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.


 





















 


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.


 





















 


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


 





















 


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


 





















 


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


 





















 


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.


 





















 


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.


 





















 


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