EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT dated and effective as of January 1, 1998, by and
between ALLIANCE GAMING CORPORATION, a Nevada corporation, 0000 Xxxxx Xxxxxxx
Xxxx, Xxx Xxxxx, Xxxxxx 00000 (the "Company"), and XXXXXX X.
XXXXXXXXX (the "Executive").
The parties agree as follows:
I. Employment. The Company employs the Executive, and the Executive
accepts employment by the Company, on the terms and conditions set forth in
this Agreement.
1. Term. The term of this Agreement shall begin on January 1, 1998, and, unless
terminated earlier pursuant to this Agreement, shall expire on December 31,
2000.
1. Position and Duties. The Executive shall serve as Senior Vice
President-Nevada Route Operations and President-United Coin Machine Co., and
shall report to the President and Chief Executive Officer of the Company. The
Executive shall perform the duties contemplated by such title and such other
duties, consistent with his experience and abilities, as may be assigned to the
Executive by the President and Chief Executive Officer of the Company. The
Executive shall devote his full time and efforts to the business and affairs of
the Company, use his best efforts to further the interests of the Company, and
at all times conduct himself in a manner that reflects credit on the Company. It
is contemplated that the Executive shall render services to the Company from the
Company's principal place of business; however, the parties acknowledge and
agree that the Executive may be required to travel from time to time in
fulfilling his duties hereunder.
1. Compensation.
a. Salary. The Company shall pay the Executive a base salary of $235,000 a year
in installments on the regularly recurring paydays in accordance with the
Company's practice. The Company shall also pay the Executive in a single lump
sum the difference between the amount of base salary that the Executive would
have earned at the foregoing rate for the period September 6, 1997, through
December 31, 1997, and the amount of base salary he actually did earn during
that period. Increases in the base salary shall be considered by the Company at
least annually, beginning with the completion of the first year of employment
and will be based on criteria applicable to other senior executives of the
Company, provided, however, that the award of any such increase shall be at the
sole discretion of the Company.
a. Bonuses. The Executive shall be eligible to receive a cash bonus from the
Company each year, provided, however, that the Company shall not be obligated to
pay any bonus, and the payment, if any, and amount and timing of any such bonus
shall be solely within the discretion of the Company and may be based on any
criteria the Company deems relevant.
a. Options. In addition to any options granted under previous agreements or
otherwise, the Executive shall be eligible to receive options (the "Options") to
acquire shares of the publicly-traded common stock of Alliance Gaming
Corporation, provided, however, that the Company shall not be obligated to award
any Options and the award, if any, and amount, timing, and terms of any such
Options shall be solely within the discretion of the Company and may be based on
any criteria the Company deems relevant.
a. Reimbursement of expenses. In accordance with established policies and
procedures of the Company as in effect from time to time, the Company shall pay
to or reimburse the Executive for all reasonable and actual out-of-pocket
expenses including but not limited to travel, hotel, and similar expenses,
incurred by the Executive from time to time in performing his obligations under
this Agreement.
a. Vacation. The Executive shall be entitled to annual paid vacation time,
prorated for any partial employment year, consistent with the Company's policy
applicable to its senior executives. The Executive also may accumulate and carry
forward unused vacation days from year to year consistent with Company policy.
The Executive shall also be entitled to reasonable periods of sick leave with
compensation and all paid holidays given by the Company to its senior executive
officers.
a. Other benefits. The Executive shall be entitled to other employment benefits,
including but not limited to life insurance, medical and hospitalization,
disability, and retirement benefits, consistent with the benefits provided to
other senior executives of the Company.
a. No Reduction. There shall be no material reduction or diminution of the
benefits provided in this section during the term of this Agreement unless (i)
the Executive consents, (ii) an equitable arrangement (embodied in a substitute
or alternative benefit or plan) is made with respect to such benefit or plan, or
(iii) the reduction is part of a program of across-the-board benefit reductions
similarly affecting the senior executive officers of the Company.
1. Termination.
a. Disability. If the Executive, because of illness or incapacity, fails to
discharge his duties under this Agreement for six or more consecutive months or
for noncontinuous periods aggregating to twenty-two weeks in any twelve-month
period, the Company may terminate this Agreement on thirty days' notice,
whereupon the obligations of the Company and the rights of the Executive under
this Agreement shall terminate, except that:
i. The Company shall pay the Executive's salary on a pro-rata basis through the
date of termination, offset by any benefits payable to the Executive under any
disability insurance policy paid for by the Company; and
i. One-half of any unvested Options shall vest and become exercisable by the
Executive's estate for two years after the date of the Executive's death; and
i. The Executive shall have the right, at the Executive's expense, to the
assignment of any and all insurance policies or health protection plans in
accordance with the terms and conditions of those plans.
a. Death. In the event of the Executive's death, this Agreement shall terminate
as of the date of his death, in which case the obligations of the Company and
the rights of the Executive under this Agreement shall terminate except that:
i. The Company shall continue to pay the Executive's salary for six months after
the date of death, offset by any benefits payable to the Executive or the
Executive's estate under any life insurance policy paid for by the Company; and
i. The Company shall reimburse the Executive's estate for all expenses
incurred and reimbursable under section ; and
i. One-half of any unvested Options shall vest and become exercisable by the
Executive's estate for two years after the date of the Executive's death.
a. Termination by Company for Cause.
i. The Company may terminate this Agreement for cause at any time immediately on
notice to the Executive, in which case the Company's obligations and the
Executive's rights under this Agreement shall terminate. For purposes of this
provision, the term "cause" includes, but is not limited to:
(1) The Executive's insubordination, fraud, disloyalty, dishonesty, willful
misconduct, or gross negligence in the performance of the Executive's duties
under this Agreement, including willful failure to perform such duties as may
properly be assigned to the Executive under this Agreement.
(1) The Executive's material breach of any provision of this Agreement.
(1) The Executive's failure to qualify (or having so qualified being thereafter
disqualified) under any suitability or licensing requirement of any jurisdiction
or regulatory authority to which the Executive may be subject by reason of his
position with the Company and its affiliates or subsidiaries.
(1) The Executive's commission of a crime against the Company or violation of
any law, order, rule, or regulation pertaining to the Company's business.
(1) The Executive's inability (other than because of death or disability under
sections and ) to perform the job functions and responsibilities assigned in
accordance with standards established, whether or not in writing, from time to
time by the Company, in its sole discretion.
(1) The Company obtains from any source information with respect to the
Executive or this Agreement that would, in the opinion of the Company,
jeopardize the gaming licenses, permits, or status of the Company or any of its
subsidiaries or affiliates with any gaming commission, board, or similar
regulatory or law enforcement authority.
i. Any termination by the Company for cause shall not be in limitation of any
other right or remedy the Company may have under this Agreement or otherwise.
a. Termination by Company without cause. The Company may terminate this
Agreement at any time without cause (as defined in paragraph ), whereupon the
Company's obligations and the Executive's rights under this Agreement shall
terminate, except that:
i. The Company shall continue to pay the Executive's salary and furnish the
benefits described in paragraph for twelve months after the date of termination,
offset by any compensation and benefits received by the Executive from other
employment during that period; and
i. One-half of any unvested Options shall vest and become exercisable by the
Executive for two years after the date of termination.
a. Termination by Executive with cause. If the Executive resigns with cause, the
Company's obligations and the Executive's rights under this Agreement shall
terminate, except that:
i. The Company shall continue to pay the Executive's salary and furnish the
benefits described in paragraph for twelve months after the date of termination,
offset by any compensation and benefits received by the Executive from other
employment during that period; and
i. One-half of any unvested Options shall vest and become exercisable by the
Executive for two years after the date of termination.
As used in this provision, "cause" is limited to the Company's
failure to cure either of the following within thirty days after
demand by the Executive: (i) the Company's failure to pay any
portion of the base salary within thirty days after it is due, and
(ii) the assignment to the Executive of duties materially
inconsistent with the duties and position set forth in this
Agreement.
a. Termination by Executive without cause. If the Executive resigns without
cause (as defined in paragraph ), this Agreement shall terminate as of the date
of his resignation, and the Company's obligations and the Executive's rights
under this Agreement shall terminate.
a. Survival of restrictive covenants. Notwithstanding the expiration or
termination of this Agreement for any reason, the Executive's covenants in
section and his obligations under that section shall survive the termination of
this Agreement as set forth in that section.
1. Restrictive covenants.
a. Covenant not to compete.
i. During the term of this Agreement and for twelve months after its termination
for any reason (other than its expiration at the end of is term pursuant to
paragraph , except as otherwise provided in paragraph ), the Executive will not,
directly or indirectly, whether as employee, owner, partner, agent, employee,
officer, consultant, advisor, stockholder (except as the beneficial owner of not
more than 5 percent of the outstanding shares of a corporation, any of the
capital stock of which is listed on any national or regional securities exchange
or quoted in the daily listing of over-the-counter market securities and, in
each case, in which the Executive does not undertake any management or
operational or advisory role) or in any other capacity, for the Executive's own
account or for the benefit of any person or entity, establish, engage, or be
connected with any person or entity that is at the time engaged in a business
then in competition with the business of the Company (which, for purposes of
this paragraph, shall include any of the Company's subsidiaries or affiliates)
in any area where the Company is doing business at the time of termination. The
Company and the Executive acknowledge and agree that the Company's market is
unlimited geographically and that the scope and duration of the covenant in this
paragraph are reasonable and fair; however, if a court of competent jurisdiction
determines that this covenant is overbroad or unenforceable in any respect, the
Company and the Executive acknowledge and agree that the covenant shall be
enforced to the greatest extent any such court deems appropriate, and such court
may modify this covenant to that extent.
i. At the expiration of this Agreement at the end of its term under paragraph ,
the Company may, in its sole and absolute discretion, continue to pay the
Executive the base salary set forth in paragraph and the other benefits set
forth in paragraph , in which case, and for so long as the Company continues to
do so, the Executive shall be bound by the covenant set forth in paragraph .
a. Covenant not to solicit customers, employees, or consultants. Executive shall
not, directly or indirectly, during the term of this Agreement and for twelve
months after its expiration or termination for any reason, (i) solicit the trade
or patronage of any of the customers or prospective customers of the Company
(which, for purposes of this paragraph, shall include any of the Company's
subsidiaries or affiliates) or of anyone who has heretofore traded or dealt with
the Company, regardless of the location of such customers or prospective
customers of the Company with respect to any technologies, services, products,
trade secrets, or other matters in which the Company is active, or (ii) aid or
endeavor to solicit or induce any other employee or consultant of the Company to
leave the Company to accept employment of any kind with any other person or
entity.
a. Confidential Information and Non-Disparagement.
i. In accordance with NRS 600A.010 et seq. (the so-called Uniform Trade Secrets
Act), the Executive shall hold in a fiduciary capacity for the benefit of the
Company and its stockholders all secret, confidential, and proprietary
information, knowledge, and data relating to the Company (and any of its
subsidiaries or affiliates), obtained by the Executive during or by reason of
the Executive's employment by the Company. During the term of this Agreement and
after its expiration or termination for any reason, the Executive shall not,
without the prior written consent of the Company or except as may be required by
law, communicate or divulge any such information, knowledge, or data to any
person or entity other than the Company (or as applicable its subsidiaries or
affiliates) and those designated by them that would result in any
misappropriation under and as defined in such Act, except that, while employed
by the Company, in furtherance of the business and for the benefit of the
Company, the Executive may provide confidential information as appropriate to
attorneys, accountants, financial institutions, and other persons or entities
engaged in business with the Company from time to time.
i. Each party agrees that, after the expiration or termination of this Agreement
for any reason, neither shall, publicly or privately, disparage or make any
statements (written or oral) that could impugn the integrity, acumen (business
or otherwise), ethics, or business practices of the other (including, in the
case of the Company, its affiliates and subsidiaries), except, in each case, to
the extent (but solely to the extent) necessary (i) in any judicial or
arbitration action to enforce the provisions of this Agreement, or (ii) in
connection with any judicial or administrative proceeding to the extent required
by applicable law.
a. Standstill. During the term of this Agreement and for twelve months after its
expiration or termination for any reason, the Executive shall not, singly or
with any other person, directly or indirectly:
i. Propose, enter into, agree to enter into, or encourage any other person to
propose, enter into, or agree to enter into (i) any form of business
combination, acquisition, or other transaction relating to the Company or any of
its subsidiaries or affiliates, or (ii) any form of restructuring,
recapitalization, or similar transaction with respect to the Company or any of
its subsidiaries or affiliates; or
i. Acquire, or offer, propose, or agree to acquire, by tender offer, purchase,
or otherwise, any voting securities of the Company or of its subsidiaries or
affiliates, except through the exercise of options or warrants beneficially
owned as of the date of this Agreement; or
i. Make or in any way participate in any solicitation of proxies or written
consents with respect to voting securities of the Company or any of its
affiliates or subsidiaries (it being understood that the mere execution of a
proxy or written consent for his own securities beneficially owned shall not be
treated as constituting participation in such a solicitation); or
i. Become a participant in any election contest with respect to the Company or a
nominee to or member of its board of directors or the board of directors of any
affiliate or subsidiary of the Company or any of its affiliates or subsidiaries;
or
i. Seek to influence any person with respect to the voting or disposition
of any voting securities of the Company or any of its affiliates or
subsidiaries; or
i. Demand a copy of the list of stockholders or other books and records
of the Company or any of its subsidiaries or affiliates; or
i. Participate in or encourage the formation of any partnership, syndicate, or
other group that owns or seeks or offers to acquire beneficial ownership of any
voting securities of the Company or any of its affiliates or subsidiaries or
that seeks to affect control of the Company or any of its affiliates or
subsidiaries or for the purpose of circumventing any provision of this
Agreement; or
i. Propose or support any director or slate of directors for nomination,
appointment, or election to the board of directors of the Company or any of its
affiliates or subsidiaries (it being understood that the mere execution of a
proxy or written shareholder consent for his own securities beneficially owned
shall not be treated as constituting such support); or
i. Otherwise act to seek or to offer to control or influence, in any
manner, the management, the board of directors, or the policies of the
Company or any of its affiliates or subsidiaries; or
i. Seek to amend or change this provision.
a. The Executive acknowledges that the Company will suffer irreparable injury,
not readily susceptible of valuation in monetary damages, if the Executive
breaches any of his obligations under this section. Accordingly, the Executive
agrees that the Company will be entitled, at the Company's option, to injunctive
relief against any breach or prospective breach by the Executive of the
Executive's obligations under this section in any federal or state court of
competent jurisdiction sitting in the State of Nevada, in addition to monetary
damages and any other remedies available at law or in equity. The Executive
hereby submits to the jurisdiction of such courts for the purposes of any
actions or proceedings instituted by the Company to obtain such injunctive
relief, and agrees that process may be served on the Executive by registered
mail, addressed to the last address of the Executive known to the Company, or in
any other manner authorized by law.
a. Material Inducements. The restrictive covenants and other provisions in this
section are material inducements to the Company entering into and performing
this Agreement. Accordingly, in the event of any breach of the provisions of
this section by the Executive, in addition to all other remedies at law or in
equity possessed by the Company, (i) the Company shall have the right to
terminate and not pay any amounts payable to the Executive under this Agreement,
(ii) all Options that are unexercised shall be immediately forfeited and
returned to the Company, and (iii) the Executive shall immediately account to
the Company and return to the Company an amount in cash equal to all profits or
benefits obtained or realized by the Executive by virtue of the ownership or
disposition of the Options.
1. Indemnification and Liability Insurance. If the Executive is or during the
term of this Agreement becomes a director of or holds a corporate office with
the Company:
a. Indemnification. The Company shall indemnify and hold the Executive harmless,
to the fullest extent legally permitted by Section 78.751 of the Nevada
Corporation Code (as amended and in effect from time to time) against any and
all expenses, liabilities, and losses (including without limitation, reasonable
attorneys' fees and disbursements of counsel reasonably satisfactory to the
Company), incurred or suffered by him in connection with his service as a
director or officer of the Company under this Agreement, in each case, except to
the extent of the Executive's intentional misconduct, fraud, or knowing
violation of law.
a. Insurance. The Company shall maintain, for the benefit of the Executive, a
directors' and officers' liability insurance policy insuring the Executive's
service as a director or officer or both of the Company (or any affiliate or
subsidiary of the Company) during the term of this Agreement in accordance with
its customary practices as in effect from time to time. The parties acknowledge
and agree that the policy may cover other officers and directors of the Company
in addition to the Executive.
1. Licenses and approvals. This Agreement is contingent on any necessary
approvals and licenses from any regulatory authorities having jurisdiction over
the parties or the subject matter of this Agreement. Each party shall promptly
apply to the appropriate regulatory authorities for any licenses and approvals
necessary for that party to perform under this Agreement, shall diligently
pursue its applications and pay all associated costs and fees, and shall
otherwise cooperate with any requests, inquiries, or investigations of any
regulatory authorities or law enforcement agencies in connection with the
Company, its affiliates, or this Agreement. If any license or approval necessary
for either party to perform under this Agreement is denied, suspended, or
revoked, this Agreement shall be void, provided, however, that if the denial,
suspension, or revocation affects performance of the Agreement in part only, the
parties may be mutual agreement continue to perform under this Agreement to the
extent it is unaffected by the denial, suspension, or revocation.
1. Compliance program. The parties acknowledge that Alliance Gaming Corporation,
as a company that operates and as the parent of companies that operate under
privileged licenses in a highly regulated industry, maintains a compliance
program to protect and preserve the name, reputation, integrity, and good will
of Alliance and its subsidiaries and affiliates through a thorough review and
determination of the integrity and fitness, both initially and thereafter, of
any person or company that performs work for those companies or with which those
companies are otherwise associated, and to monitor compliance with the
requirements established by gaming regulatory authorities in various
jurisdictions around the world. This Agreement and the association of the
Company and its affiliates with the Executive are contingent on the continued
approval of Alliance and its compliance committee under the Alliance compliance
program. The parties shall cooperate with Alliance and its compliance committee
as reasonably requested by Alliance or the committee and shall provide the
committee with such information as it may request. If Alliance, acting on the
recommendation of the committee, withdraws its approval of this Agreement or one
or more of the other parties, then this Agreement shall be void and neither
party shall have any rights thereunder.
1. General Provisions.
a. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or its breach (except, at the option of the Company, a controversy or
claim arising out of or relating to section , which the Company may choose to be
adjudicated in a federal or state court sitting in Las Vegas, Nevada), shall be
settled by arbitration in Las Vegas, Nevada, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and judgment on the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof. If any arbitration or other legal or equitable
action or proceeding is instituted to enforce any provisions of this Agreement,
the prevailing party shall be entitled to recover as costs such amounts as the
court or arbitrator may judge to be reasonable, including costs and attorneys'
fees.
a. Further assurances. Each party shall execute all documents and take all other
actions necessary to effect the provisions and purposes of this Agreement.
a. Entire agreement. This Agreement contains the entire agreement between the
parties and supersedes all other oral and written agreements previously entered
into by the parties concerning the same subject matter.
a. Modification, rescission, and assignment. This Agreement may be modified or
rescinded only with the written consent of both parties. Neither this Agreement
nor any right or interest under this Agreement shall be assignable by either
party without the written consent of the other, provided, that (i) if the
Executive dies during the term of this Agreement, the Executive's estate and his
heirs, executors, administrators, legatees, and distributees shall have the
rights and obligations as provided in this Agreement, and (ii) nothing contained
in this Agreement shall limit or restrict the Company's ability to merge or
consolidate or effect any similar transaction with any other entity,
irrespective of whether the Company is the surviving entity (including a split
up, spin off, or similar type transaction), provided that one or more of such
surviving entities continues to be bound by the provisions of this Agreement now
binding on the Company.
a. Controlling law; severability. Nevada law shall govern this Agreement and its
interpretation. If any provision is unenforceable for any reason, it shall be
deemed stricken from the Agreement but shall not otherwise affect the intention
of the parties or the remaining provisions of the Agreement.
a. Binding effect. This Agreement shall bind and inure to the benefit of each of
the parties and their respective heirs, successors, administrators, executors,
and assigns.
a. No third party benefits. This Agreement is for the benefit of the parties and
their permitted successors and assigns. The parties intend neither to confer any
benefit hereunder on any person, firm, or corporation other than the parties
hereto, nor that any such third party shall have any rights under this
Agreement.
a. Indulgence. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power, or privilege preclude any other or further exercise of the
same or of any other right, remedy, power, or privilege, nor shall any waiver of
any right, remedy, power, or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power, or privilege with respect to
any other occurrence.
a. Notices. All notices required by this Agreement must be in writing and must
be delivered, mailed, or telecopied to the addresses given above or such other
addresses as the parties may designate in writing.
a. Counterparts; facsimiles. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which, taken together,
shall constitute one and the same instrument. This Agreement may be executed and
delivered by exchange of facsimile copies showing the signatures of the parties,
and those signatures need not be affixed to the same copy. The facsimile copies
so signed will constitute originally signed copies of the same consent requiring
no further execution.
a. Captions; construction; drafting ambiguities. The captions in this Agreement
are for convenience only and shall not be used in interpreting it. In
interpreting this Agreement any change in gender or number shall be made as
appropriate to fit the context. Each party has reviewed and revised this
Agreement with independent counsel or has had the opportunity to do so. The rule
of construction that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this Agreement or of any
amendments or exhibits to this Agreement.
1. Condition precedent. This Agreement is subject to approval by the Company's
board of directors and shall be of no force and effect until that approval is
given and is evidenced by a written resolution of the board.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first set forth above.
"COMPANY" "EXECUTIVE"
Alliance Gaming Corporation
/s/ Xxxxxx Xxxxxxxxx _/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx Xxxxxxxxx, President Xxxxxx X. Xxxxxxxxx
