Exhibit 5
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GAMETECH INTERNATIONAL, INC.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into at
Tempe, Arizona on this 8th day of February, 1999 by and between Gametech
International, Inc., a Delaware corporation ("Gametech"), and Xxxxxx X. Xxxxxxx
("Executive") and shall be effective as of the Effective Date as defined in
Paragraph 3 of this Agreement.
WHEREAS
A. Bingo Technologies Corporation ("BingoTech") and the other parties
thereto have entered into a Stock Purchase Agreement dated as of February 8,
1999 (the "Acquisition Agreement"), pursuant to which BingoTech has become a
wholly-owned subsidiary of Gametech (the "Acquisition"), and which requires,
among other things, that Executive enter into this Agreement.
B. Executive has been employed as an employee of BingoTech.
C. Gametech intends to continue the business of BingoTech after the
Closing of the Acquisition Agreement. To preserve and protect the assets of
BingoTech, including BingoTech's goodwill and customers of which the Executive
has, and will have, knowledge in his role as an employee of Gametech, the
Executive has agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the provisions hereinafter
described, Gametech and Executive agree as follows:
1. DUTIES OF EXECUTIVE
During the term of this Agreement, Executive shall be employed by
Gametech as Vice President of Strategic Business Development of Gametech,
reporting to the Chief Executive Officer of Gametech, and in that capacity shall
perform all functions and duties consistent with such position on behalf of
Gametech in an efficient, trustworthy and professional manner.
Executive agrees to devote such time as necessary for the performance
of his duties under this Agreement so long as his employment under this
Agreement is continued by Gametech. 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
Gametech 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, Gametech shall employ Executive and Executive accepts such employment
under the conditions set forth herein for a two (2) year term (the "Term")
beginning on the Effective Date of this Agreement and ending upon the close of
business on the second anniversary of the Effective Date. Notwithstanding the
foregoing, if this Agreement is not terminated in accordance with the provisions
herein on or before the expiration of its 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 Term of the
Agreement, or ninety (90) days prior to the expiration of any subsequent two (2)
year Term, either Executive or Gametech 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 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; (ii) any conduct by Executive which is materially
injurious to Gametech or its Enterprises, including any action or inaction by
Executive which may jeopardize any governmental registrations, licenses, permits
or other governmental permission, material to the business of Gametech in any
jurisdiction that Gametech does or seeks or may seek to do business or (iii) any
material breach of this Agreement by Executive. (Such cause for conduct shall
exist if Executive is guilty of dishonesty, gross neglect of duty hereunder, or
other similarly serious act or omission which materially impairs Gametech's
ability to conduct its ordinary business in its usual manner.). Cause shall be
determined by the Board of Directors.
d. "CHANGE OF CONTROL" shall mean any of the following events: (i)
Gametech consolidates with, or merges with or into, another entity or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of Gametech's assets to any entity, or any entity consolidates
with, or merges with or into, Gametech and Gametech is not the surviving
Corporation; (ii) the liquidation or dissolution of Gametech; (iii) during any
consecutive two year period, individuals who
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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 Gametech 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 Gametech 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 a
location other than the Carson City, Nevada area.
g. "DISABILITY" shall be deemed to have occurred if Executive makes
application for or is otherwise eligible for disability benefits under any
Gametech-sponsored long-term disability program covering Executive, and
Executive qualifies for such benefits. In the absence of a Gametech-sponsored
long-term disability program covering Executive, Executive shall be presumed to
be totally and permanently disabled if so determined by Gametech'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. "EFFECTIVE DATE" shall mean the date of this Agreement.
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i. "ENTERPRISE" shall mean any joint venture, business pursuant to a
joint operating agreement, or other alliance or affiliated business of Gametech.
j. "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.)
k. "FISCAL YEAR" shall mean the twelve-month period beginning
November 1, unless Gametech, with the approval of the Internal Revenue Service,
shall establish a different fiscal year.
l. "SERVICE" shall mean Executive's employment with Gametech, 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 GAMETECH
a. BASE SALARY. Beginning on the Effective Date, during the Term the
minimum Annual Base Salary payable to Executive shall be $100,000. Such Base
Salary shall be paid in equal semi-monthly installments on Gametech'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.
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 Gametech, or pursuant to a plan which may be adopted by Gametech
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 Gametech during the Term. Subject to the sole
discretion of the Board of Directors, grants to Executive under such Long-Term
Incentive Plan shall be generally comparable to Executive in amount and other
key design features, including vesting restrictions, with any other plans
provided to any other executive at Gametech.
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d. FRINGE BENEFITS AND OTHER. Gametech shall provide Executive with
the following:
(i) Such benefits and perquisites, including but not limited to
medical insurance for Executive and his family (consistent with Gametech's
benefits plans), disability insurance, deferred compensation or any form of
savings or retirement plan, and an automobile allowance as may from time to time
be provided to other executives of Gametech, which automobile allowance shall
initially be $750 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 Gametech who
participate in such programs;
(ii) Reasonable vacation/sick leave each year during the Term of
thirty (30) days. Executive is allowed to accrue a maximum of sixty (60) full
days of unused vacation/sick leave time. Said vacation/sick leave 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 Gametech;
(v) Nothing in this Agreement shall be construed as limiting or
restricting any benefit to Executive under any pension, profit-sharing or
similar retirement plan, or under any group life or group health or accident or
other plan of Gametech, for the benefit of its employees generally or a group of
them, now or hereafter in existence.
5. EXECUTIVE'S RIGHTS UPON TERMINATION OF SERVICE
a. FOR REASON OF VOLUNTARY RESIGNATION CONSTITUTING CONSTRUCTIVE
TERMINATION OR TERMINATION BY GAMETECH 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 Gametech 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 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, Gametech may pay such Bonus when
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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 Gametech Long-Term Incentive Plan;
(iii) Payment of a lump sum amount equal to two (2) years of
Executive's Base Salary; and
(iv) Medical, life and disability insurance for a period of two
years (consistent with Gametech's benefit plans).
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 hereof, Executive (or if, after
expiration of the Term, 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:
(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, Gametech 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 Gametech Long-Term Incentive Plan;
(iii) Payment of any Disability or other benefits, accrued and
owed to Executive as of the date of the expiration of the Term (consistent with
Gametech's benefit plans), by Gametech 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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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 previously unpaid
or the pro-rata portion of any Bonus earned by Executive pursuant to any plan
(if necessary, Gametech 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 Gametech Long-Term Incentive Plan;
(iii) Payment of any disability or other benefits, accrued and
owed to Executive as of the date of the expiration of the Term (consistent with
Gametech's benefit plans), by Gametech and medical insurance for (1) year after
Termination of Service (consistent with Gametech's benefit plans), each 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.
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, Gametech 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 Gametech Long-Term Incentive Plan;
(iii) Payment of any other benefits accrued and owed to Executive
as of the date of the expiration of the Term (consistent with Gametech's benefit
plans) provided by Gametech in accordance with the terms and conditions of such
benefits and this Agreement;
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(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, Gametech 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 Gametech obligations with respect to
Executive's exercise of any stock options or other rights previously granted to
Executive under any Gametech 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 Gametech and Executive covering
such options or other rights; and
(iii) Payment of any Disability or other benefits, accrued and
owed to Executive as of the date of the expiration of the Term (consistent with
Gametech's benefit plans) by Gametech in accordance with the terms and
conditions of such benefits and this Agreement.
f. FOR REASON OF CAUSE. In the event of Executive's Termination of
Service for reason of Cause, Gametech's obligations to Executive shall be
limited to:
(i) Payment immediately upon Executive's Termination of Service
of any previously unpaid Base Salary;
(ii) Performance of Gametech obligations with respect to
Executive's exercise of any stock options or other rights previously granted to
Executive under any Gametech 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 Gametech and Executive covering
such options or other rights.
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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
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) breach the terms of the Non-Competition Agreement between Executive and
Gametech, (b) disclose to any third party, either directly or indirectly, any
non-public information regarding Gametech's or its Enterprises' business,
customers, financial condition, strategies or operations the disclosure of which
could possibly harm Gametech or its Enterprises in any material way. This
Paragraph 8 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 this Paragraph 8, Executive's
rights to any benefits under this Agreement shall immediately terminate.
9. SUCCESSORS
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 Gametech, and any such successor
shall be deemed substituted for Gametech under the terms of this Agreement;
PROVIDED FURTHER that in the event of death of Executive, the distribution of
benefits remaining due under this Agreement shall be to beneficiaries designated
by Executive. 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 Gametech.
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10. 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, Gametech, 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 arbitration or action at law or in equity brought by either party hereto
to enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such proceeding, as determined by a court or arbitrator in
a final judgment or decision, 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 reasonable fees
relating to any appeals), and if such successful party or parties shall recover
judgment in any such arbitration, 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.
11. ARBITRATION
Gametech and Executive agree with each other that any claim arising out
of or relating to the interpretation of this Agreement or the breach of this
Agreement or Executive's employment by Gametech, 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 following a Change of Control and 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. Notwithstanding anything contrary in the Commercial Arbitration
Rules, the arbitrator shall award costs, expenses and reasonable attorney's fees
to the prevailing party as provided in Section 10.b hereof. 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.
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12. ENTIRE AGREEMENT
With respect to the matters specified herein, this Agreement contains
the entire agreement between Gametech and Executive and supersedes all prior
written agreements, understandings and commitments between Gametech and
Executive. No amendments to this Agreement may be made except through a written
document signed by the Executive and approved in writing by Gametech's Board.
13. 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.
14. 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.
15. 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, and
addressed, in the case of Gametech, to the attention of the Board of Directors
at Gametech's then principal place of business, presently 0000 Xxxx 0xx Xxxxxx,
Xxxxx, Xxxxxxx 00000 and, in the case of Executive, to 2118 The Xxxx Xxxx,
Xxxxxxxxx, Xxxxxx 00000. 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.
16. RIGHT OF EMPLOYMENT
Nothing stated or implied by this Agreement shall prevent Gametech from
terminating the Service of Executive at any time nor prevent Executive from
voluntarily terminating Service at any time in accordance with the terms hereof.
17. WITHHOLDING TAXES AND OTHER DEDUCTIONS
To the extent required by law, Gametech 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 Gametech
policy.
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18. APPLICABLE LAW
This Agreement shall be interpreted and enforced under Arizona law.
19. PRIOR AGREEMENT.
Executive acknowledges and agrees that as of the Effective Time the
Employment Agreement between Executive and BingoTech dated as of January 1, 1997
is terminated and any and all rights of Executive to receive benefits or other
payments thereunder after the Effective Time are waived.
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IN WITNESS WHEREOF, Gametech 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.
XXXXXX X. XXXXXXX GAMETECH INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxxxx
----------------------- By:/s/ Xxxx X. Xxxxx
----------------------------
Title: Chief Executive Officer
--------------------------
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