Document:

ex105-01072009.htm

    
      

      

    

     

    
 

    EXHIBIT
10.5

    

    

    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

    

    Coreen
Sawdon

    

    

    THIS AMENDED AND RESTATED
AGREEMENT (the “Agreement”) is made and entered into as of the 31st day of
December, 2008, by and between Shuffle Master, Inc., a Minnesota corporation
(the “Company”), and 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.

    

    D.           The
Employee and Company have previously entered into an employment agreement dated
as of October 16, 2007 (the “Previous Agreement”).

    

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

    

    

    AGREEMENT

    

    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 and Chief
Accounting Officer reporting to the Chief Financial Officer of the Company and
indirectly to the Chair of the Board of Director’s Audit Committee; provided
however that if Employee is also the interim Chief Financial Officer, then the
Employee shall report directly to the Chief Executive Officer and indirectly to
the Chair of the Board of Director’s Audit Committee until such time as a
permanent Chief Financial Officer is appointed.  Employee shall
perform the normal duties of that position and as otherwise directed as
contained in Exhibit A.  Employee’s employment under
this

    
      
         

      

      
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    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, 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.

            

    

    

    
      
         

      

      
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              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.

            

    

    

    
      	
              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

            

    

    
      
         

      

      
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              b.  

            	
              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.

            

    

    

    
      	
              c.  

            	
              “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.

            

    

    

    
      	
              d.  

            	
              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.

            

    

    

    
      	
              e.  

            	
              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.

            

    

    

    
      	
              f.  

            	
              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.

            

    

    

    
      	
              g.  

            	
              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

            

    

    
      
         

      

      
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              h.  

            	
              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, subject to Section 26, 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 be available to perform services
as a part-time employee of the Company and, subject to Employee’s other
professional duties, shall be available to the Chief Financial Officer of the
Company,

    
      
         

      

      
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    v. provided,
however, that, for the avoidance of doubt, the Employee shall perform services
during such 12 month period at a level of no more than 20 percent of the average
level of bona fide services the Employee performed over the immediately
preceding 36 month period such that the Employee shall have incurred a
“separation from service” within the meaning of Section 1.409A-1(h) of the
Department of Treasury Regulations on the date of the Employee’s termination of
employment.

    

    
      	
              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
      (provided, however, that such termination occurs on or within two years of
      such acts or events):

            

    

    

    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.  .

    

    For
purposes of this Agreement, a termination without just cause shall not be deemed
to have occurred unless Employee provides the Company with notice of the events
described above within 90 days of the existence of the events, and the Company
is provided at least 30 days to cure the condition.

    

    
      	
              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.  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;

            

    

    
      
         

      

      
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    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;

    

    
      	
              e.  

            	
              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.

     

    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

     

    
      
         

      

      
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    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
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.

     

    
      
         

      

      
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    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 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.

    

    26.           Section 409A
Compliance.

    

    
      	
              a.  

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

            

    

     

    
      
         

      

      
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              b.  

            	
              It
      is intended that (i) each installment of the payments provided under this
      Agreement is a separate “payment” for purposes of Section 409A of the
      Code, (ii) that the payments satisfy, to the greatest extent possible, the
      exemptions from the application of Section 409A of the Code provided under
      Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and
      1.409A-1(b)(9)(v) and (iii) all amounts set forth in Section 6 shall be
      payable only upon a termination of the Employee’s employment that
      constitutes a “separation from service” within the meaning of Treasury
      Regulation 1.409A-1(h).

            

    

     

    
      	
              c.  

            	
              Notwithstanding
      anything to the contrary in this Agreement, if the Company determines (i)
      that on the date the Employee’s employment with the Company terminates,
      the Employee is a “specified employee” (as such term is defined under
      Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any
      payments to be provided to the Employee pursuant to this Agreement are or
      may become subject to the additional tax under Section 409A(a)(1)(B) of
      the Code or any other taxes or penalties imposed under Section 409A of the
      Code if provided at the time otherwise required under this Agreement then
      such payments shall be delayed until the date that is six months after the
      date of the Employee’s “separation from service” with the Company, or, if
      earlier, the date of the Employee’s death.  Any payments delayed
      pursuant to this Section 26 shall be made in a lump sum on the first day
      of the seventh month following the Employee’s “separation from service”
      (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if
      earlier, the date of the Employee’s
death.

            

    

     

    
      	
              d.  

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

            

    

     

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    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/ Mark L.
      Yoseloff

            	 
      	
               

               

              BY:   /s/ Coreen
      Sawdon

            
	
               

              ITS:  Chief Executive
      Officer

            	 
      	 
      

    

    

    

    

    
      	
              APPROVED:

            	 
      	 
      
	
               

              COMPENSATION
      COMMITTEE

            	 
      	 
      
	
               

               

              BY:   /s/ Lou
      Castle

            	 
      	 
      
	
               

              ITS:  Chairman

            	 
      	 
      

    

    

    

    
      
         

      

      
        11ex106-01072009.htm

    
      

      

    

     

    
 

    EXHIBIT
10.6

    

    

    

    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

    

    David
Lopez

    

    THIS AGREEMENT (the
“Agreement”) is made and entered into as of the 31st day of December, 2008, by
and between Shuffle Master, Inc., a Minnesota corporation (the “Company”), and
David Lopez (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 and its proprietary table games (both
live and electronic) (the “Business”), throughout the world.

    

    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.

    

    D.           On
or about June 10, 2008 (the “Execution Date”), the Employee and Company
previously entered into an employment agreement dated as of June 10, 2008 (the
“Previous Agreement”), as amended by that First Amendment dated November 16,
2008.

    

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

    

    

    

    AGREEMENT

    

    In consideration of the mutual promises
contained herein, Employee and the Company agree as follows:

    

    1.           Employment.  The
Company hereby employs Employee as its Executive Vice President reporting to the
Chief Executive Officer of the Company or his designee.  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 and six months (the
“Term”), beginning May 1, 2008 (the “Commencement Date”), through October
31,

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    2011.  The
parties acknowledge that from the Commencement Date through November 16, 2008,
Employee was employed as the Company’s President – Shuffle Master
Americas.

    

    2.           Salary,
Bonus and Benefits.

    

    
      	
              a.  

            	
              From
      the Commencement Date and if employed through October 31, 2008, Employee
      shall be paid an annual base salary of no less than Two Hundred Sixty
      Thousand Dollars ($260,000.00), paid in the same intervals as other
      employees of the Company; and if employed through October 31, 2008,
      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 2008, which, for
      fiscal year 2008, shall have a target bonus of no less than 50% of
      Employee’s base salary.

            

    

    

    
      	
              b.  

            	
              For
      any subsequent year after Fiscal Year 2008, Employee will receive an
      annual base salary of no less than his annual base salary for the
      immediately prior year of this Agreement, as adjusted upward by the
      Company, 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.  

            	
              Stock
      option, restricted shares or other equity grants (“Equity”), if any, will
      be at the sole discretion of the
Board.

            

    

    

    
      	
              d.  

            	
              Except
      as modified herein, any Equity issued 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, except as modified by the terms and
      conditions of the applicable grant by the
Board.

            

    

    

    
      	
              e.  

            	
              During
      the Term, the Company agrees to provide Employee with the same benefits it
      provides all of the other senior management employees of the
      Company.  Employee will not, however, be eligible to participate
      in the Company’s non-executive bonus
program.

            

    

    

    
      	
              f.  

            	
              Except
      as otherwise set forth herein, Employee’s salary is set in the expectation
      that Employee’s full professional time during the Term 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.  Except as otherwise set forth herein, Employee,
during the Term, 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:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      	
              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 and for a period (the “Non-Compete 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
      world.  Notwithstanding the foregoing, it is understood and
      agreed that Employee may hold up to one percent (1%) of the shares of any
      publicly traded company.

            

    

    

    
      	
              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, on behalf of a competitor of or to the Business, 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
  world.

            

    

    

    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.

            

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
              b.  

            	 

    

    
      	
              c.  

            	
              “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.

            

    

    

    
      	
              d.  

            	
              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.

            

    

    

    
      	
              e.  

            	
              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.

            

    

    

    
      	
              f.  

            	
              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.  Notwithstanding the foregoing,
      Employee shall have the right, as reasonably necessary, to retain copies
      of this Agreement, any employee stock option and restricted stock
      agreements, any other documents, information or materials related to
      Employee’s compensation or benefits from the Company (in order to
      confidentially review such items with Employee’s professional advisors or
      immediate family members), and any other documents which relate to
      Employee’s duties or obligations (fiduciary, ethical or otherwise) to the
      Board or the shareholders.  In addition, and subject to the
      provisions of paragraph 24 hereof, nothing in this paragraph 5(e) or in
      paragraph 5(f) below shall be construed to prevent or preclude Employee
      from responding to legal process or testifying
  truthfully.

            

    

    

    
      	
              g.  

            	
              With
      respect to any confidential information, 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

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              h.  

            	
              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.  Subject to the foregoing, Employee shall have the rights
      set forth in the final two grammatical sentences of paragraph 5(e)
      above.  Confidential information shall not include any
      information in the public domain or otherwise generally available to the
      public.

            

    

    

    6.           Termination
Without Just Cause or Non-Extension by Company.

    

    
      	
              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 (including a termination without just cause
      that qualifies as a “Company Termination Without Just Cause”, as defined
      in paragraph 6(b) hereof), 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, subject to Section 26, each one of the
      following shall apply:

            

    

    

    i. Employee
shall be paid a severance amount (the “Severance”) equal to twelve (12) months
of his then monthly base salary paid over a period of twenty-four (24) months
from Employee’s termination, except that, if the termination without just cause
qualifies as a Company Termination Without Just Cause as set forth in any of
paragraphs 6(b)(i), 6(b)(ii), 6(b)(iii) or 6(b) (iv), then the Severance amount
shall be equal to twenty-four (24) months of Employee’s then monthly base salary
paid over a period of twenty-four (24) months from Employee’s termination; and,
in any of said cases, 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 24 months from Employee’s termination, the
same medical and dental insurance, (including without limitation prescription
drugs), (collectively, “Health Insurance”), and any other benefits or insurance
coverages which Employee would have received had his employment not been so
terminated, or not extended, (but in no event less coverage than Employee is
receiving on the Execution Date, or that is at least equal to the coverage being
received by any senior management level employee); provided, however, if the
Employee is not eligible for said Health Insurance, the Company shall pay the
COBRA premiums for continuation coverage during the said 24-month period;
further provided that, at Employee’s sole option, during said 24-month period,
Employee can elect to also have his spouse covered under said Health Insurance,
with the Employee paying the Company the incremental monthly cost which the
Company incurs to so cover his spouse.  (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, among other
things,

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    iii. that
Employee will continue to vest in all Equity awards and receive all benefits
during said 24-month period after Employee’s termination);

    

    iv. Employee
shall receive, during the 24-month period from Employee’s termination,
additional compensation (the “Additional Compensation”) for his agreeing herein
to a covenant not to compete, equal to the amount of the average of all of the
annual bonuses which Employee has received over the last five (5) full fiscal
years while working full-time for the Company (the “5-year Bonus Average”), also
paid at the same intervals as Employee is then being paid his base salary,
except that if the termination without just cause qualifies as a Company
Termination Without Just Cause, then the Additional Compensation shall be equal
to the 5-year Bonus Average multiplied by two (2);

    

    v. During
the 24-month period from Employee’s termination, Employee shall be available to
perform services on a part-time basis (on a guaranteed “no dismissal” basis and
not subject to any termination, other than for just cause) for the Company and,
subject to Employee’s other professional and/or personal duties or time
commitments, shall be reasonably available, by telephone or email, to the Chief
Executive Officer of the Company, but shall not be required to be physically in
the Company’s offices or to travel on behalf of the Company, provided, however,
that, for the avoidance of doubt, the Employee shall perform services during
such 24 month period at a level of no more than 20 percent of the average level
of bona fide services the Employee performed over the immediately preceding 36
month period such that the Employee shall have incurred a “separation from
service” within the meaning of Section 1.409A-1(h) of the Department of Treasury
Regulations on the date of the Employee’s termination of
employment.

    

    vi. One (1)
business day before the expiration of the 24-month period from Employee’s
termination, any Equity which is or remains unvested as of said day shall
accelerate vest and be fully vested on such day.

    

    
      	
              b.  

            	
              For
      purposes hereof, any of the following acts or events shall, at Employee’s
      sole option, and at any time after any such occurrence, 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 without just cause”):

            

    

    

    i. any
material diminution or reduction of Employee’s title, position, duties,
reporting relationships, or responsibilities, except as solely caused by the
acts or omissions of Employee;

    

    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;

    

    iii. the
Company electing (other than for just cause) to end Employee’s full-time
employment, for any reason or no reason, after a new CEO is elected to succeed
Mark Yoseloff;

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Employee’s
ending of his employment (whether intentionally or otherwise, or by retirement
or resignation, and irrespective of whether or not the Company is offering
Employee continuing employment), at any time after there is a Change of
Control;

    

    iv. Employee’s
ending of his employment (whether intentionally or otherwise, or by retirement
or resignation, and irrespective of whether or not the Company is offering
Employee continuing employment), any time after October 31, 2011;

    

    Provided,
however, that any of the events listed in paragraphs 6(b)(i), 6(b)(ii),
6(b)(iii), and 6(b)(iv) herein shall each qualify as a Company Termination
Without Just Cause; and if there are multiple reasons for Employee’s termination
without just cause, and one of them qualifies as a Company Termination Without
Just Cause, then said termination shall be deemed and treated as a Company
Termination Without Just Cause;

    

    
      	
              c.  

            	
              In
      the event that, at the end of the
Term:

            

    

    

    i)           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-extension or non-renewal shall
be deemed and treated as a Company Termination Without Just Cause.

     

    ii)           
irrespective of whether or not the Company offers Employee continued employment
or otherwise offers to extend this Agreement, Employee, intentionally or
otherwise, by retirement or resignation, ends his employment, then such
non-renewal, non-extension, or ending of his employment shall be deemed and
treated as a termination without just cause, and governed by the provisions of
paragraph 6(b)(v).

     

    iii)           in
either of such cases, each of the applicable provisions of paragraph 6(a) shall
apply and Employee shall be bound to the provisions of paragraphs 4 and 5 hereof
for the 24-month period of time during which Employee is being paid pursuant to
paragraph 6(a).

     

    
      	
              d.  

            	
              Employee’s
      termination of employment by reason of death or total “Disability” shall
      not be a termination without just cause under paragraph 6; in either such
      event, and notwithstanding any other provisions contained herein, however,
      Employee shall still be entitled upon a termination of employment by
      reason of death or Disability to receive:  a lump sum payment of
      6 months of his then base salary: the acceleration and immediate vesting
      of all Equity; and any disability, life insurance, or other benefits to
      which Employee is entitled.    For purposes of this
      Agreement, “Disability” shall mean the total disability as determined by
      the Board in accordance with standards and procedures similar to those
      under the Company’s long-term disability plan, or, if none, a physical or
      mental infirmity which impairs Employee’s ability to perform substantially
      his duties for a period of 180 consecutive days, provided, however, to the
      extent required for purposes of compliance with Code Section 409A, a
      disability shall not be deemed to have occurred unless the disability
      constitutes a “Disability” within the meaning of Code Section
      409A.

            

    

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    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, other than any accrued but
unpaid salary or other benefits required by applicable
law.  Termination for “just cause” shall only mean:

    

    
      	
              a.  

            	
              material
      dishonesty as to a matter which is materially injurious to the Company,
      which act or omission is not remedied by the Employee within thirty (30)
      days following the Board’s specific written notice stating such alleged
      act or omission;

            

    

    

    
      	
              b.  

            	
              the
      commission of a willful act or omission intended to materially injure the
      business of the Company, which act or omission is not remedied by the
      Employee within thirty (30) days following the Board’s specific written
      notice stating such alleged act or
omission;

            

    

    

    
      	
              c.  

            	
              a
      material violation of any of the material provisions of Sections 4 and/or
      5 hereof, which violation is not remedied by the Employee within thirty
      (30) days following the Board’s specific written notice stating such
      alleged violation; or

            

    

    

    
      	
              d.  

            	
              a
      determination in writing and 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 quits” (as defined in and subject to
      paragraph 8(b)) his employment with the Company, Employee will remain
      bound under the provisions of paragraphs 4 and 5 hereof, for a period of
      24 months from such voluntary quit, but will not be entitled to receive
      any compensation and benefits following his termination of employment
      except for (and which he shall receive):  any accrued but unpaid
      salary; any other benefits required by law; and any already vested
      Equity.

            

    

    

    
      	
              b.  

            	
              “Voluntary
      Quit” means an intentional termination by the Employee without good reason
      and without pressure by the Company; and further, provided that, at the
      time of such “Voluntary Quit”, there was not a material breach of this
      Agreement by the Company.  Notwithstanding the foregoing,
      “Voluntary Quit” shall not, in any event, mean and not be deemed to have
      occurred if Employee, intentionally or otherwise, by resignation or
      retirement, and irrespective of whether or not the Company is offering
      Employee continuing employment, either ends his employment pursuant to or
      under any of the provisions of paragraph 6(b) hereof, or if there is any
      termination without just cause.

            

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    9.           Change in
Control.  A Change in Control of the Company shall mean any of
the following:

     

    
      	
              a.  

            	
              The
      Company is no longer a U.S. listed public company for a period of 3
      consecutive months;

            

    

     

    
      	
              b.  

            	
              Fifty
      percent (50%) or more of the Company’s Equity is acquired by or merged
      with another entity or entities; or

            

    

     

    
      	
              c.  

            	
              An
      event defined as a Change in Control in any of the Company’s employee
      stock plans occurs.

            

    

     

    After any
Change in Control, if Employee ends his employment pursuant to 6(b)(iv), then
Employee shall not be required to be physically present in the Company’s offices
or to travel on behalf of the Company during the applicable 24-month period, but
shall be allowed to perform any work required of him during the 24-month period
from a remote location, and by telephone or email, but, at all times, subject to
Employee’s other duties or time commitments; and, further, notwithstanding any
such Change in Control and the provisions of this paragraph 9, each of the
provisions of paragraphs 4, 5 and 6 shall continue to fully apply to
Employee.

     

    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.  Except as otherwise set forth herein, during the
Term, 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; provided, however, this paragraph 11 shall not
apply in the event of a Change of Control.

     

    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.  In the event 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

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    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, 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 all previous employment agreements
between the Company and the Employee.

     

    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.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    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 the Term and for the five (5) year period
thereafter, the Company shall maintain director and officer liability insurance
which shall cover, among others, Employee, and, in connection therewith,
Employee shall be entitled to any applicable indemnification and defense cost
provisions, if any, as provided for in the Company’s By-Laws or under any
applicable director and officer liability insurance
policy.  Employee’s coverage under any director and officer liability
insurance policy shall be no less than that of the most senior corporate officer
of the Company, or, in the event of a Change in Control, no less than that of
the most senior corporate officer of any acquiring entity.

    

    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.  Notwithstanding the foregoing,
      nothing in this paragraph 24(a) shall preclude Employee from fully
      pursuing any legitimate claims he may have or from testifying truthfully
      in an arbitration or other legal
proceeding.

            

    

    

    
      	
              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.  Such cooperation shall be subject
      to the reasonable demands of any subsequent employment undertaken by
      Employee, and Company shall cover any reasonable out-of-pocket expenses of
      Employee in so cooperating, excluding, any attorney’s fees incurred by
      Employee, unless said attorney’s fees are expressly authorized, permitted,
      or required under paragraph 23
hereof.

            

    

    

    
      	
              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.

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    25.                           Limitation
on Benefits.

    If any
payment or benefit received or to be received by Employee (including any payment
or benefit received pursuant to any employee stock plan or otherwise) would be
(in whole or part) subject to the excise tax imposed by Section 4999 or Section
280G of the Internal Revenue Code, or any successor provision thereto, or any
similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the “Excise Tax”),
then, the payments and benefits provided hereunder shall be reduced to the
extent necessary to make such payments and benefits not subject to such Excise
Tax (with payments scheduled later in time being reduced first, and those
scheduled earlier in time being reduced last), but only if such reduction
results in a higher after-tax payment to Employee after taking into account the
Excise Tax and any additional taxes Employee would pay if such payments
and  benefits were not reduced.

     

    26.           Section 409A
Compliance.

    

    
      	
              a.  

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

            

    

     

    
      	
              b.  

            	
              It
      is intended that (i) each installment of the payments provided under this
      Agreement is a separate “payment” for purposes of Section 409A of the
      Code, (ii) that the payments satisfy, to the greatest extent possible, the
      exemptions from the application of Section 409A of the Code provided under
      Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and
      1.409A-1(b)(9)(v) and (iii) all amounts set forth in Section 6 shall be
      payable only upon a termination of the Employee’s employment that
      constitutes a “separation from service” within the meaning of Treasury
      Regulation 1.409A-1(h).

            

    

     

    
      	
              c.  

            	
              Notwithstanding
      anything to the contrary in this Agreement, if the Company determines (i)
      that on the date the Employee’s employment with the Company terminates,
      the Employee is a “specified employee” (as such term is defined under
      Treasury Regulation 1.409A-1(i)(1)) of the Company and (ii) that any
      payments to be provided to the Employee pursuant to this Agreement are or
      may become subject to the additional tax under Section 409A(a)(1)(B) of
      the Code or any other taxes or penalties imposed under Section 409A of the
      Code if provided at the time otherwise required under this Agreement then
      such payments shall be delayed until the date that is six months after the
      date of the Employee’s “separation from service” with the Company, or, if
      earlier, the date of the Employee’s death.  Any payments delayed
      pursuant to this Section 26 shall be made in a lump sum on the first day
      of the seventh month following the Employee’s “separation from service”
      (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if
      earlier, the date of the Employee’s
death.

            

    

     

    
      	
              d.  

            	
              To
      the extent that any reimbursement, fringe benefit or other, similar plan
      or arrangement in which the Employee participates during the term of
      Employee’s employment under this Agreement or thereafter provides for a
      "deferral of compensation" within the meaning
of

            

    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    
      	
              e.  

            	
              Section
      409A of the Code, (i) the amount eligible for reimbursement or payment
      under such plan or arrangement in one calendar year may not affect the
      amount eligible for reimbursement or payment in any other calendar year
      (except that a plan providing medical or health benefits may impose a
      generally applicable limit on the amount that may be reimbursed or paid),
      and (ii) subject to any shorter time periods provided herein or the
      applicable plans or arrangements, any reimbursement or payment of an
      expense under such plan or arrangement must be made on or before the last
      day of the calendar year following the calendar year in which the expense
      was incurred.

            

    

     

    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.

            	 
      	
               

              DAVID
      LOPEZ

            
	
               

               

              BY:   /s/ Mark L.
      Yoseloff

            	 
      	
               

               

              BY:   /s/ David
      Lopez

            
	
               

              ITS:  Chief Executive
      Officer

            	 
      	 
      

    

    

    

    

    
      	
              APPROVED:

            	 
      	 
      
	
               

              COMPENSATION
      COMMITTEE

            	 
      	 
      
	
               

               

              BY:   /s/ Lou
      Castle

            	 
      	 
      
	
               

              ITS:  Chairman

            	 
      	 
      

    

    

    

    

    

    

    

    

    
      
         

      

      
        13

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