2003 -- S 1011 SUBSTITUTE A

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LC03058/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2003

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A N A C T

ENABLING THE RHODE ISLAND LOTTERY COMMISSION TO ENTER INTO A

MASTER CONTRACT WITH GTECH

     Introduced By: Senators Irons, J Montalbano, Algiere, Ruggerio, and Celona

     Date Introduced: April 10, 2003

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Purpose. The purpose of this act is to induce GTECH Corporation to

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construct, develop and maintain its new global corporate headquarters facility in the Capital

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Center District of the City of Providence and to expand its manufacturing operations in the Town

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of West Greenwich. This act, being necessary for the welfare of the state and its inhabitants, shall

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be liberally construed to effectuate its purposes.

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     SECTION 2. Authorized procurement of Master Contract. Notwithstanding any

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provisions of the general laws or regulations adopted thereunder to the contrary, including, but

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not limited to, the provisions of Chapter 2 of Title 37, and Chapter 61 of Title 42, the Rhode

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Island Lottery Commission (“Commission”) is hereby authorized and empowered to enter into a

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Master Contract (“Master Contract”) with GTECH Corporation, a Delaware Corporation

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(“GTECH”), which would have a term of twenty (20) years from its effective date for the

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following purposes:

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     (a) to amend the terms and conditions of the Video Lottery Central Computer System

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Agreement between GTECH and the Commission, dated as of December 20, 2001;

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     (b) to amend the terms and conditions of the On-Line Gaming Agreement between

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GTECH and the Commission, dated January 29, 1997 and as amended thereafter;

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     (c) to amend the terms and conditions of the Video Lottery Terminal Technology

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Provider License Agreement dated September 28, 2000; and

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     (d) to allow GTECH to purchase from the Commission for a payment of $12,500,000 the

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right to be exclusive provider to the Commission of information technology hardware, software

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and related services pertaining to:

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     (i) the design, development, implementation and/or operation of Video Lottery Central

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Communications Systems;

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     (ii) the design, development, implementation, operation, and/or sales of On-Line Games;

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and

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     (iii) the processing of On-Line Game Wagers and Video Lottery Wagers. For purposes of

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determining compensation, “NTI” means “Net Terminal Income.” The Commission is hereby

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empowered to fix in the Master Contract the annual compensation to be paid to GTECH provided

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such annual compensation does not exceed the following percentage formulae:

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      Lottery Percentage

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      (Calculated Annually)

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     Sales to $275 million 5.00%

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     Sales from $275-$400 million 1.00%

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     Sales above $400 million 5.00%

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      VLT Central System

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      (Calculated Annually)

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     NTI up to $500 million 2.50%

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     NTI from $500 million-$1 billion 1.00%

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     NTI above $1 billion 2.50%

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      VLT Machines

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     (Average daily income calculated on weekly basis)

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     NTI up to $325 7.00%

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     NTI from $325-$500 1.00%

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     NTI above $500 7.00%

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     Under the terms of the Master Contract authorized under this act, GTECH agrees that in

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consideration of a twenty (20) year agreement with the Commission, GTECH shall undertake,

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among others, the following obligations:

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     (a) GTECH (or a GTECH business affiliate) will develop and construct a new office

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building of at least 210,000 square feet to be constructed in the Capital Center District in the City

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of Providence and GTECH will relocate and maintain its world corporate headquarters in that

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facility for the twenty (20) year term;

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     (b) GTECH will expand its manufacturing operations in the town of West Greenwich;

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     (c) GTECH (or a GTECH business affiliate) will invest in the aggregate on or before

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December 31, 2008, at least $100,000,000 in the state (“Investment Requirement”), in connection

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with acquiring interests in land, building development projects or improvements to real property

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or facilities and performing its obligations under the Master Contract, including, without

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limitation, the provision of goods in connection with its business operations in Rhode Island

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(“Investment Requirement Assets”); and

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     (d) GTECH will employ within the state during each calendar year, beginning in calendar

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year 2006, during the term of the Master Contract with the Commission, at least 1,000 full-time

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active employees at wage levels not less than those defined in Rhode Island general laws section

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42-64.5-2(7) (“Employment Requirement”).

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     The Master Contract authorized under this act shall contain provisions which provide that

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the Commission may terminate the Master Contract if GTECH fails to fulfill the Investment

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Requirement on or before December 31, 2008, or if GTECH does not meet the employment

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requirement in any calendar year after 2005.

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     As used in this section, the term “GTECH business affiliate” shall mean any corporation,

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trust, partnership, joint venture or any other form of business entity which (acting jointly with

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GTECH or at the direction of GTECH) owns, leases or finances Investment Requirement Assets

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which are used by GTECH in its business operations in the state.

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     SECTION 3. Inconsistent provisions. Insofar as the provisions of this act are inconsistent

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with the provisions of any other general or special law, the provisions of this act shall be

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controlling and the limitations set forth in section 42-61.2-1(1) shall not apply to the Master

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Contract.

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     SECTION 4. Agreement of the state. The state does hereby pledge and agree with

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GTECH under this act that the state will not limit, alter, diminish, or adversely impact the rights

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or economic benefits which vest in GTECH under the terms of the Master Contract authorized

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hereby, unless authorized by this act.

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     SECTION 5. Effective date. This act shall take effect upon passage.

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LC03058/SUB A

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