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Separation And Consulting Agreement

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Sectors: Leisure and Entertainment
Governing Law: Nevada, View Nevada State Laws
Effective Date: June 30, 2004
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SEPARATION AND CONSULTING AGREEMENT



This Separation and Consulting Agreement (the "Agreement") is entered into as of June 30, 2004 by and between Alliance Gaming Corporation, a Nevada Corporation (the "Company") and Robert L. Miodunski (the "Executive").



WHEREAS , the Executive is a member of the Company92s Board of Directors and employed by the Company as its President and Chief Executive Officer pursuant to the terms of an Executive Employment Agreement, dated and effective as of April 24, 2001 (the "Employment Agreement");



WHEREAS , the Company and the Executive have agreed that the Executive will resign from his position as a member of the Company92s Board of Directors and as President and Chief Executive Officer of the Company effective as of October 1, 2004, or such other date as provided herein;



WHEREAS , the Company and the Executive wish to fully settle all matters between them arising out of the Employment Agreement, Executive92s employment, and his resignation from his position as a member of the Board of Directors and President and Chief Executive Officer of the Company;



WHEREAS , this Agreement shall supercede and replace the Employment Agreement in its entirety; and



WHEREAS , as a result of the experience and personalized knowledge gained by the Executive during his employment by the Company, the Company desires to retain the services of the Executive as an independent consultant following his resignation.



NOW THEREFORE , in consideration of the mutual promises contained herein, the parties hereto, intending to be legally bound, agree as follows:



1. Agreement to Resign; Salary; Bonuses and Benefits .





1.1 The Executive hereby resigns, effective October 1, 2004, or such other date as provided below (the "Resignation Date"), from his position as the Company92s President and Chief Executive Officer, as a member of the Company92s Board of Directors and any other positions that he may hold in the Company or any of its subsidiaries, except as otherwise specifically provided for herein. Notwithstanding the foregoing, the Company may, in its sole discretion, modify the Resignation Date to any date from the date hereof until December 31, 2004. Until the Resignation Date, the Executive will continue to serve as a member of the Company92s Board of Directors and devote his full time and best efforts to performing his duties as the Company92s President and Chief Executive Officer. Notwithstanding the Resignation Date, the Executive will continue to be an employee of the Company, subject to the terms of this Agreement until December 31, 2004, at which time he will cease to be an employee of the Company.








1.2 At such time as a new Chief Executive Officer has been selected by the Company, Executive will cooperate and work with the new Chief Executive Officer to provide a smooth transition (the "Transition Plan").



1.3 Until December 31, 2004, the Company will continue to pay the Executive his regular base salary of $500,000 per year in installments on the regularly recurring paydays in accordance with the Company92s practice. Executive shall be entitled to an annual cash bonus based upon performance of the Company through the fiscal year ending June 30, 2005 pursuant to the Bonus Matrix attached as Exhibit A hereto for fiscal 2004 and a substantially similar Bonus Matrix for fiscal 2005 payable in August 2004 with respect to fiscal 2004, and payable in August 2005 with respect to fiscal 2005, in such manner as the Company normally pays such bonuses (less required withholding for 2004 and not subject to withholding for 2005). The Bonus Matrix for 2005 shall be a matrix substantially similar to Exhibit A with the "Budget/Guidance" EPS target to be the Board of Directors approved EPS budget figure for Fiscal 2005 expanded and contracted by 20% in the same number of increments as in Exhibit A . The "% of Target EPS" and "% of Base Salary" columns in Exhibit A will be the same for the Bonus Matrix for Fiscal 2005, and the Base Salary to be used in the calculation shall be $500,000.



1.4 Until December 31, 2004, the Executive may continue to utilize any vacation time he has accrued under the Company92s vacation policy. As soon as practicable following December 31, 2004, the Company shall pay the Executive in a single lump sum payment, less applicable withholding, for any accrued, but unused vacation time in accordance with the terms of the Company92s vacation policy. The Executive shall also be entitled to reasonable periods of sick leave with compensation and all paid holidays given by the Company to its senior executive officers.



1.5 Until December 31, 2004, the Executive may continue to participate in the Company92s various retirement, life insurance, medical and hospitalization, disability, welfare and fringe benefit plans, programs, policies and arrangements ("Executive Benefit Plans") for which the Executive is otherwise eligible, pursuant to the terms of such plans. Following December 31, 2004, the Executive generally will cease to participate in the Executive Benefit Plans, except to the extent provided in the Executive Benefit Plan, herein, or by applicable law. Nothing in this Agreement or the Consulting Agreement (as defined in Section 6.1) shall be interpreted to expand any right the Executive may have under the Executive Benefit Plans unless otherwise expressly provided herein.



1.6 Following December 31, 2004, the Executive will be eligible for continued medical and dental coverage for himself and his dependants in accordance with the terms of the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA" ). The Executive shall be required to pay one-hundred percent (100%) of the COBRA premiums for such coverage.



1.7 As recognition of the contributions of Executive in the successful divestiture of United Coin Machine Co., a Nevada corporation and an indirect wholly owned subsidiary of the Company, Executive shall receive a special bonus of $1,000,000



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upon the consummation of the transaction (the "United Coin Bonus"). The United Coin Bonus shall be payable as follows: (a) $500,000 within 30 days of the consummation of the transaction and (b) $500,000 payable in twenty four (24) equal monthly installments of $20,833.33 on the first business day of each month commencing on January 1, 2005.



2. Stock Options . The Company agrees that any issued and outstanding stock options granted to the Executive under the Company92s Stock Option Plans (the "Options") shall continue to vest and be exercisable as if the Executive were still actively employed by the Company. In addition, the Company agrees that upon any "Change of Control" (as defined below) of the Company, all of the Options shall immediately vest and become exercisable. "Change of Control" shall be deemed to have occurred upon (i) the consummation of a tender for or purchase of fifty percent (50%) or more of the Company92s Common Stock by a third party, (ii) a merger, consolidation or recapitalization of the Company such that the stockholders of the Company immediately prior to the consummation of such transaction possess less than fifty percent (50%) of the voting securities of the surviving entity immediately after the transaction (determined on a fully-diluted basis assuming the conversion of all convertible securities of such person), or (iii) the sale, lease or other disposition of all or substantially all of the assets of the Company, in any of cases (i), (ii) or (iii) in a single transaction or series of transactions. Exhibit B details the outstanding options held by Executive at June 30, 2004.



3. Perquisites . The Company agrees to provide to Executive such computer network access as is required by the Executive to fulfill his obligations under this Agreement through the Term (as defined in Section 7.7 below); provided that, the Company expressly reserves the right to remove or block any and all secret, confidential, proprietary or other sensitive information, software, program, or application relating to the Company that the Company determines, in its sole and absolute discretion, is necessary or advisable. The Company shall continue to pay for Executive92s cell phone usage related to the Consulting Agreement throughout the Term.



4. No Other Severance . Except as provided in this Agreement, the Executive shall not be entitled to receive any other payment, benefit or other form of compensation as a result of his employment or his resignation therefrom. Specifically, the Executive shall not be eligible for severance benefits under any plan, program or arrangement sponsored or funded by the Company, and he hereby waives any right to any such benefits.



5. Return of Company Property . Subject to Section 3 above, no later than December 31, 2004, the Executive agrees to return any Company property in the Executive92s possession or control, including all equipment, the original and all copies of books, notebooks, documents, reports, files, memoranda, records, computer software and programs, correspondence, mailing lists, client or contact lists, calendars, card files, rolodexes, cardkey passes, door, file and computer keys, computer access codes or disks, company charge cards, instructional employee manuals, and other Company property which the Executive received or had control over during his employment with the Company, except to the extent the Company and the Executive mutually agree such item or items may be required by the Executive in connection with the performance of services under the Consulting Agreement.



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6. Consulting Agreement .





6.1 Agreement for Services . For four years from January 1, 2005 until December 31, 2008 (each such year shall be referred to hereinafter as a "Consulting Year"), the Executive agrees to make himself available at the Company92s reasonable request (made by either members of the Board of Directors or the Chief Executive Officer) to provide services that the Company may reasonably request in accordance with the terms set forth below (the "Consulting Agreement"). Such services may include, but not be limited to, implementing the Transition Plan, attending and participating in meetings with the executive officers of the Company, and attending and participating in meetings of the Board of Directors of the Company and any committees thereof (including any meetings of the Office of the Chairman). Such services shall be performed principally in Las Vegas, Nevada, but also at such locations as the Company may reasonably request, and the Executive agrees to use his best skill, efforts and judgment in performing such services. The Company and the Executive agree and understand that the services performed by the Executive under the Consulting Agreement will not require the Executive to engage in full-time efforts or work, but instead shall be periodic and limited in nature and that the Executive shall be entitled to accept other employment and pursue other activities and interests, so long as such employment, activities and interests do not otherwise breach the Executives covenants and obligations under Section 8 of this Agreement. The Company shall not terminate the Agreement, or any part of it, for any failure or inability by the Company to utilize or request the services of the Executive under the Consulting Agreement. The Company agrees to pay the Executive an "Annual Consulting Fee" as set forth below. The Annual Consulting Fee shall be payable in twelve (12) equal monthly installments, in arrears. The Company agrees to reimburse the Executive for all reasonable travel and other reasonable and necessary out-of-pocket business related expenses incurred by the Executive at the request of the Company in connection with the performance of services under the Consulting Agreement; provided that the Executive shall be required to submit reasonable documentation of such expenses to the Company prior to receiving reimbursement. The Annual Consulting Fee for each of the Consulting Years following the Executive92s Resignation Date shall be as follows:





Consulting Year Annual Consulting Fee
2005 $ 250,000
2006 $ 250,000
2007 $ 250,000
2008 $ 250,000




6.2 Independent Contractor. The Executive shall perform the services requested by the Company under the Consulting Agreement as an independent contractor and shall not be deemed an employee of the Company. Accordingly, the Company will not withhold federal or state income, social security, or other taxes from the consulting fee paid under the terms of the Consulting Agreement, unless otherwise required by law.



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7. Termination .



7.1 Disability. If the Executive, becomes disabled or incapacitated for six or more consecutive months or for noncontinuous periods aggregating to twenty-six weeks in any twelve-month period, the Company may terminate this Agreement on thirty days92 notice, whereupon the obligations of the Company and the rights of the Executive under this Agreement shall terminate, except that:



(a) The Company shall pay the Executive92s salary or Annual Consulting Fee, as applicable, on a pro-rata basis through the date of termination, offset by any benefits payable to the Executive under any disability insurance policy paid for by the Company; and



(b) One-half of any unvested Options shall vest and become exercisable by the Executive for two years after the date of termination.



7.2 Death . In the event of the Executive92s death, this Agreement shall terminate as of the date of his death, in which case the obligations of the Company and the rights of the Executive under this Agreement shall terminate except that:



(a) The Company shall continue to pay the Executive92s salary or Annual Consulting Fee, as applicable, for six months after the date of death, offset by any benefits payable to the Executive or the Executive92s estate under any life insurance policy paid for by the Company; and
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