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EXHIBIT 10.31
ANCHOR GAMING
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, dated as of September 24, 2000, is by and between Anchor
Gaming, a Nevada corporation ("ANCHOR GAMING"), and (the
"PARTICIPANT").
RECITALS
The Board of Directors of Anchor Gaming has adopted the Anchor Gaming 2000
Stock Incentive Plan (the "2000 PLAN") to enable directors, officers, and
employees of Anchor Gaming and its majority-owned subsidiaries to acquire shares
of Common Stock, $.01 par value, of Anchor Gaming ("COMMON STOCK") in accordance
with the provisions of the 2000 Plan.
The 2000 Plan is subject to the approval of the stockholders of the Company
at the next annual meeting of stockholders.
The Board of Directors (the "BOARD") has selected Participant to participate
in the 2000 Plan and has determined to grant Participant restricted shares of
Common Stock in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and other terms and conditions set forth in this Agreement, Anchor
Gaming and Participant agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings indicated:
(a) "CAUSE" means that the Board reasonably finds that any one or more
of the following events has occurred: (i) performance by Participant of
illegal or fraudulent acts, criminal conduct, or willful misconduct
relating to the activities of the Company, including, without limit,
violation by Participant of any material gaming laws or regulations,
which violation materially and adversely affects the ability of
Participant to perform his duties to the Company or may subject the
Company to liability; (ii) conviction of, or nolo contendere plea by
Participant to, any criminal acts involving moral turpitude having a
material adverse effect upon the Company, including, without limitation,
upon its profitability, reputation, or goodwill; (iii) willful and
material disregard of any reasonable directive(s) from the Board that are
not inconsistent with the terms of any contract with the Company to which
Participant is party, PROVIDED that the Board will provide Participant
with written notice that such event has occurred ("NOTICE OF DISREGARD")
and will further allow Participant 30 days in which to cure such
disregard, and PROVIDED FURTHER that the Board will provide an
opportunity for Participant to be heard if there is no cure within 30
days of the Notice of Disregard; (iv) breach of fiduciary duty, PROVIDED
that the Board will provide Participant with written notice that such
event has occurred ("NOTICE OF BREACH OF FIDUCIARY DUTY") and will
further allow Participant 30 days in which to cure such breach of
fiduciary duty, and PROVIDED FURTHER that the Board will allow an
opportunity for Participant to be heard if there is no cure within 30
days of the Notice of Breach of Fidicuary Duty; (v) material violation,
not cured in a reasonable time after notice from the Company, by
Participant of any of the covenants and agreements contained in any
agreement with the Company to which Participant is party; (vi) failure or
inability of Participant to obtain or maintain required gaming licenses
or approvals.
(b) "CHANGE OF CONTROL" means the occurrence of any of the following
events, as a result of one transaction or a series of transactions: (i) any
"person" (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), but excluding the
Company, its affiliates, and any qualified or non-qualified plan maintained
by the Company or its
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affiliates) becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities
of the Anchor Gaming representing more than 50% of the combined voting power
of the Anchor Gaming's then outstanding securities; (ii) individuals who
constitute a majority of the Board of Directors of the Company immediately
prior to a contested election for positions on the Board cease to constitute
a majority as a result of such contested election; (iii) Anchor Gaming is
combined (by merger, share exchange, consolidation, or otherwise) with
another entity and as a result of such combination, less than 50% of the
outstanding securities of the surviving or resulting entity are owned in the
aggregate by the former shareholders of Anchor Gaming; (iv) the Company
sells, leases, or otherwise transfers all or a majority of all of its
properties, assets or income or revenue generating capacity to another
person or entity; (v) a dissolution or liquidation of Anchor Gaming or;
(vi) any other transaction or series of transactions is consummated that
results in a required disclosure under Item 1 of Form 8-K or successor form.
(c) "COMPANY" means Anchor Gaming and its majority-owned subsidiaries.
(d) "CONFIDENTIAL INFORMATION" means all written, machine-reproducible,
oral and visual data, information, and material, including, but not limited
to, business, financial, and technical information, records regarding sales,
price and cost information, marketing plans, customer names, customer lists,
sales techniques, manufacturing or distribution plans or procedures; and
computer programs, documents, and records (including those that Participant
develops in the scope of his or her employment) that (i) the Company or any
of its customers or suppliers treats as proprietary or confidential through
markings or otherwise, (ii) relates to the Company or any of its customers
or suppliers or any of their business activities, products, or services
(including software programs and techniques) and is competitively sensitive
and not generally known in the relevant trade or industry, or (iii) derives
independent economic value from not being generally known to, and is not
readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use. Confidential Information does not
include any information or material that is approved by Anchor Gaming for
unrestricted public disclosure.
(e) "NET INVESTMENT PROCEEDS," with respect to any share of Restricted
Stock sold or otherwise transferred by Participant or Participant's
successor in interest, means the greater of the value of the gross proceeds
received for such share or the Market Value of such share on the date of
sale or transfer less, in either case, (i) $5.00 per share (adjusted to
appropriately for any stock split, reverse stock split, merger,
consolidation, or other similar change in the Common Stock), (ii) any
reasonable and customary commission actually paid for the sale or transfer,
and (iii) the verified amount of any income taxes paid or payable on the
sale or transfer.
(f) "PUBLICLY TRADED" means Common Stock has been listed on a registered
national securities exchange or approved for quotation in the
Nasdaq-Registered Trademark- National Market ("NASDAQ") or another national
securities exchange of automated quotation service.
(g) "RESTRICTED STOCK" means the shares of restricted stock granted
under this Agreement, together with any successor security, property or cash
issued or distributed by Anchor Gaming or any successor entity, whether by
way of merger, consolidation, share exchange, reorganization, liquidation,
recapitalization, or otherwise.
(h) "TRANSFER" or "TRANSFER" or derivations thereof includes any sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange, or
any other disposition or any interest in this Agreement, the Restricted
Stock, or securities issued on exercise of this Option."
(i) "VEST," "VEST," or derivations thereof with respect to any
Restricted Stock issued under this Agreement, means receiving the right to
receive a stock certificate evidencing ownership of the stock subject to
Restricted Stock grant and to transfer ownership of the shares of formerly
Restricted Stock.
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2. GRANT OF OPTION; PURCHASE OF STOCK.
(a) Subject to the terms, conditions, and restrictions set forth in the
2000 Plan, and in this Agreement, Anchor Gaming hereby grants to
Participant, and Participant hereby accepts from Anchor Gaming, a restricted
stock grant of the number of shares of Common Stock specified in
ATTACHMENT A to this Agreement, which will vest in Participant in accordance
with the Vesting Schedule set forth on ATTACHMENT A to this Agreement. The
Restricted Stock will continue to vest only for as long as Participant is an
employee of Company, unless the Board or the Committee, in its sole
discretion, agrees in writing otherwise. The Board or the Committee may,
however, in its sole discretion, provide for the lapse of any of the vesting
restrictions placed upon the Restricted Stock and may accelerate or waive
any of such restrictions in whole or in part at any time, based upon
performance and/or such other factors as the Board or the Committee may
determine, in its sole discretion. Upon the vesting of any part of the
Restricted Stock by virtue of the lapse of the Restricted Period, the
Company will deliver a stock certificate covering the requisite number of
shares to the Participant whereupon the Participant will be free to hold or
dispose of such stock at will. The stock certificate(s) evidencing the
shares covered by the Restricted Stock Award Agreement will be registered on
the Company's books in the name of the Participant as of the date hereof.
Physical possession or custody of such stock certificate(s) together with a
stock power, endorsed in blank, relating thereto will be retained by the
Company until such time as the shares of stock are fully vested. While in
its possession, the Company reserves the right to place a legend on the
stock certificate(s) restricting the transferability of such certificate(s)
and referring to the terms and conditions (including forfeiture) approved by
the Committee and applicable to the Restricted Stock.
(b) Notwithstanding the other provisions of this Agreement or
ATTACHMENT A, if Participant is terminated from employment with the Company
without Cause, the Restricted Stock not yet vested under ATTACHMENT A will
vest immediately.
(c) Notwithstanding any other provision of this Agreement, in the event
of Change of Control, the Restricted Stock not yet vested under
ATTACHMENT A will vest immediately.
(d) In the event that the total compensation paid to Participant as
severance in the event of a Change of Control, taking into account all cash
severance payments, shares of stock, accelerated vesting of stock options,
and bonuses, if any (such payments being the "SEVERANCE PAYMENT"), is found
to constitute "an excess parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE"),
then Anchor Gaming will pay to Participant, in addition to the compensation
paid as the Severance Payment, an additional amount (the "additional
amount") which, after reduction for income taxes and excise taxes on the
additional amount, is sufficient to provide for the payment of any excise
tax that may be due by Participant on the Severance Payment.
3. RESTRICTIONS ON TRANSFER. The Restricted Stock may not be sold or
otherwise transferred until it is vested. Anchor Gaming is not obligated to
recognize any purported sale or other transfer of the Option or any Restricted
Stock in violation of this Section 3 and, unless it elects to do otherwise, may
treat any such purported sale or transfer as null, void, and of no effect.
4. RIGHTS TO BUY BACK RESTRICTED STOCK AND TO REQUIRE PAYBACK OF CERTAIN
PROFITS.
(a) If the Participant has engaged in any conduct prohibited by
SECTION 5, Anchor Gaming will have (i) the right to buy back from
Participant any shares of Restricted Stock then owned by Participant, at a
purchase price equal to $5.00 per share plus the verified amount of any
income taxes paid or payable on the grant or vesting of the Restricted Stock
(adjusted to appropriately for any stock split, reverse stock split,
merger, consolidation, or other similar change in the Common Stock), and
(ii) the right to require Participant to pay back to Anchor Gaming in
cash the Net Investment Proceeds with respect to any shares of Restricted
Stock sold or otherwise transferred by Participant.
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(b) Whenever Anchor Gaming has a right to buy back shares of Restricted
Stock or to require Participant to pay back to Anchor Gaming Participant's
Net Investment Proceeds with respect to any shares of Restricted Stock under
this SECTION 4, Anchor Gaming may exercise its right by notifying
Participant or the subsequent holder of Anchor Gaming's election to exercise
its right within the designated exercise period. In the case of a buyback
under SECTION 4(a), the giving of such notice will give rise to an
obligation on the part of Participant or the subsequent holder to tender to
Anchor Gaming, within 10 days, any previously issued certificate
representing shares of Restricted Stock to be bought back, duly endorsed in
blank or having a duly executed stock power attached in proper form for
transfer free and clear of any claim by any other person or entity. If any
such certificate is not tendered within 10 days, Anchor Gaming may cancel
any outstanding certificate representing shares to be bought back. Anchor
Gaming is required to tender the purchase price for shares to be bought back
under this SECTION 4 within 20 days of giving notice of its election to
exercise its right to buy back shares. If the person from whom the shares
are to be bought back has not complied with an obligation to return a
certificate representing shares to be bought back, however, Anchor Gaming is
not required to tender the purchase price until 20 days after the
certificate is duly returned or 20 days after it cancels the certificate,
whichever occurs first.
5. COMPETITION AND NON-DISCLOSURE. Participant acknowledges that: (i) in
the course and as a result of employment with the Company, Participant will
obtain special training and knowledge and will come in contact with the
Company's current and potential customers, which training, knowledge, and
contacts would provide invaluable benefits to competitors of the Company;
(ii) the Company is continuously developing or receiving Confidential
Information, and that during Participant's employment he or she will receive
Confidential Information from the Company, its customers and suppliers and
special training related to the Company's business methodologies; and
(iii) Participant's employment by Company creates a relationship of trust that
extends to all Confidential Information that becomes known to Participant.
Accordingly, and as a material inducement to Anchor Gaming to grant the
Restricted Stock to Participant and other good and valuable consideration,
Participant agrees that Anchor Gaming, as its sole remedy under this Agreement,
will be entitled to terminate all vesting of the Restricted Stock and to
exercise the rights specified in SECTION 4 if Participant does any of the
following without the prior written consent of the Company:
(a) while employed by the Company or within one year thereafter:
(i) directly or indirectly engages in, owns or controls an interest
in (except as to those investments held at the effective date of this
agreement or as a passive investor in publicly held companies, i.e.,
Participant and Participant's spouse or lineal descendants do not own of
record, or beneficially, an aggregate of more than two percent (2%) of
any class of outstanding securities) or acts as an officer, director, or
employee of, or consultant or adviser to, any firm, corporation,
institution or entity, directly or indirectly in competition with or
engaged in a business substantially similar to that of the Company in the
United States or in any foreign country in which the Company during the
term of the Participant's employment sold, marketed, provided or
solicited to sell, market or provide products or services, including the
development, manufacture, sale or marketing of products, services,
devices, instruments, methods or techniques (or any related services or
activities) similar to any products, services, devices, instruments,
methods or techniques that the Company was engaged in the development of,
manufacturing, selling, or marketing, or had under consideration to do
the same (whether or not such products, devices, instruments, methods or
techniques or the technology related thereto were obtained from
Participant), during the term of the Participant's employment with the
Company;
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(ii) solicits or performs services, as an employee, independent
contractor, or otherwise, for any person or entity (including any
affiliates or subsidiaries of that person or entity) that is or was a
customer or prospect of the Company during the six months before
Participant's employment with the Company ended if Participant solicited
business from or performed services for that customer or prospect while
employed by Company; or
(iii) recruits, hires, or assist, directly or indirectly, anyone to
recruit or hire anyone who was an employee of the Company within the six
months before Participant's employment with the Company ended; or
(b) discloses or uses any Confidential Information, except in connection
with the good faith performance of Participant's duties as an employee;
or fails to take reasonable precautions against the unauthorized
disclosure or use of Confidential Information; fails, upon Anchor Gaming'
request, to execute and comply with a third party's agreement to protect
its confidential and proprietary information; solicits or induces the
unauthorized disclosure or use of Confidential Information; or fails to
return on Anchor Gaming's request any and all Confidential Information in
the Participant's care, custody, or control.
The existence of any claim or cause of action of Participant against the
Company, whether predicated on this Agreement or otherwise, will not constitute
a defense of the Company's enforcement of the covenants set forth in this
SECTION 5. The Participant hereby submits to the jurisdiction of the courts of
the State of Nevada and federal courts therein for the purposes of any actions
or proceedings instituted by the Company to obtain such injunctive relief.
Participant further acknowledges and agrees that the obligations contained in
SECTION 5 of this Agreement are fair, do not unreasonably restrict Participant's
further employment and business opportunities, and are commensurate with the
compensation arrangements set out in this Agreement. The covenants contained in
SECTION 5 will each be construed as an Agreement independent of any other
provision of this Agreement. Both parties intend to make the covenants of
SECTION 5 binding only to the extent that it may be lawfully done under existing
applicable laws.
If any court of competent jurisdiction finds any provision of this
SECTION 5 to be unreasonable as to substantive scope, duration or geographic
scope, then the Participant expressly agrees that, at Anchor's sole discretion,
and in addition to any other remedies at law or equity that may be available to
Anchor Gaming: (i) such provision will be considered to be amended to provide
the broadest scope of protection to the Company that such court would find
reasonable and enforceable or (ii) Anchor Gaming may require that this Agreement
be rescinded.
This SECTION 5 of this Agreement will survive either termination of the
employment relationship or termination of this Agreement for the full period set
forth in this SECTION 5.
6. COMPLIANCE WITH SECURITIES LAWS. Participant agrees that neither
Participant nor any successor in interest of Participant will sell or
otherwise transfer any shares of Restricted Stock in any way that might
result in a violation of any federal or state securities laws or
regulations. Participant acknowledges and agrees that Anchor Gaming may
require Participant or any subsequent holder of the any shares of Restricted
Stock to provide Anchor Gaming, prior to any sale or other transfer, with
such other representations, commitments, and opinions regarding compliance
with applicable securities laws and regulations as Anchor Gaming may deem
necessary or advisable. Anchor Gaming agrees to use its best efforts to
cause a registration statement covering resales of the Restricted Stock to
be filed with the Securities and Exchange Commission and to be effective,
and to list the Restricted Stock on Nasdaq and any other securities exchange
on which the common stock of Anchor Gaming is listed for trading.
7. STOCK CERTIFICATES; RIGHTS AS SHAREHOLDER. All certificates representing
shares of Restricted Stock will bear such legends as the Board determines
are necessary or appropriate. Such legends will be removed at vesting.
Whether or not certificates representing shares of Restricted Stock have
been
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issued or delivered, Participant will have all the rights of a shareholder
of Restricted Stock, including voting, dividend and distribution rights,
with respect to shares of Restricted Stock owned by Participant.
8. INCOME TAX WITHHOLDING. Participant will, upon request by the Company,
reimburse the Company for, or the Company may withhold from sums or property
otherwise due or payable to Participant, any amounts the Company is required
to remit to applicable taxing authorities as income tax withholding with
respect to any Restricted Stock. If Participant fails to reimburse the
Company for any such amount when requested, the Company has the right to
recover that amount by selling or canceling sufficient shares of any
Restricted Stock held by Participant.
9. COMPLIANCE WITH PLANS. Participant acknowledges receipt of a copy of the
2000 Plan Plan and further acknowledges that this Agreement is entered into,
and the Option is granted, pursuant to the 2000 Plan. If the provisions of
the 2000 Plan are inconsistent with the provisions of this Agreement, the
provisions of the 2000 Plan supersedes the provisions of this Agreement.
10. NOTICES. Any notice to Anchor Gaming or the Company that is required or
permitted by this Agreement will be addressed to the attention of the
Secretary of Anchor Gaming at its principal office. Any notice to
Participant that is required or permitted by this Agreement will be
addressed to Participant at the most recent address for Participant
reflected in the appropriate records of the Company. Either party may at any
time change its address for notification purposes by giving the other
written notice of the new address and the date upon which it will become
effective. Whenever this Agreement requires or permits any notice from one
party to another, the notice must be in writing to be effective and, if
mailed, will be deemed to have been given on the third business day after
the same is enclosed in an envelope, addressed to the party to be notified
at the appropriate address, properly stamped, sealed, and deposited in the
United States mail, and, if mailed to the Company, by certified mail, return
receipt requested.
11. REMEDIES. Anchor Gaming is entitled, in addition to any other remedies it
may have at law or in equity, to temporary and permanent injunctive and
other equitable relief to enforce the provisions of this Agreement. Any
action to enforce the provisions of, or relating to, this Agreement may be
brought in the state or federal courts having jurisdiction in the State of
Nevada. By signing this Agreement, Participant consents to the personal
jurisdiction of such courts in any such action.
12. ASSIGNMENT. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective heirs, personal representatives,
successors, and assigns. However, Participant does not have the power or
right to assign this Agreement without the prior written consent of Anchor
Gaming.
13. ATTORNEYS' FEES. If any legal proceeding is brought to enforce or interpret
the terms of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition
to any other relief to which that party may be entitled.
14. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable for any reason, the validity and enforceability of all other
provisions of this Agreement will not be affected.
15. HEADINGS. The section headings used herein are for reference and
convenience only and do not affect the interpretation of this Agreement.
16. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEVADA, WITHOUT REGARD TO THE CHOICE
OF LAW RULES IN SUCH LAW OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
17. ENTIRE AGREEMENT. This Agreement, together with the 2000 Plan and any
procedure adopted by the Board or the Committee under the Plan, constitutes
the entire agreement between the parties with respect to its subject matter
and may be waived or modified only in writing.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, Participant
and a duly-authorized representative of Anchor Gaming have executed this
Agreement as of the date first above written.
<TABLE>
<S> <C> <C>
PARTICIPANT ANCHOR GAMING
By:
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Signature
Title:
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Printed Name
</TABLE>
CONSENT OF SPOUSE
As the spouse of Participant, I consent to be bound by this Stock Option
Agreement and agree that this consent will be binding on my interest under this
Agreement and on my heirs, legatees, and assigns.
<TABLE>
<S> <C>
--------------------------------------------
Signature
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Printed Name
</TABLE>
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RESTRICTED STOCK AGREEMENT
1. Shares of Restricted Stock granted:
2. Vesting Schedule:
Conditioned on stockholder approval of the 2000 Plan and closing of the
transactions contemplated by the Stock Purchase Agreement dated as of
September 24, 2000 between Anchor Gaming and the Fulton Parties named
therein, twenty percent (20%) of the shares of Restricted Stock granted
specified in Item 1 above will Vest on approval of the 2000 Plan by the
stockholders of Anchor Gaming. Thereafter, beginning on March 31, 2001, 5%
of the number of shares of Restricted Stock granted specified in Item 1
above will Vest, and 5% will vest on each subsequent June 30, September 30,
December 31 and March 31 until all Options have vested.
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