EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 18th day of October
1996 by and between Spintek Gaming Technologies, Inc., a California
corporation (the "Corporation"), and Xxxx X. Xxxxxxx, (the "Executive") with
reference to the following facts:
WHEREAS, the Corporation hired Executive in the position of Chief
Operating Officer of the Corporation on April 1, 1996; and
WHEREAS, there have been significant changes in the Corporation,
both in management and in purpose, since Executive's employment; and
WHEREAS, the Corporation now desires to hire Executive as its Chief
Executive Officer;
WHEREAS, in order to retain the services of the Executive as Chief
Executive Officer and to maximize the period of his continued availability, the
Corporation desires to enter into this Employment Agreement with Executive
as is more fully set forth herein.
NOW, THEREFORE, on the basis of the foregoing facts and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
1. Employment
The Corporation hereby agrees to, and does hereby, employ the
Executive and Executive hereby accepts employment with the Corporation as
Chairman of the Board of Directors and Chief Executive Officer on the terms
and conditions set forth in this Agreement (the "Agreement").
2. Term
The Employment of the Executive hereunder shall commence on
October 18, 1996 and shall continue for a period of two (2) years until October
17, 1998 (the "Term"). After the original Term, this Agreement shall continue
in effect and shall be deemed automatically renewed for a second Term unless
either party hereto shall notify the other in writing at least thirty (30) days
prior to the end of the Term of their intention of not renewing the same. The
Corporation agrees not to terminate the Executive during the Term except for
Cause. Executive shall be considered terminated, at the Executive's election,
if (i) there is a Change of Control of the Corporation or (ii) a reduction in
Executive's duties, title, salary or position with the Corporation.
3. Duties and Services
A. The Corporation and the Executive hereby agree that, subject
to the provisions of this Agreement, the Corporation will employ the Executive
and the Executive will serve the Corporation as Chairman and Chief Executive
Officer during the Term or any extension thereof.
B. Executive agrees during the term of this Agreement not to usurp
a corporate opportunity for his own financial gain. A corporate opportunity
shall be defined as a business opportunity which the corporation is financially
able to undertake, is, from its nature, in the line of the Corporation's
business and is one in which the Corporation has an interest or a reasonable
expectancy. Executive agrees that he shall offer a corporate opportunity to the
Corporation. The Corporation shall have ten (10) days to either take the
opportunity for itself or to reject the opportunity in which case Executive
shall have the right to pursue such opportunity for himself. Failure to notify
Executive within such ten (10) day period shall be deemed a rejection of the
opportunity by the Corporation.
4. Definitions The following terms shall have the following
meanings when used herein
A. Change of Control
A Change of Control shall be deemed to have occurred at such time as:
(1) any person (other than the Corporation, any
Subsidiary of the Corporation or any employee benefit plan of the Corporation)
("Person") is or becomes the beneficial owner, directly or indirectly, through a
purchase, merger or other acquisition or transaction or series of transactions,
of shares of capital stock, whether presently issued or issued in the future, of
the Corporation entitling such Person to exercise forty (40%) percent or more of
the total voting power of all shares of capital stock of the Corporation
entitled to vote generally in the election of directors; or;
(2) any consolidation of the Corporation with, or merger
of the Corporation into, any other Person, any merger of another Person into
the Corporation (other than a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock or (y) which is effected solely to change the jurisdiction of
incorporation of the Corporation and results in a reclassification, conversion
or exchange of outstanding shares of Common Stock into solely shares of
Common Stock); or
(3) a change of Board of Directors of the Corporation in
which the individuals who constituted the Board of Directors of the Corporation
as of October 18, 1996 cease for any reason to constitute a majority of the
directors then in office.
B. Cause
Cause shall exist when and only when Executive (i) after written
notification by the Board of Directors or the CEO has willfully failed and
continues to fail to substantially perform his duties (other than failure
resulting from incapacity due to physical or mental illness), (ii) is convicted
of a crime constituting a felony, or (iii) has been proven to be dishonest, has
embezzled or has committed common law fraud.
5. Compensation.
A. As salary during the Term, the Corporation shall pay the
Executive, in accordance with its normal payroll, a minimum salary as follows:
(1)One Hundred Twenty Thousand Dollars ($120,000) per
year from date through December 31, 1996;
(2)One Hundred Thirty-two Thousand Dollars ($132,000)
per year from January 1, 1997 through December 31, 1997; and
(3)One Hundred Fifty Thousand Dollars ($150,000) from
January 1, 1998 through October 17, 1998;
provided, however, such salary is to be paid no less than bimonthly during the
Term. The Executive shall receive such additional salary as the Board of
Directors of the Corporation may from time to time determine during the Term.
Unless expressly agreed in writing by the parties hereto, no such additional
compensation or benefits shall be deemed to modify or otherwise affect the
terms or conditions of this Agreement. Notwithstanding the foregoing if
Executive is terminated other than (1) for Cause, as defined herein, or (2) as a
result of a Change of Control, as defined herein, Executive shall be entitled to
two (2) years salary (based upon his annual salary at the time of termination)
as severance. Such payment shall serve as Executive's sole and exclusive rights
pursuant to this Agreement, provided; however, such payment shall not affect
Executive's rights as to options to purchase shares in accordance with paragraph
7 hereof In the event of a Change of Control, Executive shall be entitled to two
(2) years salary, as severance, provided Executive exercises his right pursuant
to this Agreement to treat such change of control as a termination of this
Agreement. In the event Executive resigns, except as a result of a Change of
Control, Executive shall be entitled to no further remuneration or benefits
pursuant to this Agreement. In the event Executive is terminated other than for
cause or their is a Change in Control all obligations to pay Executive shall be
due and owed in a lump sum payment exactly thirty days from the earlier of (i)
the date of termination, (ii) the date of the Change of Control and/or; (iii)
the date Executive elects termination pursuant to the provisions of Paragraph 2
hereof.
B. Executive shall receive an automobile for his use while in Las
Vegas and the use of a Corporate Apartment having a minimum of two
bedrooms.
C. The Corporation shall pay Executive additional compensation,
based upon sales of its M.A.N.A.G.E.R.S. Systems ("Systems"), the following
sums: 1. Upon sale of the first 10,000 Systems $10,000; 2. Upon sale of the
second 10,000 Systems the sum of $20,000; and 3. Upon the sale of the third
10,000 System's the sum of $30,000. All such additional compensation shall be
earned when the sale is made as evidenced by purchase orders and shall be paid
within thirty days of Corporation's receipt of payment for sales aggregating the
various numbers of Systems set forth above.
D. Executive shall be entitled to two (2) round trip tourist class
tickets per month for nonbusiness travel from Las Vegas/Atlanta for Executive
or his nominee.
E. Executive shall also be provided with a life insurance policy on
his life of not less than the greater of (i) $150,000, (ii) his then current
annual salary, or (iii) his total salary package for the immediately preceding
calendar year taking into consideration all bonuses and benefits paid to or
provided for Executive.
6. Other Benefits
During the Term the Executive shall receive all rights and benefits for
which he is then eligible under any employee benefit plan or bonus plan which
the Corporation generally provides for its employees. Such benefits shall
include, but not be limited to, a bonus plan, which shall be explicitly set
forth by the Corporation's Board of Directors within ninety (90) days of the
execution of this Agreement, and full medical and health insurance for
Executive. In no event shall the bonus be less than the largest bonus (based on
percentage of salary) received by any member of the executive management team
other than the Chief Executive Officer of the Corporation and employees directly
employed in Sales and Marketing Division of Corporation.
7. Grant of Options to Acquire Stock
Corporation acknowledges that it currently has plans to adopt a
qualified stock option plan at the next annual meeting of shareholders and that
Executive will be covered under such plan. Further, Corporation guarantees
Executive will receive, whether such stock option plan is adopted or not, a
minimum of 100,000 options to acquire common shares of the Corporation for
each twelve (12) month period for which Executive is employed by
Corporation, that such options will vest subject only to the passage of time,
and that the exercise price will not be in excess of the closing price of the
publicly traded shares on the last day of any such twelve month period. The
parties further agree that a mutually satisfactory Agreement shall be entered
into between Corporation and Executive no later than thirty (30) days from the
date of the next annual meeting of Shareholders.
8. Death or Disability
In the event of the death of the Executive or the disability of the
Executive, this Agreement shall immediately terminate and the Corporation shall
pay to the Executive or his estate one (i) years salary in a single lump sum
payment which payment shall be due and payable upon the sooner of (i) thirty
(30) days of Executive's death or (ii) thirty (30) days after Executive is
declared by his physician incapable of performing his duties as specified in
this Agreement. The Corporation shall have the right to fund Executive's death
and/or disability benefit through insurance other than the insurance required by
Paragraph 5(d) hereof.
9. Place of Performance
In connection with his employment by the Corporation during the
Term, the Executive shall at all times be entitled to an office at the principal
executive offices of the Corporation, located in Las Vegas, Nevada, or at such
other office of the Corporation, in Las Vegas, Nevada, as the Chief Executive
Officer of the Corporation shall, in his reasonable discretion deem to be in the
best interest of the Corporation. In the event the Corporation moves its
principal place of business outside of Las Vegas, Nevada, other than at the
direction of executive, Executive at his option shall have the right to
terminate this Agreement and receive the greater of such salary due him for the
remaining Term of this Agreement but in no event less than twelve (12) months
salary.
10. Notice
All Notices and other communications hereunder shall be in writing
and shall be deemed to have been validly served, given or delivered five (5)
days after deposit in the United States mail, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
after delivery to any overnight courier, or when transmitted by facsimile
transmission facilities, and addressed to the party to be notified as follows:
If to Corporation at: Spintek Gaming Technologies, Inc.
000 Xxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx, 00000
Attn: Chairman
Facsimile #: 000-000-0000
If to Executive at: Xxxx X. Xxxxxxx
000 Xxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 000000
Facsimile #: 000-000-0000
The parties may from time to time and at any time supplement or
change the addresses herein by given Notice hereunder to the other party
hereto.
11. Miscellaneous
A. This Agreement shall inure to the benefit of and be binding
upon the Corporation, its successors and assigns. This Agreement may not be
assigned by the Corporation without the prior written consent of the Executive.
The obligations and duties of the Executive hereunder shall be personal and not
assignable.
B. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be valid and effective under applicable
law, but if any provision of this Agreement is found to be prohibited or invalid
under applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
C. For purposes of this Agreement an "affiliate" of a person
shall include any person, firm, corporation, association, organization, or
unincorporated trade or business that, now or hereinafter directly or
indirectly, controls, or is controlled by, or practices is under common control
with such person.
D. Any waiver, alteration or modification of any terms of this
Agreement will be valid only if made in writing and signed by the parties
hereto. Each party hereto from time to time may waive any of his or its rights
hereunder without effecting a waiver with respect to any subsequent occurrences
or transactions hereunder.
E. Captions and paragraph heading used herein are for convenience only
are not a part hereof and shall not be used in construing this Agreement.
F. This Agreement constitutes the entire understanding and
agreement of the parties and, except as otherwise provided hereunder, there are
no other agreements or understandings, written or oral, in effect between the
parties relating to the employment of the Executive by the Corporation during
the Term. All prior negotiations or agreements, if any, between the parties
relating solely to the employment of the Executive by the Corporation during
the Term are hereby superseded.
G. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Nevada.
H. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but both of which taken together shall
constitute one and the same instrument.
12. Arbitration
Any controversy between the parties hereto, including the
construction or application of any of the terms, covenants or conditions of this
Agreement, shall on written request of one party served on the other be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect. The arbitrator selected must be a
member of the National Academy of Arbitrators and must have significant
experience in arbitrating labor disputes. Further, the Arbitrator must be an
attorney practicing labor law in the Southern California area. The cost of such
arbitration shall be borne by the losing party or in such proportions as the
Arbitrator(s) shall decide. Judgment may be entered on the arbitrator's award
in any court of competent jurisdiction.
13. The Executive's Employment
Nothing contained in this Agreement (i) obligates the Corporation or
any subsidiary of the Corporation to employ the Executive in any capacity
whatsoever, or (ii) prohibits or restricts the corporation (or any such
subsidiary) from terminating the employment, if any, of the Executive at any
time or for any reason whatsoever, with or without cause, subject to the terms
and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Executive
/s/ XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
Spintek Gaming Technologies, Inc.
By: /s/ XXXXXX X. XXXXXXXXX
Xxxxxx X. Xxxxxxxxx, Chairman
By:/s/ XXXXXXX X. XXXXXXXXX V
Xxxxxxx X. Xxxxxxxxx V
Assistant Secretary
