EXHIBIT
10.3
  FIRST AMENDMENT TO EXECUTIVE
EMPLOYMENT AGREEMENT
 
 THIS
FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) is made and
entered into effective as of the 31st day of December, 2008, by and between
MULTIMEDIA GAMES, INC., a Delaware corporation(the “Company”), and GINNY SHANKS
(the “Executive”).
 
 WHEREAS, the Company and the
Executive entered into that certain Executive Employment Agreement dated July
28, 2008 (as amended, modified and supplemented from time to time, the “Employment Agreement”);
and
 
 WHEREAS, the parties desire to
amend the Employment Agreement pursuant to the terms conditions and conditions
contained herein;
 
 NOW, THEREFORE, in
consideration of the premises, the mutual covenants herein contained and for
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
 
 1.
              Terms.  Capitalized
      terms used herein and not otherwise defined herein (including, without
      limitation, in the language amendatory to the Employment Agreement) shall
      have the respective meanings given such terms in the Employment
      Agreement.
 
 2.
              Schedule
      1.7.2 entitled “Termination Without Cause;
      Resignation for Good Reason” shall be deleted in its entirety and
      replaced with the following
paragraph:
 
 1.7.2 Termination Without Cause;
Resignation for Good Reason.  Subject to the provisions set
forth in Section
1.7.3, in the case of a termination of Executive’s employment
hereunder  Without Cause in accordance with Section 1.6.4 above,
or Executive’s resignation with Good Reason, the Company (i) shall pay Executive
(A) in the event that the Termination takes place one year from the Effective
Date, one year of Base Salary continuation (to be paid in accordance with the
Company’s normal payroll practices) and Target Bonus (Target Bonus to be paid at
the end of the year within the time set forth in Section 1.4.2),
subject to the tax withholding specified in Section 1.4.1 above
or (B) in the event that the Termination takes place two years from the
Effective Date, two years of Base Salary continuation (to be paid in accordance
with the Company’s normal payroll practices) and two years of Target Bonus
(Target Bonuses to be paid at the end of each year within the time set forth in
Section 1.4.2);
such payments must not however extend beyond the second taxable year of the
Executive following the taxable year in which the termination of employment
occurred; and (ii) if Executive elects to continue health coverage under the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), for a period up to
one year after the termination, the Company will pay Executive’s premiums, in an
amount sufficient to maintain the level of health benefits in effect on
Executive’s last day of employment.  Further, subject to the
provisions set forth in Section 1.7.3, in the
event that there is a Change of Control and within one year after the closing of
the Change of Control, Executive is terminated Without Cause or resigns for Good
Reason, (i) the Company shall pay Executive a lump sum equal to two years of
Base Salary continuation and two years of Target Bonus, such lump sum payment
must be made within 60 days of such termination of employment; (ii) if Executive
elects to continue health coverage under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), for a period up to
one year after the termination, the Company will pay Executive’s premiums, in an
amount sufficient to maintain the level of health benefits in effect on
Executive’s last day of employment; and (iii) the Option will immediately vest
as set forth in Section
1.5.
  
  For purposes of this Agreement, “Good Reason” means the
occurrence of any of the following:  (i) the assignment to Executive
of duties materially inconsistent with his status as Chief Marketing Officer of
the Company or a material adverse alternation in the nature or status of his
responsibilities, duties or authority; (ii) a material reduction by the Company
in Executive’s then Base Salary or Target Bonus, a material reduction in other
benefits, or the failure by the Company to pay Executive any material portion of
his current compensation when due; (iii) a requirement that Executive report to
a primary work location that is more than 50 miles from the Company’s current
location in Reno, Nevada; or (iv) the failure of the Executive and a successor
company to reach a mutually agreeable employment agreement, so long as Executive
is willing and able to execute a new contract that substantially provides
similar terms and conditions to this Agreement.  Notwithstanding the
foregoing, Executive’s resignation shall not be treated as a resignation for
Good Reason unless (a) Executive notifies the Company in writing of a condition
constituting Good Reason within 45 days following Executive’s becoming aware of
such condition; (b) the Company fails to remedy such condition within 30 days
following such written notice (the “Remedy Period”); and (c)
Executive resigns within 30 days following the expiration of the Remedy
Period.  In addition the termination must occur within two years of
the occurrence of one of the above enumerated events.  Further, in the
event that Executive resigns for Good Reason and within two years from such date
accepts employment with the Company, any acquirer or successor to the Company’s
business or any affiliate parent or subsidiary of either the Company or its
successor, then the Executive will forfeit any right to severance payments
hereunder and will reimburse the Company for the full amount of such payments
received by Executive within 30 days of accepting such
employment.  Notwithstanding the previous sentence, if such payments
are deemed Deferred Compensation, then such payments shall only be forfeited to
the extent allowed by Section 409A.
  3.
              Section
      4.2, entitled Section 409A shall be
      deleted in its entirety and replaced by the
  following:
 4.2.           Section
409A.Notwithstanding any inconsistent provision of this
Agreement, to the extent the Company determines in good faith that (a) one or
more of the payments or benefits received or to be received by Executive
pursuant to this Agreement in connection with Executive’s termination of
employment would constitute deferred compensation subject to the rules of
Section 409A of the Code (“Section 409A”) and (b)
Executive is a “specified employee” under Section 409A, then only to the extent
required to avoid Executive’s incurrence of any additional tax or interest under
Section 409A, such payment or benefit will be delayed until the earliest date
following Executive’s “separation from service” within the meaning of Section
409A which will permit Executive to avoid such additional tax or
interest.  The Company and Executive agree to negotiate in good faith
to reform any provisions of this Agreement to maintain to the maximum extent
practicable the original intent of the applicable provisions without violating
the provisions of Section 409A, if the Company deems such reformation necessary
or advisable pursuant to guidance under Section 409A to avoid the incurrence of
any such interest and penalties.  Such reformation shall not result in
a reduction of the aggregate amount of payments or benefits under this
Agreement.  Any payments under this Agreement that are deemed subject
to Section 409A shall be subject to the following terms and
provisions:
  2
  4.2.1
                Nonassignability.  The
      Executive, nor any other person shall have the right to commute, sell,
      assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
      transfer, hypothecate, alienate, or convey in advance of actual receipt,
      the amounts, if any, payable under this Agreement that are deemed
      underSection
      409A to be “deferred compensation” (“Deferred Compensation”),
      or any part thereof, and all rights to such payments are expressly
      declared to be, unassignable and non-transferable.  Subject to
      Section
      4.2.3 below, no part of the amounts payable shall, prior to actual
      payment, be subject to seizure, attachment, garnishment, or sequestration
      for the payments of debts, judgments, alimony or separate maintenance owed
      by Executive or any other person, be transferable by operation of law in
      the event of a Executive’s or any other person’s bankruptcy or insolvency,
      or be transferable to a spouse as a result of a property settlement or
      otherwise.  Any purported assignment, encumbrance or transfer of
      any nature before actual receipt shall be null and
  void.
  4.2.2
              No Suspension of
      Severance.  Once the deferred compensation payments
      commence, such payments shall continue to be made, except as otherwise
      permitted under Section 409A.
  4.2.3
              Set-Off.  Notwithstanding
      any provision herein or any agreement to the contrary, the Company shall
      not have
      any right to offset against any Deferred Compensation benefits payable
      under this Agreement until such benefit is distributable to Executive or
      his/her beneficiary or as otherwise allowed under
      Section 409A.
  4.2.4
              Acceleration of
      Benefits.  The Company may not accelerate any Deferred
      Compensation benefits.  Notwithstanding the previous sentence,
      the Company may permit any acceleration that is allowed under Section
      409A.
  4.2.5
              Compliance with
      Section 409A.  The provisions of  this
      Agreement shall be interpreted and administered consistent with
      Section 409A, Treasury Regulations and other applicable guidance
      issued under Section 409A and shall incorporate the terms and provisions
      required by Section 409A.  If any provision herein would cause
      noncompliance with Section 409A, such provision shall be disregarded
      and this Employment Agreement shall be construed and administered as if
      such provision were not a part of this Employment
    Agreement.
  
 4.
              Ratification.  The
      Employment Agreement, as herein amended, remains in full force and effect
      in accordance with its terms, and the Company and the Executive hereby
      ratify and confirm the same.  The Company and the Executive
      agree that no event of default or default has occurred and is continuing
      under the Employment Agreement, as herein
  amended.
 
 5.
              Law
      Governing.  This Amendment shall be governed by and
      interpreted in accordance with the laws of the State of
    Texas.
  
 3
 
 This First Amendment to Executive
Employment Agreement is executed on the 31st day of
December, 2008.




“COMPANY”MULTIMEDIA
      GAMES, INC.By:
                                      /s/
      Neil E. JenkinsNEIL
      E. JENKINSChairman
      Compensation Committee“EXECUTIVE”/s/ Ginny E. ShanksGINNY
      E. SHANKS
 
 4