**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 InternationalCorporation, 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 anagreement 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 agreementscontained herein, it is hereby agreed as follows:     1. **Term****.**MIKOHN hereby employs and Employee hereby accepts employment with MIKOHN fora period of three (3) years beginning on June 20, 2005 (“Term”). Unless MIKOHN or Employee giveswritten notice that this Agreement shall be allowed to expire and the employment relationshipthereby terminated (a “Non-renewal Notice”) at least thirty (30) days prior to the expiration ofthe Term or any Renewal Term (as defined herein), this Agreement shall continue in effect foradditional terms of (1) one year each (“Renewal Term”).     2. **Duties of Employee****.**Employee’s position with MIKOHN will be Executive VicePresident and Chief Technology Officer. Employee shall do and perform all services, acts, orthings reasonably necessary or advisable to accomplish the objectives and complete the tasksassigned to Employee by MIKOHN’s Chief Executive Officer. MIKOHN may assign Employee to anotherposition commensurate with Employee’s training and experience so long as the compensation paid toEmployee is equal to or greater than the compensation provided in this Agreement and the positionand related title, reporting level and responsibilities are of equal or greater nature, status andprestige.     3. **Devotion of Time to MIKOHN’s Business****.**Employee shall be a full-time employee ofMIKOHN 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 andnecessary to accomplish the objectives and complete the tasks assigned to Employee. Prior writtenconsent of MIKOHN shall be required before Employee shall undertake to perform any outside servicesof a business, commercial, or professional nature, whether for compensation or otherwise. Theforegoing notwithstanding, Employee may devote reasonable time to activities other than thoserequired under this Agreement, including activities involving professional, charitable, community,educational, religious and similar types of organizations, speaking engagements, membership on theboards of directors of other organizations and similar types of activities to the extent that suchactivities do not inhibit or prohibit the performance of services under this Agreement.     4. **Uniqueness of Services****.**Employee hereby acknowledges that the services to beperformed 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 receivea Base Annual Salary at the rate of not less than $260,000 per annum payable in accordance withMIKOHN’s ordinary payroll practices (and in any event no less frequently than monthly). On eachanniversary date of June 20, 2005 (the “Commencement Date”), Employee’s Base Annual Salary shall beincreased by not less than 5% per annum.          b. **Signing Bonus/Moving Allowance****.**Upon the execution of this Agreement, Employeeshall 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 sumis given in consideration of Employee’s commitment not to terminate this Agreement prior to theinitial expiration date, other than as permitted pursuant to Sections 6(c) or 19 below. IfEmployee terminates this Agreement (other than as permitted pursuant to
1

 
Sections 6(c) or 19 below)or if Employee is terminated for Cause (as defined Section 6(b) below) prior to the expiration ofthree (3) years from the Commencement Date, Employee will be obligated to return and remit a prorata portion of the sum to MIKOHN. (For example, if Employee should terminate this Agreement afterone 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 theBoard 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 inthe Executive Incentive Compensation Plan, as such targets may be determined (and/or modified andrevised, as applicable) by the Chief Executive Officer and the Board of Directors in consultationwith Employee.          d. **Stock Options****.**MIKOHN has granted to Employee options to purchase 100,000 sharesof MIKOHN Common Stock (the “Options”) under MIKOHN’s Stock Option Plan (“Option Plan”). TheOptions are subject to the terms and conditions of the Option Plan (a copy of which is attachedhereto), 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 OptionAgreements or (ii) such earlier date as termination may occur according to the terms and conditionsof the Option Plan and/or the Stock Option Agreements. Upon termination of this Agreement for anyreason, Employee and/or his successors and assigns shall have only such rights with respect to theOption as are specified in the Plan, the Stock Option Agreements, or this Agreement, and shall notbe 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 thisAgreement 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 thanfor Cause or deliver a Non-renewal Notice to Employee pursuant to Section 1 above; (iii) ifEmployee 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 onEmployee (or Employee’s estate) furnishing to MIKOHN an effective waiver and release of claims (aform 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 ofthe 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 amembership 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 inconnection therewith.          g. **Employee Benefits****.**Employee shall receive such benefits, fringe benefits andentitlements as is usual and customary for MIKOHN to provide an executive employee of like statusand position and are consistent with MIKOHN’s established policies on employment, which may berevised 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
2

 
Annual Life Insurance premium paymentby 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 expensesincurred 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 grantedpursuant to the form of MIKOHN’s standard Restricted Stock Grant Agreement (a copy of which isattached 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 writtennotice to the other. If MIKOHN delivers a Non-renewal Notice to Employee, or if MIKOHN shouldterminate this Agreement other than for “Cause” as defined in Section 6(b) below (“terminationwithout Cause”) or Employee should resign for “Good Reason” as defined in Section 6(c) below (ineither instance except as described in Section 19 below, in which case the provisions of Section 19shall apply), MIKOHN shall, upon the Employee’s furnishing to MIKOHN an effective waiver andrelease of claims (a form of which is attached hereto as Exhibit A), pay to Employee (x) a sumequal to Employee’s Base Salary for the most recent 18 months, and (y) an amount equal toEmployee’s COBRA health insurance premiums for the 18month period immediately followingsuch termination. In such event, MIKOHN shall also reimburse Employee for reasonable expensesassociated 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 inconnection therewith) for Employee’s relocation. Any sums payable under this Section shall be paidin full upon the effective date of the termination of the employment relationship between MIKOHNand Employee.          b. **Termination For Cause.** MIKOHN shall have the right to terminate Employee’semployment at any time for Cause by giving Employee written notice of the effective date oftermination. In the event of termination for Cause, Employee shall be paid Employee’s salary andaccrued and unused vacation benefits through the effective date of termination on the date oftermination. After the effective date of termination, Employee shall not be entitled to accrue orvest in any further salary, severance pay, benefits, fringe benefits or entitlements except as maybe 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 inconnection therewith) for Employee’s relocation. For the purposes of this Agreement, “Cause” shallmean: (a) The willful and continued failure by the Employee to substantiallyperform his duties with MIKOHN (other than any such failure resulting from theEmployee’s being Disabled), within a reasonable period of time after a writtendemand for substantial performance is delivered to the Employee by the Board ofDirectors (“Board”), which demand specifically identifies the manner in whichthe Board believes that the Employee has not substantially performed hisduties;  (b) The willful engaging by the Employee in conduct which isdemonstrably and materially injurious to MIKOHN, monetarily or otherwise;  (c) Employee’s conviction of a crime involving seriousmoral turpitude to the extent that, in the reasonable judgment of the MIKOHN’sBoard, the Employee’s credibility and reputation no longer conform to thestandard of MIKOHN’s Employees;
3

 
 (d) The knowing or repeated violation of any material MIKOHN policyapplicable to the Employee following written notice from MIKOHN of suchviolations. (e) The loss, revocation, suspension of, or failure to obtain anylicense or certification of Employee necessary for Employee to dischargeEmployee’s duties on behalf of MIKOHN. Any issues involving the loss,revocation, suspension of or failure to obtain of such licenses and/orcertifications will be provided in writing to the Employee, and Employee, withthe assistance of MIKOHN, will have a reasonable period of time to remedy therespective issue.  (f) Willful acts or omissions by Employee which jeopardize anygovernmental registration, license, permit or other governmental permissionmaterial to the business of MIKOHN in any jurisdiction in which MIKOHN doesbusiness or seeks to do business;  (g) The solicitation or acceptance of payment or gratuity from anyexisting or potential customer or supplier of MIKOHN without the prior writtenconsent of MIKOHN’s Chief Executive Officer.          c. **Resignation For Good Reason.** Employee may terminate his employment under thisAgreement for “Good Reason” (as defined hereunder) at any time, by providing written notice toMIKOHN of same following the provision to MIKOHN of a thirty (30) day opportunity to cure such GoodReason. Any termination for Good Reason shall have the same legal effect under this Agreement as atermination without Cause by MIKOHN. For purposes of this Agreement, the term “Good Reason” shallmean, with respect to the Employee, the occurrence of one or more of the following events withoutsuch 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’sbase salary or total target annual cash compensation; or (iii) a permanent relocation of theEmployee’s business office to a location more than fifty (50) miles from the location at which theEmployee currently performs his or her duties.          d. For purposes of this Agreement, no act, or failure to act, on the Employee’s part shall bedeemed “willful” unless done, or omitted to be done, intentionally by the Employee not in goodfaith and without reasonable belief that the Employee’s action or omission was in the best interestof MIKOHN.          e. This Agreement shall terminate automatically in the event that: (i) Employee fails or isunable to perform Employee’s duties due to injury, illness or other incapacity for ninety (90) daysin any twelve (12) month period (except that Employee may be entitled to disability paymentspursuant to MIKOHN’s disability plan, if any); or (ii) Death of Employee. Upon termination of thisAgreement as the result of the death or disability of Employee, all vested stock options andrestricted 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 intoEmployee’s possession from time to time during Employee’s employment by MIKOHN, and/or any ofMIKOHN’s subsidiaries or affiliates, shall be deemed to be confidential and proprietary to MIKOHNand shall remain the sole and exclusive property of MIKOHN. Employee acknowledges that all suchconfidential and proprietary information is confidential and proprietary and not readily availableto MIKOHN’s business competitors. On the effective date of the termination of the employmentrelationship or at such other date specified by MIKOHN, Employee agrees that he will return toMIKOHN all such confidential and proprietary items (including, but not limited to, company badgeand keys) in his control or possession, and all copies thereof, and that he will not remove anysuch items from the offices of MIKOHN.     8. **Covenant of Non-Disclosure****.**Without the prior written approval of MIKOHN, Employeeshall keep confidential and not disclose or otherwise make use of any of the confidential orproprietary information or trade secrets referred to in Section 7 nor reveal the same to any thirdparty whomsoever, except as required by law.
4

 
     9. **Covenant of Non-Solicitation****.**During the Term of this Agreement and for a periodof two (2) years following the effective date of termination, Employee, either on Employee’s ownaccount or for any person, firm, company or other entity, shall not solicit, interfere with orinduce, or attempt to induce, any employee of MIKOHN, or any of its subsidiaries or affiliates toleave their employment or to breach their employment agreement, if any, with MIKOHN.     10. **Covenant of Cooperation****.**Employee agrees to cooperate with MIKOHN in anylitigation or administrative proceedings involving any matters with which Employee was involvedduring his employment by MIKOHN. MIKOHN shall reimburse Employee for reasonable expenses incurredin providing such assistance.     11. **Covenant Against Competition****.**          a. **Scope and Term****.**During the Term of this Agreement and for an additional periodending 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 orproposes to engage or hereafter engages in any business which competes with the business of MIKOHNand/or any of MIKOHN’s subsidiaries or affiliates in any geographic area in which MIKOHN conductsbusiness at the time of the termination or expiration of the employment relationship. Ownership byEmployee, as a passive investment, of less than two percent (2%) of the outstanding shares ofcapital stock of any corporation with one or more classes of its capital stock listed on a nationalsecurities exchange or publicly traded on the Nasdaq Stock Market or in the over-the-counter marketshall not constitute a breach of this paragraph.          b. **Option to Extend Term of Covenant****.**Upon thirty (30) days’ written notice toEmployee given prior to the expiration of the term of the Covenant Against Competition specified inSection 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, orEmployee terminates his employment pursuant to Sections 6(c) or 19, the sum of $300,000.00 payablein 12 monthly installments; or               (2) If Employee terminates this Agreement other than as permitted in Sections 6(c) or 19 or isterminated 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, whetherpatentable or not, relating to any present or contemplated activity of MIKOHN, including withoutlimitation devices, processes, methods, formulae, techniques, and any improvements to theforegoing.          b. **Application****.**This Section 12 shall apply to all Inventions made or conceived byEmployee, 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 byMIKOHN. This Section 12 does not apply to any invention disclosed in writing to MIKOHN by Employeeprior to the execution of this Agreement.          c. **Assignment****.**Employee hereby assigns and agrees to assign to MIKOHN all of hisrights to Inventions described in (b) above and to all proprietary rights therein, based thereon orrelated thereto, including without limitation applications for United States and foreign letterspatent and resulting letters patent.          d. **Reports****.**Employee shall inform MIKOHN promptly and fully of each Invention by awritten report, setting forth in detail the structures, procedures, and methodology employed andthe results achieved (“Notice of Invention”). A report shall also be submitted by Employee uponcompletion of any study or research project
5

 
undertaken on MIKOHN’s behalf, whether or not inEmployee’s opinion a given study or project has resulted in an Invention.          e. **Patents****.**At MIKOHN’s request and expense, Employee shall execute such documentsand provide such assistance as may be deemed necessary by MIKOHN to apply for, defend or enforceany 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 ofConfidentiality (Section 7), Covenant of Non-Disclosure (Section 8), Covenant of Non-Solicitation(Section 9), Covenant of Cooperation (Section 10), Covenant Against Competition (Section 11), orRights to Inventions (Section 12), MIKOHN shall have the right to have the obligations of Employeespecifically enforced by any court having jurisdiction on the grounds that any such breach willcause irreparable injury to MIKOHN and money damages will not provide an adequate remedy. Suchequitable remedies shall be in addition to any other remedies at law or equity, all of whichremedies shall be cumulative and not exclusive. Employee further acknowledges and agrees that theobligations contained in Sections 7 through 12, of this Agreement are fair, do not unreasonablyrestrict Employee’s future employment and business opportunities, and are commensurate with thecompensation arrangements set out in this Agreement.     14. **Survivability****.**Sections 7 through 13, of this Agreement shall survive terminationof 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 ofimplied covenant, intentional infliction of emotional distress or any other alleged claims whichare not settled by mutual agreement of the parties, shall be submitted to final and bindingarbitration in accordance with the rules of the American Arbitration Association. The cost ofarbitration shall be borne by the losing party. In consideration of each party’s agreement tosubmit to arbitration any and all disputes that arise under this Agreement, each party agrees thatthe arbitration provisions of this Agreement shall constitute his/its exclusive remedy and eachparty expressly waives the right to pursue redress of any kind in any other forum. The partiesfurther 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, anyparty shall have the limited right to seek equitable relief in the form of a temporary restrainingorder or preliminary injunction in a court of competent jurisdiction to protect itself from actualor threatened irreparable injury resulting from an alleged breach of this Agreement pending a finaldecision in arbitration.          b. **Authorization****.**MIKOHN and Employee each represent and warrant to the other thathe/it has the authority, power and right to deliver, execute and fully perform the terms of thisAgreement.          c. **Entire Agreement****.**Employee understands and acknowledges that this documentconstitutes the entire agreement between Employee and MIKOHN with regard to Employee’s employmentby MIKOHN and Employee’s post-employment activities concerning MIKOHN. This Agreement supersedesany and all other written and oral agreements between the parties with respect to the subjectmatter hereof. Any and all prior agreements, promises, negotiations, or representations, eitherwritten or oral, relating to the subject matter of this Agreement not expressly set forth in thisAgreement are of no force and effect. This Agreement may be altered, amended, or modified only inwriting signed by all of the parties hereto. Any oral representations or modifications concerningthis instrument shall be of no force and effect.          d. **Severability****.**If any term, provision, covenant, or condition of this Agreement isheld 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 fullforce 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.
6

 
          e. **Governing Law****.**Except to the extent that federal law may preempt Nevada law, thisAgreement and the rights and obligations hereunder shall be governed, construed and enforced inaccordance with the laws of the State of Nevada.          f. **Taxes****.**Except as otherwise specifically provided in this Agreement, allcompensation payable hereunder is gross and shall be subject to such withholding taxes and othertaxes 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 compensationprovided 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 thesuccessors and assigns of MIKOHN. Employee may not sell, transfer, assign, or pledge any of hisrights or interests pursuant to this Agreement.          h. **Waiver****.**Either party’s failure to enforce any provision or provisions of thisAgreement shall not in any way be construed as a waiver of any such provision or provisions, orprevent that party thereafter from enforcing such provision or provisions and each and every otherprovision of this Agreement.          i. **Captions****.**Titles and headings to sections in this Agreement are for the purpose ofreference only and shall in no way limit, define, or otherwise affect any provisions containedtherein.          j. **Breach — Right to Cure****.**A party shall be deemed in breach of this Agreement onlyupon the failure to perform any obligation under this Agreement after receipt of written notice ofbreach and failure to cure such breach within ten (10) days thereafter; provided, however, suchnotice shall not be required where a breach or threatened breach would cause irreparable harm tothe other party and such other party may immediately seek equitable relief in a court of competentjurisdiction to enjoin such breach.     16. **Acknowledgement****.**Employee acknowledges that he has been given a reasonable periodof time to study this Agreement before signing it. Employee certifies that he has fully read, hasreceived an explanation of, and completely understands the terms, nature, and effect of thisAgreement. 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 notrely on any inducements, promises, or representations by MIKOHN other than the terms and conditionsof this Agreement.     17. **[Reserved]**.     18. **Indemnification For Employee Officers.** MIKOHN will, to the maximum extentpermitted 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, damagesor liabilities to which the Employee may become subject which arise out of, are based upon orrelate to the Employee’s employment by MIKOHN (and any predecessor company to MIKOHN), or theEmployee’s service as an officer or member of the Board of Directors of MIKOHN (or any predecessorcompany of MIKOHN) or any Affiliate, including without limitation reimbursement for any legal orother expenses reasonably incurred by the Employee in connection with investigation and defendingagainst 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 Employeeshall be covered under such insurance to the same extent as other senior management employees (anddirectors, 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 Boarddetermines that it is obtainable at reasonable cost.
7

 
     19. **Change in Control Provision.** Notwithstanding any Agreement provisions to thecontrary, for a period of twelve (12) months following a Change in Control, in the event of atermination of Employee other than for Cause, or if the Employee resigns for “Good Reason” as thatterm is defined in Section 6(c) above, Employee shall be entitled to receive a sum equal to threetimes the Employee’s annualized Base Salary for the most recently completed calendar year payablein a lump sum upon termination. At any point during the thirteenth month following a Change inControl, Employee shall be entitled to terminate the Agreement and receive a sum equal to theamount they would otherwise be entitled to pursuant to termination by MIKOHN other than for Causeat the time of such election. In addition to the foregoing, upon a Change in Control andseparation of the Employee from MIKOHN, MIKOHN agrees to reimburse Employee for reasonable expensesassociated with outplacement employment activities for Employee. For the purposes of thisAgreement, the following definitions shall apply:     (i) a “Change in Control” of MIKOHN means the occurrence, in a single transaction or in aseries 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 MIKOHNrepresenting more than fifty percent (50%) of the combined voting power of MIKOHN’s thenoutstanding 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 ofthe acquisition of securities of MIKOHN by an investor, any affiliate thereof or any other ExchangeAct Person from MIKOHN in a transaction or series of related transactions the primary purpose ofwhich is to obtain financing for MIKOHN through the issuance of equity securities or (b) solelybecause the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds thedesignated percentage threshold of the outstanding voting securities as a result of a repurchase orother 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 aresult of the acquisition of voting securities by MIKOHN, and after such share acquisition, theSubject Person becomes the Owner of any additional voting securities that, assuming the repurchaseor other acquisition had not occurred, increases the percentage of the then outstanding votingsecurities Owned by the Subject Person over the designated percentage threshold, then a Change inControl shall be deemed to occur;          b. There is consummated a merger, consolidation or similar transaction involving (directly orindirectly) MIKOHN and, immediately after the consummation of such merger, consolidation or similartransaction, the stockholders of MIKOHN immediately prior thereto do not Own, directly orindirectly, either (a) outstanding voting securities representing more than fifty percent (50%) ofthe combined outstanding voting power of the surviving Entity in such merger, consolidation orsimilar transaction or (b) more than fifty percent (50%) of the combined outstanding voting powerof the parent of the surviving Entity in such merger, consolidation or similar transaction, in eachcase in substantially the same proportions as their Ownership of the outstanding voting securitiesof MIKOHN immediately prior to such transaction;          c. The stockholders of MIKOHN approve or the Board approves a plan of complete dissolution orliquidation 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 substantiallyall of the consolidated assets of MIKOHN and its subsidiaries, other than a sale, lease, license orother disposition of all or substantially all of the consolidated assets of MIKOHN and itssubsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the votingsecurities of which are Owned by stockholders of MIKOHN in substantially the same proportions astheir 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 theBoard; provided, however, that if the appointment or election (or nomination for election) of anynew Board member was approved or recommended by a majority vote of the members of the IncumbentBoard then still in office, such new
8

 
membershall 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 ofSection 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 subsidiaryof MIKOHN or any trustee or other fiduciary holding securities under an employee benefit plan ofMIKOHN or any subsidiary of MIKOHN, (C) an underwriter temporarily holding securities pursuant toan offering of such securities, or (D) an Entity Owned, directly or indirectly, by the stockholdersof 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,” tohave “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person orEntity, directly or indirectly, through any contract, arrangement, understanding, relationship orotherwise, 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 fromMIKOHN pursuant to this Agreement or otherwise (“Payment”) would (i) constitute a “parachutepayment” 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 “ExciseTax”), then the Employee will receive an additional payment (the “Gross-up”) from MIKOHN such thatafter 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 applicablemarginal rate), results in the Employee’s receipt, on an after-tax basis, of the full amount of thePayment. MIKOHN’s principal outside accounting firm or principal outside tax advisors, as selectedby 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 requestedat that time by MIKOHN or Employee) or such other time as requested by MIKOHN or the Employee. Theaccounting firm or tax advisors shall furnish MIKOHN and the Employee with an opinion reasonablyacceptable to the Employee regarding the application of the Excise Tax to such Payment. MIKOHNshall be entitled to rely upon the accounting firm’s or tax advisors’ determinations, asapplicable, which shall be final, binding and conclusive on Employee and MIKOHN.     IN WITNESS WHEREOF, the parties hereto have read, understood, and voluntarily executed thisAgreement 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

 
**EXHIBIT A****RELEASE AND WAIVER OF CLAIMS**     In consideration of the payments and other benefits set forth in Section 5(d)(4) and Section6(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 nototherwise entitled to receive, I hereby generally and completely release the Company and itsdirectors, officers, employees, shareholders, partners, agents, attorneys, predecessors,successors, parent and subsidiary entities, insurers, Affiliates, and assigns from any and allclaims, liabilities and obligations, both known and unknown, that arise out of or are in any wayrelated to events, acts, conduct, or omissions occurring prior to my signing this Release andWaiver. This general release includes, but is not limited to: (1) all claims arising out of or inany way related to my employment with the Company or the termination of that employment; (2) allclaims 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 ofcontract, 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, emotionaldistress, and discharge in violation of public policy; and (5) all federal, state, and localstatutory 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 Discriminationin 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 Codewhich reads as follows: “**A general release does not extend to claims which the creditor does notknow or suspect to exist in his favor at the time of executing the release, which if known by himmust have materially affected his settlement with the debtor.**” I hereby expressly waive andrelinquish all rights and benefits under that section and any law of any jurisdiction of similareffect 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 underADEA, that this Release and Waiver is knowing and voluntary, and that the consideration given forthis Release and Waiver is in addition to anything of value to which I was already entitled as anexecutive of the Company. If I am 40 years of age or older upon execution of this Release andWaiver, I further acknowledge that I have been advised, as required by the Older Workers BenefitProtection Act, that: (a) the release and waiver granted herein does not relate to claims underthe ADEA which may arise after this Release and Waiver is executed; (b) I have the right to consultwith an attorney prior to executing this Release and Waiver (although I may choose voluntarily notto do so); and (c) I have twenty-one (21) days from the date of termination of my employment withthe Company in which to consider this Release and Waiver (although I may choose voluntarily toexecute this Release and Waiver earlier); (d) I have seven (7) days following the execution of thisRelease and Waiver to revoke my consent to this Release and Waiver; and (e) this Release and Waivershall 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 acknowledgethat 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 oftermination 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 entireagreement between the Company and me with regard to the subject matter hereof. I am not relying onany promise or representation by the Company that is not expressly stated herein. This Release andWaiver may only be modified by a writing signed by both me and a duly authorized officer of theCompany.           Date:     By:                A-1