FORM OF
EMPLOYMENT
AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into at Tempe,
Arizona on this 16th day of February, 1999, by and between GameTech
International, Inc., a Delaware corporation ("GameTech" or the "Company"), and
Xxxxxxx X. Xxxxxx ("Executive").
Whereas :
a. The Company desires to employ Executive, and;
b. Executive is the Chief Operating Officer of the Company;
c. The Company and Executive wish pursuant to this Agreement to set forth
their full and complete understandings in respect to the above-mentioned
employment relationship, replacing any and all previous understandings and
agreements, with the exception of the terms and conditions stated in the
Offer Sheet formally executed by GameTech and Executive on January 21, 199.
Said Offer sheet is herein attached as Exhibit "A".
NOW, THEREFORE, in consideration of the provisions hereinafter described,
Company and Executive agree as follows:
1. DUTIES OF EXECUTIVE
During the term of this Agreement, Executive shall be employed by the
Company as its Chief Operating Officer and in that capacity shall perform all
functions and duties consistent with such position on behalf of the Company in
an efficient, trustworthy and professional manner, as reasonably required by the
Board of Directors of the Company or the Board of Directors governing any
successor entity to the Company (the "Board").
Executive agrees to devote substantially all of his working time and
energy to the performance of his duties under this Agreement so long as his
employment under this Agreement is continued by the Company.
Notwithstanding the above, Executive shall be entitled to reasonable
absences for administrative meetings and to pursue other outside activities.
Executive also shall be permitted to serve as a member of the Board of Directors
of other organizations, subject to approval by the Board, on a case by case
basis. Such approval shall be granted if it can be reasonably demonstrated that
such service does not involve a competitor of the Company or its Enterprises and
does not materially interfere with effective performance of Executive's duties
under this Agreement.
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2. TERM OF AGREEMENT
Unless terminated sooner in accordance with the provisions of this
Agreement, the Company shall employ Executive and Executive accepts such
employment under the conditions set forth herein for a three (3) year term (the
"Term") beginning on the effective date of this Agreement and ending upon the
close of business on February 15, 2002. Notwithstanding the foregoing, if this
Agreement is not terminated in accordance with the provisions herein on or
before the expiration of its initial Term, such Term shall continue, and the
Agreement shall continue in force for successive two (2) year periods unless, at
least ninety (90) days prior to the expiration of the initial Term of the
Agreement, or ninety (90) days prior to the expiration of any subsequent two (2)
year Term, either Executive or the Company gives the other party written notice
of its intent to terminate the Agreement at the end of such Term.
3. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Paragraph 3:
a. "ANNUAL BASE SALARY" or "BASE SALARY" shall mean the annual base
salary rate in effect for Executive from time to time during the
Term of this Agreement in accordance with the provisions of
Paragraph 4.a. of this Agreement.
b. "ANNUAL BONUS" or "BONUS" shall mean a cash payment available
annually (or as otherwise provided for in this document) to
Executive in addition to Base Salary as determined in accordance
with Paragraph 4.b. of this Agreement.
c. "CAUSE" shall mean (i) Executive's conviction for any felony
involving moral turpitude; or (ii) any conduct by Executive which
is materially injurious to the Company or its Enterprises,
including any action or inaction by Executive which may
jeopardize any governmental registration, license, permit or
other governmental permission material to the business of the
Company in any jurisdiction that the Company does or seeks or may
seek to do business. (Such cause for conduct shall exist if
Executive is guilty of dishonesty, gross neglect of duty
hereunder, or other act or omission which impairs Company's
ability to conduct its ordinary business in its usual manner.)
Such cause will be determined upon a meeting of the Company's
Board of Directors.
d. "CHANGE OF CONTROL" shall mean any of the following events: (i)
the Company consolidates with, or merges with or into, another
entity or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the Company's assets to
any entity, or any entity consolidates with, or merges with or
into, the Company and the Company is
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not the surviving Corporation; (ii) the liquidation or
dissolution of the Company; (iii) during any consecutive two year
period, individuals who at the beginning of such period
constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of the
majority of the directors then still in office who were either
directors at the beginning of such period or whose election or
nomination was previously so approved) cease for any reason to
constitute a majority of the Board then in office; or (iv) any
person or group (as such terms are defined in Section 13(d) and
14(d) under the Securities Exchange Act of 1934 (the "Exchange
Act")) is or becomes the beneficial owner (as defined in Rules
13(d)-3 and 13(d)-5 under the Exchange Act, except that a person
will be deemed to have beneficial ownership of all securities
that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time)
directly or indirectly of more than 30% of the total voting power
entitled to vote in the election of the Board; provided, however,
that such person or group shall not include any person or group
that is the beneficial owner of more than 5% of the total voting
power as of the date of this Agreement.
e. "COMPENSATION COMMITTEE" means the Compensation Committee of the
Board of Directors.
f. "CONSTRUCTIVE TERMINATION'' shall mean Executive's voluntary
Termination of Service within twelve (12) months following a
Change of Control or within ninety (90) days following the
occurrence of one or more of the following events, except if such
event is approved in writing by Executive prior to its
occurrence:
(i) A failure by the Company to abide by any part of this
Agreement that is not remedied within thirty (30) business
days after receiving written notification by Executive of
such failure;
(ii) A material reduction in Executive's title or
responsibilities.
(iii) Relocation of Executive's primary place of work to an area
other than the location of the Company's principal executive
offices.
g. DISABILITY" shall be deemed to have occurred if Executive makes
application for or is otherwise eligible for disability benefits
under any Company-sponsored long-term disability program covering
Executive, and Executive qualifies for such benefits. In the
absence of a Company-sponsored long-term disability program
covering
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Executive, Executive shall be presumed to be totally and
permanently disabled if so determined by the Company's Board
following the Board's review of two independent medical opinions
satisfactory to the Board certifying that Executive will be
permanently unable to perform his normal duties as a result of a
physical or mental condition.
h. "ENTERPRISE" shall mean any joint venture, business pursuant to a
joint operating agreement, or other alliance or affiliated
business of the Company.
i "EXECUTIVE'S SPOUSE" shall mean Executive's spouse upon the
execution of this Agreement, except as otherwise designated
herein. (All spousal pension benefits under this Agreement shall
be non-transferable should Executive remarry.)
j "FISCAL YEAR" shall mean the twelve-month period beginning
November 1, unless the Company, with the approval of the Internal
Revenue Service, shall establish a different fiscal year.
k "LONG-TERM INCENTIVE PLAN" shall mean any stock option plan or
any other form of equity (real or phantom) or other long-term
incentive plan introduced by the Company.
l "SERVICE" shall mean Executive's full-time or substantially
full-time employment with the Company, or any affiliated
organization, including any leave of absence approved by the
Board.
m. "TERMINATION OF SERVICE" shall mean Executive's termination of
Service for any reason whatsoever, including death.
4. EXECUTIVE'S RIGHTS WHILE EMPLOYED BY THE COMPANY
a. BASE SALARY
Beginning on the effective date of this Agreement during the Term,the
minimum Annual Base Salary payable to Executive shall be one-hundred
and eighty thousand dollars ($180,000.00). Such Base salary shall be
paid in equal semi-monthly installments on the Company's normal
payroll dates. Executive's base salary shall be reviewed annually by
the Compensation Committee if any, otherwise by the Board, and may be
increased but not decreased from time to time based on prevailing
market conditions, performance of the Executive and other
considerations.
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b. ANNUAL BONUS
All fiscal year bonus amounts will be determined by and awarded in
the sole discretion of the Compensation Committee if any, otherwise by
the Board commensurate with Executive's performance and the overall
performance of the Company; or pursuant to a plan which may be adopted
by the Company making payment of bonuses contingent upon achievement
of goals and objectives set by the Board for the fiscal period.
c. LONG-TERM INCENTIVES
Executive shall participate in any Long-Term Incentive Plan that may
be designed specifically for Executive or provided to other executives
of the Company during the Term. (Grants to Executive under such
Long-Term Incentive Plan shall be no less favorable to Executive in
amount and other key design features, including vesting restrictions,
with any other plans provided to any other executive at the Company.)
d. FRINGE BENEFITS AND OTHER
The Company shall provide Executive with the following:
(i) Such benefits and perquisites, including but not limited to
disability income, deferred compensation or any form of savings
or retirement plan as may from time to time be provided to other
executives of the Company, as well as an automobile allowance not
less than $750.00 per month. Such benefits and perquisites shall
exclude fees paid for Board or Board Committee service, which are
hereby included in Executive's Base Salary. Benefits and
perquisites shall be provided at the same proportional cost to
Executive as that paid by other executives of the Company who
participate in such programs;
(ii) Reasonable vacation each year during the Term not less than
Twenty (20) days. Executive is allowed to accrue a maximum of
forty (40) full days of unused vacation/sick leave time. Said
vacation shall not reduce Executive's compensation under this
Agreement;
(iii) Payment of premiums on professional liability insurance for
Executive;
(iv) Payment of dues for such professional societies and associations
of which Executive is a member that benefit the Company;
(v) Nothing in this Agreement shall be construed as limiting or
restricting any benefit to Executive under any pension,
profit-sharing or similar
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retirement plan, or under any group life or group health or
accident or other plan of the Company, for the benefit of its
employees generally or a group of them, now or hereafter in
existence.
(vi) It shall be at the Board's discretion to grant any other fringe
benefits to Executive.
5. EXECUTIVE'S RIGHTS UPON TERMINATION OF SERVICE
a. FOR REASON OF VOLUNTARY RESIGNATION CONSTITUTING CONSTRUCTIVE
TERMINATION OR TERMINATION BY THE COMPANY WITHOUT CAUSE
In the event of Executive's Termination of Service for reason of (i)
voluntary resignation by Executive constituting Constructive
Termination, (ii) Executive's Termination of Service by the Company
without Cause or (iii) Executive's Termination of Service for any
reason except those specifically described in paragraphs 5.b through
5.f herein, Executive (or if Executive dies while benefits remain due
under this Agreement, Executive's beneficiaries as designated in
accordance with the provisions of Paragraph 9 herein) shall be
entitled to receive the following upon such Termination of Service:
(i) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary and any Bonus granted and
previously unpaid or the pro-rata portion of any Bonus earned by
Executive pursuant to any plan (if necessary, the Company may
pay such Bonus when all bonuses for that Fiscal Year are
calculated and paid) through the date of Executive's Termination
of Service;
(ii) Immediate vesting of any stock options or other rights previously
provided to Executive under any Company Long-Term Incentive Plan;
and
(iii) Payment of a lump sum amount equal to two (2) years of
Executive's Base Salary.
In the event of a Change of Control, Executive shall be also be
entitled to the protections outlined in Paragraph 7 herein.
b. FOR REASON OF EXPIRATION OF THE TERM OF THIS AGREEMENT
In the event of Executive's Termination of Service for reason of expiration
of the Term of this Agreement pursuant to Paragraph 2 thereof, Executive
(or if Executive dies while benefits remain due under this Agreement,
Executive's beneficiaries as designated in accordance with the provisions
of Paragraph 9 thereof) shall be entitled to receive the following upon
such Termination of Service:
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(i) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary and any Bonus granted and
previously unpaid or the pro-rata portion of any Bonus earned by
Executive pursuant to any plan (if necessary, the Company may pay
such Bonus when all bonuses for that Fiscal Year are calculated
and paid) through the date of Executive's Termination of Service;
(ii) Immediate vesting of any stock options or other rights previously
provided to Executive under any Company Long-Term Incentive Plan;
(iii) Payment of any Disability or other benefits provided to Executive
by the Company in accordance with the terms and conditions of
such benefits and this Agreement.
(iv) Payment of a lump sum amount equal to one (1) year of Executive's
Annual Base Salary.
c. FOR REASON OF DISABILITY
In the Event of Executive's Termination of Service for reason of
Disability, Executive (or if Executive dies while benefits remain due
under this Agreement, Executive's beneficiaries as designated in
accordance with the provisions of Paragraph 9 hereof) shall be
entitled to receive the following upon such Termination of Service:
(i) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary and any Bonus granted and
reviously unpaid or the pro-rata portion of any Bonus earned by
Executive pursuant to any plan (if necessary, the Company may pay
such Bonus when all bonuses for that Fiscal Year are calculated
and paid) through the date of Executive's Termination of Service;
(ii) Immediate vesting of any stock options or other rights previously
provided to Executive under any Company Long-Term Incentive Plan;
(iii) Payment of any Disability or other benefits provided to Executive
by the Company in accordance with the terms and conditions of
such benefits and this Agreement;
(iv) Payment of a lump sum amount equal to one (1) year of Executive's
Annual Base Salary.
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d. FOR REASON OF DEATH
In the Event of Executive's Termination of Service for Reason of
Death, Executive's beneficiaries as designated in accordance with the
provisions of Paragraph 9 hereof shall be entitled to receive the
following upon such Termination of Service:
(i) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary and any Bonus granted and
previously unpaid or the pro-rata portion of any Bonus earned by
Executive pursuant to any plan (if necessary, the Company may pay
such Bonus when all bonuses for that Fiscal Year are calculated
and paid) through the date of Executive's Termination of Service;
(ii) Immediate vesting of any stock options or other rights previously
provided to Executive under any Company Long-Term Incentive Plan;
(iii) Payment of any other benefits provided by the Company in
accordance with the terms and conditions of such benefits and
this Agreement.
(iv) Payment of a lump sum amount equal to the remaining Term of
Executive's Base Salary. (Payment to be made to Executive's
Estate.)
e. FOR REASON OF VOLUNTARY RESIGNATION NOT CONSTITUTING CONSTRUCTIVE
TERMINATION
In the event of Executive's Termination of Service for reason of
voluntary resignation by Executive not constituting Constructive
Termination, Executive shall be entitled to receive the following upon
such Termination of Service:
(i) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary and any Bonus granted and
previously unpaid or the pro-rata portion of any Bonus earned by
Executive pursuant to any plan (if necessary, the Company may pay
such Bonus when all bonuses for that Fiscal Year are calculated
and paid) through the date of Executive's Termination of Service;
(ii) Performance of Company obligations with respect to Executive's
exercise of any stock options or other rights previously granted
to Executive under any Company Long-Term Incentive Plan provided
such options or other rights have vested as of the date of the
termination of Executive's service in accordance with any
agreement
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between the Company and Executive covering such options or other
rights;
(iii) Payment of any Disability or other benefits provided to Executive
by the Company in accordance with the terms and conditions of
such benefits and this Agreement.
f. FOR REASON OF CAUSE
(i) In the Event of Executive's Termination of Service for reason of
Cause, the Company's obligations to Executive shall be limited
to:
(ii) Payment immediately upon Executive's Termination of Service of
any previously unpaid Base Salary;
(iii) Performance of Company obligations with respect to Executive's
exercise of any stock options or other rights previously granted
to Executive under any Company Long-Term Incentive Plan provided
such options or other rights have vested as of the date of the
termination of executive's service in accordance with any
agreement between the Company and Executive covering such options
or other rights.
6. MITIGATION AND OFFSET REQUIREMENTS
Executive shall not be required to mitigate the amount of any benefit
provided for in this Agreement by actively seeking alternative employment
during the period in which such benefits are paid. In addition, except as
provided for in Paragraph 8 hereof, Executive shall not be required to
offset any such benefits provided for in this Agreement by amounts earned
as a result of Executive's employment or self-employment during the period
in which Executive is entitled to receive such benefits.
7. ADDITIONAL RIGHTS UPON A CHANGE OF CONTROL
In addition to Executive's rights to effect a Constructive Termination of
Service within twelve (12) months upon a Change of Control, the Term of
this Agreement shall be automatically extended through the close of
business twenty-four (24) months following the effective date of any Change
of Control.
8. BREACH OF CONFIDENTIALITY OR ENTERING INTO A DIRECT COMPETITION
a. DURING THE AGREEMENT PERIOD
During the period in which this Agreement remains in force and while
Executive is entitled to receive any benefits under this Agreement,
Executive shall not, without prior written consent of the Board or pursuant
to and consistent with the order of any court, legislative body or
regulatory agency, (a) engage directly or indirectly
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(including by way of example only, as a principal, partner, venturer,
employee or agent) nor have any direct or indirect interest, in any
business which competes with Company or its Enterprises in any material
way, (b) disclose to any third party, either directly or indirectly,
any non-public information regarding the Company's or its Enterprises'
business, customers, financial condition, strategies or operations the
disclosure of which could possibly harm the Company or its Enterprises
in any material way. Clause (a) above shall not apply to any
investment by Executive in the stock of a publicly-traded corporation,
provided such investment constitutes less than five percent (5%) of
such corporation's voting shares.
In the event that, Executive violates clauses (a) or (b) above,
Executive's rights to any benefits under this Agreement shall
immediately terminate.
b. UPON TERMINATION OF AGREEMENT
It is understood and agreed that the nature of the methods employed in
Company's Agreement shall be made in the event of Executive's death
prior to the distribution of all benefits due Executive under this
Agreement. Each beneficiary designation shall be effective only when
filed in writing with the Company during Executive's lifetime. If
Executive designates more than one beneficiary, distributions of cash
payments shall be made in equal proportions to each beneficiary unless
otherwise provided for in Executive's beneficiary designation.
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The filing of a new beneficiary designation shall cancel all designations
previously filed. Any finalized marriage or divorce (other than common law
marriage) of Executive subsequent to the date of filing a beneficiary
designation shall revoke such designation unless (a) in the case of divorce,
the previous spouse was not designated as beneficiary, and (b) in the case of
marriage, Executive's new spouse had previously been designated as
beneficiary. Executive's Spouse shall join in any designation of a
beneficiary other than Executive's Spouse.
If Executive fails to designate a beneficiary as provided for above, or
if the beneficiary designation is revoked by marriage, divorce or otherwise
without execution of a new designation, or if the beneficiary designated by
Executive dies prior to distribution of the benefits due Executive under this
Agreement, the Board of Directors of the Company shall direct the
distribution of any benefits due under this Agreement to Executive's estate.
10. SUCCESSORS
Except as provided for in Paragraph 9 above, the rights and
duties of a party hereunder shall not be assignable by that party provided,
however, that this Agreement shall be binding upon and shall inure to the
benefit of any successor of the Company, and any such successor shall be
deemed substituted for the Company under the terms of this Agreement. The
term successor as used herein shall include any person, firm, corporation or
other business entity which at any time, by merger, purchase or otherwise,
acquires substantially all of the assets or business of the Company.
11. ATTORNEYS' FEES
a. SUBSEQUENT TO ANY CHANGE OF CONTROL
Subsequent to any Change of Control, in any action at law or in equity
brought by either party hereto to enforce any of the provisions or
rights under this Agreement, the Company, in addition to bearing its own
expenses, shall pay to Executive all costs, expenses and reasonable
attorneys' fees incurred therein by Executive (including without
limitation such costs, expenses and fees on any appeals), and if
Executive shall recover judgment in any such action or proceeding, such
costs, expenses and attorneys' fees shall be included as part of such
judgment.
b. PRIOR TO ANY CHANGE OF CONTROL
Prior to any Change of Control, in any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as
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determined by the Court in a final judgment or decree, shall pay the
successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including
without limitation such costs, expenses and fees on any appeals), and if
such successful party or parties shall recover judgment in such action
or proceeding, such costs, expenses and attorneys' fees shall be
included as part of such judgment.
Notwithstanding the foregoing provisions, in no event prior to a Change
of Control shall the successful party or parties be entitled to recover an
amount from the unsuccessful party or parties for costs, expenses and
attorneys' fees that exceeds the costs, expenses and attorneys' fees incurred
by the unsuccessful party in connection with the action or proceeding.
12. ARBITRATION
Company and Executive agree with each other that any claim of Executive
arising out of or relating to this Agreement or the breach of this Agreement
or Executive's employment by Company, including, without limitation, any
claim for compensation due, wrongful termination and any claim alleging
discrimination or harassment in any form shall be resolved by binding
arbitration, except for claims in which injunctive relief is sought and
obtained. The arbitration shall be administered by the American Arbitration
Association under its Commercial Arbitration Rules at the American
Arbitration Association Office nearest Executive's place of employment. The
award entered by the arbitrator shall be final and binding in all respects
and judgment thereon may be entered in any Court having jurisdiction.
13. ENTIRE AGREEMENT
With respect to the matters specified herein, this Agreement contains
the entire agreement between the Company and Executive and supersedes all
prior written agreements, understandings and commitments between the Company
and Executive. No amendments to this Agreement may be made except through a
written document signed by the Executive and approved in writing by the
Company's Board.
14. VALIDITY
In the event that any provision of this Agreement is held to be invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provision of this Agreement.
15. PARAGRAPHS AND OTHER HEADINGS
Paragraphs and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretations of this Agreement.
16. NOTICE
Any notice or demand required or permitted to be given under this
Agreement shall be made in writing and shall be deemed effective upon the
personal delivery thereof if delivered or, if mailed, forty-eight (48) hours
after having been deposited in the United States mail, postage prepaid,
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and addressed, in the case of the Company, to the attention of the Board of
Directors at the Company's then principal place of business, presently 0000
X. 0xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx, 00000 and, in the case of
Executive, to ________________________. Either party may change the address
to which such notices are to be addressed to it by giving the other party
notice in the manner herein set forth.
17. RIGHT OF EMPLOYMENT
Nothing stated or implied by this Agreement shall prevent the Company
from terminating the Service of Executive at any time nor prevent Executive
from voluntarily terminating Service at any time.
18. WITHHOLDING TAXES AND OTHER DEDUCTIONS
To the extent required by law, the Company shall withhold from any
payments due Executive under this Agreement any applicable federal, state or
local taxes and such other deductions as are prescribed by law or Company
policy.
19. APPLICABLE LAW
To the full extent controllable by stipulation of the Company and
Executive, this Amendment shall be interpreted and enforced under Arizona law.
IN WITNESS WHEROF, the Company has caused this Agreement to be executed
by its duly authorized representative(s) and Executive has affixed his
signature as of the date first written above.
EXECUTIVE GAMETECH INTERNATIONAL, INC.
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XXXXXXX X. XXXXXX
BY:
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NAME:
--------------------
TITLE:
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