EMPLOYMENT AGREEMENT
EXHIBIT
10.5
This Agreement is made as of the 7th
day of September 2005 (the “Effective Date”), by and between WMS GAMING INC., a
Delaware corporation, with offices at 000 X. Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxxx 00000 (hereinafter called the "Corporation") and Xxxxx X. Xxxxx,
an individual residing at 0000 Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
(hereinafter called "Employee").
WITNESSETH:
WHEREAS,
Employee and the Corporation are parties to that certain Employment Agreement
dated as of July 22, 2004 (the “Original Agreement”);
WHEREAS,
Employee and the Corporation desire to amend and restate the Original Agreement
in its entirety as hereinafter set forth; and
WHEREAS,
the Corporation desires to employ Employee and Employee is willing to accept
such employment on the terms and subject to the conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth, the
parties hereto agree as follows:
1. Employment by
Corporation. The Corporation hereby agrees to employ
Employee to perform such duties on behalf of the Corporation and its affiliates
as the Chief Executive Officer or the Board of Directors of the Corporation
("Management"), may from time to time determine, including without limitation,
duties with respect to the design and development of gaming devices (“Games”) to
be manufactured and sold or leased by the Corporation or by one or more of the
other corporations under common control with the Corporation
(“Affiliates”). Employee’s title shall be Senior Vice President –
Product Development, reporting to the Executive Vice President and Chief
Operating Officer, which title and reporting may change at any time in the sole
discretion of Management.
2. Employee's Acceptance of
Employment. Employee hereby accepts such employment and agrees
that throughout the period of his employment hereunder he will devote his full
time, attention, knowledge and skills, faithfully, diligently and to the best of
his ability, in furtherance of the business of the Corporation and its
Affiliates, he will perform the duties assigned to him pursuant to Paragraph 1
hereof, subject, at all times, to the direction and control of Management and he
will do such reasonable traveling as may be required of him in the performance
thereof.
Employee
shall at all times be subject to, observe and carry out such rules, regulations,
policies, directions and restrictions as the Corporation shall from time to time
establish. During the period of his employment by the Corporation, Employee
agrees to be bound by the Corporation's Code of Conduct and any amendments
adopted thereto, a copy of which Employee hereby acknowledges he has received
and read, and Employee agrees that he shall not, without the prior written
approval of Management, directly or indirectly, accept employment or
compensation from or perform services of any nature for, any business enterprise
other than the Corporation or other corporations
under common control with the Corporation (its “Affiliates”) and such
enterprises previously disclosed to the Corporation in
writing.
3. Term. Employee shall
be employed for a term ("Term") of two (2) years commencing on the date hereof.
The term shall renew automatically for additional two-year terms at the end of
each two-year period thereafter, unless Employee's employment is terminated
voluntarily by Employee or by the Corporation for cause in accordance with
Paragraph 6 hereof, in which case the Term shall terminate immediately. If
Employee's employment is terminated by the Corporation other than by reason of
cause, Employee shall be entitled to receive as liquidated damages in
consideration of a complete release of any claims against the Corporation and
additional undertakings hereunder, including but not limited to those set forth
in Paragraph 7 hereof, a severance payment equal to the annual base salary
compensation to which Employee would otherwise be entitled during a twenty-four
(24) month period, which amounts will be paid in regular payroll intervals. Each
year of the Term is hereafter referred to as an "Employment
Year."
4. Compensation/Benefits.
4.1 The
Corporation will pay to Employee as compensation for his services hereunder an
annual base salary of Three Hundred Sixty Thousand Dollars
($360,000). Such salary may be adjusted annually based upon
annual performance evaluations and is to be payable in equal installments no
less frequently than semimonthly.
4.2 Employee
shall be entitled to receive an annual discretionary bonus in an amount of up to
seventy-five percent (75%) of Employee's then current base salary, payable pro
rata during the first fiscal year from the effective date of this
Agreement. Such bonus shall be within the sole discretion of
Management and will be based upon the extent to which the Corporation and
Employee achieve corporate and personal performance criteria and objectives
established by Management of the Corporation for such fiscal year; provided,
however, that for any fiscal year in which the Corporation is profitable,
Employee shall receive an annual bonus in an amount of not less than
Thirty-seven and one half percent (37.5%) of Employee’s then current base
salary. Employee may also participate, in the sole discretion
of Management, in such other profit sharing, incentive or other bonus
arrangements that may be in effect from time to time.
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4.3 Employee
shall be entitled to participate, to the extent he is eligible under the terms
and conditions thereof, in any bonus, pension, retirement, disability,
hospitalization, insurance, medical service, or other employee benefit plan
which is generally available to executive employees of the Corporation and which
may be in effect from time to time during the period of his employment
hereunder, including the Exec-U-Care insurance program. The
Corporation shall be under no obligation to institute or continue the existence
of any such employee benefit plan.
4.4 Employee
shall be entitled to twenty-seven (27) days paid-time off ("PTO days") during
each Employment Year. Any such PTO days are to be taken in accordance with the
policies set forth in the Company's Employee Handbook ("Handbook") and any
amendments adopted thereto, a copy of which Employee hereby acknowledges he has
received and read. Notwithstanding the provisions set forth in the Handbook,
Employee shall be eligible to bank up to ten (10)
PTO days per year or sell back up to Five (5) PTO days and bank additional PTO
days up to an aggregate of Ten (10) days, inclusive of the PTO days sold back to
the Corporation per year.
5. Business
Expenses. The Corporation shall reimburse Employee for all
authorized expenses reasonably incurred by him in accordance with the
Corporation's "Travel and Entertainment Policy and Procedure" and any amendment
thereof that the Corporation may adopt during his employment.
6. Termination. In
addition to all other rights and remedies which the parties may have under
applicable law, Employee and the Corporation hereby agree: that the Corporation
may terminate this Agreement and the services of Employee, effective upon the
occurrence of any of the following events, any one of which shall be considered
cause for termination: (i) a material failure by Employee to perform
his obligations under this Agreement in a satisfactory manner; (ii) the death of
Employee or his disability due to physical or mental illness for a period of
three (3) consecutive months; (iii) Employee fails to follow the Corporation's
"Code of Conduct," and any amendment thereof that the Corporation may adopt
during his employment; or (iv) in the event that Employee shall act, whether
with respect to his employment or otherwise, in a manner which is in violation
of the criminal laws of the United States or any State or subdivision thereof
(excluding minor violations) or which is reasonably likely to result in the loss
of a gaming license held by the Corporation or by any Affiliate or in such
entity's inability to become so licensed.
7. Non-Competition. In
consideration of the Corporation's entering into this
Agreement:
7.1 Employee
agrees that during the Term hereof and, (i) in the event Employee voluntarily
terminates his employment or the Corporation terminates Employee's employment
for cause, prior to the expiration of two (2) years following such termination
of Employee's employment, or (ii) in the event Employee is terminated for
reasons other than for cause, then for such period (not to exceed two (2) years)
as the Corporation continues to pay Employee's an amount equal to his annual
base salary pursuant to Paragraph 3 he will not directly or indirectly own,
manage, operate, join, control, participate in, perform any services for, invest
in, or otherwise be connected with, in any manner, whether as an officer,
director, employee, consultant, partner, investor or otherwise, any business
entity which is engaged in the design, manufacture and/or sale of any gaming
devices or any business entity which is engaged in any other business in which
the Corporation or any of its Affiliates is engaged within any country in the
world where Employer does business. Nothing herein contained shall be deemed to
prohibit Employee from investing his funds in securities of a company if the
securities of such company are listed for trading on a national stock exchange
or traded in the over-the-counter market and Employee's holdings therein
represent less than five percent (5%) of the total number of shares or principal
amount of other securities of such company outstanding. Employee
acknowledges that the Corporation's business is international in scope, and that
this limitation upon Employee will not interfere with Employee's ability to gain
future employment.
7.2 Employee
agrees that Employee will not, during the Term hereof or prior to the expiration
of two (2) years following the termination of the Employee's employment for any
reason, without the written consent of the Corporation, directly or indirectly,
by action alone or in concert
with others, induce or influence, or seek to induce or influence any person who
is engaged by the Corporation or any of its Affiliates as an employee, agent,
independent contractor or otherwise, to terminate his employment or engagement,
nor shall Employee, directly or indirectly, through any other person, firm or
corporation, employ or engage, or solicit for employment or engagement, or
advise or recommend to any other person or entity that such person or entity
employ or engage or solicit for employment or engagement, any person or entity
employed or engaged by the Corporation.
7.3 Employee
acknowledges that the provisions of this Paragraph 7 are reasonable in scope and
duration and are necessary for the protection of the Corporation. In the event
that any provision of this Paragraph 7, including any sentence, clause or part
hereof, shall be deemed contrary to law or invalid or unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions shall not
be affected, but shall, subject to the discretion of such court, remain in full
force and effect and any invalid and unenforceable provisions shall be deemed,
without further action on the part of the parties hereto, modified, amended and
limited to the extent necessary to render the same valid and
enforceable.
7.4 Employee
agrees that the restrictions of this Paragraph 7 shall be assignable by
Employer, whether by operation of law or otherwise, to any successor in interest
to either the game development operations or substantially all of the assets or
operations the Corporation. Employee acknowledges and agrees that Ten
percent (10%) of Employee’s annual base salary shall be paid for and in
consideration of Employer’s right to assign Employee’s agreement not to compete
under this Paragraph 7.
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8. Confidentiality
Agreement.
8.1 As
used herein, the term "Confidential Information" shall mean the terms of this
Employment Agreement and any and all information of the Corporation and of its
Affiliates (for purposes of Paragraphs 8, 9, 10 and 11 of this Agreement, the
Corporation's Affiliates shall be deemed included within the meaning of
"Corporation"), including, but not limited to, all data, compilations, programs,
devices, strategies, or methods concerning or related to (i) the Corporation's
finances, financial condition, results of operations, employee relations,
amounts of compensation paid to officers and employees and any other data or
information relating to the internal affairs of the Corporation and its
operations; (ii) the terms and conditions (including prices) of sales and offers
of sales of the Corporation's products and services; (iii) the terms, conditions
and current status of the Corporation's agreements and relationship with any
customer or supplier; (iv) the customer and supplier lists and the identities
and business preferences of the Corporation's actual and prospective customers
and suppliers or any employee or agent thereof with whom the Corporation
communicates; (v) the trade secrets, manufacturing and operating techniques,
price data, costs, methods, systems, plans, procedures, formulas, processes,
hardware, software, machines, inventions, designs, drawings, artwork,
blueprints, specifications, tools, skills, ideas, and strategic plans possessed,
developed, accumulated or acquired by the Corporation; (vi) any communications
between the Corporation, its officers, directors, shareholders, or employees,
and any attorney retained by the Corporation for any purpose, or any person
retained or employed by such attorney for the purpose of assisting such attorney
in his representation of the Corporation; (vii) any other information and
knowledge with respect to all gaming developed or in any stage of development by
the Corporation; (viii) the abilities and specialized
training or experience of others who as employees or consultants of the
Corporation during the Employee's employment have engaged in the design or
development of any such products; and (ix) any other matter or thing, whether or
not recorded on any medium, (a) by which the Corporation derives actual or
potential economic value from such matter or thing being not generally known to
other persons or entities who might obtain economic value from its disclosure or
use, or (b) which gives the Corporation an opportunity to obtain an advantage
over its competitors who do not know or use the same.
8.2 Employee
acknowledges and agrees that the Corporation is engaged in the highly
competitive gaming device business and has expended, or will expend, significant
sums of money and has invested, or will invest, a substantial amount of time to
develop and maintain the secrecy of the Confidential
Information. The Corporation has thus obtained, or will obtain,
a valuable economic asset which has enabled, or will enable, it to develop an
extensive reputation and to establish long-term business relationships with its
suppliers and customers. If such Confidential Information
were disclosed to another person or entity or used for the benefit of anyone
other than the Corporation, the Corporation would suffer irreparable harm, loss
and damage. Accordingly, Employee acknowledges and agrees that,
unless the Confidential Information becomes publicly known through legitimate
origins not involving an act or omission by Employee:
(i) the
Confidential Information is, and at all times hereafter shall remain, the sole
property of the Corporation;
(ii)
Employee shall use his best efforts and the utmost diligence to guard and
protect the Confidential Information from disclosure to any competitor, customer
or supplier of the Corporation or any other person, firm, corporation or other
entity;
(iii)
unless the Corporation gives Employee prior express written permission, during
his employment and thereafter, Employee shall not use for his own benefit, or
divulge to any competitor or customer or any other person, firm, corporation, or
other entity, any of the Confidential Information which Employee may obtain,
learn about, develop or be entrusted with as a result of Employee's employment
by the Corporation; and (iv) except in the ordinary course of the Corporation's
business, Employee shall not seek or accept any Confidential Information from
any former, present or future employee of the Corporation.
8.3 Employee
also acknowledges and agrees that all documentary and tangible Confidential
Information including, without limitation, such Confidential Information as
Employee has committed to memory, is supplied or made available by the
Corporation to the Employee solely to assist his in performing his services
under this Agreement. Employee further agrees that after his employment with the
Corporation is terminated for any reason:
(i)
Employee shall not remove from the property of the Corporation and shall
immediately return to the Corporation, all documentary or tangible Confidential
Information in his possession, custody, or control and not make or keep any
copies, notes, abstracts, summaries, tapes or other record of any type of
Confidential Information; and
(ii)
Employee shall immediately return to the Corporation any and all other property
of the Corporation in his possession, custody or control, including, without
limitation, any and all keys, security cards, passes, credit cards and marketing
literature.
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9. Invention Disclosure.
Employee agrees to disclose to the Corporation promptly and fully all ideas,
inventions, discoveries, developments or improvements ("Inventions") that may be
made or conceived by his and all "Intellectual Material" (as defined below) that
may be created or developed by his (whether such Inventions or "Intellectual
Material" are developed solely by him or jointly with others) either during his
employment by the Corporation or during a period of one (1) year after the
termination of his employment with the Corporation which either (i) in any way
is connected with or related to the actual or contemplated business, work,
research or undertakings of the Corporation or (ii) results from or is suggested
by any task, project or work that he may do for, in connection with, or on
behalf of the Corporation. Employee agrees that such Inventions and
"Intellectual Material" shall become the sole and exclusive property of the
Corporation and Employee hereby assigns to the Corporation all of his rights to
any such Inventions and "Intellectual Material." As used herein. "Intellectual
Material" shall include, but shall not be limited to, ideas, titles, themes,
production ideas, methods of presentation, artistic renderings, sketches, plots,
music, lyrics, dialogue, phrases, slogans, catch words, characters, names and
similar literary, dramatic and musical material, trade names, trademarks and
service marks and all copyrightable expressions in audio visual works, computer
software, electronic circuitry and all mask works for integrated
circuits. With respect to Inventions and Intellectual Material,
Employee shall during the period of his employment hereunder and at any time and
from time to time hereafter (a) execute all documents requested by the
Corporation for vesting in the Corporation the entire right, title and interest
in and to the same, (b) execute all documents requested by the Corporation for
filing and prosecuting such applications for patents, trademarks and/or
copyrights as the Corporation, in its sole discretion, may desire to prosecute,
and (c) give the Corporation all assistance it reasonably requires, including
the giving of testimony in any suit, action or proceeding, in order to obtain,
maintain and protect the Corporation's right therein and thereto. If
any such assistance is required following the termination of Employee's
employment with the Corporation, the Corporation shall reimburse Employee for
his lost wages or salary and the reasonable expenses incurred by him in
rendering such assistance. Anything contained in this paragraph to
the contrary notwithstanding, this paragraph does not apply to an Invention or
Intellectual Material for which no equipment, supplies, facilities, or trade
secret information of the Corporation was used and which was developed entirely
on the Employee's own time, unless the Invention or Intellectual Material
relates: (i) to the business of the Corporation,
(ii) to the Corporation's actual or demonstrably anticipated research or
development, or (iii) the Invention or Intellectual Material results from any
work performed by the Employee for the Corporation.
10. Nondisparagement. Employee
agrees that he will not disparage or make any statements or disclosures
injurious to, or which may reasonably be taken to be injurious or prejudicial or
in any way detrimental to, the Corporation or its Affiliates. In the
event that Employee breaches this Paragraph 10 while receiving severance
payments pursuant to Paragraph 3, Corporation shall have the right, without
waiving any other remedies in law or equity, to cease any further payments
pursuant to Paragraph 3. Notwithstanding such cessation of payments,
all of Employees obligations hereunder shall be continuing and
enforceable.
11. Remedies. Employee
acknowledges and agrees that the business of the Corporation is highly
competitive and that the provisions of Paragraphs 7, 8, 9 and 10 are reasonable
and necessary for the protection of the Corporation and its Affiliates and that
any violation of such covenants would cause immediate, immeasurable and
irreparable harm, loss and damage to the Corporation not adequately compensable
by a monetary award. Accordingly, the Employee agrees, without
limiting any of the other remedies available to the Corporation, that any
violation of said covenants, or any one of them, may be enjoined or restrained
by any court of competent jurisdiction, and that any temporary restraining order
or emergency, preliminary or final injunctions may be issued by any court of
competent jurisdiction, without notice and without bond. In the event any
proceedings are commenced by the Corporation against Employee for any actual or
threatened violation of any of said covenants and if the Corporation prevails in
such litigation, then, Employee shall be liable to the Corporation for, and
shall pay to the Corporation, all costs and expenses of any kind, including
reasonable attorneys' fees, which the Corporation may incur in connection with
such proceedings.
12. Change of
Control.
12.1 If
at any time during the term of this Agreement, (a) individuals who presently
constitute the Board of Directors of WMS Industries Inc. or the then ultimate
parent corporation of the Corporation (the “Parent Corporation”), or who have
been recommended for election to such Board by two-thirds of such Board
consisting of individuals who are either presently on such Board or such
recommended successors, cease for any reason to constitute at least a majority
of such Board or (b) both of the following occur (i) any person or entity or
group of affiliated persons or entities who are not owners of at least 15% of
the outstanding shares of voting securities of the Parent Corporation on the
Effective Date acquire more than 25% of the outstanding shares of voting
securities of the Parent Corporation and (ii) within 180 days of such
acquisition of 25% of the outstanding shares of voting securities the
Corporation terminates Employee’s employment for any reason other than for
cause, death or disability (the events in clause (a) or (b) being hereafter
referred to as a “Change of Control”) and, in the case of clause (a), Employee
gives written notice to the Corporation within 60 days after such Change of
Control of his election to terminate his employment hereunder, the Corporation
shall pay to Employee, as severance pay and in lieu of any other rights or
remedies which might otherwise be available to him under this Agreement, an
amount equal to the annual base salary compensation to which
Employee would otherwise be entitled during a twenty-four (24) month period,
which amount will be paid in regular payroll intervals.
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12.3 In
the event of a Change of Control of the Parent Corporation, or if any person or
entity or group of affiliated persons or entities who are not the owners of at
least 15% of the outstanding shares of voting securities of the Parent
Corporation on the date hereof acquires more than 25% of the outstanding shares
of the Parent Corporation’s voting securities (each such event being an
“Accelerated Vesting Event”), all unexpired stock options and stock equity
grants owned by Employee on the date of the Accelerated Vesting Event shall, if
unvested, vest fully on the date of the Accelerated Vesting Event
notwithstanding any vesting provisions of such options or equity
grants. All options and stock equity grants hereafter granted to
Employee by the Parent Corporation shall provide for substantially similar
accelerated vesting.
13. Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto with
respect to the matters set forth herein and no amendment or modification hereof
shall be valid or binding unless made in writing and signed by both parties
hereto.
14. Notices. Any notice,
required, permitted or desired to be given pursuant to any of the provisions of
this Agreement shall be deemed to have been sufficiently given or served for all
purposes if delivered in person or sent by certified mail, return receipt
requested, postage and fees prepaid as follows:
if to the
Corporation at:
its
address set forth above,
Attention:
Xxxxx X. Xxxxxxx, President
and, if
to Employee, at his address set forth above.
Either of
the parties hereto may at any time and from time to time change the address to
which notice shall be sent hereunder by notice to the other party given as
provided herein. The date of the giving of any notice hereunder shall be the
date delivered or if sent by mail, shall be the date of the posting of the
mail.
15. Non-Assignability.
Neither this Agreement nor the right to receive any payments hereunder may be
assigned by Employee. This Agreement shall be binding upon Employee and inure to
the benefit of his heirs, executors and administrators and be binding upon the
Corporation and inure to the benefit of its successors and
assigns.
16. Choice of Law And
Forum. This Agreement shall be governed, interpreted and
construed under the laws of the State of Illinois without regard to its conflict
of law principles. The parties agree that any dispute or litigation arising in
whole or in part hereunder shall, at the option of the Corporation, be litigated
in any state or Federal court of competent subject matter jurisdiction sitting
in Xxxx County, Illinois, to the jurisdiction of which and venue in which
Employee irrevocably consents.
17. Waiver. No
course of dealing nor any delay on the part of any party in exercising any
rights hereunder shall operate as a waiver of any such rights. No waiver of any
default or breach of
this Agreement shall be deemed a continuing waiver or a waiver of any other
breach or default.
18. Severability. If
any provision of this Agreement including any paragraph, sentence, clause or
part thereof, shall be deemed contrary to law or invalid or unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions of such
paragraph, sentence, clause or part thereof shall not be affected, but shall,
subject to the discretion of such court, remain in full force and effect and any
invalid and unenforceable provisions shall be deemed, without further action on
the part of the parties hereto, modified, amended and limited to the extent
necessary to render the same valid and enforceable.
19. Survival at
Termination. The termination of Employee's employment
hereunder shall not affect his obligations to the Corporation hereunder which by
the nature thereof are intended to survive any such termination including,
without limitation, Employee's obligations under Paragraphs 7, 8 9 and 10.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above set forth.
WMS
GAMING INC.
By: /s/ Xxxxx X.
Xxxxxxx
Xxxxx X.
Xxxxxxx
President
EMPLOYEE:
By: /s/ Xxxxx X.
Xxxxx
Xxxxx X.
Xxxxx
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