EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
the 26th day of November, 1997, by and between Casino Data Systems, a Nevada
corporation ("CDS") and Xxxxxxx Xxxxxxxx ("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 Executive
Officer and for the purpose of performing those services (the
"Services") which are usual and customary for a Chief Executive
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. Employee shall have oversight
responsibility of and authority over all other employees of CDS.
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 Board. The Board shall at all times
during the term of this Agreement have final and complete authority
over Employee with respect to all decisions related to the Services
and the direction and control of Employee. In all such cases, the
Board shall act by majority vote. In every case under this Agreement
where a vote of the Board is required, such vote shall not include
Employee's vote at any time that Employee is a member of the Board.
2. TERM.
2.1 The term of this Agreement shall commence on December 8, 1997 (the
"Effective Date") and shall expire on December 8, 2001, 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, provided
that a majority of the Board has voted to terminate this
Agreement 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 December 8, 1998, for
one additional year after the effective date of such termination or
resignation; or (ii) if such termination or resignation occurs after
December 8, 1998, 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 Board, 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 Board,
jeopardize any existing or future gaming licenses held or sought
by CDS.
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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
(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 Fifty Thousand
Dollars ($250,000.00) per annum, which Base Salary shall be payable in
twenty-six equal installment of Nine Thousand Six Hundred Fifteen and
38/100 Dollars ($9,615.38). Such installments shall be paid in
arrears every two (2) weeks. The Base Salary may be increased by the
Board.
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. One-half of the bonus is guaranteed during the first year of
this Agreement. The remaining one-half of the Bonus shall be
dependent upon Executive's satisfaction of certain criteria mutually
agreed upon by Executive and the Board. The Board and Executive will
review and, if mutually agreed, revise the criteria for the Bonus at
least annually.
3.3 Employee shall receive a relocation expense allowance in the amount of
Thirty Thousand Dollars ($30,000), payable December 8, 1997.
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
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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:
(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.
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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.
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.
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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. This
indemnity is not intended to nor shall it be interpreted to alter,
amend or in any way affect Employee's actions or duties as a member of
the Board, or the respective indemnification provisions affecting or
relating to all Directors 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.
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.
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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 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/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx Xxxxx
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Xxxxxxx Xxxxxxxx Its: Chairman
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