Exhibit 10.12
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (“AGREEMENT”) is made and entered into as of
June 6, 2005, (“Effective Date”) by and between MIKOHN GAMING CORPORATION dba
Progressive Gaming International Corporation, a Nevada corporation (“MIKOHN” or
the “Company”), and Thomas M. Galanty (“Employee”).
WITNESSETH:
     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 employment with
MIKOHN for a period of three (3) years beginning on June 20, 2005 (“Term”).
Unless MIKOHN or Employee gives written notice that this Agreement shall be
allowed to expire and the employment relationship thereby terminated (a
“Non-renewal Notice”) at least thirty (30) days prior to the expiration of the
Term or any Renewal Term (as defined herein), this Agreement shall continue in
effect for additional terms of (1) one year each (“Renewal Term”).
     2. Duties of Employee. Employee’s position with MIKOHN will be Executive
Vice President and Chief Technology Officer. 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 MIKOHN’s Chief
Executive Officer. 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
and the position and related title, reporting level and responsibilities are of
equal or greater nature, status and prestige.
     3. Devotion of Time to MIKOHN’s Business. Employee shall be a full-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. The foregoing notwithstanding, Employee may devote
reasonable time to activities other than those required under this Agreement,
including activities involving professional, charitable, community, educational,
religious and similar types of organizations, speaking engagements, membership
on the boards of directors of other organizations and similar types of
activities to the extent that such activities do not inhibit or prohibit the
performance of services under this Agreement.
     4. Uniqueness of Services. Employee hereby acknowledges that the 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.
          a. Base Annual Salary. As compensation for services hereunder,
Employee shall receive a Base Annual Salary at the rate of not less than
$260,000 per annum payable in accordance with MIKOHN’s ordinary payroll
practices (and in any event no less frequently than monthly). On each
anniversary date of June 20, 2005 (the “Commencement Date”), Employee’s Base
Annual Salary shall be increased by not less than 5% per annum.
          b. Signing Bonus/Moving Allowance. Upon the execution of this
Agreement, Employee shall be paid $80,000 as a combined signing bonus and moving
allowance. Such bonus shall be “grossed up” to cover Employee’s personal income
taxes payable in connection therewith. This sum is given in consideration of
Employee’s commitment not to terminate this Agreement prior to the initial
expiration date, other than as permitted pursuant to Sections 6(c) or 19 below.
If Employee terminates this Agreement (other than as permitted pursuant to

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Sections 6(c) or 19 below) or if Employee is terminated for Cause (as defined
Section 6(b) below) prior to the expiration of three (3) years from the
Commencement Date, Employee will be obligated to return and remit a pro rata
portion of the sum to MIKOHN. (For example, if Employee should terminate this
Agreement after one year as described above, Employee will be required to remit
the sum of $53,333.34.)
          c. Bonus. Employee shall be eligible for an annual bonus payment of up
to 60% or 80% of Employee’s Base Salary pursuant to the executive incentive
compensation plan approved by the Board of Directors on August 10, 2004 (the
“Executive Incentive Compensation Plan”); provided, however that MIKOHN and
Employee, as applicable, achieve the relevant bonus targets set forth in the
Executive Incentive Compensation Plan, as such targets may be determined (and/or
modified and revised, as applicable) by the Chief Executive Officer and the
Board of Directors in consultation with Employee.
          d. Stock Options. MIKOHN has granted to Employee options to purchase
100,000 shares of MIKOHN Common Stock (the “Options”) under MIKOHN’s Stock
Option Plan (“Option Plan”). The Options are subject to the terms and conditions
of the Option Plan (a copy of which is attached hereto), and shall additionally
provide as follows:
               (1) The Options shall be designated as Incentive Options.
               (2) Monthly, 1/48th of the Option Shares shall become eligible
for purchase by Employee.
               (3) The Options shall terminate on (i) the expiration date
specified in the Stock Option Agreements or (ii) such earlier date as
termination may occur according to the terms and conditions of the Option Plan
and/or the Stock Option Agreements. Upon termination of this Agreement for any
reason, Employee and/or his successors and assigns shall have only such rights
with respect to the Option as are specified in the Plan, the Stock Option
Agreements, or this Agreement, and shall not be entitled to any compensation in
any form for the loss of any other right with respect thereto.
               (4) All Options to acquire common stock of MIKOHN granted to
Employee during the term of this Agreement shall become 100% vested (i) upon any
“Change in Control” as defined in Section 19 below; (ii) if MIKOHN or any
successor or assignee of MIKOHN should terminate this Agreement other than for
Cause or deliver a Non-renewal Notice to Employee pursuant to Section 1 above;
(iii) if Employee should terminate this Agreement for Good Reason as permitted
in Section 6(c) below; or (iv) upon Employee’s death or permanent disability as
described in Section 6(e) below; provided, however, that in the case of (ii),
(iii) or (iv) above, such vesting shall be conditioned on Employee (or
Employee’s estate) furnishing to MIKOHN an effective waiver and release of
claims (a form of which is attached hereto as Exhibit A).
               (5) Employee shall have not less than 90 days to exercise any
options which are vested as of the effective date of termination of his
employment with MIKOHN, regardless of the reason therefor.
          e. Automobile. MIKOHN shall provide Employee an automobile allowance
in the amount of $1,000 per month.
          f. Country Club Membership. MIKOHN shall provide Employee with the use
of a membership in a country club of Employee’s choice, the initial cost of
which shall not exceed $35,000. In addition, MIKOHN shall reimburse Employee up
to $500 per month for country club dues. Such monthly amounts shall be “grossed
up” to cover Employee’s personal income taxes payable in connection therewith.
          g. Employee Benefits. Employee shall receive such benefits, fringe
benefits and entitlements as is usual and customary for MIKOHN to provide an
executive 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, including but not limited to: Executive medical
benefits for Employee and his family and an

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Annual Life Insurance premium payment by MIKOHN for Employee of up to $15,000
per annum for the duration of the Agreement.
          h. Business Expenses. MIKOHN will reimburse Employee for reasonable
business expenses incurred in performing Employee’s duties and promoting the
business of MIKOHN.
          i. Restricted Stock. MIKOHN has granted Employee 35,000 restricted
shares (“Shares”) that are governed by, and vested in accordance with the terms
of MIKOHN’s Restricted Stock Plan (”Stock Plan”). The Fair Market Price for the
Shares is $13.46. The Shares have been granted pursuant to the form of MIKOHN’s
standard Restricted Stock Grant Agreement (a copy of which is attached hereto)
and are subject to the terms and conditions thereof.
     6. Termination of Employment.
          a. Either party shall have the right to terminate this Agreement upon
thirty (30) days written notice to the other. If MIKOHN delivers a Non-renewal
Notice to Employee, or if MIKOHN should terminate this Agreement other than for
“Cause” as defined in Section 6(b) below (“termination without Cause”) or
Employee should resign for “Good Reason” as defined in Section 6(c) below (in
either instance except as described in Section 19 below, in which case the
provisions of Section 19 shall apply), MIKOHN shall, upon the Employee’s
furnishing to MIKOHN an effective waiver and release of claims (a form of which
is attached hereto as Exhibit A), pay to Employee (x) a sum equal to Employee’s
Base Salary for the most recent 18 months, and (y) an amount equal to Employee’s
COBRA health insurance premiums for the 18 month period immediately following
such termination. In such event, MIKOHN shall also reimburse Employee for
reasonable expenses associated with outplacement employment activities for
Employee, as well pay Employee the sum of $25,000 (including a “gross up” amount
to cover Employee’s personal income taxes payable in connection therewith) for
Employee’s relocation. Any sums payable under this Section shall be paid in full
upon the effective date of the termination of the employment relationship
between MIKOHN and Employee.
          b. Termination For Cause. MIKOHN shall have the right to terminate
Employee’s employment at any time for Cause by giving Employee written notice of
the effective date of termination. In the event of termination for Cause,
Employee shall be paid Employee’s salary and accrued and unused vacation
benefits through the effective date of termination on the date of termination.
After the effective date of termination, Employee shall not be entitled to
accrue or vest in any further salary, severance pay, benefits, fringe benefits
or entitlements except as may be required by statute or regulation of any agency
or competent jurisdiction; provided, however, that in the event of a termination
pursuant to Section 6(b)(e) below, pay Employee the sum of $25,000 (including a
“gross up” amount to cover Employee’s personal income taxes payable in
connection therewith) for Employee’s relocation. For the purposes of this
Agreement, “Cause” shall mean:

  (a)   The willful and continued failure by the Employee to substantially
perform his duties with MIKOHN (other than any such failure resulting from the
Employee’s being Disabled), within a reasonable period of time after a written
demand for substantial performance is delivered to the Employee by the Board of
Directors (“Board”), which demand specifically identifies the manner in which
the Board believes that the Employee has not substantially performed his duties;
    (b)   The willful engaging by the Employee in conduct which is demonstrably
and materially injurious to MIKOHN, monetarily or otherwise;     (c)  
Employee’s conviction of a crime involving serious moral turpitude to the extent
that, in the reasonable judgment of the MIKOHN’s Board, the Employee’s
credibility and reputation no longer conform to the standard of MIKOHN’s
Employees;

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  (d)   The knowing or repeated violation of any material MIKOHN policy
applicable to the Employee following written notice from MIKOHN of such
violations.

  (e)   The loss, revocation, suspension of, or failure to obtain any license or
certification of Employee necessary for Employee to discharge Employee’s duties
on behalf of MIKOHN. Any issues involving the loss, revocation, suspension of or
failure to obtain of such licenses and/or certifications will be provided in
writing to the Employee, and Employee, with the assistance of MIKOHN, will have
a reasonable period of time to remedy the respective issue.     (f)   Willful
acts or omissions by Employee which jeopardize any governmental registration,
license, permit or other governmental permission material to the business of
MIKOHN in any jurisdiction in which MIKOHN does business or seeks to do
business;     (g)   The solicitation or acceptance of payment or gratuity from
any existing or potential customer or supplier of MIKOHN without the prior
written consent of MIKOHN’s Chief Executive Officer.

          c. Resignation For Good Reason. Employee may terminate his employment
under this Agreement for “Good Reason” (as defined hereunder) at any time, by
providing written notice to MIKOHN of same following the provision to MIKOHN of
a thirty (30) day opportunity to cure such Good Reason. Any termination for Good
Reason shall have the same legal effect under this Agreement as a termination
without Cause by MIKOHN. For purposes of this Agreement, the term “Good Reason”
shall mean, with respect to the Employee, the occurrence of one or more of the
following events without such Employee’s express written consent: (i) a material
reduction in the Employee’s duties, responsibilities, title or reporting
relationships; (ii) a material reduction in the Employee’s base salary or total
target annual cash compensation; or (iii) a permanent relocation of the
Employee’s business office to a location more than fifty (50) miles from the
location at which the Employee currently performs his or her duties.
          d. For purposes of this Agreement, no act, or failure to act, on the
Employee’s part shall be deemed “willful” unless done, or omitted to be done,
intentionally by the Employee not in good faith and without reasonable belief
that the Employee’s action or omission was in the best interest of MIKOHN.
          e. 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 ninety (90) 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. Upon termination
of this Agreement as the result of the death or disability of Employee, all
vested stock options and restricted stock provided herein shall become the
property of the Employee’s estate.
     7. Covenant of Confidentiality. All documents, records, files, manuals,
forms, materials, supplies, computer programs, trade secrets 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.
     8. Covenant of Non-Disclosure. Without the prior written approval 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.

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     9. Covenant of Non-Solicitation. During the Term of this Agreement and for
a period of two (2) years following the effective date of termination, 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.
     10. Covenant of Cooperation. Employee agrees to cooperate with 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.
          a. Scope and Term. During the Term of this Agreement and for an
additional period ending one (1) year after the effective date of termination or
expiration of this Agreement, whichever occurs first, 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. Ownership
by Employee, as a passive investment, of less than two percent (2%) of the
outstanding shares of capital stock of any corporation with one or more classes
of its capital stock listed on a national securities exchange or publicly traded
on the Nasdaq Stock Market or in the over-the-counter market shall not
constitute a breach of this paragraph.
          b. Option to Extend Term of Covenant. Upon thirty (30) days’ written
notice to Employee given prior 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, or Employee terminates his employment pursuant to
Sections 6(c) or 19, the sum of $300,000.00 payable in 12 monthly installments;
or
               (2) If Employee terminates this Agreement other than as permitted
in Sections 6(c) or 19 or is terminated by MIKOHN for Cause, the sum of
$120,000.00 payable in 12 monthly installments.
     12. Rights to Inventions.
          a. Inventions Defined. “Inventions” means discoveries, concepts, and
ideas, whether patentable or not, relating to any present or contemplated
activity 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 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. This Section 12 does
not apply to any invention disclosed in writing to MIKOHN by Employee prior to
the execution of this Agreement.
          c. Assignment. Employee hereby assigns and agrees to assign to MIKOHN
all of his rights to Inventions described in (b) above 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 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

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undertaken on MIKOHN’s behalf, whether or not in Employee’s opinion a given
study or project has resulted in an Invention.
          e. Patents. At MIKOHN’s request and expense, Employee shall 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 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 survive
termination of the employment relationship and this Agreement.
     15. General Provisions.
          a. Arbitration. Any controversy involving the construction,
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
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. Authorization. MIKOHN and Employee each represent and warrant to
the other that he/it has the authority, power and right to deliver, execute and
fully perform the terms of this Agreement.
          c. Entire Agreement. Employee understands and acknowledges 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.
          d. Severability. If any term, provision, covenant, or 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.

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          e. Governing Law. Except to the extent that federal law may 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.
          f. Taxes. Except as otherwise specifically provided in this Agreement,
all compensation payable hereunder is gross and shall be subject to such
withholding taxes and other taxes as may be provided by law. Except as otherwise
specifically provided in this Agreement, 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.
          g. Assignment. This Agreement shall be binding upon and inure 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.
          h. Waiver. Either party’s failure to enforce any provision or
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.
          i. Captions. Titles and headings to sections in this Agreement are for
the purpose of reference only and shall in no way limit, define, or otherwise
affect any provisions contained therein.
          j. Breach — Right to Cure. A party shall be deemed in breach of 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
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.
     17. [Reserved].
     18. Indemnification For Employee Officers. MIKOHN will, to the maximum
extent permitted by law, defend, indemnify and hold harmless the Employee and
the Employee’s heirs, estate, executors and administrators against any costs,
losses, claims, suits, proceedings, damages or liabilities to which the Employee
may become subject which arise out of, are based upon or relate to the
Employee’s employment by MIKOHN (and any predecessor company to MIKOHN), or the
Employee’s service as an officer or member of the Board of Directors of MIKOHN
(or any predecessor company of MIKOHN) or any Affiliate, including without
limitation reimbursement for any legal or other expenses reasonably incurred by
the Employee in connection with investigation and defending against any such
costs, losses, claims, suits, proceedings, damages or liabilities.
MIKOHN may maintain directors and officers liability insurance in commercially
reasonable amounts (as reasonably determined by the Board), and, in the event
such insurance is obtained, the Employee shall be covered under such insurance
to the same extent as other senior management employees (and directors, with
respect to the Employee’s role as a director, as may be applicable); provided,
however, that MIKOHN shall not be required to maintain such insurance coverage
unless the Board determines that it is obtainable at reasonable cost.

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     19. Change in Control Provision. Notwithstanding any Agreement provisions
to the contrary, for a period of twelve (12) months following a Change in
Control, in the event of a termination of Employee other than for Cause, or if
the Employee resigns for “Good Reason” as that term is defined in Section 6(c)
above, Employee shall be entitled to receive a sum equal to three times the
Employee’s annualized Base Salary for the most recently completed calendar year
payable in a lump sum upon termination. At any point during the thirteenth month
following a Change in Control, Employee shall be entitled to terminate the
Agreement and receive a sum equal to the amount they would otherwise be entitled
to pursuant to termination by MIKOHN other than for Cause at the time of such
election. In addition to the foregoing, upon a Change in Control and separation
of the Employee from MIKOHN, MIKOHN agrees to reimburse Employee for reasonable
expenses associated with outplacement employment activities for Employee. For
the purposes of this Agreement, the following definitions shall apply:
     (i) a “Change in Control” of MIKOHN means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:
          a. Any Exchange Act Person becomes the Owner, directly or indirectly,
of securities of MIKOHN representing more than fifty percent (50%) of the
combined voting power of MIKOHN’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (a) on account of
the acquisition of securities of MIKOHN by an investor, any affiliate thereof or
any other Exchange Act Person from MIKOHN in a transaction or series of related
transactions the primary purpose of which is to obtain financing for MIKOHN
through the issuance of equity securities or (b) solely because the level of
Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the
designated percentage threshold of the outstanding voting securities as a result
of a repurchase or other acquisition of voting securities by MIKOHN reducing the
number of shares outstanding, provided that if a Change in Control would occur
(but for the operation of this sentence) as a result of the acquisition of
voting securities by MIKOHN, and after such share acquisition, the Subject
Person becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;
          b. There is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) MIKOHN and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of MIKOHN immediately prior thereto do not Own, directly or
indirectly, either (a) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (b) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the
outstanding voting securities of MIKOHN immediately prior to such transaction;
          c. The stockholders of MIKOHN approve or the Board approves a plan of
complete dissolution or liquidation of MIKOHN, or a complete dissolution or
liquidation of MIKOHN shall otherwise occur;
          d. There is consummated a sale, lease, license or other disposition of
all or substantially all of the consolidated assets of MIKOHN and its
subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of MIKOHN and its subsidiaries to
an Entity, more than fifty percent (50%) of the combined voting power of the
voting securities of which are Owned by stockholders of MIKOHN in substantially
the same proportions as their Ownership of the outstanding voting securities of
MIKOHN immediately prior to such sale, lease, license or other disposition; or
          e. Individuals who, on the date this Agreement is executed, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new

8

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member shall be considered as a member of the Incumbent Board.
     (ii) “Entity” means a corporation, partnership or other entity.
     (iii) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     (iv) “Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (A) MIKOHN or any subsidiary of MIKOHN,
(B) any employee benefit plan of MIKOHN or any subsidiary of MIKOHN or any
trustee or other fiduciary holding securities under an employee benefit plan of
MIKOHN or any subsidiary of MIKOHN, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) an Entity Owned,
directly or indirectly, by the stockholders of MIKOHN in substantially the same
proportions as their Ownership of stock of MIKOHN.
     (v) “Own,” “Owned,” “Owner,” “Ownership” — A person or Entity shall be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.
     20. Parachute Payments. If any payment or benefit the Employee would
receive from MIKOHN pursuant to this Agreement or otherwise (“Payment”) would
(i) constitute a “parachute payment” within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), and (ii) be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the
Employee will receive an additional payment (the “Gross-up”) from MIKOHN such
that after taking into account all applicable federal, state and local
employment taxes, income taxes, the Excise Tax and all applicable taxes on the
Gross-up (all computed at the highest applicable marginal rate), results in the
Employee’s receipt, on an after-tax basis, of the full amount of the Payment.
MIKOHN’s principal outside accounting firm or principal outside tax advisors, as
selected by MIKOHN and Employee, will make all determinations hereunder and
shall provide its calculations, together with detailed supporting documentation,
to MIKOHN and the Employee within fifteen (15) calendar days after the date on
which the Employee’s right to a Payment is triggered (if requested at that time
by MIKOHN or Employee) or such other time as requested by MIKOHN or the
Employee. The accounting firm or tax advisors shall furnish MIKOHN and the
Employee with an opinion reasonably acceptable to the Employee regarding the
application of the Excise Tax to such Payment. MIKOHN shall be entitled to rely
upon the accounting firm’s or tax advisors’ determinations, as applicable, which
shall be final, binding and conclusive on Employee and MIKOHN.
     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    
 
               
/s/ Thomas M. Galanty
 
THOMAS M. GALANTY
      By:   /s/ Michael F. Dreitzer
 
   
 
      Title:   E.V.P. & General Counsel    

9

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EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
     In consideration of the payments and other benefits set forth in
Section 5(d)(4) and Section 6(a) of the Employment Agreement dated      , to
which this form is attached, I, Thomas M. Galanty, hereby furnish Progressive
Gaming International Corporation (the “Company”), with the following release and
waiver (“Release and Waiver”).
     In exchange for the consideration provided to me by the Employment
Agreement that I am not otherwise entitled to receive, I hereby generally and
completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and
subsidiary entities, insurers, Affiliates, and assigns from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in
any way related to events, acts, conduct, or omissions occurring prior to my
signing this Release and Waiver. This general release includes, but is not
limited to: (1) all claims arising out of or in any way related to my employment
with the Company or the termination of that employment; (2) all claims related
to my compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership interests in
the Company; (3) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (4) all tort
claims, including, but not limited to, claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including, but not limited to, claims for
discrimination, harassment, retaliation, attorneys’ fees, or other claims
arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in
Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended).
     I also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: “A general release does not extend
to claims which the creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him must have materially
affected his settlement with the debtor.” I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to any claims I may have against the
Company.
     I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an executive of
the Company. If I am 40 years of age or older upon execution of this Release and
Waiver, I further acknowledge that I have been advised, as required by the Older
Workers Benefit Protection Act, that: (a) the release and waiver granted herein
does not relate to claims under the ADEA which may arise after this Release and
Waiver is executed; (b) I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have twenty-one (21) days from the date of termination of my
employment with the Company in which to consider this Release and Waiver
(although I may choose voluntarily to execute this Release and Waiver earlier);
(d) I have seven (7) days following the execution of this Release and Waiver to
revoke my consent to this Release and Waiver; and (e) this Release and Waiver
shall not be effective until the seven (7) day revocation period has expired.
     If I am less than 40 years of age upon execution of this Release and
Waiver, I acknowledge that I have the right to consult with an attorney prior to
executing this Release and Waiver (although I may choose voluntarily not to do
so); and (c) I have five (5) days from the date of termination of my employment
with the Company in which to consider this Release and Waiver (although I may
choose voluntarily to execute this Release and Waiver earlier).
     This Release and Waiver constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with regard to the
subject matter hereof. I am not relying on any promise or representation by the
Company that is not expressly stated herein. This Release and Waiver may only be
modified by a writing signed by both me and a duly authorized officer of the
Company.

                     
Date:
          By:        
 
 
 
         
 
   

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