Exhibit 10.1

 

EMPLOYMENT AGREEMENT

[Richard Baldwin]

THIS AGREEMENT is made and entered into as of the 30th day of November 2006, by
and between Shuffle Master, Inc., a Minnesota corporation (the “Company”), and
Richard Baldwin (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
technology systems for gaming equipment and related products and services
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 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 Chief
Financial Officer reporting to the Chief Executive Officer of the Company, or
his designee and when and as appropriate, to the Board of Directors and Audit
Committee.  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 approximately two years
(the “Term”), beginning November 1, 2006 (the “Commencement Date”), through
October 31, 2008.

2.             Salary, Bonus and Benefits.

a.               From the Commencement Date and if employed through October 31,
2007, Employee shall be paid an annual base salary of Two Hundred Seventy
Thousand Dollars ($270,000.00), paid in the same intervals as other employees of
the Company; and if employed through October 31, 2007, 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 2007, in a range of percentages, but with a target bonus
of 50% of Employee’s base salary.

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b.              For any period from November 1, 2007 through October 31, 2008,
Employee will receive an annual base salary of no less than his annual base
salary for the first 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 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”).

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.

h.              [Intentionally Omitted]

i.                  Notwithstanding any other provision contained herein,
Employee shall be and is an employee “at will,” terminable at any time, with or
without just cause or notice.

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 written consent of the
Chief Executive Officer of the Company.

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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 twenty-four (24) 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.

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.

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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 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,
the Company shall have the right to 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 one year of his then
annual base salary paid over a period of  twenty-four (24) 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;

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ii.             Employee shall continue to receive, during the twenty-four (24)
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 twenty-four (24) month period (for the
avoidance of doubt, the Company and Employee agree that it is the intent of this
language and 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 24-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 full fiscal years during which Employee was employed,
provided however that if Employee is terminated without just cause prior to
October 31, 2007, then, in lieu of the above, the Company shall use, for
Employee’s additional compensation, the amount that results from taking twice
Employee’s FY 2005 bonus of $101,538.64, adding the amount of Employee’s FY 2006
bonus, and then dividing by 3.  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 24-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:

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 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.  At any time, the
Company may terminate Employee for just cause.  In the event, at any time, 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

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under this Agreement.  Termination for “just cause” shall mean any one of the
following, with each one of the following being deemed separate, independent and
non-repetitive of any other one:

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

b.              the commission of an act or an omission intended or reasonably
likely to materially injure the business or reputation of the Company;

c.               a violation of any of the material provisions of this
Agreement;

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

e.               the commission of an act or an omission which actually or
potentially puts at risk any of the Company’s gaming licenses or regulatory
approvals;

f.                 any breach of any fiduciary duty owed by Employee to the
Company;

g.              Employee’s conviction of a crime involving moral turpitude to
the extent that, in the reasonable judgment of the Company’s Board, the
Employee’s credibility or reputation is no longer at an adequate level in order
for Employee to represent the Company to the public at Employee’s current
position;

h.              a repeated and knowing violation of any material Company policy,
applicable to the Employee; or

i.                  the loss, revocation, suspension of or failure to obtain any
license or certification of Employee necessary for Employee to discharge
Employee’s duties.

8.             Voluntary Termination by Employee.

a.               In the event Employee voluntarily terminates, at any time, 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, prior to any such termination, there was not a material breach of
this Agreement by the Company, which the Company failed to reasonably cure after
written notice thereof.

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

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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; Attorneys’ Fees.  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. 
Employee consents to the issuance of such injunctive relief without the posting
of a bond or other security.  In the event of any such alleged violation, THE
LOSING PARTY AGREES TO PAY THE COSTS, EXPENSES AND REASONABLE ATTORNEYS’ FEES
INCURRED BY THE PREVAILING PARTY IN PURSUING OR DEFENDING ANY OF ITS RIGHTS WITH
RESPECT TO SUCH ALLEGED VIOLATIONS, IN ADDITION TO THE ACTUAL DAMAGES SUSTAINED
BY THE PREVAILING PARTY AS A RESULT THEREOF.

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.

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 prior or 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.

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.

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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 Company and its 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 applicable 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.           Fees and Costs.  In any action bought by one party against the
other pursuant

to this Agreement or in the event of any dispute over the meaning of this
Agreement, the successful party, in addition to recovering its awarded damages
and other relief, shall be entitled to recover its attorney’s fees and costs
from the unsuccessful party.

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

24.           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.

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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.

 

RICHARD BALDWIN

 

 

 

 

 

By:

/s/ Mark L. Yoseloff

 

By:

/s/ Richard Baldwin

 

 

 

 

 

 

Its:

CEO

 

Its:

Senior Vice President and CFO

 

 

 

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