AMENDEDAND RESTATED COVENANTNOT TO COMPETE AGREEMENT MarkL. Yoseloff

A.  

The Company is in the business of developing, manufacturing, distributing and otherwise commercializing gaming equipment, games, and operating systems for gaming equipment and related products and services throughout the United States and in Canada and other countries (the “Business”).

B.  

Employee is Company’s Chief Executive Officer and Chairman of Company’s Board of Directors.

C.  

Company and Employee wish to provide for the orderly succession of Employee’s successor, when Employee’s employment with Company ends by providing a fixed period of time during which Employee will not compete with Company and be available to provide counsel to Employee’s successor.

D.  

The Company and Employee have previously entered into a Covenant Not to Compete Agreement dated May 1, 2002 (the “Previous Agreement”).

E.  

The Company and Employee desire to amend and restate the Previous Agreement solely in order to make changes to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(b)

either alone or in conjunction with any other person, partnership or business, directly or indirectly, solicit or divert or attempt to solicit or divert any of the employees or agents of the Company or its affiliates or successors to work for or represent any competitor of the Company or its affiliates or successors or to call upon any of the customers of the Company or its affiliates or successors.

 

(a)

Employee’s annualized base salary as of his last day of employment will be added to Employee’s average annual bonus over his last three (3) years of employment, then multiplied by 2, and that product will be paid to Employee as follows: one third on the first January 5th following Employee’s last day of employment, one third on the second January 5th following Employee’s last day of employment, and one third on the third January 5th following Employee’s last day of employment.

 

(b)

During Employee’s three year period of Non Competition, Company will provide Employee benefits it provides its non executive Employees, provided however, Employee will not receive any vacation\sick pay nor be eligible to participate in the Company’s bonus programs and stock option plans.

a.  

This Agreement is intended to comply with Section 409A of the Code (to the extent applicable) and, to the extent it would not adversely impact the Company, the Company agrees to interpret, apply and administer this Agreement in a manner necessary to comply with such requirements and without resulting in any diminution in the value of payments or benefits to the Employee. Notwithstanding any other provisions of this Agreement, the Company does not guarantee that payments will be exempt or comply with Section 409A of the Code, nor will the

b.  

Company indemnify, defend or hold harmless Employee with respect to the tax consequences of any such failure.

c.  

It is intended that (i) each installment of the payments provided under this Agreement is a separate “payment” for purposes of Section 409A of the Code, (ii) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and 1.409A-1(b)(9)(v) and (iii) all amounts set forth in Section 2 shall be payable only upon a termination of the Employee’s employment that constitutes a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h).

d.  

Notwithstanding anything to the contrary in this Agreement, if the Company determines (i) that on the date the Employee’s employment with the Company terminates, the Employee is a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any payments to be provided to the Employee pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code if provided at the time otherwise required under this Agreement then such payments shall be delayed until the date that is six months after the date of the Employee’s “separation from service” with the Company, or, if earlier, the date of the Employee’s death.  Any payments delayed pursuant to this Section 11 shall be made in a lump sum on the first day of the seventh month following the Employee’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if earlier, the date of the Employee’s death.

e.  

To the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which the Employee participates during the term of Employee’s employment under this Agreement or thereafter provides for a "deferral of compensation" within the meaning of Section 409A of the Code, (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), and (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

 

 

 

 

BY:   /s/ Jerry Smith

 

 

BY:   /s/ Mark L. Yoseloff

 

ITS:  Executive Vice President, General Counsel and Corporate Secretary

 

 

 

BY:   /s/ Lou Castle

 

ITS:  Chairman