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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Jerry Smith
THIS AMENDED AND RESTATED AGREEMENT (the “Agreement”)
is made and entered into as of the 31st day of December, 2008, by
and between Shuffle Master, Inc., a Minnesota corporation (the
“Company”), and Jerry Smith (the
“Employee”), a resident of the State of Nevada.
RECITALS:
A. The
Company is in the business of developing, manufacturing,
distributing and otherwise commercializing card shufflers and its
proprietary table games (both live and electronic) (the
“Business”), throughout the world.
B. Company
and Employee want to create an at-will employment relationship that
protects the Company with appropriate confidentiality and
non-compete covenants, and compensates and rewards the Employee for
performing his obligations for the full term of this contract or
such shorter term, as may be determined in accordance with the
terms and conditions of this Agreement.
C. The Company and Employee desire that Employee be employed
by the Company on the terms and conditions of this Agreement.
D. On or about May 14, 2008 (the “Execution
Date”), the Employee and Company previously entered into an
employment agreement dated as of May 14th, 2008 (the
“Previous Agreement”), as amended by that First
Amendment dated November 16, 2008.
E. The Company and the Employee desire to amend and restate
the Previous Agreement solely in order to make changes to comply
with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).
AGREEMENT
In consideration of the mutual promises contained herein, Employee
and the Company agree as follows:
1. Employment. The
Company hereby employs Employee as its Executive Vice President,
General Counsel and Corporate Secretary reporting to the Chief
Executive Officer of the Company. Employee shall perform
the normal duties of that position. Subject to the other
terms and conditions hereof, Employee’s employment under this
Agreement with the Company is for an initial term of three years
and six months (the “Term”), beginning May 1, 2008 (the
“Commencement Date”), through October 31,
2011. The parties acknowledge that from the Commencement
Date through November 16, 2008, Employee was employed as the
Company’s Senior Vice President and General Counsel.
2. Salary,
Bonus and Benefits.
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a.
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From the Commencement Date and if employed through October 31,
2008, Employee shall be paid an annual base salary of no less than
Two Hundred Fifty Thousand Dollars ($250,000.00), paid in the same
intervals as other employees of the Company; and if employed
through October 31, 2008, Employee will also be eligible to receive
an executive bonus in accordance with the terms and conditions of
the executive bonus program authorized by the Board of Directors of
the Company (the “Board”) for other senior management
executives of the Company for fiscal year 2008, which, for fiscal
year 2008, shall have a target bonus of no less than 50% of
Employee’s base salary.
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b.
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For any subsequent year after Fiscal Year 2008, Employee will
receive an annual base salary of no less than his annual base
salary for the immediately prior year of this Agreement, as
adjusted upward by the Company, and will also be eligible to
participate in an executive bonus program and/or in an individual
performance bonus program as authorized by the Board for said
period.
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c.
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Stock option, restricted shares or other equity grants
(“Equity”), if any, will be at the sole discretion of
the Board.
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d.
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Except as modified herein, any Equity issued at any time to
Employee shall vest in accordance with the terms and conditions set
forth in the applicable grant by the Board and, as otherwise may be
applicable, with any relevant terms and conditions of Shuffle
Master, Inc.’s 2004 Equity Incentive Plan (the
“Plan”) or any subsequent plan, except as modified by
the terms and conditions of the applicable grant by the Board.
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e.
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During the Term, the Company agrees to provide Employee with the
same benefits it provides all of the other senior management level
employees of the Company. Employee will not, however, be
eligible to participate in the Company’s non-executive bonus
program.
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f.
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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.
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g.
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During Employee’s employment with the Company, the Company
will promptly pay or reimburse Employee for reasonable travel and
other expenses incurred by Employee in the furtherance of or in
connection with the performance of Employee’s
duties. Such reimbursement will be in accordance with
Company policies in existence from time to time.
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3. Outside
Services or Consulting. Except as otherwise set forth
herein, Employee, during the Term, shall devote Employee’s
full professional time and best professional efforts to the
Company. Employee may render other professional or
consulting services to other persons or businesses from time to
time during the Term, only if Employee meets all of the following
requirements:
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a.
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The services do not interfere in any manner with the
Employee’s ability to fulfill all of his duties and
obligations to the Company.
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b.
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The services are not rendered to any business which may compete
with the Company in any area of the Business or do not otherwise
violate paragraph 4 hereof.
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c.
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The services do not relate to any products or services, which
form part of the Business.
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d.
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Employee informs and obtains the prior consent of the Chief
Executive Officer of the Company.
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4. Non-competition. In
consideration of the provisions of this Agreement, Employee hereby
agrees that he shall not, during the Term and for a period (the
“Non-Compete Period”) of twenty-four (24) months
thereafter:
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a.
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Directly or indirectly own, manage, operate, participate in,
consult with or work for any business, which is engaged in the
Business anywhere in the world. Notwithstanding the
foregoing, it is understood and agreed that Employee may hold up to
one percent (1%) of the shares of any publicly traded company.
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b.
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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).
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c.
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Directly or indirectly provide any services to any person,
company or entity, which is engaged in the Business anywhere in the
world.
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5. Confidentiality;
Inventions.
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a.
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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.
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b.
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“Inventions,” as used herein, shall include
inventions, discoveries, improvements, ideas and conceptions,
developments and designs, whether or not patentable, tested,
reduced to practice, subject to copyright or other rights or forms
of protection, or relating to data processing, communications,
computer software systems, programs and procedures.
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c.
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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.
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d.
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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.
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e.
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Employee will not publish or otherwise disclose, either during
or after Employee’s employment with the Company, any
published or proprietary or confidential information or secret
relating to the Company, the Business, the Company’s
operations or the Company’s products or
services. Employee will not publish or otherwise
disclose proprietary or confidential information of others to which
Employee has had access or obtained knowledge in the course of
Employee’s employment with the Company. Upon
termination of Employee’s employment with the Company,
Employee will not, without the prior written consent of the
Company, retain or take with Employee any drawing, writing or other
record in any form or nature which relates to any of the
foregoing. Notwithstanding the foregoing, Employee shall
have the right, as reasonably necessary, to retain copies of this
Agreement, any employee stock option and restricted stock
agreements, any other documents, information or materials related
to Employee’s compensation or benefits from the Company (in
order to confidentially review such items with Employee’s
professional advisors or immediate family members), and any other
documents which relate to Employee’s duties or obligations
(fiduciary, ethical or otherwise) to the Board or the
shareholders. In addition, and subject to the provisions
of paragraph 24 hereof, nothing in this paragraph 5(e) or in
paragraph 5(f) below shall be construed to prevent or preclude
Employee from responding to legal process or testifying
truthfully.
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f.
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With respect to any confidential information, Employee
understands that Employee’s employment with the Company
creates a relationship of trust and confidence between Employee and
the Company. Employee understands that Employee may
encounter information in the performance of Employee’s duties
that is confidential to the Company or its
customers. For the Term hereof, and until the
information falls into the public domain, Employee agrees to
maintain in confidence all information pertaining to the Business
or the Company to which Employee has access including, but not
limited to, information relating to the Company’s products,
inventions, trade secrets, know how, systems, formulas, processes,
compositions, customer information and lists, research projects,
data processing and computer software techniques, programs and
systems, costs, sales volume or strategy, pricing, profitability,
plans, marketing strategy, expansion or acquisition or divestiture
plans or strategy and information of similar nature received from
others with whom the Company does business. Employee
agrees 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.
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6. Termination
Without Just Cause or Non-Extension by Company.
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a.
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Employee’s employment by the Company is “at
will;” therefore, subject to the terms and conditions hereof,
the Company may terminate Employee’s full-time employment at
any time either with or without just cause. Because
Employee, as of the Execution Date, a) is over 55 years of age; b)
has been either a “C-level” employee with the Company
or the Company’s General Counsel for at least the last 6
consecutive years; and c) has been employed by the Company for at
least the last 6 consecutive years and was over the age of 50 in
each of these years, therefore, in the event of any termination of
Employee’s full-time employment with the Company without just
cause (including a termination without just cause that qualifies as
a “Company Termination Without Just Cause”, as defined
in paragraph 6(b) hereof), or in the event that Employee’s
full-time employment is not extended or renewed beyond the Term on
terms at least as favorable to Employee as Employee is receiving
during the last year of the Term, then Employee will remain bound
to the covenants not to compete and confidentiality obligations of
paragraphs 4 and 5 of this Agreement, according to their terms,
and, subject to Section 26, each one of the following shall
apply:
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i. Employee shall be paid a severance amount (the
“Severance”) equal to twelve (12) months of his then
monthly base salary paid over a period of twenty-four (24) months
from Employee’s termination, except that, if the termination
without just cause qualifies as a Company Termination Without Just
Cause as set forth in any of paragraphs 6(b)(i), 6(b)(ii),
6(b)(iii) or 6(b) (iv), then the Severance amount shall be equal to
twenty-four (24) months of Employee’s then monthly base
salary paid over a period of twenty-four (24) months from
Employee’s termination; and, in any of said cases, in equal
monthly installments and at the same intervals as other employees
of the Company are then being paid their base salaries;
ii. Employee shall continue to receive, during the 24 months
from Employee’s termination, the same medical and dental
insurance, (including without limitation prescription drugs),
(collectively, “Health Insurance”), and any other
benefits or insurance coverages which Employee would have received
had his employment not been so terminated, or not extended, (but in
no event less coverage than Employee is receiving on the Execution
Date, or that is at least equal to the coverage being received by
any senior management level employee); provided, however, if the
Employee is not eligible for said Health Insurance, the Company
shall pay the COBRA premiums for continuation coverage during the
said 24-month period; further provided that, at Employee’s
sole option, during said 24-month period, Employee can elect to
also have his spouse covered under said Health Insurance, with the
Employee paying the Company the incremental monthly cost which the
Company incurs to so cover his spouse. (For the
avoidance of doubt, the Company and Employee agree that it is the
intent of this language and of this paragraph 6(a), and that this
language means, among other things, that Employee will continue to
vest in all Equity awards and receive all benefits during said
24-month period after Employee’s termination);
iii. Employee shall receive, during the 24-month period from
Employee’s termination, additional compensation (the
“Additional Compensation”) for his agreeing herein to a
covenant not to compete, equal to the amount of the average of all
of the annual bonuses which Employee has received over the last
five (5) full fiscal years while working full-time for the Company
(the “5-year Bonus Average”), also paid at the same
intervals as Employee is then being paid his base salary, except
that if the termination without just cause qualifies as a Company
Termination Without Just Cause, then the Additional Compensation
shall be equal to the 5-year Bonus Average multiplied by two
(2);
iv. During the 24-month period from Employee’s
termination,
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