SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement") is made and entered into this
17th day of October, 2001, by and between Xxxxxx X. Xxxxxx ("Xxxxxx") and
Innovative Gaming Corporation of America, a Minnesota corporation ("IGCA").
BACKGROUND
X. Xxxxxx has resigned from his employment by IGCA.
B. The parties have determined to mutually agree regarding the terms and
conditions of Xxxxxx' separation from employment.
C. For purposes of this Agreement: (1) IGCA means Innovative Gaming
Corporation of America and any company related to it in the past or
present, and each of them; past or present officers, directors,
agents, and employees of IGCA; and any other person who acted on
behalf of IGCA or on instructions from IGCA; and (2) Xxxxxx xxxxx
Xxxxxx X. Xxxxxx, his heirs and assigns.
NOW, THEREFORE, in consideration of the foregoing, and the terms and
conditions set forth below, IGCA and Xxxxxx hereby agree as set forth below.
AGREEMENT
Section 1. Separation From Employment. Xxxxxx resigned from his employment
with IGCA effective October 17, 2001 (the "Effective Date"), and from and after
the Effective Date Xxxxxx' employment agreement with IGCA, dated February 16,
2001 (the "Employment Agreement"), and Xxxxxx' change in control agreement with
IGCA, dated June 15, 2001 (the "Change in Control Agreement"), shall be
terminated.
Section 2. Consideration Extended by IGCA. As consideration for this
Agreement, IGCA hereby agrees and acknowledges that it will be obligated under
this Agreement as set forth below.
(a) Severance Payment. IGCA shall xxxxxxx Xxxxxx with an amount equal
to Ninety Five Thousand and No Dollars ($95,000.00) (such amount to be
referred to as the "Severance Payment"). The Severance Payment shall be
payable in the ordinary course of payroll.
(b) Health Insurance. Xxxxxx may elect to continue his health and
dental benefits under COBRA, and in such event IGCA shall pay all COBRA
premiums for such continued health-insurance coverage, for a 6-month period
following the Effective Date. Thereafter, Xxxxxx shall be responsible for
the payment of any premiums.
(c) Life Insurance. For a period of one year, IGCA shall pay all
premiums on a one-year term life-insurance policy insuring Xxxxxx' life,
for the benefit of Xxxxxx or any other person designated by Xxxxxx as the
beneficiary of such policy, in the amount of One Million Dollars
($1,000,000). Xxxxxx shall be entitled to retain the cash value of the
current whole-life policy previously purchased by the IGCA.
(d) Vested Options. Xxxxxx shall be entitled to exercise options to
purchase 125,000 shares of IGCA common stock that have vested on the
Effective Date (the "Vested Options"). The Vested Options shall remain
exercisable for a twenty four-month period immediately following the
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Effective Date. All options to purchase shares of IGCA common stock that
are unvested on the Effective Date shall expire on the Effective Date.
(e) Expenses. IGCA agrees to forgive a maximum of $20,000 of personal
expenses of Xxxxxx charged to and paid by IGCA. To the extent personal
expenses exceed $20,000, such amount in excess of $20,000 shall be deducted
from the Severance Payment.
(f) Indemnification for Guarantees. IGCA hereby agrees to indemnify
Xxxxxx for the personal guarantees executed and delivered by Xxxxxx to
Crowne Bank and Systran Financial Services Corporation, as described on
Exhibit I. To the extent that IGCA can raise additional capital within the
next 60 days, IGCA agrees that it will, subject to IGCA's ability to pay
its obligations in the ordinary course, repay the Crowne Bank obligation in
full.
(g) No Bonus or Compensation for Accrued Vacation. Xxxxxx shall not be
entitled to any bonus under this Agreement nor any other agreement by and
between Xxxxxx and IGCA, nor shall Xxxxxx be entitled to any payments for
or in connection with accrued vacation time.
(h) Automobile. IGCA previously agreed to assume Xxxxxx' obligations
with respect to 2000 Dodge Van pursuant to a letter agreement dated
September 4, 2001. IGCA shall continue to honor that commitment.
Section 3. Consideration Extended by Xxxxxx. As consideration for this
Agreement, Xxxxxx hereby agrees and acknowledges that he will be obligated under
this Agreement as set forth below.
(a) Non-Solicitation. In consideration for the termination of the
non-solitication provisions of the Employment Agreement and Change in
Control Agreement, Xxxxxx hereby agrees that, except for those employees
listed on Schedule A attached hereto, he shall not solicit IGCA employees
for his own benefit or the benefit of any third party by: (i) directly or
indirectly interfering with the relationship between IGCA and any of its
employees; (ii) directly or indirectly soliciting the employment of any
IGCA employee; or (iii) inducing or attempting to induce any person who was
employed by IGCA during the six-month period immediately preceding the date
of this Agreement, to leave employment with IGCA.
(b) Non-Competition. In consideration for the termination of the
non-competition provisions of the Employment Agreement, Xxxxxx hereby
agrees that, except as otherwise provided in a European agreement by and
between IGCA and Xertain, Inc. subsequent to the date hereof, he shall not,
for a six month period following the Effective Date, compete with IGCA by:
(i) directly or indirectly providing services to a competitor of IGCA's
Business, in any capacity, including but not limited to as an employee,
independent contractor, director, or consultant; (ii) directly or
indirectly owning an interest in any commercial activity that competes with
IGCA's Business, within any state in the United States or within any
country in which IGCA directly markets or currently intends to market, or
services products or currently intends to provide services, including but
not limited to an interest as a shareholder, partner, joint venturer, or
"Affiliate" of any competing entity or business; or (iii) directly or
indirectly contacting or soliciting the business of any client, business
prospect, or prospective client of IGCA.
For purposes of this Agreement, the term "Affiliate" shall mean a role
in any capacity in which Xxxxxx (A) has direct or indirect control of, is
controlled by, or is under common control with another person or business,
(B) is an officer, director, partner, trustee, member, or manager, of a
business or other commercial activity described in clause (A) above.
For purposes of this Agreement, the term "Business" shall mean the
design, manufacture, and distribution of gaming machines.
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(c) Inventions. Xxxxxx hereby agrees that all "Inventions" (as
defined below) made by Xxxxxx during his employment with IGCA shall be
the sole and exclusive property of IGCA, and that he has or will, upon
IGCA's request, assign any and all rights to any such Inventions.
As used in this Agreement, the term "Inventions" shall mean any
discoveries, improvements or ideas (whether or not put in writing or
reduced to practice), or works of authorship (whether or not such
works can be patented or copyrighted) that Xxxxxx makes, authors, or
conceives (either alone or with another person or entity), and that
(i) are reasonably related to IGCA's Business, and (ii) Xxxxxx made,
authored, conceived, or otherwise developed during his employment with
IGCA.
Section 4. Confidentiality. In consideration for the termination of the
confidentiality provisions contained in the Employment Agreement and the Change
in Control Agreement, the terms of this Agreement will be treated as
confidential by Xxxxxx and IGCA and, except as provided in this Agreement, will
not be disclosed by Xxxxxx to anyone except that: (a) Xxxxxx may make such
disclosures to his attorney and accountant, and as required by law or regulation
or in connection with a legal or administrative action, proceeding, or
investigation; and (b) IGCA may make such disclosures to its executive officers
and directors, its accountants, and counsel, and as required by law or
regulation or in connection with any legal or administrative action, proceeding,
or investigation. Any disclosures permitted by this paragraph will be made on
the condition that the person to whom such disclosure is made will agree to in
turn keep the terms of this Agreement confidential.
Section 5. Mutual Return of Records, Documents, and Property. Xxxxxx has
returned or will return to IGCA all of IGCA's property, records, correspondence,
and documents in Xxxxxx' possession. IGCA has returned or will return all
personal effects and possessions of Xxxxxx in IGCA's possession, and will make
reasonable efforts to provide copies of Xxxxxx' personal data or documents in
IGCA's information systems as requested by Xxxxxx.
Section 6. Mutual Non-Disparagement. Xxxxxx and IGCA agree that they will
not issue any press releases or other statements disparaging each other other
than disclosures required by law.
Section 7. Cooperation. Xxxxxx agrees to cooperate with IGCA now and in the
future concerning aspects of IGCA's business, including but not limited to the
obligation to answer truthfully any reasonable questions presented to him by
IGCA and shall assist IGCA in the defense of any claim against IGCA.
Section 8. Non-Admission. Nothing in this Agreement is intended to be, nor
will it be deemed to be, an admission of liability by IGCA or Xxxxxx that they
have violated any state or federal statute, local ordinance, or principal of
common law, or that IGCA or Xxxxxx has engaged in any wrongdoing.
Section 9. Release of Claims. In consideration of the benefit of this
Agreement, Xxxxxx hereby fully and finally releases, waives, and otherwise
relinquishes any and all claims that he has or believes he may have against IGCA
through the date of this Agreement. Xxxxxx will not bring any lawsuits or make
any other demands against IGCA except as necessary to enforce this Agreement.
The benefits that Xxxxxx will receive under this Agreement constitute full and
fair consideration for the release of such claims. IGCA does not owe Xxxxxx
anything other than what is set forth in this Agreement. The benefit that Xxxxxx
will receive hereunder constitutes consideration in excess to anything to which
he is entitled.
The claims that Xxxxxx is releasing, waiving, and otherwise relinquishing
hereunder include all of the rights he has now to any relief of any kind from
IGCA, including but not limited to claims for breach of contract, breach of
fiduciary duty, fraud or misrepresentation, discrimination claims under the
Nevada Fair Employment Practices Act, discrimination claims under the Age
Discrimination in Employment Act ("ADEA"), discrimination claims under other
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federal, state, or local civil-rights laws, defamation, intentional or negligent
infliction of emotional distress, unlawful or wrongful termination of
employment, and any other claims for unlawful employment practices.
Section 10. Rights and Information Concerning Release. IGCA hereby advises
Xxxxxx to consult with an attorney prior to signing this Agreement, and Xxxxxx
hereby acknowledges that he has been so advised and given fair opportunity to
consult with counsel.
Xxxxxx understands that, pursuant to the Older Workers Benefits Protection
Act, he has the right to rescind his release of discrimination rights and claims
under the ADEA within 45 calendar days of the date upon which he signs this
Agreement. He understands that, if he desires to do so, he must put the
rescission in writing and deliver it to IGCA, in care of Xxxxx X. Xxxx, General
Counsel, 000 Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, by hand or mail
within 45 calendar days of the date of execution of this Agreement. If he
delivers a rescission relating to the release of IGCA for claims other than ADEA
claims, it must be: (1) postmarked within 15 calendar days of the day on which
he signs this Agreement; (2) addressed to General Counsel at the above address;
and (3) sent by certified mail, return receipt requested.
Xxxxxx understands that if he rescinds his waivers as more fully set forth
above, this Agreement is null and void.
Pursuant to the Older Workers Benefits Protection Act, IGCA has furnished
required information on Schedule B.
Section 11. Entire Agreement. This Agreement and any exhibits attached
hereto constitute the entire agreement between the parties with respect to the
termination of Xxxxxx' employment relationship with IGCA, and the parties agree
that there were no other inducements or representations leading to the
negotiation, drafting, and execution of this Agreement.
Section 12. Severability. If any one or more of the provisions of this Agreement
should be declared by a court of competent jurisdiction to be invalid, illegal,
or unenforceable in any respect, then the validity, legality, and enforceability
of the remaining provisions of this Agreement will not in any way be affected or
impaired.
Section 13. Amendment and Waiver. This Agreement may be modified or amended
only pursuant to a writing signed by both Xxxxxx and IGCA. No failure or delay
by either party to enforce any provision of this Agreement or exercise any
remedy provided hereunder or under the principles of common law or statute shall
constitute a waiver of any provision, right, or remedy of or under this
Agreement. No single or partial exercise of any rights or remedies under this
Agreement shall preclude a party from otherwise or further exercising any rights
or remedies, or any rights or remedies granted to the parties under other
agreements, law, or equity.
Section 14. Voluntary and Knowing Action. Xxxxxx and IGCA hereby
acknowledge that they have read and understand, and voluntarily enter into this
Agreement.
Section 15. Heirs and Successors. This Agreement shall inure to the benefit
of and bind the parties, their heirs, successors, representatives, and assigns.
Section 16. Governing Law. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Nevada without regard to
such state's conflicts-of-law principles.
Section 17. Captions. Headings in this Agreement are provided solely for
convenience and shall not affect the interpretation of this Agreement.
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Section 18. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
Section 19. Notices. Any notice, request, demand, or communication
permitted, required, or otherwise given relating to this Agreement either by
IGCA to Xxxxxx or by Xxxxxx to IGCA shall be in writing and, unless otherwise
required under the terms of a separate agreement or law or regulation, shall be
deemed to have been given to the other when the delivering party deposits such
notice or communication in the U.S. Postal Service mail, postage prepaid,
certified mail, return receipt requested, properly addressed to the party to
whom it is directed, as provided below. Either party may, by notice sent in like
manner, designate a different address for notices and communications.
If Sent to IGCA: Innovative Gaming Corporation of America
c/o General Counsel
000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
If Sent to Xxxxxx: Xxxxxx X. Xxxxxx
0000 Xx Xxxx
Xxxxxxxxx, XX 00000-0000
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed on
the day and year first above written.
INNOVATIVE GAMING CORPORATION OF AMERICA
a Minnesota corporation
By: /s/
-----------------------------------
Name: Xxx Xxxxx
-----------------------------------
Title: Chairman & CEO
-----------------------------------
/s/
-----------------------------------
Xxxxxx X. Xxxxxx
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SCHEDULE A
Employees Exempted from Non-Solicitation under Section 3(a)
NONE
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SCHEDULE B
The following information is provided in connection with Section 10 of the
Agreement and the Older Workers Benefits Protection Act.
A. Information Regarding Persons Released:
Title Age
----- ---
Chief Executive Officer 50
B. Information Regarding Persons Retained: none.
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EXHIBIT II
Indemnified Personal Guarantees
Attached as Exhibit I are those personal guarantees executed and delivered
by Xxxxxx to Crowne Bank and Systran Financial Services Corporation for which
IGCA has agreeed, pursuant to Section 2(e) of the Agreement, to indemnify
Xxxxxx.
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