EXECUTIVE EMPLOYMENT AGREEMENT
This
Employment Agreement (this “Agreement”)
is made and entered into as of February 10, 2009 (the “Effective
Date”), by and between Multimedia Games, Inc., a Delaware corporation
(the “Company”),
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 and Chief Financial Officer 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. 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 the Effective 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.
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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 $250,000.00 (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 Target
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. 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, that such Target Bonus shall be
paid before the latter of: (i) the 15th day of the third calendar month
following the calendar year that the Target 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 Target Bonus is earned.
1.4.3 Discretionary
Bonus. Beginning April 1, 2009, Executive shall also be
eligible for a separate discretionary bonus in an amount up to but not exceeding
$20,000 per quarter (less statutory and other authorized deductions and
withholdings), based upon criteria for quarterly objectives as set by the Chief
Executive Officer.
1.4.4 Sign-On
Bonus. Executive shall receive a sign-on bonus of $15,000
(less statutory and other authorized deductions and withholdings) payable on the
Effective Date.
1.4.5 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 senior-level executive employees.
1.5 Stock
Grant and Stock Option. Upon the
Effective Date, Executive will be granted one or more options (collectively, the
“Option”) to purchase 250,000
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 year, and will continue to vest over three years in
equal quarterly installments during each of the following three
years. The Plan documents shall provide that, in the event that,
within one 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.
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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
therefor (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 Board of Directors: (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.
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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,
(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, accrued but unused
vacation to the extent required by the Company’s policies, vested benefits under
any employee benefit plan, and any unreimbursed expenses pursuant to Section 1.4.3 or
1.4.4 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 one year from the Effective
Date, one year of Base Salary continuation (to be paid in accordance with the
Company’s normal payroll practices), any unpaid amounts associated with
Executives Discretionary Bonus and Target Bonus (Target Bonus to be paid at the
end of the 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 two years from the
Effective Date, two years of Base Salary continuation (to be paid in accordance
with the Company’s normal payroll practices) and two years of Target Bonus
(Target Bonuses to be paid at the end of each year within the time set forth in
Section 1.4.2);
such payments must not however extend beyond the second taxable year of the
Executive following the taxable year in which the termination of employment
occurred; 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 years of
Base Salary continuation and two years of Target Bonus, such lump sum payment
must be made within 60 days of such termination of employment; (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.
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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 Chief Financial Officer of
the Company or a material adverse alternation in the nature or status of his
responsibilities, duties or authority; (ii) a material reduction by the Company
in Executive’s then Base Salary or Target 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 50 miles from the Company’s current
location in Austin, Texas; or (iv) the failure of the Executive and a successor
company to reach a mutually agreeable employment agreement, so long as Executive
is willing and able to execute a new contract that substantially provides
similar terms and conditions to this 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. In addition the termination must occur within two years of
the occurrence of one of the above enumerated events. Further, in the
event that Executive resigns for Good Reason and within two 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 the 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 thirty (30) days of accepting such
employment. Notwithstanding the previous sentence, if such payments
are deemed Deferred Compensation, then such payments shall only be forfeited to
the extent allowed by Section 409A.
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.
Non-Competition.
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.
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2.1.3 Promise To Refrain From
Competing. Executive understands and agrees that 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 2.1.2 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 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 2.1.3, 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 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.
2.1.5 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.
2.1.6 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.
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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; 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 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.
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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 (“Section 409A”) and (b)
Executive is a “specified employee” under Section 409A, 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. Any payments under this Agreement that are deemed subject
to Section 409A shall be subject to the following terms and
provisions:
4.2.1 Nonassignability. The
Executive, nor any other person shall have the right to commute, sell, assign,
transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer,
hypothecate, alienate, or convey in advance of actual receipt, the amounts, if
any, payable under this Agreement that are deemed under
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Section 409A to be “deferred
compensation” (“Deferred
Compensation”), or any part thereof, and all rights to such payments are
expressly declared to be, unassignable and non-transferable. Subject
to Section
4.2.3 below, no part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment, or sequestration for
the payments of debts, judgments, alimony or separate maintenance owed by
Executive or any other person, be transferable by operation of law in the event
of a Executive’s or any other person’s bankruptcy or insolvency, or be
transferable to a spouse as a result of a property settlement or
otherwise. Any purported assignment, encumbrance or transfer of any
nature before actual receipt shall be null and void.
4.2.2 No Suspension of
Severance. Once the deferred compensation payments commence,
such payments shall continue to be made, except as otherwise permitted under
Section 409A.
4.2.3 Set-Off. Notwithstanding
any provision herein or any agreement to the contrary, the Company shall not have any right to
offset against any Deferred Compensation benefits payable under this Agreement
until such benefit is distributable to Executive or his/her beneficiary or as
otherwise allowed under Section 409A.
4.2.4 Acceleration of
Benefits. The Company may not accelerate any Deferred
Compensation benefits. Notwithstanding the previous sentence, the
Company may permit any acceleration that is allowed under Section
409A.
4.2.5 Compliance with
Section 409A. The provisions of this Agreement shall be
interpreted and administered consistent with Section 409A, Treasury
Regulations and other applicable guidance issued under Section 409A and shall
incorporate the terms and provisions required by Section 409A. If any
provision herein would cause noncompliance with Section 409A, such
provision shall be disregarded and this Employment Agreement shall be construed
and administered as if such provision were not a part of this Employment
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 Xxx
Xxxxxx,
Xxxxx 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.
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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.
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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.
[Signature
Page To Employment Agreement Follows]
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IN WITNESS WHEREOF, the
parties hereto have caused this Employment Agreement to be executed as of the
date first written above.
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“COMPANY”
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||
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MULTIMEDIA
GAMES, INC.
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||
|
By:
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/s/ Xxxxxxx Xxxxxxxxxx
|
|
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Xxxxxxx
Xxxxxxxxxx
|
||
|
Chief
Executive
Officer
|
||
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“EXECUTIVE”
|
|
|
XXXX
XXXXXX
|
|
|
/s/ Xxxx X. Xxxxxx
|
|
|
Executive’s
Signature
|
|
12
