.
13. Non-assignability. (a) Neither this Agreement nor any rights or
interest hereunder shall be assignable by Xx. Xxxxxxxx, his beneficiaries, or
legal representatives without GTECH's prior written consent.
(b) This Agreement shall be binding upon, and accrue to the benefit of,
Xx. Xxxxxxxx and the Company and their respective heirs, executors,
administrators, successors and permitted assigns, including, in the case of
GTECH, any person or entity acquiring all or substantially all of the assets.
14. Governing Law. This Agreement is made pursuant to and shall be governed by
the laws of the State of Rhode Island, without regard to its rules regarding
conflict of laws. In any dispute concerning this Agreement, the non-prevailing
party shall pay the prevailing party's reasonable attorney's fees and costs,
together with interest on any unpaid amount due at the rate of twelve percent
per annum (but not in excess of the highest rate allowed by law).
15. Entire Agreement. This Agreement contains the entire understanding
between Xx. Xxxxxxxx and GTECH regarding the subject matter hereof and,
except as expressly set forth herein, supersedes any prior agreements,
written or oral.
16. Stock Options and Certain Other Benefits. Xx. Xxxxxxxx'x entitlement
to any options shall be exercised in accordance with the applicable Stock
Option Plans. Additionally, stock options scheduled to vest before May 2,
2002 may be exercised for a period of one year from the Separation Date in
accordance with his existing stock option agreement.
17. Change in Control Agreement. Reference is made to the Agreement
between GTECH Holdings Corporation ("Holdings") and Xx. Xxxxxxxx dated
October 13, 1998 (the "CIC Agreement").
a. Anything in this Agreement to the contrary notwithstanding, in the
event a "Change in Control" (as that term is defined in CIC Agreement) occurs
after the effective date of this Agreement and on or before May 1, 2002, the CIC
Agreement shall take effect in accordance with its terms, and the absolute value
of all payments paid and other benefits provided to Xx. Xxxxxxxx under this
Agreement (other than salary payments and health insurance benefits for the
period prior to the Separation Date) shall be subtracted from any payments and
benefits due to Xx. Xxxxxxxx under the CIC Agreement.
b. In the event a "Change in Control" (as that term is defined in CIC
Agreement) occurs after the effective date of this Agreement and on or after May
1, 2002, the CIC agreement shall no longer be in effect and Xx. Xxxxxxxx shall
not be entitled to any payments or benefits due under the CIC Agreement.
18. Modification. This Agreement may not be changed orally but only by an
instrument in writing signed by the parties hereto. Xx. Xxxxxxxx
acknowledges that he has not relied upon any representation or statement,
written or oral, not set forth in this Agreement.
19. Revocation; Effective Date. Xx. Xxxxxxxx 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 GTECH. This Agreement shall become
effective upon the expiration of the Revocation Period.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
set forth below.
GTECH Holdings Corporation Attest:
By:
------------------------
Date:
GTECH Corporation Attest:
By:
------------------------ -----------------------------
Date:
Witness:
------------------------ ------------------------------
Xx. Xxxx-Xxxxxx Xxxxxxxx
Date:
