EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of July 1998 by and
between Spintek Gaming Technologies, Inc., a California corporation (the
"Corporation"), and Xxxxxx X. Xxxxxxx, (the "Executive") with reference to the
following facts:
WHEREAS, the Corporation hired Executive in the position of Chief Financial
Officer of the Corporation on November 15, 1995; and
WHEREAS, there have been significant changes in the Corporation, both in
management and in purpose, since Executive's employment; and
WHERAS, the Corporation is desirous of promoting Executive to the position
of President and Chief Operating Officer; and
WHEREAS, in order to retain the services of the Executive in the position
of President and Chief Operating Officer, and to maximize the period of his
continued availability, the Corporation desires to enter into a new Employment
Agreement with Executive as is more fully set forth herein.
NOW, THEREFORE, on the basis of the foregoing facts and in consideration of
the mutual covenants and agreements contained herein, the parties hereto agree
as follows:
1. Employment
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The Corporation hereby agrees to, and does hereby, employ the Executive
and Executive hereby accepts employment with the Corporation on the terms and
conditions set forth in this Agreement (the "Agreement").
2. Term
----
The Employment of the Executive hereunder shall commence on July 1,
1998 and shall continue for a period of two (2) years until June 30, 2000 (the
"Term"). After the original Term, this Agreement shall continue in effect and
shall be deemed automatically renewed for a second two year Term unless either
party hereto shall notify the other in writing at least thirty (30) days prior
to the end of the Term of their intention of not renewing the same. The
Corporation agrees not to terminate the Executive during the Term except for
Cause. Executive shall be considered terminated, at the Executive's election, if
(i) there is a Change of Control of the Corporation or (ii) a reduction in
Executive's duties, salary or position with the Corporation.
3. Duties and Services
-------------------
A. The Corporation and the Executive hereby agree that, subject to the
provisions of this Agreement, the Corporation will employ the Executive
and the Executive will serve the Corporation as President and Chief
Operating Officer during the Term or any extension thereof.
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B. Executive agrees during the term of this Agreement not to usurp a
corporate opportunity for his own financial gain. A corporate
opportunity shall be defined as a business opportunity which the
corporation is financially able to undertake, is, from its nature, in
the line of the Corporation's business and is one in which the
Corporation has an interest or a reasonable expectancy. Executive
agrees that he shall offer a corporate opportunity to the Corporation.
The Corporation shall have thirty (30) days to either take the
opportunity for itself or to reject the opportunity in which case
Executive shall have the right to pursue such opportunity for himself.
Failure to notify Executive within such thirty (30) day period shall be
deemed a rejection of the opportunity by the Corporation.
4. Definitions
-----------
The following terms shall have the following meanings when used herein:
A. Change of Control
A Change of Control shall be deemed to have occurred at such time as:
(1) any person or group of affiliated or related persons
(other than the Corporation, any Subsidiary of the
Corporation or any employee benefit plan of the
Corporation) ("Person") is or becomes the beneficial
owner, directly or indirectly, through a purchase, merger
or other acquisition or transaction or series of
transactions, of shares of capital stock, whether
presently issued or issued in the future, of the
Corporation entitling such Person to exercise forty (40%)
percent or more of the total voting power of all shares of
capital stock of the Corporation entitled to vote
generally in the election of directors; or;
(2) any consolidation of the Corporation with, or merger of
the Corporation into, any other Person, any merger of
another Person into the Corporation (other than a merger
(x) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares
of Common Stock or (y) which is effected solely to change
the jurisdiction of incorporation of the Corporation and
results in a reclassification, conversion or exchange of
outstanding shares of Common Stock into solely shares of
Common Stock); or
(3) a change of Board of Directors of the Corporation in which
the individuals who constituted the Board of Directors of
the Corporation as of July 1, 1998 cease for any reason to
constitute a majority of the directors then in office.
B. Cause.
Cause shall exist when and only when Executive (i) after receipt of
written notification by the Board of Directors or the CEO has willfully
failed and continues to fail to substantially perform his duties and
has failed to cure such deficiencies within a thirty (30) day period
after such notification (other than failure resulting from incapacity
due to physical or mental illness), (ii) is convicted of a crime
constituting a felony, or (iii) has been proven to be dishonest, has
embezzled, has committed common law fraud, or a willful violation of
any
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State or Federal Securities Law resulting in a fine (to Company or
Executive)) or imprisonment ("for Cause").
5. Compensation
------------
A. As salary during the Term, the Corporation shall pay the Executive,
in accordance with its normal payroll, a minimum annual salary of One Hundred
Eighty Six Thousand Dollars ($186,000) such salary to be paid no less than
biweekly during the Term. The Executive shall receive such additional salary as
the Board of Directors of the Corporation may from time to time determine during
the Term. Unless expressly agreed in writing by the parties hereto, no such
additional compensation or benefits shall be deemed to modify or otherwise
affect the terms or conditions of this Agreement. Notwithstanding the foregoing
if this Agreement is not renewed, or Executive is terminated other than (1) for
Cause, as defined herein, or (2) as a result of a Change of Control, as defined
herein, Executive shall be entitled to twelve (12) months salary based upon his
annual salary at the time of termination) as severance. Such payment shall serve
as Executive's sole and exclusive rights pursuant to this Agreement, provided;
however, such payment shall not affect Executive's rights as to options to
purchase shares in accordance with paragraph 7 hereof. In the event of a Change
of Control, Executive shall be entitled to two (2) years salary, as severance,
provided Executive exercises his right pursuant to Agreement to treat such
change of control as a termination of this Agreement. In the event Executive is
terminated other than for cause, or there is a Change in Control, all
obligations to pay Executive, including the obligation contained in subparagraph
C of paragraph 5, shall be due and owed in a lump sum payment on or before
thirty (30) days from the earlier of the date of termination, the date of the
Change of Control and/or the date Executive elects termination pursuant to the
provisions of Paragraph 2 hereof.
B. Executive shall receive an automobile allowance in the amount of
Seven Hundred Fifty Dollars ($750) per month during the Term.
C. The Corporation shall reimburse Executive for the cost of his
country club membership, such amount not to exceed $35,000. Such country club
membership shall be held in the name of the Executive for the benefit of
Executive and shall be the exclusive property of the Executive. Corporation
shall reimburse Executive in accordance with the schedule attached hereto as
Exhibit "A". Notwithstanding the foregoing provisions of this subparagraph if
Executive is terminated for cause the obligation of Corporation under this
paragraph to reimburse Executive shall terminate on the date of such
termination.
D. Executive shall receive additional compensation in the form of
Bonuses granted by the Corporation at the discretion of the Board of Directors
or Chief Executive Officer of the Corporation (the "CEO"). The amount of the
Bonus paid to Executive shall be determined in the discretion of the Board of
Directors.
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6. Other Benefits
--------------
During the Term the Executive shall receive all rights and benefits for which he
is then eligible under any employee benefit plan or bonus plan which the
Corporation generally provides for its employees. Executive shall be provided
with a life insurance policy on his life for not less than double his then
current base annual salary; and, he shall also be provided with a disability
insurance policy for not less than 60% of his then current annual salary.
7. Grant of Options to Acquire Stock
---------------------------------
In addition to those options previously granted by the Corporation to
Executive, Corporation shall grant Executive options to purchase 200,000 shares
of the Corporations common stock on the date of execution of this Agreement.
Such option shall vest in full on the date granted. Further, Corporation
guarantees Executive will receive a minimum of 100,000 options to acquire common
shares of the Corporation for each twelve (12) month period for which Executive
is employed by Corporation, that such options will vest immediately on the date
of grant, and that the exercise price will be the closing price of the publicly
traded shares on the day of such grant.
8. Death or Disability
-------------------
In the event of the death of the Executive or the disability of the
Executive, this Agreement shall immediately terminate and the Corporation shall
pay to the Executive or his estate one (1) years salary in a single lump sum
payment which payment shall be due and payable upon the sooner of (i) thirty
(30) days of Executive's death or (ii) thirty (30) days after Executive is
declared by his physician incapable of performing his duties as specified in
this Agreement. The Corporation shall have the right to fund Executive's death
and/or disability benefit through life insurance.
9. Place of Performance
--------------------
In connection with his employment by the Corporation during the Term,
the Executive shall at all times be entitled to an office at the principal
executive offices of the Corporation, located in Las Vegas, Nevada, or at such
other office of the Corporation, in Las Vegas, Nevada, as the Chief Executive
Officer of the Corporation shall, in his reasonable discretion deem to be in the
best interest of the Corporation. In the event the Corporation moves its
principal place of business outside of Las Vegas, Nevada, Executive at his
option shall have the right to terminate this Agreement and receive the greater
of such salary due him for the remaining Term of this Agreement but in no event
less than twelve (12) months salary.
10. Notice
------
All Notices and other communications hereunder shall be in writing and
shall be deemed to have been validly served, given or delivered five (5) days
after deposit in the United States mail, by certified mail with return receipt
requested and postage prepaid, when delivered personally, one (1) day after
delivery to any overnight courier, or when transmitted by facsimile transmission
facilities,
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and addressed to the party to be notified as follows:
If to Corporation at: Spintek Gaming Technologies, Inc.
000 Xxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx, 00000
Attn: Chairman
Facsimile #: 000-000-0000
If to Executive at: Xxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Facsimile #: 000-000-0000
11. Miscellaneous
-------------
A. This Agreement shall inure to the benefit of and be binding upon
the Corporation, its successors and assigns. This Agreement may
not be assigned by the Corporation without the prior written
consent of the Executive. The obligations and duties of the
Executive hereunder shall be personal and not assignable.
B. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be valid and effective under
applicable law, but if any provision of this Agreement is found to
be prohibited or invalid under applicable law, such provision will
be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
C. For purposes of this Agreement an "affiliate" of a person shall
include any person, group of persons, firm, corporation,
association, organization, or unincorporated trade or business
that, now or hereinafter directly or indirectly, controls, or is
controlled by, or practices is under common control with such
person.
D. Any waiver, alteration or modification of any terms of this
Agreement will be valid only if made in writing and signed by the
parties hereto. Each party hereto from time to time may waive any
of his or its rights hereunder without effecting a waiver with
respect to any subsequent occurrences or transactions hereunder.
E. Captions and paragraph heading used herein are for convenience
only are not a part hereof and shall not be used in construing
this Agreement.
F. This Agreement constitutes the entire understanding and agreement
of the parties and, except as otherwise provided hereunder, there
are no other agreements or understandings, written or oral, in
effect between the parties relating to the employment of the
Executive by the Corporation during the Term. All prior
negotiations or agreements, if any, between the parties relating
solely to the employment of the Executive by the Corporation
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during the Term are hereby superseded.
G. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Nevada.
H. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
12. Arbitration
Any controversy between the parties hereto, including the construction
or application of any of the terms, covenants or conditions of this Agreement,
shall on written request of one party served on the other be settled exclusively
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. The arbitrator selected must be a member of the
National Academy of Arbitrators and must have significant experience in
arbitrating labor disputes. Further, the Arbitrator must be an attorney
practicing labor law in the Southern Nevada area. The cost of such arbitration
shall be borne by the losing party or in such proportions as the Arbitrator(s)
shall decide. Judgment may be entered on the arbitrator's award in any court of
competent jurisdiction. The parties shall have the right to bring an action in a
Nevada court of competent jurisdiction to enforce any equitable remedy such
party may have.
13. The Executive's Employment
Nothing contained in this Agreement (i) obligates the Corporation or
any subsidiary of the Corporation to employ the Executive in any capacity
whatsoever, or (ii) prohibits or restricts the corporation (or any such
subsidiary) from terminating the employment, if any, of the Executive at any
time or for any reason whatsoever, with or without cause, subject to the terms
and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Executive Date July 1, 1998
/S/Xxxxxx X. Xxxxxxx
--------------------
Xxxxxx X. Xxxxxxx
Spintek Gaming Technologies, Inc.
/s/Xxxx X. Xxxxxxx, Chairman & CEO
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Xxxx X. Xxxxxxx, Chairman & CEO
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Xxxxxxx X. Xxxxxxxxx V, Secretary
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EXHIBIT A
The Red Rock Country Club Membership Payment Schedule is attached here.
