Document:

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                                 EHHIBIT 10.13
                             MULTIMEDIA GAMES, INC.
                             2002 Stock Option Plan

Section 1. General Purpose of Plan; Definitions.

The name of this plan is the Multimedia Games, Inc. 2002 Stock Plan (the
"Plan"). The Plan was adopted by the Board on December 18, 2002. The purpose of
the Plan is to enable the Company to attract and retain highly qualified
personnel who will contribute to the Company's success by their ability,
ingenuity and industry and to provide incentives to the participating officers,
employees, directors, consultants and advisors that are linked directly to
increases in stockholder value and will therefore inure to the benefit of all
stockholders of the Company.

For purposes of the Plan, the following terms shall be defined as set forth
below:

"Act" means Securities Exchange Act of 1934, as amended.

"Administrator" means the Board, or if the Board does not administer the Plan,
the Committee in accordance with Section 2.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or
any successor thereto.

"Committee" means the Committee of the Board designated from time to time by the
Board to be the Administrator.

"Commission" means Securities and Exchange Commission.

"Company" means Multimedia Games, Inc., a Texas corporation (or any successor
corporation).

"Disability" means the inability of a Participant to perform substantially his
duties and responsibilities to the Company by reason of a physical or mental
disability or infirmity (i) for a continuous period of six months, or (ii) at
such earlier time as the Participant submits medical evidence satisfactory to
the Company that he has a physical or mental disability or infirmity which will
likely prevent him from returning to the performance of his work duties for six
months or longer. The date of such Disability shall be on the last day of such
six-month period or the day on which the Participant submits such satisfactory
medical evidence, as the case may be.

"Effective Date" shall mean the date provided pursuant to Section 9.

"Eligible Employee" means an employee of the Company eligible to participate in
the Plan pursuant to Section 4.

"Fair Market Value" means, as of any given date, with respect to any awards
granted hereunder, at the discretion of the Administrator and subject to such
limitations as the Administrator may impose, (A) if the Stock is publicly
traded, the closing sale price of the Stock on such date as reported in the Wall
Street Journal, or the average of the closing price of the Stock on each day on
which the Stock was traded over a period-of up to twenty trading days
immediately prior to such date, (B) the fair market value of the Stock as
determined in accordance with a method prescribed in the agreement evidencing
any award hereunder, or (C) the fair market value of the Stock as otherwise
determined by the Administrator in the good faith exercise of its discretion.

"Incentive Stock Option" or "ISO" means any Stock Option intended to be
designated as an "incentive stock option" within the meaning of Section 422 of
the Code (and any successor provision of the Code having a similar intent).

"Non-Qualified Stock Option" or "NQSO" means any Stock Option that is not an
Incentive Stock Option, including any Stock Option that provides (as of the time
such option is granted) that it will not be treated as an Incentive Stock
Option.

"Parent Corporation" means any corporation (other the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations in
the chain (other than the Company) owns stock possessing 50% or more of the
combined voting power of all classes of stock in one of the other corporations
in the chain.

"Participant" means any Eligible Employee, consultant or advisor to the Company
selected by the Administrator, pursuant to the Administrator's authority in
Section 2 below, to receive grants of Stock Options.

"Stock" means the Common Stock, $0.01 par value, of the Company.

"Stock Option" means any option to purchase shares of Stock granted pursuant to
Section 5.

"Subsidiary" means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company, if each of the corporations (other
than the last corporation) in the unbroken chain owns stock

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possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.

Section 2. Administration.

The Plan shall be administered by the Board or by the Committee which shall be
appointed by the Board and which shall serve at the pleasure of the Board.

The Administrator shall have the power and authority to grant Stock Options to
Eligible Employees, consultants and advisors to the Company, pursuant to the
terms of the Plan.

In particular, the Administrator shall have the authority:

(a)    to select those employees of the Company who shall be Eligible Employees;

(b)    to determine whether and to what extent Stock Options are to be granted
       hereunder to Eligible Employees, consultants and advisors to the Company;

(c)    to determine the number of shares to be covered by each Stock Option
       granted hereunder;

(d)    to determine the terms and conditions, not inconsistent with the terms of
       the Plan, of any Stock Option granted hereunder; and

(e)    to determine the terms and conditions, not inconsistent with the terms of
       the Plan, which shall govern all written instruments evidencing the Stock
       Options.

The Administrator shall have the authority, in its discretion, to adopt, alter
and repeal such administrative rules, guidelines and practices governing the
Plan as it shall from time to time deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.

All decisions made by the Administrator pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and the
Participants.

Section 3. Stock Subject to Plan.

The total number of shares of Stock reserved and available for issuance under
the Plan (and the total number of shares that may be granted as ISO's) shall be
700,000 of shares of Stock. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

To the extent that a Stock Option expires or is otherwise terminated without
being exercised, such shares shall again be available for issuance in connection
with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be available for
issuance in connection with future awards under the Plan. To the extent that a
Participant is eligible to use, and uses, shares of Stock to exercise a Stock
Option, the number of Shares of Stock so used shall be available for issuance in
connection with future awards under the Plan.

In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend or other change in corporate structure affecting the Stock, an
appropriate substitution or adjustment shall be made in the aggregate number of
shares reserved for issuance under the Plan as may be determined by the
Administrator, in its sole discretion. Any other substitutions or adjustments
shall be made as may be determined by the Administrator, in its sole discretion.
In connection with any event described in this paragraph, the Administrator may
provide, in its discretion, for the cancellation of any outstanding awards and
payment in cash or other property therefor.

Section 4. Eligibility.

Officers (including officers who are directors of the Company), employees of the
Company, and consultants and advisors to the Company who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company shall be eligible to be granted Stock Options. The Participants under
the Plan shall be selected from time to time by the Administrator, in its sole
discretion, from among the Eligible Employees, consultants and advisors to the
Company recommended by the senior management of the Company, and the
Administrator shall determine, in its sole discretion, the number of shares
covered by each award.

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Section 5. Stock Options.

Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve, and the provisions of Stock Option
awards need not be the same with respect to each optionee. Recipients of Stock
Options shall enter into a subscription and/or award agreement with the Company,
in such form as the Administrator shall determine which agreement shall set
forth, among other things, the exercise price of the option, the term of the
option and provisions regarding exercisability of the option granted thereunder.

The Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.

The Administrator shall have the authority to grant any Eligible Employee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options. Consultants and advisors may only be granted Non-Qualified Stock
Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option. More
than one option may be granted to the same optionee and be outstanding
concurrently hereunder.

Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:

(1)  Option Price. The option price per share of Stock purchasable under a Stock
     Option shall be determined by the Administrator in its sole discretion at
     the time of grant but shall not, (i) in the case of Incentive Stock
     Options, be less than 100% of the Fair Market Value of the Stock on such
     date, (ii) in the case of Non-Qualified Stock Options, be less than 85% of
     the Fair Market Value of the Stock on such date, and (iii) in any event, be
     less than the par value of the Stock. If an employee owns or is deemed to
     own (by reason of the attribution rules applicable under Section 425(d) of
     the Code) more than 10% of the combined voting power of all classes of
     stock of the Company or any Parent Corporation and an Incentive Stock
     Option is granted to such employee, the option price of such Incentive
     Stock Option (to the extent required by the Code at the time of grant)
     shall be no less than 110% of the Fair Market Value of the Stock on the
     date such Incentive Stock Option is granted.

(2)  Option Term. The term of each Stock Option shall be fixed by the
     Administrator, but no Stock Option shall be exercisable more than ten years
     after the date such Stock Option is granted; provided, however, that if an
     employee owns or is deemed to own (by reason of the attribution rules of
     Section 425(d) of the Code) more than 10% of the combined voting power of
     all classes of stock of the Company or any Parent Corporation and an
     Incentive Stock Option is granted to such employee, the term of such
     Incentive Stock Option (to the extent required by the Code at the time of
     grant) shall be no more than five years from the date of grant.

(3)  Exercisability. Stock Options shall be exercisable at such time or times
     and subject to such terms and conditions as shall be determined by the
     Administrator at or after grant. The Administrator may provide, in its
     discretion, that any Stock Option shall be exercisable only in
     installments, and the Administrator may waive such installment exercise
     provisions at any time in whole or in part based on such factors as the
     Administrator may determine, in its sole discretion.

(4)  Method of Exercise. Subject to Section 5(3) above, Stock Options may be
     exercised in whole or in part at any time during the option period, by
     giving written notice of exercise to the Company satisfying the number of
     shares to be purchased, accompanied by payment in full of the purchase
     price in cash or in such other form of consideration as is set forth in the
     related Stock Option agreement as determined by the Administrator. As
     determined by the Administrator, in its sole discretion, payment in whole
     or in part may also be made in the form of unrestricted Stock already owned
     by the optionee; provided, however, that the right to make payment in the
     form of already owned shares may be authorized only at the time of grant.
     An optionee shall generally have the rights to dividends and any other
     rights of a stockholder with respect to the Stock subject to the option
     only after the optionee has given written notice of exercise, has paid in
     full for such shares, and, if requested, has given the representation
     described in paragraph (1) of Section 10.

     The Administrator may require the voluntary surrender of all or a portion
     of any Stock Option granted under the Plan as a condition precedent to the
     grant of a new Stock Option. Subject to the provisions of the Plan, such
     new Stock Option shall be exercisable at the price, during such period and
     on such other terms and conditions as are specified by the Administrator at
     the time the new Stock Option is granted. Upon their surrender, Stock
     Options shall be canceled and the shares previously subject to such
     canceled Stock Options shall again be available for grants of Stock Options
     and other awards hereunder.

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(5)  Loans. The Company may make loans available to Stock Option holders in
     connection with the exercise of outstanding options granted under the Plan,
     as the Administrator, in its discretion, may determine; provided, however,
     that the right to make payment in the form of loans may be authorized only
     at the time of grant and the terms of such loans shall be specified in the
     related Stock Option agreement. Such loans shall (i) be evidenced by
     promissory notes entered into by the Stock Option holders in favor of the
     Company, (ii) be subject to the terms and conditions set forth in this
     Section 5(5) and such other terms and conditions, not inconsistent with the
     Plan, as the Administrator shall determine, (iii) bear interest, if any, at
     such rate as the Administrator shall determine, and (iv) be subject to
     Board approval (or to approval by the Administrator to the extent the Board
     may delegate such authority). In no event may the principal amount of any
     such loan exceed the sum of (x) the exercise price less the-par value of
     the shares of Stock covered by the option, or portion thereof, exercised by
     the holder, and (y) any federal, state, and local income tax attributable
     to such exercise. The initial term of the loan, the schedule of payments of
     principal and interest (if any) under the loan, the extent to which the
     loan is to be with or without recourse against the holder with respect to
     principal or interest and the conditions upon which the loan will become
     payable in the event of the holder's termination of employment shall be
     determined by the Administrator. Unless the Administrator determines
     otherwise, when a loan is made, shares of Stock having a Fair Market Value
     at least equal to the principal amount of the loan shall be pledged by the
     holder to the Company as security for payment of the unpaid balance of the
     loan, and such pledge shall be evidenced by a pledge agreement, the terms
     of which shall be determined by the Administrator, in its discretion;
     provided, however, that each loan shall comply with all applicable laws,
     regulations and rules of the Board of Governors of the Federal Reserve
     System and any other governmental agency having jurisdiction.

(6)  Non-transferability of Options. Unless otherwise determined by the
     Administrator, no Stock Option shall be transferable by the optionee, and
     all Stock Options shall be exercisable, during the optionee's lifetime,
     only by the optionee.

(7)  Termination of Employment or Service. If an optionee's employment with or
     service as a director of or consultant or advisor to the Company terminates
     by reason of death, Disability or for any other reason, the Stock Option
     may thereafter be exercised to the extent provided in the applicable
     subscription or award agreement, or as otherwise determined by the
     Administrator.

(8)  Annual Limit on Incentive Stock Options. To the extent that the aggregate
     Fair Market Value (determined as of the date the Incentive Stock Option is
     granted) of shares of Stock with respect to which Incentive Stock Options
     granted to an Optionee under this Plan and all other option plans of the
     Company or its Parent Corporation become exercisable for the first time by
     the Optionee during any calendar year exceeds $100,000, such Stock Options
     shall be treated as Non-Qualified Stock Options.

Section 6. Amendment and Termination.

The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent.

The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any holder without his or her consent.

Section 7. Unfunded Status of Plan.

The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.

Section 8. General Provisions.

(1)  The Administrator may require each person purchasing shares pursuant to a
     Stock Option to represent to and agree with the Company in writing that
     such person is acquiring the shares without a view to distribution thereof.
     The certificates for such shares may include any legend which the
     Administrator deems appropriate to reflect any restrictions on transfer.

     All certificates for shares of Stock delivered under the Plan shall be
     subject to such stock-transfer orders and other restrictions as the
     Administrator may deem advisable under the rules, regulations, and other
     requirements of the Commission, any stock exchange upon which the Stock is
     then listed, and any applicable

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     federal or state securities law, and the Administrator may cause a legend
     or legends to be placed on any such certificates to make appropriate
     reference to such restrictions.

(2)  Nothing contained in the Plan shall prevent the Board from adopting other
     or additional compensation arrangements, subject to stockholder approval if
     such approval is required; and such arrangements may be either generally
     applicable or applicable only in specific cases. The adoption of the Plan
     shall not confer upon any employee, director, consultant or advisor of the
     Company any right to continued employment or service with the Company, as
     the case may be, nor shall it interfere in any way with the right of the
     Company to terminate the employment or service of any of its employees,
     directors, consultants or advisors at any time.

(3)  Each Participant shall, no later than the date as of which the value of an
     award first becomes includible in the gross income of the Participant for
     federal income tax purposes, pay to the Company, or make arrangements
     satisfactory to the Administrator regarding payment of, any federal, state,
     or local taxes of any kind required by law to be withheld with respect to
     the award. The obligations of the Company under the Plan shall be
     conditional on the making of such payments or arrangements, and the Company
     shall, to the extent permitted by law, have the right to deduct any such
     taxes from any payment of any kind otherwise due to the Participant.

(4)  No member of the Board or the Administrator, nor any officer or employee of
     the Company acting on behalf of the Board or the Administrator, shall be
     personally liable for any action, determination, or interpretation taken or
     made in good faith with respect to the Plan, and all members of the Board
     or the Administrator and each and any officer or employee of the Company
     acting on their behalf shall, to the extent permitted by law, be fully
     indemnified and protected by the Company in respect of any such action,
     determination or interpretation.

Section 9. Effective Date of Plan.

The Plan became effective (the "Effective Date") on December 18, 2002, provided
that, the Plan shall become effective with respect to Incentive Stock Options on
the date the Company's stockholders formally approve the Plan.

Section 10. Term of Plan.

No Stock Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but awards theretofore granted may extend
beyond that date.<PAGE>

                                  EXHIBIT 10.14
                              EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is entered into March 26, 2003, by and
between Multimedia Games, Inc., a Texas corporation ("Company") and Gordon T.
Graves ("Executive") (either party individually, a "Party"; collectively, the
"Parties").

WHEREAS, Executive has, prior to the Effective Date, served the Company as its
Chief Executive Officer;

WHEREAS, as part of the planned succession of the Chief Executive Officer
position, Executive wishes to resign his position as Chief Executive Officer,
effective upon the date of the Company's annual meeting of shareholders
scheduled to be held on or about February 18, 2003;

WHEREAS, the Company desires to retain the services of Executive as Chairman
("Chairman") of the Company's Board of Directors (the "Board") and as a member
of the Company's Executive Committee, and Executive desires to continue his
service to the Company in that capacity;

WHEREAS, the Parties desire to enter into this Agreement to set forth the terms
and conditions of Executive's service to the Company and to address certain
matters related to Executive's position with the Company;

NOW, THEREFORE, in consideration of the foregoing and the mutual provisions
contained herein, and for other good and valuable consideration, the Parties
hereto agree as follows:

1.     Resignation. Executive hereby confirms his resignation from his position
       as Chief Executive Officer of the Company, effective immediately
       following the Company's next annual meeting of shareholders (the
       "Effective Date"), currently scheduled to be held on or about February
       18, 2003.

2.     Agreement to Serve as Chairman. Company hereby retains Executive as
       Chairman, and Executive hereby accepts such position, upon the terms and
       conditions set forth herein.

3.     Duties.

       3.1    Position. Executive is retained as Chairman and shall generally
              have the duties and responsibilities described in that certain
              Confidential MGAM Internal Memorandum dated November 12, 2002
              addressing the roles and responsibilities of the Company's Chief
              Executive Officer and Chairman. Executive will serve as a member
              of the Company's Executive Committee and, in addition, Executive
              shall perform such other duties assigned by the Board as are
              consistent with the position of Chairman. Executive shall report
              to the Board. Executive shall perform faithfully and diligently
              all such duties assigned to Executive by the Board.

       3.2    Standard of Conduct/Full-time. During the term of this Agreement,
              Executive will act loyally and in good faith to discharge the
              duties of Chairman, and will abide by all policies and decisions
              made by the Board of Directors, as well as all applicable federal,
              state and local laws, regulations or ordinances. In his capacity
              as Chairman, Executive will act solely on behalf of Company. While
              serving as a member of the Executive Committee, Executive shall
              devote an average of at least 40 hours per week to the performance
              of Executive's assigned duties for Company, unless Executive
              notifies the Board in advance of Executive's intent to engage in
              other paid work and the Board does not express its written
              objection thereto. Notwithstanding the foregoing, Executive may
              devote a portion of his available business time to a charitable
              foundation and other non-competitive, family-related corporate
              endeavors.

       3.3    No Conflict of Interest. Executive will not, at any time while
              serving as a director of the Company, accept any engagement for
              work, paid or unpaid, that at the time such engagement is
              undertaken creates a conflict of interest with the Company that is
              imminent and evident. If the Board reasonably believes such a
              conflict exists and can demonstrate that such a conflict existed
              at the time the Executive commenced such work, the Board may ask
              Executive to discontinue such work. If the parties cannot reach
              agreement, either party may request a determination by an
              arbitrator pursuant to Section 13, below, and if the Board's
              determination hereunder is upheld by the arbitrator, and
              Executive then refuses to promptly resign his conflicting
              engagement, such refusal shall constitute a material breach of
              this Agreement.

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     3.4  Work Location. The Company will provide an executive office and
          related clerical and administrative support for Executive at the
          Company's headquarters in Austin, Texas that Executive may use for his
          work as a member of the Executive Committee. Notwithstanding the
          foregoing, Executive is expected to operate for the majority of his
          time from his home or other off-site location, and may have the
          assistance of a Company secretary at such off-site location.

4.   Term.

     4.1  Initial Term. Unless sooner terminated in accordance with the terms of
          this Agreement, Executive shall serve as Chairman and as a member of
          the Executive Committee for an initial term commencing on the
          Effective Date and continuing for nine (9) months from the Effective
          Date (the "Initial Term").

     4.2  Service following Expiration of Initial Term. Following expiration of
          the Initial Term, Executive may continue to serve as Chairman and as a
          member of the Executive Committee at the pleasure of the Board. The
          term of this Agreement shall renew for successive thirty (30) day
          periods until terminated in accordance with the provisions of this
          Agreement.

5.   Compensation.

     5.1  Base Salary for Service as Member of Executive Committee. As
          compensation for Executive's service on the Executive Committee,
          Company shall pay to Executive a salary of $12,500 per month, payable
          in monthly installments and in accordance with the normal payroll
          practices of Company.

     5.2  Outside Director Compensation. During any period that Executive serves
          as a member of the Board but does not serve on the Executive
          Committee, Executive shall be entitled to the same compensation and
          benefits paid to the Company's other non-employee directors.

6.   Other Benefits. Executive will be eligible for all customary and usual
     fringe benefits generally available to non-employee directors of Company
     (including benefits available to non-employee members of the Executive
     Committee) subject to the terms and conditions of Company's benefit plan
     documents. Company reserves the right to change or eliminate the fringe
     benefits on a prospective basis, at any time, effective upon notice to
     Executive; provided, however, that during the Initial Term, Executive (and
     his spouse and eligible dependents) shall be entitled to receive all
     benefits generally available to other non-employee members of Company's
     Board (including benefits available to non-employee members of the
     Executive Committee). The benefits currently made available to Executive
     are listed in Exhibit A. In addition to the foregoing, during the Initial
     Term Executive shall be entitled to receive the same or similar benefits as
     those received by Executive prior to his resignation as the Company's Chief
     Executive Officer.

     6.1  [Intentionally Omitted]

     6.2  The Company shall deliver to Steve Fleckman, Executive's attorney, all
          instruments and certificates in the Company's possession evidencing
          the Company's shares, options, and warrants outstanding in favor of
          Executive.

7.   Business Expenses. Executive will be reimbursed for all reasonable,
     out-of-pocket business expenses incurred in the performance of Executive's
     duties on behalf of Company. To obtain reimbursement, expenses must be
     submitted promptly with appropriate supporting documentation in accordance
     with Company's policies.

8.   Termination of Executive's Positions.

     8.1  Removal for Cause by Company. The Company may remove Executive from
          the position of Chairman or from the Executive Committee immediately
          at any time for Cause. For purposes of this Agreement, "Cause" is
          defined as: (a) theft, dishonesty, or intentional falsification of any
          employment or Company records; improper disclosure of the Company's
          confidential or proprietary information; (b) Executive's conviction
          (including any plea of guilty or nolo contendere) for any criminal act
          that materially impairs his ability to perform his duties for the
          Company; or (c) a material breach of this agreement by Executive which
          is not cured within thirty (30) days of receipt by executive of
          reasonably detailed written notice from the Company. In the event
          Executive's employment as a member of the Executive Committee is
          terminated in accordance with this Section 8.1, Executive shall be
          entitled to receive only unpaid Base Salary then in effect, prorated
          to the date of termination, together with any amounts to which
          Executive is entitled pursuant to Sections 6 or 7 hereof. All other
          Company obligations to Executive pursuant to this Agreement will
          become automatically terminated and completely

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          extinguished (except those arising pursuant Section 9, which shall not
          be affected by this Section). Executive will not be entitled to
          receive the Severance Payments described in Section 8.2, below.

     8.2  Removal Without Cause by Company/Severance. Company may remove
          Executive from the position of Chairman or from the Executive
          Committee without Cause at any time on thirty (30) days' advance
          written notice to Executive. In the event Executive is terminated only
          from his position as Chairman he shall continue to receive
          compensation and benefits as provided above for so long as he is a
          member of the Executive Committee. In the event of Executive's
          termination as a member of the Executive Committee, whether he
          continues as Chairman or not, Executive will receive ratably, in equal
          monthly installments in accordance with the Company's standard payroll
          practices, (i) all unpaid Base Salary pursuant to Section 5 as of the
          date of termination; (ii) continued payment of Executive's Base Salary
          pursuant to Section 5 for the balance of the Initial Term following
          the effective date of Executive's termination; and (iii) any amounts
          to which Executive is entitled pursuant to Section 5 or 6 hereof (the
          amounts due under clauses (i), (ii) and (iii) are collectively
          referred to as the "Severance Payments"), provided that Executive: (a)
          shall comply with all surviving provisions of this Agreement,
          including without limitation those provisions specified in subsection
          17.8, below; and (b) executes a full general release, releasing all
          claims, known or unknown, that Executive may have against Company
          arising out of or any way related to Executive's employment or
          termination of employment with Company, in substantially the form
          contained herein as Section 14 below, or in another form that is
          mutually acceptable to Company and Executive, provided that such
          release shall exclude amounts due or to become due Executive as
          contemplated by this Agreement. Except as provided above in this
          Section 8.2 and except for (i) any compensation or benefits accruing
          to Executive for any continuing service as a non-employee member of
          the Board under Sections 5.2, 6 and 7, and (ii) any compensation
          accruing to Executive under Section 9, all other Company obligations
          to Executive under this Agreement will be automatically terminated and
          completely extinguished upon removal of Executive from the position of
          Chairman and from the Executive Committee. This provision will not
          impair Executive's rights under Section 9.

     8.3  Resignation by Executive/Severance Upon Breach by the Company.
          Executive may resign either or both of his positions under this
          Agreement at any time on five (5) days' advance written notice to
          Company in the event of any material breach of this Agreement by the
          Company. In the event of such resignation, Executive will be entitled
          to receive the Severance Payments described in Section 8.2, above,
          provided that Executive complies with the conditions to receiving the
          Severance Payments described in Sections 8.2(a) and 8.2(b), above.
          Excluding the Severance Payments and any amounts due or to become due
          Executive under Section 9 of this Agreement, all other Company
          obligations to Executive will be automatically terminated and
          completely extinguished upon resignation by Executive of his position
          on the Executive Committee and his position as Chairman. This
          provision will not affect Executive's rights under Section 9.

     8.4  Voluntary Resignation by Executive. Executive may voluntarily resign
          Executive's position as Chairman of the Company or as a member of its
          Executive Committee for any reason, at any time after the Effective
          Date, on five (5) days' advance written notice. In the event of
          Executive's resignation as a member of the Executive Committee,
          Executive will be entitled to receive only the unpaid Base Salary and
          any benefits under Section 6 and 7 that have accrued through the
          five-day notice period and no other amount for the remaining months of
          the current term. Excluding amounts due or to become due Executive
          under Section 9, all other Company obligations to Executive pursuant
          to this Agreement (including obligations to make the Severance
          Payments described in Section 8.2) will be automatically terminated
          and completely extinguished from and after the effective date of
          notice of Executive's resignation from the Executive Committee
          pursuant to this Section. The provisions of this Section 8.4 shall not
          apply to Executive's resignation pursuant to Section 8.3. This
          provision will not impair Executive's rights under Section 9.

9.   Post-Termination Non-Competition.

     9.1  Consideration For Promise To Refrain From Competing. Executive agrees
          that Executive's services are special and unique, that Company's
          disclosure of confidential, proprietary information and specialized
          training and knowledge to Executive, and that Executive's level of
          compensation and benefits are partly in consideration of and
          conditioned upon Executive not competing with Company. In addition, in
          further consideration for the promise to refrain from competing, the
          Company agrees to pay Executive $250,000.00 per year during the
          Non-Compete Period (defined below), in equal monthly

                                       3

<PAGE>

          installments of $20,833.33 beginning February 28, 2003. Executive
          acknowledges that such consideration is adequate for and supports
          Executive's promises contained within this Section 9.

     9.2  Promise To Refrain From Competing. Executive understands Company's
          need for Executive's promise not to compete with Company is based on
          the following: (a) Company has expended, and will continue to expend,
          substantial time, money and effort in developing its proprietary
          information; (b) Executive will in the course of Executive's service,
          develop, be personally entrusted with and exposed to Company's
          proprietary information; (c) both during and after the term of
          Executive's service, Company will be engaged in the highly competitive
          gaming technology industry; (d) Company provides products and services
          nationally and internationally; and (e) Company will suffer great loss
          and irreparable harm if Executive were to enter into competition with
          Company. Therefore, in exchange for the consideration described in
          Section 9.1 above, Executive agrees that during the term of his
          service as a director of the Company, and for a period of three (3)
          years following the date Executive is no longer affiliated with the
          Company (the "Non-Compete Period"), Executive will not either directly
          or indirectly, whether as an owner, director, officer, manager,
          consultant, agent or employee: (i) work for or provide services or
          assistance to a competitor of Company, which is defined to include
          those entities or persons in the business of developing, marketing,
          selling and supporting technology to or for gaming businesses in which
          the Company engages or in which the Company has an actual intention,
          as evidenced by the Company's written business plans to engage, in any
          country in which the Company does business (the "Restricted
          Business"); or (ii) make or hold any investment in any Restricted
          Business, whether such investment be by way of loan, purchase of stock
          or otherwise, provided that there shall be excluded from the foregoing
          the ownership of not more than 3% of the listed or traded stock of any
          publicly held corporation. For purposes of this Section 9, the term
          "Company" shall mean and include Company, any subsidiary or affiliate
          of Company, any successor to the business of Company (by merger,
          consolidation, sale of assets or stock or otherwise) and any other
          corporation or entity of which Executive may serve as a director,
          officer or employee at the request of Company or any successor of
          Company. Notwithstanding the foregoing, the scope of this covenant not
          to compete shall not be expanded as a result of an acquisition of the
          Company by a successor.

     9.3  Reasonableness of Restrictions. Executive represents and agrees that
          the restrictions on competition, as to time, geographic area, and
          scope of activity, required by this Section 9 are reasonable, do not
          impose a greater restraint than is necessary to protect the goodwill
          and business interests of Company, and are not unduly burdensome to
          Executive. Executive expressly acknowledges that Company competes on
          an international basis and that the geographical scope of these
          limitations is reasonable and necessary for the protection of
          Company's trade secrets and other confidential and proprietary
          information. Executive further agrees that these restrictions allow
          Executive an adequate number and variety of employment alternatives,
          based on Executive's varied skills and abilities. Executive represents
          that Executive is willing and able to compete in other employment not
          prohibited by this Agreement.

     9.4  Non-Exclusive Remedy. In addition to and not exclusive of other legal
          and equitable remedies available to the Company, Executive will
          reimburse the Non-Compete Payment to the Company in its entirety if
          Executive violates the terms of the Promise to Refrain from Competing
          during the three-year Non-Compete Period. Executive agrees that this
          consideration, together with the Company's disclosure of confidential,
          proprietary information and specialized training and knowledge to
          Executive, and Executive's level of compensation and benefits are
          consideration for and conditioned upon Executive not competing with
          the Company. Any repayment of the Non-Compete Payment shall not
          constitute a waiver of the Executive's obligations under the Promise
          to Refrain from Competing set forth in Section 9.2.

     9.5  Voluntary Non-Competition Consideration. Following expiration of the
          Non-Compete Period, and only for so long as Executive continues to
          comply with each of the provisions of Sections 9.2 and 11 hereof,
          above, then following expiration of the Non-Compete Period the Company
          will continue to pay Executive $20,833.33 per month during his life.
          At any time that Executive ceases to comply in any respect with any of
          the provisions of Section 9.2 or Section 11, and failing Executive's
          timely cure of such breach in accordance with Section 9.7, all Company
          obligations to make the continuing payments as provided in this
          section shall immediately terminate and thus shall become null and
          void, but any payments due Executive as of the day preceding the date
          on which Executive ceased to comply with the provisions of Section 9.2
          or Section 11 shall be promptly paid to Executive.

                                       4

<PAGE>

     9.6  Reformation if Necessary. In the event a court of competent
          jurisdiction determines that the geographic area, duration, or scope
          of activity of any restriction under this Section 9 and its
          subsections is unenforceable, the restrictions under this section and
          its subsections shall not be terminated but shall be reformed and
          modified to the extent required to render them valid and enforceable.
          Executive further agrees that the court may reform this Agreement to
          extend the initial three-year Non-Compete Period by an amount of time
          equal to any period (during such Non-Compete Period) in which
          Executive is in breach of his Promise to Refrain from Competing.

     9.7  Notice and Cure. Prior to asserting a right to any legal or equitable
          remedy for an alleged breach by Executive of the provisions of this
          Section 9 or Section 11 (including, without limitation, the cessation
          of any payments provided for herein), (a) the Company will provide
          Executive with a reasonably detailed notice of the alleged breach
          which includes a description of the facts upon which the Company bases
          its claim of breach and a general explanation of the harm experienced
          or anticipated to be experienced by the Company; and (b) Executive
          shall have fourteen calendar (14) days to terminate the conduct
          described in the notice and cure any financial harm actually sustained
          by the Company that the Company identifies with reasonable
          particularity in its notice.

10.  Confidentiality and Proprietary Rights. Executive agrees to read, sign and
     abide by Company's Employee Innovations and Proprietary Rights Assignment
     Agreement, which was previously executed by Executive and incorporated
     herein by reference.

11.  Nonsolicitation.

     11.1 Nonsolicitation of Customers or Prospects. Executive acknowledges that
          information about Company's customers is confidential and constitutes
          trade secrets. Accordingly, Executive agrees that during the
          Non-Compete Period, Executive will not, either directly or indirectly,
          separately or in association with others, interfere with, impair,
          disrupt or damage Company's relationship with any of its customers or
          customer prospects by soliciting or encouraging others to solicit any
          of them for the purpose of diverting or taking away business from
          Company.

     11.2 Nonsolicitation of Company's Employees. Executive agrees that during
          the Non-Compete Period, Executive will not, either directly or
          indirectly, separately or in association with others, interfere with,
          impair, disrupt or damage Company's business by soliciting,
          encouraging, hiring or attempting to hire any of Company's employees
          or causing others to solicit or encourage any of Company's employees
          to discontinue their employment with Company.

12.  Injunctive Relief. Executive acknowledges that Executive's breach of the
     covenants contained in Sections 9-11 (collectively, the "Covenants") would
     cause irreparable injury to Company and agrees that in the event of any
     such breach, Company shall be entitled to seek temporary, preliminary and
     permanent injunctive relief without the necessity of proving actual damages
     or posting any bond or other security (except as required by law).

13.  Agreement to Arbitrate. To the fullest extent permitted by law, and in any
     event subject to the specific provisions of Exhibit B attached, Executive
     and Company agree to arbitrate any controversy, claim or dispute between
     them arising out of or in any way related to this Agreement, the employment
     relationship between Company and Executive and any disputes upon
     termination of employment, including but not limited to breach of contract,
     tort, discrimination, harassment, wrongful termination, demotion,
     discipline, failure to accommodate, family and medical leave, compensation
     or benefits claims, constitutional claims; and any claims for violation of
     any local, state or federal law, statute, regulation or ordinance or common
     law. Claims relating to physical torts, the right to workers' compensation,
     and unemployment insurance benefits are excluded, and except as provided in
     Exhibit B, claims for enforcement of the parties' rights under the
     Covenants, are excluded. For the purpose of this agreement to arbitrate,
     references to "Company" include all parent, subsidiary or related entities
     and their employees, supervisors, officers, directors, agents, pension or
     benefit plans, pension or benefit plan sponsors, fiduciaries,
     administrators, affiliates and all successors and assigns of any of them,
     and this Agreement shall apply to them to the extent Executive's claims
     arise out of or relate to their actions on behalf of Company. The
     Arbitration shall be governed by, initiated and conducted in accordance
     with the provisions of Exhibit B hereof.

14.  Release of Claims. Executive for himself and on behalf of his attorneys,
     heirs, assigns, successors, executors, and administrators IRREVOCABLY AND
     UNCONDITIONALLY RELEASES, ACQUITS AND

                                       5

<PAGE>

          FOREVER DISCHARGES the Company and any current and former parent,
          subsidiary, affiliated, and related corporations, firms, associations,
          partnerships, and entities, and their successors and assigns, of and
          from all claims and causes of action whatsoever, whether known or
          unknown or whether connected with Employee's employment by the Company
          or not, which may have arisen, or which may arise, prior to, or at the
          time of, the execution of this Agreement, including, but not limited
          to, any claim or cause of action arising under Title VII of the Civil
          Rights Act of 1964, the Americans with Disabilities Act, the Texas
          Commission on Human Rights Act, the Age Discrimination in Employment
          Act, the Texas Labor Code, the Texas Payday Act, or any other
          municipal, local, state, or federal law, common or statutory.
          Notwithstanding the foregoing, Executive reserves all rights (A) to
          indemnification that he may currently or hereafter possess as an
          officer, director or agent or former officer, director or agent of the
          Company (or its affiliates) under applicable corporate statutes or the
          organic corporate documents of the Company (and the scope of any
          indemnification existing as of this date shall not be reduced as to
          Executive by future action of the Company); (B) under any employee
          insurance policies or benefit programs that by their terms continue to
          apply to Executive [(C) to participate as a passive member (but not
          active member or class representative) of any class action brought for
          the benefit of public investors of the Company;]; and (D) under any
          other provision of this Agreement. Company hereby represents that,
          without investigation or undertaking any duty of inquiry, its Board of
          Directors and executive officers are unaware of any claims Company may
          have against Executive as of the date of this Agreement.

     15.  Voting Agreement. Executive agrees from and after the date of this
          Agreement and until Midnight, September 30, 2003 (the "Voting
          Agreement Period"), that he shall vote, or cause the vote of, all
          shares of Common Stock, Preferred Stock, and other voting securities
          of the Company over which he has or shares voting control, in favor of
          the Company's current Board of Directors and any additional
          director(s) nominated unanimously by the current Board of Directors to
          stand for election to the Company's Board of Directors at any special
          or annual meeting of the stockholders of the Company. Executive
          further agrees that during the Voting Agreement Period he will not
          make or in any way participate, directly or indirectly, in any
          "solicitation" of "proxies" to vote (as such terms are used in the
          rules of the Securities and Exchange Commission), or seek to advise or
          influence any person or entity with respect to the voting of any
          voting securities of the other party, and Executive shall not form,
          join or in any way participate in a "group" as defined in Section
          13(d)(3) of the Securities Exchange Act of 1934, as amended, in
          connection with the foregoing.

     16.  Patent License; Right of First Offer. As soon as practicable following
          the execution of this Agreement, the parties will continue
          negotiations regarding a Patent License Agreement on substantially the
          terms described in the Term Sheet for Employment between Gordon T.
          Graves and Multimedia Games, Inc. dated November 12, 2002. Executive
          agrees that, prior to transferring or licensing any intellectual
          property or technology developed by Executive, solely or jointly with
          others, to any third party that could reasonably be used by or useful
          to the Company, Executive shall first offer to transfer or lease such
          intellectual property or technology to the Company. The Company shall
          have 60 days to negotiate an acquisition of license of such technology
          or intellectual property with Executive. If, following expiration of
          such 60-day period, Executive and Company have failed to conclude
          negotiations, Executive may, at any time within 240 days after the
          expiration of such period, license or transfer such technology or
          intellectual property to a third party or parties on terms no more
          favorable than those last offered by Executive to the Company. After
          expiration of such 240-day period, Executive may not transfer or
          license such technology or intellectual property without again
          complying with the right of first offer described in this section.

     17.  General Provisions.

          17.1 Successors and Assigns. The rights and obligations of Company
               under this Agreement shall inure to the benefit of and shall be
               binding upon the successors and assigns of Company. Executive
               shall not be entitled to assign any of Executive's rights or
               obligations under this Agreement other than vested rights to
               receive payments hereunder.

          17.2 Waiver. Either party's failure to enforce any provision of this
               Agreement shall not, unless confirmed in writing by the party
               against whom waiver is urged, in any way be construed as a waiver
               of such provision in any other circumstance, or prevent that
               party thereafter from enforcing each and every other provision of
               this Agreement.

          17.3 Attorneys' Fees. In the event of a dispute the prevailing party
               shall be entitled to recover reasonable attorney fees.

                                       6

<PAGE>

     17.4 Severability. In the event any provision of this Agreement is found to
          be unenforceable by an arbitrator or court of competent jurisdiction,
          such provision shall be deemed modified to the extent necessary to
          allow enforceability of the provision as so limited, it being intended
          that the parties shall receive the benefit contemplated herein to the
          fullest extent permitted by law. If a deemed modification is not
          satisfactory in the judgment of such arbitrator or court, the
          unenforceable provision shall be deemed deleted, and the validity and
          enforceability of the remaining provisions shall not be affected
          thereby.

     17.5 Interpretation; Construction. The headings set forth in this Agreement
          are for convenience only and shall not be used in interpreting this
          Agreement. This Agreement has been drafted by legal counsel
          representing Company, but Executive has participated in the
          negotiation of its terms. Furthermore, Executive acknowledges that
          Executive has had an opportunity to review and revise the Agreement
          and have it reviewed by legal counsel, if desired, and, therefore, the
          normal rule of construction to the effect that any ambiguities are to
          be resolved against the drafting party shall not be employed in the
          interpretation of this Agreement.

     17.6 Governing Law. This Agreement will be governed by and construed in
          accordance with the laws of the United States and the State of Texas.
          Each party consents to the jurisdiction and venue of the state or
          federal courts in Travis County, Texas, if applicable, in any action,
          suit, or proceeding arising out of or relating to this Agreement.

     17.7 Notices. Any notice required or permitted by this Agreement shall be
          in writing and shall be delivered as follows with notice deemed given
          as indicated: (a) by personal delivery when delivered personally; (b)
          by overnight courier upon written verification of receipt; (c) by
          telecopy or facsimile transmission upon acknowledgment of receipt of
          electronic transmission; or (d) by certified or registered mail,
          return receipt requested, upon verification of receipt. Notice shall
          be sent to the addresses set forth below, or such other address as
          either party may specify in writing.

     17.8 Survival. Executive's right to receive payments contemplated by this
          Agreement to continue beyond his employment, shall survive except to
          the extent expressly provided otherwise. To the extent reasonably
          contemplated to continue beyond the termination of Executive's
          employment, the following provisions shall also survive: Sections 3.3
          ("No Conflict of Interest"), 5.2 ("Outside Director Compensation"),
          8.2 ("Removal without Cause by Company/Severance"), 9
          ("Post-Termination Non-Competition"), 10 ("Confidentiality and
          Proprietary Rights"), 11 ("Nonsolicitation"), 12 ("Injunctive
          Relief"), 13 ("Agreement to Arbitrate"), 16 ("Patent Licenses; Right
          of First Offer") 17 ("General Provisions") and 18 ("Entire
          Agreement").

     17.9 Entire Agreement. This Agreement, including the Company Employee
          Innovations and Proprietary Rights Assignment Agreement and the Patent
          License Agreement, constitutes the entire agreement between the
          parties relating to this subject matter and supersedes all prior or
          simultaneous representations, discussions, negotiations, and
          agreements, whether written or oral. This Agreement may be amended or
          modified only with the written consent of Executive and the Company.
          No oral waiver, amendment or modification will be effective under any
          circumstances whatsoever.

            [The remainder of this page is intentionally left blank.]

                                       7

<PAGE>

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

                                          EXECUTIVE

Dated:     March 26, 2003                 By:       /s/ Gordon T. Graves
       ------------------------                 --------------------------------
                                                Gordon T. Graves

                                          Address

                                          MULTIMEDIA GAMES, INC.

Dated:   March 26, 2003                   By:      /s/ Thomas W. Sarnoff
       ------------------------                 --------------------------------
                                                     Thomas W. Sarnoff

                                          Address

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