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EXHIBIT 10.6
SEVERANCE AGREEMENT AND RELEASE
This
Severance Agreement and Release (this "Agreement") is made as of
the
24th day of NOVEMBER, 2004,
by and among GTECH HOLDINGS CORPORATION
("Holdings"), GTECH
Corporation ("GTECH Corporation" and together with
Holdings
and their respective direct
and indirect subsidiaries and affiliates,
collectively, "GTECH" or the
"Company") and KATHLEEN MCKEOUGH ("Ms. McKeough",
and together with GTECH,
sometimes referred to collectively as the "Parties").
WITNESSETH:
WHEREAS,
Ms. McKeough has been employed by GTECH since May 2000 as
its
Senior Vice President of
Human Resources; and
WHEREAS,
GTECH has sought for its own convenience that Ms. McKeough
and
GTECH sever their
relationship and Ms. McKeough has sought to sever her
relationship as an employee
and officer of GTECH; and
WHEREAS,
the parties entered into a Separation Agreement dated June
28,
2000 (the "Separation
Agreement") detailing the rights and obligations of the
parties upon Ms. McKeough's
separation from employment with GTECH; 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: (a) Ms.
McKeough's
employment terminates
effective December 31, 2004 (the "Termination Date"),
and
(b) as of the Termination
Date, Ms. McKeough shall no longer serve as: (i) an
employee of Holdings; (ii) an
employee of GTECH Corporation; or (iii) an
employee or director of any
direct or indirect subsidiary or other affiliate of
GTECH. Notwithstanding the
foregoing, except as GTECH may otherwise request, Ms.
McKeough will not be required
to report to GTECH's offices after December 3,
2004. Additionally, Ms.
McKeough shall cease to be an officer of GTECH
(including any direct or
indirect subsidiary or other affiliate of GTECH)
effective on November 30,
2004.
2.
CONTINUATION OF BASE SALARY. (a) For the period commencing January
1,
2005 through December 31,
2005 (the "Post-Termination Period"), GTECH shall
continue to pay Ms. McKeough
her base salary as of the Termination Date
(annualized at $280,000.00),
subject to all applicable deductions and otherwise
in accordance with GTECH's
normal payroll practices. In the event of Ms.
McKeough's death, any
remaining severance payments to which she would have
been
entitled under this Agreement
will be made to her estate.
(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
constitute full and complete
settlement of any
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claim under law or equity
that Ms. McKeough might otherwise assert against GTECH
for compensation, benefits or
remuneration of any form.
3.
BENEFITS. From and after the Termination Date, Ms. McKeough shall
not
be eligible for any GTECH
benefits or perquisites (including, without
limitation, any management
incentive bonus with respect to GTECH's 2005 fiscal
year), and shall no longer be
eligible to participate in any GTECH benefit
program or plan, except as
expressly set forth below:
(a) During
the Post-Termination Period, or until Ms. McKeough's
earlier
death, and subject to payment
by Ms. McKeough of the employee contribution
portion of the applicable
monthly benefits cost, GTECH shall continue to provide
Ms. McKeough with the life
insurance coverage, and the medical, dental and
vision coverage, and
accidental death and dismemberment insurance, available
under Company
plans.
(b)
Commencing on January 1, 2006, GTECH will respect Ms.
McKeough's
rights, if any, to continued
coverage at her own expense under the Consolidated
Omnibus Budget Reconciliation
Act ("COBRA") through June 30, 2007.
(c)
Commencing on January 1, 2006 (or if Ms. McKeough shall have
elected
to continue coverage at her
own expense under COBRA, upon the termination of the
period of such COBRA
coverage), GTECH shall permit Ms. McKeough to
participate
in GTECH's Retiree Benefits
Plan at her own expense.
(d) On or
before January 15, 2005, GTECH shall pay to Ms. McKeough
an
amount equal to the value,
calculated in accordance with GTECH's standard
policy, of Ms. McKeough's
accrued but unused vacation as of the Termination
Date.
(e) GTECH
shall pay, or reimburse Ms. McKeough, in accordance with
GTECH's
standard policy for one
executive physical examination provided that such
physical is performed prior
to June 1, 2005.
(f) Ms.
McKeough and GTECH are parties to certain Restricted
Stock
Agreements and Non-Qualified
Stock Option Agreements that are described on
Exhibit A attached hereto and
made a part hereof. The Restricted Stock
Agreements and the
Non-Qualified Stock Option Agreements are collectively
referred to as the
"Executive's Stock Related Agreements". The Parties
hereby
agree that the Executive's
Stock Related Agreements are amended with effect from
the date of this Agreement:
(i) to provide for the immediate vesting of such
stock options, and shares of
restricted stock, granted under the Executive's
Stock Related Agreements that
are specifically identified on Exhibit A; and (ii)
to provide that all of Ms.
McKeough's rights to exercise options to acquire
stock under the Executive's
Stock Related Agreements shall expire on June 30,
2005. The Parties hereby
agree that Exhibit A fully and accurately sets forth
with respect to the
Executive's Stock-Related Agreements, as amended hereby:
(A)
with respect to the options,
the grant date, the number of options granted, the
grant price and the number of
options for which vesting is accelerated as of the
Termination Date; and (B)
with respect to the restricted stock, the award date,
the number of shares awarded,
the number of shares forfeited under plan rules
and the number of shares for
which vesting has been accelerated as of the
Termination Date. Except as
expressly provided herein, nothing in this Agreement
is intended to amend or alter
the Executive's Stock Related Agreements, which
remain in full force and
effect
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in accordance with their
terms (including, without limitation, the restrictions
on the transfer of shares
contained therein).
(g) On or
before May 1, 2005, GTECH shall pay to Ms. McKeough $55,000,
in
accordance with GTECH's
Executive Perquisites Program.
4.
CONTINUING OBLIGATIONS. Ms. McKeough further covenants with GTECH
as
follows:
(a) For a
period of three years after the Termination Date, Ms.
McKeough,
upon reasonable notice, shall
furnish such information and proper assistance to
GTECH as may reasonably be
required in connection with any third party claims,
investigations, litigation or
similar proceedings which may involve GTECH with
respect to the period of Ms.
McKeough's employment with GTECH. GTECH shall
reimburse Ms. McKeough for
all reasonable expenses including, but not limited
to, travel costs associated
with fulfilling her duty of cooperation under this
Section 4(a).
(b) Ms.
McKeough shall not knowingly use for her own benefit or
disclose
or reveal to any unauthorized
person any trade secret or other confidential
information relating to
GTECH, including, without limitation, 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 GTECH,
provided that such
restriction shall not apply to information which is (i)
proven to be generally
available in the industry, (ii) disclosed in published
literature, (iii) obtained by
Ms. McKeough after the Termination Date from a
third party without binder of
secrecy, or (iv) required to be disclosed by Ms.
McKeough by court order or
other process of law, provided however, that Ms.
McKeough shall to the extent
the circumstances allow, provide GTECH with prior
written notice of any such
requirement and with the opportunity to assist in
opposing such court order or
other process of law. Ms. McKeough agrees that,
except as otherwise agreed by
GTECH, she will return to GTECH, 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 Ms.
McKeough may have conceived,
created, organized, prepared or produced during the
period of her employment with
GTECH and which relate to the business of GT
