Document:

exhibit10-2f.htm

    
       

       

      
        
          Exhibit
10.2(f)

           

        

      

    

    PEOPLES
BANCORP INC.

    138
Putnam Street, Post Office Box 738

    Marietta,
Ohio 45750-0738

    (740)
373-3155

    www.peoplesbancorp.com

    

    Joseph S.
Yazombek

    Executive
Vice President - Chief Lending Officer

    Peoples
Bancorp Inc.

    138
Putnam Street

    Post
Office Box 738

    Marietta,
Ohio 45750-0738

    

    Dear
Joe:

    

    Peoples
Bancorp Inc. (the “Company”) anticipates entering into a Letter Agreement and
Securities Purchase Agreement – Standard Terms incorporated into the Letter
Agreement, attached hereto as Appendix A
(collectively, the “Participation Agreement”), with the United States Department
of the Treasury (the “Treasury”) that provides for the Company’s participation
in the Capital Purchase Program (the “CPP”) of the Treasury’s Troubled Assets
Relief Program.

    

    In order
for the Company to participate in the CPP, and as a condition to the closing of
the investment by the Treasury in the Company contemplated by the Participation
Agreement, the Company is required to establish specified standards for
executive compensation payable to Senior Executive Officers and to make certain
changes to its compensation arrangements as described below:

    

    
      	
              (1)

            	
              No Golden Parachute
      Payments. The Company is prohibited from making any Golden
      Parachute Payment to you during any CPP Covered
  Period.

            

    

    

    
      	
              (2)

            	
              Recovery of Bonus and
      Incentive Compensation.  Any bonus and/or incentive
      compensation paid to you during a CPP Covered Period (including any bonus
      and/or incentive compensation considered to have been paid to you during a
      CPP Covered Period pursuant to 31 C.F.R. § 30.6 (as in effect on the
      Closing Date)) is subject to recovery by the Company if the payments were
      based on materially inaccurate financial statements or any other
      materially inaccurate performance metric
  criteria.

            

    

    

    
      	
              (3)

            	
              No Unnecessary or
      Excessive Risk.  The Company is required to review its
      Benefit Plans to ensure that they do not encourage Senior Executive
      Officers to take unnecessary and excessive risks that threaten the value
      of the Company.

            

    

    

    This
letter is intended to comply with the requirements imposed by the
CPP.  In consideration of the benefits that you will receive as a
result of the Company’s participation in the CPP, by signing this letter, you
agree that each of the Company’s compensation, bonus, incentive and other
benefit plans, arrangements and agreements (including golden parachute,
severance and employment agreements) (collectively, “Benefit Plans”) with
respect to you is hereby amended to the extent necessary to give effect to
provisions (1) and (2), above. For your reference, the affected Benefit Plans
are set forth in Appendix B to this
letter.   In addition, you and the Company agree to negotiate
revisions to any Benefit Plan required to give effect to provision (3), above,
promptly and in good faith.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Provisions
(1), (2) and (3) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to the
maximum extent consistent with the foregoing, to permit operation of the Benefit
Plans in accordance with their terms before giving effect to this
letter).

    

    The
following capitalized terms shall have the meanings set forth
below:

    

    
      	
              (a)

            	
              “Company”
      includes Peoples Bancorp Inc. and any entity treated as a single employer
      with Peoples Bancorp Inc. under 31 C.F.R. § 30.1(b) (as in effect on the
      Closing Date).

            

    

    

    
      	
              (b)

            	
              “CPP
      Covered Period” is any period during which: (a) you are a Senior Executive
      Officer; and (b) the Treasury holds an equity or debt position acquired
      from the Company under the CPP.   The term “CPP Covered
      Period” shall be limited by, and interpreted in a manner consistent with,
      31 C.F.R. § 30.11 (as in effect on the Closing
  Date).

            

    

    

    
      	
              (c)

            	
              “Closing
      Date” shall have the meaning given to it in the Participation
      Agreement.

            

    

    

    
      	
              (d)

            	
              “EESA”
      means the Emergency Economic Stabilization Act of 2008 as implemented by
      guidance or regulation issued by the Treasury and as published in the
      Federal Register on October 20,
2008.

            

    

    

    
      	
              (e)

            	
              “Golden
      Parachute Payment” is used with same meaning as in Section 111(b)(2)(C) of
      EESA as supplemented by 31 C.F.R. § 30.9 (as in effect on the Closing
      Date).

            

    

    

    
      	
              (f)

            	
              “Senior
      Executive Officer” means the Company’s “senior executive officers” as
      defined in Section 111(b)(3) of EESA as supplemented by 31 C.F.R. § 30.2
      (as in effect on the Closing Date).

            

    

    

    To the
extent not subject to federal law, this letter will be governed by and construed
in accordance with the laws of Ohio.  This letter may be executed in
two or more counterparts, each of which will be deemed to be an original. A
signature transmitted by facsimile will be deemed an original
signature.

    

    If the
Company does not participate or ceases at any time to participate in the CPP,
this letter shall be of no further force and effect.

    

    The Board
appreciates the concessions you are making and looks forward to your continued
leadership during these financially turbulent times.

    

    [signature
page follows]

    
      
        2 

      

      
         

        
          

        

      

      
         

      

    

    Yours
sincerely,

    

    PEOPLES
BANCORP INC.

    

    By:           /s/ CAROL A.
SCHNEEBERGER                                                                

                          
Carol A. Schneeberger
Title:              EVP,
Operations                                                                

    Date:              01/23/2009                                                                

    

    *****

    
 

    Intending
to be legally bound, I agree with and accept the foregoing terms on the date set
forth below.

     

    By:        /s/ JOSEPH S.
YAZOMBEK                                                                         

                      
Joseph S. Yazombek

    Date:
         January 23,
2009

    

    

    

    
      
        3 

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
A

    

                        Letter Agreement, and
Securities

                        Purchase Agreement –
Standard Terms

                        incorporated into
Letter Agreement, with

                        United States
Department of the Treasury

    

    

                        [Intentionally
omitted; Included as

                         Exhibit 10.1 to
the Current Report on Form 8-K

                         dated
February 2, 2009 and filed on that

                         date by Peoples
Bancorp Inc. with the 

                        Securities and
Exchange Commission]

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    APPENDIX
B

    

    The Benefit Plans described in this
letter include, but are not limited to, the following plans, agreements,
arrangement and methods:

    

    
      	
              1.  

            	
              Peoples
      Bancorp Inc. Amended and Restated 2006 Equity Plan (effective as of
      December 11, 2008)

            

    

    

    
      	
              2.  

            	
              Peoples
      Bancorp Inc. Amended and Restated Incentive Award Plan (effective as of
      December 11, 2008)

            

    

     

    
      	
              3.  

            	
              Peoples
      Bancorp Inc. Amended and Restated Change in Control Agreement (effective
      as of December 11, 2008)a08k0202220021.htm

    
      

      

    

     

    

      EXHIBIT
10.1

      

      

      

      
        

          EMPLOYMENT
AGREEMENT

          

          TIM
J. PARROTT

          

          THIS AGREEMENT is made and
entered into as of the 28th day of
January, 2009 (the “Execution Date”), by and between Shuffle Master, Inc., a
Minnesota corporation (the “Company”), and Tim J. Parrott (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 Agreement 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.

          

          a.           The
Company hereby employs Employee as its Chief Executive Officer (“CEO”),
reporting to the Board of Directors (the “Board”) of the
Company.  Employee shall perform the typical and normal duties of a
chief executive officer of a U.S., multi-national public company, and as
otherwise directed by the Board.  Subject to the other terms and
conditions of this Agreement, Employee’s employment under this Agreement is for
a term of approximately four (4) years and nine (9) months (the “Term”),
beginning February 2, 2009 (the “Commencement Date”), through October 31, 2013;
provided, however, that from the Commencement Date through no later than March
15, 2009, Employee shall be employed as the “CEO-Elect”; and thereafter, on or
before March 15, 2009, as the CEO.

          

          
            	
                    2.  

                  	
                    Salary,
      Bonus and Benefits.

                  

          

          

          While
employed by the Company as its CEO:

          

          a. From the
Commencement Date and if employed through October 31, 2009, Employee shall be
paid an annual base salary of Five Hundred Thousand Dollars ($500,000), paid in
the same intervals as other employees of the Company; and if employed as the
Company’s CEO through October 31, 2009, Employee will also be eligible to
receive a cash bonus in accordance with the terms and conditions of the
executive bonus program authorized by the Compensation Committee of the Board
(the “Committee”) and ratified by the Board for other senior management
executives of the Company for fiscal year 2009, which, for Employee, shall have
a “target” cash bonus of 50% of Employee’s base salary and a maximum cash bonus
of 100% of Employee’s base salary, but in no event less than
$75,000.  For purposes of determining Employee’s cash bonus, the
Committee, the Board and the Employee shall mutually agree upon certain Company
financial metrics and certain other non-financial goals which shall be factors
in determining the amount of Employee’s cash bonus.

           

          

            
              
                 

              

              
                1

                
                  

                

              

              
                 

              

            

          

          

          b. For any
subsequent year after fiscal year 2009, 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
Committee and/or the Board for said period for senior management executives of
the Company.

          

          c. In
addition, in the Committee’s sole discretion, the Employee shall be considered
for an annual long-term incentive bonus which may take the form, at the
Committee’s sole discretion, of either cash, equity or a combination
thereof.

          

          d. At the
first regularly scheduled Board meeting after the Commencement Date, Employee
shall receive 300,000 options to purchase the Company’s common stock (the
“Options”), as per the recommendation of the Committee, and the approval of the
Board.  The Options shall not be issued out of any option or equity
plan, but shall qualify as an inducement grant under Rule 4350(i)(1)(A)(iv) of
the NASDAQ Stock Market Rules.  The Options shall expire ten (10)
years from the grant date.  The shares underlying the Options shall be
registered on Form S-8 within nine (9) months of the grant
date.  Except as otherwise set forth in and subject to paragraph 2(e)
hereof, one-quarter (1/4) of the Options shall vest on each 12-month anniversary
date of the grant date, commencing on the first 12-month anniversary date
thereof and continuing for three years thereafter, such that full vesting will
occur at the end of four years.  The exercise price of the Options
shall be the Company’s closing stock price on the date of the
grant.  All vesting of the Options shall be subject to Employee being
employed with the Company on each scheduled vesting
date.  Notwithstanding the above vesting schedule, all Options shall
accelerate vest in the event of the Employee’s death or total disability while
the Employee is employed by the Company, or in the event a Change in Control of
the Company closes while the Employee is employed as the Chief Executive Officer
of the Company.  Any future stock options, restricted shares or other
equity grants (“Equity”), if any, will be at the sole discretion of the
Board.

          

          e. Except as
modified herein, any other 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 (upon recommendation of the Committee) and, as otherwise may be
applicable, with any relevant terms and conditions of the applicable Company
equity incentive plan (the “Plan”), except as modified by the terms and
conditions of the applicable grant by the Board.

          

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

          

          g. 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.

          

          h. During
Employee’s employment with the Company, the Company will 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.  Separate from the foregoing
and consistent with its practices for the other senior executive-level employees
of the Company, the Company shall pay all gaming licensing fees of and all
gaming investigative costs relating to Employee.

          

          i. Notwithstanding
any other provision contained in this Agreement which may be to the
contrary:

          

          i)           Employee
shall be an employee-at-will with no guaranteed term of employment, and either
Employee or the Company shall be entitled to terminate said employment with or
without any prior notice, or with or without any cause; and

          

          ii)           Except
as otherwise expressly set forth in paragraph 2(a) hereof, Employee is not
guaranteed any bonus (or specific amount thereof) which may be mentioned in this
Agreement.

           

          

            
              
                 

              

              
                2

                
                  

                

              

              
                 

              

            

          

          

          3.           Outside Services or
Consulting.  Except as otherwise set forth in this Agreement,
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:

          

          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 of this
Agreement;

          

          c. The
services do not relate to any products or services, which form part of the
Business; and

          

          d. Employee
informs and obtains the prior consent of the Board.

          

          e. Provided
that paragraphs 3(a), 3(b) and 3(c) are not violated and as otherwise fully
adhered to, the Company consents to Employee’s involvement in his family-owned
businesses, as listed in Exhibit A hereto.

          

          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 of twenty-four (24) months
thereafter (the “Non-Compete Period”):

          

          a. Directly
or indirectly own, manage, operate, participate in, consult with or work for any
business, which is engaged in the shuffler or table games (live and electronic)
part of the Business anywhere in the world, or which is engaged in any other
part of the Business in the United States.  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); and

          

          c. Directly
or indirectly provide any services to any person, company or entity, which is
engaged in the shuffler or table games (live and electronic) part of the
Business anywhere in the world, or which is engaged in any other part of the
Business in the Untied States.

          

          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. “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 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.

          

          f. 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, except
in the furtherance of his duties with the Company, 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.  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.

          

          g. Employee
has not and will not disclose to the Company any confidential information of a
third party.

          

          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 of this Agreement, the Company may terminate Employee’s full-time
employment at any time either with or without just cause.  Further, in
the event of any termination of Employee’s full-time employment, without just
cause, or in the event that Employee’s full-time employment is not extended or
renewed by the Company 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 paragraph 26, the provisions of paragraphs 6(a) through 6(e)
shall apply.

           

          

            
              
                 

              

              
                4

                
                  

                

              

              
                 

              

            

          

          

          i)           Employee
shall be paid a severance amount (the “Severance”) equal to twenty-four (24)
months of his then monthly base salary paid over a period of twenty-four (24)
months from such 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 24 months from such 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 all other senior executive-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), that this language means, among other things, that Employee
will continue to vest in all Equity awards and receive all benefits during said
24-month period after such termination);

          

          iii)           Employee
shall receive, during the 24-month period from such termination, additional
compensation (the “Additional Compensation”) for his agreeing herein to a
covenant not to compete, equal to two times the amount of his immediate prior
year’s actual cash bonus (excluding any Equity grants and long-term incentive
bonuses, but, as for all senior management executives of the Company, including
any spot bonuses), also paid at the same intervals as Employee is then being
paid his base salary;

          

          iv)           During
the 24-month period from such 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) of 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;
and

          

          v)           One
(1) business day before the expiration of the 24-month period from such
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, at Employee’s sole option,
and provided Employee elects, within 30 days of any such occurrence, to treat
such occurrence as a termination without just cause, shall constitute a
termination without just cause under this paragraph 6 (but the following is not
the entire list of reasons or events which may constitute a “termination without
just cause”):

          

          i) Any
material diminution or reduction of Employee’s Chief Executive Officer 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 or begun to be
cured within thirty (30) days  after written notice by Employee of
such breach; or

          

          iii) Employee’s
ending of his employment as the Chief Executive Officer (whether intentionally
or otherwise, or by retirement or resignation, and irrespective of whether or
not the Company is offering Employee continuing employment), within 30 days
after a Change of Control has closed.

           

          

            
              
                 

              

              
                5

                
                  

                

              

              
                 

              

            

          

          

          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 as the
Chief Executive Officer 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 termination
without just cause; and

          

          ii) Thereafter,
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
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 in this Agreement, however, Employee shall still be entitled to
receive:  a lump sum payment of 6 months of his then base salary;
provided Employee is the Chief Executive Officer at the time of such death or
total disability, the acceleration and immediate vesting of all of Employee’s
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.

           

          e. The
Company’s obligations to make the payments set forth in paragraph 6(a) and
Employee’s right to any payments, compensation, part-time employment or other
benefits as set forth in paragraph 6(a) is contingent upon and subject to
Employee executing, concurrently upon the cessation of Employee’s full-time
employment with the Company, the Company’s standard form general release (the
“Release”), which Release shall:  (a) generally, release the
Company, its affiliates, and its officers and representatives from any claims,
obligations, losses, damages, acts or omissions, known or unknown, which the
Employee has or may have or may have suffered against the Company, excepting
only the Company’s obligations under this Agreement, pursuant to and subject to
its terms and conditions; and (b) have Employee make certain
representations and warranties regarding his employment with the
Company.

           

          7.           Early Termination by Company for Just
Cause.  No matter what Employee’s position is, 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 such termination of employment, other than any accrued but
unpaid salary or other benefits required by applicable
law.  Termination for “just cause” shall only mean (and each of the
following shall be deemed non-cumulative):

          

          a. Material
dishonesty as to a matter which is materially injurious to the Company, which
act or omission, if curable, 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, if curable, 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 this Agreement,
including without limitation, Sections 4 and/or 5 hereof, or of any Company
policy or procedure pertaining to ethics, any of which violation, if curable, is
not remedied by the Employee within thirty (30) days following the Board’s
specific written notice stating such alleged violation;

          

          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
the Board, (it being understood that this provision, as well as the same
provision in any other senior management executive employment agreements,
applies to “material” duties), which failure, if curable, is not remedied by the
Employee within thirty (30) days following the Board’s specific written notice
stating such alleged failure;

           

          

            
              
                 

              

              
                6

                
                  

                

              

              
                 

              

            

          

          

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

          

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

          

          g. Employee’s
being accused or convicted of:  (i) any felony; or (ii) any crime
involving moral turpitude to the extent that, in the reasonable judgment of the
Company, the Employee’s credibility or reputation is no longer at an adequate
level in order for Employee to positively represent the Company to the public at
Employee’s current position; or

          

          h. The
inability or refusal of Employee to be licensed or approved in any jurisdiction
by a gaming regulator, or if Employee is denied a gaming license or approval (or
any of same is revoked, suspended or conditional) in or by any jurisdiction, or
if Employee’s employment with the Company puts at risk any of the Company’s
licenses or approvals, or if Employee fails to cooperate with respect to any
compliance or regulatory matter.

          
 

          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, or that just cause under paragraph 7 for Employee’s termination did not
exist.  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.

          

          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 has closed, and unless Employee’s agreement with any acquirer
provides to the contrary, if Employee ends his employment as the Chief Executive
Officer pursuant to paragraph 6(b)(iii), 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.

           

          

            
              
                 

              

              
                7

                
                  

                

              

              
                 

              

            

          

           

          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 in 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 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.  Any notices to Employee shall also be sent to William R.
Urga, Esq., Jolley Urga Wirth Woodbury & Standish, 3800 Howard Hughes
Parkway, Suite 1600, Las Vegas, NV  89169.

           

          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, including without limitation, any Memorandum or Term Sheet relating to
this 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 obtains control
of the Company.

           

          

            
              
                 

              

              
                8

                
                  

                

              

              
                 

              

            

          

           

          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 each of the
Employee, a Corporate Officer (other than Employee), and the Chairman of the
Compensation Committee of the Company, and no course of dealing or conduct of
the Company shall constitute a waiver of any of the provisions of this
Agreement.

           

          22.           Fees and Costs.  In
any action bought by one party against the other pursuant to this Agreement or
in the event of any dispute over the meaning of this Agreement, the successful
party, in addition to recovering its awarded damages and other relief, shall be
entitled to recover its attorney’s fees and costs from the unsuccessful
party.

           

          23.           D & O
Policy.  During 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 five (5) 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 of this
Agreement.

          

          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.

           

          

            
              
                 

              

              
                9

                
                  

                

              

              
                 

              

            

          

          

          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
280(g) 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 in the
manner selected by Employee 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 24 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.

          

          27.           Directorship.

           

          No later
than the first Board meeting after Employee becomes CEO, and subject to the
other terms and conditions contained in this Agreement, the Board shall appoint
Employee as a member of the Board, to serve until any successor to Employee is
elected or appointed by the Board; provided, however, that Employee agrees to
resign as a director at the same time as his employment as CEO
ends.  Notwithstanding the foregoing, the Board shall have no
obligation to appoint Employee as a member of the Board in the event that
Employee’s becoming a member would result in the Board being comprised of less
than a majority of Independent Directors, with such term “Independent” being as
defined by both the applicable NASDAQ rules and the applicable rules of
Institutional Shareholder Services.

           

          
            
               

            

            
              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.

              	 
      	
                 

                TIM
      J. PARROTT

              
	
                 

                 

                BY:   /s/ Mark L.
      Yoseloff

              	 
      	
                 

                 

                BY:   /s/ Tim J.
      Parrott

              
	
                 

                ITS:  Chief Executive
      Officer

              	 
      	 
      

      

      

      

      

      
        	
                APPROVED:

              	 
      	 
      
	
                 

                COMPENSATION
      COMMITTEE

              	 
      	 
      
	
                 

                 

                BY:   /s/ Lou
      Castle

              	 
      	 
      
	
                 

                ITS:  Chairman

              	 
      	 
      

      

      

      

      

      

      

      

      

        
          
             

          

          
            11

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