EXHIBIT 10.6
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November 17th, 2000
CASINO DATA SYSTEMS
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into
effective the 17th day of November, 2000 (the "Effective Date"), by and between
Casino Data Systems, a Nevada corporation ("CDS") and Xxxxxx Xxxxx ("Employee").
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CDS and Employee hereby agree as follows:
1. EMPLOYMENT: SERVICES.
1.1 CDS hereby hires and employs Employee and Employee
hereby accepts such hiring and employment for the position set forth on Exhibit
A (the "Position") and for the purpose of performing those services (the
"Services") which are usual and customary for the Position. Employee shall use
diligent efforts and shall devote such time and energies as may be reasonably
required to perform the Services to the best of Employee's ability. Employee's
Services also include all tasks and obligations of a general nature necessary
for the operation and maintenance of Company. The precise services of the
Employee may be extended or curtailed, from time to time, at the direction of
Company. The Employee shall assume and perform such further reasonable
responsibilities and duties as may be assigned to him from time to time by
Company.
1.2 Employee shall not engage in, have a relationship
with or become interested in nor have an equity or profit participation in any
business, calling, or enterprise which is in Direct Competition with the Company
(other than a passive investment not to exceed 5% of the total equity of any
entity) while Employee is employed by Company. The Company is engaged in the
following endeavors:
1) Production of accounting, tracking and reporting software for Casino
Floor Operations;
2) Production of Gaming Devices for Casinos;
3) Operation of Gaming Devices;
4) Production of signs and displays for Casinos; and
5) Development of tools and libraries for professional programmers
which tools and libraries are intended for sale to end users.
For purposes of this Agreement, a business, calling or enterprise which is in
Direct Competition with the Company is one which is engaged in the endeavors
listed above in the Jurisdictions in which the Company is licensed, provided
that the Company is still actively conducting business in these areas. Employee
shall not engage in any endeavor that prevents Employee from fulfilling
Employee's obligations to the Company.
1.3 Employee shall report only to the person identified
in Exhibit A as the "Supervisor". Employee's Supervisor shall at all times
during the term of this Agreement have final and complete authority over
Employee with respect to all decisions related to the Services and the direction
and control of Employee. In all cases set forth in this Agreement requiring
Board action, the Board shall act by majority vote.
2. Term.
2.1 The term of this Agreement shall commence on the
Effective Date (the "Effective Date") and shall expire on November 17th, 2003,
unless terminated earlier pursuant to one or more of the following provisions:
2.1.1 CDS shall have the right to terminate this
Agreement and the Services by delivery of written notice to Employee, provided
that a majority of the Board has voted to terminate this Agreement. In such
case, this Agreement shall terminate thirty (30) days following the date of
delivery of such notice.
2.1.2 Employee shall have the right to terminate
this Agreement and the Services by delivery of written notice to CDS at any
time. In such case, this Agreement shall terminate thirty (30) days following
the date of delivery of such notice.
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November 17th, 2000
2.1.3 This Agreement shall terminate upon
Employee's death.
2.2 In the event that any of the following events occurs:
2.2.1 This Agreement is terminated by CDS without
"Good Cause" (defined below), or
2.2.2 Employee resigns for "Good Reason" (defined
below) prior to the expiration of this Agreement's term, then, in addition to
all salary, prorated bonus, and benefits due to the effective date of
termination, CDS shall also pay to Employee severance compensation as follows:
Employee will be paid in the amount of $175,000.00, plus increases as
determined in prior compensation reviews, plus a bonus equal to the
previous year's bonus. In addition, during the period of severance
payments the Employee shall continue to receive all of the Company's
employee benefits, if eligible, and if not eligible for health
benefits, the Company shall pay the COBRA premiums for continuation
coverage during the period of severance payments.
2.3 If this Agreement is terminated by CDS prior to the
end of its term for Good Cause or if Employee resigns for other than Good
Reason, then CDS shall pay Employee's Salary, and benefits only through the
effective date of termination of employment.
2.4 As used herein, "Good Cause" shall mean any of the
following:
2.4.1 Employee persists in taking actions
reasonably considered to be in material breach of this Agreement by CDS; or
2.4.2 Employee is guilty of any grave misconduct
or willful material neglect in any discharge of any of Employee's material
duties hereunder to the detriment of CDS as determined by a majority of the
Board of Directors in the reasonable exercise of their discretion; or
2.4.3 Employee is convicted of any serious
criminal offense which, in the reasonable opinion of the Board, affects
Employee's position as an employee of CDS; or
2.4.4 Employee has engaged in any conduct or has
engaged in relationships with other persons that would, in the reasonable
opinion of the Board, jeopardize any existing or future gaming licenses held or
sought by CDS.
2.5 As used herein, "Good Reason" shall mean one of the
following shall occur, and employee acts to terminate for Good Reason within
eighteen months of such occurrence:
2.5.2 Employee has been demoted; or
2.5.3 Employee has incurred a substantial
reduction in Employee's authority or responsibility (as that authority and/or
responsibility is defined in Exhibit 'A'); or
2.5.4 There has been a material change in
Employee's working hours or working days to non-normal working hours or
non-normal working days; or
2.5.5 Employee has incurred material reduction in
Employee's remuneration either as base pay or benefits.
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3. COMPENSATION.
3.1 From and after the Effective Date, CDS shall pay to
Employee an annual gross base salary (the "Base
Salary") equal to the amount set forth on Exhibit A
hereof which Base Salary shall be payable in
twenty-six equal installments. Such installments
shall be paid in arrears every two (2) weeks.
3.2 Should the Corporation reach its goal as reasonably
determined by the Board of Directors, then Employee shall receive an
annualized bonus (the "Bonus") of the amount specified on Exhibit A hereof,
payable at the end of January of each year. For any year in which employee
terminates his employment at less than a full year for Good Cause, then the
bonus shall be pro-rated at termination such that employee receives a bonus
equally to the number of whole or partial months employee is employed during any
partial year multiplied by one-twelfth of the bonus employee would have received
as determined by the most recent Financial Operations Review derived Projected
financial performance for the Company for the year, or if the practice of
Financial Operation Reviews is discontinued, its equivalent as agreed to by
Employee and the Corporation.
3.4 CDS shall withhold all relevant income taxes,
unemployment insurance, Social Security contributions, worker's compensation
insurance, and other customary amounts from Employee's Base Salary and Bonus, if
any, prior to distribution of the net proceeds therefrom to Employee.
3.5 Employee shall be eligible for any other benefits as
may be provided by CDS from time to time for its executive employees, pursuant
to CDS' policies and eligibility requirements with respect thereto. Such
benefits may be amended, changed, or terminated from time to time by the Board,
in its sole discretion, provided that CDS takes such action with respect to all
employees similarly situated as Employee and does not discriminate against
Employee in any such action.
3.6 CDS shall have the right to purchase "key man"
insurance covering Employee at any time. Any such policy and the proceeds
therefrom shall at all times remain the property of CDS, which shall at all
times be designated beneficiary thereunder and neither Employee nor Employee's
estate, heirs, or beneficiaries shall have any right, title or interest therein
or thereto.
3.7 All stock options of CDS held by Employee, whether
granted before or following the date of this
Agreement, shall, notwithstanding any other
conditions described in the agreements covering such
stock options, vest in their entirety upon a Change
of Control (as defined in Section 2.5.1 herein)
occurring during the term of this Agreement.
3.8 Employee shall be reimbursed for Employee's
authorized out-of-pocket expenses incurred on behalf
of Company. Employee shall maintain records in such
detail as Company may require in order to comply with
the substantiation requirements of the U.S. Internal
Revenue Code. Materials or items that have been
purchased by Employee and reimbursed by Company (or
which are related to items which have been reimbursed
by Company) shall be the property of Company.
Examples of such items or materials include but are
not limited to books, magazines, software, hardware,
documentation, furniture, computers, equipment,
clothing, and name badges.
3.9 Company shall pay the costs of any professional dues
or fees incurred by Employee. Company shall pay the
costs and expenses of Employee's continuing
education, including tuition, fees, travel and per
diem.
4. NON-COMPETITION.
4.1.1 This non-competition provision shall remain
in effect until:
4.1.2 Employee dies; or
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November 17th, 2000
4.1.3 Employee's employment with CDS is terminated
without Good Cause or is terminated by Employee for Good Reason; or
4.1.4 One year after the date of the termination
of Employee's employment by CDS for Good Cause or the termination of Employee's
employment by Employee without Good Reason; or
4.1.5 One year after the termination of Employee's
employment with CDS by reason of the expiration of this Agreement and Employee's
refusal at CDS's request to renew this Agreement for other than Good Reason.
The term of this non-competition provision shall expire as specified in the
applicable subsection above upon the happening of the first of any of the above
events to occur.
4.2 During the term of this non-competition provision,
Employee shall not, either directly or indirectly,
for or on behalf of Employee or for or in conjunction
with any other person, company, or other entity,
whether as an employee, independent contractor,
consultant, shareholder, owner, or otherwise, engage
in any business, calling, or enterprise which is in
Direct Competition with the Company (as that term is
defined above) in any jurisdiction in which Company
does business. Without limiting the generality of the
foregoing, during the term of this
non-competition provision, Employee shall not call
upon any customer or potential customer of CDS or any
related entity of CDS, perform any of the Services or
other activities which Employee performed while in
the employ of CDS for a competitor of CDS or its
related entities, solicit orders for any products or
services similar to those products or services of
CDS, divert or take away any customer or business
opportunity of CDS or any related entity of CDS,
entice or hire away any employee from CDS or any
related entity of CDS, or otherwise compete with CDS
in any manner during the term of this Agreement.
4.3 Furthermore, during the term of this Agreement and
for a period of one year after termination of or
separation from employment Employee shall not
disrupt, damage, impair or interfere with the
business or operations of Company.
5. CONFIDENTIALITY; PROPRIETARY RIGHTS OF CDS; DISCLAIMER OF
RIGHTS TO TECHNOLOGY AND INTELLECTUAL PROPERTY.
5.1 At all times during the term of this Agreement and
from and after the termination of this Agreement, whether such termination takes
place in accordance with the provisions of this Agreement or for any other
reason, and whether this Agreement is terminated for or without cause, Employee
shall keep strictly confidential and secret any and all proprietary or
confidential information related to CDS or CDS' business, whether such
information is obtained by Employee in the course of Employee's employment or
otherwise. Without limiting the generality of the foregoing, Employee shall not
disclose to any other person, company, or entity (except in connection with
Employee's duties and obligations consistent wit the terms of this Agreement and
the scope of the Services) any aspect of CDS' business methods, manufacturing
processes, business secrets, business systems or products, customer names,
prospective customers, accounting systems, computer software or hardware
systems, or marketing or business plans (collectively, the "Confidential
Information").
The Employee recognizes that the disclosure of
Confidential Information or trade secrets by the Employee may give rise to
irreparable injury to Company, which may not be adequately compensated by
damages. Accordingly, in the event of a breach or threatened breach by the
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Employee of any provision of this section, Company shall be entitled to an
injunction restraining the Employee from disclosing, in whole or in part, the
confidential information defined in this paragraph, or from rendering any
services to any person, firm corporation, association or other entity to whom
such confidential information, in whole or in part, has been disclosed or is
threatened to be disclosed. Nothing herein shall be construed as prohibiting
Company from pursuing any other remedies available to Company for such breach or
threatened breach, including the recovery of damages from the Employee. The
undertaking set forth in this section shall survive the termination or
cancellation of this Agreement or of the separation of Employee's employment.
The Employee may not remove any Confidential
Information or trade secrets from the premises of Company without the written
consent of Company, except to enable Employee, if Employee so desires, to work
at home or another convenient location. The Employee promises and agrees to
protect and maintain the confidentiality of any materials removed from the
Company's premises, and to promptly return any such information to the Company's
premises.
Notwithstanding the foregoing, Company understands that Employee has years of
experience in the same or similar businesses as Company and that Employee
has the right to use such pre-acquired knowledge for Employee's own benefit and
to earn a living and enjoy a career in the future, either as a principal or
employee with another organization.
5.2 The foregoing notwithstanding, Confidential
Information does not include any of the following:
5.2.1 Information which through no wrongful act or
failure to act on the part of the Employee becomes generally known or available,
or
5.2.2 Information which is furnished to others by
CDS without restriction on disclosure, or
5.2.3 Information which is hereafter furnished to
Employee by third parties as a matter of right and without restriction on
disclosure, or
5.2.4 Information which is known to others in the
industry or is ascertainable from other
sources without a breach by the other
sources of any nondisclosure agreement on
their part.
5.3 Employee agrees that upon request by Company, and in
any event upon termination of or separation from employment, Employee shall turn
over to Company all equipment, tools, furnishings, materials, documents, papers,
discs or any other property, real or personal, tangible or intangible, in any
media whatsoever, which property is in the Employee's possession or under
Employee's control and which property rightfully belongs to Company. In
addition, upon request by Company, and in any event upon termination of or
separation from employment, Employee shall immediately turn over to Company any
documents, materials, discs or writings of any kind whatsoever in any media
whatsoever, including all duplicates, which may contain or be derived from
Confidential Information or any of the Intellectual Property, together with all
documents, notes or other work product which is connected with or derived from
Employee's services to Company. Employee agrees that the Employee shall have no
proprietary interest in any work product developed for Company in the course of
employment and arising out of Employee's employment by Company.
5.4 At all times during the term of this Agreement and
from and after the termination of this Agreement,
Employee shall hold in a fiduciary capacity for the
benefit of CDS and shall disclose fully to CDS
immediately upon origination, discovery, invention or
acquisition, any and all inventions, discoveries,
improvements, apparatus, processes, compounds,
formulae, computer programs, patents, licenses,
copyrights and trademarks made,
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invented, discovered, developed or secured by
Employee during his employment by CDS, solely or
jointly with others, or otherwise, and which may be
directly or indirectly useful in, or relate to, the
manufacture, production, sale, development, or use of
any product or service of CDS, and all of the
foregoing shall be owned exclusively by CDS. Employee
agrees and acknowledges that the compensation paid to
Employee under this Agreement is full and adequate
consideration for Employee's covenants under Section
5.4 and that employee shall not be entitled to
receive any other compensation, fee, commissions,
royalty or other amount in connection therewith.
5.5 All work performed by Employee while in the employ of
Company, (during business hours or not) in any language, on any platform, for
any operating system, in any media or in any form whatsoever (including but not
limited to any of the Confidential Information), shall be deemed to have been
done at the instruction of the Company, shall be a "Work Made for Hire" within
the meaning of the Copyright Act, shall be the property of Company and may not
be used by Employee for any purpose except the benefit of the Company. Any and
all such property shall be forthwith delivered to the Company upon the Company's
request.
The only exception to the above paragraph concerning all work being property of
the Company shall be work prepared by the Employee, which meets all of the
following conditions;
(a) The work is performed on the Employee's own time,
(b) The work does not compete with any past or present project or
product of Company,
(c) The work does not relate at the time of conception or reduction to
practice of the work or Invention to the Company's business, or actual
or demonstrably anticipated research or development of the Company,
(d) The work does not interfere with Employee's work for Company, even
if Employee is required to work after hours or longer than the regular
hours of business for Company and
(e) Employee has not used any of Company's equipment, supplies,
facilities, trade secret information, Confidential Information, or
Intellectual Property for any purpose not related to the business of
Company without the Company's express written consent.
Any exceptions to this section shall be in writing.
Employee shall, from time to time as may be requested by Company, do
all things which may be necessary to establish or document Company's ownership
of any work or work product which is properly the Property of Company,
including, but not limited to execution of appropriate copyright applications,
copyright assignments, transfers, sales, releases or any and all other documents
or writings. Employee hereby waives any power Employee may have to control,
cause to modify or otherwise effect the Intellectual Property, and hereby
transfers all such powers, including but not limited to any powers of Droit
Morale, to Company. Employee hereby irrevocably appoints Company as his attorney
in fact empowered solely to execute any documents necessary to establish
Company's ownership rights, rights to maintain, rights to defend and rights to
control any of the Intellectual Property and/or Confidential Property.
6. INDEMNITY; SURVIVAL.
6.1 Each of Employee and CDS shall indemnify, defend, and
hold harmless the other from and against any and all loss, cost, damage,
liability, or expense, as a result of malicious conduct of the other, or a
willful breach of a duty of good faith. As to Employee, this indemnity shall
only apply to Employee's actions and duties as an employee of CDS. This
indemnity is not intended to nor shall it be interpreted to alter, amend or in
any way effect Employee's actions or duties as a member of the Board (if
applicable), or the respective indemnification provisions affecting or relating
to all Directors of CDS.
6.2 The provisions of Articles 4, 5 and 6 of this
Agreement shall survive the termination of this Agreement.
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7. MISCELLANEOUS PROVISIONS.
7.1 FILES. All records contained in the files of CDS
(other than Employee's personal background and financial information) shall be
the property of CDS and Employee shall not remove such records upon termination
of Employee's employment with CDS. Upon such termination, and at Employee's
written request, CDS shall provide Employee with copies of all of Employee's
personal background and financial information then held by CDS and CDS shall
destroy all remaining copies including any electronic form of such information.
7.2 INTEGRATION: AMENDMENTS. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements between the parties with respect
thereto. This Agreement may not be altered, amended, changed, terminated or
modified in any respect or particular unless the same shall be in writing and
signed by the part to be changed.
7.3 ATTORNEY'S FEES. In the event of any action for or
breach of, to enforce the provisions of, or otherwise arising out of or in
connection with this Agreement, the prevailing party in such action, as
determined by the court in such action, shall be entitled to receive its
reasonable attorney's fees and costs from the other party. If a party
voluntarily dismisses an action, a reasonable sum as attorney's fees shall be
awarded to the other party.
7.4 NEVADA LAW; JURISDICTION AND VENUE. This Agreement,
including Exhibit A attached hereto, shall be governed by and construed in
accordance with the law of the State of Nevada. The parties hereby consent to
the personal jurisdiction of any court of competent jurisdiction with the State
of Nevada. The exclusive venue for any action or proceeding relating to or
arising out of this Agreement shall be Xxxxx County, Nevada.
7.5 BINDING EFFECT. Employee acknowledges that the
Employee's obligations and duties under this Agreement are unique personal
services benefiting CDS and shall not be delegated in any manner or respect nor
shall this Agreement be assigned by Employee. This Agreement may not be assigned
by CDS without Employee's prior consent, except in connection with any sale or
transfer of all or part of CDS's business, in which case no consent of Employee
shall be required. This Agreement shall be binding upon and inure to the benefit
of any permitted heirs, successors, and assigns.
7.6 VALIDITY. Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be valid based upon
applicable law. But, if any provision or part of any provision of this Agreement
shall be held by a court of competent jurisdiction to be invalid or prohibited
thereunder, such provision or part of any such provision shall be ineffective
only to the extent of such invalidity or prohibition, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
7.7 HEADINGS. The headings of the sections of this
Agreement are inserted solely for convenience of reference and are not part of
and are not intended to govern, limit or aid in the construction of any item or
provision of this Agreement.
7.8 NOTICES. Any notice required or permitted to be given
under this Agreement shall be in writing and delivered in person to the other
party, or sent by certified United States Mail, with postage prepaid.
7.9 WAIVER. The failure of either party to enforce any of
its rights or remedies in connection with a breach of this Agreement by the
other party or in any other case shall not be deemed to be a waiver of said
first party's rights or remedies with respect thereto or with respect to any
other breach of this Agreement by the other party. No such waiver of rights or
remedies shall exist unless the same shall be in writing and signed by the party
to be charged.
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7.10 REMEDIES. Employee acknowledges that CDS' remedy at
law for any breach or threatened breach by Employee of Articles 4 and 5 hereof
will be inadequate. Therefore, CDS shall be entitled to injunctive and other
equitable relief restraining Employee from violating those requirements, in
addition to any other remedies that may be available to CDS under this Agreement
or applicable law.
IN WITNESS WHEREOF, CDS and Employee have executed this Agreement as of
the date first set forth above.
CASINO DATA SYSTEMS, EMPLOYEE
A Nevada corporation
BY:/s/ Xxxxxx X. Xxxxx /s/ Xxxxxx Xxxxx
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Its: CEO/Chairman
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EXHIBIT A
Employee: Xxxxxx X. Xxxxx
Position: Chief Financial Officer Supervisor: Xxxxx Xxxxx or Nominee
Compensation Continuation
Period: One Year
Base Salary: One Hundred and Seventy-Five Thousand, annually, plus
increases as determined in compensation reviews.
Annual Bonus: A base of Forty Percent of annual salary, plus any increases
added by the compensation committee. A percentage of the base bonus amount equal
to the percentage of the EBITDA target (as established by the Board of
Directors) achieved by the Company is awarded to the employee if annual EBITDA
equals or exceeds 90% the EBITDA target. No bonus is paid if the Company fails
to achieve at least 90% of the EBITDA target.
Additional Terms: Employee agrees to keep confidential and not disclose
to any third party, information concerning Employee's personnel records,
including financial and background information, except as may be required by law
or by gaming regulatory authorities.
Responsibilities: The principal Chief Financial Officer and Corporate Secretary
for the consolidated Company reporting to the CEO and responsible for management
of all aspects of treasury, financial management and reporting, investor
relations and the administrative functions of the Company including Human
Resources, Information Technologies and Business Policies and Procedures. In
carrying out these duties, serves as primary interface with stock and industry
analysts, banks and the financial press. Expected to routinely make
presentations at investor conferences and to the Board of Directors.
