Exhibit 10.34
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "AGREEMENT") is made as of April 13,
1999 (the "EFFECTIVE DATE") by and between Anchor Gaming, a Nevada
corporation (the "COMPANY"), and Xxxxxxx X. Xxxxxxxx ("CONSULTANT").
BACKGROUND
The Company has entered into an Agreement and Plan of Merger, dated
as of March 9, 1999 (the "MERGER AGREEMENT"), with Powerhouse Technologies,
Inc., a Delaware corporation ("POWERHOUSE"), pursuant to which Anchor
Powerhouse Acquisition Corporation, a Delaware corporation, a wholly-owned
subsidiary of the Company will merge (the "MERGER") with and into Powerhouse.
Consultant serves as the President and Chief Executive Officer of
Powerhouse pursuant to an employment agreement with Powerhouse, dated as of
January 1, 1998, which by its terms is scheduled to expire on January 1, 2002
(the "EMPLOYMENT AGREEMENT") and as such has gained certain knowledge of the
business and affairs of Powerhouse and its policies, methods, personnel, and
plans for the future.
Effective as of the day and time of the Merger (the "EFFECTIVE
TIME"), the parties desire to terminate Consultant's position as President
and Chief Executive Officer of Powerhouse and enter into a consulting
relationship, under which Consultant would provide services to the Company in
accordance with the terms and conditions of this Agreement.
Each of Consultant and the Company agree that the terms, conditions,
and provisions of this Agreement are fair and reasonable and are necessary to
protect the legitimate business interests of each other.
THEREFORE, in consideration of the mutual promises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, the Company and Consultant
agree as follows:
1. STATUS OF EMPLOYMENT AGREEMENT. As of the Effective Time,
Consultant hereby terminates his employment pursuant to Section 8(d) of the
Employment Agreement as President and Chief Executive Officer of Powerhouse,
and the Company hereby acknowledges Powerhouse's acceptance of such
resignation under the Employment Agreement. The Company and Consultant hereby
agree that upon payment to the Consultant of the amounts set forth on
SCHEDULE 1 to this Agreement, the only terms of the existing Employment
Agreement that will remain to be performed by the Company are as listed on
SCHEDULE 1 to this Agreement. Consultant agrees that his obligations under
the Employment Agreement will survive the execution of this Agreement
pursuant to the terms of the Employment Agreement.
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2. CONSULTING SERVICES. Subject to the terms and conditions set
forth in this Agreement, the Company hereby agrees to engage Consultant as an
independent business consultant for the Term (as defined in Section 3). In
such position, Consultant shall perform such consulting service for the
Company diligently and to the reasonable satisfaction of the Company's Board
of Directors. During the first six month period after the Effective Time (the
"INITIAL PERIOD"), Consultant will devote his full professional time and
efforts to the business and operations of the Company. During the Initial
Period, Consultant shall maintain his residence within 50 miles of Las Vegas,
Nevada. Thereafter, and during the remaining Term (as defined in SECTION 3),
Consultant will be available to the Company to devote himself to the tasks
specified by the Board of Directors of the Company and the Chairman of the
Board and Chief Executive Officer of the Company as follows (a) for the
second six-month period following the Effective Time, for up to 24 hours per
month; (b) for the third six month period following the Effective Time, for
up to 16 hours per month; and (c) for the fourth six month period following
the Effective Time, for up to 8 hours per month. Consultant will report to
the Chief Executive Officer of the Company or the Chairman of the Board of
the Company. Consultant agrees to serve as a member of the Board of Directors
of the Company for two years from the Effective Time.
3. TERM AND TERMINATION. The term of Consultant's engagement under
this Agreement (the "TERM") will commence on the Effective Time and continue
until the second anniversary of the Effective Time. The Company may end the
Term earlier under the following circumstances:
(a) in the event of Consultant's death;
(b) if Consultant is totally disabled so that he has been
unable to perform his duties and responsibilities hereunder for a
period of 180 consecutive days;
(c) if the Company's Board of Directors terminates this
Agreement with "cause" (as defined below); or
(d) if Consultant materially breaches the terms of this
Agreement and such breach remains uncured after reasonable written
notice of and opportunity to cure such breach.
If the Company terminates this Agreement pursuant to this SECTION 3 prior to
the stated end of the Term, Consultant (or his representative in the event of
his death) will be entitled to receive payment of all compensation described
herein, except that amounts due under SECTION 4 will only be due through the
date of termination. The provisions of SECTIONS 6 and 7 hereof will survive
any termination in accordance with their terms. As used in this Agreement,
termination with "CAUSE" means any termination evidenced by a finding adopted
in good faith by the Board of Director of the Company that the Consultant (i)
willfully and continually failed to substantially perform his duties under
this Agreement (other than a failure resulting from the Consultant's
incapacity due to physical or mental illness) and such failure continues
after written notice to the Consultant
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providing a reasonable description of the basis for the determination that
the Consultant has failed to perform his duties, (ii) has been indicted for
or has entered into a plea bargain with respect to a criminal offense other
than misdemeanors not disclosable under the federal securities laws, (iii)
has breached this Agreement in any material respect and such breach is not
susceptible to remedy or cure or, is susceptible to remedy or cure and no
material damage to the Company has occurred, is not cured or remedied
reasonably promptly after written notice to the Consultant providing a
reasonable description of the breach, (iv) engaged in conduct to the material
detriment of the Company that is dishonest, fraudulent, unlawful or grossly
negligent or which is not in compliance with the Company's Code of Conduct or
similar applicable set of standards or conduct and business practices set
forth in writing and provided to the Consultant prior to such conduct, (v)
has been found by any regulatory authority, gaming commission, lottery agency
or similar authority in any jurisdiction in which the Company is conducting
business or intends to submit a proposal or conduct business unsuitable or
unfit to continue to perform his obligations to the Company under this
Agreement, and is the subject of a written notice received by the Company
from such authority of such a finding or (vi) has failed to file appropriate
applications with, provide requested information to, or otherwise fails to
cooperate with, any such authority. No act, nor failure to act, on the
Consultant's part, shall be considered "willful" for purposes of (i) above
unless he has acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best
interest of the Company.
4. COMPENSATION.
(a) During the Term, as compensation for the performance of
Consultant's services under this Agreement, the Company will pay
Consultant as follows:
(i) $150,000 per month during the Initial
Period; and
(ii) $23,000 per month for the remainder of the
Term.
(b) As consideration for the restrictions in
SECTION 6, the Company will pay Consultant
$450,000 in immediately available funds
within five (5) days after the Effective
Time.
(c) As compensation for the performance of
the Board of Director duties the same
compensation and benefits that it pays to
other members of its Board of Directors that
are not employees or officers of the
Company.
5. CONSULTANT BENEFITS; REIMBURSEMENT OF EXPENSES.
(a) The Company will pay Consultant at the Effective Time
$120,000 for relocation costs to the greater Las Vegas area.
(b) The Company will reimburse Consultant for his reasonable
travel and entertainment expenses as well as licensing costs incurred
in connection with his duties
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under this Agreement in accordance with the policies of the Company in
effect from time to time .
6. RESTRICTIVE COVENANT. In addition to any other covenants,
contracts, or agreements to which Consultant may be subject, during the Term
and for a period of two (2) years from the Effective Time (the "RESTRICTED
PERIOD"), Consultant will not without the written consent of the Chairman or
Chief Executive Officer of the Company, directly or indirectly, either as an
individual or as a consultant, partner, officer, director, over 5%
shareholder in any entity the securities of which are listed on a national
securities exchange or the NASDAQ National Market or investor, trustee,
agent, or advisor or in any other capacity whatsoever, of any Person (as
defined below):
(a) conduct or assist others in conducting any business that
is in competition with the business of the Company (the "COMPANY'S
BUSINESS") in any market area in the continental United States or
Europe;
(b) recruit, hire, assist others in recruiting or hiring,
discuss employment with, or refer to others for employment
(collectively referred to as "RECRUITING ACTIVITY") any individual who
is, or within the 6-month period immediately preceding the date of any
such Recruiting Activity was, at any time, an employee of or consultant
to the Company or its Affiliates (as defined below); or
(c) solicit any customer, supplier, client, distributor,
dealer or independent salesperson of the Company or any of its
Affiliates that has a relationship with the Company or its Affiliates
in the continental United States or Europe; or induce, attempt to
induce or assist any other Person in inducing or attempting to induce,
directly or indirectly, any such customer, dealer, distributor, or
independent salesperson to discontinue their relationship with the
Company or its Affiliates.
It is the desire and intent of the parties to this Agreement that
the provisions of this SECTION 6 be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Consultant agrees and warrants that the scope
of this covenant contained in this SECTION 6 is reasonable as to time, area,
and persons covered and is necessary to protect the legitimate business
interest of the Company. It is further agreed that such covenant will be
regarded as divisible and will be operative as to time, area, and persons to
the extent that it may be so operative, and if any part of it is declared
invalid, unenforceable, or void as to time, area, or persons covered, the
validity and enforceability of the remainder will not be affected.
The term "Affiliate" is used in this Agreement to indicate a
relationship with one or more Persons and when used shall mean (a) any
corporation or organization of which such Person is an officer, director, or
partner or is directly or indirectly the beneficial owner of five percent
(5%) or more of any class of equity securities or financial interest therein;
(b) any trust or other estate in which such Person has a beneficial interest
or as to which such Person serves as trustee or in any similar fiduciary
capacity; (c) any relative of such person being related to the person in
question
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within the second degree; (d) any director or officer of the Company or its
Affiliates; or (e) any Person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the Person specified. The term "Person" as used in this Agreement means
an individual, corporation, association, partnership, trust, or
unincorporated organization, or any governmental or regulatory body or other
entity.
7. CONFIDENTIALITY.
(a) Consultant acknowledges that the trade secrets, plans,
strategies, and technology and processes of the Company and its
Affiliates, as they may exist from time to time, and information
concerning the products, services, production, reconditioning,
development, technology, and all technical information, procurement and
sales activities and procedures, customer, supplier, or distributor
lists, promotion and pricing techniques, and credit and financial data
concerning customers, suppliers, and distributors of the Company are
valuable, special, and unique assets of the Company (collectively,
"CONFIDENTIAL INFORMATION"). In light of the competitive nature of the
industry in which the business of the Company is conducted, Consultant
agrees that all knowledge and information about the Confidential
Information known by Consultant will be considered Confidential
Information. In recognition of this, Consultant represents and agrees
that except as specifically authorized in writing by the Company, or as
may be necessary or appropriate to further the best interests of the
Company, Consultant will not, in whole or in part, (i) disclose any
Confidential Information to any Person, other than the Company, or (ii)
make use of any Confidential Information for his own purposes or for
the benefit of any other Person, other than the Company.
(b) Consultant acknowledges and agrees that all manuals,
drawings, blueprints, letters, notes, notebooks, reports, books,
procedures, forms, documents, records, or paper or copies thereof
pertaining to the operations or business of the Company or its
Affiliates made or received by Consultant or made known to him in nay
way in connection with his employment and any other Confidential
Information are and will be the exclusive property of the Company.
Consultant acknowledges that all such papers and records will at all
times be subject to the control of the Company, and Consultant agrees
to surrender the same upon request of the Company, and will surrender
such no later than any termination of his employment with the Company,
whether voluntary or involuntary. The Company may notify anyone
employing Consultant at any time of the provisions of this Agreement.
8. PROPRIETARY INFORMATION. Consultant agrees to promptly disclose
and deliver to the Company any and all improvements, inventions,
developments, discoveries, works of authorship, innovations, systems,
techniques, ideas, processes, programs, and other things which may be of
assistance to the Company or its Affiliates, whether patentable or
unpatentable, relating to or arising out of any development, service, or
product of, or pertaining in any manner to the business of, the Company or
its Affiliates or any of their customers, whether conceived, developed or
learned by Consultant, alone or with others, during or after normal business
hours, while employed by the Company (collectively referred to hereinafter as
"NEW DEVELOPMENTS").
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Consultant acknowledges and agrees that all New Developments shall be and
remain the exclusive property of the Company and that Consultant shall, upon
the request of the Company, and without further compensation, do all lawful
things requested by the Company to ensure the Company's ownership of the New
Developments, including, without limitation, the execution of all documents
requested by the Company to assign and transfer to the Company and its
assigns, all of Consultant's right, title, and interest therein, if any, and
to enable the Company to file and obtain patents, copyrights, and other
proprietary rights in the United States and foreign countries relating
thereto. Consultant hereby appoints the Company as his attorney-in-fact, with
full power of substitution, to execute and deliver such documents or patents
on behalf of Consultant.
9. INJUNCTIVE RELIEF. Each party acknowledges that a remedy at law
for any breach or attempted breach of this Agreement will be inadequate,
agrees that each party will be entitled to specific performance and
injunctive and other equitable relief in case of any breach or attempted
breach, and agrees not to use as a defense that any party has an adequate
remedy at law. This Agreement shall be enforceable in a court of equity, or
other tribunal with jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
herewith. Such remedy shall not be exclusive and shall be in addition to any
other remedies now or hereafter existing at law or in equity, by statute or
otherwise. No delay or omission in exercising any right or remedy set forth
in this Agreement shall operate as a waiver thereof or of any other right or
remedy and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right or remedy.
10. NOTICES. Any notice or other communication required or permitted
under this Agreement shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission, or sent by certified,
registered, or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed, or sent by
facsimile transmission or, if mailed five (5) days after the date of deposit
in the United States mails, as follows:
(a) If to the Company:
Anchor Gaming
000 Xxxxx Xxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Fax: (000) 000-0000
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(b) If to Consultant:
Xxxxxxx X. Xxxxxxxx
00 Xxxxxxxx Xxx., X.X.
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
with a copy to:
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X Xxxxxx
Fax: 000-000-0000
Either party may by notice given in accordance with this SECTION 10 to the
other party designate another address or person for receipt of notices under
this Agreement. All notices will be deemed to be effective upon delivery to
any agent for personal delivery or upon mailing.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter of this
Agreement, and there are no prior written or prior or contemporaneous oral
understandings or agreements relative to this Agreement that are not fully
expressed in this Agreement.
12. WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, cancelled, renewed, or extended, and the terms hereof may be
waived, only by a written instrument signed by the parties or, in the case of
a waiver, by the party waiving compliance. No delay or omission on the part
of either party in exercising any right, power, or privilege under this
Agreement shall operate as a waiver thereof. Nor shall any waiver on the part
of either party of any such right, power, or privilege, nor any single or
partial exercise of any such right, power, or privilege, preclude any further
exercise thereof or the exercise of any other such right, power, or
privilege. No waivers of or exceptions to any term, condition, or provision
of this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition, or
provision. All remedies provided for in this Agreement will be cumulative and
in addition to and not in lieu of any other remedies available to either
party at law, in equity, or otherwise.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS, AND NOT THE CHOICE OF LAW
PROVISIONS, OF THE STATE OF NEVADA.
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14. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns and legal representatives. The Company may assign this Agreement in
connection with a reincorporation, merger, or consolidation involving the
Company or a sale of substantially all of the assets of the Company, to the
surviving entity or purchaser, as the case may be.
15. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
16. HEADINGS. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
17. SEVERABILITY. The parties hereto expressly agree that it is not
the intention of any of them to violate any public policy, statutory or
common law rules, regulations, or decisions of any governmental or regulatory
body. If any provision of this Agreement is judicially or administratively
interpreted or construed as being in violation of any such provision, such
sections, sentences, words, clauses, or combinations thereof shall be
inoperative and the remainder of this Agreement shall remain binding upon the
parties hereto.
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IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
ANCHOR GAMING
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
/s/ XXXXXXX X. XXXXXXXX
------------------------------
Xxxxxxx X. Xxxxxxxx
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Schedule 1
Attached to and made a part of the
Consulting Agreement dated April 13, 1999
Between
Xxxxxxx X. Xxxxxxxx and Anchor Gaming
1. Salary, benefits and bonuses due from January 1, 1999 through
Effective Time, as determined by Compensation Committee of the Board of
Directors of Company, consistent with and pursuant to the Employment
Agreement and 1999 Company Compensation Plans.
2. Medical, dental and hospitalization insurance through December
31, 2002 as applicable to other executive officers.
3. Life Insurance:
- As provided to other officers
- $11,000 per year for split dollar life insurance for 1999, 2000,
2001, 2002
4. Two times salary and bonus as defined in paragraph 9(b) of the
Employment Agreement. This amount will be no less than $1,804,000, payable
within five days of the Effective Date.
5. All unvested restricted stock vests and is paid within five days
of the change of control.
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