Employment Agreement









Exhibit

10.34




 




EMPLOYMENT

AGREEMENT




 




 




Mark L.

Yoseloff




 




THIS AGREEMENT is made and entered into as of the 1st day of May,

2002, 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.            Company and Employee want to create a Fixed employment

relationship that protects the Company with appropriate confidentiality and

non-compete covenants and rewards the Employee for performing his obligations

for the full term of this contract or such shorter term as may be created by

his earlier termination by the Company or its successors pursuant to this

Agreement.




 




C.            The Company and employee desire that Employee be employed

by the Company on the terms and conditions of this Agreement.




 




D.            Nothing contained in this Agreement precludes the Company

and Employee from extending, renegotiating, or otherwise modifying Employee’s

employment relationship by mutual agreement of Company and Employee.




 




 




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 Executive Officer and Chairman of the Board of Directors.  Employee shall perform the duties of those




 




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positions and shall perform such other related duties as the Company’s

Board of Directors may direct from time to time.  Employee’s employment with the Company is for the period

beginning May 1, 2002 through October 31, 2004, but may be terminated earlier in accordance with the

provisions of this Agreement, or extended or otherwise modified by the mutual

agreement of Employee and Company. 

Company and Employee agree to meet not later than December 31, 2003, to

discuss and negotiate any mutually agreeable extension or other modification of

this Agreement.




 




2.             Salary

and Benefits. 

During the period from May 1, 2002 through October 31, 2002.  (a) Employee shall be paid an annual base

salary of Three Hundred Thousand Dollars ($300,000.00), paid in the same

intervals as other employees of the Company; and (b) if employed through

October 31, 2002, Employee will 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, as set forth on Exhibit

A attached hereto.  During the

period from November 1, 2002, to October 31, 2003, Employee will receive a base

salary of no less than Three Hundred Twenty- Five Thousand Dollars

($325,000.00) and will be eligible to participate in an executive bonus program

authorized by the Board of Directors of the Company for the fiscal year ending

October 31, 2003, which is expected to be generally similar to that set forth

in Exhibit A, but with such performance targets and bonus percentages as

may be adopted by the Board.  During the  period from November 1, 2003 through

October 31, 2004, Employee will receive an annualized base salary of no less

than Three Hundred Fifty Thousand Dollars ($350,000.00) and will be eligible to

participate in the executive bonus program 

authorized by the Board of Directors for the fiscal year ending October

31, 2004, which is expected to be generally similar to that set forth in Exhibit

A, but with such performance targets and bonus




 




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percentages as may be adopted by the Board.  Employee has received a stock option grant to purchase one

hundred sixty thousand (160,000) shares of the Company’s common stock in

accordance with, and subject to, the terms and conditions imposed by the Board

of Directors at its September 19th, 2001 meeting and the Company’s

Employee Stock Option Plans.  Future

Stock Option grants to the Employee are at the discretion of the Company’s

Board of Directors. Employee’s salary is set on the expectation that (except

for vacation days and holidays) Employee’s full time will be devoted to

Employee’s duties hereunder.  The

Company agrees to provide Employee with the benefits it provides its executive

team.  Employee will not, however, be eligible

to participate in the Company’s non-executive bonus program.




 




3.             Strategic

Performance Bonus. 

The Board of Directors of the Company believes that long-range,

strategic planning is among the most important duties of the Company’s Chief

Executive Officer, including identifying and working toward the successful

growth and diversification of the Company and the creation and maintenance of a

succession plan for the Company’s executives. 

In order to motivate and reward Employee regarding these duties, the Company’s Board of Directors, in its

discretion, may grant employee a special bonus of up to $100,000 per year based

upon specific factors determined by the Company’s Board of Directors from time

to time and communicated to Employee.




 




4.             Outside

Consulting.  Employee shall devote Employee’s full-time

and best efforts to the Company. 

Employee may render consulting services to other businesses from time to

time if Employee first obtains the consent of the Board of Directors of the

Company.




 




5.             Non-competition. 

In consideration of the provisions of this Agreement, Employee shall

not, while employed full-time by the Company or its successor:




 




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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.




 




In further consideration of the provisions of this

Agreement Employee is entering into a Covenant Not to Compete Agreement

effective May 1, 2002, covering Employee during the three (3) year period

immediately following his last day of employment.




 




6.             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 working 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




 




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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 unpublished 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.  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.




 




7.             Early

Termination by Company for Just Cause.  The Company may terminate Employee for

just cause.  In the event the Company

(or its successor) terminates the Employee for just cause, in consideration of

Company’s obligations under this Agreement, the Employee




 




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will remain bound under the Covenant Not to Compete Agreement entered

into between Company and Employee effective May 1, 2002 for a period of three

years immediately following his last day of employment, and the confidentiality

obligations contained in Section 6 for as long as the information covered by

Section 6 remains confidential. 

Termination for “just cause” shall include, but not be limited to:




 




(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 material provision

of this Agreement, including, in particular, the provisions of Sections 4

and 5 hereof; or




 




(d)           a determination in good faith by the

vote of all outside members of the Company’s Board of Directors that the

Employee has failed to make a good faith effort to perform his duties as

assigned by the Board of Directors;




 




provided, that if the Company desires to terminate Employee for the

reasons stated in subsection 7(d), it shall first give Employee written

notice of such intention, stating the specific reasons for the termination, and

Employee shall have thirty (30) days from the date of receipt of such notice to

cure the alleged wrongdoing to the reasonable satisfaction of the outside

members of the Company’s Board of Directors.




 




8.             Employee’s

Voluntary Termination and Employee’s Termination Without Cause.  In the event Employee voluntarily

terminates his employment with the Company (or its successor), in the event

Company (or its successor) terminates the Employee without just cause or in the

event Company (or its successor) does not renew this Agreement on terms at

least as favorable to Employee as Employee is receiving on October 31, 2004,

then Employee will be bound under the confidentiality obligations of Section 6

for as long as the information remains confidential and the Covenant Not to

Compete Agreement entered into between Company and




 




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Employee effective May 1, 2002. 

Voluntary termination means any termination by the Employee except for

one made in response to an attempt by Company to terminate Employee for just

cause under Section 7.  Voluntary

termination includes a termination caused by the death of Employee or

disability of Employee for more than six (6) months.




 




9.             Part-time Employment.  In the event that Employee is terminated without “just

cause” (as defined in Section 7) or leaves his employment voluntarily (as

defined in Section 8) and is no longer Chairman of the Board of Directors prior

to the end of the term set forth in Section 1 hereof, then during the three (3)

year period immediately following Employee’s last day of employment (the

Part-time Employment Period”), Employee will be paid each month as Employee’s

sole remedy an amount determined as follows:  Employee’s annualized base salary

as of his last day of employment will be added to Employee’s average annual

bonus over the last three (3) years. 

The resulting amount will be paid to Employee in equal amounts at the

same intervals as other employees of the Company over the three (3) year period

immediately following his last day of employment.




 




Employee’s salary during the Part-time Employment

Period is set on the expectation that Employee’s time will be spent as

reasonably needed to perform his duties to assist the Company’s new Chief

Executive Officer and Chairman of the Board. 

Company will not require that Employee travel more than two (2) nights

per month during his Part-time Employment Period.  The Company agrees to provide Employee with the general benefits

it provides its non-executive employees during his Part-time Employment

Period.  Employee will not, however,

receive any vacation, be eligible to participate in the Company’s non-executive

bonus program, nor will Employee be eligible to participate; in the Company’s

executive bonus program and the executive stock option plan.




 




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10.          Change in Control. 

For the purposes of this Agreement, “Change in Control” of the Company

shall be defined the same as the conditions for acceleration of an employee’s

stock options, pursuant to the Company’s 1993 Stock Option Plan as amended (the

“Plan”), or the Company’s 2002 Employee Stock Option Plan (the “New

Plan”).  In the event of a Change in

Control Employee will reasonably cooperate with the Company and exercise his

stock options in a way as to not hinder the progress or closing of the

transaction, and in no event later than three (3) months following the closing.




 




11.          Stock Options.  All 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 the 1993 Stock Option Plan as amended (the

“Plan”), to the extent that said options are from the Plan, or, for any options

issued out of the New Plan, then pursuant to the New Plan.




 




12.          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.




 




13.          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.




 




14.          Independent

Covenants. 

The covenants on the part of the Employee contained in Sections 5 and 6

hereof 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




 




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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 those covenants.




 




15.          Injunctive

Relief; Attorneys’ Fees.  In recognition of the irreparable harm that

a violation by Employee of any of the covenants contained in Sections 5 and 6

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 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.




 




 




16.          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.




 




17.          Entire

Agreement.  This Agreement is the entire agreement of

the parties hereto concerning the subject matter hereof and supersedes and

replaces any oral or written existing agreements between the Company and the

Employee relating generally to the same subject matter.  Company and Employee hereby acknowledge that

there are no agreements or understandings of any nature, oral or written, regarding

Employee’s employment, apart from this Agreement.




 




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18.          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.




 




19.          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.




 




20.          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.




 




 




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.


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  By:


  	

  \s\  Howard

  Liszt


  	

   


  	

  \s\ Mark L. Yoseloff


  
	

  Its:


  	

  Director


  	

   


  	

  Mark L. Yoseloff


  





 




 




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EXHIBIT A




 




Executive

Bonus Program — F/Y/E 10/31/2002




 




                Employee may earn a percentage

of Employee’s base salary as a bonus during fiscal year 2002, which will vary

depending on the percentage of Targeted Income before taxes earned by the

Company (“Targeted Income”), the amount of which was approved by the Company’s

Board of Directors at its November 6, 2001 meeting, as part of the approved FY

2002 budget:




 




	

  Company Earnings as % of Targeted Income


  	

   


  	

  Bonus


  
	

  a.


  	

  Less than 90%


  	

   


  	

  0


  
	

  b.


  	

  90%


  	

   


  	

  40% of base salary.


  
	

  c.


  	

  90% - 100%


  	

   


  	

  40% of base salary plus an additional 1% of base

  salary for each increase of 1% 


  over 90%.


  
	

  d.


  	

  100%


  	

   


  	

  50% of base salary.


  
	

  e.


  	

  100% - 120%


  	

   


  	

  50% of base salary plus an additional 1⁄2 of 1% of

  base salary for each increase of 1% over 100%.


  
	

  f.


  	

  120%


  	

   


  	

  60% of base salary.


  
	

  g.


  	

  over 120%


  	

   


  	

  60% of base salary plus an additional 1% of base

  salary for each increase of 1% 


  over 120%.


  





 




                For example, if the Company earns 100% of its

Targeted Income during fiscal year 2002, Employee would be paid a performance

bonus of 50% of his base salary.  If the

Company earns 90% of its Targeted Income during fiscal year 2002, Employee

would be paid a performance bonus of 40% of his base salary.  If the Company earns 120% of its Targeted

Income, then Employee’s performance bonus would be 60% of his base salary.  If the Company earns more than 120% of its

Targeted Income, Employee’s performance bonus would further increase by an

amount equal to 1% of his base salary for each percent by which the percentage

increase in Targeted Income exceeds 120% of Targeted Income.




 




 




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