Exhibit 10.1


 


EMPLOYMENT
AGREEMENT


 


Coreen Sawdon


 


                                                THIS
AGREEMENT is made and entered into as of the 16th  day of October, 2007, by and between Shuffle
Master, Inc., a Minnesota corporation (the “Company”), and Coreen Sawdon
(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 (live, electronic and simulated),
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 an at-will employment relationship that protects the
Company with appropriate confidentiality and non-compete covenants, and
compensates the Employee for performing her obligations appropriately.


 


                                                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
Senior Vice President — Finance and Chief Accountant reporting to the Chief
Financial Officer of the Company and indirectly to the Chair of the Board of
Director’s Audit Committee.  Employee
shall perform the normal duties of that position and as otherwise directed as
contained in Exhibit A.  Employee’s
employment under this Agreement with the Company is for a term of two (2) years
(the “Term”), beginning on August 1, 2007 (the “Commencement Date”),
through July 31, 2009.


 


2.                                       Salary,
Bonus and Benefits.


 


a.               From the Commencement Date
through July 31, 2008, and retroactively to February 18, 2007,
Employee shall be paid an annual base salary of Two Hundred Thousand Dollars
($200,000.00), for the period January 1, 2007 through February 17,
2007, Employee shall be paid an annual base salary of One Hundred Seventy-Seven
Thousand Six Hundred Seventy Five Dollars ($177,675.00) paid in the same
intervals as other Employees of the Company; and if employed through October 31,
2007, Employee will be eligible to receive an executive bonus in accordance
with the terms and conditions of the executive bonus program and/or the
individual performance bonus program authorized by the Board of Directors of
the Company (the “Board”) for other comparable senior vice president-level
employees of the Company for fiscal year 2007, 


 


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with a bonus in a range of percentages, but with a target bonus of 40%
of Employee’s base salary.


 


b.              During the second fiscal
year of this Agreement, Employee will receive an annualized base salary of no
less than Two Hundred Thousand Dollars ($200,000), and will also be eligible to
participate in an executive bonus program and/or in an individual performance
bonus program that applies to other comparable senior vice-president level
employees of the Company as authorized by the Board, up to a target bonus of
45% of Employee’s base salary.  Employee
will not, however, be eligible to participate in the Company’s non-executive
bonus program.  Employee acknowledges
receipt of any bonuses or incentives applicable to fiscal years 2005 and 2006
and any equity grants promised to Employee in her Letter Agreement with the
Company, dated June 17, 2005. 
Employee also acknowledges receipt of 5,000 restricted shares on July 17,
2007, in anticipation of this Agreement.


 


c.               Any stock options or
restricted stock units 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 2004 Equity Incentive Plan as amended (the “Plan”).  Employee acknowledges that any option grants
are at the sole discretion of the Board.


 


d.              Employee’s salary is set in
the expectation that (except for vacation days and holidays) Employee’s full
time will be devoted to Employee’s duties hereunder.


 


e.               During Employee’s employment
with the Company, the Company will promptly pay or reimburse Employee for
reasonable travel, entertainment 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.


 


f.                 For as long as the Company
makes the following benefits available to any comparable senior vice
president-level employees of the Company, Company agrees to provide Employee
with:


 


i.                  Club Sport
Family membership;


ii.               Premiere Care
medical services.


 


g.              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 her
duties and obligations to the Company.


 


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b.              The services are not
rendered to any business that 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 consent of the Chief Executive Officer of the Company.


 


4.                                       Non-competition.  In consideration of the provisions of this
Agreement, Employee hereby agrees that she shall not, during the term of her
full-time employment and for a period of twelve (12) 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.


 


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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 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 


 


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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-half of her then annual base salary, paid over a
period of twelve (12) 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 twelve (12) months from Employee’s termination,
all medical insurance and any other benefits (except for the benefit in
paragraph 2(f)(i)) or insurance coverages which Employee would have received
had her 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 twelve (12)
month period;


 


iii.                                    Employee shall
receive additional compensation for her 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; and if the Employee has not been employed for a full fiscal year,
than the Company shall use the bonus amount, if any, paid to Employee (but
annualized for a full fiscal year) from the most recent partial  fiscal year for which the Employee was
entitled to a bonus under this Agreement, and 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 12-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 Financial 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 events which may constitute a “termination
without 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 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 


 


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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 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 her termination of employment under this
Agreement.  Termination for “just cause”
shall mean any of the following (and none of the following shall be interpreted
as cumulative):


 


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


 


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


 


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


 


d.              a determination in good
faith by the CFO or the Board that the Employee has failed to make a good faith
effort to fully perform her duties as assigned by either the CFO or the Board,
which is not remedied by the Employee within fifteen (15) days following the
CFO’s or the Board’s written notice stating such alleged failure;


 


e.               the
Employee is repeatedly inattentive to her duties pursuant to this Agreement and has received written notice of same and, if curable, has
failed to so cure within 15 days of such
written notice;


 


f.                 the Employee fails or is
unable to become licensed in any jurisdiction where licensing is required, or
once licensed, any loss or suspension thereof;


 


8.                                       Voluntary
Termination by Employee.


 


a.               In the event Employee
voluntarily terminates her 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 her 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.


 


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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
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 or
understandings of any nature, oral or written, regarding Employee’s employment,
apart from this Agreement, and Employee acknowledges that no promises 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.


 


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 


 


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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.


 


21.                                 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. 
Such arbitration shall be before an arbitrator, who must be a member of
the National Academy of Arbitrators; chosen in accordance with the rules then
in effect, of the American Arbitration Association.  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 American Arbitration Association.  The decision of the arbitrator shall be
final, conclusive and binding upon the Company and Employee.


 


22.                                 Amendment.  This Agreement may be amended only by a
document in writing signed by both the Employee and an officer 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.


 


23.                                 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.


 


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.


 


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 


 


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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.


 


25.                                 D &
O Policy.  During
Employee’s employment with the Company under this Agreement, the Company shall
maintain director and officer liability insurance in reasonable scope and
amounts which insurance will cover Employee.


 


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.

  	
  COREEN
  SAWDON

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  Jerry Smith

  	
   

  	
  By: 

  	
  /s/
  Coreen Sawdon

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its: 

  	
  Senior
  Vice President & General Counsel.

  	
   

  	
  Its: 

  	
  Senior
  Vice President Finance & Chief Accountant Officer

  	
   

  



 


 


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