EMPLOYMENT AGREEMENT
AGREEMENT made as of the 3rd day of February, 1997 between
International Sports Wagering Inc., a Delaware corporation (the
"Company"), and Xxxxxx Xxxxxxx ("Employee").
W I T N E S S
E T H:
WHEREAS, the
Company
is in the business of developing,
producing,
marketing, leasing,
licensing and servicing computerized
sports wagering systems; and
WHEREAS, the
Company
desires to employ Employee as its General
Manager - Nevada Operations and Employee desires to serve the
Company
in such capacity:
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions herein
contained, the
Company
hereby employs Employee as its General
Manager - Nevada Operations and Employee hereby agrees to serve the
Company
in such capacity.
2. DUTIES.
(a) Employee agrees, during the
"Term"
(as herein-
after defined), to devote his full business attention and best
efforts to the business of the
Company
and to perform such duties
of an
executive, marketing
and administrative nature as the Chief
Executive Officer, President or Board of Directors of the
Company
shall assign or
direct,
consistent with his status and position as
General Manager - Nevada Operations, including, without limitation,
such duties as would typically be performed by persons holding
similar positions in other
companies, recognizing that the Company
is a small development stage Company with limited resources and
personnel.
(b) Employee shall conduct himself at all times in
a manner consistent with his position with the
Company.
3. TERM
(a) The term of Employee's
employment pursuant to
this Agreement
(the "Term") shall commence as of February
3,
1997,
and shall terminate on
January 31, 2000, subject
to earlier
termination
by the Company
(
i
) in the event of Employee's death;
(ii) at the option of the
Company,
in the event of
Employee's
"disability"
(as hereinafter
defined);
(iii) for
"cause" or without
cause pursuant to Section 10.
(b) For the purpose of this Agreement, (i)
"disability" shall mean any injury or any physical or mental
condition or illness which shall render Employee unable to perform
his duties in accordance with this
Agreement for 60 consecutive
days or an aggregate of 90 days during any 180 day period during
the Term
and (ii) "cause" shall include, but
not be
limited to,
failure of the Employee to be licensed by any relevant Nevada
gaming
authority
or the revocation or suspension of the Employee's
license by
such gaming
authority.
4. COMPENSATION AND BENEFITS. As compensation for all
duties to be rendered by Employee to the
Company
and any of its
subsidiaries and affiliates, in all capacities, the
Company
shall
pay
to the
Employee during the Term a minimum of the following,
payable in accordance with the
Company's standard
payroll
practice:
(a) During each year of the Term, the Employee
shall be paid a base salary at the rate of $100,000 per year. In
addition, (i) during each of the first two years of the Term, the
Employee shall be paid (x) a non-refundable draw (advance) at the
rate of $100,000 per year (payable in the same manner and time that
the base salary is paid), against "Commissions" (as hereinafter
defined) that may be earned by the Employee, as hereinafter
provided, and (y) any Commissions earned by the Employee with
respect to the Company's Player Betting Stations ("PBS") installed
and first put into operation in excess of the minimums described in
subsection 4(b) or 4(c), as the case may be; and (ii) during the
third year of the Term, the Employee shall be paid any Commissions
earned by the Employee in excess of the minimums described
subsection 4(d).
(b) During the first year of the Term, the Employee
shall be paid a one-time Commission with respect to each PBS first
installed and put into operation in a casino or other gaming
establishment in the State of Nevada during said year in excess of
1,000 PBS' (the "First Year Minimum"); provided that the Employee
shall not be paid a Commission with respect to any PBS installed
and put into operation in a casino or gaming establishment owned or
operated by [Circus Circus
] or any of its subsidiaries or
affiliates (collectively referred to as "Circus"); and provided,
further that PBS' installed and put into operation in a casino or
gaming establishment owned or operated by Circus shall not count
toward reaching
the First Year
Minimum.
(c) During the second year of the Term, the
Employee shall be paid a one-time Commission with respect to each
PBS first installed and put into operation in a casino or other
gaming establishment in the State of Nevada during said year in
excess of the greater of (i) 1,000 or (ii) 2,000 less the number of
PBS' installed and first put into operation during the first year
of the Term (the "Second Year Minimum"); provided that the Employee
shall not be paid a Commission with respect to any PBS installed
and put into operation in a casino or gaming establishment owned or
operated by Circus; and provided, further that PBS' installed and
put into operation in a casino or gaming establishment owned or
operated by Circus shall not count toward reaching the Second Year
Minimum.
(d) During
the third year of the Term, the Employee
shall be paid a one-time Commission with respect to each
PBS
first
installed and put into operation in a casino or other gaming
establishment in
the State of Nevada
during
said year
in
excess of
the greater of (i) 0 or (ii) the Second Year Minimum less the
number of PBS' installed and first put into operation during the
second year of the Term; provided
that the Employee shall not be
paid a Commission
with respect to
any PBS installed
and put into
operation in
a casino or gaming establishment owned or operated by
Circus; and provided, further that PBS' installed and put into
operation in a casino or gaming establishment owned or operated by
Circus shall not count toward reaching any Minimum.
For example (and not by way of limitation) (i) if during
the first year of the Term, 1,150 PBS' are installed and put into
operation in Nevada, of which 250 are put into operation in casinos
owned by Circus and 900 are put into operation in casinos not owned
by Circus, the Employee would not, during such first year, be
entitled to any Commission beyond the non-refundable draw
(advance); and if thereafter, during the second year of the Term,
1,250 additional PBS' are installed in casinos in Nevada, all of
which were not owned by Circus, the Employee would be entitled to
a Commission with respect to 150 PBS'. (ii) If during the first
year of the Term 2,500 PBS' are installed and first put into
operation, of which 1,050 are in casinos owned by Circus and 1,450
are in casinos not owned by Circus, the Employee would be entitled
to a Commission with respect to 450 PBS (in addition to the
$100,000 draw (advance)); if thereafter, during the second year of
the Term, 550 PBS are installed in casinos not owned by Circus, the
Employee would not be entitled to any Commission (although the
Employee would receive the $100,000 draw (advance)).
(e) If a Commission
is due and payable as provided
above, it shall be a
one-time payment of $100 for each PBS first
installed and placed in operation in a casino or other gaming
establishment in the State of Nevada; provided that such PBS
remains in operation in the casino or other gaming establishment in
which it was
first installed and
placed in operation for at least
one year. If a PBS is placed in operation in a casino or other
gaming establishment and within less than one year thereafter
that
PBS is removed from
operation for any reason whatsoever (other than
maintenance),
any Commission earned by the Employee with respect
thereto shall
offset any Commission that may be earned by the
Employee thereafter. A PBS shall be deemed to have been placed in
operation after (i) it is installed in a casino or other gaming
establishment in Nevada and (ii) is used in conjunction with the
Company's SportXction sports wagering game for the placement of
real money bets for at least one
sporting
event. A PBS installed
and put into operation in order to replace a PBS that is removed
for maintenance shall not be considered a new PBS installed and put
into operation for purposes of calculating any Commission.
(f) The
Company and the Employee each agree to use
their best efforts during each year of the Term, to maximize the
number of PBS' installed and put into operation in Nevada in all
casinos and gaming establishments including, but not limited to,
those owned or operated by Circus.
(g) If
a PBS is installed and put into operation in
one casino or gaming establishment and thereafter is moved to
another casino or gaming establishment, it shall be counted only
once for purposes of determining the Commission
due or
any Minimum
number of PBS' installed.
All Commissions earned shall be paid
within 30 days after the end of the month in which the PBS with
respect to which the Commission was earned was installed and placed
in operation.
(h) In
addition, Employee shall be entitled to
receive (a) such salary increases, bonuses or other incentive
compensation as may be approved by the Board of Directors; (b) two
weeks vacation during each year of the Term; (c) such health
insurance as the Company may from time to time provide to its other
employees; (d) such life insurance, if any, as the Company may from
time to time provide to all other employees; and (e) such other
fringe benefits as the Company may from time to time provide to all
other employees.
(i) During
the Term the Employee shall be required
to maintain his principal residence in Las Vegas, Nevada.
5. REIMBURSEMENT OF EXPENSES. The Company shall reimburse
Employee for all reasonable business expenses paid or incurred by
him on behalf of the Company during the Term in connection with the
performance of his duties hereunder including, but not limited to,
reasonable travel and entertainment expenses, provided that he
submits, in a timely manner, receipts or other expense records and
reports in such detail as may be required by the Company.
6. LOAN. Promptly after the Employee commences employment
with the Company the Company shall lend to the Employee $100,000 in
accordance with agreements containing the following terms:
a) The loan will be interest
free (any tax
consequences of this loan will be the burden of the
Employee).
b) The loan will be secured by a
second mortgage on
the principal residence of the Employee located in
Nevada and certain other property located in
Laughlin, N.V.
c) The loan shall be repaid at the rate of (i) $50,000
during the first year of the Term and (ii) $25,000
during each of the second and third years of the
Term. All such repayments shall be made by means
of payroll
deductions from the base salary, payable
to the Employee as herein
provided.
d) If the Employee resigns prior to expiration of the
Term, the remaining unpaid balance of the loan
shall be repaid to the Company within 30 days of
such
resignation.
e) If the Employee's employment is terminated by the
Company, other than for
cause or as a result of
Employee's death or disability,
prior to the end of
the Term, the outstanding unpaid balance of the
loan will be forgiven.
7. NO CONFLICTING COMMITMENTS.
Employee represents and warrants that he has no commit-
ments or obligations nor is he a party to any agreement with any
prior employer or otherwise of any kind whatsoever inconsistent
with this Agreement which would impair, infringe upon or limit his
ability to enter into this Agreement or to perform the services
required of him hereunder.
8. PROPRIETARY INFORMATION. Simultaneous with the execution
of this Employment Agreement, Employee agrees to sign the
Proprietary Information Agreement attached hereto as Exhibit A.
9. Non-Competition; Non-Solicitation;
Non-Interference. The
Employee acknowledges that during the course of his employment with
the Company he will become apprised of sensitive and proprietary
business, marketing, technical and financial information,
disclosure or use of which other than for the benefit of the
Company could cause serious and irreparable damage to the Company.
The Employee further acknowledges that the Company would not hire
him if he did not agree to and abide by the provisions of this
Section 9 and the Proprietary Information Agreement to be entered
into simultaneously herewith.
(a) Employee
agrees that during the Term and for a
period of two years after the expiration or termination thereof, he
will not, without the prior written consent of the Company in each
case, directly or indirectly, serve as a director, officer,
partner, consultant, joint venturer, agent, representative or
employee of or render any services or advice to, or have any
interest (debt, equity or otherwise) in, or own, manage, operate or
control or participate in the ownership, management, operation or
control of,
the
business in which the Company is
involved
within
the State of Nevada or within any other geographical area or
jurisdiction in which the business of the Company is being
conducted; provided that the foregoing shall not preclude the
Employee (i) from owning less than 1% of the outstanding shares of
any public Company that is involved in interactive sports wagering
and (ii) after the Term, being the manager of a sports book
operation in a casino or other gaming establishment even if such
sports book operation utilizes terminals for interactive sports
wagering that are competitive with the Company's PBS'.
(b) The
Employee shall during the Term and
thereafter (i) use his best efforts to preserve the business
organization of the Company, keep available to the Company the
services of the Company's directors, officers, employees, agents
and representatives; (ii) not cause, induce, encourage or solicit
any of the Company's directors, officers, employees, agents or
representatives to leave the Company; (iii) preserve for the
Company its actual and prospective business relations with its
customers, suppliers, distributors and others; and (iv) not commit
any act or in any way assist others in committing any act which
will injure the Company or its business or in any way be inimical
to the best interests of the Company.
(c) Employee
agrees that this Section 9 is an
independent and severable covenant, which shall be enforceable
notwithstanding any rights or remedies that he may have under any
provision of this Agreement or otherwise; that the remedy for
breach hereof will be inadequate and that the Company shall be
entitled to temporary and permanent injunctive relief for any
breach of this Section 9 without the necessity of proving
damages;
and that in the event a court were to determine that the duration
or geographical scope of any part of this Section 9 were
unreasonably long or broad, such court shall not declare this
Section or part thereof to be void, but shall interpret it and
enforce it to the extent that the court deems reasonable and in a
manner that will fulfill the intent of the parties.
10. TERMINATION.
(a) This Agreement shall terminate automatically
upon the death of the Employee. The Company in its discretion may
terminate this Agreement in the event the Employee becomes disabled
as provided in Section 3.
(b) In the event the Employee elects to terminate
his employment with the Company, the Employee agrees to give the
Company not less than 60 days prior written notice thereof.
(c) The Company reserves the right to terminate the
Employee either with or without cause. If the Company elects to
terminate the employment of the Employee for cause it may do so
without any prior notice thereof to Employee; in which event this
Agreement and all rights and obligations of either party hereunder
except for the obligations of the Employee set forth in Sections 5,
6, 7, 8, 9, 10 and 16 and the Proprietary Information Agreement
shall terminate and the Employee shall not thereafter be entitled
to any further compensation hereunder. If during the Term, the
Company elects to terminate the Employee's employment without
cause, the Company shall continue to pay the Employee (i) his base
salary for the lesser of six months or until the expiration of the
Term (the "Severance Period") and (ii) any Commissions to which the
Employee is entitled as herein provided based upon PBS' installed
and first put into operation during the Severance Period; provided
that there was a contract between the Company and the casino or
other gaming establishment providing for the installation of PBS,
which contract was entered into prior to the date on which the
Severance Period began. Payments made during the Severance Period
shall be in accordance with the Company's standard payroll
practice.
11. ACCEPTANCE OF ORDERS. The Company reserves the right, in
its discretion, to accept, reject and negotiate all terms and
conditions of arrangements for providing its PBS' to each casino or
other gaming establishment, including but not limited to, number of
PBS' to instal and put into operation, time of delivery of PBS,
fees or other arrangements for the compensation to be received by
the Corporation. The exercise of the Company's discretion shall in
no way affect the Employee's entitlement to any Commissions.
12. ENTIRE AGREEMENT. This Agreement embodies the entire
understanding and agreement of the parties hereto in relation to
the subject matter hereof, and no promise, condition, representa-
tion or warranty, express or implied, not herein set forth shall
bind any party hereto. None of the terms and conditions of this
Agreement may be changed, modified, waived or cancelled orally or
otherwise except in a writing signed by both the parties hereto,
specifying such change, modification, waiver or cancellation. A
waiver at any time of compliance with any of the terms and condi-
tions of this Agreement shall not be considered a modification,
cancellation or waiver of such terms and conditions of any pre-
ceding or succeeding breach thereof unless expressly so stated.
13. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
legal representatives, successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by the
internal laws of the State of Nevada without regard to principles
of conflicts of law.
15. NOTICES. Any notice or other communication required or
desired to be given shall be in writing and shall be sent by
registered or certified mail return receipt requested or by express
mail. Each such notice shall be deemed given at the time it is
mailed in any post office maintained by the United States to the
following respective addresses, which either party may change as to
such party upon ten (10) days' notice to the other.
To the Company:
International Sports Wagering Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: President
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx
00 Xxxxxxxxxxx Xxxxx (00xx Xxxxx)
Xxx Xxxx, Xxx Xxxx 00000
To Employee:
Xx. Xxxxxx Xxxxxxx
0000 Xxxxx 00xx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
With a copy to:
[ ]
16. EXTRAORDINARY RELIEF. Employee acknowledges and agrees
that irreparable damage will result to the Company in the event of
a breach of the Proprietary Information Agreement. Accordingly,
Employee agrees that the Company shall be entitled to enforce its
rights under said Proprietary Information Agreement, in the event
of a breach or threatened breach thereof, in the court of equity,
and shall be entitled to a decree of specific performance or
appropriate injunctive relief. Such remedies shall be cumulative
and not exclusive and shall be in addition to any other rights or
remedies available to the Company.
17. INVALIDITY. Any provision of this Agreement found to be
prohibited by law shall be ineffective as written without
invalidating the remainder of this Agreement and shall be deemed
amended to the fullest extent allowable by applicable law to
effectuate the purposes of said provision.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
INTERNATIONAL SPORTS WAGERING INC.
By:
Xxxxxxx Xxxxxxxx, President
Xxxxxx Xxxxxxx
