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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of August
2nd,
2005, by and between GTECH HOLDINGS
CORPORATION AND GTECH CORPORATION, each a
Delaware corporation (collectively, the
"Company"), and W. BRUCE TURNER
("Executive").
WHEREAS,
pursuant to an employment agreement dated as of August 2, 2002
(the "Original Employment Agreement"),
Executive is employed by the Company as
Chief Executive Officer and President.
WHEREAS,
the Company and Executive desire to amend certain provisions of
the Original Employment Agreement and to
restate the Original Employment
Agreement in its entirety.
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 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 Holdings Corporation.
"CAUSE"
means any of the following:
(i) any
negligent and/or willful failure by Executive to
substantially perform his duties;
(ii) Executive's
engaging in serious misconduct which is injurious
to the Company or breaching any of the Company'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 the
Company) as from time to time implemented by the Company;
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(iii) any material breach by Executive of the terms of Sections
4(c), 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 his 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
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 30% or more of the combined voting power of the
Company's then outstanding securities;
(ii) the stockholders
of the Company shall approve a definitive
agreement (1) for the merger or other business combination of
the Company with or into another corporation if (A) 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
immediately prior to the effective date of such merger own
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
(iii) the purchase of 30% or more of the Common Stock 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 Company, any of its Affiliates, or
any employee benefit plan of the Company or any of its
Affiliates.
"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 the Company is terminated
by the Company 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 Compensation Committee of the Board.
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"COMMON
STOCK" means the Common Stock, par value $.01 per share, of the
Company.
"DISABILITY" means the inability (as determined by the Board in its
sole
discretion after affording Executive a
reasonable opportunity to present his
case) of Executive to render his
agreed-upon, full-time services to the Company
due to physical and/or mental
infirmity.
"EFFECTIVE
DATE" means August 6, 2005.
"EXPIRATION DATE" means the latest date upon which stock option
granted to
Executive would be exercisable under its
grant terms if Employee had remained
employed with the Company though 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, responsibilities and/or
reporting relationship 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
failure to pay Executive any amounts otherwise
vested and due hereunder or under any plan or policy of the
Company;
(iii) a reduction in the title of Executive or in the
authorities,
duties or responsibilities of Executive except that the loss
of the title of President shall not be "Good Reason" as set
forth herein;
(iv) any material
breach of this Agreement by the Company;
(v) the failure
to extend this Agreement (for a minimum of one
year on the same or better terms respecting annual cash
compensation and benefits, excluding one time awards of
restricted stock or stock options, other one-time benefits
such as relocation benefits, and any other benefits which have
been changed with respect to Senior Executives generally) at
least 90 days prior to the end of the Term or the end of any
extended term, as the case may be; or
(vi) the failure by
the Company to renominate Executive as a
director at the expiration of his current term as director.
"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, including
the portion of the Performance Bonus paid
in stock equivalent (but excluding the
portion of the stock award representing a
discount beyond the cash equivalent
made in conjunction with the payment of the
Performance Bonus).
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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 the
Company.
"RETIREMENT" means Executive's termination of his employment when
the sum
of Executive's age and years of continuous
full-time employment with the Company
or any Affiliate total to 65 or more.
"RETIREMENT FACTOR" means the sum of Executive's age and years
of
continuous full-time employment with the
Company or any Affiliate at the time of
Executive's Retirement.
"SENIOR
EXECUTIVES" means such executives of the Company as constitute,
from time-to-time, the "executive officers"
of the Company within the meaning of
Regulation Section 240.3b-7 issued under
the Act.
"STOCK OWNERSHIP
REQUIREMENTS" mean with respect to Executive, holding
Common Stock having a fair market value of
at least two (2) times his Base
Salary.
2.
EMPLOYMENT
OF EXECUTIVE.
The
Company hereby agrees to employ Executive, and Executive agrees to
be
employed by the Company, to render services
to the Company 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 Effective
Date, and shall continue for a term of
three 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 9 hereof.
4.
POSITION
AND DUTIES.
(a) Position. During the Term, Executive shall be retained and
shall
serve as Chief Executive Officer and
President of the Company. During the Term,
Executive also agrees to serve, if elected,
as a director and/or officer of any
subsidiary or Affiliate of the Company.
(b) Duties. During the Term, Executive shall have the authority
and
power to perform such duties consistent
with his positions as Chief Executive
Officer and President as designated by the
Board, and shall report only to the
Board or any committees thereof at the
request of the Board. Executive shall not
be required without his consent to
undertake responsibilities not commensurate
with his position. Executive shall comply
fully and promptly
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with the various policies, procedures and
rules governing employees promulgated
and/or as amended from time to time by the
Company and any applicable subsidiary
or Affiliate of the Company (including,
without limitation, the Company's Code
of Conduct and Government Affairs Policies
and Procedures) and with any
applicable disclosure and other
requirements of any governmental authority and
of any other entity with which the Company,
its subsidiaries and Affiliates are
doing or propose to do business. Except for
illness, vacations, and holidays in
accordance with then-current Company
policy, and (subject to the approval of the
Board) reasonable leaves of absence,
Executive shall devote his full business
time, attention, skill, undivided loyalty
and best efforts to the faithful
performance of his 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 Chairman of the Board,
serve (and retain any compensation with
respect to such service) on corporate,
civic and charitable boards and committees,
(ii) deliver lectures and fulfill
speaking engagements, and (iii) manage
personal investments.
(c) Principal Place of Employment. Executive's principal place
of
employment shall be at the Company's
principal executive offices (currently
located in West Greenwich, Rhode Island) or
at such other location as the
Company hereafter reasonably may require.
Executive agrees to reside in Rhode
Island, as long as the Company's principal
executive offices or such offices of
a successor company to the Company remain
in Rhode Island.
(d) Nomination as Director. Assuming the Term has not been
terminated, the Board agrees to nominate
Executive for reelection as director at
the Company's 2006 Annual Meeting, at which
time Executive's current term as a
director is scheduled to expire, and
Executive agrees, subject to Section 8(d)
hereof, to continue to serve as a director
if elected.
5.
COMPENSATION AND REIMBURSEMENT OF EXPENSES
(a) Base Salary. For all services rendered by Executive in all
capacities with the Company, its
subsidiaries and Affiliates during the Term,
the Company shall pay or cause to be paid
to Executive as compensation a salary
at an annual rate of $750,000 (the "Base
Salary"), payable in equal installments
not less frequently than monthly through
the Company's standard payroll
practices.
(b) Performance Bonus.
(i) With respect to each fiscal year of the Company during the
Term, Executive shall be eligible to earn a
Performance Bonus at the discretion
of the Committee. The amount of the
Performance Bonus, if any, for a given
fiscal year shall be recommended by the
Committee and determined by the Board in
accordance with the performance metrics and
business objectives included in the
GTECH Management Incentive Plan as approved
annually by the Board in its sole
discretion for all Senior Executives. 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 200%
of Base Salary. The annual target
Performance Bonus will be 100% of Base
Salary.
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(ii) Any Performance Bonus awarded to Executive shall be paid
not later than 30 days following payment of
bonus amounts to Senior Executives.
Bonus payments for GTECH are normally made
in April/May of each year for the
preceding fiscal year ending in February,
and Executive shall receive his
Performance Bonus not later than June 15
for such preceding fiscal year.
Executive's Performance Bonus, if any, for
any given fiscal year shall be paid
by the Company in a mix of cash and
discounted restricted stock, at the
discretion of the Board, which shall
determine annually (a) the maximum amount
of bonus required to be paid in discounted
restricted stock, not to exceed 30%
of the Performance Bonus, (b) the magnitude
of the discount, and (c) the vesting
terms under the Omnibus Stock Plan for
GTECH, it being understood that the
portion of the Performance Bonus paid in
stock in lieu of the cash payment shall
vest immediately, subject to transfer
restrictions as established by the Board
that apply generally to performance bonus
stock awards for other Senior
Executives, and the portion of any stock
award representing a discount beyond
the Performance Bonus equivalent shall
cliff vest as established by the Board.
Notwithstanding anything in this Section
5(b)(ii) to the contrary, Executive
shall have the right to have up to 100% of
the Performance Bonus with respect to
a fiscal year paid in the form of
discounted restricted stock by giving written
notice to the Company within the thirty
(30) day period prior to the end of a
fiscal year of his exercise of such right
with respect to such upcoming fiscal
year.
(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 the
Company for any reason other than Cause, or
in the event Executive resigns for
Good Reason. within eighteen months after
the Change of Control Date, the
Company 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 the
Executive and contributed by the Company
on Executive's behalf to the Company'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 the Executive from the Company for
the three (3) most recent full fiscal years
of the Company, plus (C) the maximum
amount allowable under the Executive
Perquisite Program during the most recent
calendar year of the Company. In addition,
Company shall pay Executive within 10
days after such termination (i) his 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.
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(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 the Company
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
the Company, until the fourth anniversary
of termination, plus any extension
earned pursuant to Section 3 of Appendix A
to this Agreement. Executive will
also become fully vested in the retirement
plans, and all non-qualified plans,
and within thirty (30) days of Executive's
termination of employment, Company
shall pay to Executive the sum of (i) all
benefits accrued under the
Non-Qualified Plans and (ii) an amount
equal to 2.99 times the average benefit
accrued and/or Company contributions made
to the retirement plans and the
non-qualified plans over the last three
fiscal years prior to termination.
(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 to or for the benefit
of the 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 the 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"), then the Executive shall be
entitled to receive an additional payment
(a "Gross-Up Payment") in an amount
such that after payment by the 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, the Executive retains an
amount of the Gross-Up Payment equal to the
Excise Tax imposed on the Payments.
(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 the
Executive (the "Accounting Firm") which
shall provide detailed supporting
calculations both to the Company and the
Executive within 15 business days of
the receipt of notice from the Executive
that there has been a Payment, or such
earlier time as is requested by the
Company. In the event that the Accounting
Firm is serving as accountant or auditor
for the individual, entity or group
effecting the Change in Control, the
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 the Company.
Any Gross-Up Payment, as determined
pursuant to this Section 5(c), shall be paid
by the Company to the 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 the Company and
the 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 Finn hereunder, it is possible
that Gross-Up Payments which will not
have been made by the Company should have
been made ("Underpayment"), consistent
with the calculations required to
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be made hereunder. In the event that the
Company exhausts its remedies and the
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 the Company to or for the
benefit of the Executive (so as to fully
extinguish Executive's tax liability
for the Payments including all interest and
penalties).
(v) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that,
if successful, would require the
payment by the Company of the Gross-Up
Payment. Such notification shall be given
as soon as practicable but no later than
ten business days after the Executive
is informed in writing of such claim and
shall apprise the Company of the nature
of such claim and the date on which such
claim is requested to be paid. The
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 the Company (or such
shorter period ending on the date that any
payment of taxes with respect to such
claim is due). If the Company notifies the
Executive in writing prior to the
expiration of such period that it desires
to contest such claim, the Executive
shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company 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 the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company 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 the 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), the Company 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
the Executive to pay the tax claimed and
sue for a refund or contest the claim
in any permissible manner, and the
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 the Company shall
determine; provided, however, that if the
Company directs the Executive to pay
such claim and sue for a refund, the
Company shall advance the amount of such
payment to the Executive, on an
interest-free basis and shall indemnify and hold
the 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
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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
the Executive with respect to which
such contested amount is claimed to be due
is limited solely to such contested
amount. Furthermore, the Company's control
of the contest shall be limited to
issues with respect to which a Gross-Up
Payment would be payable hereunder and
the 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.
(vi) If,
after the receipt by the Executive of an amount
advanced by the Company pursuant to Section
5(c), the Executive becomes entitled
to receive any refund with respect to such
claim, the Executive shall (subject
to the Company's complying with the
requirements of Section 5(c)) promptly pay
to the Company the amount of such refund
(together with any interest paid or
credited thereon after taxes applicable
thereto). If, after the receipt by the
Executive of an amount advanced by the
Company pursuant to Sect
