Exhibit 10.4


 


AGREEMENT


 


This Agreement
(this “Agreement”) is dated as of July 1, 2004, and is between Alliance Gaming
Corporation, a Nevada corporation (the “Company”), and Joel Kirschbaum, an
individual (“Kirschbaum”).


 


BACKGROUND


 


Kirschbaum is
currently a member of the Board of Directors of the Company (the “Board”).  The Company and industry are currently
experiencing a period of rapid growth in an increasingly complex
multi-jurisdictional gaming industry which is dynamic and challenging.  Contemporaneously, the Company is preparing
for a transition in management and is engaging in a program of succession
planning.  To address, among others,
these issues, the Company has created an Office of the Chairman and would like
to secure the services of Kirschbaum as a member of the Office of the Chairman
during this period.  Kirschbaum is
willing to serve in such capacities and provide such services pursuant to the
terms and conditions of this Agreement.


 


NOW THEREFORE,
in consideration of the mutual covenants and promises set forth in this
Agreement, and intending to be legally bound, the parties agree as follows:


 


1.             Services.


 


(a)           The Company hereby
appoints Kirschbaum to serve, and Kirschbaum hereby accepts such appointment to
serve, as a member of the Office of the Chairman.  As a member of the Office of the Chairman, Kirschbaum shall have
such powers and perform such duties as are contemplated by the Amended and
Restated Bylaws of the Company and as may be delegated to Kirschbaum by the
Board.


 


(b)           In serving as a member
of the Office of the Chairman, Kirschbaum shall devote such time and attention
as is reasonable and appropriate to perform his services hereunder.


 


2.             Term and
Termination.


 


(a)           Term.  The term of this Agreement shall be for a
period of three and one-half (3.5) years commencing on July 1, 2004 and
terminating on December 31, 2007  (the
“Term”), unless earlier terminated as provided herein.


 


(b)           Termination.  This Agreement may be terminated prior to
expiration of the Term as follows:


 


(i)            By Kirschbaum.  If Kirschbaum voluntarily resigns from the
Board, or otherwise provides the Company with written notice of his voluntary
termination of this Agreement prior to the expiration of the Term, this
Agreement shall terminate as of the date of such resignation or termination,
and the Company shall have no further obligations to Kirschbaum or his heirs or
estate under this Agreement.


 

















 


(ii)           By the Company.  [a] 
If the Board requests in writing that Kirschbaum resign from the Board,
or Kirschbaum is not re-nominated or having been re-nominated is not re-elected
to serve on the Board, or otherwise provides Kirschbaum with written notice of
termination of this Agreement, other than for Cause (as herein defined) prior
to the expiration of the Term, this Agreement shall terminate as of the date of
the Board’s request or notice.  In such
circumstances, the Company shall pay Kirschbaum the remainder, if any, of the
fees for his serving as a member of the Office of the Chairman due under
Section 3(a) of this Agreement for the remainder of the Term, to be paid in
accordance with the payment provisions set forth in Section 3(b) hereof and the
options referred to in Section 3(a) shall be fully vested and exercisable.  [b] 
For purposes of this Agreement, “Cause” shall mean (i) Kirschbaum’s
willful and continual failure to substantially perform his duties with the
Company (other than a failure resulting from Kirschbaum becoming Disabled) and
such failure continues for a period of thirty (30) days after Kirschbaum’s
receipt of written notice from the Company providing a reasonable description
of the basis for the determination that Kirschbaum has failed to perform his
duties; (ii) Kirschbaum’s conviction of a felony other than a conviction not
disclosable under the federal securities laws; (iii) Kirschbaum’s breach of
this Agreement in any material respect and such breach is not susceptible to
remedy or cure or has already materially damaged the Company, or such breach is
susceptible to remedy or cure and no such damage has occurred and such breach
is not cured or remedied reasonably promptly after Kirschbaum’s receipt of
written notice from the Company providing a reasonable description of the
breach; (iv) Kirschbaum’s failure to qualify (or having so qualified being thereafter
disqualified) under a suitability or licensing requirement of any jurisdiction
or regulatory authority that is material to the Company and to which Kirschbaum
may be subject by reason of his position with the Company and its affiliates or
subsidiaries; (v) the Company’s having obtained from any source information
with respect to Kirschbaum or this Agreement that could reasonably be expected,
in the reasonable written opinion of both the Company and its outside counsel,
to 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; or (vi) conduct to the material
detriment of the Company that is dishonest, fraudulent, unlawful or grossly
negligent or which is not in compliance with the Company’s Code of Conduct or
similar applicable set of standards or conduct and business practices set forth
in writing and provided to Kirschbaum prior to such conduct and which has a material
detriment to the Company and is not susceptible to remedy or cure by
Kirschbaum.


 


(c)           By Death
or Disability.  If
Kirschbaum dies before the expiration of the Term, this Agreement shall
terminate on the date of his death.  If
Kirschbaum becomes disabled or incapacitated (“Disabled”) for any period of six
(6) or more consecutive months or for a non-


 

















 


continuous period aggregating to twenty-six
weeks in any twelve month period as a result of illness or incapacity before
the expiration of the Term, the Board shall have the right to terminate this
Agreement upon written notice to Kirschbaum. 
In the event Kirschbaum dies or becomes Disabled, and the Board
terminates the Agreement, the Company shall have no further obligations to
Kirschbaum or his heirs or estate under this Agreement.


 


3.             Compensation.


 


(a)           Cash and Options.  As compensation for his services as a member
of the Office of the Chairman hereunder, the Company shall: (i) pay Kirschbaum
$100,000 per year; and (ii) grant to Kirschbaum stock options to purchase
39,000 shares of the Company’s Common Stock with an exercise price of $17.16
and an exercise period of 10 years.  The
options shall vest in equal increments on the first, second and third anniversary
dates of this Agreement.  Kirschbaum
shall not be entitled to receive any other cash fees or compensation for
service on the Board during the Term; provided, however, that this Section
3(a)is not intended to limit or restrict the Company from providing equity
incentive awards to Kirschbaum in accordance with it stock incentive plans or
otherwise and Kirschbaum shall be granted options/equity compensation in
accordance with regular grants applicable to non-employee Board members.


 


(b)           Payment of Fees.  The Company shall pay the fees and compensation
contemplated in Section 3(a) in 12 monthly installments per year.  Each installment shall be due and paid in
arrears by the first day of each month beginning August 1, 2004.


 


4.             Business Expenses.  The Company shall reimburse Kirschbaum for
all reasonable and necessary out-of-pocket expenses incurred or paid by
Kirschbaum in connection with, or related to, the performance of his service
under this Agreement.  Kirschbaum shall
submit to the Company periodic itemized statements, in a form satisfactory to
the Company, of such expenses as incurred. 
The Company shall pay to Kirschbaum amounts shown on each statement in
accordance with its regular procedures, but in any event within thirty (30)
days after receipt thereof. 
Notwithstanding the foregoing, Kirschbaum shall not incur total expenses
in excess of $5,000.00 per month without the prior written approval of the
Company.


 


5.             Independent
Contractor.  The parties acknowledge
and confirm that Kirschbaum is an independent contractor to the Company and, as
such, shall be responsible for the payment of all taxes including, but not
limited to, social security and income tax relating to the compensation paid to
Kirschbaum pursuant to the terms of this Agreement.  Nothing herein contained shall be construed or deemed by the
parties hereto as creating or having created any relationship of employer and
employee, principal and agent or partnership or joint venture between
Kirschbaum and the Company.


 


6.             Confidential
Information.  Kirschbaum recognizes
and acknowledges that he has had, and will have, during the Term, access to
certain Confidential Information (as defined below) of the Company and that
such information constitutes valuable, special and unique property of the
Company.  Kirschbaum agrees that he will
not, during or after the Term, disclose any of such Confidential Information to
any person or entity without the consent of the Company, except as necessary or
appropriate in the ordinary course of performing the Services hereunder or as
required by law, rule or regulation.


 

















 


(a)  “Confidential Information” shall mean
information that is not generally known to the public, which is used, developed
or obtained by the Company and/or any of its affiliates, relating to its or
their business and the businesses of its or their clients, vendors or customers
including, but not limited to: business and marketing strategies, products or
services; fees, costs and pricing structure; marketing information; advertising
and pricing strategies; analyses; reports; computer software, including
operating systems, applications and program listings; flow charts; manuals and
documentation; data bases; accounting and business methods; hardware design;
technology, inventions and new development and methods, whether patentable or unpatentable
and whether or not reduced to practice; all copyrightable works; the Company’s
or any of its affiliates’ existing and prospective clients, customers, and
vendor lists and other data related thereto; all trade secret information
protected by the federal Economic Espionage Act of 1996, 18 U.S.C. § 1831 et seq.; and all
similar and related information in whatever form.


 


(b)  “Confidential Information” shall not include
any information that has been published in a form generally available to the
public prior to the date upon which Kirschbaum proposes to disclose such
information.  Information shall not be
deemed to have been published merely because individual portions of the
information have been separately published, but only if all the material features
comprising such information have been published in combination.


 


7.             Covenant Not to
Compete.  During his engagement
under this Agreement, and in the event of Kirschbaum’s termination pursuant to
paragraph 2(b)(ii) hereof, during the period the Company is obligated to pay
Kirschbaum the remainder of his fees due under Section 3(a) of this Agreement,
Kirschbaum shall not become employed by, act as a consultant for, contract
with, obtain a beneficial ownership interest in or otherwise enter into any form
of business relationship with International Game Technology, Inc., WMS
Industries, Inc., Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech
Holdings Corp., Multimedia Games, Inc., Sigma Game Inc., or any of their
present and future subsidiaries, divisions, parent companies and successors
(“Peer Group”).  The provisions of this
Section 7 shall not prevent Kirschbaum from investing his assets in such form
and manner as he chooses; provided, however, that Kirschbaum shall not have any
personal interest, direct or indirect (other than through the Company or its
subsidiaries), financial or otherwise, in any member of the Peer Group unless
such interest has been approved by the Compensation Committee or such interest
is, or arises solely from ownership of, less than three percent (3%) of the
outstanding capital stock of such member and such capital stock is available to
the general public through trading on any national, regional or
over-the-counter securities market.


 


8.             Notices.  All notices, requests and other
communications hereunder shall be in writing. 
Any notice, request or other communication hereunder shall be deemed
duly given if it is sent by facsimile, with confirmation received, by hand
delivery, by overnight delivery service


 

















 


or by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:


 


(a)           If to the Company:


 


Alliance
Gaming Corporation


6601 South
Bermuda Road


Las Vegas,
Nevada  89119


Attention:  Chief Executive Officer


Copy to:  General Counsel

Facsimile:  (702) 270-7699


 


(b)           If to Kirschbaum:


 


Joel
Kirschbaum


527 Madison
Avenue, 17th Floor

New York, New York  10022


Facsimile:  (212) 888-1253


 


9.             Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.


 


10.           Amendment.  This Agreement may be amended or modified
only by a written instrument executed by both the Company and Kirschbaum.


 


11.           Successors and
Assigns.  This Agreement is personal
to Kirschbaum and may not be transferred or assigned by him.  Neither this Agreement nor any right or
interest under it shall be assignable by the Company without the prior written
consent of Kirschbaum; provided, however, that the Company shall be obligated
to cause the assignment of this Agreement pursuant to a Change of Control, as
set forth in Section 12 below.  This
Agreement shall be binding upon and inure to the benefit of the heirs, estate,
successors and permitted assigns of each party.


 


12.           Change of Control.  Upon a Change of Control of the Company (as
defined below), the Company shall be obligated to cause any surviving or
successor entity to assume, be responsible for and honor Sections 2(b)(ii) and
3(a) of this Agreement.  For purposes of
this Agreement, a “Change of Control” means (a) the acquisition, directly or
indirectly, by any unaffiliated person, entity or group (a “Third Party”) of
beneficial ownership of 50% or greater of the combined voting power of the
Company’s then outstanding voting securities entitled to vote generally in the
election of directors; or (b) consummation of (i) a reorganization, merger or
consolidation of the Company, or (ii) a liquidation or dissolution of the
Company or (iii) a sale of all or substantially all of the assets of the
Company (whether such assets are held directly or indirectly) to a Third Party;
or (c) the individuals who as of the
date of this Agreement are members of the Board of Directors (together with any
directors elected or nominated by a majority of such individuals) cease for any
reason to constitute at least a majority of the members of the Board of
Directors; except that any event or transaction which would be a “Change
of


 

















 


Control” under
clause (a) or (b)(i) or (iii) of this definition, shall not be a change of
control if persons who were the equity holders of the Company immediately prior
to such event or transaction (other than the acquiror in the case of a reorganization,
merger or consolidation), immediately thereafter, beneficially own more than
50% of the combined voting power of the Company’s or the reorganized, merged or
consolidated company’s then outstanding voting securities entitled to vote
generally in the election of directors.


 


13.           Other Activities.  The Company explicitly acknowledges and
agrees that during the Term, Kirschbaum will also be engaged in a variety of
other substantial business activities that do not relate to the business of the
Company.


 


14.           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 as to any future violations
thereof, nor prevent that party thereafter from enforcing each and every other
provision of this Agreement.


 


15.           Severability.  If, for any reason, any provision of this
Agreement is determined to be invalid or unenforceable, such invalidity or lack
of enforceability shall not affect any other provision of this Agreement not so
determined to be invalid or unenforceable, and each such provision shall, to
the full extent consistent with applicable law, continue in full force and
effect, irrespective of such invalid or unenforceable provision.


 


16.           Governing Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the laws of Nevada, without regard
to principles of conflicts of law.


 


17.           Counterparts.  This Agreement may be executed in
counterparts, each of which when so executed and delivered shall be an original
and all of which taken together shall constitute but one and the same
instrument.


 


IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.


 


	
   

  	
  ALLIANCE GAMING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JOEL KIRSCHBAUM