1
ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
EXHIBIT 10.71
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of March 31, 1995 by and between
Alliance Gaming Corporation, a Nevada corporation (the "Company"), and Xxxxx X.
Xxxxxxx, an individual (the "Executive").
R E C I T A L S :
A. The Company considers it important and in its best
interest and the best interest of its stockholders to xxxxxx the employment of
key management personnel, and desires to retain the services of the Executive,
on the terms and subject to the conditions provided in this Agreement.
B. The Executive desires to accept employment by the
Company and to render services to the Company, on the terms and subject to the
conditions provided in this Agreement.
A G R E E M E N T :
The parties hereto agree as follows:
I. Employment. The Company hereby agrees to employ and
retain the Executive, and the Executive agrees to be employed and retained by
the Company, to render services to the Company for the period, at the rate of
compensation and upon the other terms and conditions set forth in this
Agreement.
I. Term. The term of the Executive's employment under
this Agreement (the "Term") shall commence on the date hereof and shall continue
through and including March 31, 1998, unless earlier terminated as provided in
this Agreement (the date of any termination of this Agreement or the expiration
of the Term, as provided herein, the "Termination Date").
I. Position and Duties.
(a) Position. The Executive shall serve as Senior Vice
President and General Counsel of the Company. During his employment hereunder,
the Executive shall report directly to the Chief Executive Officer and the board
of directors of the Company (the "Board").
(b) Duties. During the Term, the Executive shall have and
exercise the full power and authority of a Senior Vice President and General
Counsel of the Company and shall perform the duties contemplated by such title
and such other duties, consistent with his experience and abilities, as may be
assigned to the Executive from time to time by the Chief Executive Officer or
the Board. The Executive shall devote his full time and efforts to the business
and affairs of the Company, use his best efforts to further the interests of the
Company and at all times conduct himself in a manner which reflects credit upon
the Company. It is contemplated that the Executive shall render services to the
Company from the Company's principal place of business; however,
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
the parties acknowledge and agree that the Executive may be required to travel
extensively during the Term in fulfilling his duties hereunder.
I. Compensation and Reimbursement of Expenses.
(1) Salary. For purposes of this Agreement, each consecutive
12-month period during the Term ending on each March 31st during the Term shall
be referred to as an "Employment Year." For services rendered by the Executive
under this Agreement, the Company shall pay to the Executive as compensation
during each Employment Year during the Term, a base salary (the "Base Salary")
at an annual rate of $200,000 per year (prorated for any partial Employment
Years). Increases in the Base Salary shall be considered by the Board no less
frequently than annually, commencing at the end of the first Employment Year
hereunder and will be based upon criteria applicable to other senior executives
of the Company; it being understood, however, that the award of any such
increase shall be in the sole discretion of the Board (with the Executive not
voting on such determination). The Base Salary shall be payable in equal
bi-weekly installments, commencing with the end of the pay period which next
follows the commencement of the Term, and shall be subject to customary payroll
deductions (i.e., for social security, federal, state and local taxes and other
amounts customarily withheld from the salaries of employees of the Company).
(b) Bonus. The Executive shall be eligible to receive from
the Company, within 120 days of the end of each Employment Year, a cash bonus in
respect of such Employment Year (the "Annual Bonus"), which shall be based upon
all relevant criteria, including without limitation, (i) the performance of the
Company during such Employment Year based upon customary financial and other
criteria, such as but not limited to, return on the Company's consolidated
stockholders' equity and total capital (i.e., stockholders' equity and total
debt), performance of the Company's Common Stock, par value $.10 per share (the
"Common Stock"), and the Company's absolute and relative amounts of consolidated
cash flow, operating income and net income, and the comparison of such results
with the Company's budgets and projections therefor, and (ii) the performance of
the Executive in rendering services to the Company. It is contemplated but not
certain that the Annual Bonus shall be between 50% and 100% of the Base Salary
for each applicable Employment Year; it being understood, however, that the
Company shall not be obligated to pay to the Executive any Annual Bonus and the
payment, if any, and amount thereof shall be solely within the discretion of the
Company. It is also contemplated that the Compensation Committee of the Board
shall formulate specific criteria and performance targets for the determination
of the Executive's Annual Bonus, if any. The Annual Bonus shall be subject to
customary payroll deductions (i.e., for social security, federal, state and
local taxes and other amounts customarily withheld from the salaries of
employees of the Company).
(c) Options. The Company and Executive acknowledge and
agree that, as a consequence of Executive's initial employment arrangement with
the Company, he is entitled to receive and has been granted Executive options
(issued pursuant to the Company's 1991 Incentive Stock Option Plan and/or the
proposed 1996 Incentive Stock Option Plan (the "Plans")) to acquire 200,000
shares of Common Stock of the Company (the "Employment Options"). For any such
options to be issued under the proposed 1996 Incentive Stock Option Plan,
Executive will be granted, under a plan subject to the approval of the Board of
Directors but not of stockholders, stock appreciations rights entitling
Executive to receive a cash payment equal to the appreciation in price of
Alliance Common Stock from the date of grant to the date of exercise, in the
event that the Company's stockholders do not approve the 1996 Incentive Stock
Option Plan. The Employment Options shall have an
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
exercise price of $3.4375 per share and shall vest and become exercisable at the
end of each Employment Year as follows:
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
March 31, 1996 - 66,667 shares
March 31, 1997 - 66,666 shares
March 31, 1998 - 66,666 shares
Notwithstanding any provision to the contrary in the Plans,
and without regard to Executive's continued employment by the Company, all
vested Employment Options shall be exercisable and not expire until August 29,
2001.
(d) Reimbursement of Expenses. Consistent with established
policies of the Company as in effect from time to time, the Company shall pay to
or reimburse the Executive for all reasonable and actual out-of-pocket expenses,
including without limitation, travel, hotel and similar expenses, incurred by
the Executive from time to time in performing his obligations under this
Agreement.
I. Benefits.
(1) Benefit Plans. The payments provided in Section 4
above are in addition to any benefits to which the Executive may be, or may
become, entitled under any of the Company's employee benefit plans or programs
for which key executives are or shall become eligible, including without
limitation, retirement, life, health and disability benefits. In addition, the
Executive shall be eligible to receive during the Term benefits and emoluments
which are consistent with the benefits and emoluments provided to all senior
officers or executives of the Company.
(1) Vacation. The Executive shall be entitled to three
weeks annual paid vacation time. The Executive's entitlement to such vacation
time for each Employment Year shall vest and accrue on the first day of each
such Employment Year. In the event any of such vacation days are not used by the
Executive in any Employment Year, the Executive shall have the right to
accumulate and carry forward such number of days from year to year as shall be
consistent with the Company's policy therefor for senior executives, as in
effect from time to time. The Executive shall also be entitled to reasonable
periods of sick leave with compensation and all paid holidays given by the
Company to its senior executive officers.
(1) Club Membership. During the Employment Term, the
Company shall pay the cost of membership for the Executive and his family in
Canyon Gate Country Club, including the $15,000 balance of the Executive's
membership initiation fee as of the commencement of the Employment Term, plus
monthly dues and other expenses of such membership. Upon the termination of
Executive's employment with the Company, for any reason, the Executive shall
have the right, but not the obligation, within a period of six (6) months
following the effective date of such termination, to purchase the Company's
interest in the Canyon Gate Country Club membership acquired pursuant to this
section for $15,000, which is the amount paid by the Company for the balance of
the Executive's membership initiation fee to Canyon Gate Country Club, with no
interest thereon. The Company shall have no right to reimbursement for any
monthly dues or other expenses paid by the Company during the Employment Term.
If the Executive elects not to exercise the right to purchase the Company's
interest as set forth in this section, the Company shall be deemed to be the
owner of the country club membership, the Executive shall have no further rights
thereto, and the Company shall be responsible for all fees, dues, and other
expenses of the membership from and after the termination of Executive's
employment with the Company. The
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Company shall indemnify and hold the Executive harmless from any such fees, dues
and other expenses if the Executive elects not to exercise the right to purchase
the Company's interest as set forth in this section.
(1) No Reduction. There shall be no material reduction
or diminution of the benefits provided in this Section 5 during the Term unless
(i) the Executive shall have provided his consent to such reduction or
diminution, (ii) an equitable arrangement (embodied in an ongoing substitute or
alternative benefit or plan) has been made with respect to such benefit or plan
or (iii) such reduction is part of a program of across-the-board benefit
reductions similarly affecting the senior executive officers of the Company.
I. Benefits Payable Upon Disability.
(1) Disability Benefits. During any period of
Disability (as defined below) occurring during the Term, the Company shall
continue to pay to the Executive the Base Salary as provided herein and continue
to extend to him the benefits described in Sections 4 and 5 hereof; it being
understood that if disability benefits are provided under any disability
insurance or similar policy maintained by the Company (or maintained by the
Executive, the cost of which is reimbursed or paid by the Company), payments
under such policy shall be considered as payments by the Company and shall
offset any Base Salary payable to the Executive under this Agreement. As used in
this Agreement, "Disability" shall mean the inability of the Executive to render
services to the Company, as provided herein, as a result of physical or mental
infirmity or disability.
(1) Services During Disability. During the Term,
notwithstanding any Disability, the Executive shall, to the extent that he is
physically and mentally able to do so, furnish information, assistance and
services to the Company, and, upon the reasonable request in writing on behalf
of the Company, from time to time, he shall make himself available to the
Company to undertake reasonable assignments and fulfill his duties hereunder,
consistent with his current position with the Company and his physical and
mental health.
I. Termination. This Agreement shall be terminated in
accordance with the provisions of this Section 7, in which case the provision of
Section 8 below shall be applicable.
(a) Upon Expiration of the Term. This Agreement shall
terminate in accordance with Section 2 above.
(b) By The Company. In addition to the provisions of
Section 7(a) above, this Agreement is subject to earlier termination by the
Company, as follows:
(i) Death of Executive. If the Executive dies, this
Agreement shall terminate, the Termination Date being the date of the
Executive's death.
(ii) Disability. If the Executive has been absent from
service to the Company, as required in this Agreement, for a period of
90 days or more as a result of Disability during any consecutive
180-day period during the Term, the Company shall have the right to
terminate this Agreement, the Termination Date being 15 days after
notice thereof is provided to the Executive.
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
(iii) Termination by Company for Cause. The Company shall
have the right to terminate the Executive's employment under this
Agreement for Cause (as defined below), such termination to be
effective immediately upon notice thereof from the Company to the
Executive. For purposes of this Agreement, "Cause" shall mean the
Executive's (A) conviction of any misdemeanor involving moral
turpitude, or any felony, (B) misappropriation or embezzlement from the
Company, (C) denial or rejection of any gaming license or permit or
commission of any act which could reasonably be expected to result in
such denial or rejection, (D) any breach during the Term of Sections 10
or 11 below or (E) the persistent failure or refusal after notice to
comply with the Executive's duties or obligations hereunder.
(iv) Termination by the Company Without Cause. The
Company shall have the right to terminate the Executive's employment
hereunder for any other reason not set forth in clauses (i), (ii) or
(iii) of this Section 7(b), the Termination Date being 15 days after
notice from the Company to the Executive.
(c) By The Executive. In addition to the provisions of
Section 7(a) above, this Agreement is subject to earlier termination by the
Executive, as follows:
(i) Termination by the Executive for Just Cause. The
Executive shall have the right to terminate his employment under this
Agreement upon the occurrence of a material breach of this Agreement by
the Company, which the parties agree shall be limited to (A) a
reduction by the Company in the Base Salary below the minimum Base
Salary specified in Section 4(a) above or the failure of the Company to
pay to the Executive any portion of the Base Salary within 30 days of
the time that any such amount is due and payable hereunder or (B) the
assignment to the Executive of duties and responsibilities that are
materially inconsistent with those of a Senior Vice President and
General Counsel of the Company, in each case, in the cases of clauses
(A) and (B), which has not been cured by the Company after 30 days'
written notice from the Executive to the Company; provided, that in the
case of three such material breaches (and notice thereof), the
Executive shall thereafter have the right to terminate this Agreement
immediately upon notice to the Company in the case of a subsequent
material breach. In the event that the Executive elects to terminate
this Agreement as a result of the events described in clauses (A) or
(B) above, the Executive shall exercise such right within 10 days after
the lapsing of the 30-day period referred to above in this clause (i)
(assuming that the Company shall have failed to cure such material
breach within such period), or, as applicable, within 10 days of any
additional material breach giving rise to an immediate right of
termination; thereafter, such right to terminate shall no longer be
exercisable. The Termination Date shall be a date specified by the
Executive, which shall be between 30 and 45 days after the date of such
default notice by the Executive.
(ii) Termination by the Executive Following a Change in
Control. In the event that a Change In Control (as defined below) shall
occur at any time during the Term, the Executive shall have a one-time
right, to be exercised by providing written notice thereof to the
Company within 90 days of the consummation of the transaction in which
a Change In Control occurs, to terminate this Agreement, with the
Termination Date being a date specified by the Executive in such notice
of termination, which day shall be between 15 and 45 days following
such notice. If the Executive shall provide such notice in a timely
manner, his right to terminate this Agreement under this Section
7(c)(ii) shall expire and be of no further force and effect. The
Executive's rights under this Section 7(c)(ii) shall apply only to the
first
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
Change In Control which shall occur during the Term period. For
purposes of this Agreement, a Change in Control shall mean (A) the
consummation of any merger, consolidation or combination with the
Company and another entity in which (i) the Company is not the
surviving entity and (ii) the stockholders of the Company immediately
prior to such transaction do not own a majority of the voting equity
securities of the surviving entity immediately after such transaction
or members of the Board immediately prior to such transaction do not
constitute a majority of the board of directors of the surviving entity
immediately following such transaction; (B) any transaction or related
transactions whereby any person or group (each within the meaning the
Securities Exchange Act of 1934), other than Xxxxxx X. Xxxxx, Xxxxxxxx
Investment Corporation, the holder of the Company's debentures
outstanding on the date hereof, or any of their respective affiliates,
acquires 50% or more of the voting equity securities of the Company or
(C) the sale of all or substantially all of the assets of the Company
to an unaffiliated entity followed by the liquidation of the Company.
(iii) Termination by the Executive Without Just Cause. The
Executive shall have the right to terminate the Executive's employment
under this Agreement for any other reason not set forth in clauses (i)
or (ii) of this Section 7(c), the Termination Date being 15 days after
notice thereof from the Executive to the Company.
8. Effect of Termination. The following provisions
shall be applicable in the event of the termination of this Agreement as
provided in Section 7 above.
(a) Expiration of Term. Upon termination of this
Agreement as provided in Section 7(a) above, this Agreement shall
terminate and be of no further force and effect, except as provided in
Sections 11, 12 and 13(b) below, which shall survive such termination,
and no additional payments, liabilities or obligations shall be due and
owing from either party to the other.
(b) Death. Upon the termination of this Agreement as
provided in Section 7(b)(i) above, the Company shall pay to the
Executive's estate (i) an amount equal to the sum of (A) the Base
Salary which would otherwise be payable for the 6 months following the
Termination Date (but not earlier than any recovery of insurance
proceeds in respect thereof, as provided below), and (B) any Annual
Bonus for the Employment Year in which the Termination Date occurs that
the Board determines would otherwise have been payable had the
Executive not died, which Annual Bonus shall be reduced by prorating it
through the Termination Date, payable, in the case of this clause (B),
at the time such payment would otherwise be due and payable hereunder,
and (ii) expense reimbursement amounts accrued through the Termination
Date, at the time such payment would otherwise be due and payable
thereunder, and neither party shall have any further liability or
obligation to the other, except as provided in Section 12 below, which
shall survive the Termination Date. Notwithstanding the provisions of
clause (i) above, the Company shall have the right to provide for
either or both of the payments described therein by purchasing life
insurance on the Executive's life itself or reimbursing to the
Executive the cost of the premiums in respect of such life insurance
which shall be purchased directly by the Executive; in the event that
either or both of such insurance coverages is obtained, such payments
shall be made solely from such insurance coverages and not from the
Company and shall constitute the Executive's estate's or heirs' sole
remedy in respect of such payments.
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
An amount equal to 50% of any unvested Employment Options as
of the Termination Date shall vest and become exercisable by virtue of
any termination under Section 7(b)(i) and, notwithstanding the
provisions of the Company's Stock Option Plan pursuant to which the
Employment Options may have been granted, the Executive's estate shall
have a period of two years from the Termination Date to exercise the
Employment Options.
(c) Disability. Upon the termination of this Agreement
as provided in Section 7(b)(ii) above, the Company shall pay to the
Executive (i) an amount equal to the Base Salary which would otherwise
be payable for the 6 months following the Termination Date (but not
earlier than any recovery of insurance proceeds in respect thereof, as
provided below, (ii) any Annual Bonus for the Employment Year in which
the Termination Date occurs that the Board determines would otherwise
have been payable had the Executive not become Disabled, which Annual
Bonus shall be reduced by prorating it through the Termination Date, in
each case, payable at the times such payments would otherwise be due
and payable hereunder; provided, in the case of clauses (i) and (ii)
above, that the Executive continues to comply with his covenants in
Sections 10 (during the Term had such termination under Section
7(b)(ii) above not occurred) and 11 below, as provided therein, and
(iii) expense reimbursement amounts accrued through the Termination
Date, at the time such payment would otherwise be due and payable
thereunder, and neither party shall have any further liability or
obligation to the other, except that the provisions of Sections 11, 12
and 13(b) below shall survive the Termination Date, to the extent
provided therein. Notwithstanding the provisions of clauses (i) and
(ii) above, the Company shall have the right to provide for either or
both of such payments by either purchasing disability insurance itself
in respect of the Executive or reimbursing to the Executive the cost of
the premiums in respect of such disability insurance which shall be
purchased directly by the Executive; in the event that either or both
of such insurance coverages is obtained, such payments shall be made
solely from such insurance coverages and not from the Company and shall
constitute the Executive's sole remedy in respect of such payments.
An amount equal to 50% of any unvested Employment Options as
of the Termination Date shall vest and become exercisable by virtue of
any termination under Section 7(b)(ii) and, notwithstanding the
provisions of the Company's Stock Option Plan pursuant to which the
Employment Options may have been granted, the Executive shall have a
period of two years from the Termination Date to exercise such options.
(d) Termination by the Company For Cause. Upon the
termination of this Agreement as provided in Section 7(b)(iii) above,
the Company shall pay to the Executive (i) the accrued and unpaid Base
Salary, if any, through the Termination Date and (ii) expense
reimbursement amounts accrued through the Termination Date, at the time
such payments are otherwise due and payable thereunder, and neither
party shall have any further liability or obligation to the other,
except that the provisions of Sections 11, 12 and 13(b) below shall
survive the Termination Date, to the extent provided therein. No
unvested Employment Options shall vest or become exercisable by virtue
of any termination under Section 7(b)(iii) and any and all rights
thereto then possessed by the Executive shall be terminated and of no
further force and effect.
(e) Termination by the Company Without Cause. Upon
termination of this Agreement as provided in Section 7(b)(iv) above,
the Company shall pay to the Executive (i) the Base Salary which
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
would otherwise be payable hereunder for a period of twelve (12) months
(provided, that if the Executive commences full-time employment with
another entity within the applicable period described in clauses (1) or
(2) above, then, in each such case, from and after the commencement of
such other employment, (x) if the aggregate compensation payable to the
Executive in respect of such other employment which exceeds the Base
Salary, no additional compensation shall be payable to the Executive
under this clause (i) and (y) if the aggregate compensation payable to
Executive in respect of such other employment is at a rate which is
less than the Base Salary, the Company shall be obligated to pay the
Executive (for the applicable period described in clauses (1) or (2)
above) the difference between the Base Salary and the such other
compensation); provided, that the Executive continues to comply with
the covenants in Section 11 below, as provided therein, and (ii)
expense reimbursement amounts accrued through the Termination Date, in
each case, in the case of clauses (i) and (ii) above, at the time such
payments are otherwise due and payable thereunder, and neither party
shall have any further liability or obligation to the other, except
that the provisions of Sections 11, 12 and 13(b) below shall survive
the Termination Date, to the extent provided therein; it being
understood that the covenants in Section 10 below shall be of no
further force and effect following the Termination Date. Any unvested
Employment Options otherwise provided in this agreement to vest and
become exercisable within the 364 day period following the Termination
Date shall vest and become exercisable by virtue of any termination
under Section 7(b)(iv).
(f) Termination by the Executive for Just Cause. Upon
termination of this Agreement as provided in Section 7(c)(i) above, the
Company shall pay to the Executive (i) the Base Compensation which
would otherwise be payable hereunder for a period of twelve months
(provided, that if the Executive commences full-time employment with
another entity within the applicable period described in clauses (1) or
(2) above, then in each such case, from and after the date of
commencement of such other employment, (x) if the aggregate
compensation payable to the Executive in respect of such other
employment is at a rate which exceeds the Base Salary, no additional
compensation shall be payable to the Executive under this clause (i)
and (y) if the aggregate compensation payable to the Executive in
respect of such other employment is at a rate which is less than the
Base Salary, the Company shall be obligated to pay to the Executive
(for the applicable period described in clauses (1) or (2) above) the
difference between the Base Salary and such other compensation);
provided, that the Executive continues to comply with the covenants in
Section 11 below, as provided therein; and (ii) expense reimbursement
amounts accrued through the Termination Date, in each case, in the case
of clauses (i) and (ii) above, at the time such payments are otherwise
due and payable thereunder, and neither party shall have any further
liability or obligation to the other, except that the provisions of
Sections 11, 12 and 13(b) below shall survive the Termination Date, to
the extent provided therein; it being understood that the covenants in
Section 10 below shall be of no further force and effect following the
Termination Date. Any unvested Employment Options otherwise provided in
this Agreement to vest and become exercisable within the 364 day period
following the Termination Date shall vest and become exercisable by
virtue of any termination under Section 7(c)(i) above.
(g) Termination by the Executive Following a Change in
Control. Upon termination of this Agreement as provided in Section
7(c)(ii) above, the Company shall pay to Executive (i) the Base Salary
which would otherwise be payable hereunder for a period of twelve (12)
months (provided, that if the Executive commences full-time employment
with another entity within the applicable period described in clauses
(1) or (2) above, then in each such case, from and after the date of
commencement of such other
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ALLIANCE GAMING CORPORATION
FORM 10-Q
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employment, (x) if the aggregate compensation payable to the Executive
in respect of such other employment is at a rate which exceeds the Base
Salary, no additional compensation shall be payable to the Executive
under this clause (i) and (y) if the aggregate compensation payable to
the Executive in respect of such other employment is at a rate which is
less than the Base Salary, the Company shall be obligated to pay to the
Executive (for the applicable period described in clauses (1) or (2)
above) the difference between the Base Salary and such other
compensation); provided, that the Executive continues to comply with
the covenants in Section 11 below, as provided therein; and (ii)
expense reimbursement amounts accrued through the Termination Date, in
each case, in the case of clauses (i) and (ii) above, at the time such
payments are otherwise due and payable thereunder, and neither party
shall have any further liability or obligation to the other, except
that the provisions of Sections 11, 12 and 13(b) below shall survive
the Termination Date, to the extent provided therein; it being
understood that the covenants in Section 11 below shall be of no
further force and effect following the Termination Date. Any unvested
Employee Options otherwise provided in this Agreement to vest and
become exercisable within the 364 day period following the Termination
Date shall vest and become exercisable on the Termination Date by
virtue of any termination under Section 7(c)(ii).
(h) Termination by the Executive Without Just Cause.
Upon the termination of this Agreement as provided in Section 7(c)(iii)
above, the Company shall pay to the Executive (i) the accrued and
unpaid Base Salary, if any, through the Termination Date, and (ii)
expense reimbursement amounts accrued through the Termination Date and
at the time such payments are otherwise due and payable thereunder, and
neither party shall have any further liability or obligation to the
other, except that the provisions of Sections 11, 12 and 13(b) below
shall survive the Termination Date, to the extent provided therein. No
unvested Employment Options shall vest or become exercisable by virtue
of any termination under Section 7(c)(iii) and any and all rights
thereto then possessed by the Executive shall be terminated and of no
further force and effect.
9. Federal Income Tax and Other Withholdings. The
Company shall withhold from any benefits payable pursuant to this Agreement such
Federal, State, City or other taxes and other amounts as may be required to be
withheld pursuant to any applicable law or governmental regulations or ruling
and shall timely pay over to the appropriate governmental or other authorities
the amount withheld, together with any additional amounts required to be paid by
the Company in respect thereof.
10. Non-Competition. The Executive covenants and agrees
that he will not at any time during his employment with the Company, directly or
indirectly, whether as employee, owner, partner, agent, director, officer,
consultant, advisor, stockholder (except as the beneficial owner of not more
than 5% of the outstanding shares of a corporation, any of the capital stock of
which is listed on any national or regional securities exchange or quoted in the
daily listing of over-the-counter market securities and, in each case, in which
the Executive does not undertake any management or operational or advisory role)
or in any other capacity, for his own account or for the benefit of any person
or entity, establish, engage or be connected with or in any manner any person or
entity which is at the time engaged in a business which is then in competition
with the business of the Company (or any of its subsidiaries or affiliates).
11. Confidential Information and Non-Disparagement. (a) In
accordance with NRS 600A.010 et seq. (the so-called Uniform Trade Secrets Act),
the Executive shall hold in a fiduciary capacity for
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the benefit of the Company and its stockholders all secret, confidential or
proprietary information, knowledge or data relating to the Company (and any of
its subsidiaries or affiliates), which shall have been obtained by the Executive
during or by reason of his employment by the Company. During and after the end
of the Term, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge or data to any
person or entity other than the Company (or such applicable subsidiaries or
affiliates) and those designated by them which would result in any
misappropriation under and as defined in such Act, except that, while employed
by the Company, in furtherance of the business and for the benefit of the
Company, the Executive may provide confidential information as appropriate to
attorneys, accountants, financial institutions or other persons or entities
engaged in business with the Company from time to time.
(b) Each of the parties agrees that from and after any termination or
expiration of the Term, neither shall, publicly or privately, disparage or make
any statements (written or oral) that could impugn the integrity, acumen
(business or otherwise), ethics or business practices, of the other, except, in
each case, to the extent (but solely to the extent) necessary (i) in any
judicial or arbitral action to enforce the provisions of this Agreement or (ii)
in connection with any judicial or administrative proceeding to the extent
required by applicable law.
12. Indemnification and Liability Insurance.
(a) Indemnification. The Company shall indemnify and hold the
Executive harmless, to the fullest extent legally permitted by Section 78.751 of
the Nevada Corporation Code (as amended and in effect from time to time) against
any and all expenses, liabilities and losses (including without limitation,
reasonable attorneys' fees and disbursements of counsel reasonably satisfactory
to the Company), incurred or suffered by him in connection with his service as a
director or officer of the Company during the Term, in each case, except to the
extent of the Executive's negligence or willful misconduct.
(b) Insurance. The Company shall maintain, for the benefit of
the Executive, a directors' and officers' liability insurance policy insuring
the Executive's service as a director and/or officer of the Company (or any
subsidiary of the Company) during the Term in accordance with its customary
practices as in effect from time to time during the Term. The parties
acknowledge and agree that such policy may cover other officers and directors of
the Company in addition to the Executive.
13. General Provisions.
(a) Assignment. Neither this Agreement nor any right or
interest hereunder shall be assignable by the Executive or the Company without
the prior written consent of the other; provided, that (i) in the event of the
Executive's Death during the Term, the Executive's estate and his heirs,
executors, administrators, legatees and distributees shall have the rights and
obligations set forth herein, as provided herein, and (ii) nothing contained in
this Agreement shall limit or restrict the Company's ability to merge or
consolidate or effect any similar transaction with any other entity,
irrespective of whether the Company is the surviving entity (including a split
up, spin off or similar type transaction); provided, that one or more of such
surviving entities shall continue to be bound by the provisions hereof binding
upon the Company.
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ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
(b) Material Inducements. The provisions of Sections 10
and 11 above are material inducements to the Company entering into and
performing this Agreement; accordingly, in the event of any breach of the
provisions of Sections 10 or 11(a) by the Executive, in addition to all other
remedies at law or in equity possessed by the Company, (i) the Company shall
have the right to terminate and not pay any amounts payable to the Executive
hereunder, (ii) all Employment Options that are unexercised shall be immediately
forfeited and returned to the Company and (iii) the Executive shall immediately
account to the Company and return to the Company an amount in cash equal to all
profits or benefits obtained or realized by the Executive by virtue of the
ownership or disposition of the Incentive Warrants and Employment Options.
(c) Binding Agreement. This Agreement shall be binding
upon, and inure to the benefit of, the Executive and the Company and their
respective heirs, executors, administrators, legatees and distributees,
successors and permitted assigns.
(d) Amendment of Agreement. This Agreement may not be
modified or amended except by an instrument in writing signed by the parties
hereto.
(e) Severability. If, for any reason, any provision of
this Agreement is determined to be invalid or unenforceable, such invalidity or
lack of enforceability shall not affect any other provision of this Agreement
not so determined to be invalid or unenforceable, and each such other provision
shall, to the full extent consistent with applicable law, continue in full force
and effect, irrespective of such invalid or unenforceable provision.
(f) Effect of Prior Agreements. This Agreement contains
the entire understanding between the parties hereto respecting the Executive's
employment by the Company, and supersedes any prior employment agreement between
the Company and the Executive.
(g) Notices. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when delivered, if sent by
telecopy or by hand, (ii) one business day after sending, if sent by reputable
overnight courier service, such as Federal Express, or (iii) three business days
after being mailed, if sent by United States certified or registered mail,
return receipt requested, postage prepaid. Notices shall be sent by one of the
methods described above; provided, that any notice sent by telecopy shall also
be sent by any other method permitted above. Notices shall be sent, if to the
Executive, to 0000 Xxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000; and if to the
Company, to Alliance Gaming Corporation, 0000 Xxxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxx
00000, directed to the attention of the Board with copies to the Chairman and
the Assistant Secretary of the Company; or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
(h) Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(i) Arbitration. In the event of a dispute or
controversy arising under or in connection with this Agreement (except, at the
option of the Company, Sections 10 and 11 above, which may be adjudicated in a
federal or state court sitting in Las Vegas, Nevada), the Executive shall give
the Company or the Company shall
13
ALLIANCE GAMING CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
give the Executive, as applicable, a written demand for relief. If the dispute
or controversy is not resolved, it shall be settled exclusively by arbitration,
conducted in Las Vegas, Nevada, in accordance with the rules of the American
Arbitration Association (or if such association does not then conduct business
in such city, another arbitral panel reasonably satisfactory to each party) then
in effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction over the parties hereto.
(j) Indulgences, Etc. Neither the failure nor any delay
on the part of either party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
(k) Headings. The headings of sections and paragraphs
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.
(l) Governing Law. This Agreement has been executed and
delivered in the State of Nevada, and its validity, interpretation, performance,
and enforcement shall be governed by the laws of such State, without regard to
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer, and the Executive has signed this
Agreement, all as of the date first set forth above.
Alliance Gaming Corporation
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
