EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.2
This
Employment Agreement (this “Agreement”)
is made and entered into as of January 12, 2009 (the “Effective
Date”), by and between
Multimedia Games, Inc., a Delaware corporation (the “Company” and/or “MGAM”), and Xxxx Xxxxxx, an
individual (“Executive”).
RECITALS
WHEREAS, the Company desires to hire Executive
and Executive desires to become employed by the Company; and
WHEREAS, the Company and Executive have
determined that it is in their respective best interests to enter into this
Agreement to govern the employment relationship on the terms and conditions set
forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration
of the premises and the mutual covenants and promises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT
TERMS AND DUTIES
1.1 Employment. The Company hereby employs
Executive, and Executive hereby accepts employment by the Company, upon the
terms and conditions set forth in this Agreement.
1.2 Duties. Executive shall serve as
Senior Vice President of
Sales and shall report directly to the Company’s Chief Executive
Officer. Executive shall have the authority, and perform the duties
customarily associated with his titles and offices together with such additional
duties as may from time to time be assigned by the Chief Executive
Officer. With the exception of the limited engagements agreed to in
Exhibit A of this Agreement, during the term of Executive’s employment
hereunder, Executive shall devote his full working time and efforts to the
performance of his duties and the furtherance of the interests of the Company
and shall not be otherwise employed or engaged.
1.3 Term. Subject to the provisions of
Section
1.6 below, the term of
employment of Executive under this Agreement shall commence on January
12, 2009 (the "Start Date"), and
shall continue until terminated by either party (the “Employment
Term”). Upon
termination of this Agreement, this Agreement shall expire and have no further
effect, except as otherwise provided in Section 5.5 below.
1.4 Compensation
and Benefits.
1.4.1 Base
Salary. In
consideration of the services rendered to the Company hereunder by Executive and
Executive’s covenants hereunder and in the Company’s Agreement Regarding
Proprietary Developments, Confidential Information and Non-Solicitation attached
hereto as Exhibit A (the “Proprietary
Agreement”), during the
Employment Term, the Company shall pay Executive a salary at the annual rate of
Two
Hundred Thousand U.S. Dollars ($200,000.00) (the “Base
Salary”), less statutory
and other authorized deductions and withholdings, payable in accordance with the
Company’s regular payroll practices. The Chief Executive Officer will
review the Base Salary annually.
1.4.2 Bonuses. Executive shall be entitled to receive
a quarterly Incentive Bonus upon achievement of new sales and new placement
goals mutually agreed to by and between the Executive and the Company’s Chief
Executive Officer for each quarter. (the “Incentive
Bonus”) It is expressly
agreed that the Incentive Bonus shall not exceed One Hundred Thousand
U.S. Dollars ($100,000.00)
in any individual twelve (12) month period. In addition to the Incentive Bonus,
Executive shall receive an annual bonus equal to 60% of Executive’s then current
Base Salary (the “Target
Bonus”) upon achievement of
bonus plan performance targets then in effect as approved by the Chief Executive
Officer, which bonus may be as much as 100% of Executive’s then current Base
Salary for overachievement against said targets.
1.4.3 Any bonus payment shall be less
statutory and other authorized deductions and withholdings and payable at the
times when other management bonuses are paid; provided, however, the Target
Bonus shall be paid before the latter of: (i) the 15th day of the third calendar month
following the calendar year that the bonus is earned; or (ii) the 15th day of the third calendar month
following the end of the fiscal year of the Company that the bonus is
earned.
1.4.4 Benefits
Package; Vacation; Business Expenses. As an employee of the
Company, Executive will be eligible to enroll in the Company’s benefit programs
(including short and long term disability plans and reasonable Directors’ and
Officers’ coverage) as they are established from time to time for senior-level
executive employees. Executive shall not be eligible for Company
holidays and paid vacation as set forth in the Company’s then current policies
for employees.
1.5 Stock
Grant and Stock Option. On
January 12, 2009 Executive
will be granted one or more options (collectively, the “Option”) to purchase Two Hundred Thousand
(200,000) shares of the
Company’s Common Stock. Such Option will be granted pursuant to the
Company’s 2008 Employment Inducement Award Plan (the “Plan”). The exercise price for the Option
shall be equal to the fair market value of the Company’s Common Stock on the
date of grant of such Option. The Option will be immediately exercisable, but
the Option shares initially will be unvested and will vest 25% after one (1)
year, and will continue to vest over three (3) years in equal quarterly
installments during each of the following three years. The Plan
documents shall provide that, in the event that, within one (1) year after a
Change of Control, either (i) Executive is terminated Without Cause pursuant to
Section 1.6.4, or (ii) Executive resigns for Good Reason pursuant to Section
1.7.2, Executive shall acquire a vested interest in, and the Company's
repurchase rights shall terminate with respect to all unvested Option shares
covered by the Option. In the event Executive is terminated for any
reason, then such termination shall not affect in any manner Executive's right
to receive or exercise the options which have vested as of the date of
termination pursuant to the provisions of this Agreement. The terms
of the Option will be as set forth in the Plan documents. The Company
will promptly prepare and file a registration statement on Form S-8 with respect
to the Plan, and shall maintain the effectiveness of such registration statement
during the term of the Plan.
For purposes of this Agreement, a
“Change
of Control” shall mean: (a)
the consummation of a merger, consolidation or reorganization approved by the
Company’s stockholders, unless securities representing more than 50% of the
total combined voting power of the outstanding voting securities of
the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the persons
who beneficially owned the Company's outstanding voting securities immediately
prior to such transaction; or (b) the sale, transfer or other disposition of all
or substantially all of the Company's assets as an entirety or substantially as
an entirety to any person, entity or group of persons acting in concert other
than a sale, transfer or disposition to an entity, at least 50% of the combined
voting power of the voting securities of which is owned by the Company or by
stockholders of the Company in substantially the same proportion as their
ownership of the Company immediately prior to such sale; or (c) any transaction
or series of related transactions within a period of 12 months pursuant to which
any person or any group of persons comprising a "group" within the meaning of
Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (other
than the Company or a person that, prior to such transaction or series of
related transactions, directly or indirectly controls, is controlled by or is
under common control with, the Company) acquires (other than directly from the
Company) beneficial ownership (within the meaning of Rule l3d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
35% of the total combined voting power of the Company's securities outstanding
immediately after the consummation of such transaction or series of related
transactions.
1.6 Termination. Executive’s employment and
this Agreement (except as otherwise provided hereunder) shall terminate upon the
occurrence of any of the following, at the time set forth therefore (the time of
any such termination being the “Termination
Date”):
1.6.1 Death
or Disability. Immediately upon the death
of Executive or in the event that Executive has ceased to be able to perform the
essential functions of his duties, with or without reasonable accommodation, for
a period of not less than 180 days, due to a mental or physical illness or
incapacity; as determined in the good faith judgment of the Chief Executive
Officer and confirmed by the opinion of an independent medical physician
(“Disability”) (termination pursuant to this
Section 1.6.1 being referred to herein as termination for “Death
or Disability”);
or
1.6.2 Voluntary
Termination. Thirty (30) days following
Executive’s written notice to the Company of termination of employment;
provided, however, that the Company may waive all or a portion of the thirty
(30) days notice and accelerate the effective date of such termination (and the
Termination Date) (termination pursuant to this Section 1.6.2 being referred to herein as
“Voluntary” termination); or
1.6.3 Termination
For Cause. Immediately following notice
of termination for Cause given by the Company. As used herein,
“Cause” means termination based on any one of
the following, as determined in good faith by the Chief Executive Officer: (i)
any intentional act of misconduct or dishonesty by Executive in the performance
of his duties under the Agreement; (ii) any willful failure or refusal by
Executive to attend to his duties under this Agreement; (iii) any material
breach of this Agreement; (iv) Executive’s conviction of or plea of “guilty” or
“no contest” to any crime constituting a felony or a misdemeanor involving
theft, embezzlement, dishonesty, or moral turpitude; or (v) Executive’s
unsatisfactory performance of his duties as determined by the Chief Executive
Officer and failure of Executive to improve such performance in the reasonable
judgment of the Chief Executive Officer following the thirty (30)-day period
after Executive is provided written notice of such unsatisfactory
performance. In the event that the Chief Executive Officer believes
that an event has occurred that would constitute a termination for Cause
pursuant to clauses (i), (ii) or (iii), prior to terminating Executive, the
Chief Executive Officer will notify Executive of such belief in writing,
including an explanation of the concern, and Executive will have thirty (30)
days to address the concern to the Chief Executive Officer’s satisfaction prior
to the effectiveness of the termination; provided that the Chief Executive
Officer may instruct Executive to take a paid leave of absence during such
period.
1.6.4 Termination
Without Cause. Notwithstanding any other
provisions contained herein, including, but not limited to Section 1.3 above,
the Company may terminate Executive’s employment following a thirty (30) day
written notice of termination without Cause given by the Company as approved by
the Board of Directors (termination pursuant to this Section 1.6.4 being
referred to herein as termination “Without
Cause”).
1.6.5 Other
Remedies. Termination pursuant to
Section 1.6.3 above shall be in addition to and without prejudice to any other
right or remedy to which the Company may be entitled at law, in equity, or under
this Agreement.
1.7 Severance
and Termination.
1.7.1 Voluntary
Termination, Termination for Cause, Termination for Death or
Disability. In
the case of a termination of Executive’s employment hereunder for Death or
Disability in accordance with Section 1.6.1 above, or Executive’s Voluntary
termination of employment hereunder in accordance with Section 1.6.2 above, or a
termination of Executive’s employment hereunder for Cause in accordance with
Section 1.6.3 above, or termination for failure to comply with the conditions
and/or limitations in Section 2 of this Agreement with regard to Executive’s
association with the Restricted Businesses listed in Exhibit A (i)
Executive shall not be entitled to receive payment of, and the Company shall
have no obligation to pay, any severance or similar compensation attributable to
such termination, other than Base Salary earned but unpaid, vested benefits
under any employee benefit plan, and any unreimbursed expenses pursuant to
Section 1.4.3 hereof incurred by Executive as of the Termination Date, and (ii)
the Company’s other obligations under this Agreement shall immediately
cease.
1.7.2 Termination
Without Cause; Resignation for Good Reason. Subject to the provisions
set forth in Section 1.7.3, in the case of a termination of Executive’s
employment hereunder Without Cause in accordance with Section 1.6.4 above, or
Executive’s resignation with Good Reason, the Company (i) shall pay Executive
(a) in the event that the Termination takes place on or before January 12, 2009,
one (1) year of Base Salary continuation (to be paid in accordance with the
Company’s normal payroll practices) and Target Bonus (be paid at the end of the
fiscal year within the time set forth in Section 1.4.2), subject to the tax
withholding specified in Section 1.4.1 above or (b) in the event that the
Termination takes place after January 12, 2009, two years of Base Salary
continuation (to be paid in accordance with the Company’s normal payroll
practices) and two years of Target Bonus (to be paid at the end of
each fiscal year within the time set forth in Section 1.4.2); and
(ii) if Executive elects to continue health coverage under the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”), for a period up to one year after
the termination, the Company will pay Executive’s premiums, in an amount
sufficient to maintain the level of health benefits in effect on Executive’s
last day of employment. Further, subject to the provisions set forth
in Section 1.7.3, in the event that there is a Change of Control and within one
year after the closing of the Change of Control, Executive is terminated Without
Cause or resigns for Good Reason, (i) the Company shall pay Executive a lump sum
equal to two (2) years of Base Salary continuation (to be paid in accordance
with the Company’s normal payroll practices) and two years of Target Bonus; (ii)
if Executive elects to continue health coverage under the Consolidated Omnibus
Budget Reconciliation Act (“COBRA”), for a period up to one year after
the termination, the Company will pay Executive’s premiums, in an amount
sufficient to maintain the level of health benefits in effect on Executive’s
last day of employment; and (iii) the Option will immediately vest as set forth
in Section 1.5.
For purposes of this Agreement,
“Good
Reason“ means the
occurrence of any of the following: (i) the assignment to Executive of duties
materially inconsistent with his status as Senior Vice President of Sales or a
material adverse alteration in the nature or status of his responsibilities,
duties or authority; (ii) a material reduction by the Company in Executive’s
then Base Salary, Target Bonus, or Incentive Bonus, a material reduction in
other benefits, or the failure by the Company to pay Executive any material
portion of his current compensation when due; (iii) a requirement that Executive
report to a primary work location that is more than fifty (50) miles from the
Company’s current location in Austin, Texas or any office located in Reno or Las
Vegas, Nevada; (iv) the Company requiring Executive either (a) to be based
anywhere other than the location of the Company's principle offices in Austin or
any Office located in Reno or Las Vegas, Nevada (except for required travel in
the Company's business to an extent substantially consistent with Executive's
present business obligations); or (viii) the failure of the Executive and any
successor company following a Change of Control to reach a mutually agreeable
employment agreement. Notwithstanding the foregoing, Executive’s
resignation shall not be treated as a resignation for Good Reason unless (a)
Executive notifies the Company in writing of a condition constituting Good
Reason within forty-five (45) days following Executive’s becoming
aware of such condition; (b) the Company fails to remedy such condition within
thirty (30) days following such written notice (the “Remedy
Period”); and (c) Executive
resigns within thirty (30) days following the expiration of the
Remedy Period. Further, in the event that Executive resigns for Good
Reason and within two (2) years from such date accepts employment with the
Company, any acquirer or successor to the Company’s business or any affiliate,
parent, or subsidiary of either the Company or its successor, then Executive
will forfeit any right to severance payments hereunder and will reimburse the
Company for the full amount of such payments received by Executive within 30
days of accepting such employment.
1.7.3 Severance
Conditioned on Release of Claims. The Company’s obligation to provide
Executive with the severance benefits set forth in Section 1.7.2 is contingent
upon Executive’s execution of a mutual release of claims satisfactory to the
Company. Such release will not contain any non-competition period or
otherwise restrict Executive's future employment opportunity and will not affect
Executive’s continuing obligations to the Company under the Proprietary
Agreement.
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2.
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PROTECTION
OF COMPANY’S PROPRIETARY INFORMATION AND INVENTIONS;
NON-COMPETITION
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2.1.1 Proprietary
Agreement. This Agreement, and
Executive’s employment hereunder, is contingent upon Executive’s execution of
the Proprietary Agreement, effective contemporaneously with the execution of
this Agreement. The Proprietary Agreement survives the termination of
this Agreement, the Employment Term and/or Executive’s employment with the
Company.
2.1.2 Consideration
For Promise To Refrain From Competing. Executive agrees that
Executive’s services are special and unique, that the Company’s disclosure of
confidential, proprietary information and specialized training and knowledge to
Executive, and that Executive’s level of compensation and benefits, including
the amount of severance as set forth in Section 1.7 hereof, are partly in
consideration of Executive not competing with the Company following the
termination of his employment. Also, the Company promises to provide
Executive with proprietary and confidential information to which Executive has
not had access (including without limitation information developed and presented
in Board of Director meetings). Executive acknowledges that such
consideration (including without limitation the Company’s promise to provide
Executive access to proprietary and confidential information made in this
section) is adequate for Executive’s promises contained within this
Section 2.
2.1.3 Promise
To Refrain From Competing. Executive understands the
Company’s need for Executive’s promise not to compete with the Company is based
on the following: (i) the Company has expended, and will
continue to expend, substantial time, money and effort in developing its
proprietary information; (ii) Executive will in the course of Executive’s
employment develop, be personally entrusted with and exposed to the Company’s
proprietary information; (iii) the Company is engaged in the highly insular
and competitive gaming technology industry; (iv) the Company provides
products and services nationally and internationally; and (v) the Company
will suffer great loss and irreparable harm if Executive were to enter into
competition with the Company. Therefore, in exchange for the
consideration described in Section 2.12 above, Executive agrees that during
Executive’s employment with the Company, and for one (1) year following the
effective date of the termination of Executive’s employment with the Company for
any reason (such one (1) year period to be increased to two (2) years in the
event Executive becomes entitled to two (2) year’s Base Salary and Target Bonus
as severance pursuant to Section 1.7.2(i)(B) hereof or otherwise) (the
“Covenant
Period”), Executive will
not either directly or indirectly, whether as an owner, director, officer,
manager, consultant, agent or employee: (i) work for or provide
services or assistance to a competitor of the Company as of the date of
termination of employment, which is defined to include those entities or persons
primarily engaged in the business of developing, marketing, selling and
supporting technology to or for gaming businesses in which, as of the date of
termination of employment, the Company engages or in which the Company has an
actual intention, as evidenced by the Company’s written business plans to
engage, in any country in which the Company does business as of the date of
termination of employment (the “Restricted
Business”); or (ii) make or
hold any investment in any Restricted Business, whether such investment be by
way of loan, purchase of stock or otherwise, provided that there shall be
excluded from the foregoing the ownership of not more than 1% of the listed or
traded stock of any publicly held corporation. For purposes of this
Section 2, the term “Company” shall mean and include the Company,
any subsidiary or affiliate of the Company, and any successor to the business of
the Company (by merger, consolidation, sale of assets or stock or
otherwise). For purposes of clarification and not limitation, casinos
or gaming operations that are not primarily engaged in the business of
developing, marketing, selling and supporting technology to or for gaming
businesses shall not be Restricted Businesses hereunder.
2.1.4 Notwithstanding the above, Executive
shall be allowed to provide limited consulting services, and own limited equity
interest in the Restricted Businesses listed in Exhibit A of this agreement
subject to the following conditions/ limitations:
2.1.4.1 None of the work done by Executive for
any Restricted Business listed on Exhibit A shall compete directly or
indirectly with Company in any jurisdiction in which Company currently conducts
business;
2.1.4.2 Executive shall limit the amount of
time, effort, and resource he contributes to any Restricted Business to that
which has been disclosed in Exhibit A;
2.1.4.3 Executive shall not accept any
additional work, assignments, or equity interest in any Restricted Business
greater than that disclosed in Exhibit A without mutual
consent;
2.1.4.4 Executive shall immediately notify
Company, upon his completion of any engagement and/or contractual obligation
with any of the Restricted Businesses listed in Exhibit A;
2.1.4.5 Company shall have the right to
unilaterally and immediately terminate Executive’s employment upon its sole
determination that Executive has an existing contractual obligation with any
Restricted Business that conflicts in any way with Company’s business objectives
or exposes Company to any possible liability. Termination of
Executive’s employment under this provision shall be considered For Cause and
Company shall have no financial liability to Executive. In any case where
Executive is terminated in accordance with this provision within the first
thirty (30) days of employment, Executive shall not be bound or in any way
obligated under the non-compete provisions of this Section 2 of the
Agreement;
2.1.4.6 Executive shall immediately notify
Company of: (i) all jurisdictions in which any Restricted Business listed in
Exhibit A is licensed or plans to become licensed, (ii) any notice of violation,
allegation of non compliance, or formal communication asserting failure to
adhere to or comply with regulatory requirements issued by any federal, state,
local or tribal regulatory body, board, agency, or commission (gaming or
nongaming) against any Restricted Business listed in Exhibit A, and (iii) any
planned (no less than 14 days advanced notice) appearance by Executive before
any federal, state, local or tribal regulatory body, board, agency, or
commission (gaming or nongaming) as an agent, representative, or employee of any
Restricted Business;
2.1.4.7 Company shall have the right to
unilaterally and immediately terminate Executive’s employment upon its sole
determination that Executive’s association (current or past) with any Restricted
Business is contrary to Company’s regulatory compliance initiatives. Termination
of Executive’s employment under this provision shall be considered For Cause and
Company shall have no financial liability to Executive. In any case where
Executive is terminated in accordance with this provision within the first
thirty (30) days of employment, Executive shall not be bound or in any way
obligated under the non-compete provisions of this Section 2 of the
Agreement;
2.1.5 Reasonableness
of Restrictions. Executive represents and
agrees that the restrictions on competition, as to time, geographic area, and
scope of activity, required by this Section 2 are reasonable, do not impose
a greater restraint than is necessary to protect the goodwill and business
interests of the Company, and are not unduly burdensome to
Executive. Executive expressly acknowledges that the Company competes
on an international basis and that the geographical scope of these limitations
is reasonable and necessary for the protection of the Company’s trade secrets
and other confidential and proprietary information. Executive further
agrees that these restrictions allow Executive an adequate number and variety of
employment alternatives, based on Executive’s varied skills and
abilities. Executive represents that Executive is willing and able to
compete in other employment not prohibited by this
Agreement.
2.1.6 Xxxxxx
Gaming LLC Intellectual Property. Executive shall
continue to work toward developing and licensing its intellectual property
during his employment with Company. It is agreed that Company shall have a
right of first refusal, subject to any currently existing obligations or
contractual commitments of Executive/Xxxxxx Gaming, for the license of any game
concept or patent. Before Executive enters any license and or
distribution deal with a third party during the term of his employment with the
Company, the Company shall have 30 days to negotiate a deal on terms no less
favorable then the best terms offered by the third party for any individual
rights to intellectual property designed and / or developed by Xxxxxx Gaming
LLC. Executive hereby warrants that he has the right, power, and
authorization to bind Xxxxxx Gaming LLC to the obligations of this provision.
Company’s rights of first refusal shall apply to any Intellectual property
developed, designed, and/or distributed by Xxxxxx Gaming LLC during Executive’s
employment with Company, including, but not limited to, the Intellectual
Property listed in Exhibit B of this Agreement.
2.1.7 Reformation
if Necessary. In
the event a court of competent jurisdiction determines that the geographic area,
duration, or scope of activity of any restriction under this Section 2 and its
subsections is unenforceable, the restrictions under this section and its
subsections shall not be terminated but shall be reformed and modified to the
extent required to render them valid and enforceable.
2.1.8 Early
Termination of Covenant Period. Beginning six (6) months
after the beginning of the Covenant Period, Executive may, upon thirty (30)
days’ written notice to the Company, elect to forego and forfeit any claim to
any unpaid severance benefits pursuant to Section 1.7.2 above and, subject to
and conditioned upon such notice and written election by Executive, Executive
will, effective upon the date of such notice, be released from any remaining
obligations under this Section 2, and this Section shall be of no further force
and effect. any federal, state, local or tribal regulatory body, board, agency,
or commission (gaming or nongaming) against any Restricted
Business
3. REPRESENTATIONS
AND WARRANTIES BY EXECUTIVE
Executive represents and warrants to the
Company that (i) this Agreement is valid and binding upon and enforceable
against him in accordance with its terms; (ii) Executive is not bound by or
subject to any contractual or other obligation that would be violated by his
execution or performance of this Agreement, including, but not limited to, any
non-competition agreement presently in effect (including but not limited to
associations with Restricted Businesses listed in Exhibit A); and (iii)
Executive is not subject to any pending or, to Executive’s knowledge, threatened
claim, action, judgment, order, or investigation that could adversely affect his
ability to perform his obligations under this Agreement or the business
reputation of the Company. Executive has not entered into, and agrees
that he will not enter into, any agreement either written or oral in conflict
herewith.
4. TAXES
4.1 Section
4999.
4.1.1 Gross-Up
Payment Amount. In the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of Executive, whether paid, payable, distributed or distributable pursuant to
this Agreement (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision) or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are collectively referred to in this
Agreement as the “Excise
Tax”), then Executive shall
be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such
that after the payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payment.
4.1.2 Determinations. Subject to the provisions of
Section 4.1.3, all determinations required to be made under this Section 4,
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by an accounting firm reasonably selected by the
Company (the “Accounting
Firm”), which shall provide
detailed supporting calculations to both the Company and Executive within
forty-five (45) days of the receipt of written notice from Executive that there
has been a Payment, or such earlier time as is requested by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section 4, shall be paid by the Company to Executive within thirty (30)
days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the possible uncertainty in application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments will not have
been made by the Company that should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Section 4.1.3 and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of
Executive.
4.1.3 IRS
Claims. Executive shall notify the
Company in writing of any claim by the Internal Revenue Service (the
“IRS”) that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than thirty (30) days after Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is to be paid. Executive shall
not pay such claim prior to the expiration of the 60-day period following the
date on which Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall: (i) give the
Company any information reasonably requested by the Company relating to such
claim; (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney selected by the Company and reasonably acceptable to Executive;
(iii) cooperate with the Company in good faith in order effectively to contest
such claim; and (iv) permit the Company to participate in any proceedings
relating to such claim. The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts as the Company shall
determine.
4.1.4 Refunds. If, after receipt by
Executive of an amount advanced by the Company, Executive becomes entitled to
receive any refund with respect to such claim, Executive shall promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).
4.2 Section 409A. Notwithstanding any
inconsistent provision of this Agreement, to the extent the Company determines
in good faith that (a) one or more of the payments or benefits received or
to be received by Executive pursuant to this Agreement in connection with
Executive’s termination of employment would constitute deferred compensation
subject to the rules of Section 409A of the Code, and (b) Executive is
a “specified employee” under Section 409A of the Code, then only to the
extent required to avoid Executive’s incurrence of any additional tax or
interest under Section 409A, such payment or benefit will be delayed until
the earliest date following Executive’s “separation from service” within the
meaning of Section 409A which will permit Executive to avoid such
additional tax or interest. The Company and Executive agree to negotiate in good
faith to reform any provisions of this Agreement to maintain to the maximum
extent practicable the original intent of the applicable provisions without
violating the provisions of Section 409A, if the Company deems such
reformation necessary or advisable pursuant to guidance under Section 409A
to avoid the incurrence of any such interest and penalties. Such reformation
shall not result in a reduction of the aggregate amount of payments or benefits
under this Agreement.
5. MISCELLANEOUS
5.1 Notices. All notices, requests, and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally against written receipt or mailed (postage
prepaid by certified or registered mail, return receipt requested) or by
overnight courier to the parties at the following addresses:
If to Executive, to:
Xxxx Xxxxxx
000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
If to the Company,
to:
Multimedia Games,
Inc.
000 Xxxx Xxxxx Xx
Xxxx X, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive
Officer
All such notices, requests and other
communications will (i) if delivered personally to the address as provided in
this Section 5.1, be deemed given upon delivery, and (ii) if delivered by mail
or overnight courier in the manner described above to the address as provided in
this Section 5.1, be deemed given upon receipt. Any party from time
to time may change its address or other information for the purpose of notices
to that party by giving written notice specifying such change to the other
parties hereto.
5.2 Authorization
to be Employed. This Agreement, and Executive’s
employment hereunder, is subject to Executive providing the Company with legally
required proof of Executive’s authorization to be employed in the United States
of America.
5.3 Indemnification
Agreement. The Company and Executive
shall enter into an Indemnification Agreement in substantially the form attached
hereto as Exhibit C.
5.4 Entire
Agreement. This Agreement, and the
documents referenced herein, supersede all prior discussions and agreements
among the parties with respect to the subject matter hereof, and contains the
sole and entire agreement between the parties hereto with respect
thereto.
5.5 Survival. The respective rights and obligations of
the parties that require performance following expiration or termination of this
Agreement, including but not limited to Sections 1.5, 1.7.2, 1.7.3, 2, 4
and 5, shall survive the expiration or termination of this Agreement, the
Employment Term and/or Executive’s employment with the
Company.
5.6 Waiver. Any term or condition of
this Agreement may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving such term
or condition. No waiver by any party hereto of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
5.7 Amendment. This Agreement may be amended,
supplemented, or modified only by a written instrument duly executed by or on
behalf of each party hereto.
5.8 Attorney’s
Fees. In the event of any litigation arising
from or relating to this Agreement, the prevailing party in such litigation
proceedings shall be entitled to recover from the non-prevailing party the
prevailing party’s reasonable costs and attorney’s fees, in addition to all
other legal or equitable remedies to which it may otherwise be
entitled. In addition, the Company shall pay Executive’s reasonable
attorneys’ fees, not to exceed $5,000.00, incurred in connection the negotiation
of this Agreement.
5.9 No
Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and the
Company’s successors and assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
5.10 No
Assignment; Binding Effect. This Agreement and its
obligations may not be assigned by either the Company or
Executive.
5.11 Headings. The headings used in this
Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof.
5.12 Severability. The Company and Executive
intend all provisions of this Agreement to be enforced to the fullest extent
permitted by law. Accordingly, if a court of competent jurisdiction determines
that the scope and/or operation of any provision of this Agreement is too broad
to be enforced as written, the Company and Executive intend that the court
should reform such provision to such narrower scope and/or operation as it
determines to be enforceable. If, however, any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be
fully severable, (ii) this Agreement shall be construed and enforced as if such
provision was never a part of this Agreement, and (iii) the remaining provisions
of this Agreement shall remain in full force and effect and shall not be
affected by illegal, invalid, or unenforceable provisions or by their
severance.
5.13 Governing
Law; Arbitration. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES. IN THE EVENT OF ANY DISPUTE ARISING
UNDER THIS AGREEMENT THAT CANNOT BE RESOLVED BETWEEN THE PARTIES, THE SAME SHALL
BE SUBMITTED TO FINAL AND BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR OF THE
AMERICAN ARBITRATION ASSOCIATION'S PANEL OF COMMERCIAL ARBITRATORS, WHO SHALL BE
CHOSEN BY AGREEMENT OF THE PARTIES. IF THE PARTIES CANNOT AGREE, THEN
EACH PARTY SHALL NOMINATE AN ARBITRATOR AND EACH OF THE TWO NOMINEES SHALL
SELECT A THIRD ARBITRATOR TO SO SERVE. THE COMPANY HEREBY AGREES TO
BE FULLY RESPONSIBLE FOR ALL COSTS ASSOCIATED WITH THE ADMINISTRATION OF THE
ARBITRATION, INCLUDING ANY AND ALL FILING OR OTHER FEES CHARGED BY THE AMERICAN
ARBITRATION ASSOCIATION AND ANY FEES CHARGED BY THE ARBITRATOR. THIS
PROVISION AND ANY ARBITRATION AWARD ISSUED PURSUANT TO THIS PROVISION MAY BE
ENFORCED BY ANY COURT OF COMPETENT JURISDICTION. THE ARBITRATION
SHALL TAKE PLACE IN AUSTIN, TEXAS UNLESS OTHERWISE MUTUALLY AGREED BY THE
PARTIES.
5.14 Counterparts. This Agreement may be
executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
IN WITNESS
WHEREOF, the parties hereto
have caused this Employment Agreement to be executed as of the date first
written above.
|
“COMPANY”
|
||
|
MULTIMEDIA GAMES,
INC.
|
||
|
By:
|
/s/ Xxxxxxx
Xxxxxxxxxx
|
|
|
Xxxxxxx
Xxxxxxxxxx
Chief Executive
Officer
|
||
|
“EXECUTIVE”
|
||
|
XXXX
XXXXXX
|
||
|
/s/ Xxxx
Xxxxxx
|
||
|
Executive’s
Signature
|
||
