<PAGE>
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FORM 10-K/A NO. 1
UNITED STATE SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE
TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-21426
------------------------
CASINO DATA SYSTEMS
(Exact name of registrant as specified in its charter)
NEVADA 88-0261839
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
3300 BIRTCHER DRIVE
LAS VEGAS, NEVADA 89118
(Address of principal executive offices) (Zip Code)
(702) 269-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR
VALUE
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes /X/ No / /
As of April 23, 1999, 18,065,897 shares of the Registrant's Common Stock
were outstanding. The aggregate market value of the Common Stock held by
non-affiliates of the Registrant on such date, based upon the last sale price of
the Common Stock as reported on the NASDAQ National Market on April 23, 1999,
was $46,319,749. For purposes of this computation, affiliates of the Registrant
are deemed only to be the Registrant's executive officers and directors.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following persons currently serve the Company as executive officers
and/or members of its Board of Directors. Each director has consented to serve
an additional term, if elected at the Company's next annual meeting of
shareholders.
STEVEN A. WEISS, age 36, founded the Company in June 1990 and served as the
Company's Chairman of the Board from June 1990 to August 1994, and from November
1994 to the present. Mr. Weiss has served as an executive officer of the Company
since its inception, including as Chief Executive Officer, and currently serves
as President of its Research and Development Division. Mr. Weiss designed the
prototype slot accounting and player tracking system that evolved into the
Company's OASIS information management system in 1991. Prior thereto, Mr. Weiss
was employed by Bally as a consultant for Bally's slot information system.
PHIL E. BRYAN, age 59, has served as a director of the Company since April
1995. Mr. Bryan also served as Chief Executive Officer of the Company from April
1995 to April 1996. Mr. Bryan became the Chief Operating Officer, President and
a director of Boomtown, Inc. in April, 1996. Mr. Bryan has more than thirty
years' experience in the gaming industry, serving as President and Chief
Executive Officer of the Gold River Operating Corp. from January 1993 to
February 1995. Prior thereto, Mr. Bryan served as President of the Sands Hotel
and Casino in Las Vegas from January to April 1992 and as Chief Executive
Officer of the Peppermill Casino Resort in Reno, Nevada from August 1982 to
January 1992.
LEE LEMAS, age 52, joined the Company as Chief Financial Officer in July
1998. Ms. Lemas is currently Chief Operating Officer, Chief Financial Officer
and Vice President of Finance. Prior to joining CDS in 1998 and beginning in
1997, Ms. Lemas served as the Director of Finance for O.R. Technology. From 1995
to 1997, Ms. Lemas served as Chief Financial Officer of Amdahl's Open Enterprise
Systems. From 1991 to 1995, Ms. Lemas served as Chief Financial Officer at nCUBE
where, for a period of six months, she was also acting Vice President of
Manufacturing.
HOWARD W. YENKE, age 62, served the Company as Chief Executive Officer from
June 1998 to February 19, 1999, and has served as a Director since June 1998.
Prior to joining the Company, Mr. Yenke served as President and Chief Executive
Officer of Silent Systems, Inc., a private company providing thermal and
acoustic products to the personal computer industry, a position he began in
November 1997. From June 1996 to November 1997, Mr. Yenke served as President,
Chief Executive Officer and Director of Lanart Corporation, a privately held
company providing LAN connectivity solutions to the computer industry. Mr. Yenke
was also President and CEO of Enterprise Development Corporation of Palm Beach
County, a not-for-profit consulting services company, from November 1994 to
November 1996. During the same time period, Mr. Yenke was President, CEO and
Director of Technology Deployment Holdings Company, Inc., a for profit
investment firm. From May 1994 to October 1994, Mr. Yenke served as President,
CEO and Director of ARCO Computer Products Company, a privately held company
providing PC peripheral products to the computer industry. From 1989 to 1994,
Mr. Yenke was employed by Boca Research, Inc. in several capacities including
President and CEO. Prior thereto, Mr. Yenke was employed by IBM Corporation for
over 25 years in various executive and management positions. Mr. Yenke also sits
on the boards of directors of Checkmate Electronics, Inc., Access Solutions
International, Inc., and Communications Systems International.
THOMAS E. GARDNER, age 61, is President of LJT Associates, a consulting firm
which provides strategic planning, financial and management services to
corporations and assists investors in late stage venture capital opportunities
and acquisitions, a position he has held since 1993. From 1990 to 1992, Mr.
Gardner was Director Treasury Management Information with BankBoston
Corporation. From 1979 to 1990 Mr. Gardner was Senior Vice President and a
member of the senior management committee with a predecessor bank, Rhode Island
Hospital Trust National Bank, and acted as head of Treasury and Chairman of the
Asset and Liability Management Committee. Mr. Gardner is Chairman of the Board
of Directors of Access Solutions International, Inc. and a Director of Mossberg
Industries, Inc.
<PAGE>
JOHN F. (JACK) HARVEY, age 76, is an independent business consultant. He
served on the Board of Directors of Del Webb Corporation from 1988 to 1994. Mr.
Harvey was a lecturer and member of the Finance faculty for the College of
Business and Economics at the University of Nevada, Las Vegas from 1986 to 1992.
Prior to his retirement in 1986, Mr. Harvey was Senior Vice President,
Treasurer, Chief Financial Officer and a director of Summa Corporation
(currently The Howard Hughes Corporation).
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the Nasdaq National Market. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on review of the copies of
such forms furnished to the Company, or written representations that no Forms 5
were required, the Company believes that during the fiscal year ended December
31, 1998, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were satisfied.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by each executive officer of
the Company whose salary and bonus during the year ended December 31, 1998
exceeded $100,000, or would have exceeded $100,000 had they been employed by the
Company at the end of the fiscal year.
2
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-
TERM
COMPEN-
ANNUAL COMPENSATION SATION
--------------------------------- AWARDS
ALL OTHER -----------
ANNUAL SECURITIES ALL OTHER
FISCAL SALARY BONUS COMPEN- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) SATION ($) OPTIONS # ($)
- ---------------------------------------------- ----------- --------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss............................... 1998 300,000 -- 9,600(1) 100,000
Chairman of the Board 1997 300,000 -- 9,600(1) --
1996 279,500 -- 9,600(1) 52,750
Lee Lemas (2)................................. 1998 147,913 4,800(1) 150,000
Chief Financial Officer
Howard Yenke (3).............................. 1998 146,154 5,539(1) 250,000
Diana L. Bennett.............................. 1998 200,000 -- 9,600(1) 100,000
President and Chief Operating Officer (4) 1997 200,000 45,000 9,600(1) 20,000
1996 160,778 9,563(1) 55,000
Kenneth S. Hardesty........................... 1998 82,692 -- 285,000 36,000(6)
Chief Executive Officer (5) 1997 14,423 --
Michael Perez (7)............................. 1998 171,538 60,000
</TABLE>
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(1) Represents automobile allowances provided to the Company's executive
officers.
(2) Ms. Lemas became an executive officer of the Company in July 1998.
(3) Mr. Yenke served as Chief Executive Officer from June 1998 to February 19,
1999.
(4) Ms. Bennett served as the Company's President and Chief Operating Officer
from January 1996 to February 1999.
(5) Mr. Hardesty served as the Company's Chief Executive Officer from December,
1997 to May 15, 1998.
(6) Represents a rental expense of $6,000 and a relocation expense allowance in
the amount of $30,000 paid pursuant to Mr. Hardesty's employment agreement
with the Company.
(7) Mr. Perez served as Chief Financial Officer from January 13, 1998 to June
1998.
3
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OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes information with respect to options granted
to the executive officers named in the Summary Compensation Table during the
last fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE OF
------------------------------ ASSUMED ANNUAL RATES
PERCENTAGE OF
OF TOTAL STOCK PRICE
NUMBER OF OPTIONS APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM (2)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME OPTION GRANTED FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- -------------------------------- -------------- --------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss................. 100,000 8.5 $ 1.81 10/26/2008 113,830 288,467
Lee Lemas....................... 50,000 4.3 $ 3.00 03/09/2008 90,190 226,464
100,000 8.5 $ 1.53 10/09/2008 96,221 243,843
Howard Yenke.................... 250,000 21.3 $ 3.19 06/04/2008 501,543 1,271,010
Diana L. Bennett................ 100,000 8.5 $ 1.81 10/26/2008 113,830 288,467
Mike Perez (3).................. 100,000 8.5 $ 3.13 01/13/2003 87,078 192,609
</TABLE>
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(1) All options were granted at a price equal to the fair market value of the
Company's common stock on the date of grant.
(2) Amounts shown in these columns have been derived by multiplying the exercise
price by the annual appreciation rate shown (compounded for the term of the
options), multiplying the result by the number of shares covered by the
options, and subtracting the aggregate exercise price of the options. The
dollar amounts set forth under this heading are the result of calculations
at the 5 percent and 10 percent rates set by the Securities and Exchange
Commission, and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
(3) Mr. Perez left the Company in June 1998 and his options have expired.
4
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table summarizes information with respect to options held by
the executive officers named in the Summary Compensation Table and the value of
the options held by such persons as of the end of the last fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-
NUMBER OF UNEXERCISED MONEY OPTIONS AT FY-END
SHARES OPTIONS AT FY-END (#) ($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Weiss................ -- -- 135,812 109,750 0 $ 19,000
Lee Lemas...................... -- -- 12,500 137,500 $ 0 $ 47,000
Howard Yenke................... -- -- 0 250,000 0 0
Diana L. Bennett............... -- -- 29,167 145,833 0 19,000
Kenneth S. Hardesty............ -- -- 0 0 0 0
Mike Perez..................... -- -- 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Weiss that expires
on December 31, 1999, and is terminable by the Company or Mr. Weiss upon notice.
The agreement provides for an annual base salary of $300,000. Mr. Weiss is
subject to certain non-competition provisions during the term of the employment
agreement and for two years thereafter, unless the employment agreement is
terminated by the Company or Mr. Weiss under certain circumstances, including in
the event of a change in control of the Company.
The Company entered into an employment agreement with Ms. Lemas that expires
on December 31, 1999, and is terminable by the Company or Ms. Lemas upon notice.
The agreement provides for an annual salary of $215,000. Ms. Lemas is subject to
certain non-competition provisions during the term of the employment agreement
and for one year thereafter, unless the agreement is terminated by the Company
or Ms. Lemas under certain circumstances, including in the event of a change in
control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. Thomas E. Gardner
and Phil E. Bryan.
DIRECTOR COMPENSATION
Directors who are not also employees of the Company receive a $25,000 annual
director's fee and are reimbursed for costs and expenses they incur to attend
board meetings. Directors who are not also employees of the Company are entitled
to participate in the Company's 1994 Non-employee Director Stock Option Plan.
This plan is a formula stock option plan that provides for the initial grant of
a stock option covering 11,250 shares upon a person joining the Board and an
annual stock option grant covering 5,625 shares at each annual meeting of
shareholders. Each option granted has a ten-year term, vests equally over a two
year period and has an exercise price equal to the fair market value on the date
of grant.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation and Stock Option Committee (the "Compensation
Committee") of the Board. Each member of the Compensation Committee is a
non-employee director. All decisions by the Compensation Committee
5
<PAGE>
relating to the compensation of the Company's executive officers are reviewed by
the full Board. Each executive officer who also serves as a director of the
Company abstains from the discussion and vote relating to his or her
compensation. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the Compensation Committee addressing the Company's compensation policies for
the year ended December 31, 1997 as they affected the Company's executive
officers. The following report of the Compensation Committee, as well as the
Performance Graph set forth herein, are not soliciting materials, are not deemed
filed with the Securities and Exchange Commission (the "SEC") and are not
incorporated by reference in any filing of the Company under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether made before or after the date of this Proxy Statement
and irrespective of any general incorporation language in any such filing.
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation that integrate pay with the Company's
annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The Compensation
Committee intends to set executive compensation at levels that the Compensation
Committee believes to be consistent with others in the Company's industry.
There are three elements in the Company's executive compensation program,
all determined by individual and corporate performance.
Base salary compensation
Annual incentive compensation
Stock options
Base salary compensation and increases are determined by the potential
effect the individual has on the Company, the skills and experiences required by
the job, and the performance and potential of the incumbent in the job.
Effective in April 1996, the Compensation Committee instituted a bonus
incentive compensation plan which allows each executive to earn a percentage of
such executive's salary (up to 50%), payable quarterly, dependent upon the
Company's earnings performance for such fiscal year.
Awards of stock grants under the Company's 1993 Stock Option and
Compensation Plan (the "Plan") are designed to promote the identity of long-term
interests between the Company's executives and its stockholders, and assist in
the retention of executives. The Plan also permits the Committee to grant stock
options to key personnel. Options become exercisable based upon criteria
established by the Company.
While the value realizable from exercisable options is dependent upon the
extent to which the Company's performance is reflected in the market price of
the Company's common stock at any particular point in time, the decision as to
whether such value will be realized in any particular year is determined by each
individual executive and not by the Compensation Committee. Accordingly, when
the Committee recommends that an option be granted to an executive, that
recommendation does not take into account any gains realized that year by that
executive as a result of his or her individual decision to exercise an option
granted in a previous year.
The Compensation Committee does not anticipate that any of the compensation
payable to executive officers of the Company in the coming year will exceed the
limits and deductibilities set forth in section 162(m) of the Internal Revenue
Code of 1986, as amended. The Compensation Committee has not established a
policy regarding compensation in excess of these limits, but will continue to
monitor this issue.
By the Compensation and Stock Option Committee
THOMAS E. GARDNER
PHIL E. BRYAN, JR.
6
<PAGE>
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission (the "SEC") requires that the Company
include in this Form 10-K/A a line-graph presentation comparing cumulative,
five-year return to the Company's stockholders (based on appreciation of the
market price of the Company's common stock) on an indexed basis with (i) a broad
equity market index and (ii) an appropriate published industry or
line-of-business index, or peer group index constructed by the Company. The
following presentation compares the Company's common stock price from December
31, 1993 to December 31, 1998, to the S&P 500 Stock Index and a "peer group"
index created by the Company over the same period. The "peer group" index that
the Company believes is representative of its industry includes Acres Gaming,
Inc., Alliance Gaming Corporation, Anchor Gaming, GTech Holdings Corp.,
International Game Technology, Shuffle Master, Inc., Powerhouse Technologies,
Inc. (formerly know as Video Lottery Technologies, Inc.), WMS Industries, and
Silicon Gaming, Inc.
In the graph, the presentation assumes that the value of an investment in
each of the Company's common stock, the S&P 500 Index, and the two peer group
indices was $100 on December 31, 1993, and that any dividends paid were
reinvested in the same security.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN ANALYSIS
<S> <C> <C> <C>
Casino Data Systems Peer Group S&P 500
12/31/1993 $100.00 $100.00 $100.00
12/31/1994 $60.00 $61.51 $101.53
12/29/1995 $142.86 $72.35 $139.69
12/30/1996 $58.93 $95.97 $171.82
12/31/1997 $24.64 $119.93 $229.13
12/31/1998 $17.14 $123.77 $293.74
</TABLE>
7
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's common stock as of the date hereof, by: (i) each
person known by the Company to be the beneficial owner of more than five percent
of its common stock, (ii) each director, (iii) each executive officer for whom
disclosure is required pursuant to Item 403 of Regulation S-K and (iv) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
(1)
-----------------------
<S> <C> <C>
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------------------------------------ ---------- -----------
Steven A. Weiss (2)....................................................................... 2,913,967 16.0%
Lee Lemas (3)............................................................................. 12,500 *
Howard Yenke.............................................................................. 5,000 *
Phil E. Bryan (4)......................................................................... 14,063 *
Thomas E. Gardner (5)..................................................................... 6,625 *
John F. Harvey............................................................................ 1,000 *
Franklin Resources, Inc. (6).............................................................. 1,575,000 8.7%
All current executive officers, directors and director nominees,
as a group (6 persons) (7).............................................................. 3,015,655 16.5%
</TABLE>
- ------------------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and includes generally voting power
and/or investment power with respect to securities. Shares of the Company's
common stock subject to options currently exercisable or exercisable within
60 days of the date hereof, are deemed outstanding for computing the
percentage ownership of the person holding such options but are not deemed
outstanding for computing the percentage ownership of any other person.
Except as otherwise indicated, the Company believes that the beneficial
owners of the common stock listed above, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable, and that there
are no other affiliations among the stockholders listed in the table.
(2) The address of such person is 3300 Birtcher Drive, Las Vegas, Nevada 89118.
Includes options to purchase 135,812 shares that are exercisable within 60
days. Also includes 453,225 shares which are held by a trust for the benefit
of Mr. Weiss' spouse and 353,024 shares which are held by a trust of which
Mr. Weiss' spouse is one of the beneficiaries. Mr. Weiss disclaims
beneficial ownership of these shares.
(3) Includes options to purchase 12,500 shares that are exercisable within 60
days.
(4) Includes options to purchase 14,063 shares that are exercisable within 60
days.
(5) Includes options to purchase 5,625 shares that are exercisable within 60
days.
(6) Based on the most recent Schedule 13G filed with the Securities and Exchange
Commission on January 26, 1999, on behalf of Franklin Resources, Inc., a
holding company; Charles B. Johnson and Rupert H. Johnson, Jr., principal
shareholders of the holding company; and Franklin Advisory Services, Inc.,
an Investment Adviser. The address of such entity is 777 Mariners Island
Boulevard, San Mateo, California 94404.
8
<PAGE>
(7) Includes options to purchase 230,500 shares that are exercisable within 60
days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(None).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
(a)(1) These documents are listed in the Index to Consolidated Financial Statements
and Supplementary Data in Item 8 of the Company's Form 10-K405.
(a)(2) Schedules
See Schedule attached.
(a)(3) EXHIBITS
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<S> <C>
3.1 Articles of Incorporation, as amended (incorporated herein by reference to Exhibit 3.1 of the Company's
Registration Statement on Form SB-2 (File No. 33-59148LA)).
3.2 By-laws (incorporated herein by reference to Exhibit 3.2 of the Company's Registration Statement on Form
SB-2 (File No. 33-59148LA)).
10.1 1993 Employee Stock Option and Compensation Plan, as amended (incorporated herein by reference to Exhibit
10.9 of the Company's Registration Statement on Form SB-2 (File No. 33-59148LA)).+
10.2 1994 Non-Employee Director Option Plan (incorporated by reference to Exhibit A of the Registrant's Proxy
Statement dated June 13, 1995).+
10.3 Employment Agreement dated as of January 1, 1999 by and between the Company and Steven Weiss.+
10.4 Employment Agreement dated as of January 27, 1997 between Diana L. Bennett and Casino Data Systems
(incorporated by reference as Exhibit 10.5 to the Company's Form 10-K for the fiscal year ended December
31, 1997).+
10.5 Employment Agreement dated as of February 16, 1999 by and between the Company and Lee Lemas.+
22 Subsidiaries of the Registrant.
24.1 Consent of KPMG Peat Marwick LLP.*
27 Financial Data Schedule*
</TABLE>
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+ Executive Compensatory Plan or Arrangement
* Filed with the Company's Form 10-K for the fiscal year ended December 31,
1998.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Casino Data Systems has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized:
<TABLE>
<S> <C> <C>
CASINO DATA SYSTEMS
/s/ LEE LEMAS
-------------------------------------
By: Lee Lemas,
Chief Operating Officer,
Chief Financial Officer and
Vice President--Finance
(Principal Financial Officer)
Date: April 30, 1999
</TABLE>
10
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
effective the 1st day of January, 1999 (the "Effective Date"), by and between
Casino Data Systems, a Nevada corporation ("CDS") and Steven A. Weiss
("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 set forth on Exhibit A
(the "Position") and for the purpose of performing those services (the
"Services") which are usual and customary for the Position. 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 Employee's 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 Employee's
own behalf 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 of CDS (the "Board").
1.3 Employee shall report only to the person identified in Exhibit
A (the "Supervisor") such position 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 cases requiring Board action, 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 the Effective
Date (the "Effective Date") and shall expire on December 31, 1999, 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:
1
<PAGE>
2.2.1. This Agreement is terminated by CDS without "Good
Cause" (defined below), or
2.2.2. Employee resigns for "Good Reason" (defined below)
prior to the expiration of this Agreement's term,
then, in addition to all salary, prorated bonus, and benefits due to the
effective date of termination, CDS shall also pay to Employee base salary,
prorated bonus and benefits for the compensation continuation period set
forth in Exhibit A to this Agreement.
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:
2.4.1. 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 Employee's obligations hereunder;
or
2.4.2. Employee is guilty of any grave misconduct or willful
material neglect in any discharge of any of Employee's material duties
hereunder to the serious detriment of CDS; or
2.4.3. Employee is convicted of any serious criminal offense
which, in the reasonable opinion of the Board, affects Employee's position as
an employee of CDS; or
2.4.4. Employee has 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.
2.5 As used herein, "Good Reason" shall mean one of the following
shall occur:
2.5.1. A "Change of Control" of CDS occurs. For purposes of
this Agreement, a "Change of Control" shall mean any one or more of the
following occurrences:
2.5.1.1 Any person or group of persons becomes the
beneficial owner of 30% or more of any equity security of CDS entitled to
vote for the election of directors.
2.5.1.2 A majority of the members of the Board is
replaced within period of less than two years by directors not nominated and
approved by the Board.
2.5.1.3 The stockholders of CDS approve an agreement
to merge or consolidate with or into another corporation, or an agreement to
sell or otherwise dispose of all or substantially all of the assets of CDS
(including a plan of liquidation); or
2.5.2 Employee has been demoted; or
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2.5.3 Employee has incurred a substantial reduction in
Employee's authority or responsibility; or
2.5.4 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
2.5.5 Employee has incurred material reduction in Employee's
remuneration either as base pay or benefits.
3. COMPENSATION.
3.1 From and after the Effective Date, CDS shall pay to Employee
an annual gross base salary (the "Base Salary") equal to the amount set forth
on Exhibit A hereof which Base Salary shall be payable in twenty-six equal
installments. Such installments shall be paid in arrears every two (2)
weeks. The Base Salary may be increased by the Board.
3.2 In addition to Employee's salary, Employee shall receive a
monthly car allowance equal to the amount set forth on Exhibit A hereof.
3.3 Employee may receive an annualized bonus (the "Bonus") of up
to the amount specified on Exhibit A hereof, payable at such time and manner
designated by the Supervisor. The Bonus will be dependent upon Employee's
satisfaction of certain criteria mutually agreed upon by Employee and the
Supervisor. Employee and the Supervisor will review and, if mutually agreed,
revise the criteria for the Bonus not less frequently than annually.
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 Employee's
estate, heirs, or beneficiaries shall have any right, title or interest
therein or thereto.
3.7 All stock options of CDS held by Employee, whether granted
before or following the date of this Agreement, shall, notwithstanding any
other conditions described in the agreements covering stock options, vest in
their entirety upon a Change in Control (as defined in Section 2.5.1. herein)
occurring during the term of this Agreement.
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4. NON-COMPETITION.
4.1.1. This non-competition provision shall remain in effect
until:
4.1.2. Employee dies; or
4.1.3. Employee's employment with CDS is terminated without
Good Cause or is terminated by Employee for Good Reason; or
4.1.4. 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
4.1.5. Two years after the termination of Employee's
employment with CDS by reason of the expiration of this Agreement and
Employee's refusal at CDS's request to renew this Agreement for other than
Good Reason.
The term of this non-competition provision shall expire as specified in the
applicable subsection 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 on behalf of Employee 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 Employee 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 Employee's 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 (collectively, the "Confidential
Information").
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5.2 The foregoing notwithstanding, Confidential Information does
not include any of the following:
5.2.1. information which through no wrongful act or failure to
act on the part of Employee becomes generally known or available, or
5.2.2. information which is furnished to others by CDS without
restriction on disclosure, or
5.2.3. information which is hereafter furnished to Employee by
third parties as a matter of right and without restriction on disclosure, or
5.2.4. 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 Each of 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 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 (if applicable), 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 background and financial information) shall be the
property of CDS and Employee shall not remove such records upon the
termination of Employee's employment with CDS. Upon such termination, and at
Employee's written request, CDS shall provide Employee with copies of all of
Employee's personal
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background and financial information then held by CDS and CDS shall destroy
all remaining copies, including any electronic form of such information.
7.2 INTEGRATION; AMENDMENTS. This Agreement, including Exhibit A
attached hereto, 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
Clark 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 sections 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.
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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, EMPLOYEE
a Nevada corporation
By: /s/ LEE LEMAS /s/ STEVEN A. WEISS
---------------------------- --------------------------
Its: Chief Financial Officer Steven A. Weiss
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EXHIBIT A
Employee: Steven A. Weiss
--------------------------------------------------------------
Position: Chief Executive Officer and Chief Technical Officer
--------------------------------------------------------------
Supervisor: Board of Directors
--------------------------------------------------------------
Compensation Continuation Period: Two years
--------------------------------------------
Base Salary: $300,000
--------------------------------------------------------------
Annual Bonus: Up to 50% of base salary
--------------------------------------------------------------
Car Allowance: $800, monthly
--------------------------------------------------------------
Additional Terms: CDS AGREES TO KEEP CONFIDENTIAL AND NOT DISCLOSE TO ANY
THIRD PARTY, INFORMATION CONCERNING EMPLOYEE'S PERSONEL
RECORDS, INCLUDING FINANCIAL AND BACKGROUND INFORMATION,
EXCEPT AS MAY BE REQUIRED BY LAW OR BY GAMING REGULATORY
AUTHORITIES.
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into
effective the 16th day of February, 1999 (the "Effective Date"), by and
between Casino Data Systems, a Nevada corporation ("CDS") and Lee Lemas
("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 set forth on Exhibit A
(the "Position") and for the purpose of performing those services (the
"Services") which are usual and customary for the Position. 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 Employee's 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 Employee's
own behalf 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 of CDS (the "Board").
1.3 Employee shall report only to the person identified in Exhibit
A (the "Supervisor") such position 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 cases requiring Board action, 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 the Effective
Date (the "Effective Date") and shall expire on December 31, 1999, 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:
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2.2.1. This Agreement is terminated by CDS without "Good Cause"
(defined below), or
2.2.2. Employee resigns for "Good Reason" (defined below) prior
to the expiration of this Agreement's term,
then, in addition to all salary, prorated bonus, and benefits due to the
effective date of termination, CDS shall also pay to Employee base salary,
prorated bonus and benefits for the compensation continuation period set
forth in Exhibit A to this Agreement.
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:
2.4.1. 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 Employee's obligations hereunder;
or
2.4.2. Employee is guilty of any grave misconduct or willful
material neglect in any discharge of any of Employee's material duties
hereunder to the serious detriment of CDS; or
2.4.3. Employee is convicted of any serious criminal offense
which, in the reasonable opinion of the Board, affects Employee's position as
an employee of CDS; or
2.4.4. Employee has 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.
2.5 As used herein, "Good Reason" shall mean one of the following
shall occur:
2.5.1. A "Change of Control" of CDS occurs. For purposes of
this Agreement, a "Change of Control" shall mean any one or more of the
following occurrences:
2.5.1.1 Any person or group of persons becomes the
beneficial owner of 30% or more of any equity security of CDS entitled to
vote for the election of directors.
2.5.1.2 A majority of the members of the Board is
replaced within a period of less than two years by directors not nominated
and approved by the Board.
2.5.1.3 The stockholders of CDS approve an agreement
to merge or consolidate with or into another corporation, or an agreement to
sell or otherwise dispose of all or substantially all of the assets of CDS
(including a plan of liquidation); or
2.5.2 Employee has been demoted; or
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2.5.3 Employee has incurred a substantial reduction in
Employee's authority or responsibility; or
2.5.4 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
2.5.5 Employee has incurred material reduction in Employee's
remuneration either as base pay or benefits.
3. COMPENSATION.
3.1 From and after the Effective Date, CDS shall pay to Employee
an annual gross base salary (the "Base Salary") equal to the amount set forth
on Exhibit A hereof which Base Salary shall be payable in twenty-six equal
installments. Such installments shall be paid in arrears every two (2)
weeks. The Base Salary may be increased by the Board.
3.2 In addition to Employee's salary, Employee shall receive a
monthly car allowance equal to the amount set forth on Exhibit A hereof.
3.3 Employee may receive an annualized bonus (the "Bonus") of up
to the amount specified on Exhibit A hereof, payable at such time and manner
designated by the Supervisor. The Bonus will be dependent upon Employee's
satisfaction of certain criteria mutually agreed upon by Employee and the
Supervisor. Employee and the Supervisor will review and, if mutually agreed,
revise the criteria for the Bonus not less frequently than annually.
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 Employee's
estate, heirs, or beneficiaries shall have any right, title or interest
therein or thereto.
3.7 All stocks options of CDS held by Employee, whether granted
before or following the date of this Agreement, shall, notwithstanding any
other conditions described in the agreements covering such stock options,
vest in their entirety upon a Change in Control (as defined in Section 2.5.1.
herein) occurring during the term of this Agreement.
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4. NON-COMPETITION.
4.1.1. This non-competition provision shall remain in effect
until:
4.1.2. Employee dies; or
4.1.3. Employee's employment with CDS is terminated without
Good Cause or is terminated by Employee for Good Reason; or
4.1.4. One year 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
4.1.5. One year after the termination of Employee's employment
with CDS by reason of the expiration of this Agreement and Employee's refusal
at CDS's request to renew this Agreement for other than Good Reason.
The term of this non-competition provision shall expire as specified in the
applicable subsection 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 on behalf of Employee 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 Employee 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 Employee's 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 (collectively, the "Confidential
Information").
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5.2 The foregoing notwithstanding, Confidential Information does
not include any of the following:
5.2.1. information which through no wrongful act or failure to
act on the part of Employee becomes generally known or available, or
5.2.2. information which is furnished to others by CDS without
restriction on disclosure, or
5.2.3. information which is hereafter furnished to Employee by
third parties as a matter of right and without restriction on disclosure, or
5.2.4. 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 Each of 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 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 (if applicable), 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 background and financial information) shall be the property
of CDS and Employee shall not remove such records upon the termination of
Employee's employment with CDS. Upon such termination, and at Employee's
written request, CDS shall provide Employee with copies of all of Employee's
personal
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background and financial information then held by CDS and CDS shall destroy
all remaining copies, including any electronic form of such information.
7.2 INTEGRATION; 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, including
Exhibit A attached hereto, 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 Clark 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 sections 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.
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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, EMPLOYEE
a Nevada corporation
By: /s/ STEVEN A. WEISS /s/ LEE LEMAS
---------------------------- ------------------------
Its: Chief Executive Officer Lee Lemas
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EXHIBIT A
Employee: Lee Lemas
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Position: Chief Operating Officer, Chief Financial Officer and Secretary
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Supervisor: Board of Directors
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Compensation Continuation Period: One year
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Base Salary: $215,000
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Annual Bonus: Up to 50% of Base Salary
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Car Allowance: $800, monthly
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Additional Terms: CDS AGREES TO KEEP CONFIDENTIAL AND NOT DISCLOSE TO ANY
THIRD PARTY, INFORMATION CONCERNING EMPLOYEE'S PERSONNEL
RECORDS, INCLUDING FINANCIAL AND BACKGROUND INFORMATION,
EXCEPT AS MAY BE REQUIRED BY LAW OR BY GAMING REGULATORY
AUTHORITIES.
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EXHIBIT 22
SUBSIDIARIES
OF
CASINO DATA SYSTEMS
CDS Services Company, a Nevada corporation
CDS Signs, Inc., a Nevada corporation
TurboPower Software Company, a Nevada corporation
CDS Gaming Company, a Nevada corporation
CDS Graphics and Imaging, a Nevada corporation
Imageworks, Inc., a Nevada corporation
