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EXHIBIT 10.4
 
AMENDED AND RESTATED
 
COVENANT NOT TO COMPETE AGREEMENT
 

 
Mark L. Yoseloff
 
THIS AMENDED AND RESTATED AGREEMENT (the “Agreement”) is made and entered into
as of the 31st day of December, 2008, by and between Shuffle Master, Inc., a
Minnesota corporation (the “Company”), and Mark L. Yoseloff (the “Employee”), a
resident of the State of Nevada.
RECITALS:

A.  
The Company is in the business of developing, manufacturing, distributing and
otherwise commercializing gaming equipment, games, and operating systems for
gaming equipment and related products and services throughout the United States
and in Canada and other countries (the “Business”).

 
B.  
Employee is Company’s Chief Executive Officer and Chairman of Company’s Board of
Directors.

 
C.  
Company and Employee wish to provide for the orderly succession of Employee’s
successor, when Employee’s employment with Company ends by providing a fixed
period of time during which Employee will not compete with Company and be
available to provide counsel to Employee’s successor.

 
D.  
The Company and Employee have previously entered into a Covenant Not to Compete
Agreement dated May 1, 2002 (the “Previous Agreement”).

 
E.  
The Company and Employee desire to amend and restate the Previous Agreement
solely in order to make changes to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).

 
AGREEMENT

Now therefore Employee and the Company agree as follows:

1.           Non-competition.  In consideration of the provisions of this
Agreement and in consideration the provisions of Employee’s Employment Agreement
with Company, Employee shall not, for a period of three (3) years immediately
following his last day of employment:

 
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(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.

 
(b)
either alone or in conjunction with any other person, partnership or business,
directly or indirectly, solicit or divert or attempt to solicit or divert any of
the employees 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.

 
2.           Non Compete Payments.  In consideration of the covenants contained
herein, including the three (3) year period of non-competition following
Employee’s employment, the Company agrees that, in the event (a) Employee is
terminated without just cause, (b) Employee voluntarily terminates his
employment with Company, or (c) Employee’s May 1st 2002 Employment Agreement is
not renewed on terms at least as beneficial as those received by Employee as of
October 31st , 2004, that Company will compensate Employee upon such “separation
from service” as defined in Code Section 409A as follows, but subject to Section
11 hereof:
 
 
(a)
Employee’s annualized base salary as of his last day of employment will be added
to Employee’s average annual bonus over his last three (3) years of employment,
then multiplied by 2, and that product will be paid to Employee as follows: one
third on the first January 5th following Employee’s last day of employment, one
third on the second January 5th following Employee’s last day of employment, and
one third on the third January 5th following Employee’s last day of employment.

 
 
(b)
During Employee’s three year period of Non Competition, Company will provide
Employee benefits it provides its non executive Employees, provided however,
Employee will not receive any vacation\sick pay nor be eligible to participate
in the Company’s bonus programs and stock option plans.

 
In the event, Employee is terminated by the Company for just cause as defined in
Employee’s May 1st Employment Agreement with Company, then Employee will remain
bound by this Covenant Not to Compete, but Company will have no obligation to
make any of the payments or provide any of the other benefits to be made to
Employee under this Agreement.

3.           Consultation With New C.E.O.  Employee at Company’s request will
provide consultation to the Company’s new Chief Executive Officer as reasonably
needed to effect a smooth transition.

4.           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.

 
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5.           Independent Covenants.  The covenants on the part of the Employee
contained herein shall be construed as agreements independent of any other
provision in this Agreement; 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 to enforcement by the Company of these covenants.

6.           Injunctive Relief; Attorneys’ Fees.  In recognition of the
irreparable harm that a violation by Employee of any of the covenants contained
herein 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 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.  Employee consents to the issuance of
such injunction relief without the posting of a bond or other security.  In the
event of any such violation, THE EMPLOYEE AGREES TO PAY THE COSTS, EXPENSES AND
REASONABLE ATTORNEYS’ FEES INCURRED BY THE COMPANY IN PURSUING ANY OF ITS RIGHTS
WITH RESPECT TO SUCH VIOLATIONS, IN ADDITION TO THE ACTUAL DAMAGES SUSTAINED BY
THE COMPANY AS A RESULT THEREOF.

7.           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.

8.           Severability.  It is further agreed and understood by the parties
hereto that if any provision of this Agreement should be determined by a 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.

9.           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.

10.           Heirs, Successors and Assigns.  The terms, conditions, 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 and assigns.

11.           Section 409A Compliance
 
a.  
This Agreement is intended to comply with Section 409A of the Code (to the
extent applicable) and, to the extent it would not adversely impact the Company,
the Company agrees to interpret, apply and administer this Agreement in a manner
necessary to comply with such requirements and without resulting in any
diminution in the value of payments or benefits to the Employee. Notwithstanding
any other provisions of this Agreement, the Company does not guarantee that
payments will be exempt or comply with Section 409A of the Code, nor will the

 

 
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b.  
Company indemnify, defend or hold harmless Employee with respect to the tax
consequences of any such failure.

 
c.  
It is intended that (i) each installment of the payments provided under this
Agreement is a separate “payment” for purposes of Section 409A of the Code, (ii)
that the payments satisfy, to the greatest extent possible, the exemptions from
the application of Section 409A of the Code provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and 1.409A-1(b)(9)(v) and (iii) all amounts
set forth in Section 2 shall be payable only upon a termination of the
Employee’s employment that constitutes a “separation from service” within the
meaning of Treasury Regulation 1.409A-1(h).

 
d.  
Notwithstanding anything to the contrary in this Agreement, if the Company
determines (i) that on the date the Employee’s employment with the Company
terminates, the Employee is a “specified employee” (as such term is defined
under Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any
payments to be provided to the Employee pursuant to this Agreement are or may
become subject to the additional tax under Section 409A(a)(1)(B) of the Code or
any other taxes or penalties imposed under Section 409A of the Code if provided
at the time otherwise required under this Agreement then such payments shall be
delayed until the date that is six months after the date of the Employee’s
“separation from service” with the Company, or, if earlier, the date of the
Employee’s death.  Any payments delayed pursuant to this Section 11 shall be
made in a lump sum on the first day of the seventh month following the
Employee’s “separation from service” (as such term is defined under Treasury
Regulation 1.409A-1(h)), or, if earlier, the date of the Employee’s death.

 
e.  
To the extent that any reimbursement, fringe benefit or other, similar plan or
arrangement in which the Employee participates during the term of Employee’s
employment under this Agreement or thereafter provides for a "deferral of
compensation" within the meaning of Section 409A of the Code, (i) the amount
eligible for reimbursement or payment under such plan or arrangement in one
calendar year may not affect the amount eligible for reimbursement or payment in
any other calendar year (except that a plan providing medical or health benefits
may impose a generally applicable limit on the amount that may be reimbursed or
paid), and (ii) subject to any shorter time periods provided herein or the
applicable plans or arrangements, any reimbursement or payment of an expense
under such plan or arrangement must be made on or before the last day of the
calendar year following the calendar year in which the expense was incurred.

 

 
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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.
 
 
MARK YOSELOFF
 
 
BY:   /s/ Jerry Smith
 
 
 
BY:   /s/ Mark L. Yoseloff
 
ITS:  Executive Vice President, General Counsel and Corporate Secretary
   

APPROVED:
   
 
COMPENSATION COMMITTEE
   
 
 
BY:   /s/ Lou Castle
   
 
ITS:  Chairman
   

 
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