AMENDED AND RESTATED
                          EMPLOYMENT AGREEMENT


         THIS AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT,  dated  September 19,
1997, effective as of July 14, 1997, by and between GTECH Holdings  Corporation,
a  Delaware   corporation  (the  "Company"),   GTECH  Corporation,   a  Delaware
corporation (the "Subsidiary"), and William Y. O'Connor ("Executive").

         WHEREAS,  the  Company  and  Executive  are  parties  to an  Employment
Agreement   dated  October  27,  1994,  as   subsequently   amended  (the  "1994
Agreement"); and

         WHEREAS,  Executive,  the Company,  the  Subsidiary  and  Executive now
desire to amend and restate the 1994 Agreement to reflect certain changes in the
terms and provisions thereof.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants  herein  contained,  the parties  hereto hereby  covenant and agree as
follows:

         1.       Definitions.

                  Capitalized  terms used in this  Agreement  and not  otherwise
defined herein shall have the following meanings:

         "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%.

         "Base Salary" has the meaning set forth in Section 5(a)
hereof.

         "Board" means the Board of Directors of the Company.

         "Cause" means any of the following:

                  (i)      any willful and  continuing  failure by  Executive to
                           substantially perform his employment duties which has
                           a  demonstrable,   material  adverse  affect  on  the
                           Company;

                  (ii)     any  engaging by  Executive  in serious,  willful and
                           continuing  misconduct  which is  demonstratably  and
                           materially injurious to the Company, its subsidiaries
                           or Affiliates;

                  (iii)    any  willful  and  continuing   material   breach  by
                           Executive of the terms of this Agreement,  including,
                           without  limitation,  Sections 11 and 12 hereof which
                           has a  demonstrable,  material  adverse affect on the
                           Company;

                   (iv)    Executive's conviction of or pleading nolo contendere
                           to a crime  involving fraud or  misrepresentation,  a
                           gambling-related offense or a felony where such crime
                           or  offense  has  a  demonstrable,  material  adverse
                           affect on the Company; or

                   (v)     Executive's   abuse   of   illegal   drugs  or  other
                           controlled substances or his habitual intoxication;

provided  that in no event  shall  Executive's  failure  to  perform  the duties
associated  with  his  position  caused  by  a  mental  or  physical  disability
constitute Cause for his termination.

         "Change in Control" has the meaning set forth in Section
10(d) hereof.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Committee" has the meaning set forth in Section 5(a)
hereof.

         "Common Stock" means the Common Stock, par value $.01 per
share, of the Company.

         "Company" means GTECH Holdings Corporation and any
successor thereto.

         "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.

         "Executive" means William Y. O'Connor.

         "Good Reason" means any of the following events:

                  (i)      the assignment to Executive of duties,
                           responsibilities and/or reporting
                           relationship that are inconsistent, in a
                           material respect, 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) hereof);

                  (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 compensation or
                           benefits payable to Executive hereunder
                           (including without limitation any
                           compensation provided for in the
                           appendices hereto), or a material adverse
                           change in the terms or conditions on
                           which such compensation or benefits are
                           payable;

                  (iv)     a reduction in the title of Executive  from President
                           and Chief Executive  Officer of the Company or in the
                           authority, duties or responsibilities of
                           Executive;

                  (v)      if Executive's  principal  place of employment by the
                           Company  is  relocated  more than 50 miles  from West
                           Greenwich,  Rhode  Island,  or Boca  Raton,  Florida,
                           without the written consent of Executive;

                  (vi)     the events  constituting  Good  Reason  specified  in
                           Section 4(a) hereof;

                  (vii)    the failure by the Company to obtain an  agreement in
                           form  and  substance   reasonably   satisfactory   to
                           Executive  from any  successor to the business of the
                           Company  to  assume   and  agree  to   perform   this
                           Agreement; or

                  (viii)   any  material  breach by the  Company of the terms of
                           this Agreement.

         "Life  Insurance  Coverage"  has the meaning set forth in Section  9(c)
hereof and as described in Section 6(b) hereof.

         "Medical Coverage" has the meaning set forth in Section 9(c) hereof and
as described in Appendix B hereto.

         "Performance Bonus" has the meaning set forth in Section
5(b) hereof.

         "Retirement"  means retirement from active  employment with the Company
with the  express  consent  of the Board or in  accordance  with the  retirement
policies of the Company applicable to other senior executives generally.

         "Term" has the meaning set forth in Section 3 hereof.

         2.       Employment.

                  The Company hereby agrees to employ and retain Executive,  and
Executive agrees to be employed and retained 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 hereinafter set
forth.

         3.       Term.

                  The term of Executive's employment hereunder shall commence on
July 14, 1997, and shall continue in accordance with the terms of this Agreement
until terminated in accordance herewith (the "Term").

         4.       Position and Duties.

                  (a) Position. During the Term, Executive shall be retained and
shall serve as President and Chief Executive  Officer of the Company,  reporting
directly to the Board.  At such time as Guy B. Snowden steps down as Chairman of
the Board of the Company (the "Chairman"),  it is the expectation that the Board
will consider Executive as a candidate for that position to succeed Mr. Snowden.
However,  whether  Executive,  in fact,  will be  elected  by the  Board to that
position,  and if so when,  shall be in the sole  discretion  of the  Board.  If
Executive is not elected Chairman when Mr. Snowden steps down, the failure so to
elect him shall be deemed Good Reason for Executive to terminate his  employment
Term. During the Term,  Executive also agrees to serve, if elected,  as a senior
executive officer and/or director 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  those of the
President  and Chief  Executive  Officer and shall not be  required  without his
written  consent  to  undertake   responsibilities  not  commensurate  with  his
position.  If Executive becomes Chairman,  then he also shall have the authority
and power to perform the duties  consistent with such 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 the
Company and any  applicable  subsidiary or Affiliate of the Company  (including,
without  limitation,  the  Company's  Ethical  Conduct and Conflicts of Interest
Policy and Government  Relations Policy) 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 (or, if applicable, this Agreement), 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 with
the approval of the Board (which  approval shall not  unreasonably be withheld),
from time to time,  Executive may serve,  or continue to serve,  on the board of
directors  of,  and hold  any  other  offices  or  positions,  in  companies  or
organizations,  which in the Board's judgment,  will not present any conflict of
interest  with the  Company,  its  subsidiaries  or  Affiliates,  or  materially
adversely  affect  the  performance  of  Executive's  duties  pursuant  to  this
Agreement.

                  (c) Principal Place of Employment. Executive's principal place
of  employment  shall be at the  Company's  offices  (in West  Greenwich,  Rhode
Island, or in Boca Raton,  Florida) or at such other location as the Company and
Executive  mutually  may agree in  writing.  Executive  agrees to reside  within
reasonable  daily  commuting   distance  by  car  of  such  principal  place  of
employment.  The  Company  shall  not  require  Executive  to  travel  away from
Executive's principal place of employment for more than 21 consecutive days, nor
for more than an aggregate of 180 days in any year during the Term.

                  (d)  Nomination  as  Director.  Assuming the Term has not been
terminated,  the Board agrees to nominate  Executive as a candidate for election
to the Board at each of the Company's  Annual  Meetings of Shareholders at which
Executive's  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 $550,000 (the "Base Salary"), payable in equal installments
not less  frequently  than  monthly.  The Base Salary  shall be increased on the
first day of each fiscal year of the Company  commencing  with fiscal year 1999,
and each annual  anniversary  thereof (the "Annual  Adjustment Date") during the
Term at a rate equal to the annual rate of  increase,  if any, in the All Cities
Consumer Price Index for Urban Wage Earners and Clerical Workers  ("CPI-W"),  as
published by the United States Department of Labor,  Bureau of Labor Statistics,
applicable for the calendar year  immediately  preceding the  applicable  Annual
Adjustment  Date.  The Base  Salary  also shall be subject to  possible  further
increase  from  time  to  time  in  the  sole  discretion  of the  Board  or the
Compensation Committee of the Board or another Committee of the Board designated
for such  purpose  (the  "Committee").  The Base Salary  shall not be subject to
decrease.

                  (b) Performance Bonus. With respect to each fiscal year of the
Company during the Term  commencing  with fiscal year 1998,  Executive  shall be
eligible  to  earn  a  performance  bonus  of  up to a  maximum  of  four  times
Executive's Base Salary then in effect (the "Performance  Bonus"). The amount of
the Performance Bonus for a given fiscal year shall be determined using a matrix
of  selected  reasonable  quantitative  metrics yet to be  determined  but which
likely shall include Company stock price appreciation,  profit growth, return on
capital and the like.  The matrix will provide for  possible  bonus values up to
four times Base Salary.  The criteria and attainment  levels for the Performance
Bonus shall be established  each year by and in the discretion of the Committee,
and may be changed each year in the good faith discretion of the Committee.  Any
Performance  Bonus  to which  Executive  is  entitled  shall be paid at the time
executive  bonuses  customarily  are paid by the Company,  but in no event later
than 120 days  after the end of the  fiscal  year  with  respect  to which  such
Performance Bonus is payable.

                  (c)  Increase of  Compensation.  All  compensation  payable to
Executive  hereunder shall be subject to possible  further increase from time to
time in the sole discretion of the Board or the Committee.

                  (d) Certain Requirements.  Notwithstanding  anything contained
in this  Agreement  to the  contrary  (including  Sections 9 and 10 hereof),  if
Executive's  employment  hereunder has terminated for any reason,  except by the
Company for Cause or by the Executive  voluntarily  without Good Reason prior to
the end of a given fiscal year,  Executive shall receive a Performance  Bonus in
an amount  determined  by  multiplying  the average of the  Performance  Bonuses
awarded to Executive for the preceding  three years (or all years,  if less than
three years after the Term begins) by a fraction,  the numerator of which is the
number of  complete  months of such  fiscal  year  during  which  Executive  was
employed with the Company, and the denominator of which is twelve.

                  (e)  Reimbursement of Expenses.  Consistent with the Company's
established  policies,  the Company  shall pay or  reimburse  Executive  for all
reasonable  and  necessary  travel and other  expenses of Executive  incurred by
Executive  in  performing   his  duties   hereunder   upon  receipt  of  written
substantiation of such expenses.

         6.       Benefits.

                  (a) Benefit Plans.  The payments  provided in Section 5 hereof
are in  addition  to any  benefits  to which  Executive  may be, or may  become,
entitled under any benefit plan, program or arrangement  (excluding any increase
in salaries,  generally) of the Company for which senior  executives  are or may
become  eligible,   including  any  Supplemental   Retirement  Plan  for  Senior
Executives  ("SERP").  Further,  except as otherwise  expressly provided herein,
Executive  shall be entitled to receive,  during the Term,  benefits at least at
the level provided  generally to other senior  executives under any such benefit
plan, program or arrangement,  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) Term Life  Insurance.  During the Term,  the Company shall
provide  Executive  with and  shall  pay the  premium  on a policy  of term life
insurance  in the face  amount of 3.5 times his Base  Salary,  with the  primary
beneficiary to be Executive's wife, Denise Fields O'Connor.

                  (c) Stock  Options.  Executive  shall be  eligible  for annual
grants of stock options under the Company's option plans for employees, any such
grants to be in the  discretion  of the Committee  based upon its  evaluation of
Executive's performance.

                  The terms and provisions of the stock options  provided for in
Section 6(d) of the 1994  Agreement and any stock  options  granted to Executive
hereafter are and shall be as set forth in Appendix A hereto.  In addition,  the
Company expressly  acknowledges that Executive has been granted Restricted Stock
Rights  pursuant to a certain  agreement  with the Company  dated June 30, 1995.
(For the purposes of that agreement "Cause" shall be conclusively  defined as in
this Agreement.) The Company shall use its best efforts to file, and cause to be
effective under the Securities Act of 1933, as amended, a registration statement
on Form S-8 (or a comparable  form) with respect to the shares (or other rights)
of equity issued as provided for or  referenced  by the foregoing  provisions of
this  Section  6(c) or,  if  applicable,  issuable  upon  exercise  of rights so
provided for or referenced. The Company will also use its best efforts to ensure
that each grant provided for under Appendix A or referenced above shall meet the
requirements for exemption under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").

                  (d)  Certain  Specific  Benefits  and  Arrangements.   Without
limiting the  generality  of  subsection  (a) above  (except as may otherwise be
specified  in Appendix B hereto),  Executive  shall be entitled to the  specific
benefits and arrangements set forth in Appendix B hereto.

         7.       Benefits Payable During Term Upon Disability.

                  (a)  Disability  Benefits.  In  the  event  of  Disability  of
Executive  during  the  Term of his  employment  hereunder,  the  Company  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(f) 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,  the
Company,  at its election,  may terminate the Term of Executive's  employment in
which event Executive shall receive the benefits provided in Section 9(c).

                  (b)   Services   During    Disability.    During   the   Term,
notwithstanding  any  Disability,  Executive  shall,  to the  extent  that he is
physically and mentally able to do so, furnish information and assistance to the
Company,  and, in addition,  upon the reasonable request in writing on behalf of
the Board, or a senior executive  officer  designated by the Board, from time to
time,  he shall make  himself  available to the Company,  its  subsidiaries  and
Affiliates to undertake reasonable  assignments consistent with his position and
his  physical  and mental  health.  During such  period of service,  he shall be
responsible  and report to,  and shall be  subject  to the  supervision  of, the
Board, or a senior executive  officer  designated by the Board, as to the method
and manner in which he shall perform such  assignments and shall keep the Board,
or such senior executive officer, as the case may be, appropriately  informed of
his progress in each such assignment.

         8.       Termination of Employment.

                  (a)      Expiration and Earlier Termination.
Executive's Term of employment shall terminate:

                           (i)      upon the death or Retirement of Executive;

                           (ii)     at the  election of the Company in the event
                                    of  Executive's  Disability  (as provided in
                                    Section 7(a) hereof);

                           (iii)    upon  discharge  of Executive by the Company
                                    for Cause or resignation of Executive  other
                                    than for Good Reason; and

                           (iv)     upon discharge of Executive without Cause or
                                    Executive's resignation for Good Reason.

                  (b) Certain Obligations of the Company. The Company shall give
Executive not less than 60 days prior written notice of any intended termination
of  Executive's  employment  by the Company for Cause,  without  Cause or due to
Executive's  Disability.  In the event of such a proposed termination for Cause,
such notice  shall  specify the  grounds for such  termination,  and the Company
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.  However, after giving such notice, the Company may relieve Executive of
his duties on an interim  basis.  Further,  Cause shall in no event be deemed to
exist except upon a finding  reflected in a resolution of the Board  approved by
at least 75% of the  members of the Board,  whose  finding  shall not be binding
upon  or  entitled  to  any   deference  by  any  court,   arbitrator  or  other
decision-maker  ruling on this Agreement,  at a meeting of which Executive shall
have been given proper notice and at which Executive (and  Executive's  counsel)
shall have a reasonable opportunity to present Executive's case.

                  (c) Certain Obligations of Executive. Executive shall give the
Company not less than 60 days prior written  notice of any intended  termination
by Executive of Executive's employment whether for Good Reason or other than for
Good Reason. In the event of a proposed termination for Good Reason, such notice
shall  specify the grounds for such  termination,  and  Executive  shall only be
entitled to terminate his  employment  for Good Reason if the Company shall have
failed to correct  the  specified  grounds  within said  60-day  notice  period.
Executive shall not be entitled to terminate for Good Reason unless he has given
notice to the Company of his intention so to terminate  within 60 days following
the occurrence of the event alleged to constitute such Good Reason,  except that
notice of Executive's intention to terminate for the reason set forth in Section
4(a) hereof may be given  within six months of Mr.  Snowden's  stepping  down as
Chairman. After Executive provides such notice to the Company, the Company shall
have 30 days  from the date of  receipt  of such  notice to effect a cure of the
condition  constituting Good Reason, and, upon cure thereof by the Company, such
event shall no longer  constitute  Good Reason;  provided that the Company shall
only be permitted the  opportunity to cure one time during the Term (except that
the  limitation to one such  opportunity  to cure shall not apply in the case of
immaterial  reallocation  of benefits  which are provided for under Section 6(a)
hereof,  (but not under Sections 6(b),  (c), or (d)) from one type of benefit to
another).  Notwithstanding the foregoing,  in the event that Executive has given
the Company  notice of his  intention to resign for "Good  Reason" or otherwise,
the Board may elect to have such resignation become effective  immediately or at
such other date, not later than the effective  date specified in the notice,  as
the Board may determine.

                  (d)  Upon  termination  of  Executive's  Term  of  employment,
Executive (unless otherwise  requested by the Board)  concurrently  shall resign
any  directorships  which  he holds  with  the  Company,  its  subsidiaries  and
Affiliates.

         9.       Compensation, Benefits, etc. upon, and Effects
of, Termination.

                  (a) Death, Retirement, Discharge for Cause and Resignation for
Other than for Good Reason. If the Term of Executive's  employment is terminated
by  reason of his  death,  Retirement,  discharge  by the  Company  for Cause or
resignation  other than for Good  Reason,  the Company  shall pay or cause to be
paid to  Executive  or his estate or  beneficiaries,  as the case may be, at the
time such payment is due (i) his Base Salary accrued  through the effective date
of such termination at the rate in effect immediately prior to such termination,
and (ii) any other  amounts to which  Executive  is entitled  under the terms of
Sections  5 and 6  hereof  through  the  effective  date  of  such  termination.
Executive  also shall be  entitled,  to the extent  not  inconsistent  with this
Agreement, to receive such additional benefits, if any, as he may be entitled to
under the express  terms of the  applicable  benefit plans (other than bonus and
severance plans) of the Company, its subsidiaries and Affiliates.

                  (b)  Retirement  at or after  65.  If the Term of  Executive's
employment  is  terminated  by  reason  of  Executive's  Retirement  on or after
attaining  the age of 65, in addition to the payments  and benefits  provided in
subsection (a) above,  the Company shall  continue,  at its expense,  to provide
until  Executive's  death  (i)  medical  coverage  (including,  hospitalization,
dental,  orthodontic  and optical) for executive and eligible  family members at
substantially  the same level of the most  comprehensive  medical coverage as is
provided,  from time to time, to any senior executive of the Company,  with such
coverage to continue to be available after  Executive's  death to his spouse and
family members at their expense at rates  available to the Company except to the
extent such  continuation is prohibited by applicable  federal or state law, and
(ii) term life insurance as provided in Section 6(b) hereof.

                  (c)  Disability,  Discharge  Without Cause and Resignation for
Good Reason. If the Term of Executive's  employment is terminated by the Company
by reason of Executive's  Disability as provided in Section 7(a) hereof,  by the
Company  without Cause or by reason of Executive's  resignation for Good Reason,
the Company  shall pay or cause to be paid to  Executive  or his estate,  as the
case  may be,  (i) an  amount  equal  to  three  times  the  average  of each of
Executive's  Base Salary,  Performance  Bonus and payments  under the  Company's
Executive  Perquisites  Program for the prior three full fiscal years, plus (ii)
in consideration of Executive's  obligations under Section 12 hereof, the sum of
$1,500,000.  The amounts  specified  in clauses (i) and (ii) above shall be paid
within 45 days of the effective date of  termination  of Executive's  employment
pursuant to this  subsection  (c).  Further,  Executive shall be entitled to the
compensation  and benefits set forth in  subsection  (a) above,  and the Company
shall (i) for a period  of three  years  following  the  effective  date of such
termination,  or until Executive's earlier death,  continue,  at its expense, to
provide the life  insurance  specified  in Section  6(b) hereof in the amount in
effect  immediately  prior  to the  effective  date of such  termination  ("Life
Insurance  Coverage"),  (ii)  the  Company  shall  provide  Executive  with  out
placement services through a bona fide out placement organization  acceptable to
Executive  that,  at a minimum,  agrees to supply  Executive  with out placement
counseling,  a private office and administrative  support,  including  telephone
service until such time that Executive  secures suitable  employment,  and (iii)
for a period of three years following the effective date of such termination, or
until  Executive's  earlier  death,  continue to provide the medical  (including
dental,  orthodontic  and  optical)  coverage  specified in Appendix B ("Medical
Coverage")  and on the terms and  conditions so specified at  substantially  the
same level as provided to Executive and his spouse, and his dependents from time
to time, at the effective date of such termination,  and,  thereafter,  medical,
prescription  drug,  vision,  dental,  orthodontic,  etc.,  coverage  under  the
medical, prescription drug, vision, dental, orthodontic,  etc., plans applicable
to senior executives of the Company on the same terms as the most  comprehensive
medical  coverage  available to any senior  executive of the Company,  with such
coverage (together with the gross-up referred to in the last sentence of Section
4 of Appendix B hereto,  if applicable)  to continue for an additional  year (or
portion  thereof)  after  such  three-year  period  for every  year (or  portion
thereof)  Executive  is  employed  by the  Company  after the date  hereof  (the
"Continuation  Period").  Following the expiration of the  Continuation  Period,
Executive shall be entitled to whatever medical coverage, if any, as is required
to be provided by applicable law.

                  Further, upon such termination of Executive's employment,  all
restricted  stock  then held by  Executive  shall  vest and  become  immediately
transferable  free of restrictions and Executive will become fully vested in the
Company's   SERP  in   existence  as  of  the  date  hereof  and  in  any  other
non-qualified,  deferred compensation, incentive compensation or retirement plan
currently in effect or adopted by the Company subsequent to the date hereof, and
any successor plan or plans (together with the SERP, the "Non-qualified Plans").
Within 30 days after  Executive's  termination of employment,  the Company shall
pay to Executive the sum of (i) the present value of all benefits  accrued under
the  Non-qualified  Plans (as supplemented by any early  retirement  subsidies),
using  such  actuarial  assumptions  as are  then  used  to fund  the  Company's
tax-qualified  defined  benefit pension plan (or, if there is no such plan, such
actuarial factors as would reasonably be used by comparable companies in funding
defined benefit pension plans (but including, in all events, an interest rate no
greater  than the rate that would then be used by the Pension  Benefit  Guaranty
Corporation to value immediate  annuities upon plan  termination)),  and (ii) an
amount  equal to three times the average  benefit  accrued (in the case of plans
providing for accruals of identified future benefits) and Company  contributions
(in the case of other plans) made to the Company's tax-qualified defined benefit
plan and profit-sharing  and 401(k) retirement plan and the Non-qualified  Plans
over the previous three fiscal years (as supplemental by, in the case of accrued
benefits,  any  early  retirement  subsidies).  The  Company  shall  also pay to
Executive  (i) any amount in  Executive's  account  under the  Company's  profit
sharing and 401(k) plan forfeited by the Executive due to his  termination,  and
(ii) the present  value of any accrued  benefit  (as  supplemented  by any early
retirement subsidies) under any defined benefit plan of the Company forfeited by
Executive due to his termination, determined using such actuarial assumptions as
are then used to fund such plan.

                  (d) Termination of Certain Benefits Upon Reemployment.  In the
event that,  following  termination  of  Executive's  employment  as a result of
Executive's  Retirement  at or after age 65 or his  Disability,  by the  Company
without  Cause  or  by  Executive  for  Good  Reason,  Executive  secures  other
employment (including employment as a consultant) during the period in which the
Company is obligated to continue Life Insurance Coverage and/or medical coverage
under  subsections (b) and (c) above as applicable,  the Company may offset such
obligations by any life insurance  coverage or medical  coverage which Executive
receives during the applicable continuation period from a successor employer, so
long as the aggregate coverage (from the Company and the successor  employer) is
no less, as to each and every amount payable or other benefit, than the coverage
otherwise  applicable under such provisions of (b) and (c) above;  provided that
nothing  contained herein shall limit any  continuation of coverage  required by
law.  However,  subject to  subsection  (f) below,  the  securing  of such other
employment by Executive shall not affect the Company's  obligations with respect
to the  continued  payment to Executive of the other  payments  provided in this
Section 9.  Executive  shall notify the Company  promptly of his securing of any
such employment (including employment as a consultant).

                  (e) Consulting  Services by Executive.  If Executive's Term of
employment is terminated by the Company for  Disability,  by the Company without
Cause or by  Executive  for Good  Reason,  Executive,  in  consideration  of the
payments and benefits under Section 9(c) hereof,  as  applicable,  shall provide
for a period of three years  following the effective  date of termination of his
employment  hereunder,  to the extent that he is physically and mentally able to
do so,  such  reasonable  consulting  services to the Company as the Company may
from  time to  time  request;  provided  that,  unless  otherwise  agreed  to by
Executive,  such  services (i) shall not require in excess of an aggregate of 60
hours during any fiscal quarter, (ii) may be rendered by telephone and shall not
require Executive's  presence in person, and (iii) subject to Sections 11(b) and
12 hereof,  shall not preclude  Executive  from engaging in other  employment or
activities.  Such services shall be at the direction and control of the Board or
a senior executive officer designated by the Board.

                  (f)  Reductions,   Forfeitures,   etc.   Notwithstanding   the
foregoing or Section 10 hereof, (i) any payments or benefits required to be paid
or provided to  Executive  pursuant to Sections  7(a),  9(c) and 10(b) hereof on
account of Executive's Disability shall be reduced to the extent that comparable
payments or benefits are received by Executive for such  Disability  during such
period under the Company's  disability plan, as in effect from time to time, and
(ii) except as otherwise  expressly  provided herein,  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.

                  (g)  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 the Company,  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 the Company,  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 the Executive might otherwise assert against the Company,  its subsidiaries
or Affiliates,  for  compensation and benefits or any of its or their respective
directors, officers or employees on account of such termination of employment.

         10.      Change in Control, Tax Gross-up; etc.

         (a)       In the event of a Change in Control (as defined
                  in subsection (d) below):

                           (i) any and all restricted stock and restricted stock
                           rights then held by Executive  shall  thereupon fully
                           vest  and  become  immediately  transferable  free of
                           restrictions,  other  than  restrictions  imposed  by
                           applicable securities laws;

                           (ii)  (A)  any  and all  outstanding  unvested  stock
                           options  and  stock   appreciation   rights  held  by
                           Executive shall thereupon vest and become immediately
                           exercisable,   (B)  such  options  and  rights  shall
                           otherwise be  exercisable  in  accordance  with their
                           terms,  and  (C)  notwithstanding   anything  to  the
                           contrary  contained  in clause  (B),  all options and
                           stock appreciation  rights held by Executive shall be
                           exercisable  for three  years  (one year (or less for
                           incentive  stock  options)  in the  case  of  options
                           granted under the Company's 1994 Stock Option Plan to
                           the extent  required by such Plan) after  termination
                           of employment (regardless of the party initiating the
                           termination,  for any reason or no reason  (including
                           without  limitation  by  virtue  of  Cause,  death or
                           Disability)),  except  that this clause (C) shall not
                           extend the generally  applicable  term of the options
                           or rights  which is  measured  from the date of grant
                           thereof, nor shall it preclude earlier termination of
                           options,  to the extent  required,  in the event of a
                           corporate  transaction,  in  accordance  with Section
                           3(b) of the 1994 and the 1997 Stock Option Plans; and

                           (iii) any and all benefits accrued by Executive under
                           the terms of any Non-qualified  Plans shall thereupon
                           fully  vest  and  the   Company   shall   immediately
                           contribute  to a  rabbi  trust  for  the  benefit  of
                           Executive   the  full  amount  of  all  such  accrued
                           benefits  (and  the  Company  shall  make  additional
                           contributions  to such rabbi  trust equal to the full
                           amount  of  any   additional   benefits   accrued  by
                           Executive pursuant to such plans).

         (b)      In addition to the payments and benefits provided
                  in subsection (a) above, in the event of any
                  termination of Executive's employment for any of
                  the reasons set forth in Section 9(c) hereof
                  within the 24-month period following a Change in
                  Control, or if Executive shall voluntarily
                  terminate his employment at any time not earlier
                  than six months nor later than one-year following
                  a Change in Control, or if Executive's employment
                  with the Company is terminated for any of the
                  reasons set forth in 9(a) (except for Retirement)
                  in the 12-month period following a Change in
                  Control:

                           (i)      the Company shall pay or cause
                                    to be paid to Executive (or his
                                    estate, as the case may be) (A)
                                    his Base Salary accrued through
                                    the effective date of such
                                    termination, at the rate in
                                    effect immediately prior to such
                                    termination, (B) any other
                                    amounts to which Executive is
                                    entitled under the terms of
                                    Section 5 and 6 hereof through
                                    the effective date of such
                                    termination, and (C) such
                                    additional benefits, if any, as
                                    he may be entitled to under the
                                    express terms of the applicable
                                    benefit plans (other than
                                    severance plans) of the Company,
                                    its subsidiaries and Affiliates;

                           (ii)     the Company shall pay to
                                    Executive (or his estate, as the
                                    case may be) an amount equal to
                                    2.99 times the sum of (A)
                                    Executive's Base Salary, at the
                                    rate in effect immediately prior
                                    to such termination, (B) the
                                    annual amount to which he then
                                    is entitled under the Company's
                                    Executive Perquisites Program,
                                    and (C) the most recent
                                    Performance Bonus awarded to
                                    Executive, or, if higher, the
                                    Performance Bonus most recently
                                    awarded to him before the Change
                                    in Control, such amount to be
                                    paid no later than three
                                    business days after such
                                    termination;

                           (iii)    the Company shall continue for a
                                    period of four years following
                                    the effective date of such
                                    termination, or until
                                    Executive's earlier death, to
                                    provide the Life Insurance
                                    Coverage specified in Section
                                    6(b) hereof;

                           (iv)     the Company shall continue to
                                    provide for a period of four
                                    years following the effective
                                    date of such termination, the
                                    medical (including dental,
                                    orthodontic and optical)
                                    coverage specified in Appendix B
                                    hereto and on the terms and
                                    conditions so specified at
                                    substantially the same level as
                                    provided to Executive and his
                                    spouse and his eligible
                                    dependents from time to time,
                                    and following the four-year
                                    period, Executive and such other
                                    parties shall be entitled to
                                    (together with the gross-up
                                    referred to in the last sentence
                                    of Section 4 of Appendix B
                                    hereto, if applicable), lifetime
                                    medical, prescription drug,
                                    vision, dental, orthodontic,
                                    etc., coverage under the
                                    medical, prescription drug,
                                    vision, dental, orthodontic,
                                    etc., plans applicable to senior
                                    executives of the Company on the
                                    same terms as the most
                                    comprehensive medical coverage
                                    available to any senior
                                    executive of the Company;
                                    provided that the Company may
                                    offset its obligations under the
                                    foregoing provisions of this
                                    Section 10(b)(iv) by any health
                                    benefits which Executive
                                    receives during the applicable
                                    period from a successor
                                    employer, so long as the
                                    aggregate coverage (from the
                                    Company and the successor
                                    employer) is no less, as to each
                                    and every amount payable and
                                    other benefit, than the coverage
                                    otherwise applicable with
                                    respect to such period hereunder
                                    under the provisions of this
                                    Section 10(b)(iv) without regard
                                    to this proviso;

                           (v)      Executive will become fully
                                    vested in the Company's
                                    Non-qualified Plans and no later
                                    than 30 days after Executive's
                                    termination of employment, the
                                    Company shall pay to Executive
                                    the sum of (A) the present value
                                    of all benefits accrued under
                                    the Non-qualified Plans (as
                                    supplemented by any early
                                    retirement subsidies) using such
                                    actuarial assumptions as are
                                    then used to fund the Company's
                                    tax-qualified defined benefit
                                    pension plan (or, if there is no
                                    such plan, such actuarial
                                    factors as would reasonably be
                                    used by comparable companies in
                                    funding defined benefit pension
                                    plans (but including, in all
                                    events, an interest rate no
                                    greater than the rate that would
                                    then be used by the Pension
                                    Benefit Guaranty Corporation to
                                    value immediate annuities upon
                                    plan termination)); (B) an
                                    amount equal to four times the
                                    average benefit accrued (in the
                                    case of plans providing for
                                    accruals of identified future
                                    benefits) and Company
                                    contributions (in the case of
                                    other plans) made to the
                                    Company's tax-qualified defined
                                    benefit plan and profit-sharing
                                    and 401(k) retirement plan and
                                    the Non-qualified Plans over the
                                    previous three fiscal years (as
                                    supplemental by, in the case of
                                    accrued benefits, any early
                                    retirement subsidies); (C) any
                                    amount in Executive's account
                                    under the Company's profit
                                    sharing and 401(k) plan
                                    forfeited by the Executive due
                                    to his termination; and (D) the
                                    present value of any accrued
                                    benefit (as supplemented by any
                                    early retirement subsidies)
                                    under any defined benefit plan
                                    of the Company forfeited by
                                    Executive due to his
                                    termination, determined using
                                    such actuarial assumptions as
                                    are then used to fund such plan;
                                    and

                           (vi)     the Company shall provide
                                    Executive with out placement
                                    service through a bona fide out
                                    placement organization
                                    acceptable to,, Executive that,
                                    at a minimum, agrees to supply
                                    Executive with out placement
                                    counseling, a private office and
                                    administrative support including
                                    telephone service until such
                                    time that Executive secures
                                    suitable employment.

                  (c)      If all, or any portion, of the payments
                           or other benefits provided under any
                           section of this Agreement (including,
                           without limitation, Sections 9 and 10
                           hereof), either alone or together with
                           other payments and benefits which
                           Executive receives or is entitled to
                           receive from the Company or its
                           Affiliates, would constitute an excess
                           "parachute payment" within the meaning of
                           Section 280G of the Code (whether or not
                           under an existing plan, arrangement or
                           other agreement) (each such excess
                           parachute payment, a "Parachute
                           Payment"), and would result in the
                           imposition on Executive of an excise tax
                           under Section 4999 of the Code, then, in
                           addition to any other benefits to which
                           Executive is entitled under this
                           Agreement, Executive shall be paid by the
                           Company an amount in cash equal to the
                           sum of the excise taxes payable by
                           Executive by reason of receiving
                           Parachute Payments plus a gross-up amount
                           necessary to offset any and all
                           applicable federal, state and local
                           excise, income or other taxes incurred by
                           Executive by reason of the Company's
                           payment of the amount of such excise
                           taxes or incurred by reason of the
                           gross-up payments made pursuant to this
                           Section 10(c).  The amount of the
                           payments under this Section 10(c) (the
                           "Parachute Gross-up") shall be computed
                           by Ernst & Young LLP or by another
                           certified public accounting firm of
                           national reputation mutually agreeable to
                           the Company and Executive.  If either the
                           Company or Executive desires to dispute
                           the computation rendered by such
                           accounting firm, the disputing party may
                           select an alternative certified public
                           accounting firm of national reputation to
                           perform the applicable computations.  If
                           the two accounting firms cannot agree
                           upon the computations, Executive and the
                           Company will jointly appoint a third
                           certified public accounting firm of
                           national reputation, reasonably
                           acceptable to Executive and the Company,
                           within 10 calendar days after the two
                           conflicting computations have been
                           rendered.  Such third accounting firm
                           shall be asked to determine within 30
                           calendar days the computation of the
                           Parachute Gross-up to be paid to
                           Executive, and payments shall be made
                           accordingly.  In any event, the Company
                           will pay to Executive or pay on
                           Executive's behalf the Parachute Gross-up
                           as computed by the initial accounting
                           firm by the time any taxes payable by
                           Executive as a result of the Parachute
                           Payments become due, with Executive
                           agreeing promptly to return the excess
                           amount of such payment over the final
                           computation rendered from the process
                           described in this Section 10(c).
                           Executive and the Company will provide
                           the accounting firms with all information
                           which any such accounting firm reasonably
                           deems necessary in computing the
                           Parachute Gross-up to be paid to
                           Executive.  The costs and expenses of all
                           of the accounting firms retained to
                           perform the computations described above
                           shall be borne by the Company.

                  (d)      For purposes of this  Agreement,  "Change in Control"
                           shall mean the happening of any of the following:

                           (i)      the members of the Board at the
                                    beginning of any consecutive 24
                                    calendar month period (the
                                    "Incumbent Directors") cease for
                                    any reason other than due to
                                    death to constitute at least a
                                    majority of the members of the
                                    Board, provided that any
                                    director whose election, or
                                    nomination for election by the
                                    Company's stockholders, was
                                    approved by a vote of at least a
                                    majority of the members of the
                                    Board then still in office who
                                    were members of the Board at the
                                    beginning of such 24 calendar
                                    month period, shall be deemed an
                                    Incumbent Director;

                           (ii)     any "person", including a
                                    "group" (as such terms are used
                                    in Sections 13(d) and 14(d) of
                                    the Exchange 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 Exchange 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;

                           (iii)    the stockholders of the Company
                                    shall approve a definitive
                                    agreement (A) for the merger or
                                    other business combination of
                                    the Company with or into another
                                    corporation if (1) a majority of
                                    directors of the surviving
                                    corporation were not directors
                                    of the Company immediately prior
                                    to the effective date of such
                                    merger or (2) 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
                                    (B) for the sale or other
                                    disposition of all or
                                    substantially all of the assets
                                    of the Company; or

                           (iv)     the purchase of 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
                                    Exchange Act), other than the
                                    Company, any of its Affiliates,
                                    or any employee benefit plan of
                                    the Company or any of its
                                    Affiliates, for 30% or more of
                                    the Common Stock of the Company.

                  (e)      If Executive's employment with the
                           Company is terminated prior to the date
                           on which a 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, for all purposes
                           of this Agreement, such termination shall
                           be treated as a termination following a
                           Change in Control and shall be covered by
                           this Section 10 accordingly.

                  (f)      It is the intention of the parties that
                           the provisions of this Section 10 shall
                           govern the determination of the payments
                           and benefits to which Executive is
                           entitled in the event of termination of
                           his employment (in the circumstances
                           specified in subsection (b) above)
                           following a Change in Control (and in the
                           circumstances specified in subsection (e)
                           above), and in the event of any such
                           specified terminations of employment the
                           provisions of this Section 10 shall
                           supersede the provisions of Sections
                           9(a), (b), (c), (d) and (e) hereof.

         11.      Certain Obligations of Executive.

                  Executive  further  covenants with the Company as follows.  As
used in Sections 11 and 12 hereof,  the term the  "Company"  shall include GTECH
Holdings Corporation and its subsidiaries and Affiliates.

                  (a)  Assistance  in  Litigation.  During  the Term,  and for a
period of three years  thereafter,  Executive,  upon  reasonable  notice,  shall
furnish such information and proper  assistance to the Company as may reasonably
be required in  connection  with any  litigation in which the Company is, or may
become, a party. If such information or assistance is required in the three-year
period following the Term,  Executive shall be reimbursed by the Company 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) Confidential  Information,  Proprietary  Rights,  etc. (i)
Executive  shall not  knowingly use for his own benefit or disclose or reveal to
any  unauthorized  person,  during or after the Term,  except as  appropriate in
connection with Executive's performance of his duties, 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 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 the Company,  he will return to the Company,
promptly  upon the request of the Board or any executive  officer  designated by
the Board, any physical embodiment of such confidential information, except that
in any event Executive may retain his rolodex.

                  (ii) 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 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,  shall be owned by the  Company,  and  Executive  agrees  to  execute
instruments or documents,  to provide  evidence and testimony,  and to otherwise
assist the Company in establishing, enforcing and maintaining such rights, title
and interest of the Company during the Term. Executive further agrees to provide
reasonable assistance to the Company,  including executing documents,  providing
evidence and testimony, in establishing,  enforcing and maintaining such rights,
title and interest of the Company  after the Term;  provided  that the Executive
shall be  compensated  at a  reasonable  hourly  rate to be  agreed  upon by the
parties and reimbursed for any and all reasonable  expenses  incurred as well as
for any  compensation  from other  sources that  Executive can  demonstrate  was
foregone by virtue of providing such assistance.

                  (iii) Executive does hereby irrevocably constitute, authorize,
empower and appoint the Company,  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 the Company's name,
to take and do such action, and to make, sign, execute,  acknowledge and deliver
any and all instruments or documents  which the Company,  from time to time, may
deem desirable or necessary to vest in the Company,  its successors and assigns,
any of the rights,  title or interest  granted pursuant to clause (ii) above for
the use and benefit of the Company, its successors and assigns.

         12.  Non-Competition.  (a)  For  a  period  of  three  years  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) anywhere in the United States,  including its territories and
possessions,  or in any foreign  country (the United States and any such foreign
country  being  deemed  to be a  separate  "Territory")  in any  business  which
competes  or  proposes  to  compete  with  any  business   (including,   without
limitation,  the  Lottery  and Gaming  Business,  the EBT  Business  and network
communications  services)  in which the  Company  was  engaged or proposed to be
engaged  in  such  Territory  at the  time  of the  termination  of  Executive's
employment;  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 "Lottery and Gaming  Business" shall mean
the provision of products or services of every nature  relating to the operation
of all manner of lotteries,  non-lottery games of chance and parimutuel wagering
however and wherever  conducted,  and "EBT Business" shall mean the provision of
products or services of every nature relating to the  distribution by electronic
means of payments or payments in kind, and the conducting by electronic means of
financial transactions, relating to governmental public assistance programs.

                  The parties  acknowledge  that the  business of the Company is
subject to change and they agree  periodically  to update,  by  Addendum to this
Agreement,  the  description of the business in which the Company is engaged and
to which this  subsection  (a) relates to reflect  accurately  material  changes
which occur while the Executive is employed by the Company.

                  (b) Further, for a period of three years following termination
of Executive's  employment  (irrespective  of the reason for such  termination),
Executive  shall not (i)  intentionally  disturb or interfere  with any business
relationship between the Company and any of its employees,  dealers,  customers,
suppliers  or  similar  business  associates,  or (ii)  solicit  or  cause to be
solicited  any officer or employee of the  Company to  terminate  such  person's
relationship with the Company.

         13.      Tax Withholding.

                  The Company 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.

         14.      Effect of Prior Agreements.

                  This Agreement,  including the Appendices hereto, contains the
entire  understanding  between the parties  hereto with respect,  to the matters
covered  herein  and  supersedes  any  prior   agreement   (including  the  1994
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.

         15.      General Provisions.

                  (a)  Indemnification;  Liability  Insurance.  Executive shall,
from  time to  time,  be  indemnified  by the  Company  in  connection  with his
performance of services  hereunder,  at the maximum level  permitted by law. The
Company shall cause Executive (together with other officers and directors) to be
covered  from  time  to time  by  directors  and  officers  liability  insurance
substantially  similar to that provided to the Company's  directors and officers
immediately  before  the  beginning  of the  Term,  but in no event  shall  such
liability  insurance  provide  less than  $20,000,000  of coverage  for all such
directors  and officers,  including  Executive.  The Company  shall  continue to
indemnify  Executive as provided  above,  and maintain such liability  insurance
with coverage for Executive, after the Term has ended for any claims that may be
made against  Executive  with respect to his service as a director or officer of
the Company.

                  (b)  Non-assignability.  Neither this Agreement nor any rights
or interest hereunder shall be assignable by Executive,  his  beneficiaries,  or
legal representatives  without the Company's prior written consent. In the event
of any sale,  transfer or other  disposition of all or substantially  all of the
Company's assets or business,  whether by merger,  consolidation or otherwise to
any entity or person other than the Company, this Agreement,  and the rights and
obligations  of the Company  under it,  shall be  transferred  to such entity or
person pursuant to an agreement in form and substance reasonably satisfactory to
Executive  from any successor to the business of the Company to assume and agree
to perform this  Agreement,  but such assignment or transfer shall not limit the
Company's  liability  under this  Agreement to  Executive.  Notwithstanding  the
foregoing,  in no event shall any such  assignment of this  Agreement  adversely
affect Executive's rights upon the occurrence of a Change in Control as provided
for in Section 10 herein.

                  (c) Binding  Agreement.  This Agreement shall be binding upon,
and accrue to the benefit  of,  Executive  and the Company and their  respective
heirs, executors, administrator, successors and permitted assigns, including, in
the case of the Company, any person or entity acquiring all or substantially all
of the Company's assets.

                  (d) Amendment of Agreement. This Agreement may not be modified
or amended except by an instrument in writing signed by the parties hereto.

                  (e) Disputes; Remedies etc.. Executive acknowledges and agrees
that the possible  restrictions on his activities which may occur as a result of
his  performance  of his  obligations  under  Sections  11(b) and 12 hereof  are
required for the  reasonable  protection of the Company,  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 the
Company,  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 court of competent jurisdiction including,  without limitation, any state or
federal  court in Rhode  Island.  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.

                  The  Company  shall  pay,  at least  monthly,  all  costs  and
expenses, including attorney's fees and disbursements,  incurred by Executive in
connection with any legal proceeding (including an arbitration),  whether or not
instituted  by the  Company or  Executive,  relating to any  provisions  of this
Agreement,  including  but not  limited to the  interpretation,  enforcement  or
reasonableness   thereof;   provided  that,  (i)  if  Executive  instituted  the
proceeding and the judge or other  decision-maker  presiding over the proceeding
affirmatively finds that Executive has failed to prevail on all material issues,
or (ii) if at issue is whether or not  Executive  was  discharged by the Company
for  Cause and such  judge or other  decision-maker  finds  that  Executive  was
properly so discharged for Cause in accordance with this Agreement  (except that
this clause (ii) shall not apply if  Executive  is seeking to enforce his rights
to amounts or benefits to which he may be entitled  hereunder as a result of his
discharge for Cause),  Executive  shall pay his own costs and expenses  (and, if
applicable,  return any amounts  theretofore  paid to Executive or on his behalf
under this Section 15(e)).

                  The parties further agree that, except as expressly  otherwise
provided in this  Agreement,  the state and federal courts of Rhode Island shall
have  exclusive   jurisdiction  over  disputes  arising  with  respect  to  this
Agreement, and the parties hereby submit to such jurisdiction.

                  (f) 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.

                  (g)  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.

                  (h) 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,  with a copy to Rogers & Wells,  200 Park  Avenue,  New
York, New York 10166-0153, directed to the attention of Andrew L. Oringer, Esq.;
if to the Company,  addressed to GTECH Holdings Corporation,  55 Technology Way,
West  Greenwich,  Rhode Island 02817 and directed to the  attention of the Board
with a copy to the  Secretary  of the  Company;  if to a  member  of the  Board,
addressed to each member at his respective address on file with the Secretary of
the Company with a copy to 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.

                  (i)  Counterparts.  This  Agreement may be executed 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.

                  (j) 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.

                  (k) Headings.  The headings of Sections and paragraphs  herein
are  included  solely  for  convenience  of  reference  and shall not affect the
meaning or interpretation of any of the provisions of this Agreement.

                  (l)  Governing  Law. 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.

                  (m) Joint and  Several  Liability.  Notwithstanding  any other
provision  of this  Agreement,  each of the  Company and  Subsidiary,  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  the  Subsidiary  are
transferred to any other direct or indirect subsidiary or other affiliate of the
Company, whether in one transaction or a series of transactions,  the Company or
the Subsidiary,  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.

                  IN  WITNESS  WHEREOF,  GTECH  Holdings  Corporation  and GTECH
Corporation  has 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.

                                        GTECH HOLDINGS CORPORATION



Attest:/s/ Jacqueline Godbout          By: /s/ Guy B. Snowden
         Name:Jacqueline Godbout       Name: Guy B. Snowden
         Title:Exec. Assistant         Title: Chairman of the Board

  
                                       GTECH CORPORATION



Attest: /s/ Jacqueline Godbout         By: /s/ Guy B. Snowden
         Name:Jacqueline Godbout       Name:Guy B. Snowden
         Title:Exec. Assistant         Title: Chairman of the Board



Witness: /s/ Elena Chiaradio           EXECUTIVE


                                       /s/ William Y. O'Connor
                                       William Y. O'Connor


                                       Address: 55 Technology Way
                                                West Greenwich, RI 02817


<PAGE>

                                   APPENDIX A


Summary of Terms of Stock Options

         The stock  options  granted to Executive as provided in Section 6(d) of
the 1994 Agreement were granted pursuant to the Company's 1994 Stock Option Plan
and are subject to the terms and  conditions  of that Plan and the stock  option
agreements dated December 20, 1994, January 30, 1995, August 9, 1995 and January
2, 1996,  governing  such  options  (provided,  however,  that "Cause" and "Good
Reason" for purposes thereof shall be exclusively as defined in this Agreement),
as well as the provisions of Section 10(a) of this  Agreement.  Any future stock
options granted to Executive shall have the following attributes:


     Nature  of  Options  -  Nonqualified  unless  otherwise  determined  by the
Committee.

     Exercisability - Options shall become exercisable (i.e. vest) in four equal
annual  installments  commencing  one  year  from  the  dates  of  grant  of the
particular option and subject to acceleration  under the terms of the applicable
Plan.

     Option Price - Fair  market value at the date of the grant of
the particular option.

     Term - Ten  years  from the date of  grant of the  particular  option,
subject to earlier  termination in certain  circumstances under the terms of the
applicable Plan.

     Termination  of  Employment  -  In  the    event
Executive's employment is terminated:  (i) by reason of death or Retirement,  by
the Company for Disability or without Cause,  or by Executive's  resignation for
Good Reason,  his  outstanding  options,  whether or not they have vested on the
date of such  termination of employment,  shall  accelerate and become vested in
full and shall  remain  exercisable  for a period of one year;  and (ii) for any
reason other than those  listed in (i) above,  Executive's  outstanding  options
(i.e,  options which have been granted but have not been exercised or terminated
and  have not  expired),  to the  extent  they  are  vested  at the date of such
termination,  shall remain exercisable for a period of six months, provided that
in no event shall any option be  exercisable  after the  expiration of its term.
Notwithstanding  the  foregoing,  (i) the  period of  exercisability  of options
granted  under  the  Company's  1994  and  1997  Stock  Option  Plans  following
termination of employment  specified  above is subject to possible  reduction in
certain  circumstances to the extent required under the terms of Section 3(b) of
the 1994 and 1997 Stock Option Plans,  (ii) in the event of a Change in Control,
the  provisions  of Section  10(a) of the  Agreement  shall be applicable to all
Executive's stock options whether heretofore or hereafter granted,  and (iii) in
no event shall any option be exercisable after the expiration of its term.

<PAGE>


                                   APPENDIX B

                  Summary of Certain Benefits and Arrangements

                   1.       Housing & Related Matters.

                   (a) Possible  Relocation.  Executive currently owns a home in
New  Jersey  and has the use of a  condominium  in Rhode  Island.  If  Executive
commits to relocate his primary  residence within one year from the date of this
Agreement to either the West Greenwich,  Rhode Island,  or Boca Raton,  Florida,
areas, the Company shall:

                   (i)  extend  the due  date of the  Company's  outstanding  6%
$500,000  principal amount loan to Executive from November 1, 1999 to January 1,
2000 and forgive  $125,000 of the  principal of such loan in four  installments,
commencing  August 1, 1997 and on  January  1,  1998,  1999 and 2000;  provided,
however,  that  Executive  shall  remain  responsible  for making  the  interest
payments on the outstanding  balance of such loan and for any taxes arising from
the forgiveness of principal;

                   (ii) provide Executive with an unsecured $1,000,000 revolving
line of credit for the purpose of facilitating the move to and/or renovating his
new primary residence in the West Greenwich or Boca Raton area, any such line of
credit loan to bear interest at the lowest Applicable  Federal Rate established,
from  time to time,  by the  Internal  Revenue  Service,  such line of credit to
terminate and any loan  outstanding  thereunder to become payable in full on the
earlier of ten days following the sale of Executive's home in New Jersey or July
14, 2002; and

                   (iii) pay  Executive's  moving  expenses  to Florida or Rhode
Island,  as the case may be, and in the event  that  Executive  incurs  federal,
state or local income taxes  attributable  to the Company's  bearing such moving
expenses,  the Company  shall pay  Executive a gross-up  payment  sufficient  to
offset any such income taxes  (excluding any interest or penalties) and any such
income taxes imposed by reason of the gross-up payment.

                   Notwithstanding  the foregoing,  the outstanding  balances of
the above loan and line of credit,  if not  earlier  due,  shall  become due and
payable 120 days after  Executive's  Term of employment  has  terminated for any
reason,  other than a termination by the Company  without Cause or a termination
by Executive for Good Reason.

                   The above loan and line of credit  shall be evidenced by such
promissory notes and collateral documents as the Company may reasonably request.

                   (b) During  the Term,  the  Company,  at its  expense,  shall
provide Executive with the use of a suitable furnished  condominium in whichever
of the West  Greenwich  or Boca Raton area as to which he does not  relocate his
primary residence, or in one of such areas if he does not choose to relocate his
primary residence to either such area. The Company shall pay Executive  gross-up
payments in the same manner as specified in  subsection  (a)(iii)  above for any
taxes attributable to the Company's bearing such condominium  expenses or to the
gross-up payment.

                   (c) The  benefits  provided in this  Section 1 are in lieu of
any other benefits under the Company's relocation policy.

                   2. Vacation.  During the Term, Executive shall be entitled to
a paid vacation of four weeks per year.

                   3.  Automobile.  During  the Term,  the  Company  shall  make
available to  Executive  for his own use a passenger  automobile,  such as a BMW
750i or its equivalent,  as Executive may select. Executive shall be entitled to
select a new  automobile  once every three  years.  All  expenses of  operating,
repairing, insuring, garaging and otherwise maintaining such automobile shall be
borne by the Company. Further, in the event that Executive incurs federal, state
or local income taxes  attributable  to the Company's  providing such automobile
and bearing such  expenses,  the Company shall pay Executive a gross-up  payment
sufficient to offset any such income taxes (excluding interest or penalties) and
any such income taxes imposed by reason of the gross-up payment.



<PAGE>

                   4.  Medical.  During the Term (and  thereafter  as and to the
extent expressly provided in the Agreement),  the Company shall bear the cost of
all medical  expenses  reasonably  incurred by Executive and his family  (family
eligibility to be determined in accordance with the Company's  general  policies
concerning medical coverage),  including hospitalization (private room), dental,
orthodontic,  optical  and  choice of  physicians  such  coverage  to be 100% of
expenses and to be at no cost to  Executive  nor his family,  including  without
limitation no premiums, no deductibles and no co-payments.  Further,  during the
Term, the cost of Executive's annual physical examination also shall be borne by
the Company.  The Company shall pay Executive a gross-up  payment  sufficient to
offset any income taxes as may arise by virtue of Section 105(h) of the Code and
any such income taxes imposed by reason of the gross-up payment.

                   5. Spousal  Travel.  During the Term,  the Company shall bear
the expense of first class air travel and related  travel  living  expenses  for
Executive and his spouse on Executive's  business trips.  Further,  in the event
that Executive incurs federal,  state or local income taxes  attributable to the
Company's  bearing  such travel  expenses  for his wife,  the Company  shall pay
Executive  a  gross-up  payment  sufficient  to  offset  any such  income  taxes
(excluding  any  interest or  penalties)  and any such income  taxes  imposed by
reason of the gross-up payment.

                   6. Tax  Preparation.  During the Term, the Company shall bear
the expense for annual tax  preparation  for  Executive.  The Company  shall pay
Executive  gross-up  payments in the same manner as set forth in Section 5 above
for any  taxes  attributable  to the  Company's  bearing  such  tax  preparation
expenses or to the gross-up payment.

                   7. Certain Fees.  During the Term,  the Company shall provide
Executive  with a reasonable  allowance for health club,  country club and other
similar club  memberships,  for home  security and for  computer,  facsimile and
other similar  equipment;  and the Company shall pay Executive gross-up payments
in the same manner as set forth in Section 5 above for any taxes attributable to
such allowances or to the gross-up payment.

                   8.  Perquisite  Plan.  During  the Term,  Executive  shall be
entitled to participate in the Company's  Executive  Perquisites Plan. Among the
items  which may be  selected  under the Plan  (subject  to the Plan's  cap) are
estate  planning and other financial  services.  The Company shall pay Executive
gross-up  payments  in the same  manner as set forth in  Section 5 above for any
taxes attributable to items selected under the Executive  Perquisites Plan or to
the gross-up payment.  Benefits  specifically  numbered above in this Appendix B
shall not be deemed to be provided under the Plan or subject to the Plan's cap.

                   9.  Professional  Fees.  The Company shall pay the reasonable
professional   fees  of  Executive  in  connection   with  the  negotiation  and
preparation  of  this  Agreement,   including   attorneys'  fees,   compensation
consultants' fees and their related expenses and disbursements.