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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
PARTIES:
Innovative Gaming Corporation of America, Inc.
0000 Xxxxx Xxxxxx
Xxxx, Xxxxxx 00000 (the "Company")
Xxxxxx X. Xxxxxxxxx
0 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000 (the "Executive")
DATE: January 1, 1999
RECITALS:
A. The parties hereto entered into an employment agreement dated as of
February 15, 1996 (the "First Employment Agreement") to provide for the
employment of the Executive as President and Chief Executive Officer of
the Company.
B. Subsequent to the date of execution of the First Employment Agreement,
Executive became Chairman of the Board of the Company and relinquished
the position of President of the Company.
C. The First Employment Agreement terminates February 15, 1999.
D. The parties wish to terminate the First Employment Agreement as of the
date hereof and provide for the continued employment of the Executive as
the Chairman of the Board and Chief Executive Officer of the Company
following the termination of the First Employment Agreement pursuant to
the terms and conditions of this Agreement.
E. The Executive wishes to receive compensation from the Company for the
Executive's continued services, and the Company wants reasonable
protection of its confidential business and technical information that
has been acquired and is being developed by the Company at substantial
expense.
F. The Company wishes to obtain reasonable protection against unfair
competition from the Executive following termination of employment and
to further protect against unfair use of its confidential business and
technical information and the Executive is willing to grant the Company
the benefits of a covenant-not-to-compete for these purposes.
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AGREEMENT:
The Company and the Executive, each intending to be legally bound, agree as
follows:
1. Termination of First Employment Agreement. The First Employment
Agreement is hereby terminated. All terms and conditions relating to Executive's
employment with the Company are contained in this Agreement.
2. Employment. Subject to all of the terms and conditions of this
Agreement, the Company agrees to continue to employ the Executive as the
Chairman of the Board and the Chief Executive Officer of the Company, and the
Executive accepts such employment.
3. Duties. The Executive will devote substantially all of his business
hours to and, during such time, make the best use of his energy, knowledge and
training in advancing the Company's interests. The Executive will diligently and
conscientiously perform the duties of the Executive's position within the
general guidelines to be determined by the Company's Board of Directors (the
"Board of Directors"). While the Executive is employed by the Company, Executive
will keep the Company informed of any other business activities, and will
promptly stop any activity or employment that might conflict with the Company's
interests or adversely affect the performance of the Executive's duties for the
Company.
4. Term. This Agreement will remain in effect for three (3) years after
the date of this Agreement, unless it is terminated in accordance with Section 5
hereof.
5. Termination. Subject to the respective continuing obligations of the
Company and the Executive under Sections 7, 8 and 9 hereof:
a. The Company may terminate this Agreement immediately upon
written notice to the Executive "for cause," which is defined as: (i)
dishonesty, fraud, material and deliberate injury or attempted injury,
in each case related to the Company or its business, (ii) any criminal
activity of a serious nature, or (iii) the continued failure by
Executive to satisfactorily perform the duties assigned to him pursuant
to Section 3 of this Agreement for a period of 60 days after a written
demand by the Board of Directors for such satisfactory performance which
specifically identifies the manner in which it is alleged that Executive
has not satisfactorily performed such duties. In the event of
termination of this Agreement for cause pursuant to this Section 5(a),
Executive will be paid at the usual rate Executive's annual Base Salary
through the date of
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termination specified in any notice of termination and Executive will
have no right to receive any bonus for the period after which the
termination occurs or any future periods, provided that such payments
will be made within 30 days after termination for cause pursuant to this
Section 5(a). Any termination by the Company other than for a reason
enumerated in this Section 5(a) shall be deemed to be a termination
"without cause." The Executive shall also be deemed to be terminated
"without cause" in the event: (i) the Executive is required to relocate
from the Reno, Nevada metropolitan area or (ii) the Executive is removed
from the office of Chief Executive Officer or (iii) the Executive has
had his authority and position diminished from that provided in Section
2; provided, however, that it shall not be deemed to be a diminishment
of authority and position if the Company's Board of Directors appoints a
Co-Chairman and Co-Chief Executive Officer.
b. This Agreement will terminate upon the Executive's death or
permanent disability.
6. Compensation.
1. Base Salary. In consideration for the Executive's services
under this Agreement, the Company agrees to pay the Executive an initial
base salary at a rate of Two Hundred Fifty Thousand Dollars
($250,000.00) per year (the "Base Salary"). Such Base Salary shall be
paid no less often than monthly in accordance with the standard payroll
practices of the Company. Such Base Salary may be adjusted from time to
time by the Board of Directors but may not be decreased during the term
of this Agreement.
2. Bonus. In addition to other compensation to be paid under
this Section 6, the Company will pay Executive an annual bonus or a
merit increase of up to 25% of the current year's Base Salary for each
year in which he performs services under this Agreement, the exact
amount to be determined by the Board of Directors based upon Executive's
and the Company's attainment during the preceding year of specified
annual objectives established by the Board of Directors in consultation
with the Executive. In addition to such bonus, the Company will pay
Executive an additional annual bonus of up to 25% of the current year's
Base Salary for each year in which he performs services under this
Agreement, the exact amount to be determined pursuant to a profit
formula to be determined by the Compensation Committee of the Company's
Board of Directors.
3. Reimbursement of Business Expenses. In addition to payment of
Base Salary, the Company agrees to reimburse the Executive for all
reasonable out-of-pocket business
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expenses incurred by the Executive on behalf of the Company, provided
that the Executive properly accounts to the Company for all such
expenses in accordance with the rules and regulations of the Internal
Revenue Service under the Internal Revenue Code of 1986, as amended, and
in accordance with the standard policies of the Company relating to
reimbursement of business expenses.
4. Benefits and Vacation. The Executive will be entitled to
participate in all benefit plans adopted by the Company to the extent
that the terms of such benefit plans permit the Executive to
participate. The Executive will be entitled to an annual paid vacation
of three weeks and all legal holidays observed by the Company, in each
case, in accordance with the Company's policies as in effect from time
to time.
5. Termination Without Cause. If the Company terminates this
Agreement without cause, (i) all options granted to Executive to
purchase Common Stock of the Company shall vest and remain exercisable
for thirty-six months following such termination without cause; and (ii)
the Company shall pay or grant to Executive: (1) the greater of (a) the
Base Salary (or such greater amount as it may be at the time of such
termination) for a twelve (12) month period after the date of such
termination or (b) base salary for the balance of the remaining
Agreement term; (2) any accrued bonus to be paid pursuant to Section
6(b) of this Agreement for the period through the date of termination;
(3) the unreimbursed out-of-pocket business expenses incurred by the
Executive on behalf of the Company of this Agreement; and (4) a
continuation of health, life and disability insurance benefits for a
twelve (12) month period after the date of termination on the same basis
as Executive's health, life and disability insurance benefits
immediately prior to such termination.
7. Inventions.
1. "Inventions," as used in this Section 7, means any
discoveries, improvements and ideas (whether or not they are in writing
or reduced to practice) or works of authorship (whether or not they can
be patented or copyrighted) that the Executive makes, authors, or
conceives (either alone or with others) and that:
(1) concern directly the Company's business or the
Company's present or demonstrably anticipated future research or
development;
(2) result from any work the Executive performs for the
Company;
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(3) use the Company's equipment, supplies, facilities,
or trade secret information; or
(4) the Executive develops during the time the Executive
is performing employment duties for the Company.
2. The Executive agrees that all Inventions made by the Executive during
or within six (6) months after the term of this Agreement will be the Company's
sole and exclusive property. The Executive will, with respect to any Invention:
(1) keep current, accurate, and complete records, which
will belong to the Company and be kept and stored on the
Company's premises while the Executive is employed by the
Company;
(2) promptly and fully disclose the existence and
describe the nature of the Invention to the Company in writing
(and without request);
(3) assign (and the Executive does hereby assign) to the
Company all of his rights to the Invention, any applications he
makes for patents or copyrights in any country, and any patents
or copyrights granted to him in any country; and
(4) acknowledge and deliver promptly to the Company any
written instruments, and perform any other acts necessary in the
Company's opinion to preserve property rights in the Invention
against forfeiture, abandonment or loss and to obtain and
maintain letters patent and/or copyrights to the Invention and
to vest the entire right and title to the Invention in the
Company.
The requirements of this subsection 7(b) do not apply to an Invention
for which no equipment, supplies, facility or trade secret information
of the Company was used and which was developed entirely on the
Executive's own time, and (1) which does not relate directly to the
Company's business or to the Company's actual or demonstrably
anticipated research or development, or (2) which does not result from
any work the Executive performed for the Company. Except as previously
disclosed to the Company in writing, the Executive does not have, and
will not assert, any claims to or rights under any Inventions as having
been made, conceived, authored or acquired by the Executive prior to his
employment by the Company. With respect to any obligations performed by
the Executive under this subsection
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7(b) following termination of employment, the Company will pay the
Executive reasonable hourly compensation (consistent with the last Base
salary) and will pay or reimburse all reasonable out-of-pocket expenses.
8. Confidential Information.
1. "Confidential Information," as used in this Section 8, means
information that is not generally known and that is proprietary to the Company
or that the Company is obligated to treat as proprietary. Any information that
the Executive reasonably considers Confidential Information, or that the Company
treats as Confidential Information, will be presumed to be Confidential
Information (whether the Executive or others originated it and regardless of how
the Executive obtained it).
2. Except as specifically permitted by an authorized officer of the
Company or by written Company policies, the Executive will never, either during
or after his employment by the Company, use Confidential Information for any
purpose other than the business of the Company or disclose it to any person who
is not also an Executive of the Company. When the Executive's employment with
the Company ends, the Executive will promptly deliver to the Company all records
and any compositions, articles, devices, apparatus and other items that
disclose, describe or embody Confidential Information, including all copies,
reproductions and specimens of the Confidential Information in the Executive's
possession, regardless of who prepared them and will promptly deliver any other
property of the Company in the Executive's possession, whether or not
Confidential Information.
9. Competitive Activities. The Executive agrees that, during the term of
employment with the Company and the period during which severance is paid, if
any, under this Agreement following termination of employment (if this Agreement
is terminated by the Company "without cause," then the Executive will not alone,
or in any capacity with another firm,
1. directly engage in any commercial activity that competes with
the Company's business, as the Company has conducted it during the two
(2) years before the Executive's employment with the Company ends,
within any state in the United States or within any country in which the
Company directly markets or services products or provides services,
2. in any way interfere or attempt to interfere with the
Company's relationships with any of its current or potential customers,
or
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3. employ or attempt to employ any of the Company's then
Executives on behalf of any other entity competing with the Company.
This Section 9 shall cease to be applicable to any activity of the Executive
from and after such time as the Company (i) shall have ceased all business
activities for a period of sixty (60) days or (ii) shall have made a decision
through its Board of Directors not to continue, or shall have ceased for a
period of sixty (60) days, the business activities with which such activity of
the Executive would be competitive.
10. Conflicts of Interest. The Executive agrees that he will not,
directly or indirectly, transact business with the Company personally, or as
agent, owner, partner or shareholder of any other entity; provided, however,
that any such transaction may be entered into if approved by the Board of
Directors.
11. No Adequate Remedy. The Executive understands that if the Executive
fails to fulfill the Executive's obligations under this Agreement, the damages
to the Company would be very difficult to determine. Therefore, in addition to
any other rights or remedies available to the Company at law, in equity, or by
statute, the Executive hereby consents to the specific enforcement of this
Agreement by the Company through an injunction or restraining order issued by an
appropriate court.
12. Miscellaneous.
1. Successors and Assigns. This Agreement is binding on and
inures to the benefit of the Company's successors and assigns, all of
which are included in the term the "Company" as it is used in this
Agreement; provided, however, that the Company may assign this Agreement
only in connection with a merger, consolidation, assignment, sale or
other disposition of substantially all of its assets or business.
2. Modification. This Agreement may be modified or amended only
by a written statement signed by both the Company and the Executive.
3. Governing law. The laws of Nevada will govern the validity,
construction, and performance of this Agreement. Any legal proceeding
related to this Agreement will be brought in an appropriate Nevada
court, and both the Company and the Executive hereby consent to the
exclusive jurisdiction of that court for this purpose.
4. Construction. Wherever possible, each provision of this
Agreement will be interpreted so that it is valid under the applicable
law. If any provision of this Agreement is to any extent invalid under
the applicable law,
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that provision will still be effective to the extent it remains valid.
The remainder of this Agreement also will continue to be valid, and the
entire Agreement will continue to be valid in other jurisdictions.
5. Waivers. No failure or delay by either the Company or the
Executive in exercising any right or remedy under this Agreement will
waive any provision of the Agreement. Nor will any single or partial
exercise by either the Company or the Executive of any right or remedy
under this Agreement preclude either of them from otherwise or further
exercising these rights or remedies, or any other rights or remedies
granted by any law or any related document.
6. Captions. The headings in this Agreement are for convenience
only and do not affect this Agreement's interpretation.
7. Entire Agreement. This Agreement supersedes all previous and
contemporaneous oral negotiations, commitments, writings and
understandings between the parties concerning the matters in this
Agreement, including without limitation the First Employment Agreement
and any policy or personnel manuals of the Company.
8. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be hand
delivered or sent by registered or certified first-class mail, postage
prepaid, and shall be effective upon delivery if hand delivered, or
three (3) days after mailing if mailed to the addresses stated at the
beginning of this Agreement. These addresses may be changed at any time
by like notice. IN WITNESS WHEREOF, the Company and the Executive have
executed this Agreement as of the date first above written.
INNOVATIVE GAMING CORPORATION EXECUTIVE
OF AMERICA
By/s/ Xxxx Xxxxxx
----------------------------------- /s/ Xxxxxx X. Xxxxxxxxx
Its Director -------------------------------
Xxxxxx X. Xxxxxxxxx
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