Document:

ex1025.htm

 

EMPLOYMENT AGREEMENT

 

 

This EMPLOYMENT AGREEMENT (this “Agreement”), is effective as of January 1, 2011 (the “Effective Date”), by and between AVT, Inc. a Nevada corporation (“AVT”), and James Winsor, an individual (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to continue to be so employed and to serve from and after the Effective Date, in the capacity of Vice President of Engineering to perform services on its behalf in said position;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           EMPLOYMENT

 

The Company agrees to continue to employ the Executive, and the Executive agrees to continue to serve the Company, on the terms and conditions set forth herein.

 

2.           TERM

 

Subject to Section 5 hereof, the Executive’s employment under this Agreement shall commence on the Effective Date and shall end on the first anniversary of the Effective Date (the “Initial Term”); provided that such term shall be automatically extended for additional one-year periods, unless, not later than 45 days prior to the expiration of the Initial Term (or any extension thereof pursuant to this Section 2) either party hereto shall provide written notice of its or her desire not to extend the term hereof to the other party hereto.  As used herein, the term “Term” shall mean the Initial Term together with each one-year extension.

 

3.           POSITION AND DUTIES

 

(a)           The Executive shall be duly appointed, effective on the Effective Date, and shall thereafter during the Term, serve as Chief Executive Officer of the Company and shall perform such duties and exercise such supervision and powers over and with regard to the business of the Company customarily associated with the position of Vice President of Engineering, as well as such duties and services required herein and as may be reasonably assigned to her from time to time by the Board of Directors of the Company (the “Board”).  The Executive shall perform her duties to the best of her ability and in a diligent and proper manner.

 

(b)           Except during vacations and periods of illness, the Executive shall, during the Term, devote all Executive’s business time (as opposed to personal time) and attention to the performance of services for the Company and its subsidiaries hereunder; provided, however, that the Executive shall be permitted, to (i) continue to serve on the boards of the business enterprises on which she is serving as of the Effective Date, (ii) subject to the prior consent of the Corporate Governance Committee of the Board (the “Corporate Governance Committee”), serve on any board of any business enterprise other than those referenced in clause (i) above, and (iii) serve on any board of any non-profit organization without obtaining such a consent.  Notwithstanding the foregoing, the Corporate Governance Committee shall have the right, at any time during the Term, to require that the Executive resign from Executive’s position on the board or trusteeship of any for-profit organization, effective as soon as such resignation may be properly effected under applicable law, and the charters, by-laws or other governing documents of the applicable for-profit organization.  On or before the Effective Date, the Executive shall provide the Corporate Governance Committee with a list of the boards and committees on which she is serving as of the Effective Date.

 

4.           COMPENSATION AND RELATED MATTERS

 

(a)           Salary.                      During the Term, the Company shall pay to the Executive a base salary at a rate of not less than $75,000 per annum, payable in accordance with the usual payroll practices of the Company, but not less frequently than monthly.  The Executive’s base salary may be increased from time to time by the Compensation Committee of the Board (the “Committee”) and, if so increased, shall not thereafter be decreased during the Term.  As used herein, “Base Salary” means the Executive’s initial salary hereunder as the same may be increased during the Term.

 

 Notwithstanding anything in this Agreement to the contrary, the Executive shall not be entitled to assert that any breach of this Section 4(a)(ii) constitutes grounds for the Executive’s termination of Executive’s employment for “Good Reason” (as defined below).

 

(b)           Bonus.                      Executive shall be eligible to earn an annual bonus (the “Bonus”) as directed by the Company’s Committee.

 

(c)           Compensation Warrant.  On each of the following dates: March 31, 2011; June 30, 2011; September 30, 2011; and December 31, 2011, Executive shall receive a five (5) year cashless warrant to purchase up to 30,000 shares of the Company’s common stock at an exercise price of $.10 per share (the “Compensation Warrant”).  During the time when Executive is employed by the Company, and for a period of 5 years thereafter, Executive shall limit Executive’s (or any affiliate of Executive) daily sale of the shares of common stock issued upon exercise of the Compensation Warrant (or any additional shares of common stock received from the Company as compensation) to no more than 5% of the average daily volume of the Company’s common stock as quoted on www.otcmarkets.com based upon the average trading volume for the previous 30 trading days.

 

(d)           Vacations.                      During the Term, Executive shall be entitled to the number of days of paid time off (“PTO”) in each fiscal year determined in accordance with the Company’s PTO policies.  During the first year of this Agreement, Executive shall receive 15 days PTO which may be used as vacation and five (5) sick days per year.  PTO and sick may be used in any combination.

 

 

(e)           Benefit Plans.                                Executive will be entitled to the Company’s standard benefit plans.

 

5.           TERMINATION

 

The Executive’s employment hereunder and the Term may be terminated under the following circumstances:

 

(a) Death.  The Executive’s employment hereunder shall terminate upon Executive’s death.  In the case of any such termination upon death, the Executive’s estate shall be entitled to the payments and benefits described in Section 6(a).

 

(b) Disability.  If the Executive is unable to timely and regularly perform Executive’s duties hereunder due to physical or mental illness, injury or incapacity, as determined by the Board in good faith based on medical evidence acceptable to it (a “Disability”), and such Disability continues for a period of six consecutive months, then the Company may terminate the Executive’s employment hereunder.  A return to work for less than 30 consecutive days during any period of Disability shall not be deemed to interrupt the running of (and shall be included in) the aforementioned six-month period.  In the case of any such termination by the Board on account of Disability, the Executive shall be entitled to the payments and benefits described in Section 6(a).

 

(c) Termination by the Company for Cause.  The Company may terminate the Executive’s employment hereunder at any time for Cause.  For purposes of this Agreement, “Cause” shall mean a termination of employment of the Executive by the Company due to (i) the commission by the Executive of an act of fraud or embezzlement against the Company or any of its subsidiaries or the conviction of the Executive in a court of law, or guilty plea or no contest plea, of any charge involving an act of fraud or embezzlement (including the willful and unauthorized disclosure of information of the Company or any of its subsidiaries which the Executive knows or should know to be material, confidential and proprietary to the Company or any of its subsidiaries, which results, or could reasonably have been expected to result, in material financial loss to the Company or any of its subsidiaries), (ii) the conviction of the Executive in a court of law, or guilty plea or no contest plea, to a felony charge, (iii) the willful misconduct of the Executive as an employee of the Company or any of its subsidiaries which is reasonably likely to result in injury or financial loss to (I) the Company or (II) to any subsidiaries of the Company, which injury or loss is material to the Company taken as a whole, (iv) the willful failure of the Executive to render services to the Company or any of its subsidiaries in accordance with the Executive’s employment, which failure amounts to a material neglect of the Executive’s duties to the Company and does not result from physical illness, injury or incapacity, and which failure is not cured promptly after adequate notice of such failure and a reasonably detailed explanation has been presented by the Company to the Executive, or (v) a material breach of any of the covenants in subsections 3(a), 3(b) or Section 10 hereof by the Executive, which breach is not cured, if curable, within 30 days after a written notice of such breach is delivered to the Executive.  The Executive shall not be deemed to have been terminated for Cause unless the Company shall have given or delivered to the Executive (1) reasonable notice setting forth the basis for termination for Cause, and (2) a reasonable opportunity for the Executive, together with Executive’s counsel, to request reconsideration by and be heard before the Board, provided; however, that such notice and opportunity to be heard shall not be required if the Board, based on the advice of counsel, deems it inconsistent with its fiduciary duties and so advises the Executive.

 

For purposes of determining whether the Executive was given “reasonable notice” and “reasonable opportunity to be heard” in connection with any determination by the Board as to whether Cause exists, 10 business days’ notice of the Board meeting shall be deemed to constitute “reasonable notice” (without prejudice to the determination of whether some other period would also constitute “reasonable notice”), and the opportunity for the Executive and Executive’s counsel to present arguments to the Board at such meeting as to why the Executive believes that no Cause exists shall constitute “reasonable opportunity to be heard” (without prejudice to the determination of whether some other forum or method would also constitute a “reasonable opportunity to be heard”).  For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.

 

(d) Termination by the Executive for Good Reason.  The Executive may voluntarily terminate Executive’s employment hereunder at any time for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean (i) a material breach by the Company of this Agreement (for the avoidance of doubt, other than any breach of Section 4(a)(ii) or 4(c)(ii)) or of the Non-Qualified Stock Option Agreement, which breach is not cured within 30 days after the Board’s receipt of written notice of such non-compliance from the Executive; (ii) the assignment to the Executive without Executive’s consent by the Company of duties materially and adversely inconsistent with the Executive’s position, duties or responsibilities as in effect immediately after the Effective Date, including, but not limited to, any material reduction in such position, duties or responsibilities, or a change in the Executive’s title or office, as then in effect, or any removal of the Executive from any of such positions, titles or offices, or any failure to elect or reelect the Executive as a member of the Board or any removal of the Executive as such a member, except in connection with the termination of Executive’s employment pursuant to any of subsections 5(a), 5(b) or 5(c) hereof; or (iii) the relocation of the Company’s headquarters to a place more than 50 miles from its location as of the Effective Date without the approval of the Executive.

 

(e) Termination by the Company Without Cause.  The Company may at any time terminate the Executive for any reason, and, except for the amounts payable pursuant to subsection 6(b) hereof (or as otherwise set forth in any equity agreement), the Executive shall have no claim against the Company under this Agreement or otherwise by reason of such termination.

 

(f) Termination by the Executive Without Good Reason. The Executive may at any time terminate Executive’s employment hereunder without Good Reason; provided that the Executive will be required to give the Company at least 90 days’ advance written notice of a resignation without Good Reason.

 

(g) Notice of Termination.  Any termination of the Executive’s employment hereunder, by the Company or by the Executive (other than termination pursuant to subsection 5(a) hereof), shall be communicated by written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

6.           COMPENSATION UPON TERMINATION

 

(a)           Death or Disability.  If the Executive’s employment hereunder terminates pursuant to subsections 5(a) (Death) or 5(b) (Disability), the Executive or Executive’s estate (as the case may be) shall be entitled to receive: (i) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (ii) an additional lump sum payment not later than thirty (30) days following such termination equal to (A) two times Base Salary, and (B) the amount of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  In addition, the Executive or Executive’s estate, as the case may be, shall be entitled to receive the Bonus for the Fiscal Year in which such termination occurs, which is provided under the Bonus formula for such Fiscal Year, based on Actual Performance for such Fiscal Year as if the Executive had remained in the employ of the Company through the end of such Fiscal Year.  Such Bonus to be paid as and when bonuses are paid to the other senior executives of the Company.  In addition, for a period of 24 months after such termination, the Executive (unless the termination is the result of the Executive’s death) and Executive’s eligible dependents shall, to the extent permitted under the applicable plans of the Company as in effect on the date of such termination be eligible to continue to participate in the medical, life, dental and disability insurance coverage provided to employees at the Company’s expense; provided, however, that after such termination the Executive shall continue to pay premiums in respect to such coverage to the same extent that the Executive was paying such premiums immediately prior to such termination.

 

(b)           Termination by the Company Without Cause or by the Executive for Good Reason.

 

If the Executive’s employment is terminated by the Company pursuant to subsection 5(e) (Without Cause) or if the Executive terminates Executive’s employment pursuant to subsection 5(d) (for Good Reason), then the Executive shall be entitled to receive: (A) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (B) an additional lump sum payment not later than thirty (30) days following such termination equal to (I) any earned but unpaid Bonus; and (II) the amount of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  The Executive shall have no further rights to any compensation or other benefits under this Agreement.

 

(c)           Termination by the Company For Cause or by the Executive Without Good Reason.

 

If the Executive’s employment is terminated by the Company under subsection 5(c) (for Cause) or by the Executive under subsection 5(f) (without Good Reason), the Executive shall be entitled to receive: (i) a lump sum payment on the date of such termination equal to the amount of any earned, but unpaid Base Salary through the date of such termination; and (ii) an additional lump sum payment not later than thirty (30) days following such termination for reimbursement of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of the Executive’s termination.  If the Executive’s employment hereunder is terminated by the Executive under subsection 5(f) (without Good Reason), the Executive shall also be entitled to receive any earned but unpaid Bonus not later than thirty (30) days following such termination.  The Executive shall have no further rights to any compensation or other benefits under this Agreement.

 

(d)           Expiration of the Employment Term.  In the event that the Company or the Executive elects not to extend the Term as provided in Section 2 hereof, the Executive’s employment shall be terminated upon the expiration of the Term, and, subject to Section 14 hereof, the provisions of this Agreement shall cease to apply effective as of such expiration, and the Executive shall be entitled to receive only the following:  (i) any accrued but unpaid Base Salary through the date of termination; (ii) reimbursement of any unreimbursed business expenses properly incurred by the Executive in accordance with Company policy prior to the date of termination; and (iii) any earned but unpaid Bonus.  The Executive shall thereafter receive no other compensation or benefits, other than pursuant to the terms of the plans, policies and practices of the Company; provided, however, that the Executive shall not be entitled to any payments or benefits under any separately stated severance plan, policy or program of the Company.

 

7.           INDEMNIFICATION AND INSURANCE

 

During the Term and thereafter, the Executive shall be entitled to indemnification to the fullest extent permitted in accordance with the By-Laws and/or charters or other formation and governing documents of the Company and its subsidiaries and affiliates and as provided under the terms of the Company’s directors and officers liability and (if applicable) fiduciary liability insurance policies (the “Policies”), as the Policies may be amended from time to time, or any successor policy, provided, that any such policy shall have terms that are, in the aggregate, no less favorable than the terms of the relevant policy in effect on the Effective Date.  If at any time the Company’s Board of Directors or a committee thereof approves a form of indemnification agreement for use with the Company’s directors or officers, then the Company shall enter into an indemnification agreement with the Executive containing the same terms and conditions as are contained in such form of indemnification agreement.

 

8.           TAXES

 

Except as otherwise provided in Section 7 of this Agreement, the Company shall withhold from all amounts payable under this Agreement all federal, state, local and other taxes required by law to be withheld with respect to such payments.

 

9.           CONFIDENTIALITY AND NON-SOLICITATION

 

(a)           The Executive acknowledges that the information, observations and data obtained by Executive’s while employed by the Company concerning the business or affairs of the Company and its subsidiaries and affiliates which are not available to the public, customers, suppliers and competitors of the Company which are in the nature of trade secrets, are proprietary or the disclosure of which could reasonably be expected to cause a financial loss to the Company, or otherwise have an adverse effect on the Company (“Confidential Information”) are the property of the Company or such subsidiary or affiliate.  Therefore, the Executive agrees that, except as required by law or the rules of any national securities exchange, she shall not disclose to any unauthorized person or use for Executive’s own account any Confidential Information without the prior written consent of the Board, unless and to the extent that any of the aforementioned matters becomes generally known to the public or is ascertainable from public or published information and is available for use by the public other than as a result of the Executive’s acts or omissions to act.  The Executive shall deliver to the Company any time the Company may request in writing, all copies of all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data, or the portions thereof, that contain the Confidential Information, which she may then possess or have under Executive’s control.

 

During the Term and for 36 months thereafter, the Executive shall not either directly or indirectly through another entity, (i) induce or attempt to induce any management or other key employees of the Company or its subsidiaries or affiliates to leave the employ of the Company or such subsidiary or affiliate, or in any way interfere with the relationship between the Company or its subsidiaries or affiliates and any such employee, or (ii) hire any person who was a management or other key employee of the Company or its subsidiaries or affiliates at any time during the Executive’s employment with the Company.

 

(b)           If, at the time of enforcement of this Section 10, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances, if less, shall be substituted for the stated duration, scope or area and that the court or arbitrator shall be allowed to revise the restrictions contained herein to cover, if less, the maximum period, scope and area permitted by law.

 

(c)           In the event of the breach or a threatened breach by the Executive of any of the provisions of this Section 10, the Company, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

 

10.           SUCCESSORS; BINDING AGREEMENT

 

(a)           This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, including, any corporation acquiring directly or indirectly all or substantially all of the Common Stock, business or assets of the Company, whether by merger, restructuring, reorganization, consolidation, sale or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement).  Each of the Company’s subsidiaries is hereby acknowledged to be a third-party beneficiary with respect to the provisions of Section 10 hereof and shall be entitled to enforce such provisions as if it were a party hereto.

 

(b)           This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  In the event of the Executive’s death or of a judicial determination of Executive’s incompetence, reference in this Agreement to the Executive shall be deemed to refer, as appropriate, to Executive’s beneficiary, estate or other legal representative.

 

11.           NO MITIGATION; NO OFFSET

 

The Company agrees that, subsequent to the Executive’s termination of employment by the Company, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to Executive’s due under this Agreement, and that the amount of any payment that the Company is obligated to make to the Executive shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

 

 

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12.           NOTICE

 

For the purposes of this Agreement, notices, demands and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when hand delivered or (unless otherwise specified) when mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

[Redacted]

If to the Company:

 

Natalie Russell

AVT, Inc.

341 Bonnie Circle, Suite 102

Corona, CA 92880

or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

13.           SURVIVORSHIP

 

The respective rights and obligations of the parties hereunder, including the rights and obligations set forth in Sections 6, 7, 8, 9 and 10 of this Agreement, shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

 

14.           REPRESENTATIONS AND WARRANTIES

 

(a)           The Company represents and warrants that (i) it is fully authorized and empowered to enter into this Agreement and that the Board has approved the terms of this Agreement, (ii) the execution of this Agreement and the performance of its obligations under this Agreement will not violate or result in a breach of the terms of any material agreement to which the Company is a party or by which it is bound, (iii) no approval by any governmental authority or body is required for it to enter into this Agreement, and (iv) the Agreement is valid, binding and enforceable against the Company in accordance with its terms.

 

(b)           The Executive hereby represents to the Company that the execution and delivery of this Agreement by the Executive and the Company, and the performance by the Executive of the Executive’s duties hereunder, shall not constitute a breach of, or otherwise contravene, the terms of any employment or other agreement to which the Executive is a party or otherwise bound.

 

15.           MISCELLANEOUS

 

The parties hereto agree that this Agreement contains the entire understanding and agreement between them, and supersedes all prior understandings and agreements between the parties respecting the employment by the Company of the Executive (including, without limitation, the Executive Severance Agreement, dated as of November 19, 1999), and that the provisions of this Agreement may not be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.  The validity, interpretations, construction and performance of this Agreement shall be governed by the laws of the State of California without giving effect to conflict of laws principles.  The parties hereby consent to the jurisdiction of the state and federal courts located within the State of California.  Any legal action, mediation or arbitration shall be held in North County San Diego, State of California.

 

16.           VALIDITY

 

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision or provisions of this Agreement, which shall remain in full force and effect.

 

17.           OWNERSHIP.

 

Company shall solely own and have exclusive worldwide right, title and interest in to all the work performed by Executive, and to all derivative works and/or modifications thereto, and in all United States and foreign trademarks, service marks, copyrights, patents, trade secrets, and all other intellectual property rights (collectively “Intellectual Property Rights”) relating thereto.  No license, ownership or other interest of any kind in the Work is granted directly or indirectly to Contractor.  In the event this Agreement is terminated for any reason prior to the completion of all of the Term, Company shall still exclusively own all rights in the work and other work in process related thereto, and in all Intellectual Property Rights related thereto.

 

18.           ASSIGNMENT.

 

All work performed by Executive, and all written, graphic and/or machine readable materials, documentation, designs, models, drawings, inventions, know-how, software code and tools, algorithms, libraries, routines, deliverables and other items created or produced by Executive hereunder (collectively “Related Materials”) are commissioned at Company’s request and direction and shall be considered a “work-made-for-hire” under the copyright laws of the United States.  To the extent that any of the work performed by Executive and/or Related Materials are not considered a “work-made-for-hire,” Executive hereby irrevocably assigns and transfers to Company all right, title and interest worldwide in and to the work performed by Executive and Related Materials, whether or not patentable or copyrighted, made or conceived or reduced to practice, and to all modifications and derivative works thereof and to all Intellectual Property Rights related thereto.  In addition, Executive hereby irrevocably waive any right to assert any moral rights against Company or any third party with respect to the work performed by Executive, Related Materials, any modifications or derivative works thereof, and/or to any Intellectual Property Rights related thereto.

 

19.           COUNTERPARTS

 

This Agreement may be executed in one or more counterparts (and by facsimile), each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and the year first above written.

 

	
AVT, Inc.

A Nevada corporation

 

 

 

______________________________________

By:  Natalie Russell

Its:  Secretary

	  	
Executive

 

 

 

 

_______________________________________

James Winsor

 

 

Pageex10-1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the "Agreement") effective as of March 16, 2011 (the "Agreement Date"), is between Shuffle Master, Inc. ("Company"), and Michael Gavin Isaacs ("Executive").

 

Company desires to employ Executive to serve as its Chief Executive Officer upon the terms and subject to the conditions set forth herein;

 

THEREFORE, Company and Executive hereby agree as follows:

 

I.           TERM OF AGREEMENT.  The term of Executive's employment under this Agreement shall begin on April 1, 2011 (the “Commencement Date”), and end on the third anniversary of the Commencement Date (the "Initial Term").  Subject to the terms of this Agreement, Company may terminate Executive's employment at any time for any reason or for no reason.  Executive may terminate his employment upon forty-five (45) days' prior written notice to the Board of Directors of Company (the “Board”) for any reason or for no reason.  The term “Employment Period” shall include the Initial Term and all extensions of the employment term thereafter, which extensions shall be within the sole discretion of Company and Executive and shall be effective only if in writing and signed on behalf of the Board and by Executive.  Company and Executive understand that Executive is employed at will, subject to discharge at any time, with or without notice, for any reason or for no reason whatsoever.  Where this Agreement provides for the provision of a perquisite or benefit that is subject to or governed by Company’s plans or policies, Executive agrees that Company may alter, amend, limit, or otherwise eliminate such plans or policies at will.

 

II.           POSITION AND DUTIES.  Company shall employ Executive during the Employment Period as its Chief Executive Officer.  During the Employment Period, Executive shall perform the duties lawfully assigned to him by the Board in the Board’s sole discretion, shall devote his full-time attention and efforts to the affairs of Company, and shall use his best efforts to promote the interests of Company.  During the Employment Period, Executive shall report to the Board.  Executive may not serve on any corporate, civic or charitable boards or committees without the express approval of the Board, and such approval will ordinarily only be given if such activities do not interfere with Executive's duties, under this Agreement, as determined in the sole but reasonable discretion of the Board.  Unless determined by the Board to the contrary, Executive shall not be entitled to retain fees and other compensation derived from such activities.  Executive may invest his personal funds in any form or manner he may choose, provided that such investments (other than investments in mutual funds or not more than one percent (1%) of the equity in a publicly held company whose securities are registered with the United States Securities Exchange Commission or a comparable foreign governmental agency) shall not be in any entities that compete with the Company's business (e.g., a casino or internet gaming supplier), and provided that such investments comply with laws governing the Company and its executives.

 

III.           COMPENSATION.

 

  

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A.           Annual Salary.  Company shall pay Executive, in accordance with the normal payroll practices of Company, an annual salary at a rate of $500,000.00 per year ("Annual Base Salary") commencing on the Commencement Date.  During the Employment Period, the Annual Base Salary shall be reviewed by the Compensation Committee at least annually and may be increased, but not decreased, from time to time as approved by the Board of Directors in its sole discretion; provided however that Annual Base Salary may be decreased by Company, without Executive's consent, in the event of broad-based reductions in base salaries throughout Company, but any such reduction of Executive's Annual Base Salary shall not be proportionately less favorable than reductions in the base salaries of other senior management executives.

 

B.           Annual Bonus.   If Executive is employed through October 31, 2011, Executive 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 the Company for other senior management executives of the Company for fiscal year 2011, which, for fiscal year 2011, shall have a target bonus of no less than 50% of Executive's Annual Base Salary.  For any subsequent year after Fiscal Year 2011, Executive will be eligible to participate in an executive bonus program and/or in an individual performance bonus program as authorized by the Board of Directors for said period.  Notwithstanding the foregoing, in the event that Company restates its earnings, then Executive upon the written demand of the Board shall be required to immediately repay Company any bonus amount paid in excess of that supported by the restated earnings (the “Clawback Right”).

 

C.           Equity Grants and Vesting.  The Board may, in its sole discretion, grant to Executive options to purchase the Company’s common stock (the “Options”).  The Board shall consider possible Options grants annually.  In the event the Board elects to grant Options to Executive, the Options shall expire ten (10) years from the grant date.  All vesting of the Options shall be governed by the terms of Company’s written equity plan, and/or the specific grant.

 

D.           Sign-On Award.  At the Agreement Date, Executive shall be granted, under the Company's 2004 Equity Incentive Plan as amended and restated on January 28, 2009 and pursuant to the recommendation of the Compensation Committee of the Board (the "Committee") and the approval of the Board, (i) options to purchase the Company’s common stock in an amount equal to $500,000 valued at the Black Scholes method (the “Sign-On Options”) and (ii) restricted stock units in an amount equal to $500,000 valued at the closing stock price of the Company’s common stock as of the date of grant (the "Sign-on Units" and together with the Sign On Options, the "Sign-On Awards").  The Sign-On Options shall expire ten (10) years from the grant date.  Except as otherwise set forth in and subject to paragraph III(E) hereof, one-quarter (1/4) of the Sign-On Options and one quarter (1/4) of the Sign On Units, concurrently, shall vest on each 12-month anniversary date of the Commencement 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 for each share of stock subject to the Sign-On Options shall be the Company’s closing stock price for a share of its common stock on the date of the grant.  All vesting of the Sign-On Awards shall be subject to Executive being employed with the Company on each scheduled vesting date.  Notwithstanding the above vesting schedule, all outstanding Sign-On Awards shall become 100% vested in the event of the Executive’s death or total disability (as defined in Article V(C) hereof) while the Executive is employed by the Company.  Any future stock options, restricted shares or other equity grants (“Equity”), if any, will be at the sole discretion of the Board.

 

  

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E.           Other Equity.  Except as modified herein, any other Equity issued at any time to Executive 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.

 

IV.           BENEFITS.

 

A.           Employee Benefit Plans.  During the Employment Period, Executive and, to the extent permitted by the applicable employee benefit plans, his spouse and other dependents may participate in Company's employee benefit plans in accordance with the terms of such employee benefit plans as may be in effect from time to time to the same extent as other members of the Senior Executive Management Team (such as medical, dental and other similar benefits); provided however, that Executive shall not be eligible to receive any benefits from any severance plan or policy of Company.

 

B.           Vacation.  During the Employment Period, Executive shall be entitled to vacation time based on Company's policies as in effect from time to time; however, notwithstanding such policies, Executive shall be entitled to a minimum of four (4) weeks paid time off per year.

 

C.           Business Expense Reimbursement.  During the Employment Period, Executive shall be reimbursed, in accordance with Company's policies in effect from time to time, for reasonable business expenses he incurs.  Executive shall submit to Company such documentation as is required for such reimbursement, in accordance with Company's expense reimbursement policy in effect from time to time.

 

V.           EFFECT OF TERMINATION.

 

A.           Termination for Cause by Company.  If Company terminates Executive's employment for Cause, Company shall pay to Executive as soon as practical after the termination date an amount equal to the sum of Executive's accrued Annual Base Salary earned but not yet paid through the termination date, and accrued vacation days, and Executive shall not be entitled to any other benefits or payments under this Agreement, other than such benefits mandated by applicable law.  A finding of termination for Cause shall be made by resolution adopted by a majority of the Governance  Committee of the Board (“Governance Committee”), if such committee is then in existence, or, if it is not then in existence, by a majority of the Board (excluding Executive if he is a member of the Board), setting forth the particulars thereof.  In the case of a termination for Cause, Executive's termination date shall be effective immediately.

 

  

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"Cause" means (i) Executive's engagement in any material act or omission constituting dishonesty, wrongdoing or malfeasance with respect to Company; or (ii) Executive's engagement in conduct which a) is a material breach of fiduciary duty with respect to Company; b) materially violates Company's conflict of interest policies; or c) in the reasonable opinion of the Governance Committee (or if such committee does not then exist, the Board), would tend to materially injure the Company’s reputation with federal, State or tribal regulatory agencies; any Federal, State, municipal, tribal or other governmental or regulatory body; investment analysts, rating agencies, securities exchanges, other self-regulatory organizations or shareholder activist organizations (such as MSCI/RiskMetrics); or (iii) Executive's commission of any felony or other crime of moral turpitude; or (iv) Executive's material disobedience or disregard of a lawful and proper direction of the Board or Company; or (v) the denial of or the failure to be issued any gaming license, finding of suitability or other similar regulatory approval to Executive following good faith efforts to obtain the same after the expiration of a customary amount of time has passed for the issuance of the same, or, in the event any such license, finding of suitability or other similar regulatory approval has been issued to Executive, the subsequent revocation, suspension or non-renewal of the same; or (vi) Executive's material breach of this Agreement, which breach by its nature, is incapable of being cured or, if curable, remains uncured for more than thirty (30) calendar days after receipt by Executive of written notice from Company specifying the nature of the breach and demanding the cure thereof, which notice must be received within ninety (90) days after the alleged breach is discovered by the Company.  For purposes of clause (vi) above, a breach of this Agreement that involves substantially similar acts or omissions as a prior breach that was cured, shall be deemed incapable of being cured.

 

B.           Termination Without Good Reason by the Executive.  If Executive terminates his or her employment without Good Reason, Company shall pay to Executive as soon as practical after the termination date an amount equal to the sum of Executive’s accrued Annual Base Salary earned but not yet paid through the termination date, and accrued vacation days, and Executive shall not be entitled to any other benefits or payments under this Agreement, other than such benefits mandated by applicable law.

 

"Good Reason" means: (i) a material reduction in the nature or scope of Executive's duties, responsibilities, authority, or position; or (ii) a material reduction in Executive's base salary (other than any reduction pursuant to Article III(A) or VII(F) of this Agreement); or (iii) a material breach of this Agreement by Company, which breach by its nature, is incapable of being cured or, if curable, remains uncured for more than thirty (30) calendar days after receipt by Company of written notice from Executive specifying the nature of the breach and demanding the cure thereof, which notice must be received within ninety (90) days of the alleged breach; or (iv) a change in control (as defined in the Company's 2004 Equity Incentive Plan, as amended and restated on January 28, 2009) of Company whereby there is a material reduction in the nature or scope of Executive’s duties, responsibilities, authority, or position.  Notwithstanding the foregoing, any Good Reason condition stated herein that arises out of an act of God or force majeure shall not constitute Good Reason for purposes of this Agreement.  For purposes of clause (iii), a breach of this Agreement that involves substantially similar acts or omissions as a prior breach that was cured, shall be deemed incapable of being cured.

 

  

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C.           Executive's Death or Disability.  If, before the end of the Employment Period, Executive's employment terminates due to his death or disability (which is defined as Executive being unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or as defined in Company’s long term disability policy if consistent with Section 409A of the Internal Revenue Code of 1986, as amended), Company shall pay to Executive or his beneficiaries, as the case may be, within ninety (90) days after the termination date, an amount which is equal to the sum of Executive's accrued Annual Base Salary earned but not yet paid through the termination date, an amount equal to six (6) months of Executive’s Annual Base Salary, and his accrued vacation days.  Company shall also pay the COBRA premium for group health coverage for Executive, and, if covered under Company's group health coverage immediately before Executive's death or disability, for his spouse and dependents for six (6) consecutive months after Executive's termination date, provided that Executive (and his spouse and dependents if applicable) are eligible for and elect COBRA coverage.  Additionally, if Executive's termination is due to disability, then to the extent he is a participant in any disability plans sponsored by Company on his termination date, he shall be entitled to benefits in accordance with the terms of those plans as in effect from time to time.  Executive shall also be entitled to immediate acceleration and immediate vesting of any outstanding equity interests previously provided to Executive by Company provided that such vesting and acceleration are permitted under Company’s written equity plan.

 

D.           Termination Without Cause, or for Good Reason, or Non-Renewal of Employment Agreement.  If Company terminates Executive's employment without Cause, or if Executive terminates his employment for Good Reason, or if the Employment Period expires and Company does not renew or extend Executive’s employment on terms substantially equal to or better than those set forth in this Agreement, Executive shall not be eligible to participate in or receive any payments or benefits from any severance plan or policy of Company.  Instead, Executive shall receive the following payments and benefits listed in this Article V(D)  of this Agreement:

 

	
  

	
1.

	
as soon as reasonably practical after the termination date, accrued Annual Base Salary earned but not yet paid through the termination date;

 

	
  

	
2.

	
severance equal to one-half (1/2) year’s Annual Base Salary in existence as of the date of termination, which amount shall be paid by Company to Executive in accordance with the normal payroll practices of Company in effect on the date of this Agreement, in equal installments over a twelve (12) month period beginning on the next payroll date immediately following termination;

 

  

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3.

	
as soon as reasonably practical after the termination date, a lump sum amount equal to his accrued vacation days; and,

 

	
  

	
4.

	
subject to the provisions of Company's medical benefit plans, if Executive (and his spouse and dependents if applicable) is eligible for and elects continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and if COBRA coverage is applicable to Company's medical benefit plans, through the earlier of (i) twelve (12) months from the termination date of Executive or the maximum number of months that COBRA coverage is available by law at the time of Executive’s termination, whichever is less, or (ii) Executive's date of employment by a subsequent employer, Company shall pay the premiums for Executive's (and spouse’s and dependents’ if applicable) COBRA coverage; and

 

	
  

	
5.

	
The payments identified in Article VI(G).

 

E.           Return of Company Property.  Executive shall immediately return all Company property to Company upon the termination date.

 

F.           General Release and Waiver.  In consideration for entering into this Agreement, upon termination of his employment with Company for any reason other than his death, Executive shall execute a release and waiver of all claims and potential claims against Company in a form provided by and reasonably acceptable to Company (the "Release").  Company shall present the Release to Executive within ten (10 ) days of termination, and Executive shall have up to forty-five (45) days following termination to consider whether to execute the Release; in the event Executive executes the Release, Executive shall have an additional eight (8) calendar days in which to expressly revoke his execution of the release in writing.  In the event that Executive fails to execute the Release within the forty-five (45) days following termination, or in the event Executive formally revokes his execution of the release within eight (8) calendar days of his execution of the Release, then this Agreement shall be null and void, provided, however, that the covenants and payments provided in Article VI of this Agreement shall remain in full force and effect.   Executive shall not be entitled to any payments or benefits under this Agreement other than those provided in Article VI of this Agreement after termination of his employment if he does not execute the Release or if he revokes the Release during any statutory revocation period, and to the extent that Company has made any payments to Executive prior to Executive’s failure to execute the Release within forty-five (45) days following termination or prior to his revocation, then Executive shall immediately reimburse Company for any all and all such payments other than those provided in Article VI of this Agreement.

 

G.           Effect of Restrictive Covenant Compliance on Termination Pay.  Notwithstanding any other provision contained herein, in the event that Executive materially breaches any duties set forth in Article VI of this Agreement, then Executive shall not be entitled to any further post-termination compensation or benefits of any kind, Executive shall immediately reimburse Company for all post-termination amounts or benefits previously paid or conferred by Company upon Executive and Company’s cost associated with the provision of any post-termination benefits to Executive, and the duties set forth in Article VI of this Agreement shall continue in full force and effect.

 

  

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VI.           RESTRICTIVE COVENANTS.

 

A.           Non-Solicitation of Employees.  Executive covenants and agrees that he shall not, at any time during the Employment Period and for one (1) year following termination of his employment with Company (the "Restriction Period"), directly or indirectly hire or seek to hire for any person or entity, any person employed at that time by Company or any Company affiliate, and shall not otherwise encourage any such person to leave such employment.

 

B.           Non-Competition.  Executive covenants and agrees that he shall not at any time during the Restriction Period directly or indirectly consult with, be employed by, provide services to, or be a business associate of any person or entity that competes or plans to compete with the business activities of Company that are in existence or under consideration by Company at the time of and the two years leading up to the Restriction Period.  Executive understands and agrees that, because Company has a global business and because of Executive’s position as a senior executive, a global restriction on competition is reasonable and appropriate and will not materially impede Executive’s ability to earn a living.

 

C.           Confidentiality.  Except as required to fulfill his duties during the Employment Period pursuant to the terms of his employment under this Agreement, Executive covenants and agrees that at no time during the Employment Period nor at any time following termination of his employment will Executive use, communicate, furnish, divulge or disclose in any manner to any person or entity any Confidential Information without the prior express written consent of Company.  "Confidential Information" shall mean financial information about Company or any Company affiliates, strategies and techniques, trade secrets, contract terms with vendors and suppliers, supplier lists and data, and such other confidential, proprietary, or sensitive information to which Executive has access as a result of his position with Company.  Confidential Information shall not include (i) any information which was or becomes generally available to the public other than as a result of a wrongful disclosure by Executive, or (ii) any information compelled to be disclosed by applicable law; provided that Executive, to the extent not prohibited from so doing by applicable law, shall give Company prior written notice of the information to be so disclosed pursuant to clause (ii) of this sentence as far in advance of its disclosure as may be practical.

 

D.           Inventions.

 

1.           Executive shall fully and promptly disclose to the Company all inventions, discoveries, software and writings that Executive may make, conceive, discover, develop or reduce to practice either solely or jointly with others during Executive’s employment with the Company, whether or not during usual work hours.  Executive agrees that all such inventions, discoveries, software and writing shall be and remain the sole and exclusive property of the Company, and Executive hereby agrees to assign, and hereby assigns all of Executive’s right, title and interest in and to any such inventions, discoveries, software and writings to the Company.  Executive 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 Executive’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.

 

  

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2.           “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.

 

3.           Executive understands that all copyrightable work that Executive may create while employed by the Company is a “work made for hire,” and that the Company is the owner of the copyright therein.  Executive hereby assigns all right, title and interest to the copyright therein to the Company.

 

4.           Executive 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.           Non-Disparagement.  At all times during the Employment Period and for a period of five (5) consecutive years thereafter, Executive shall refrain from all conduct, verbal or otherwise, that materially disparages or materially damages, or could materially disparage or materially damage, the reputation, goodwill, or standing in the community of Company or any Company affiliates.  The Company and its authorized representatives agree to refrain from any non-disparagement of Executive for a period of five (5) years after the Employment Period.

 

F.           Injunction and Forfeiture.  Executive acknowledges that monetary damages will not be an adequate remedy for Company in the event of a breach of this Article VI.  Therefore, Executive agrees that, in addition to other rights that Company may have, Company is entitled to an injunction preventing Executive from any breach of this Article VI.

 

G.           Compensation for Covenants.  In addition to the consideration provided elsewhere in this Agreement, in exchange for the restrictive covenants contained herein, Company shall pay Executive an amount equal to one-half (1/2) year’s Annual Base Salary in existence as of the date of termination, which amount shall be paid by Company to Executive in accordance with the normal payroll practices of the Company in effect on the date of this Agreement in equal installments over a twelve (12) month period beginning on the payroll date immediately following the termination.  Notwithstanding the foregoing, in the event of a termination by Executive without good reason, a termination by Company for cause, or Executive's death, Executive shall not be entitled to the compensation set forth in this Article VI (G), but shall nonetheless be required to honor the Restrictive Covenants set forth herein.

 

  

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H.           Termination of Payment Obligations.  Notwithstanding any other provision contained herein, in the event that Executive materially breaches any duties set forth in these Restrictive Covenants, then Executive shall not be entitled to any further post-termination compensation or benefits of any kind, Executive shall immediately reimburse Company for all post-termination amounts or benefits previously paid or conferred by Company upon Executive and Company’s cost associated with the provision of any post-termination benefits to Executive, and the duties set forth in these Restrictive Covenants shall continue in full force and effect.

 

VII.           MISCELLANEOUS.

 

A.           Dispute Resolution.

 

	
  

	
1.

	
Article VI Disputes. Executive and Company agree that any disputes arising out of the provisions of Article VI of this Agreement shall be settled by the courts of law, mediation or arbitration (binding or otherwise), at the sole election of Company.

 

	
  

	
2.

	
Other Disputes.  Executive and Company agree that any disputes between them other than those arising out of or relating to Article VI of this Agreement shall be submitted to mediation.  If not resolved in mediation, such dispute shall be finally resolved by arbitration in accordance with the Commercial Rules of the American Arbitration Association.  During the arbitration, Executive will pay for Executive's own costs and attorneys' fees, if any, and Company will pay for its own costs and attorneys' fees, if any.  Attorneys' fees and costs may be awarded by the arbitrator to the prevailing party.  The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction.  The arbitrator shall not have the right to award speculative damages or punitive damages to either Executive or Company except as expressly permitted by statute and shall not have the power to amend this Agreement.  The arbitrator shall be required to follow applicable law.  The place of arbitration shall be within twenty-five (25) miles of Company’s corporate headquarters in existence as of the date of the demand for arbitration.  Any application to enforce or set aside the arbitration award shall be filed in a state or federal court located within the jurisdiction closest to Company’s headquarters in existence as of the date of the demand for arbitration.

 

  

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B.           Assignment; Successors.  This Agreement shall be binding upon and inure to the benefit of Executive, Company and the successors and permitted assigns of Company.

 

C.           Severability.  If all or any part of this Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any portion of this Agreement not declared to be unlawful or invalid.  Any provision so declared to be unlawful or invalid shall, if possible, be construed, or if necessary reformed in a manner which will give effect to the terms of such provision to the fullest extent possible while remaining lawful and valid.

 

D.           Amendment; Waiver.  This Agreement shall not be amended or modified except by written instrument executed by Company and Executive.  A waiver of any term, covenant or condition contained in this Agreement shall not be deemed a waiver of any other term, covenant or condition, and any waiver of any default in any such term, covenant or condition shall not be deemed a waiver of any later default thereof or of any other term, covenant or condition.

 

E.           Notices.  All notices hereunder shall be in writing and delivered by hand, or by a nationally-recognized delivery service that guarantees overnight delivery, or by first- class, registered or certified mail, return receipt requested, postage prepaid, or by facsimile or electronic mail, addressed to Executive at his most recent home address, facsimile number or email address on file at Company, and to the Board of Directors of Company at 1106 Palms Airport Drive, Las Vegas, Nevada 89119.

 

F.           Withholding.  Company may withhold from any amounts payable under any provision of this Agreement any taxes that are required to be withheld pursuant to applicable law as well as, if and to the extent permitted by Code Section 409A, any amounts Company reasonably believes are due and owing from Executive to Company.

 

G.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

H.           Entire Agreement.  This Agreement forms the entire agreement between the parties hereto with respect to the subject matter contained in the Agreement and shall supersede all prior agreements, promises and representations regarding employment, compensation, or severance, whether in writing or otherwise.

 

I.           Applicable Law.  This Agreement shall be interpreted and construed in accordance with the laws of the State of Nevada, without regard to its choice of law principles.

 

J.           Cooperation.

 

1.           Executive 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 Executive was involved during Executive's employment with the Company.  Such cooperation shall be subject to the reasonable demands of any subsequent employment undertaken by Executive, and Company shall cover any reasonable out-of-pocket expenses of Executive in so cooperating, excluding, any attorney’s fees incurred by Executive, unless said attorney’s fees are expressly authorized, permitted, or required under any applicable directors’ and officers’ insurance.

 

  

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2.           In the event Executive is contacted by parties or their legal counsel involved in litigation adverse to the Company or its affiliates, Executive (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.

 

K.           Code Section 409A.

 

1.           General.  It is the intention of both the Company and Executive that the benefits and rights to which Executive could be entitled pursuant to this Agreement comply with Code Section 409A, to the extent that the requirements of Code Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.  Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to the Executive.

 

2.           Distributions on Account of Separation from Service.  If and to the extent required to comply with Code Section 409A, any payment or benefit required to be paid under this Agreement on account of termination of Executive's employment shall be made upon Executive incurring a “separation of service” within the meaning of Code Section 409A.

 

3.           Timing of Severance Payments.  Notwithstanding anything in this Agreement to the contrary, if Executive is deemed to be a “specified employee” for purposes of Code Section 409A, no severance payment or other payments pursuant to, or contemplated by, this Agreement shall be made to Executive by the Company before the date that is six months after the Executive's  “separation from service” (or, if earlier, the date of Executive's death) if and to the extent that such payment or benefit constitutes a deferral of compensation under Code Section 409A.  Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

 

  

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4.           Treatment of Each Installment as a Separate Payment.  For purposes of applying the provisions of Code Section 409A to this Agreement, each separately identified amount to which Executive is entitled under this Agreement shall be treated as a separate payment.  In addition, to the extent permissible under Code Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

5.           Expenses.  Notwithstanding anything in this Agreement to the contrary, except to the extent any expense or reimbursement hereunder does not constitute a deferral of compensation under Code Section 409A, any expense or reimbursement shall meet the following requirements:  (i) the amount of expenses eligible for reimbursement provided to Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to Executive in any other calendar year, (ii) the reimbursements for expenses for which Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, (iii) the right to payment or reimbursement or in-kind benefits hereunder may not be liquidated or exchanged for any other benefit, and (iv) the reimbursements shall be made pursuant to objectively determinable and nondiscretionary Company policies and procedures regarding such reimbursement expenses.

 

	
  

	
L.

	
Post-Termination Medical Benefits.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that the provision of post-termination medical benefits to Executive pursuant to Article V(C) or V(D)(4) above would, at any time such benefits are to be provided to Executive, subject the Company to adverse tax consequences under applicable Federal or state law, the Company in its sole discretion will instead reimburse Executive each month for either: (1) the amount necessary to enable Executive to pay the COBRA premium applicable to the coverage maintained by Executive for the month; or (2) the amount necessary to enable Executive to pay the premium Executive would be required to pay to obtain coverage comparable to the coverage then maintained by Executive under a policy of insurance selected by Company if Executive (and, if applicable any qualified beneficiary related to Executive) waives the right to COBRA continuation coverage.  The payment to be made pursuant to the preceding sentence shall continue through, but only through, the period during which Company would otherwise be required to provide post-termination medical coverage pursuant to Article V(C) or V(D)(4) above.

 

	
  

	
M.

	
Company Policies.   During the term of this Agreement, Executive shall engage in no activity or employment which may conflict with the interests 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.

 

  

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VIII.           DIRECTORSHIP.  No later than the first Board meeting after the Commencement Date, and subject to the other terms and conditions contained in this Agreement, the Board shall appoint Executive as a member of the Board, to serve until any successor to Executive is elected or appointed by the Board; provided, however, that Executive agrees to resign as a director at the same time as his employment as CEO ends and agrees to resign promptly as a director if Executive is denied a license or a finding of suitability or similar regulatory approval, or the same is not renewed,  or is revoked or suspended by any gaming regulatory agency with jurisdiction over the Company.  Notwithstanding the foregoing, the Board shall have no obligation to appoint Executive as a member of the Board in the event that Executive’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.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the date first written above.

 

	 	
SHUFFLE MASTER, INC.

	 
	 	 	 	 
	 	
By: 

	/s/ GARRY W. SAUNDERS	 
	 	Its:	Chairman of the Board	 
	 	Date: 	March 16, 2011	 

 

	 	
EXECUTIVE: 

	/s/ MICHAEL GAVIN ISAACS	 
	 	Date: 	March 16, 2011	 

 

	 	APPROVED:	 
	 	 	 
	 	COMPENSATION COMMITTEE	 
	 	 	 	 
	 	
By: 

	/s/ DANIEL WADE	 
	 	 	Daniel Wade, Chairman	 

 

 

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