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Employment Agreement - CryptoLogic Inc. and Jim Ryan

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December 18, 2001

Mr. Jim Ryan
16134 Mountainview Road
Caledon East, Ontario
L0N 1E0

Dear Jim:

I am delighted to extend an offer to you for the position of Chief Financial
Officer, with CryptoLogic Inc. In this role, you will report to me and will be
located at the company headquarters at 1867 Yonge Street in Toronto.

As Chief Financial Officer, you will be charged with leading CryptoLogic's
accounting, planning, and finance, and play a key role in investor relations and
mergers and acquisitions activities to make a significant contribution to the
company's growth and success. The Board of Directors, David Outhwaite and I look
forward to working closely with you in this regard. As discussed, you will begin
your employment in this role on or before January 28, 2002.

The terms and conditions of this offer are as follows:

BASE SALARY: Your annual base salary will be $220,000, to be paid on a
bi-monthly basis and reviewed in January of each calendar year.

THREE MONTH BONUS: In lieu of the bonus payment you will forfeit with your
previous employer as you join CryptoLogic, the company is prepared to offer you
a three month bonus of $25,000 which will be paid after three months of joining
the company.

ANNUAL BONUS: Your target bonus will be 40% of base salary, paid in January
based on performance in the previous calendar year. The parameters for
individual and corporate performance which shall determine payout versus target,
will be agreed by you and me at the start of each year.

LONG-TERM INCENTIVE PLAN: As Chief Financial officer, you will be provided with
an allocation of 60,000 stock options in CryptoLogic Inc. These options will be
priced at the closing price of the stock on any date of your choice between the
date on which you start your employment and the date of signing this agreement.
You have to advise me immediately in writing as to the date of pricing of the
stock options. These options will vest in equal amounts every 12 months from
your start date over the next 4 years.

Further allocations of stock options may be made in the future, at the
discretion of the CEO and the Board of Directors.

VACATION: Four weeks annually, to be taken each year, non-cumulative, with
timing mutually agreed to.

BENEFITS: You will be enrolled in the CryptoLogic benefits program, which is
attached. Furthermore, we will waive all waiting periods for your participation
in the benefits program.

TERMINATION: In the event your employment is terminated by the company for any
reason other than cause, you will receive six months annual base salary (less
applicable withholding taxes) plus full benefits coverage for you and your

                                CRYPTOLOGIC INC.
                      TEL (416) 545-1455 FAX (416) 545-1454




OTHER BENEFITS: A car allow for $800 per month will be added to your

As with all senior officers of CryptoLogic, this offer is conditional upon your
signing our Non-Competition Agreement and Confidentiality Agreement which is
attached and passing our probity review.

Jim, let me say how much I look forward to your joining us and your contribution
to the future success of our business.

This offer remains in effect until the close of business on December 20, 2001.
To indicate your acceptance of the terms of this officer, please sign below and
return one copy of this letter by that time.

Yours truly,

/s/ Jean Noelting
Jean Noelting
Chief Executive Officer

Copy to: Dennis Wing                                 AGREED TO AND ACCEPTED:

                                                     /s/ James A. Ryan
                                                     Jim Ryan

                                                     Date: December 19, 2001


                                    EXHIBIT 2



In consideration of my employment with CryptoLogic Inc., I hereby agree as


I agree at all times during my employment and for a period of two (2) years
thereafter to hold in confidence and not to use, nor remove from CryptoLogic
Inc.'s premises, nor disclose to any person, firm, corporation or other entity,
including media, except with the express authorization of an officer of
CryptoLogic Inc., any Confidential Information.

"Confidential Information" means any proprietary information of CryptoLogic Inc.
or any of its subsidiaries, affiliates or related entities (collectively
"CryptoLogic) irrespective of its form or method of transmission, including but
not limited to data, trade secrets, know-how, research, manuals, product plans,
products, services, customer lists (including, but not limited to, licensees),
software, developments, computer programs, inventions, processes, formulas,
algorithms, technology, designs, drawings, engineering, hardware configuration
information, business opportunities, marketing, financial or other business
information related in any way to the business of CryptoLogic. Confidential
Information does not include any of the above mentioned items which has become
publicly known through no fault on my part.

I will use Confidential Information solely in the course of my employment and
solely for the benefit of CryptoLogic.

I agree to hold all confidential or proprietary information received by
CryptoLogic from third parties in confidence, and not to disclose such
information to any person, firm or corporation or other entity, or to use it
except as is necessary to carry out my work for CryptoLogic, and I shall comply
with any agreements CryptoLogic has with such third parties regarding the
confidentiality of such information.


I agree to fully disclose to CryptoLogic, hold in trust for the sole right and
benefit of CryptoLogic and assign to CryptoLogic or its designee all right,
title, and interest, including all intellectual property rights, throughout the
world, in and to any and all discoveries, inventions, developments, concepts,
improvements, software, notes, charts, algorithms, formulae and all other
original works, whether or not patentable or registrable under copyright or
similar laws, which I solely or jointly with someone else conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to
practice, during the course of my employment with CryptoLogic (collectively
referred to as "Works"), and I hereby expressly disclaim and waive all rights,
including moral rights, in Works in favour of CryptoLogic. Moreover, I will not
incorporate into Works any code which I know to be a virus or harmful.


I agree to keep and maintain adequate and current written records (in the form
of notes, sketches, drawings, or other formats) of all Works The records will be
available to and remain the sole property of CryptoLogic at all times, and shall
be returned to CryptoLogic when my employment shall terminate or expire. I
covenant that I am the author of Works and that they are original.

I agree to assist CryptoLogic in securing its rights in Works, and any
copyrights, patents, or other intellectual property rights relating thereto,
throughout the world, including signing all documents necessary, even after the
termination or expiration of my employment for any reason. If I am unable or
unwilling to assist CryptoLogic in this regard, I irrevocably appoint the CEO of
CryptoLogic to act as my attorney to execute all such documents on my behalf.


I agree that during the course of my employment with CryptoLogic, I will not
engage in any other employment, occupation, consulting or other business
activity related to the business CryptoLogic, or any business in which it may
become involved, nor will I engage in any other activities that conflict with my
contractual or common law obligations to CryptoLogic.


Upon the termination or expiration of my employment with CryptoLogic, for any
reason, I will immediately deliver to CryptoLogic, and will not retain, copy,
reproduce, recreate or deliver to anyone else, all property of CryptoLogic which
is in my possession, including Confidential Information, Works, hardware,
software, any materials related thereto, and all copies or reproductions


I agree that during my employment with CryptoLogic I will not improperly use or
disclose any proprietary information or trade secrets of any former employer or
other person or entity, and that I will not bring onto CryptoLogic's premises
any proprietary information belonging to any such employer, person or entity
which is not publicly known, unless consented to in writing by such employer,
person or entity.


I agree that for twelve (12) months immediately following the termination or
expiration of my employment with CryptoLogic, I will not directly or indirectly
solicit, induce, recruit or encourage any of CryptoLogic's employees or
consultants to leave their employment with CryptoLogic for any reason. Moreover,
I will not directly or indirectly solicit, induce, or encourage any of
CryptoLogic's customers, licensees, business partners or any person or entity
engaged in a business relationship of any kind with CryptoLogic to terminate
such business relationship for any reason.


7.       GENERAL

My obligations under this Agreement will survive the termination or expiration
of my employment with CryptoLogic. If any portion of this Agreement is
determined to be invalid or unenforceable for any reason, that will not affect
the validity or enforceability of the remaining portions of this Agreement, and
if such portion is severed, and the remainder of the Agreement will remain in
full force and effect.

This Agreement constitutes the entire agreement between myself and CryptoLogic
with respect to the subject matter herein, and I do not rely on any warranties,
representations or other agreements with respect to this subject matter other
than the ones contained herein.

This Agreement will be governed by the laws of the Province of Ontario and I
submit to the non-exclusive jurisdiction of the courts of the Province of
Ontario. If I breach this Agreement, CryptoLogic will have, in addition to all
other rights and remedies available to, the right to obtain equitable relief by
way of an injunction restraining such breach, and to specific performance of any
provision of this Agreement.

Signed at Toronto, Ontario, Canada this 19th day of December 2001.

/s/ Anna La Caprara                                     /s/ James A. Ryan
-----------------------------                           ------------------------
Signature of Witness                                    Signature of Employee

Anna La Caprara                                         James A. Ryan
-----------------------------                           ------------------------
Name of Witness                                         Name of Employee