EXHIBIT 10.27
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("AGREEMENT"), is made and entered into as
of ____________, 1997 ("Effective Date") by and between MIKOHN GAMING
CORPORATION, a Nevada corporation ("MIKOHN"), and BEHNAM BAVARIAN ("Employee").
W I T N E S S E T H:
WHEREAS, MIKOHN and Employee deem it to be in their respective best
interests to enter into an agreement providing for MIKOHN's employment of
Employee pursuant to the terms herein stated.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, it is hereby agreed as follows:
1. TERM. MIKOHN hereby employs and Employee hereby accepts
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employment with MIKOHN for a period of two (2) years beginning on the date
hereof ("Initial Term"). Unless MIKOHN or Employee gives written notice that
this Agreement shall be allowed to expire and the employment relationship
thereby terminated at least thirty (30) days prior to the expiration of the
Initial Term, this Agreement shall continue in effect from month to month after
the expiration of the Term and shall be terminable by either party upon thirty
(30) days' written notice. (The Initial Term and the period during which this
Agreement may remain in effect thereafter are collectively referred to herein as
the "Term".)
2. DUTIES OF EMPLOYEE. Employee's position with MIKOHN will be Vice
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President of Engineering. Employee shall do and perform all services, acts, or
things reasonably necessary or advisable to accomplish the objectives and
complete the tasks assigned to Employee by senior management of MIKOHN. MIKOHN
may assign Employee to another position commensurate with Employee's training
and experience so long as the compensation paid to Employee is equal to or
greater than the compensation provided in this Agreement.
3. DEVOTION OF TIME TO MIKOHN'S BUSINESS. Employee shall be a full-
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time employee of MIKOHN and shall devote such substantial and sufficient amounts
of his productive time, ability, and attention to the business of MIKOHN during
the Term of this Agreement as may be reasonable and necessary to accomplish the
objectives and complete the tasks assigned to Employee. Prior written consent
of MIKOHN shall be required before Employee shall undertake to perform any
outside services of a business, commercial, or professional nature, whether for
compensation or otherwise. Written consent shall not be required as to
Employee's reasonable participation in educational and professional activities
related to the maintenance of Employee's qualifications and stature in his
profession. The foregoing notwithstanding, MIKOHN consents to Employee's
involvement in the entities described in Addendum 1 in the capacities indicated;
provided, however, Employee shall terminate his involvement in any such entity
upon request by MIKOHN if, in the reasonable judgement of MIKOHN, any continued
involvement (i) would materially interfere with, impede or impair the efficient
and effective performance of Employee's duties under this Agreement or (ii)
could subject MIKOHN to significant disciplinary action or cause MIKOHN to lose
or become unable to obtain or reinstate any federal, state and/or foreign
registration, license or approval material to MIKOHN's business or the business
of any MIKOHN subsidiary.
4. UNIQUENESS OF SERVICES. Employee hereby acknowledges that the
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services to be performed by him under the terms of this Agreement are of a
special and unique value. Accordingly, the obligations of Employee under this
Agreement are non-assignable.
5. COMPENSATION OF EMPLOYEE.
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a. BASE ANNUAL SALARY. Subject to other specific provisions in
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this Agreement, as compensation for services hereunder, Employee shall receive a
Base Annual Salary at the rate of not less than $130,000 per annum.
b. STOCK OPTIONS. MIKOHN grant's to Employee options to
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purchase shares of MIKOHN Common Stock (the "Option") under MIKOHN's Stock
Option Plan ("Plan"). The Option shall be in the form of MIKOHN's standard
Stock Option Agreement and subject to the terms and conditions thereof and of
the Plan, and shall additionally provide as follows:
(1) The number of shares subject to the Option shall be
20,000.
(2) The purchase price per share shall be the closing price
of MIKOHN common stock on the Effective Date, to wit $_______.
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(3) The Option shall be designated as an Incentive Option.
(4) On each of the next five (5) anniversary dates of the
Effective Date, one-fifth (1/5) of the Option Shares shall become eligible for
purchase by Employee.
(5) The Option shall terminate on (i) the expiration date
specified in the Stock Option Agreement or (ii) such earlier date as termination
may occur according to the terms and conditions of the Plan and/or the Stock
Option Agreement. Upon termination for any reason, Employee and/or his
successors and assigns shall have only such rights as are specified in the Plan
and the Stock Option Agreement, and shall not be entitled to any compensation in
any form for the loss of any other right.
c. 1997 BUSINESS PLAN STOCK OPTIONS. MIKOHN grant's to
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Employee additional Options to purchase shares of MIKOHN Common Stock under the
Plan which will vest on an accelerated basis if MIKOHN achieves its 1997
Business Plan objectives. The Option shall be in the form of MIKOHN's standard
Stock Option Agreement and subject to the terms and conditions thereof and of
the Plan, and shall additionally provide as follows:
(1) The number of shares subject to the Option shall be
40,000.
(2) The purchase price per share shall be as specified in
Section 5(b)(2) above.
(3) The Option shall be designated as an Incentive Option.
(4) The options will vest over six years at the rate of 15%
per year for the first four years commencing February 11, 1998 and 20% per year
for years five and six. If MIKOHN achieves earnings per share of $.50 for 1997,
the options shall vest over five years at the rate of 20% per year commencing
February 11, 1997. If MIKOHN achieves earnings per share of $.75 for 1997, one-
half of the options shall vest on January 1, 1999 and the balance of the options
shall vest over five years at the rate of 20% per year commencing February 11,
1997.
(5) The Option shall terminate on (i) the expiration date
specified in the Stock Option Agreement or (ii) such earlier date as termination
may occur according to the terms and conditions of the Plan and/or the Stock
Option Agreement. Upon termination for any reason, Employee and/or his
successors and assigns shall have only such rights as are specified in the Plan
and the Stock Option Agreement, and shall not be entitled to any compensation in
any form for the loss of any other right.
d. BONUS STOCK OPTIONS. During the Term of this Agreement,
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Employee shall be granted options to purchase shares of MIKOHN's common stock
under the Plan. The options shall be represented by a Stock Option Agreement
and shall contain the following provisions among others:
(1) The option shall be a "Incentive option" as that term
is defined in the Plan.
(2) The option shall cover a total of 50,000 shares of
MIKOHN common stock.
(3) The exercise price of all of the shares shall be as
specified in Section 5(b)(2) above.
(4) The option shall contain the following conditions
relating to its exercise and to the purchase of shares from time to time
thereunder:
(a) The number of shares as to which the option shall
become exercisable from time to time ("Exercisable Shares") is dependent upon
the prices at which MIKOHN's common stock is regularly traded in the future on
the NASDAQ Stock Market (or other market on which MIKOHN's common stock is
regularly traded at the time of any proposed exercise of the option). Following
is a schedule of minimum prices at which MIKOHN common stock must have traded
("Triggering Price or Prices") for at least 20 consecutive trading days and the
number of shares that shall become Exercisable Shares as each Triggering Price
is reached:
Triggering Price Number Of Exercisable shares
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7.50 10,000
10.00 10,000
12.50 10,000
15.00 10,000
17.50 10,000
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(b) Once any of the shares become Exercisable Shares,
they remain Exercisable shares irrespective of any subsequent decline in the
price at which MIKOHN common stock is traded.
e. FURTHER STOCK OPTIONS. During the Term of this Agreement,
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Employee will be considered to receive further stock options. Employee
understands that the decision to grant stock options and the amount thereof is
within the sole and absolute discretion of MIKOHN's Compensation Committee and
the Board of Directors and shall be based on various factors which include,
without limitation, Employee's performance, the compensation paid to similarly
situated employees of businesses similar in type and size to MIKOHN, the
financial condition of MIKOHN, and the economic and market conditions to which
MIKOHN is or may be subject.
f. AUTOMOBILE. MIKOHN shall provide Employee an automobile
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allowance in the amount of $1,000 per month.
g. ATHLETIC CLUB. MIKOHN shall provide Employee a membership
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in a an athletic club of Employee's choice the initial cost of which shall not
exceed $250. During the term of this Agreement, MIKOHN shall reimburse Employee
for athletic club membership dues in an amount of not more than $125 per month.
h. RELOCATION EXPENSES. MIKOHN will reimburse Employee for the
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following relocation expenses:
(1) Moving company charges for packing, moving and
unpacking household items including insurance (Employee to provide three (3)
bids); and
(2) Temporary residence in Las Vegas for up to three months
(cost not to exceed $4,500); and
(3) Legal and escrow fees, closing costs, real estate
commissions and loan points not to exceed $10,000 incurred in sale of home and
purchase of new home in Las Vegas.
i. EMPLOYEE BENEFITS. Employee shall receive such benefits,
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fringe benefits and entitlements as is usual and customary for MIKOHN to provide
an employee of like status and position and are consistent with MIKOHN's
established policies on employment, which may be revised from time to time in
the sole discretion of MIKOHN.
j. BUSINESS EXPENSES. MIKOHN will reimburse Employee for
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reasonable business expenses incurred in performing Employee's duties and
promoting the business of MIKOHN.
6. TERMINATION OF EMPLOYMENT.
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a. During the Initial Term of this Agreement, MIKOHN may
terminate this Agreement at any time without stated cause upon the payment to
Employee of a sum equal to $65,000. After the Initial Term, either party may
terminate this Agreement without further liability or obligation to the other,
except as provided in Sections 7 through 13, upon thirty (30) days written
notice.
b. For just cause MIKOHN may terminate this Agreement
immediately at any time without further liability to Employee by giving written
notice of termination to Employee.
c. Termination for any of the reasons set forth in this Section
6(b)(1) shall be deemed termination for just cause. For purposes of this
Agreement, just cause includes the following: (a) commission of a crime
involving moral turpitude; (b) engaging in any act of dishonesty or material
insubordination; (c) material breach of this Agreement; (d) habitual neglect of
duties which Employee is required to perform under the terms of this Agreement;
(e) failure of Employee to act in a professional manner; (f) failure of Employee
to timely and successfully complete work assigned; (g) failure of Employee to
observe all employment policies of MIKOHN; or (h) any other reason which is
legally sufficient under the laws of the State of Nevada
d. MIKOHN may terminate this Agreement if it appears in the
reasonable judgment of MIKOHN that due to Employee's employment by MIKOHN:
(1) MIKOHN may be subjected to significant disciplinary
action or lose or become unable to obtain or reinstate any federal, state and/or
foreign registration, license or approval material to MIKOHN's business or the
business of any MIKOHN subsidiary; or
(2) MIKOHN or any key employee, officer, director or
shareholder of MIKOHN required to
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qualify or be found suitable under any gaming law may not so qualify or be found
suitable.
e. MIKOHN may terminate this Agreement if Employee solicits or
accepts any payment or gratuity from any existing or potential customer or
supplier of MIKOHN without the prior written consent of the President of MIKOHN.
f. MIKOHN may terminate this Agreement if Employee has made any
misrepresentation of fact or has failed to disclose any fact which might be
material to MIKOHN's decision to enter into this Agreement including, without
limitation, failure to disclose any criminal or civil fraud charges brought
against Employee at any time or failure to disclose a prior business or personal
bankruptcy action involving Employee.
g. This Agreement shall terminate automatically in the event
that: (i) Employee fails or is unable to perform Employee's duties due to
injury, illness or other incapacity for thirty (30) days in any twelve (12)
month period (except that Employee may be entitled to disability payments
pursuant to MIKOHN's disability plan, if any); or (ii) Death of Employee.
h. In the event of a termination of Employee's employment for
any reason, Employee shall be required to seek other employment in order to
mitigate any damages resulting from the breach of this Agreement.
7. COVENANT OF CONFIDENTIALITY. All documents, records, files,
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manuals, forms, materials, supplies, computer programs, trade secrets, customer
lists, and other information which comes into Employee's possession from time to
time during Employee's employment by MIKOHN, and/or any of MIKOHN's subsidiaries
or affiliates, shall be deemed to be confidential and proprietary to MIKOHN and
shall remain the sole and exclusive property of MIKOHN. Employee acknowledges
that all such confidential and proprietary information is confidential and
proprietary and not readily available to MIKOHN's business competitors. On the
effective date of the termination of the employment relationship or at such
other date specified by MIKOHN, Employee agrees that he will return to MIKOHN
all such confidential and proprietary items (including, but not limited to,
company badge and keys) in his control or possession, and all copies thereof,
and that he will not remove any such items from the offices of MIKOHN. It is
the intention of the parties that the broadest possible protection be given to
MIKOHN's trade secrets and proprietary information and nothing in this Section 7
shall in any way be construed to narrow or limit the protection and remedies
afforded by the Uniform Trade Secrets Act.
8. COVENANT OF NON-DISCLOSURE. Without the prior written approval
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of MIKOHN, Employee shall keep confidential and not disclose or otherwise make
use of any of the confidential or proprietary information or trade secrets
referred to in Section 7 nor reveal the same to any third party whomsoever,
except as required by law.
9. COVENANT OF NON-SOLICITATION.
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a. EMPLOYEES. During the Term of this Agreement and for a
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period of two (2) years following the effective date of termination of the
employment relationship, Employee, either on Employee's own account or for any
person, firm, company or other entity, shall not solicit, interfere with or
induce, or attempt to induce, any employee of MIKOHN, or any of its subsidiaries
or affiliates to leave their employment or to breach their employment agreement,
if any, with MIKOHN.
b. CUSTOMERS. During the Term of this Agreement and for a
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period of one (1) year following the effective date of termination of the
employment relationship, Employee, either on Employee's own account or for any
person, firm, company or other entity, shall not solicit or induce, or attempt
to induce, any customer of MIKOHN to purchase any products or services which
compete with any products or services offered by MIKOHN at the time of the
termination of the employment relationship.
10. COVENANT OF COOPERATION. Employee agrees to cooperate with
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MIKOHN in any litigation or administrative proceedings involving any matters
with which Employee was involved during his employment by MIKOHN. MIKOHN shall
reimburse Employee for reasonable expenses incurred in providing such
assistance.
11. COVENANT AGAINST COMPETITION.
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a. SCOPE AND TERM. During the Term of this Agreement and for
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an additional period ending one (1) year after the expiration or termination of
this Agreement, Employee shall not directly or indirectly engage in or become a
partner, officer, principal, employee, consultant, investor, creditor or
stockholder of any business, proprietorship, association, firm, corporation or
any other business entity which is engaged or proposes to engage or hereafter
engages in any business which competes with the business of MIKOHN and/or any of
MIKOHN's subsidiaries or affiliates in any geographic area in which MIKOHN
conducts business at the time of the termination or expiration of the employment
relationship.
b. OPTION TO EXTEND TERM OF COVENANT. Upon thirty (30) days'
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written notice to Employee given prior
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to the expiration of the term of the Covenant Against Competition specified in
Section 11(a) above, MIKOHN shall have the option to extend said term for a
period of up to one (1) additional year upon payment of the following
consideration to Employee:
(1) If Employee is terminated without cause or this
Agreement expires without renewal, the sum of $36,000.00 payable in 12 monthly
installments; or
(2) If Employee terminates this Agreement or is terminated
by MIKOHN for just cause, the sum of $18,000.00 payable in 12 monthly
installments.
c. CONSIDERATION FOR COVENANT AGAINST COMPETITION. Employee
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understands and acknowledges that MIKOHN's products and services are marketed
worldwide and that the geographic scope and term of this Covenant Against
Competition are reasonable and appropriate in view of the substantial
compensation provided in Section 5 above. Employee understands that it is
MIKOHN's policy to grant stock options only to Employees who agree to become
subject to a covenant against competition. Employee agrees that the
compensation provided in Section 5 above, which includes the grant of 110,000
stock options, is adequate consideration for this Covenant Against Competition.
12. RIGHTS TO INVENTIONS.
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a. INVENTIONS DEFINED. "Inventions" means discoveries,
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concepts, and ideas, whether patentable or not, relating to any present or
prospective activities of MIKOHN, including without limitation devices,
processes, methods, formulae, techniques, and any improvements to the foregoing.
b. APPLICATION. This Section 12 shall apply to all Inventions
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made or conceived by Employee, whether or not during the hours of his employment
or with the use of MIKOHN facilities, materials, or personnel, either solely or
jointly with others, during the Term of his employment by MIKOHN and for a
period of one (1) year after any termination of such employment.
c. ASSIGNMENT. Employee hereby assigns and agrees to assign to
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MIKOHN all of his rights to Inventions and to all proprietary rights therein,
based thereon or related thereto, including without limitation applications for
United States and foreign letters patent and resulting letters patent.
d. REPORTS. Employee shall inform MIKOHN promptly and fully of
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each Invention by a written report, setting forth in detail the structures,
procedures, and methodology employed and the results achieved ("Notice of
Invention"). A report shall also be submitted by Employee upon completion of
any study or research project undertaken on MIKOHN's behalf, whether or not in
the Employee's opinion a given study or project has resulted in an Invention.
e. PATENTS. At MIKOHN's request and expense, Employee shall
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execute such documents and provide such assistance as may be deemed necessary by
MIKOHN to apply for, defend or enforce any United States and foreign letters
patent based on or related to such Inventions.
13. REMEDIES. Notwithstanding any other provision in this Agreement
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to the contrary, Employee acknowledges and agrees that if Employee commits a
material breach of the Covenant of Confidentiality (Section 7), Covenant of Non-
Disclosure (Section 8), Covenant of Non-Solicitation (Section 9), Covenant of
Cooperation (Section 10), Covenant Against Competition (Section 11), or Rights
to Inventions (Section 12), MIKOHN shall have the right to have the obligations
of Employee specifically enforced by any court having jurisdiction on the
grounds that any such breach will cause irreparable injury to MIKOHN and money
damages will not provide an adequate remedy. Such equitable remedies shall be
in addition to any other remedies at law or equity, all of which remedies shall
be cumulative and not exclusive. Employee further acknowledges and agrees that
the obligations contained in Sections 7 through 12, of this Agreement are fair,
do not unreasonably restrict Employee's future employment and business
opportunities, and are commensurate with the compensation arrangements set out
in this Agreement.
14. SURVIVABILITY. Sections 7 through 13, of this Agreement shall
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survive termination of the employment relationship and this Agreement.
15. GENERAL PROVISIONS.
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a. ARBITRATION. Any controversy involving the construction,
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application, enforceability or breach of any of the terms, provisions, or
conditions of this Agreement, including without limitation claims for breach of
contract, violation of public policy, breach of implied covenant, intentional
infliction of emotional distress or any other alleged claims which are not
settled by mutual agreement of the parties, shall be submitted to final and
binding arbitration in accordance with the rules of the American Arbitration
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Association. The cost of arbitration shall be borne by the losing party. In
consideration of each party's agreement to submit to arbitration any and all
disputes that arise under this Agreement, each party agrees that the arbitration
provisions of this Agreement shall constitute his/its exclusive remedy and each
party expressly waives the right to pursue redress of any kind in any other
forum. The parties further agree that the arbitrator acting hereunder shall not
be empowered to add to, subtract from, delete or in any other way modify the
terms of this Agreement. Notwithstanding the foregoing, any party shall have the
limited right to seek equitable relief in the form of a temporary restraining
order or preliminary injunction in a court of competent jurisdiction to protect
itself from actual or threatened irreparable injury resulting from an alleged
breach of this Agreement pending a final decision in arbitration.
b. ATTORNEYS' FEES AND COSTS. If any action in law, equity,
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arbitration or otherwise is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs, and necessary disbursements in addition to any other relief to which
he/it may be entitled. The term "prevailing party" means the party obtaining
substantially the relief sought, whether by compromise, settlement, award or
judgment.
c. AUTHORIZATION. MIKOHN and Employee each represent and
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warrant to the other that he/she/it has the authority, power and right to
deliver, execute and fully perform the terms of this Agreement.
d. ENTIRE AGREEMENT. Employee understands and acknowledges
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that this document constitutes the entire agreement between Employee and MIKOHN
with regard to Employee's employment by MIKOHN and Employee's post-employment
activities concerning MIKOHN. This Agreement supersedes any and all other
written and oral agreements between the parties with respect to the subject
matter hereof. Any and all prior agreements, promises, negotiations, or
representations, either written or oral, relating to the subject matter of this
Agreement not expressly set forth in this Agreement are of no force and effect.
This Agreement may be altered, amended, or modified only in writing signed by
all of the parties hereto. Any oral representations or modifications concerning
this instrument shall be of no force and effect.
e. SEVERABILITY. If any term, provision, covenant, or
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condition of this Agreement is held by a court or other tribunal of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of such
provisions and all of the remaining provisions hereof shall remain in full force
and effect to the fullest extent permitted by law and shall in no way be
affected, impaired, or invalidated as a result of such decision.
f. GOVERNING LAW. Except to the extent that federal law may
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preempt Nevada law, this Agreement and the rights and obligations hereunder
shall be governed, construed and enforced in accordance with the laws of the
State of Nevada.
g. TAXES. All compensation payable hereunder is gross and
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shall be subject to such withholding taxes and other taxes as may be provided by
law. Employee shall be responsible for the payment of all taxes attributable to
the compensation provided by this Agreement except for those taxes required by
law to be paid or withheld by MIKOHN.
h. ASSIGNMENT. This Agreement shall be binding upon and inure
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to the benefit of the successors and assigns of MIKOHN. Employee may not sell,
transfer, assign, or pledge any of his rights or interests pursuant to this
Agreement.
i. WAIVER. Either party's failure to enforce any provision or
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provisions of this Agreement shall not in any way be construed as a waiver of
any such provision or provisions, or prevent that party thereafter from
enforcing such provision or provisions and each and every other provision of
this Agreement.
j. CAPTIONS. Titles and headings to sections in this Agreement
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are for the purpose of reference only and shall in no way limit, define, or
otherwise affect any provisions contained therein.
k. BREACH - RIGHT TO CURE. A party shall be deemed in breach of
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this Agreement only upon the failure to perform any obligation under this
Agreement after receipt of written notice of breach and failure to cure such
breach within ten (10) days thereafter; provided, however, such notice shall not
be required where a breach or threatened breach would cause irreparable harm to
the other party and such other party may immediately seek equitable relief in a
court of competent jurisdiction to enjoin such breach.
16. ACKNOWLEDGEMENT. Employee acknowledges that he has been given a
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reasonable period of time to study this Agreement before signing it. Employee
certifies that he has fully read, has received an explanation of, and completely
understands the terms, nature, and effect of this Agreement. Employee further
acknowledges that he is executing this Agreement freely, knowingly, and
voluntarily and that Employee's execution of this Agreement is not the result of
any fraud, duress, mistake, or undue influence whatsoever. In executing this
Agreement, Employee does not rely on any inducements, promises, or
representations by MIKOHN other than the terms and conditions of this Agreement.
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17. EFFECTIVE ONLY UPON EXECUTION BY AUTHORIZED OFFICER OF MIKOHN.
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This Agreement shall have no force or effect and shall be unenforceable in its
entirety until (i) it is approved by the Compensation Committee and Board of
Directors of MIKOHN and (ii) it is executed by a duly authorized officer of
MIKOHN and such executed Agreement is delivered to Employee.
18. AGREEMENT SUBJECT TO SATISFACTORY BACKGROUND INVESTIGATION.
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Employee understands and acknowledges that his employment is subject to the
satisfactory conclusion of a background investigation. Any other provision in
this Agreement to the contrary notwithstanding, MIKOHN may terminate this
Agreement without further obligation or liability to Employee if a background
investigation of Employee reveals information which, in the reasonable judgment
of MIKOHN, (i) would materially interfere with, impede or impair the efficient
and effective performance of Employee's duties under this Agreement or (ii)
could subject MIKOHN to significant disciplinary action or cause MIKOHN to lose
or become unable to obtain or reinstate any federal, state and/or foreign
registration, license or approval material to MIKOHN's business or the business
of any MIKOHN subsidiary.
IN WITNESS WHEREOF, the parties hereto have read, understood, and
voluntarily executed this Agreement as of the day and year first above written.
EMPLOYEE MIKOHN GAMING CORPORATION
_________________________ By:___________________________
BEHNAM BAVARIAN
Title:___________________________
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