Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

[Paul Meyer]

 

THIS AGREEMENT is made and entered into as of the 31st day of October 2005, by
and between Shuffle Master, Inc., a Minnesota corporation (the “Company”), and
Paul Meyer (the “Employee”), a resident of the State of Nevada.

 

RECITALS:

 

A.            The Company is in the business of developing, manufacturing,
distributing and otherwise commercializing card shufflers, table games (both
live and electronic) and related gaming equipment and technology systems
throughout the world (the “Business”).

 

B.            Company and Employee want to create an at-will employment
relationship that protects the Company with appropriate confidentiality and
non-compete covenants, and compensates and rewards the Employee for performing
his obligations for the full term of this contract or such shorter term, as may
be determined in accordance with the terms and conditions of this Agreement.

 

C.            The Company and Employee desire that Employee be employed by the
Company on the terms and conditions of this Agreement.

 

AGREEMENT

 

In consideration of the mutual promises contained herein, Employee and the
Company agree as follows:

 

1.             Employment.  The Company hereby employs Employee as its President
and Chief Operating Officer reporting to the Chief Executive Officer of the
Company.  Employee shall perform the normal duties of that position.  Subject to
the other terms and conditions hereof, Employee’s employment under this
Agreement with the Company is for an initial term of three years (the “Term”),
beginning November 1, 2005 (the “Commencement Date”), through October 31, 2008.

 

2.             Salary, Bonus and Benefits.

 

a.               From the Commencement Date and if employed through October 31,
2006, Employee shall be paid an annual base salary of three hundred thousand
dollars ($300,000) from November 1, 2005 through January 31, 2006 and then three
hundred twenty-five thousand dollars ($325,000) from February 1, 2006 through
October 31, 2006, paid in the same intervals as other Employees of the Company;
and if employed through October 31, 2006, Employee will also be eligible to
receive an executive bonus in accordance with the terms and conditions of the
executive bonus program authorized by the Board of Directors of the Company (the
“Board”) for other senior management executives of the Company for fiscal year
2006, in a range of percentages, but with a target bonus of 50% of Employee’s
base salary.

 

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b.              For any subsequent year after the first year of this Agreement,
Employee will receive an annual base salary of no less than his annual base
salary for the immediately prior year of this Agreement, and will also be
eligible to participate in an executive bonus program and/or in an individual
performance bonus program as authorized by the Board for said period.

 

c.               Any future stock option grants, if any, will be at the sole
discretion of the Board.

 

d.              Any stock options granted at any time to Employee shall vest in
accordance with the terms and conditions set forth in the applicable grant by
the Board and, as otherwise may be applicable, with any relevant terms and
conditions of Shuffle Master, Inc.’s 2004 Equity Incentive Plan (the “Plan”) or
any subsequent plan.

 

e.               The Company agrees to provide Employee with the same benefits
it provides all of the other members of its senior management executive team. 
Employee will not, however, be eligible to participate in the Company’s
non-executive bonus program.

 

f.                 Employee’s salary is set in the expectation that Employee’s
full professional time will be devoted to Employee’s duties hereunder.

 

g.              During Employee’s employment with the Company, the Company will
promptly pay or reimburse Employee for reasonable travel and other expenses
incurred by Employee in the furtherance of or in connection with the performance
of Employee’s duties.  Such reimbursement will be in accordance with Company
policies in existence from time to time.

 

3.             Outside Services or Consulting.  Employee shall devote Employee’s
full professional time and best professional efforts to the Company.  Employee
may render other professional or consulting services to other persons or
businesses from time to time during the Term, only if Employee meets all of the
following requirements:

 

a.               The services do not interfere in any manner with the Employee’s
ability to fulfill all of his duties and obligations to the Company.

 

b.              The services are not rendered to any business which may compete
with the Company in any area of the Business or do not otherwise violate
paragraph 4 hereof.

 

c.               The services do not relate to any products or services, which
form part of the Business.

 

d.              Employee informs and obtains the prior consent of the Chief
Executive Officer of the Company.

 

4.             Non-competition.  In consideration of the provisions of this
Agreement, Employee hereby agrees that he shall not, during the term of his
full-time employment and for a period of thirty-six (36) months thereafter:

 

a.               Directly or indirectly own, manage, operate, participate in,
consult with or work for any business, which is engaged in the Business anywhere
in the United States or Canada.

 

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b.              Either alone or in conjunction with any other person,
partnership or business, directly or indirectly, solicit, hire, or divert or
attempt to solicit, hire or divert any of the Employees, independent
contractors, or agents of the Company (or its affiliates or successors) to work
for or represent any competitor of the Company (or its affiliates or
successors), or to call upon any of the customers of the Company (or its
affiliates or successors).

 

c.               Directly or indirectly provide any services to any person,
company or entity, which is engaged in the Business anywhere in the United
States or Canada.

 

5.             Confidentiality; Inventions.

 

a.               Employee shall fully and promptly disclose to the Company all
inventions, discoveries, software and writings that Employee may make, conceive,
discover, develop or reduce to practice either solely or jointly with others
during Employee’s employment with the Company, whether or not during usual work
hours.  Employee agrees that all such inventions, discoveries, software and
writing shall be and remain the sole and exclusive property of the Company, and
Employee hereby agrees to assign, and hereby assigns all of Employee’s right,
title and interest in and to any such inventions, discoveries, software and
writings to the Company.  Employee agrees to keep complete records of such
inventions, discoveries, software and writings, which records shall be and
remain the sole property of the Company, and to execute and deliver, either
during or after Employee’s employment with the Company, such documents as the
Company shall deem necessary or desirable to obtain such letters patent, utility
models, inventor’s certificates, copyrights, trademarks or other appropriate
legal rights of the United States and foreign countries as the Company may, in
its sole discretion, elect, and to vest title thereto in the Company, its
successors, assigns, or nominees.

 

b.              “Inventions,” as used herein, shall include inventions,
discoveries, improvements, ideas and conceptions, developments and designs,
whether or not patentable, tested, reduced to practice, subject to copyright or
other rights or forms of protection, or relating to data processing,
communications, computer software systems, programs and procedures.

 

c.               Employee understands that all copyrightable work that Employee
may create while employed by the Company is a “work made for hire,” and that the
Company is the owner of the copyright therein.  Employee hereby assigns all
right, title and interest to the copyright therein to the Company.

 

d.              Employee has no inventions, improvements, discoveries, software
or writings useful to the Company or its subsidiaries or affiliates in the
normal course of business, which were conceived, made or written prior to the
date of this Agreement.

 

e.               Employee will not publish or otherwise disclose, either during
or after Employee’s employment with the Company, any published or proprietary or
confidential information or secret relating to the Company, the Business, the
Company’s operations or the Company’s products or services.  Employee will not
publish or otherwise disclose proprietary or confidential information of others
to which

 

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Employee has had access or obtained knowledge in the course of Employee’s
employment with the Company.  Upon termination of Employee’s employment with the
Company, Employee will not, without the prior written consent of the Company,
retain or take with Employee any drawing, writing or other record in any form or
nature which relates to any of the foregoing.

 

f.                 Employee understands that Employee’s employment with the
Company creates a relationship of trust and confidence between Employee and the
Company.  Employee understands that Employee may encounter information in the
performance of Employee’s duties that is confidential to the Company or its
customers.  For the Term hereof, and until the information falls into the public
domain, Employee agrees to maintain in confidence all information pertaining to
the Business or the Company to which Employee has access including, but not
limited to, information relating to the Company’s products, inventions, trade
secrets, know how, systems, formulas, processes, compositions, customer
information and lists, research projects, data processing and computer software
techniques, programs and systems, costs, sales volume or strategy, pricing,
profitability, plans, marketing strategy, expansion or acquisition or
divestiture plans or strategy and information of similar nature received from
others with whom the Company does business.  Employee agrees not to use,
communicate or disclose or authorize any other person to use, communicate or
disclose such information orally, in writing, or by publication, either during
Employee’s employment with the Company or thereafter except as expressly
authorized in writing by the Company unless and until such information becomes
generally known in the relevant trade to which it relates without fault on
Employee’s part, or as required by law.

 

6.             Termination or Non-Extension by Company Without Just Cause

 

a.               Employee’s employment by the Company is “at will;” therefore,
subject to the terms and conditions hereof, the Company may terminate Employee’s
full-time employment at any time either with or without just cause.  In the
event of any termination of Employee’s full-time employment with the Company
without just cause, or in the event that Employee’s full-time employment is not
extended or renewed beyond the Term on terms at least as favorable to Employee
as Employee is receiving during the last year of the Term, then Employee will
remain bound to the covenants not to compete and confidentiality obligations of
paragraphs 4 and 5 of this Agreement, according to their terms, and each one of
the following shall apply:

 

i.      Employee shall be paid an amount equal to eighteen (18) months of his
then monthly base salary paid over a period of thirty-six (36) months from
Employee’s termination in equal monthly installments and at the same intervals
as other Employees of the Company are then being paid their base salaries;

 

ii.     Employee shall continue to receive, during the thirty (36) months from
Employee’s termination, all medical insurance and any other benefits or
insurance coverages which Employee would have received had his employment not
been so terminated, or not extended, provided however, if the Employee is not
eligible for said medical insurance, the Company shall pay the COBRA premiums
for continuation coverage during the said thirty-six (36) month period (for the
avoidance of doubt, the Company and Employee agree that it is the intent of this
language and

 

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of this paragraph 6(a), and that this language means, that Employee will
continue to vest in previous stock option and restricted stock awards during
said 36-month period after Employee’s termination);

 

iii.    Employee shall receive additional compensation for his covenant not to
compete equal to the average annual bonus which Employee has received for the
three most recent fiscal years during which Employee was employed, provided
however that if Employee has not been employed for three full fiscal years, then
the Company shall use the actual number of full fiscal years that the Employee
was employed.  The amount due under this paragraph 6(a)(iii) shall be paid in
the same intervals as other Employees of the Company are then being paid their
base salaries;

 

iv.    Notwithstanding anything else contained herein to the contrary, during
the 36-month period referred to in this paragraph 6, Employee shall remain a
part-time employee of the Company’s and, subject to Employee’s other
professional duties, shall be available to the Chief Executive Officer of the
Company.

 

b.              For purposes hereof, any of the following acts or events shall,
at Employee’s option, constitute a termination without just cause under this
paragraph 6 (but the following is not the entire list of reasons or event which
may constitute a “termination with just cause”):

 

i.      any material diminution or reduction of Employee’s title, position,
duties or responsibilities, except as caused by the acts or omissions of
Employee; or

 

ii.     any material breach by Company of this Agreement that is not cured
within thirty (30) days after written notice by Employee of such breach.

 

c.               In the event that, at the end of the Term, the Company elects
not to extend or renew Employee’s full-time employment beyond the Term on terms
at least as favorably to Employee as Employee is receiving during the last
fiscal year of the Term, then such non-renewal shall be treated as a termination
without cause.  In such case, the provisions of paragraphs 6(a)(i) through
(iv) shall apply and Employee shall be bound to the provisions of paragraphs 4
and 5 hereof for the period of time during which Employee is being paid pursuant
to paragraph 6(a).

 

7.             Early Termination by Company for Just Cause.  The Company may
terminate Employee for just cause.  In the event that the Company terminates the
Employee for just cause, the Employee will remain bound under the provisions of
paragraphs 4 and 5, but will not be entitled to any compensation or benefits
following his termination of employment under this Agreement.  Termination for
“just cause” shall mean:

 

a.               dishonesty as to a matter which is materially injurious to the
Company;

 

b.              the commission of a willful act or omission intended to
materially injure the business of the Company;

 

c.               a violation of any of the material provisions of Sections 4
and/or 5 hereof; or

 

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d.              a determination in good faith by the Board that the Employee has
failed to make a good faith effort to fully perform his duties as assigned by
either the CEO or the Board, which failure is not remedied by the Employee
within thirty (30) days following the CEO’s specific written notice stating such
alleged failure from the Board;

 

8.             Voluntary Termination by Employee.

 

a.               In the event Employee voluntarily terminates, his employment
with the Company, Employee will remain bound under the provisions of paragraphs
4 and 5 hereof, but will not be entitled to receive any compensation and
benefits following his termination of employment except for any payments or
benefits required by law.

 

b.              Voluntary termination means an intentional termination by the
Employee without good reason and without pressure by the Company; and further,
provided that there was not a material breach of this Agreement by the Company,
prior to any such termination which remains uncured.

 

9.             Cooperation with Change in Control.  Employee will reasonably
cooperate with the Company in the event of a change in control.

 

10.           No Conflicting Agreements.  Employee has the right to enter into
this Agreement, and hereby confirms Employee has no contractual or other
impediments to the performance of Employee’s obligations including, without
limitation, any non-competition or similar agreement in favor of any other
person or entity.

 

11.           Company Policies.  During the term of Employee’s employment,
Employee shall engage in no activity or employment which may conflict with the
interest of the Company, and Employee shall comply with all policies and
procedures of the Company including, without limitation, all policies and
procedures pertaining to ethics.

 

12.           Independent Covenants.  The covenants and agreements on the part
of the Employee contained in paragraphs 4 and 5 hereof shall be construed as
agreements independent of any other provision in this Agreement; thus, it is
agreed that the relief for any claim or cause of action of the Employee against
the Company, whether predicated on this Agreement or otherwise, shall be
measured in damages and shall not constitute a defense or bar to enforcement by
the Company of those covenants and agreements.

 

13.           Injunctive Relief.  In recognition of the irreparable harm that a
violation by Employee of any of the covenants contained in either paragraphs 4
or 5 hereof would cause the Company, the Employee agrees that, in addition to
any other relief afforded by law, an injunction (both temporary and permanent)
against such violation or violations may be issued against him or her and every
other person and entity concerned thereby, it being the understanding of the
parties that both damages and an injunction shall be proper modes of relief and
are not to be considered alternative remedies; provided, however, that the issue
and amount, if any, of damages shall be litigated through arbitration as
required by paragraph 20 below.  Employee consents to the issuance of such
injunctive relief without the posting of a bond or other security.

 

14.           Notice.  Any notice sent by registered mail to the last known
address of the party to whom such notice is to be given shall satisfy the
requirements of notice in this Agreement.

 

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15.           Entire Agreement.  This Agreement is the entire agreement of the
parties hereto concerning the subject matter hereof and supersedes and replaces
in its entirety any oral or written existing agreements or understandings
between the Company and the Employee relating generally to the same subject
matter.  Company and Employee hereby acknowledge that there are no agreements,
promises, representations or understandings of any nature, oral or written,
regarding Employee’s employment, apart from this Agreement, and Employee
acknowledges that no promises, representations or agreements not contained in
this Agreement have been made or offered by the Company.  This Agreement
supersedes the employment agreement between the Company and the Employee, dated
as of September 24, 2003.

 

16.           Severability.  It is agreed and understood by the parties hereto
that if any provision of this Agreement should be determined by an arbitrator or
court to be unenforceable in whole or in part, it shall be deemed modified to
the minimum extent necessary to make it reasonable and enforceable under the
circumstances, and the court shall be authorized by the parties to reform this
Agreement in the least way necessary in order to make it reasonable and
enforceable.

 

17.           Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada, without giving effect to the
principles of conflicts of laws thereof.

 

18.           Heirs, Successors and Assigns.  The terms, conditions,
obligations, agreements and covenants hereof shall extend to, be binding upon,
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors, assigns, and/or acquirers, including any
entity which acquires, merges with, or obtain control of the Company.

 

19.           Waiver of Breach.  The waiver by either the Company or the
Employee of any breach of any provision of this Agreement shall not operate as
or be deemed a waiver of any subsequent breach by either the Company or the
Employee.

 

20.           Dispute Resolution.  Except for the Company’s right (either
pursuant to paragraph 13 hereof or otherwise) to injunctive relief to enforce
the provisions of paragraphs 4 and 5 hereof, the exclusive forum for the
resolution of any dispute arising under this Agreement or any question of
interpretation regarding the provisions of this Agreement (other than disputes
relative to paragraphs 4 or 5 hereof) shall be resolved by arbitration, to be
held in Clark County, Nevada, in accordance with the rules of the American
Arbitration Association (“AAA”).  Such arbitration shall be before an
arbitrator, chosen in accordance with the rules then in effect of the AAA.  In
the event the Employee and Company fails within a reasonable period of time to
agree on an arbitrator, the arbitrator shall be chosen by the AAA.  The decision
of the arbitrator shall be final, conclusive and binding upon the Company and
Employee.

 

21.           Amendment.  This Agreement may be amended only by a document in
writing signed by both the Employee and a Corporate Officer (other than
Employee) of the Company, and no course of dealing or conduct of the Company
shall constitute a waiver of any of the provisions of this Agreement.

 

22.           D & O Policy.  During Employee’s employment with the Company, the
Company shall maintain director and officer liability insurance.

 

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23.           Non-Disparagement and Cooperation.

 

a.               During any period of time wherein the Company is paying any
base salary to Employee, whether during the Term hereof or during any time after
the termination or expiration of this Agreement, and for a period of three
(3) years thereafter, Employee shall not disparage or otherwise make any
negative comments about the Company, its policies, products, Employees or
management.  The Company may enforce these non-disparagement provisions by
resort to injunctive relief as set forth in paragraph 13, in addition to any
other damages that it may be entitled to under this Agreement or otherwise at
law.

 

b.              Employee agrees to fully cooperate with the Company and its
affiliates during the entire scope and duration of any litigation or
administrative proceedings involving any matters with which Employee was
involved during Employee’s employment with the Company.

 

c.               In the event Employee is contacted by parties or their legal
counsel involved in litigation adverse to the Company or its affiliates,
Employee (i) agrees to provide notice of such contact as soon as practicable;
and (ii) acknowledges that any communication with or in the presence of legal
counsel for the Company (including without limitation the Company’s outside
legal counsel, the Company’s inside legal counsel, and legal counsel of each
related or affiliated entity of the Company) shall be privileged to the extent
recognized by law and, further, will not do anything to waive such privilege
unless and until a court of competent jurisdiction decides that the
communication is not privileged.  In the event the existence or scope of the
privileged communication is subject to legal challenge, then the Company must
either waive the privilege or pursue litigation to protect the privilege at the
Company’s sole expense.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day, month and year first above written.

 

 

EMPLOYER:

EMPLOYEE:

 

 

SHUFFLE MASTER, INC.

PAUL MEYER

 

 

By: 

  /s/ Mark L. Yoseloff

 

By: 

  /s/ Paul Meyer

 

 

 

 

 

Its:

  CEO

 

 

 

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