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EMPLOYMENT AGREEMENT
(Personal Service Agreement)
AND
COVENANT NOT TO COMPETE
THIS AGREEMENT is made and entered into this 31st day of March, 1996, by and
between CASINOVATIONS INCORPORATED, a Washington corporation (hereinafter
referred to as "Employer and/or "Corporation" and/or "Company") and XXXXX X.
XXXXX, a resident of Washington, (hereinafter referred to as "Employee"
and/or Individual).
WHEREAS, Corporation is engaged in the rendering of services related
to the invention, development, marketing, and manufacturing of gaming and
gaming related products, and other related services and areas to come before
the Corporation;
WHEREAS, Corporation desires to employ Employee upon the terms and
conditions hereinafter set forth, and Employee desires to accept such
employment; and
WHEREAS, the Employee entered into a Funding Agreement as of January
15, 1996 with various parties (to include Sharps International Limited
Partnership) and such Funding Agreement provided Employee enter into this
Personal Service Agreement;
Now, Therefore, IT IS AGREED for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, as follows:
1. Purpose and Employment. The purpose of this agreement is to define
the relationship between Corporation as an employer of Employee and Employee
as an employee of Corporation. hereby employs Employee and Employee hereby
accepts employment by Corporation upon the terms and conditions as set forth
herein.
2. Duties. Corporation hereby employs, engages, and hires Employee as
employee to provide a multitude of services on behalf of Corporation to
include but not be limited to the inventing, developing, conceptualizing,
marketing, manufacturing, and licensing of gaming and gaming related products
and services. Employee may also be an officer and/or a director of
Corporation. Employee will carry out the policies and procedures relating to
such employment as such policies and procedures are formulated by
Corporations shareholders, Board of Directors and Officers. Employee hereby
accepts and agrees to such hiring, engagement and employment subject to the
general supervision, orders, advice and direction of Corporation. Employee
shall perform such duties as are customarily performed by one holding such
position in the same or similar businesses or enterprises as that engaged in
by Corporation, and shall additionally render such other related and
unrelated services and duties as may be reasonably assigned to Employee from
time to time by Corporation. Employee agrees that Employee will, at all
times, faithfully, industriously and to the best of Employee's ability,
experience and talents perform all of the duties which may be reasonably
required of and from Employee pursuant to the express and implicit terms of
this agreement and to the reasonable satisfaction of Corporation. Such
duties shall be rendered in the States of Washington and Nevada and such
other place or places as Corporation shall, in good faith, require or as the
interests, needs, businesses or opportunities of Corporation shall require.
Employee shall furnish the hours Employee, in Employee's sole discretion,
deems necessary for the fulfillment of Employee's obligations hereunder and
the rendering services on behalf of Corporation in furtherance of its best
interests.
3. Term. The term of employment under this agreement shall be from
January 15, 1996 and ending at such time as this Agreement is terminated as
hereinafter provided.
4. Compensation. Except as provided in paragraph B. below, Corporation
shall pay to Employee and Employee shall accept from Corporation, in full
payment for Employee's services, compensation at the rate of Ten Thousand and
no/100 Dollars ('10,000.00) per month for full time employment; or a pro rata
share of Ten Thousand and no/100 Dollars ($10,000.00) per month in the event
Employee provides services to any other entity(ies), to include Employee's
own businesses.
5. Fringe Benefits. Employee shall be entitled to participate with all
other employees of Corporation in all Employee group fringe benefits which
may be authorized and adopted from time to time by the Board of Directors of
Corporation.
6. Working Facilities and Expenses. Employee is encouraged and
expected, from time to time, to incur reasonable expenses for the promotion
of the business of Corporation, including expenses for an automobile and
transportation, home telephone, maintaining necessary facilities for
consultation with Corporation's clients in Employee's home, social and civic
membership and participation, entertainment, travel and similar items.
Corporation shall solely at the discretion of the Board of Directors,
reimburse Employee for any such legitimate, ordinary, customarily and
necessary expenses upon documentation by Employee pursuant to the provisions
of internal Revenue Code Section 274(d).
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7. Meetings and Seminars. Employee is encouraged and expected, at such
time or times as may be approved by Corporation's Board of Directors, to
attend business seminars, meetings and conventions and business education
courses and to freely participate in organized business activities.
The cost of travel, tuition or registration and food and lodging for
attending such activities shall be paid by Employee. However, because of
unusual circumstances, the Board of Directors of Corporation may determine
that the costs of Employee's attendance at business seminars, meetings and
conventions should be authorized as an expense of Corporation. Should any
such additional expense of attendance be so authorized, Employee shall be
reimbursed therefor upon presentation to Corporation of an itemized expense
voucher that complies with Corporation policy and Internal Revenue Code
requirements for adequate documentation of expenses.
8. Termination. This Agreement is for a two (2) year period effective
as of January 15, 1996 and is subject to automatic renewals for consecutive
two (2) year terms thereafter unless and until Corporation and/or Employee
gives written notice of non-renewal at least sixty (60) days prior to
expiration of then current term, further subject to earlier termination as
provided herein. Except as provided below, in the event of termination,
Corporation shall only be obligated to continue to pay Employee the salary
due Employee under this agreement up to the termination date. Following any
such notice of termination, Employee shall fully cooperate with Corporation
in all matters relating to the winding up of Employee's pending work on
behalf of Corporation and to the orderly transfer of any such pending work to
other employees of Corporation as may be designated by the Board of Directors
of Corporation. Such termination shall not affect any liability or other
obligation which may have accrued prior to such termination, including but
not limited to any liability for loss or damage on account of default.
Employee shall not be entitled to retain or copy any corporate information or
documents in the event of termination and Employee shall remain bound by the
other terms and conditions of this Agreement to include paragraphs 14.
through 18.
The Corporation may terminate this Agreement for Adequate Cause (defined
below) immediately upon giving written notice to the Individual. If
terminated for Adequate Cause, the Corporation's compensation obligations
shall terminate upon the last day of the employment relationship as specified
in the termination notice.
The Corporation may also terminate this Agreement without Adequate Cause, but
in such event (other than Disassociation, defined below), the Corporation
shall be obligated to pay Employee compensation for a period equal to the
longer of six (6) months or the balance of the then current term of this
Agreement, at a monthly rate equal to the average monthly compensation paid
by the Company to the Employee during the six (6) month period immediately
preceding the month in which termination occurs. Notwithstanding the
preceding sentence, in the case of a Mandatory Disassociation (defined
below), Employee shall be entitled to compensation at the rate determined in
accordance with the preceding sentence for a period of six (6) months
following the termination. As used herein, the term "Mandatory
Disassociation" means a termination of Employee by the Company as a result of
any circumstance in which, in the reasonable opinion of counsel to the
Corporation and after giving effect to paragraph 19 below, the continuation
of this Agreement would render the Corporation unable to obtain any material
gaming or other license, franchise, permit or approval required for the
Corporation to sell, lease, license and distribute its products and otherwise
engage in its business activities.
As used herein, the term "Adequate Cause" means and includes any of
the following:
a. Employee's failure or refusal to carry out the reasonable
directions of the Board of Directors of Corporation, provided that the
directions are reasonably consistent with the normal duties performed by
Employee, which failure or refusal continues for thirty (30 days) after the
Employee's receipt or written notice thereof;
b. Employee's willful failure or refusal to comply in any
material respect with the reasonable policies and procedures of the
Corporation as in effect from time to time, which failure or refusal
continues for thirty (30) days after Employee's receipt of written notice
thereof;
c. Employee's breach of this Agreement, including but not
limited to, his failure, inability, or refusal in any material respect to
perform his or her duties in accordance with this Agreement, which breach
remains uncured for thirty (30) days after Employee's receipt of written
notice of the breach; or
d. Any deceptive, fraudulent, dishonest or illegal act (or failure
to act) or breach of fiduciary duty by the Employee with respect to
Corporation or with respect to Sharps International Limited Partnership, a
Nevada limited partnership.
In addition to the Corporation's rights of termination, the Employee
may terminate this Agreement voluntarily upon giving at least sixty (60) days
prior written notice to Corporation and Employee's compensation shall cease
on termination date. In addition, after notice of termination has been
given, or prior to such time in the event Employee has decided to terminate
his employment with Employer but not yet notified Employer, Employee
agrees that he will not:
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(a). Make any statement or perform any act intended to advance
an interest of any existing or prospective competitor of Employer in any way
that will, or may, injure an interest of Employer in its relationship and
dealings with existing or potential customers and clients, or solicit or
encourage any other employee of Employer to do any act that is disloyal to
Employer, or inconsistent with Employer's
interests, or in violation of any provision of this Agreement;
(b) Discuss with any other employee the formation or operation
of any business intended to compete with Employer, or the possible
future employment of such other Employee by any such business, if Employee
has or expects to acquire a proprietary interest in such business, or is or
expects to be made an officer or director of such business;
(c) Inform any existing or potential customer of Employer that
Employee intends to resign, or make any statement or do any act intended
to cause any existing or potential customer of Employer to learn of
Employee's intention to resign, or to terminate his employment, whether
voluntarily or involuntarily, without having first given a corporate officer
of Employer at least ten (10) days notice, in writing, of such intention, and
the names of each representative of an existing or potential customer whom
Employer intends to inform or cause to be informed of such intention, and
having gained written approval for such contact in advance; and
(d) Discuss with an existing or potential customer of Employer,
the present or future availability of services or products by a business, if
Employee has or expects to acquire a proprietary interest in such business,
or such services or products are competitive with services or products which
Employer provides.
On or before the effective date of termination of employment with Employer,
Employee shall tender his resignation as an officer and director of that
company if he is then serving in that capacity. In addition, in the event
Employee gives notice of termination, such notice shall also include his
tender of resignation as an officer and director of the Corporation.
9. Notices. Any and all notices required or permitted to be
given under this Agreement shall be sufficient if furnished in writing and
sent by registered or certified mail to the last known residence of Employee
or to the principal office of Corporation.
10. Choice of Law and Venue. This agreement shall be
interpreted, construed and governed according to the laws of the State of
Washington, and venue shall be in Spokane County, State of Washington.
11. Captions. Headings used in this Agreement are solely for
convenience and shall not affect or be used in connection with the
interpretation of this Agreement.
12. Internal Revenue Code References. Whenever reference is
made herein to the Internal Revenue Code or any section thereof, such
reference shall be construed to mean the Internal Revenue Code of 1986 as
amended, or such section thereof as the case may be as heretofore or
hereafter amended, supplemented or superseded by subsequent laws of similar
effect.
13. Amendments. Except as otherwise provided herein, no
amendments or additions to this Agreement shall be binding unless in writing
and signed by both parties.
14. Non-Competition. In consideration of the compensation and
other benefits to be paid to the Employee under this Agreement and other
additional valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in view of the unique value to Corporation of the
services of Employee and the confidential information obtained by or
disclosed to Employee pursuant to the employment relationship embodied
herein, for and in additional consideration of One Hundred and no/100 Dollars
($100.00), which is payable within ninety (90) days of termination of
employment and additional valuable consideration (such additional
consideration acknowledged by Corporation and Employee as including but not
limited to Employee's employment and Employee's continued employment), the
Employee agrees that, beginning on the data of this agreement and continuing
for two (2) years after the date which is the later of (a) the termination of
the Employee's employment with the Corporation (including any period of this
Employee's continued employment or engagement as an employee or consultant
following expiration of the term of this Agreement) (the "Termination Date")
he shall not, directly or indirectly, for his own account or as agent,
employee, officer, director, trustee, member, consultant or partner, or as a
stockholder or equity owner of any corporation or any other entity (except
that he may own securities constituting less than five percent (5%) of any
class of securities of a public company) , or member of any firm or
otherwise, (a) engage or attempt to engage, in the Restricted Territory (as
hereinafter defined) , in the business (as hereinafter defined) or any other
business or activity which is the same as, substantially similar to or
directly or indirectly competitive with the business conducted by the
corporation at the Employee's termination date,
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(b) employ or solicit the employment of any person who is employed by the
Corporation at the Employee's termination date or at any time during the six-
month period preceding the Employee's termination date, (c) canvass or
solicit business in competition with the business conducted by the
Corporation immediately prior to the termination date from any person or
entity who during the six-month period preceding the termination date shall
have been a customer or client of the Corporation, or from any person or
entity which the Employee has reason to believe might thereafter become a
customer or client of the Corporation as a result of marketing, contacts or
other facts and circumstances of which the Employee is aware, (d) willfully
dissuade or discourage any person or entity from using, employing or
conducting business with the Corporation or (e) disrupt or interfere with, or
seek to disrupt or interfere with, the business or contractual relationship
between the Corporation and any supplier who during the six-month period
preceding the termination date shall have supplied components, materials or
services to the Corporation. For purposes of this Agreement, the term
Restricted Territory shall mean anywhere in the world. Business is defined
as the inventing, developing, marketing, sales, and manufacture of gaming and
gaming related products and services and any other lawful business activity
engaged in by the Corporation on the termination date.
Notwithstanding the foregoing, the restrictions imposed by this
Section 14. or Sections 15. through 17. hereof shall not in any manner be
construed to prohibit, directly or indirectly, the Employee from serving as
an employee of the Corporation in accordance with the terms and conditions of
this Agreement.
15. Confidential Information. Employee shall take all
reasonable precautions to safeguard the confidential nature of all
confidential information of or belonging to the Corporation and its
Affiliates and shall take any other precautions with respect thereto which
the Corporations in its sole discretion, may reasonably request. For
purposes of this Agreement, "confidential information" shall mean all
information pertaining to the business and operations of the Corporation and
its Affiliates which is not generally available to the public and which the
Corporation desires to keep confidential, including, but not limited to,
trade secrets, proprietary rights and information, technology, concepts,
inventions, ideas, financial information, developments, information as to
customers and customer lists, sales and marketing information, information as
to suppliers, manufacturing, production and pricing information, information
as to business methods, practices and strategies, and all documents,
electronic records and other tangible items relating to or containing any
such information.
16. Personal Property. The Employee agrees that the
Corporation shall own all right, title, and interest in and to all
developments and confidential information the Employee receives, invents,
conceives, or develops, either alone or with others, during the term of his
employment hereunder. Without limiting the generality of the foregoing, all
notes, notebooks, memoranda, working papers, graphs, charts, pictures, data,
drawing, documents and all other items containing or relating in any way to
confidential information made, compiled or obtained by the Employee, and all
copies thereat, together with all rights associated with ownership of such
items (such as copyright, patent, trade secret and other proprietary rights)
shall become the property of the Corporation when so made, compiled or
obtained, whether or not delivered to the Corporation, and shall be held by
the Employee in trust for the Corporation and shall be delivered to
the Corporation upon request and, in any event, upon termination of the
Employee's employment hereunder.
17. Developments.
(a) The Employee agrees to immediately communicate to the Board
of Directors of the Corporation or to such other individual the Board of
Directors may designate, a full and complete disclosure of each Development
(as defined in subsection (e) below) conceived, made, or otherwise developed
by the Employee prior to December 31, 1992 during the term of his employment
hereunder and during the two (2) year covenant period per paragraph 14.,
whether solely or jointly with others, and whether or not while actually
engaged in performing work for the Corporation.
(b) The Employee agrees to assign and transfer to the
Corporation, without any separate remuneration or compensation, his entire
right, title and interest in and to all Developments and any United States
and foreign patent, copyright and any other proprietary rights in and respect
to all such Developments, conceived, made or otherwise developed by the
Employee after December 31, 1992 and during the term of his employment
hereunder, whether a full or partial interest, and whether or not while
engaged in performing work for the Corporation. The Employee understands and
agrees that the Corporation will determine, in its sole and absolute
discretion, whether an application for a copyright, patent or other
proprietary right registration will be filed on the Employee's Development
and whether any such application will be abandoned prior to issuance of a
patent, copyright or other proprietary right registration.
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(c) The Employee shall take such action including, but not
limited to, execution, acknowledgment, delivery and assistance in preparation
of documentation as may reasonably be requested by the Corporation for the
Implementation or continuing performance of subsection 17. (b) of this
Agreement. Without limiting the generality of the foregoing, the Employee
shall execute, acknowledge, deliver and assist in preparing such instrument
of conveyance, patent or copyright application, or assignment or further
assurance as the Corporation may reasonably request, to evidence, transfer,
vest and confirm the right, title and interest transferred or granted or to
be transferred or granted to the Corporation under subsection 17. (b) of this
Agreement. The Employee shall not contest the validity of any patent,
copyright or other proprietary right, either United States or foreign, which
is transferred, conveyed, granted, vested or otherwise assured to the
Corporation for concepts or inventions conceived or invented after December
31, 1992, or while an Employee, to which the Employee made any contribution
or in which the Employee participated in any way, and shall not assist any
other party in any way to contest the validity of such patent, copyright, or
proprietary right.
(d) The Employee has prepared and attached hereto as Exhibit
"A", a list of all inventions, developments, patent applications and patents
that were made, developed, conceived or first reduced to practice by the
Employee prior to December 31, 1992 and the commencement of the term of his
employment hereunder that are subject to prior agreements or that the
Employee desires to exclude from this Agreement. If no such list is
attached, the Employee represents and warrants that there are no such
inventions, developments, patent applications or patents.
(e) "Developments" means (1) any invention, discovery, concept
or idea, whether or not patentable; (2) any writing, drawing, design or other
creative expression, whether or not copyright or trademark applications are
filed thereon; (3) any computer program, discovery, idea, device, process,
design, development, improvement, conception, concept, application, technique
or know-how; or (4) any other invention, whether patentable or copyrightable,
and whether or not reduced to practice, and, with respect to all of items (1)
through (4) of this subsection (e) , that is (a) within the scope of the
Corporation's business, research or investigation; (b) results from or is
suggested by any work performed by the Employee for Corporation and related
to the business of the Employee's employment with the Corporation or under
the Employee's direction, whether or not it is made or discovered, conceived,
made or discovered during normal working hours or on the premises of the
Corporation; or (c) results from the use of the Corporation's
facilities, equipment, property, or other assets. Developments shall
include, but not be limited to articles, processes, methods, formulas,
systems, computer source codes and techniques as well as improvements thereof
and know-how related thereto. All developments are the property of the
Corporation with the exception of the "Literary Rights" as defined in Section
19.
18. Equitable Remedies. The Employee represents and warrants
that he has had an opportunity to consult with his attorney regarding this
Agreement, has thoroughly and completely reviewed Agreement with his
attorney, and fully understands the hereof. Furthermore, the Employee (a)
acknowledges that a remedy at law for his failure to comply with Sections
14., 15.,16 and 17 of this Agreement may be inadequate; and (b) consents to
the Corporation obtaining from a court having jurisdiction specific
performance, an injunction, a restraining order or any equitable relief in
order to enforce any such provision. The right to obtain such equitable
relief shall be in addition to any remedy to which the Corporation is
entitled under applicable law (including, but not limited to, monetary
damages). The Parties acknowledge that Xxxxxxx X. Xxxxxxxx, P.C. is attorney
only for the Corporation and not for Employee and Employee has been advised
to consult independent legal counsel and has had sufficient time to do so.
19. Transfers. Employee hereby transfers to the Corporation,
without additional compensation, royalty or other consideration, full
ownership of any inventions, ideas, or other intellectual property (other
than the Literary Rights) heretofore developed by the Employee and/or Xxxxx-
Xxxxx, a Nevada partnership, or hereafter developed by Employee while
employed or retained by the Corporation that (a) relate to the present or
future business of the Corporation or (b) are developed on the Corporation's
premises or using the facilities, property or the assets of the Corporation.
The transfers herein shall not be deemed to restrict the ability of
Employee to write or develop articles, books, movie scripts, motion pictures,
sound recordings or other literary works about the Inventions transferred to
Corporation by Employee and future Corporation Inventions or the story behind
the development thereof, including any copyrights therein (collectively the
"Literary Rights") ; provided, however, exercise of such rights shall not
involve disclosure of confidential information of Corporation which may have
commercial value to the business of Corporation or its successors.
The Employee agrees to timely take all actions and execute all
documents to transfer all right, title, and interest to Corporation in all
gaming and other inventions, licenses, developments, franchises, permits and
approvals required for the Company to sell, lease, license and distribute its
products and otherwise engage in its business activities.
20. Restrictions. In the event any provision of Paragraphs 14
and 15 relating to time period and/or areas of restriction shall be declared
by a court of competent jurisdiction to exceed the maximum time period or
areas as such court deems reasonable and enforceable, said time period and/or
areas of restriction shall be deemed to become and thereafter be the maximum
time period and/or areas which such court deems reasonable and enforceable.
21. Burden and Benefit. This agreement shall be binding upon
and inure to the benefit of Employee and Corporation and their respective
successors, heirs, and assigns.
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22. Survival of Covenants. The covenants and provisions of
this Agreement shall survive the termination of the employment relationship
embodied herein.
23. Schedules and Exhibits. All schedules and exhibits
attached to this Agreement shall be deemed part of this Agreement and
incorporated herein where applicable, as if fully set forth herein.
24. Interpretation. This Agreement is the product of
negotiation and amendment, and shall not be interpreted particularly for or
against either party because that party's legal representative drafted
this Agreement or a portion of it.
25. Timely Compensation. In the event the compensation due
Employee by Employer is not timely made, Employee shall be entitled to
interest, along with all Employee's other rights and remedies available,
at the rate of nine and one-half percent (9 1/2%) per annum.
26. Funding Agreement. Incorporated by reference as Exhibit
"B" is a Funding Agreement dated January 15, 1996 by and among Xxxxxxx X.
Xxxxx, an individual, Sharps International Limited Partnership, Nevada
limited partnership, Xxxxx X. Xxxxx, an individual, Xxxxxx X. Xxxxx an
individual, Xxxxx-Xxxxx Partnership, a Nevada general partnership, and Xxxxxx
X. Xxxxx, an individual. Said Exhibit "B" sets forth terms and conditions
not otherwise provided for in this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement as of the day
and year first above written.
"CORPORATION"
CASINOVATIONS INCORPORATED
a Washington corporation
By: Xxxxx X. Xxxxx, President
"EMPLOYEE"
By: Xxxxx X. Xxxxx
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AMENDMENT
TO
EMPLOYMENT AGREEMENT
(Personal Service Agreement)
AND
COVENANT NOT TO COMPETE
This is an Amendment to the Employment Agreement and Covenant Not To Compete
dated March 1, 1996 by and between CASINOVATIONS INCORPORATED, a
Washington
Corporation and XXXXX X. XXXXX ("Employee").
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, the parties amend the Agreement as follows:
1. The Employment Agreement and Covenant not to Compete dated
March 31, 1996 remains in full force and effect as originally agreed to
except as provided below. The attached pages 1, 4, 5, 6, 8, 9, 10, 11, 14,
15 and Exhibit "A" are changes and replacements to the respective pages of
the Employment Agreement and are incorporated into the original Agreement as
part of the Agreement.
DATED this day of June, 1996.
"CORPORATION"
CASINOVATIONS INCORPORATED
a Washington Corporation
By: Xxxxx X. Xxxxx, President
"EMPLOYEE"
By: Xxxxx X. Xxxxx
