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EMPLOYMENT AGREEMENT
OF
XXX X. XXXX
THIS EMPLOYMENT AGREEMENT (hereafter the "Agreement"), is entered into this
1st day of January, 1997, effective January 1, 1997, by and between
CASINOVATIONS INCORPORATED, a Washington corporation authorized to do
business in Nevada (hereafter the "Company"), and XXX X. XXXX (hereafter the
"Employee").
The parties recite that:
(a) The Company desires the knowledge, skills, and ability of the
Employee for the befit of the Company.
(b) The Employee wishes to be employed by the Company in accordance
with the terms of this agreement.
(c) The Employee recognizes the legitimate need of the Company for
protection of its confidential information.
(d) The Company recognizes and acknowledges the value of the
Employee's services and deems it necessary and desirable to retain the
Employee's services for the period herein described.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the Company and the Employee agree as follows:
1. EMPLOYMENT
The Company hereby employs the Employee upon the terms and conditions
hereinafter set forth, and the Employee hereby accepts employment upon said
terms and conditions.
2. TERM AND RENEWAL
Except as otherwise provided, this agreement shall be for a term of two (2)
years, commencing on January 1, 1997, subject to the early termination
provisions of Article 8. At the expiration date of this agreement,
it shall be considered renewed for regular successive periods of one (1) year
terms unless either party submits a notice of termination thirty (30) days
prior to the end of the preceding period.
3. DUTIES
The Company hereby employs the Employees as Vice-President Finance and Chief
Financial Officer, and the Employee hereby promises to perform the duties
related thereto and to perform such other duties as the Company may from time
to time assign. As directed by the appropriate representative(s) of the
Company, the Employee shall also render services for and perform duties for
entities related to the Company and for persons or entities having a
contractual relationship with the Company requiring the Company to provide
such services. The Employee will be under the supervision of the President
and Chief Executive Officer and shall perform such tasks and duties as
assigned by him. The Employee shall perform all of his duties at
such place or places and at such times as the Company shall in good faith
require and as the interest, needs, business or opportunity of the Company
shall require. The Company, through its designated representatives, retains
the right to supervise the Employee in the performance of his duties.
4. TIME AND EFFORTS OF EMPLOYEE
So long as this agreement continues in effect, the Employee promises to
devote his exclusive time and energies ot the business affairs of the Company
necessary to achieve the business objectives of the Company; use his best
efforts, skills, and ability to promote the Company's interest; perform the
duties described in Article 3 of this agreement; and to perform such other
duties as may be assigned to him by the Company.
5. COMPENSATION AND BENEFITS
%.1 Compensation. Form all services rendered by the Employee under
this agreement and the Employee's obligation under Articles 6 and 7 herein,
Employee will be compensated as follows:
(a) Base Salary. The Employee shall receive a "Base Salary" for each
calendar month under the term of this agreement of Seven Thousand Five
Hundred Dollars ($7,500.00). The Base Salary shall be payable in equal semi-
monthly installments on the first and fifteen of each month.
(b) Quarterly Bonus. The Employee shall be entitled to receive a
bonus, payable on a quarterly basis and in amount not to exceed Two Thousand
Five Hundred Dollars per month ($2,500) upon the Company achieving its goals
as set by the Board of Directors, upon the fulfillment of the Employees
duties and the Company achieving its goals. The determination of whether
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the Employee has fulfilled his duties and the Company has met its goals is in
the discretion of the President of the Company. However, the Employee
shall be afforded, on a quarterly basis, a meeting with the President to
discuss the Employee's performance under this agreement and his right to
receive the bonus.
(e) Stock Bonus. In addition to the Base Salary Quarterly Bonus
stated above, the Employee shall receive "Stock Options" to purchase up to
one hundred and fifty thousand (150,000) shares of the Company's common stock
("Shares") under the following terms and conditions:
(I) Upon the successful S-1 registration of the Company's shares
with the Securities and Exchange Commission, the Employee shall have the
right to acquire up to fifty thousand (50,000) Shares at One Dollar and Fifty
Cents ($1.50) per Share.
(ii) Upon the Employee fulfilling his obligations and the Company
reaching its goals for 1997, as provided on Schedule 1, the Employee shall
have the right to acquire up to an additional fifty thousand (50,000) Shares
at One Dollar and Fifty Cents ($1,50) per Share. The determination of
whether the Employee has met his obligations and the Company has reached its
goals shall be made at the discretion of the President and Chief Executive
Officer and approved by the Company's Board of Directors. The Employee
shall be entitled to a meeting with the President and Chief Executive Officer
during January 1998 to discuss the bonus to be paid hereunder, if any. The
Stock Options to be issued under this subparagraph shall be vested in the
Employee no later than January 31, 1998.
(iii) Upon the Employee fulfilling his obligations and the Company
reaching its goals for 1998, as provided on Schedule 1, the Employee shall
have the right to acquire up to an additional fifty thousand (50,000) Shares
at One Dollar and Fifty Cents ($1,50) per Share. The determination of
whether the Employee has met his obligations and the Company has reached its
goals shall be made at the discretion of the President and Chief Executive
Officer and approved by the Company's Board of Directors. The Employee
shall be entitled to a meeting with the President and Chief Executive Officer
during January 1998 to discuss the bonus to be paid hereunder, if any. The
Stock Options to be issued under this subparagraph shall be vested in the
Employee no later than January 31, 1999.
(iv) The Stock Options must be exercised within Five (5) years from
the date the Employee's rights are vested. The Shares will be issued within
Thirty (30) days from when the Employee notifies his intent to exercise the
options and tenders the purchase price to the Company. The Company offers
no warranty as to the tradability of the Shares or as to whether such shares
will be registered with the Securities and Exchange Commission.
(v) If the Company is to be sold, a portion of the Stock Options
not yet issued hereinabove shall vest in the Employee thirty (30) days prior
to such sale. The number of Stock Options to vest under this subparagraph
shall be determined pro rata based upon the number of Stock Options that the
Employee may be entitled to for the year and the number of months the
Employee was retained under this Agreement during this same year. For
example, if the Company was to be sold on April 1, 1998, the Employee would
have an additional twelve thousand five hundred Stock Options vest on March
1, 1998. [(50,000 stock options for 1988) x (3 months of employment/12
months)].
The Company shall notify the Employee in writing of (1) the impending sale,
(2) the right of the Employee to exercise the Stock Options and (3) the terms
and conditions of the proposed sale of the Company. For purposes herein,
the Company shall be deemed sold if substantially all of its assets are sold,
including patents and goodwill, or the Company's stock is sold or transferred
causing a change in the person or persons who currently have majority control
of the Company. This Paragraph does not apply to transfers of stock of the
Company, (1) by an assignment to a revocable living trust in which the holder
is and remains a trustee and a beneficiary, or (2) by reason of death of the
holder. It is the Employee's discretion to exercise the Stock Options prior
to the proposed sale. Any Stock Options vested in this subparagraph shall
remain vested in the Employee, whether or not they are exercised before the
sale, under the terms of subparagraph (vi).
5.2 Other Benefits. The Employee shall be entitled to participate on
a reasonable basis in any deferred compensation, medical reimbursement,
pension, profit sharing, thrift, savings, vacation, group insurance, or other
plan or program, and to receive any other benefits for which he is eligible
and which the Company may provide for him or for its Employees generally.
The Employee is entitled to a car allowance of Four Hundred and Fifty Dollars
($450.00) per month.
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6. CONFIDENTIAL INFORMATION
6.1 Disclosure of Confidential Information.
(a) Definition. "Confidential information" shall mean and include
all records of the accounts of customers, route books, customer lists, and
any other records and books relating in any manner to the customers and/or
suppliers of the Company (whether such records, books or lists are prepared
by the Employee or otherwise come into the possession or use of the
Employee). "Confidential information" shall also mean and include any
product information, technical data, know-how, specifications, processes,
drawings, sketches, formulas, computations and any other information of any
kind whatsoever, whether written or not, concerning any process, manufacture,
composition of matter, plant, design, idea, method, system or plan in
which the Company has a possessory interest and which becomes known to
Employee. The Employee acknowledges that the Company's primary assets
consist of its gaming products or accessories. Any unauthorized disclosure
of the design or marketing of such products by the Employee shall violate
this Article.
"Confidential information" shall also mean and include any accounting,
sales, advertising, marketing or management information, methods or
techniques, any business plans, any computer programs and routines of the
Company and any other information of any kind whatsoever, whether written or
not, concerning, directly or indirectly, the Company, its plans, programs or
operations, which information is not generally known in the businesses or
industries in which the Company is or may become engaged during Employee's
term of this agreement.
(b) Restriction on Use. Any confidential information received or
developed by Employee shall be used only in the conduct by the Employee of
the business of the Company. Such confidential information shall not be
used by Employee for any other purpose unless otherwise directed or
authorized in writing by the Company.
(c) Protection of Confidential Information. The Company and the
Employee expressly recognize and acknowledge that any confidential
information disclosed to or developed by Employee will not, at any time
either during or after the term of this agreement, in any manner, either
directly or indirectly be divulged, disclosed, or communicated to any person,
firm or corporation, or any other business entity by the Employee, nor shall
the Employee use for his own benefit or for any other purpose than the
exclusive benefit of the Company, its subsidiaries, successors, or assigns,
confidential information or any information whatsoever concerning matters
affecting or relating to the business of the Company which the Employee knows
or has reason to know would be valuable to competitors or potential
competitors of the Company, including but not limited to, confidential
information or information relating to the Company's relationships with
actual or potential customers or suppliers and to the needs and requirements
of any such actual or potential customers. Furthermore, but not by was of
limitation of the foregoing, the Employee shall not (I) make known to any
firm, person or corporation the names or addresses of any of the customers of
the Company or any other information pertaining to them or (ii) call on,
solicit, or take away or attempt to call on, any of the customers of the
Company on whom the Employee called or with whom he became acquainted during
his consulting with the Company, either for himself or for any other person,
firm or corporation.
6.2 Books and Records. The Employee promises further that he shall
not, without the prior written approval of the Company, make copies of any
books, drawings, documents, records or other written or printed,
photographic, encoded, taped, electrostatically or electromagnetically
encoded data or information of whatever nature (hereinafter the "documents"
of the Company; that he shall not, without the prior written approval of the
Company, remove any of the foregoing from the premises of the Company; and
that he shall not, without the prior written approval of the Company, make
available to third parties access to said documents of the Company. The
Employee agrees that all records and books relating in any manner whosoever
to the customers (whether actual or potential) of the Company, whether
prepared by the Employee or otherwise coming into his possession shall be the
exclusive property of the Company regardless of who actually purchased the
original book or record. All such books and records shall be immediately
returned to the Company by the Employee upon any termination of this
agreement. If the Employee purchases any original book or record, he shall
immediately inform the Company, which shall immediately reimburse the
Employee.
6.3 Limitation. Nothing contained int his Article or in any other
part of this agreement shall restrict the ability of the Consultant to make,
with the written consent of the Company and in the ordinary course of his
consulting, such disclosures as may be necessary or appropriate to the
effective and efficient discharge of his duties to the Company.
6.4 Term. Notwithstanding any other provision of this agreement, the
provisions of this Article 6 shall continue in full force and effect for a
period of two (2) years following the expiration or other termination of this
agreement.
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6.5 Liquidated Damages. In addition to an injunction preventing the
dissemination or unauthorized use of Confidential Information as permitted by
law, the parties agree that the reasonable amount of damages the Company will
suffer for a breach of the provisions of Article 6 or Article 7 shall be
$100,000; provided, however, that a breach of both Articles 6 and 7 shall
total $200,000 in damages.
7. EMPLOYEE'S COVENANT NOT TO COMPETE
7.1 Covenant Not to Compete.
(a) General. The Company and the Employee expressly recognize and
acknowledge that the Company is engaged in a business which is highly
competitive; that any knowledge of the Company's confidential information or
business affairs would give a competitor or potential competitor unfair
competitive advantage over the Company' that consulting or employment,
directly or indirectly, of the Employee anywhere in the area in which the
Company conducts its business would give to such competitor an unfair
competitive advantage; and that the Employee possesses valuable skills and
knowledge. In recognition of the above, the Employee and the Company hereby
expressly agree that the restrictions on competition by the Employee
contained in this Article 7 are reasonable, will not overburden the Employee,
and are in the best interest of both the Employee and the Company.
(b) Time Period and Area Covered. The Consultant promises that,
during the term of this agreement, as set forth in Article 2 hereof, and for
a period of two (2) years after the expiration or other termination of this
agreement, he shall not either directly or indirectly engage in competition
with the Company, or with any subsidiary, successor or appointee of the
Company, as constituted during the term of this agreement as of his
resignation, departure, discharge or termination with the Company in, Nevada,
and within a fifty (50) mile radius of any other place of business operated
by the Company as of such date. The Employee acknowledges that the
Company's business is international and that the solicitation of the
Company's international clients in competition of the Company is a violation
of this agreement.
(c) Affiliations Covered. The Employee further promises that, during
the term of this agreement, as set forth in Article 2 hereof, and for a
period of two (2) years after the expiration or other termination of said
agreement, he shall not engage directly or indirectly as a proprietor,
partner, shareholder, director, officer, Employee, agent, consultant, or in
any other capacity or manner whatsoever, in any business activity competitive
with the business of the Company or of any subsidiary, successor or appointee
of the Company, as constituted during his consulting.
(d) Board of Directors Approval. Either or both of the provisions
contained in Subsections (b) and (c) above may be waived at any time in
writing by the board of directors of the Company. Such waiver shall
not be unreasonable withheld but no such waiver shall be considered as a
waiver of any other term, covenant or provision of this agreement, nor shall
it be considered a waiver of any subsequent action by the Employee.
7.2 Limitation. Nothing contained in this Article 7 shall prevent
the Employee from purchasing or causing or permitting to be purchased for his
direct or indirect benefit securities of any corporation whose securities are
regularly traded on any national or regional securities exchange; provided,
however, that such purchase must not result in the direct or indirect
beneficial ownership of more than one percent of any outstanding class of
equity securities of any corporation engaged directly or indirectly in any
trade or business activities competitive with that carried on by the Company
without the written approval of the Company.
7.3 Liquidated Damages. In addition to an injunction prevent the
Employee from competing with the Company as allowed by law, the parties agree
that the reasonable amount of damages the Company will suffer for a breach of
the provisions of Article 6 or Article 7 shall be $50,000; provided, however,
that a breach of both Articles 6 and 7 shall total $100,000 in damages.
8. TERMINATION
8.1 Grounds for Termination. This agreement shall terminate as it
relates to the Employee upon the first to occur of the following events:
(a) The death of the Employee;
(b) Immediately upon five (5) days written notice form the Company to
the Employee "for cause". For cause is defined as:
(I) a breach of the terms and conditions of this agreement by the
Employee (other than a breach described in subparagraph 8.1(b)(ii) herein
below), including the performance of the Employee's obligations and duties
herein, which remains uncured for a period of twenty (2) days after written
notice by the Company to the Employee of any such breach;
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(ii) a breach of the terms and conditions of this agreement by the
Employee which breach consists of dishonest or criminal conduct, or such
breach constitutes gross negligence by the Employee in failing to perform his
duties and obligations under this agreement.
(c) Upon the passing of fifteen (15) days after notice from the
Company to the Employee of a bona fide decision by the Company to terminate
its business.
8.2 Severance Pay. If the agreement is terminated for any reason,
other than for a reason under Section 8.1(b)(ii), the Company shall pay the
Employee, upon termination, severance pay in a one time lump sum equal to
nine (9) months of the Employee's Base Salary in effect at the time of
severance.
Under no circumstances shall the employee be entitled to any Commissions,
Quarterly Bonus, Licensing Bonus, or Stock Bonus, which has not vested or
accrued prior to the Employee's termination.
8.3 Effect of Termination on Articles 6 and 7. Notwithstanding the
provisions of this Article, the provisions of Articles 6 and 7 will not
terminate upon the occurrence of an event described above, but will
continue in full force and effect for the term described in those Articles.
The severance pay shall constitute additional consideration for the
enforcement of such provisions.
9. MISCELLANEOUS
9.1 Assignment of Agreement. The knowledge and skills of the
Employee are unique and his services bargained for by this agreement may not
be delegated by the Consultant to any other person. This agreement
shall inure to the benefit of and be binding upon the Employee and his
testate or intestate distributes, and the Company, its successors and assigns
including, without limitation, any person, partnership, trust, corporation or
other legal entity which may acquire all or substantially all of the
Company's assets or which may acquire a controlling interest, either direct
or beneficial, in the Company or with or into which the Company may be
consolidated or merged. As used in this agreement, the term "Company" shall
include any such successor or assignee.
9.2 Remedies. It is agreed that any breach of Article 6 or 7 of this
agreement by the Employee will result in irreparable injury to the Company
and will authorize recourse by the Company to equitable remedies, including,
but not limited to , affirmative or negative injunctive relief. It is
further agreed that in the event of such breach, violation, or evasion of any
of the Articles hereinbefore mentioned, or of any other Article herein, the
Company may forthwith terminate this agreement and thereafter be released
from all claims of the Employee hereunder; provided, however, that such a
termination shall not release the Employee from any warrant, covenant, term,
or condition under Articles 6 or 7 of this agreement. Nothing contained
herein shall be deemed to obligate the Company to undertake such termination
and nothing contained herein shall be deemed to preclude the Company from
pursuing any remedy, whether legal or equitable, which is available to it in
the event of any breach, violation or evasion of any Article of this
agreement.
9.3 Enforcement Costs. The prevailing party shall be entitled to all
costs of enforcing this agreement, regardless of whether an action at law or
in equity is commenced or maintained, including but not limited to, court
costs and reasonable attorney's fees.
9.4 Waiver of Breach. The waiver of the breach of any term of
condition of this agreement shall not be deemed to constitute the waiver of
any other or subsequent breach of the same or any other terms of condition.
9.5 Severability. All terms and conditions contained herein are
severable, and in the event that any of them shall be held or considered to
be unenforceable by any Court of competent jurisdiction, this agreement shall
be interpreted as if such unenforceable term or condition was not contained
herein.
9.6 Law to Apply. This agreement shall be governed by and
interpreted according to the laws of the State of Nevada. Each party
submits to the personal jurisdiction of all courts, whether Federal or State,
within Nevada, and agrees that any action pertaining to this agreement shall
be brought in a court in Nevada.
9.7 Notice. Any notice required or permitted to e given under this
agreement shall be sufficient if in writing, and if sent by registered mail
to his last residence as recorded on the records of the Company in the case
of the Employee, or to the principal offices of the Company in the case of
the Company.
9.8 Modification of Agreement. No waiver or modification of this
agreement or of any term or condition herein contained shall be valid unless
in writing and duly executed, nor shall any waiver or modification of this
agreement not duly executed as provided herein be deemed to be a part of this
agreement under any circumstances.
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9.9 Gender, Number, Etc. Where applicable, the singular includes the
plural, the masculine includes the feminine, and vice versa.,
IN WITNESS WHEREOF, the parties have executed this agreement, delivery
of which is hereby acknowledged, as of the date first above written.
CASINOVATIONS INCORPORATED
ATTEST
/s/ Xxxxxxxxx Gefeuide
------------------------ ---------------------------------
Xxxxxxxxx Gefeuide By:
Witness President
EMPLOYEE
/s/ Xxx X. Xxxx
------------------------
Xxx X. Xxxx
