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Employment Agreement - Autotote Corp. and Thomas C. DeFazio

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                             AUTOTOTE CORPORATION
                              888 SEVENTH AVENUE
                                  SUITE 1808
                           NEW YORK, NEW YORK 10106

                                                                 April 17, 1995

Mr. Thomas C. DeFazio
3l1 Codfish Lane
Weston, Connecticut 06883

Dear Mr. DeFazio:

  Autotote Corporation (the "Company") wishes to retain your services upon the
following terms and conditions:

  1. Employment and Offices. You will serve the Company as its Executive Vice
President and Chief Financial Officer, and as such you will have direct
reporting responsibility for all financial and administrative functions of the
Company. Additionally, as the Company's second-ranking senior officer, you
will work with the Company's Chief Executive Officer to oversee and implement
the Company's strategy and operations on a world-wide basis.

  2. Term. The term of this Agreement shall commence on the date you join the
Company, which shall be no later than April 17, 1995 (the "Effective Date")
and shall end three (3) years thereafter (the "Initial Term"); provided,
however, that the term of this Agreement shall be automatically extended for
successive, additional terms of twelve months each (each, an "Additional
Term") at the end of the Initial Term and each Additional Term, unless either
you or the Company shall have given written notice to the other at least
twelve months prior thereto that the term of this Agreement shall not be so

  3. Services. You agree to accept employment on a full time basis and to
perform, to the best of your ability, the duties, undertake the
responsibilities and exercise the authority customarily performed, undertaken
and exercised by a chief financial officer of a publicly-held corporation,
without commitment to other business endeavors, except that you may serve as a
director of businesses and charities with the approval of the Board of
Directors of the Company.

  4. Compensation.

    (a) Base Salary. As base salary for your services as described in Section
  3 above, and for the covenants set forth in Section 7 hereof, the Company
  will pay you a base salary of $275,000 per year ("Base Salary"), payable
  according to the Company's regular pay practices.

    (b) Performance Bonus. In addition to the amount payable as provided in
  Section 4(a) hereof, you shall be eligible to receive an annual performance
  bonus of up to 45% of Base Salary (the "Bonus") as follows:

      (i) 50% of the Bonus shall be based on the formula applicable to
    Group A executives as set forth in the Company's executive incentive
    compensation plan as in effect from time to time; and

      (ii) 50% of the Bonus shall be based on the achievement of objectives
    to be established by the Chief Executive Officer of the Company and the
    Board of Directors in their sole discretion, it being understood that
    no performance bonus is required by this Section 4(b)(ii).

    (c) You will be granted a five-year option (the "Option") to purchase
  200,000 shares of the Company's Class A Common Stock, $.01 par value per
  share (the "Common Stock"), which shall become exercisable in three equal
  installments, on each of the first, second and third anniversaries of the
  date of grant. The exercise price of the Option shall be the closing price
  of the Common Stock on the NASDAQ National Market System on the Effective
  Date. Following the first anniversary of the Effective Date, the

  Chief Executive Officer and the Compensation Committee of the Board of
  Directors will review your stock option position as part of your overall
  first year performance review.

    (d) The Company will reimburse you for all reasonable costs of interim
  housing incurred by you for housing in New York, New York beginning on the
  Effective Date for a period not to exceed six months. The Company also
  agrees to pay you on the Effective Date a relocation allowance of $110,000;
  provided, however, that if you terminate this Agreement or the Company
  terminates this Agreement for Cause at any time before the second
  anniversary of the Effective Date, you will promptly repay to the Company
  an amount equal to the product of (i) $110,000 and (ii) a fraction, the
  numerator of which is the number of full months between the date of
  termination of the Agreement and the second anniversary of the Effective
  Date and the denominator of which is twenty-four (24) or, at your
  discretion, a number of shares of the Company's Class A Common Stock equal
  to the product of (x) 20,000 and (y) the fraction described in clause (ii)

  5. Termination of Employment.

    (a) Notice. You may terminate this Agreement upon thirty (30) days' prior
  written notice to the Company. The Company may terminate this Agreement
  upon twelve (12) months' prior written notice to you; provided, however,
  that if the Company terminates this Agreement prior to the third
  anniversary of the date hereof, the Company shall promptly pay to you the
  greater of (i) an amount equal to one year's base salary at the then
  current rate or (ii) an amount equal to the product of (i) your then
  current monthly salary and (ii) the number of months, or fraction thereof
  remaining under the initial three-year term, except that the Company may
  terminate your employment hereunder for Cause, as defined in Section 5(d),
  at any time upon notice to you.

    (b) Termination Otherwise than for Cause Upon a Change in Control. If
  during the Initial Term or any Additional Term a Change of Control, as
  defined in Section 5(d), occurs and the Company terminates your employment
  other than for Cause within twelve (12) months following such Change of
  Control, you shall be entitled:

      (i) to collect from the Company a lump-sum payment equal to Base
    Salary for the remainder of the Initial Term, or any Additional Term
    then in effect, as the case may be; and

      (ii) the Option shall be accelerated to become fully vested and
    exercisable in full 10 days prior to the anticipated effective date of
    the Change in Control and will terminate as of the effective date of
    the Change in Control.

  For purposes of this Section 5(b), a termination nominally at your
initiative but in fact induced without Cause by the Company shall be deemed a
termination by the Company without Cause, rather than a voluntary termination,
and in that event the Company shall make the payments to you provided in this
Section 5(b).

    (c) Voluntary Termination or Termination by the Company. If during the
  Initial Term or any Additional Term your employment should terminate by
  reason of your voluntary act, or if the Company shall terminate your
  employment, you shall not be entitled to any compensation after such
  termination, except as otherwise provided in Section 5(b).

    (d) Definitions. For purposes of this Agreement,

      (i) "Cause" shall mean (A) conviction of fraud, crimes of moral
    turpitude or other conduct which reflects on the Company in a material
    and adverse manner; (B) a willful failure to carry out a directive of
    the Board of Directors or the Chief Executive Officer; (C) disloyalty,
    bad faith or embezzlement of funds of the Company; or (D) gross
    negligence or willful misconduct that is materially harmful to the
    Company. Cause shall be established by the good faith determination of
    the Board of Directors; and

      (ii) "Change of Control" means the acquisition of substantially all
    the Company's outstanding stock by a single person or entity or by a
    group of persons and/or entities acting in concert or the sale or
    transfer of substantially all the Company's assets.


    (e) Death. Upon your death this Agreement shall terminate. The Company
  shall be obligated to make all Base Salary payments to you or your legal
  representative accrued up to the date of death.

    (f) Disability. In the event of your disability (whether total or
  partial, and whether temporary or permanent) which prevents your performing
  your duties hereunder, you shall be entitled to receive your Base Salary
  hereunder pursuant to Section 5(a) for the period of disability; provided,
  however, that if at any time after six months of disability your disability
  is total and permanent, or you are, as a result thereof, incapable of
  performing your duties under this Agreement, the obligation of the Company
  to make payments to you pursuant to this paragraph shall terminate from and
  after such date and this Agreement shall terminate. Disability shall be
  determined by a physician selected by mutual agreement of you and the

    (g) Limitations. Notwithstanding anything in this Agreement to the
  contrary, the maximum amount of cash and other benefits payable (whether on
  a current or deferred basis and whether or not includible in income for
  income tax purposes) under this Agreement (the "Contract Benefits") shall
  be limited to the extent necessary to avoid causing any portion of such
  Contract Benefits, or any other payment in the nature of compensation to
  you, to be treated as a "parachute payment" within the meaning of Section
  280G(b)(2) of the Internal Revenue Code of 1986, as amended. Any adjustment
  required to satisfy the limitation described in the preceding sentence
  shall be accomplished first by reducing any cash payments that would
  otherwise be made to you and then, if further reductions are necessary, by
  adjusting other benefits as determined by the Company.

  6. Insurance for the Benefit of the Company. You agree that the Company may
at any time or times and for the Company's own benefit (or for a lender to the
Company) apply for and take out life, health, accident and other insurance
covering you, either independently or together with others, in any amount
which the Company may deem to be in its best interests. The Company shall own
all rights in such insurance and proceeds thereof and you shall not have any
right, title or interest therein. You agree to assist the Company at the
Company's expense in obtaining any such insurance by, among other things,
submitting to the customary examinations and correctly preparing, signing and
delivering such applications and other documents as reasonably may be

  7. Restrictive Covenants.

    (a) You agree that you will not, during your employment with the Company
  and for a period of twenty-four (24) months after termination thereof,
  engage (whether for compensation or without compensation) in any business
  activity, either as principal, proprietor, consultant, partner, officer,
  director, employee, agent or in any other capacity, which competes with any
  business then being conducted or planned (at the time of such termination)
  by the Company, its subsidiaries or affiliates in any geographic area in
  which the Company, its subsidiaries or affiliates are then engaged in such
  business. For purposes of this Section 7(a), the term "business activity"
  shall mean any activity whether conducted for profit or not for profit by
  an individual, partnership, firm, corporation, government or any other
  entity which competes with the Company. For purposes of this section 7(a),
  "Planned" shall refer to any business which has been actively discussed as
  a potential new business for the company during the twelve months prior to
  such termination.

    (b) You agree that, except as required in the performance of your duties
  hereunder, you will not at any time disclose to any person or entity any
  trade secrets, secret processes or any other confidential information
  belonging or relating to the Company, its business practices, personnel or
  those of its subsidiaries or affiliates; provided, however, this
  prohibition shall not apply to any such secret or confidential data which
  becomes generally publicly known or is publicly disclosed through or by
  persons other than you. This Section 7(b) shall survive the termination of
  this Agreement.

    (c) During your employment with the Company and for a period of twenty-
  four (24) months after termination of your employment with the Company, you
  will not, directly or indirectly, recruit or otherwise solicit employees of
  the Company, its subsidiaries or affiliates or otherwise induce such
  employees to leave


  the Company, its subsidiaries or affiliates and to join or otherwise become
  employed by or associated with you or any company or organization with
  which you may then be employed or associated.

    (d) Upon the termination of this Agreement, all documents, records,
  notebooks, computer programs, data systems and similar repositories
  containing trade secrets or other confidential information, whether
  prepared by you or others, will be left with the Company.

    (e) You agree that any violation of the covenants in this Section 7 will
  cause the Company irreparable injury and agree that the Company may enforce
  said covenants by seeking injunctive or other equitable relief (in addition
  to any other remedies the Company may have at law for damages or otherwise)
  from a court of competent jurisdiction. In the event such court declares
  these covenants to be too broad to be specifically enforced, the covenants
  shall be enforced to the largest extent for the Company's protection as may
  be allowed by such court. You agree that no breach by the Company of, or
  other failure by the Company to perform, any of the covenants and
  obligations of the Company under this Agreement shall relieve you of any of
  your obligations under this Section 7, and that in the event of any such
  breach or failure of performance, you will seek no remedy other than
  damages at law.

  8. Other Benefits. You shall be eligible for four weeks of paid vacation for
each year of service under this Agreement. The Company will also provide you
with all fringe benefits routinely furnished to senior executives of the

  9. Representation by Employee. You represent and warrant that your
execution, delivery and performance of this Agreement will not violate, result
in a breach of or constitute a default under any agreement, understanding or
instrument to which you are a party or by which you are bound.

  10. Miscellaneous.

    (a) This Agreement shall be binding on and inure to the benefit of the
  parties hereto and their respective heirs, legal representatives,
  successors and assigns. You may not assign this Agreement to any person or
  entity. In the event that the Company consolidates with or merges into
  another corporation and the Company is not the surviving corporation, or
  substantially all of the assets of the Company are sold to another
  corporation, this Agreement and the obligations of the parties shall
  survive such consolidation, merger or sale and shall bind the company
  and/or successor in interest of the Company. This Agreement may be modified
  or amended only by a written agreement signed by the parties hereto.

    (b) Each party hereby consents and submits to the jurisdiction of the
  federal and state courts in and of the State of Delaware and will accept
  service of process by registered or certified mail or the equivalent
  directed to the addresses set forth herein or such other addresses as shall
  have been furnished for this purpose by the parties or by whatever other
  means are permitted by such court.

    (c) This Agreement shall be governed by and construed in accordance with
  the laws of the State of Delaware (other than internal conflict of law

    (d) The waiver of any breach of any term or condition of this Agreement
  shall not be deemed to constitute a waiver of any other term or condition
  hereof. If any term or provision of this Agreement or the application
  thereof to any person or circumstance shall to any extent be invalid or
  unenforceable, the remainder of this Agreement or the application of such
  term or provision to persons or circumstances other than those as to which
  it is held invalid or unenforceable shall not be affected thereby, and each
  term and provision of this Agreement shall be valid and enforceable to the
  fullest extent permitted by law.

    (e) All notices pursuant to this Agreement shall be in writing and shall
  be given by depositing said notices in the United States, registered or
  certified mails, return receipt requested, addressed to the parties hereto
  at the addresses set forth below, or to such other addresses as may
  hereafter be specified by notice in writing given in the same manner by any


  Notice to the Company:

    Autotote Corporation
    888 Seventh Avenue
    Suite 1808
    New York, New York 10106
      Attention: Chief Executive Officer

  Notice to Employee:

    Thomas C. DeFazio
    31 Codfish Lane
    Weston, CT 06883

    (f) This Agreement constitutes the entire Agreement between the parties
  and supersedes all prior communications, agreements and understandings,
  written or oral, with respect to the terms of your employment with the

  If you accept and agree to the foregoing, please so signify by signing and
returning a counterpart of this letter, whereupon this letter will become a
binding agreement between you and the Company as of the date first written

                                          Very truly yours,

                                          Autotote Corporation

                                                   /s/ Larry J. Lawrence
                                          By: _________________________________
                                                     Larry J. Lawrence
                                             Chairman, Executive Committee of
                                                  the Board of Directors

Accepted and Agreed to:

          /s/ Thomas C. DeFazio
          Thomas C. DeFazio