EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of the 13th day of January, 1998, by and between Casino Data Systems, a Nevada
corporation ("CDS") and Xxxx Xxxxx ("Employee"). For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
CDS and Employee hereby agree as follows:
1. EMPLOYMENT; SERVICES.
1.1 CDS hereby hires and employs Employee, and Employee hereby accepts
such hiring and employment, for the position of Chief Financial
Officer and for the purpose of performing those services (the
"Services") which are usual and customary for a Chief Financial
Officer. Employee shall use diligent efforts and shall devote such
time and energies as may be reasonably required to perform the
Services to the best of his ability.
1.2 During the term of this Agreement, Employee shall not (i) work as
an employee of or independent consultant or contractor for, or
provide any other services for hire or benefit to, any third party
that competes with CDS or its related entities, or (ii) engage in
any activity that in any way competes with the interests of CDS,
whether Employee is acting by himself or as an officer, director,
shareholder, partner, fiduciary, or otherwise, unless Employee
shall first receive the written consent of a majority of the Board
of Directors (the "Board").
1.3 Employee shall report only to the Chief Executive Officer.
2. TERM.
2.1 The term of this Agreement shall commence on January 13, 1998 (the
"Effective Date") and shall expire on January 13, 2002, unless
terminated earlier pursuant to one or more of the following
provisions:
2.1.1 CDS shall have the right to terminate this Agreement and
the Services by delivery of written notice to Employee not
less than thirty (30) days prior to the delivery of such
notice. In such case, this Agreement shall terminate
thirty (30) days following the date of delivery of such
notice.
2.1.2 Employee shall have the right to terminate this Agreement
and the Services by delivery of written notice to CDS at
any time. In such case, this Agreement shall terminate
thirty (30) days following the date of delivery of such
notice.
2.1.3 This Agreement shall terminate upon Employee's death.
2.2 In the event that any of the following events occurs:
(a) This Agreement is terminated by CDS without "Good Cause"
(defined below), or
(b) Employee resigns for "Good Reason" (defined below) prior
to the expiration of this Agreement's term,
then, in addition to all Base Salary, prorated Bonus and benefits
due to the effective date of termination, CDS shall also pay to
Employee additional Base Salary, prorated Bonus and benefits: (i)
if such termination or resignation occurs on or before January 13,
1999, for one additional year after the effective date of such
termination or resignation; or (ii) if such termination or
resignation occurs after January 13, 1999, either for six
additional months after the effective date of such termination or
resignation or until the normal expiration date of this Agreement,
whichever time period is shorter.
2.3 If this Agreement is terminated by CDS prior to the end of its term
for Good Cause or if Employee resigns for other than Good Reason,
then CDS shall pay Employee's Salary, prorated Bonus and benefits
only through the effective date of termination of employment.
2.4 As used herein, "Good Cause" shall mean any of the following:
(a) Employee persists in taking actions reasonably considered
to be in material breach of this Agreement by CDS after
notice that such actions are a material breach of his
obligations hereunder; or
(b) Employee is guilty of any grave misconduct or willful
material neglect in any discharge of any of his material
duties hereunder to the serious detriment of CDS; or
(c) Employee is convicted of any serious criminal offense
which, in the reasonable opinion of the Chief Executive
Officer, affects his position as an employee of CDS; or
(d) Employee has, at any time during or following the
Effective Date, engaged in any conduct or has engaged in
relationships with other persons that would, in the
reasonable opinion of the Chief Executive Officer,
jeopardize any existing or future gaming licenses held or
sought by CDS.
2.5 As used herein, "Good Reason" shall mean that a "Change in Control"
as defined in Section 11.12 of the CDS 1993 Stock Option and
Compensation Plan, as amended (the "Plan") has occurred and
thereafter one or more of the following occurs:
(a) Employee has been demoted; or
(b) Employee has incurred a substantial reduction in his
authority or responsibility; or
(c) There has been a material change in Employee's working
hours or working days to non-normal working hours or
non-normal working days; or
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(d) Employee has incurred material reduction in his
remuneration either as base pay or benefits.
3. COMPENSATION.
3.1 From and after the Effective Date, CDS shall pay to Employee a
gross base salary (the "Base Salary") equal to Two Hundred Thousand
Dollars ($200,000.00) per annum, which Base Salary shall be payable
in twenty-six equal installment of Seven Thousand Six Hundred
Ninety-two and 31/100 Dollars ($7,692.31). Such installments shall
be paid in arrears every two (2) weeks. The Base Salary may be
increased by the Chief Executive Officer.
3.2 Employee shall receive an annualized bonus (the "Bonus") of up to
50% of his Base Salary payable at such time and manner designated
by the Board. The Bonus shall be dependent upon Employee's
satisfaction of certain criteria mutually agreed upon by Employee
and the Chief Executive Officer. The Chief Executive Officer and
Employee will review and, if mutually agreed, revise the criteria
for the Bonus at least annually.
3.3 Employee shall be reimbursed his reasonable relocation expenses in
the amount not to exceed Twenty Thousand Dollars ($20,000).
Relocation expenses shall include the cost of family travel to
locate a new residence, sales commissions and other expenses of
selling his current residence, all moving and moving-related
expenses, and any mortgage "points" payable at the closing with
respect to his new residence.
3.4 CDS shall withhold all relevant income taxes, unemployment
insurance, Social Security contributions, workers' compensation
insurance, and other customary amounts from Employee's Base Salary
and Bonus, if any, prior to distribution of the net proceeds
therefrom to Employee.
3.5 Employee shall be eligible for any other benefits as may be
provided by CDS from time to time for its executive employees,
pursuant to CDS' policies and eligibility requirements with respect
thereto. Such benefits may be amended, changed, or terminated from
time to time by the Board, in its sole and absolute discretion,
provided that CDS takes such action with respect to all employees
similarly situated as Employee and does not discriminate against
Employee in any such action.
3.6 CDS shall have the right to purchase "key man" insurance covering
Employee at any time. Any such policy and the proceeds therefrom
shall at all times remain the property of CDS, which shall at all
times be the designated beneficiary thereunder and neither Employee
nor his estate, heirs, or beneficiaries shall have any right, title
or interest therein or thereto.
4. NON-COMPETITION.
4.1 This non-competition provision shall remain in effect until:
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(a) Employee dies; or
(b) Employee's employment with CDS is terminated without Good
Cause or is terminated by Employee for Good Reason; or
(c) Two years after the date of the termination of Employee's
employment by CDS for Good Cause or the termination of
Employee's employment by Employee without Good Reason; or
(d) Two years after the termination of Employee's employment
with CDS by reason of the expiration of this Agreement and
Employee's election not to renew this Agreement for other
than Good Reason.
The term of this non-competition provision shall expire as
specified in the applicable subparagraph above upon the happening
of the first of any of the above events to occur.
4.2 During the term of this non-competition provision, Employee shall
not, either directly or indirectly, for or by himself or for or in
conjunction with any other person, company, or other entity,
whether as an employee, independent contractor, consultant,
shareholder, owner, or otherwise, engage in any activity in any
location or place in the world if such activity directly or
indirectly competes with the business of CDS. Without limiting the
generality of the foregoing, during the term of this non-competition
provision, Employee shall not call upon any customer or potential
customer of CDS or any related entity of CDS, perform any of the
Services or other activities which he performed while in the
employ of CDS for a competitor of CDS or its related entities,
solicit orders for any products or services similar to those
products or services offered by CDS, sell any products or services
competing with the products or services of CDS, divert or take away
any customer or business opportunity of CDS or any related entity
of CDS, entice or hire away any employee from CDS or any related
entity of CDS, or otherwise compete with CDS in any manner during
the term of this Agreement.
5. CONFIDENTIALITY; PROPRIETARY RIGHTS OF CDS; DISCLAIMER OF RIGHTS TO
TECHNOLOGY AND INTELLECTUAL PROPERTY.
5.1 At all times during the term of this Agreement and from and after
the termination of this Agreement, whether such termination takes
place in accordance with the provisions of this Agreement or for
any other reason, and whether this Agreement is terminated for or
without cause, Employee shall keep strictly confidential and secret
any and all proprietary or confidential information related to CDS
or CDS' business, whether such information is obtained by Employee
in the course of his employment or otherwise. Without limiting the
generality of the foregoing, Employee shall not disclose to any
other person, company, or entity (except in connection with
Employee's duties and obligations consistent with the terms of this
Agreement and the scope of the Services) any aspect of CDS'
business methods, manufacturing processes, business secrets,
business systems or products, customer names, prospective
customers, accounting systems, computer software or hardware
systems, or marketing or business plans.
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5.2 The foregoing notwithstanding, Confidential Information does not
include any of the following:
(a) information which through no wrongful act or failure to
act on the part of Employee becomes generally known or
available, or
(b) information which is furnished to others by CDS without
restriction on disclosure, or
(c) information which is hereafter furnished to Employee by
third parties as a matter of right and without restriction
on disclosure, or
(d) information which is known to others in the industry or is
ascertainable from other sources without a breach by the
other sources of any nondisclosure agreement on their
part.
5.3 At all times during the term of this Agreement and from
and after the termination of this Agreement, Employee
shall hold in a fiduciary capacity for the benefit of CDS
and shall disclose fully to CDS immediately upon
origination, discovery, invention or acquisition, any and
all inventions, discoveries, improvements, apparatus,
processes, compounds, formulae, computer programs,
patents, licenses, copyrights and trademarks made,
invented, discovered, developed or secured by Employee
during his employment by CDS, solely or jointly with
others, or otherwise, and which may be directly or
indirectly useful in, or relate to, the manufacture,
production, sale, development, or use of any product or
service of CDS, and all of the foregoing shall be owned
exclusively by CDS. Employee agrees and acknowledges that
the compensation paid to Employee under this Agreement is
full and adequate consideration for Employee's covenants
under this Section 5.3 and that Employee shall not be
entitled to receive any other compensation, fee,
commissions, royalty or other amount in connection
therewith.
6. INDEMNITY; SURVIVAL.
6.1 Employee and CDS shall indemnify, defend, and hold harmless the
other from and against any and all loss, cost, damage, liability,
or expense, as a result of reckless or malicious conduct of the
other, or a willful breach of a duty of good faith. This indemnity
shall only apply to Employee's actions and duties as an employee of
CDS.
6.2 The provisions of Articles 4, 5 and 6 of this Agreement shall
survive the termination of this Agreement.
7. MISCELLANEOUS PROVISIONS.
7.1 FILES. All records contained in the files of CDS (other than
Employee's personal financial information) shall be the property of
CDS and Employee shall not remove such records upon the termination
of Employee's employment with CDS.
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7.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements between the
parties with respect thereto. This Agreement may not be altered,
amended, changed, terminated or modified in any respect or
particular unless the same shall be in writing and signed by the
part to be charged.
7.3 ATTORNEY'S FEES. In the event of any action for breach of, to
enforce the provisions of, or otherwise arising out of or in
connection with this Agreement, the prevailing party in such
action, as determined by the court in such action, shall be
entitled to receive its reasonable attorneys' fees and costs form
the other party. If a party voluntarily dismisses an action, a
reasonable sum as attorneys' fees shall be awarded to the other
party.
7.4 NEVADA LAW; JURISDICTION AND VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Nevada. This parties hereby consent to the personal
jurisdiction of any court of competent jurisdiction with the State
of Nevada. The exclusive venue for any action or proceeding
relating to or arising out of this Agreement shall be Xxxxx County,
Nevada.
7.5 BINDING EFFECT. Employee acknowledges that Employee's obligations
and duties under this Agreement are unique personal services
benefiting CDS and shall not be delegated in any manner or respect
nor shall this Agreement be assigned by Employee. This Agreement
may not be assigned by CDS without Employee's prior consent, except
in connection with any sale or transfer of all or part of CDS'
business, in which case no consent of Employee shall be required.
This Agreement shall be binding upon and inure to the benefit of
any permitted heirs, successors, and assigns.
7.6 VALIDITY. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid based upon
applicable law. But, if any provision or part of any provision of
this Agreement shall be held by a court of competent jurisdiction
to be invalid or prohibited thereunder, such provision or part of
any such provision shall be ineffective only to the extent of such
invalidity or prohibition, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
7.7 HEADINGS. The headings of the paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part of
and are not intended to govern, limit or aid in the construction of
any term or provision of this Agreement.
7.8 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and delivered in person to the other
party, or sent by certified United States Mail, with postage
prepaid.
7.9 WAIVER. The failure of either party to enforce any of its rights
or remedies in connection with a breach of this Agreement by the
other party or in any other case shall not be deemed to be a waiver
of said first party's rights or remedies with respect thereto or
with
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respect to any other breach of this Agreement by the other
party. No such waiver of rights or remedies shall exist unless the
same shall be in writing and signed by the party to be charged.
7.10 REMEDIES. Employee acknowledges that CDS' remedy at law for any
breach or threatened breach by Employee of Articles 4 and 5 hereof
will be inadequate. Therefore, CDS shall be entitled to injunctive
and other equitable relief restraining Employee from violating those
requirements, in addition to any other remedies that may be
available to CDS under this Agreement or applicable law.
IN WITNESS WHEREOF, CDS and Employee have executed this Agreement as of the
date first set forth above.
CASINO DATA SYSTEMS,
a Nevada corporation
/s/ Xxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------ --------------------------------------
Xxxx Xxxxx Its: C E O
---------------------------------
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Amendment to the Employment Agreement of Xxxxxxx Xxxxx
1. With respect to Section 2.5, this section is expanded to include the
following as an event which would qualify as "Good Reason";
"The termination of the CEO, whether by resignation with or without good
cause or good reason, shall be considered an event which would justify
resignation by the CFO for "Good Reason".
2. The total amount of relocation expenses in section 3.3 is changed to "not
to exceed Thirty Thousand Dollars ($30,000)".
3. The Board of Directors has agreed to grant to Xxxxxxx Xxxxx options to
purchase 100,000 shares of common stock of the company at a price of
$3.13. However, since only 60,000 shares are left in the option pool,
this section clarifies that Casino Data Systems agrees to grant to Xxxxxxx
Xxxxx the right and option to purchase an aggregate of 100,000 shares of
common stock of the company at a purchase price of $3.13 vesting as set
forth in the following schedule:
Total shares vested Vesting Date
--------------------- -----------------
25,000 January 13, 1999
50,000 January 13, 2000
75,000 January 13, 2001
100,000 January 13, 2002
The 40,000 shares not available for immediate grant from the current pool
of options available for grant, will be granted upon an increase in the
option pool at the same price of $3.13 and the same vesting schedule
above.
4. The definition of "Change of Control" for purposes regarding the
provision for the acceleration of vesting privileges will be defined as
the events set forth in provisions (1), (2), and (3) in section 11.12
of the CDS 1993 Stock Option and Compensation Plan, as amended and WILL
NOT BE SUBJECT TO DETERMINATION by "the board of directors and a majority
of the Continuing Directors" as currently written in the first paragraph
of this section.
5. The 30 day waiting period for health benefits is waived and benefits will
be effective from the date of employment.
6. During the first year of employment the company will provide 2 weeks of
paid vacation.
In Witness Whereof, CDS and Employee have executed this Amendment to
the Employment Agreement as of the date set forth below:
CASINO DATA SYSTEMS,
a Nevada corporation
/s/ Xxxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------ ----------------------------
Xxxxxxx Xxxxx Its: Chief Executive Officer
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DATE: 1/3/98
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