Document:

Exhibit 10.1

 

SIXTH AMENDMENT TO

HADDRILL EMPLOYMENT AGREEMENT

 

This
Sixth Amendment to the Employment Agreement (the “Sixth Amendment”) is
made and entered into as of August 10, 2009 (the “Effective Date”),
by and between Bally Technologies, Inc., a Nevada corporation (the “Company”),
and Richard Haddrill (“Haddrill”).

 

WHEREAS,
the Company and Haddrill are parties to that certain Employment Agreement dated
as of June 30, 2004, as amended on December 22, 2004, June 13,
2005, June 20, 2006, February 18, 2008 and October 22, 2008 (as
amended, the “Employment Agreement”) pursuant to which Haddrill is
employed as the Company’s Chief Executive Officer; and

 

WHEREAS,
the Company and Haddrill desire to amend the Employment Agreement in accordance
with and subject to the terms and conditions of this Sixth Amendment.

 

NOW
THEREFORE, on the basis of the foregoing premises and in consideration of the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:

 

1.             During the term of the
Employment Agreement: (i) Haddrill will continue to receive the
compensation and benefits currently provided to him on the terms and conditions
set forth in the Employment Agreement and (ii) Haddrill’s base salary will
remain at $998,000 per year through December 31, 2012.

 

2.             The Company and Haddrill
agree that the following Section 4(g) is hereby added to the
Employment Agreement:

 

“(g)         Strategic Initiatives Bonus.  Haddrill shall be entitled to a lump sum cash
payment of $2,500,000 (the “Strategic Initiatives Bonus”) upon the first to
occur of: (i) the achievement of certain strategic initiatives established
by the Board of Directors on or before December 31, 2010, as determined by
Board of Directors, in its sole discretion, or (ii) a Change of Control
occurring on or before December 31, 2010. 
If the Strategic Initiatives Bonus becomes payable pursuant to the
preceding sentence, the Strategic Initiatives Bonus shall be paid to Haddrill
within fifteen (15) days following the Board of Director’s determination that
the Strategic Initiatives Bonus has been earned; provided, however, that the
payment of the Strategic Initiatives Bonus shall be delayed until the first business
day of the first taxable year in which Haddrill is not subject to Section 162(m) of
the Code.  If payment of the Strategic
Initiatives Bonus is delayed pursuant to the preceding sentence, interest shall
accrue on the Strategic Initiatives Bonus at a rate equal to the prime rate in
effect on the date that the Strategic Initiatives Bonus is earned (as
determined by the Board of Directors), as reported by Reuters, for the period
beginning on the date that the Strategic Initiatives Bonus is earned (as
determined by the Board of Directors) and ending on the date that the Strategic
Initiatives Bonus is paid.”

 

3.             The Company and Haddrill
agree that the following Section 4(h) is hereby added to the
Employment Agreement:

 

“(h)         Performance Bonus.  Subject to stockholder approval of the Bally
Technologies, Inc. Executive Incentive Plan (the “EIP”) at the 2009 Annual
Meeting of Stockholders, Haddrill shall be entitled to a cash bonus under the
EIP, if earned, ranging in value from $1,000,000 to

 

1

 

$3,500,000
(the “Performance Bonus”), based upon the Company’s achievement of cumulative diluted
EPS targets established by the Board of Directors with respect to the Company’s
combined fiscal year 2010-2011 period, and, if earned, payable at the same time
bonuses are paid to executives generally for the 2011 fiscal year, but in no
event later than December 31, 2011.”

 

4.             The Company and Haddrill
agree that Section 8(d)(i)[a] of the Employment Agreement shall is hereby
amended and restated in its entirety to read as follows:

 

“[a]
the Company shall pay to Haddrill $998,000 and, if such Change of Control
occurs on or before December 31, 2010, an additional payment equal to
$1,996,000, and”

 

5.             The Company and Haddrill
agree that the following Section 8(e) is hereby added to the
Employment Agreement:

 

“(e)         Notwithstanding anything to
the contrary in this Agreement, upon Haddrill’s termination for any reason
other than as described in Section 7(a), he shall continue to receive the
benefits provided in Section 4(b) (other than paid vacation and
holidays), through December 31, 2012.”

 

6.             The Company and Haddrill
agree that Section 12(a) of the Employment Agreement shall is hereby
amended and restated in its entirety to read as follows:

 

“During
his employment under this Agreement and until the date that is four (4) years
following the later of December 31, 2012 or the termination of his
employment under this Agreement for whatever reason, Haddrill shall not become
employed by, act as a consultant for, contract with, obtain a beneficial
ownership interest of 5% or more in or otherwise enter into any form of
business relationship with any business entity that is engaged in the design,
importation, manufacture and/or sale of electronic gaming devices, systems or
systems products or any business entity which is engaged in any other business
in which the Company or any subsidiary of the Company is engaged at the time of
termination of Haddrill’s service with the Company or, to the knowledge of
Haddrill, is planning to be engaged (“Competitors”).  Such Competitors currently include, but are
not limited to, International Game Technology, Inc., WMS Industries, Inc.,
Shuffle Master, Inc., Aristocrat Leisure, Ltd., Gtech Holdings Corp., Multimedia
Games, Inc. or Konami Gaming, Inc., or any of their present and
future affiliates, subsidiaries, divisions, parent companies and successors.”

 

7.             The Company and Haddrill
agree that Section 12(b) of the Employment Agreement shall is hereby
amended and restated in its entirety to read as follows:

 

“During
his employment under this Agreement and until the date that is one (1) year
following the later of December 31, 2012 or the termination of his
employment under this Agreement for whatever reason, Haddrill shall not become
employed by, act as a consultant for, contract with, obtain a beneficial
ownership interest of 5% or more in or otherwise enter into any form of
business relationship with any person, firm, company, corporation, partnership,
association or other organization within the United States that is not listed in or otherwise covered by paragraph 12(a) but
that is otherwise engaged in the gaming business.”

 

2

 

8.             The Company and Haddrill
agree that the reference to “for a period of one (1) or (2) years”
contained in Section 14 of the Employment Agreement is hereby changed to “during
the period of time covered by the covenant not to compete contained in Section 12(a).”

 

9.             On August 10, 2009, the
Company granted Haddrill a number of restricted stock units under the Plan (the
“Additional Restricted Stock Units”) having a value equal to $1.5 million
dollars, as calculated in accordance with Schedule A-6 hereto.  The Additional Restricted Stock Units shall
vest and be subject to the terms and conditions set forth in the Plan and on
Schedule A-6 hereto.

 

10.           Except as expressly modified
by this Sixth Amendment, the Employment Agreement shall remain unchanged and
shall remain in full force and effect.

 

[signatures on next page]

 

3

 

IN
WITNESS WHEREOF, the Company and Haddrill have duly executed this Sixth
Amendment as of the date first above written.

 

 

	
   

  	
  BALLY
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin Verner

  
	
   

  	
  Name:

  	
       Kevin
  Verner

  
	
   

  	
  Title:

  	
  Chairman,
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Richard M. Haddrill

  
	
   

  	
  Richard
  M. Haddrill

  

 

[Signature Page to Sixth Amendment to Haddrill
Employment Agreement]

 

 

Schedule A-6

 

ADDITIONAL RESTRICTED
STOCK UNITS

 

1.             The number of
shares of common stock subject to the Additional Restricted Stock Units was determined
by dividing $1.5 million dollars by the average per share closing price of
the Company’s common stock on the stock exchange in which the stock is
principally traded for the 20 business days immediately prior to the date of
the grant.

 

2.             The Additional
Restricted Stock Units shall vest in full on January 1, 2011, so long as
Haddrill remains in continuous service with the Company through such date.

 

3.             If Haddrill’s
employment with the Company is terminated under paragraphs 7(b) or 7(c) of
the Employment Agreement, in addition to the other compensation and benefits
provided under the Employment Agreement, the vesting of the Additional
Restricted Stock Units will accelerate in full as of the termination date.

 

4.             In addition to
the above, notwithstanding any provision of the Employment Agreement, or the
Plan to the contrary, in the event of a Change of Control (as defined in the
Employment Agreement), the Additional Restricted Stock Units shall become
immediately and fully vested and exercisable effective as of immediately prior
to such Change of Control.

 

5.             Each vested
Additional Restricted Stock Unit represents Haddrill’s right to receive one
share of the Company’s common stock on the applicable vesting date (subject to
the terms and conditions of the Plan, including the satisfaction of any tax
withholding obligations).

 

6.             Except as
described in this Schedule A-6, upon a termination of Haddrill’s service with
the Company (or any successor) for any reason, the unvested portion of the
Additional Restricted Stock Units granted hereunder at the time of such
termination of service (after giving effect to the accelerated vesting, if any,
described in this Schedule A-6, if any) shall be forfeited effective as of the
date of termination.Exhibit 10.1

 

UNSECURED
PROMISSORY NOTE

 

	
  $274,410 –
  Original Principal Amount

  	
   

  	
  Issue Date – August 10, 2009

  
	
   

  	
   

  	
  Santa Ana, California

  

 

For value
received, MAXxess Systems, Inc., a California corporation and its
successors and assigns (the “Company”),
hereby promises to pay to Iteris, Inc., a Delaware corporation (together
with its successors and assigns, the “Holder”),
in lawful money of the United States at the address of Holder set forth below,
the principal sum of Two Hundred Seventy-Four Thousand Four Hundred Ten Dollars
($274,410), together with all accrued but unpaid interest thereon.  This Unsecured Promissory Note (the “Note”) memorializes the Company’s
pre-existing business obligation owed to Holder for prior sublease payments and
other services previously rendered to the Company.

 

1.                                       Due
Date.

 

Unless this
Note is extended with the written consent of the Holder or is accelerated in
accordance with the terms of this Note, the entire outstanding principal
balance of this Note, together with all accrued and unpaid interest, shall be
due and payable on August 10, 2014 
(the “Due Date”).

 

2.                                       Terms
of Payment; Interest.

 

2.1                                 Interest
shall accrue on the principal outstanding under this Note from time to time,
commencing from the Issue Date of this Note and continuing until repayment of
this Note in full, at a rate equal to six percent (6%) per annum, compounded
annually (computed on the basis of a year of three hundred sixty-five (365)
days of actual days elapsed).  Accrued
interest shall be payable annually on the first business day of each calendar
year.  Notwithstanding anything herein to
the contrary, if during any period for which interest is computed under this
Note, the amount of interest computed on the basis provided for in this Note,
together with all fees, charges and other payments that are treated as interest
under applicable law, would exceed the amount of such interest computed on the
basis of the Highest Lawful Rate, the Company’s obligations hereunder shall,
automatically and retroactively, be deemed reduced to the Highest Lawful Rate
(as defined below), and during any such period the interest payable under this
Note shall be computed on the basis of the Highest Lawful Rate.  In the event Holder receives as interest an
amount that would exceed the Highest Lawful Rate, then the amount of any excess
interest shall not be applied to the payment of interest hereunder, but shall
be applied to the reduction of the unpaid principal balance due hereunder.  As used herein, “Highest
Lawful Rate” means the maximum non-usurious rate of interest, as
in effect from time to time, which may be charged, contracted for, reserved,
received or collected by the Holder in connection with this Note under
applicable law.

 

2.2                                 All
payments under this Note shall be made (i) in lawful money of the United
States of America at the principal office of the Company, or at such other
place as Holder may from time to time designate in writing to the Company; or (ii) in
bona fide services rendered by the Company to the Holder, provided that the
nature and value of such services are approved in writing in advance by the
Holder and the Company.  Payments under
this Note shall be applied first to the payment of all accrued and unpaid
interest and then to the payment of principal. 
Prepayment of the principal amount of this Note, together with all
accrued and unpaid interest on the portion of principal so prepaid, may be made
in whole or in part at any time without penalty.

 

3.                                       Subordination.

 

3.1                                 Subordinated
Amount.  The Holder and the
Company agree that this Note and the Company’s obligations under this Note
shall be subordinated to any debt financing by the Company with one or more
lenders subsequent to the Issue Date of this Note, but only up to an aggregate
subordinated amount of Five Million Dollars ($5,000,000) (the “Subordinated Amount”).  The Holder agrees
to execute any documents reasonably requested by the investors in such
financings to give effect to such subordination.

 

1

 

UNSECURED
PROMISSORY NOTE

 

3.2                                 Pari
Passu Amount.  The Company and the
Holder agree that this Note and the Company’s obligations under this Note shall
be on pari passu with any debt financing by
the Company in excess of the Subordinated Amount, and the Company agrees to
execute (and to have such investor in the excess investor to execute as a
condition to such financing) any documents (including, but not limited to, any
related intercreditor agreements, security agreements. and financing
statements) reasonably requested by the Holder to give effect to such pari passu treatment.

 

3.3                                 Notice
of Financings.  For so long as any
amount of this Note remains outstanding, the Company agrees to notify the
Holder in writing at least five (5) business days prior to the closing of
any debt or equity financing by the Company. 
For the purposes of this Note, the term “financing”
shall not include (a) any option exercises or stock issuance under the
Company’s benefit plans, (b) trade payables incurred in the ordinary
course of the Company’s business or (c) short-term bank borrowings or
receivable factoring.

 

4.                                       Representations
and Warranties of Company.

 

The Company
hereby represents and warrants to the Holder that this Note has been duly and
validly executed and delivered by Company and constitutes a legal, valid and
binding obligation of Company enforceable against Company in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, or other similar laws relating to the
enforcement of creditors’ rights generally and by general principles of equity.

 

5.                                       Acceleration Upon Change in
Control or Significant Financing.

 

For the purposes of this Note, a “Change in Control” shall be deemed
to occur upon (i) the sale, lease, license or transfer, in a single
transaction or a series of transactions, of all or substantially all of the
Company’s assets; (ii) the sale or transfer, in a single transaction or a
series of transactions, of 50% or more of the presently outstanding shares of
capital stock of the Company, or (iii) the issuance by the Company of
stock, whether in one or more transactions, which individually or in the
aggregate results in the ownership, following such transaction or transactions,
by the present stockholders of the Company of less than 50% of the issued and
outstanding shares of voting stock of the Company.  In the event of a Change in Control or a
Significant Financing (as defined below) while the Note is outstanding, all of
the Company’s obligations under this Note shall be immediately accelerated and
the Company shall pay to the Holder the outstanding principal balance under the
Note and all accrued interest thereunder, which payments shall be paid in cash
(by cashier’s check or wire transfer) to the Holder at the closing of such
Change in Control or Significant Financing, as the case may be. For the
purposes of this Note, a “Significant Financing”
shall be deemed to occur upon the closing of one or a more debt or equity
financings by the Company after the Issue Date with gross proceeds to the
Company in the aggregate of at least $10.0 million.

 

6.                                       General

 

6.1                                 Saturdays,
Sundays, or Holidays. If any payment of principal or interest on this Note
shall become due on a Saturday, Sunday, or a public holiday under the laws of
the State of California, such payment shall be made on the next succeeding
business day and such extension of time shall be included in computing interest
in connection with such payment.

 

6.2                                 Assignment.
This Note may be transferred only upon surrender of the original Note for
registration of transfer, duly endorsed, or accompanied by a duly executed
written instrument of transfer in form reasonably satisfactory to the Company.
Thereupon, a new Note for like principal amount and interest will be issued to,
and registered in the name of, the transferee. Interest and principal are
payable only to the registered holder of the Note.

 

6.3                                 Cancellation
Upon Payment in Full. Upon payment in full of all principal and interest
payable hereunder, this Note shall be surrendered to the Company for
cancellation.

 

2

 

UNSECURED
PROMISSORY NOTE

 

6.4                                 Presentment,
Notice, etc. The Company waives presentment, demand for performance, notice
of nonperformance, protest, notice of protest, and notice of dishonor. No delay
on the part of Holder in exercising any right hereunder shall operate as a
waiver of such right under this Note.

 

6.5                                 Events of Default and
Acceleration.  Notwithstanding the provisions set forth
above, the entire unpaid principal balance of this Note, together with all
accrued and unpaid interest, shall become immediately due and payable prior to
the Due Date upon the occurrence of one or more of the following events (each
an “Event of Default”):

 

(a)                                  The execution by the Company
of a general assignment for the benefit of creditors, the filing by or against
the Company of any petition in bankruptcy or any petition for relief under the
provisions of the Federal bankruptcy act or any other state or Federal law for
the relief of debtors and the continuation of such petition without dismissal
for a period of 60 days or more, the appointment of a receiver or trustee to
take possession of any property or assets of the Company or the attachment of
or execution against any property or assets of the Company which is not
discharged within 60 days from its inception;

 

(b)                             The Company approves or
effects (i) the dissolution or liquidation of the Company, or (ii) the
cessation or termination of all or substantially all of the Company’s
operations or business; or

 

(c)                              The Company’s failure to
timely make any payment of principal and/or interest hereunder or the Company’s
breach of any material agreement, covenant, representation or warranty set
forth in this Note or the Security Agreement, and the failure to make such
payment or remedy such breach for a period of 15 days from the receipt of
notice of such failure or breach.

 

6.6                                 Attorneys
Fees.  If any party hereto incurs any
legal fees, whether or not an action is instituted, to enforce the terms of
this Note or to recover damages or injunctive relief for breach of this Note,
it is agreed that the successful or prevailing parties shall be entitled to
reasonable attorneys fees, expert witness fees and other costs in addition to
any other relief to which it or they may be entitled.

 

6.7                                 Notices.  Except as set forth below, all notices,
deliveries or other communications required or permitted hereunder shall be in
writing and shall be deemed to have been given: (i) upon personal delivery
to the party to be notified; (ii) when sent by confirmed facsimile if sent
during the normal business hours of the recipient, if not, then on the next
business day; (iii) one (1) business day after deposit with a
nationally recognized overnight courier designating next business day delivery;
or (iv) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid.  All notices, deliveries or other
communications shall be sent to the address or facsimile number as set forth
below or at such other address as such party may designate by ten (10) days’
advance written notice to the other parties.

 

	
  If to Holder:

  	
   

  	
  Iteris, Inc.

  
	
   

  	
   

  	
  1700 Carnegie Ave., Ste. 100

  
	
   

  	
   

  	
  Santa Ana, CA 92705

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  If to the
  Company:

  	
   

  	
  MAXxess
  Systems, Inc.

  
	
   

  	
   

  	
  1040 N.
  Tustin Ave.

  
	
   

  	
   

  	
  Anaheim, CA
  92087

  
	
   

  	
   

  	
  Attn: Chief
  Executive Officer

  

 

Notwithstanding
the foregoing, any payment under this Note shall be deemed made upon receipt by
Holder. Holder or the Company may change their address for purposes of this Section by
giving to the other party notice in conformance with this Section of such
new address.

 

6.8                                 Governing
Law; Counterparts; Assignability. This Note shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.  This Note may be executed in
counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument, and a document signed and 

 

3

 

UNSECURED
PROMISSORY NOTE

 

transmitted by
facsimile shall be treated as an original document.  This Note shall be assignable by Holder (as
security or otherwise), provided that Holder shall provide to the Company with
ten (10) days’ advance written notice of its intention so to assign this
Note, which notice shall identify the proposed assignee.

 

6.9                                 Time
of the Essence; Remedies.  Time is of
the essence of this Note.  The rights and
remedies under this Note are cumulative and not exclusive of any rights,
remedies, powers and privileges that may otherwise be available to the Holder.

 

6.10                           Entire
Agreement.  This Note and the Security
Agreement constitute the full and entire understanding, promise and agreement
between the Company and the Holder with respect to the subject matter hereof
and thereof, and supersede, merge and render void every other prior written
and/or oral understanding, promise or agreement between the Company and the
Holder with respect to the subject matter hereof and thereof.

 

6.11                           Severability.  If one or more provisions of this Note are
held to be unenforceable under applicable law, such provision shall be excluded
from this Note, the balance of the Note shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.  The Company and the Holder shall
use good faith to negotiate to substitute (or a court may a substitute) a valid
and enforceable provision that replaces the excluded provision and that most
nearly effects the parties’ intent in entering into this Note.

 

6.12                           Waiver;
Amendment; Successors and Assigns. 
Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed or terminated except by an instrument in writing
signed by the Company and the Holder.  No
delay or omission by the Holder in exercising its rights under this Note shall
constitute a waiver of or bar to exercising such right or any other rights in
the future.  This Note shall be binding
upon, inure to the benefit of and be enforceable by the Company, the Holder and
their respective heirs, personal representatives, successors and assigns.

 

[SIGNATURE PAGE FOLLOWS]

 

4

 

UNSECURED
PROMISSORY NOTE

 

IN WITNESS
WHEREOF, the Company has caused this Note to be duly executed and delivered on
and as of the Issue Date set forth above.

 

 

	
   

  	
   

  	
   

  	
  MAXxess
  Systems, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Kevin C.
  Daly

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Kevin C.
  Daly

  
	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accepted and
  agreed upon

  	
   

  	
   

  	
   

  
	
  as of the
  Issue Date set forth above.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Iteris, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Abbas
  Mohaddes

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Abbas
  Mohaddes

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
   

  	
   

  

 

5

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