EXHIBIT 10.18
XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of October 3rd,
2005, between VendingData Corporation, a Nevada corporation (together with its
successors or assigns as permitted under this Agreement, the "Company"), and
Xxxxx Xxx, an individual (the "Executive").
RECITALS
The Company desires to employ the Executive and enter into this
Agreement embodying the terms of such employment and the Executive desires to
enter into this Agreement and to accept such employment.
In consideration of the mutual covenants and for other good and valuable
consideration, the Company and the Executive (individually a "Party" and
together the "Parties") agree as follows:
1. DEFINITIONS
(a) "Base Salary" shall mean the salary provided for in Section 4 below
subject to such increases as may be made from time to time.
(b) "Cause" shall mean:
(i) the conviction of (including any act as a result of pleading
nolo contendere) or entry of judgment against the Executive by a
civil or criminal court of competent jurisdiction of a felony,
or any other offense or wrongdoing involving embezzlement,
fraud, misappropriation of funds, any act of moral turpitude or
dishonesty;
(ii) the indictment of the Executive by a state or federal grand
jury or the filing of a criminal complaint or information for a
felony, or any other offense involving embezzlement, fraud,
misappropriation of funds, any act of moral turpitude or
dishonesty, unless such indictment or filing is dismissed within
one hundred eighty (180) days from the date of such indictment
or filing. The Board may elect to suspend and extend the Term of
Employment by such one hundred eighty (180) day period or the
number of days actually taken by the Executive to dismiss such
indictment or filing, whichever is less; provided that the
Executive notifies the Company in writing that the Executive
intends to contest in good faith such indictment or filing and
pursues the dismissal of such indictment or filing with
reasonable diligence. During such period of suspension,
Executive may be relieved of duties, but shall be entitled to
receive Base Salary;
(iii) the written confession by the Executive of embezzlement,
fraud, misappropriation of funds, any act of moral turpitude or
dishonesty or acts constituting a felony;
(iv) the finding by a court of competent jurisdiction in a
criminal or civil action or by the U.S. Securities and Exchange
Commission or state blue sky agency in an administrative
proceeding that the Executive has willfully violated any federal
or state securities law;
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
(v) the engagement by the Executive in willful and continued
misconduct, or the Executive's willful and continued failure to
substantially perform the Executive's obligations;
(vi) the use by the Executive of alcohol or any controlled
substance to an extent that it interferes, in the sole
discretion of the Board, on a continuing and material basis with
the performance of the Executive's duties under the Agreement;
(vii) the willful, unauthorized disclosure by the Executive of
Confidential Information, as defined in Section 12, concerning
the Company or any Subsidiary, unless such disclosure was (A)
believed in good faith by the Executive to be appropriate in the
course of properly carrying out duties under the Agreement, or
(B) required by an order of a court having jurisdiction over the
subject matter or a summons, subpoena or order in the nature
thereof of any legislative body (including any committee
thereof) or any governmental or administrative agency;
(viii) performance of services by the Executive, other than in
the course of properly carrying out his or her duties under the
Agreement and as otherwise provided herein, for any other
corporation or person that competes with the Company while the
Executive is employed by the Company
(ix) misconduct in connection with the performance of any of
Executive's duties, including, without limitation,
misappropriation of funds or property of the Company, securing
or attempting to secure personally any profit in connection with
any transaction entered into on behalf of the Company,
misrepresentation to the Company, or any violation of law or
regulations on Company premises or to which the Company is
subject;
(x) commission by Executive of an act involving moral turpitude,
dishonesty, theft or unethical business conduct, or conduct
which impairs or injures the reputation of, or xxxxx, the
Company;
(xi) disloyalty by Executive, including without limitation,
aiding a competitor;
(xii) any breach of this Agreement or Company rules; or
(xiii) any other bad act or misconduct by Executive;
(c) "Change in Control" means, and shall be deemed to occur upon the
happening of the acquisition, directly or indirectly, in a single transaction or
a series of related transactions by any person resulting in the beneficial
ownership of 50% or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote;
(d) "Term of Employment" shall mean the initial two-year period
specified in Section 2 below and if, but only if, automatically renewed as
provided in Section 2, shall include the period of such renewal.
(e) "Voting Securities" means securities of the Company, the holders of
which are entitled to vote for the election of directors.
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
2. TERM OF EMPLOYMENT
(a) The Company hereby employs the Executive, and the Executive hereby
accepts employment with the Company, in the position and with the duties and
responsibilities as set forth in Section 3 below for the Term of Employment,
subject to the terms and conditions of the Agreement.
(b) The initial Term of Employment shall commence on October 3rd, 2005
and shall terminate on September 30, 2007, unless terminated earlier as provided
in Section 8; provided that the Term of Employment shall automatically renew for
successive one-year periods unless (i) it has sooner terminated as provided in
Section 8 or (ii) either party has notified the other in writing at least thirty
(30) days prior to the otherwise scheduled expiration of the Term of Employment
that such Term of Employment shall not so renew.
3. POSITION, DUTIES AND AUTHORITIES
During the Term of Employment, the Executive shall be employed as the
Vice President of Engineering and Manufacturing of the Company. Subject to
supervision and in accordance with the policies and directives established by
the Chief Executive Officer, the Executive's duties and responsibilities shall
include those duties set forth on Exhibit 'A', attached hereto, and such other
duties, responsibilities and authorities customarily associated with such
positions.
4. BASE SALARY
During the Term of Employment, the Executive shall be paid by the
Company a Base Salary payable no less frequently than in equal monthly
installments at an annualized rate of $175,000.00; subject to increase as may be
determined by the Company within its sole discretion.
5. OPTIONS
Executive will receive options ("Options") to purchase 150,000 shares of
the Company's common stock at an exercise price of $1.34 per share, which
options shall be exercisable upon a Change in Control, and which Options vest
upon a Change in Control. Except for any conflicting provisions in this
Agreement, which shall prevail, the Options shall be issued under and governed
by the terms of the Company's 1999 Stock Option Plan. These Options are intended
to benefit Executive upon a Change in Control, and are in addition to stock
options already granted to Executive in connection with Executive's employment.
6. BONUS
The Executive will be entitled to receive a performance-based bonus of
up to 50% of the Executive's annual Base Salary for the calendar year commencing
January 1, 2006 and for each calendar year during the remainder of the Term of
Employment. The performance bonus shall be subject to the Executive's
satisfaction of certain performance goals determined by the Chief Executive
Officer. Prior to January 1, 2006 and the commencement of each calendar year
thereafter during the remainder of the Term of Employment, the Chief Executive
Officer shall determine, in that Officer's sole and absolute discretion, the
performance goals for the Executive and deliver a written description of those
goals to Executive. The written description shall be incorporated into and
become a part of this Agreement. All payments of bonuses earned during any
calendar year shall be due and payable no later than March 31st of the following
year. The determination of whether the Executive has satisfied the performance
goals shall be made by the Board of Directors in its reasonable discretion.
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
7. EMPLOYEE BENEFIT PROGRAMS
During the Term of Employment, the Executive and his dependents shall be
entitled to participate in, at the Company's expense, whatever employee benefit
plans the Company endorses to obtain, if any, such as medical, surgical,
hospitalization, dental and visual insurance coverage. The Company will pay all
expenses for these insurance program(s) or plan(s).
8. TERMINATION OF EMPLOYMENT
(a) Termination by the Company for Cause. At any time after learning of
an event constituting Cause, the Company may elect to give the Executive written
notice of its intention to terminate for Cause, specifying in such notice the
event forming the basis for Cause. Termination shall be effective immediately
upon delivery of notice hereunder. In the event the Executive's employment is
terminated by the Company for Cause, the Executive shall be entitled only to:
(i) Base Salary, at the rate in effect at the time of
termination, accrued and payable through the date of termination of
employment;
(ii) reimbursement for expenses incurred but not yet reimbursed
by the Company; and
(iii) any other compensation and benefits accrued and to which
the Executive is entitled under applicable plans, programs and
agreements of the Company as of the date of termination of employment.
The Executive's entitlement to the foregoing shall be without prejudice to the
right of the Company to claim or xxx for any damages or other legal or equitable
remedy to which the Company may be entitled as a result of such Cause; provided,
however, that offset shall not be available to the Company in any event.
(b) Termination Without Cause. In the event the Executive's employment
is terminated by the Company without Cause (which shall not include a
termination pursuant to Section 8(a)), the Executive shall be entitled only to
those items described in the subsections (i) through (vi) below. Termination
Without Cause shall be effective immediately, unless a later date is stated,
upon delivery of a written notice of such termination from the Company to the
Executive.
(i) Base Salary, at the rate in effect at the time of
termination, accrued and payable through the date of termination of
employment;
(ii) an amount equal to the greater of (a) the Base Salary owing
over the balance of the term of this agreement or (b) 12 months' Base
Salary (Base Salary as used in this section shall be determined at the
rate of compensation in effect as of the date of termination Without
Cause) (the "Base Salary Termination Payment");
(iii) in lieu of any bonus under Section 6, an amount equal to
50% of the Base Salary Termination Payment;
(iv) reimbursement for expenses incurred but not yet reimbursed
by the Company;
(v) any amounts due to the Executive under Section 9; and
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
(vi) any other compensation and benefits accrued and to which
the Executive is entitled under applicable plans, programs and
agreements of the Company as of the date of Termination Without Cause.
(c) Voluntary Termination. A "Voluntary Termination" shall mean a
termination of employment by the Executive on his own initiative other than a
termination under Section 8(a) or 8(b). In the event of a Voluntary Termination,
the Executive shall be entitled only to:
(i) Base Salary, at the rate in effect at the time of
termination, accrued and payable through the date of termination of
employment;
(ii) reimbursement for expenses incurred but not yet reimbursed
by the Company; and
(iii) any other compensation and benefits accrued and to which
the Executive is entitled under applicable plans, programs and
agreements of the Company.
A Voluntary Termination shall not, solely due to a Voluntary Termination, be
deemed a breach of this Agreement and shall be effective upon the expiration of
30 days after written notice is delivered to the Company, unless another period
of time is agreed to in writing by the Parties.
(d) No Mitigation; No Offset. In the event of any termination of the
Executive's employment under the Agreement without Cause, the Executive shall be
under no obligation to seek other employment, and there shall be no offset
against amounts due the Executive under the Agreement on account of any
remuneration attributable to any subsequent employment that the Executive may
obtain.
(e) Nature of Payments. Any amounts due the Executive under the
Agreement in the event of any termination of employment with the Company are in
the nature of severance payments, or liquidated damages which contemplate both
direct damages and consequential damages that the Executive may suffer as a
result of the termination of employment, or both, and are not in the nature of a
penalty.
9. PAYMENTS IN CASE OF CHANGE IN CONTROL
Upon a Change in Control, as such term is defined herein, and in
addition to any other payments to which Executive is entitled under Section 8 or
any other provision of this Agreement, Executive shall be entitled to:
(i) an amount equal to 12 months' Base Salary in effect as of
the effective date of the Change in Control; and
(ii) an amount equal to 50% of the annual Base Salary in effect
as of the effective date of the Change in Control.
10. CONDITIONS OF ENTITLEMENT TO PAYMENT
The consideration described in Section 8(b)(i) and (ii) and Section 9
are due and owing if and only if all of the conditions set forth in this Section
10 are satisfied:
(a) Executive must have signed and delivered to the Chairman of the
Board of the Company upon the termination of employment a release in
substantially the form attached as Exhibit B (the "Release") subject to the
timing and effectiveness requirements set forth in the Release; Executive must
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
have substantially complied with all written contractual obligations owed to the
Company, including without limitation obligations of Executive under this
Agreement. This subpart (a) is applicable to payments under Section 9 only if
prior to the Change in Control the Executive has received notice of termination
without Cause to take effect upon the Change in Control or within 30 days
thereafter.
(b) No cash payments shall be due or owing to Executive under this
Agreement if the Company is (i) out of compliance with any covenants imposed by
its senior lenders and such lenders have failed to waive the non-compliance or
grant a forbearance, or (ii) is insolvent, or (iii), in the good faith
discretion of the Board of Directors of the Company, any such payment or
payments, by itself or when combined with any other obligations of the Company,
would cause the Company to be out of compliance with such covenants (and the
Board of Directors in its sole judgment has determined that it is unlikely that
its senior lenders will waive the non-compliance or grant a forbearance) or
insolvent. In the event of application of (i), (ii) or (iii) above, the cash
payment shall be become due and owing and shall be paid promptly after the Board
of Directors in its good faith determines that sections (i), (ii) and (iii)
cease to apply.
(c) No payments shall have been made previously under this Agreement
with regard to a prior Change in Control.
11. COVENANT NOT TO COMPETE
In the event of a termination of this Agreement prior to the scheduled
expiration of the Term of Employment, the Executive shall not, for the remaining
Term of Employment or 12 months, whichever is longer, engage in competition with
the Company. For purposes of this Section 11, the Executive shall be engaging in
competition with the Company if the Executive engages in the manufacture of
playing card shufflers, playing card readers and/or playing card deck setters in
Xxxxx County, Nevada or any other location in which the Company is engaging in
business at the time of the termination of the Executive's employment, whether
as an employee, executive, partner, principal, agent, representative,
stockholder or consultant (other than as a holder of not more than a 10% equity
interest) or in any other corporate or any capacity, so long as the Company is
engaged in business in the location in question.
12. COVENANTS TO PROTECT CONFIDENTIAL INFORMATION
The Executive shall not, during the Term of Employment or anytime
thereafter, without prior written consent of the Company, divulge, publish or
otherwise disclose to any other person any Confidential Information regarding
the Company except in the course of carrying out the Executive's
responsibilities on behalf of the Company (e.g., providing information to the
Company's attorneys, accountants, bankers, etc.) or if required to do so
pursuant to the order of a court having jurisdiction over the subject matter or
a summons, subpoena or order in the nature thereof of any legislative body
(including any committee thereof and any litigation or dispute resolution method
against the Company related to or arising out of this Agreement) or any
governmental or administrative agency. For this purpose, Confidential
Information shall include, but is not limited to, the Company's financial
position and results of operations, trades secrets and intellectual property,
products and product development plans, marketing and promotional plans and
strategies, customer lists and customer data bases. Confidential Information
does not include information that is generally available to the public other
than through a breach of the Agreement on the part of the Executive.
13. NON-SOLICITATION
Except with the prior written consent of the Company, Executive shall
not solicit customers, clients, or employees of the Company or any of its
affiliates for a period of twelve (12) months after the
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
date of the expiration or termination of this Agreement. Without limiting the
generality of the foregoing, Executive will not, for a period of twelve (12)
months after the date of the expiration or termination of this Agreement,
willfully canvas or solicit any such business in competition with the business
of the Company from any customers of the Company with whom Executive had contact
during, or of which Executive had knowledge solely as a result of, his
performance of services for the Company pursuant to this Agreement. Executive
will not, for a period of twelve (12) months after the date of the expiration or
termination of this Agreement, directly or indirectly request, induce or advise
any customers of the Company with whom Executive had contact during the term of
this Agreement to withdraw, curtail or cancel their business with the Company.
Executive will not, for a period of twelve (12) months after the date of the
expiration or termination of this Agreement, induce or attempt to induce any
employee of the Company to terminate his/her employment with the Company.
14. REMEDIES
(a) Executive acknowledges and agrees that immediate and irreparable
harm, for which damages would be an inadequate remedy, would occur in the event
any of the provisions of Sections 11, 12 and 13 of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, Executive agrees that Company shall be entitled to an injunction or
injunctions to prevent breaches of such provisions of this Agreement and to
enforce specifically the terms and provisions thereof without the necessity of
proving actual damages or securing or posting any bond or providing prior
notice, in addition to any other remedy to which it may be entitled at law or
equity.
(b) Nothing herein contained is intended to waive or diminish any rights
Company may have at law or in equity at any time to protect and defend its
legitimate property interests (including its business relationship with third
parties), the foregoing provisions being intended to be in addition to and not
in derogation or limitation of any other rights the Company may have at law or
equity.
(c) Executive shall have no rights, remedies or claims for damages, at
law, in equity or otherwise with respect to any termination of Executive's
employment by the Company other than as set forth in Section 8 of this
Agreement.
15. REPRESENTATION
The Company and the Executive respectively represent and warrant to each
other that each respectively is fully authorized and empowered to enter into the
Agreement and that their entering into the Agreement and the performance of
their respective obligations under the Agreement will not violate any agreement
between the Company or the Executive respectively and any other person, firm or
organization or any law or governmental regulation.
16. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the Parties and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Parties.
17. AMENDMENT OR WAIVER
This Agreement cannot be changed, modified or amended without the
consent in writing of both the Executive and the Company. No waiver by either
Party at any time of any breach by the other Party of any condition or provision
of the Agreement shall be deemed a waiver of a similar or dissimilar
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
condition or provision at the same or at any prior or subsequent time. Any
waiver must be in writing and signed by the Executive or an authorized officer
of the Company, as the case may be.
18. SEVERABILITY
The provisions of this Agreement shall be severable and the invalidity,
illegality or unenforceability of any provision of this Agreement shall not
affect, impair or render unenforceable this Agreement or any other provision
hereof, all of which shall remain in full force and effect. If any provision of
this Agreement is adjudicated by a court of competent jurisdiction as invalid,
illegal or otherwise unenforceable, but such provision may be made enforceable
by a limitation or reduction of its scope, the Parties agree to abide by such
limitation or reduction as may be necessary so that said provision shall be
enforceable to the fullest extent permitted by law. The Parties further intend
to and hereby confer jurisdiction to enforce the covenants contained in Sections
11, 12 and 13 (the "Restrictive Covenants") upon the courts of any jurisdiction
within the geographical scope of such Restrictive Covenants. If the courts of
any one or more of such jurisdictions hold any Restrictive Covenant
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the Company and Executive that such determination not bar or in any
way affect the right of the Company to the relief provided for in this section
in the courts of any other jurisdiction within the geographical scope of such
Restrictive Covenant as to breaches of such Restrictive Covenant in such other
respective jurisdictions (such Restrictive Covenant as it relates to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants).
19. SURVIVAL
The respective rights and obligations of the Parties shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
20. GOVERNING LAW
This Agreement shall be governed by and construed under the law of the
State of Nevada, disregarding any principles of conflicts of law that would
otherwise provide for the application of the substantive law of another
jurisdiction. The Parties each hereby consents to the jurisdiction and venue of
the state courts of Xxxxx County, Nevada and the United States district courts
with jurisdiction in Nevada with respect to any matter arising out of or
relating to this Agreement other than matters that are subject to the
arbitration provisions of Section 21 of this Agreement.
21. SETTLEMENT OF DISPUTES
Except for equitable actions seeking to enforce the provisions of
Sections 11, 12 and 13 of this Agreement which may be brought by a court in any
competent jurisdiction, in the event a dispute, claim or controversy arises
between the parties relating to the validity, interpretation, performance,
termination or breach of this Agreement, (collectively, a "Dispute"), the
Parties agree to hold a meeting regarding the Dispute, attended by individuals
with decision-making authority, to attempt in good faith to negotiate a
resolution of the Dispute prior to pursuing other available remedies. If, within
thirty (30) days after such meeting or after good faith attempts to schedule
such a meeting have failed, the Parties have not succeeded in negotiating a
resolution of the Dispute, the Dispute shall be resolved through final and
binding arbitration to be held in Nevada in accordance with the rules and
procedures of the American Arbitration Association. The prevailing party in such
proceeding shall be entitled to recover the costs of the arbitration from the
other party, including, without limitation, reasonable attorneys' fees.
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
22. HEADINGS
The headings of the paragraphs contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
23. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
24. TAXES
The Compensation payable is stated in gross amounts and shall be subject
to such withholding taxes and other taxes as may be required by law.
25. ACKNOWLEDGMENT
The Executive acknowledges that he/she has been given a reasonable
period of time to study this Agreement before signing it and has had an
opportunity to secure counsel of his/her own. The Executive certifies that
he/she has fully read and completely understands the terms, nature, and effect
of this Agreement. The Executive further acknowledges that he/she is executing
this Agreement freely, knowingly, and voluntarily and that the Executive's
execution of this Agreement is not the result of any fraud, duress, mistake, or
undue influence whatsoever. In executing this Agreement, the Executive does not
rely on any inducements, promises, or representations by the Company other than
that which is stated in this Agreement.
26. WAIVER OF JURY TRIAL
Each Party waives, to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any litigation arising
out of or relating to this Agreement and Executive's employment by the Company.
Each Party (a) certifies that no representative, agent or attorney of the other
Party has represented, expressly or otherwise, that such other Party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications set forth in this section.
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XXXXX XXX EXECUTIVE EMPLOYMENT AGREEMENT
VENDINGDATA OCTOBER 3RD, 2005
IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date
first written above.
VENDINGDATA CORPORATION, VENDINGDATA CORPORATION,
a Nevada corporation a Nevada corporation
By: By:
--------------------------------- -------------------------------
Xxxx X. Xxxxxxx Xxxxx X. Xxxxxx
Its: Executive Director of the Board Its: Chairman of the Board
EXECUTIVE
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Xxxxx Xxx
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