AMENDED AND RESTATED EMPLOYMENT AGREEMENT Mark L. Yoseloff
EXHIBIT
10.3
AMENDED
AND RESTATED
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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 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Employee"), a resident of the State
of Nevada.
RECITALS:
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A.
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The
Company is in the business of developing, manufacturing, distributing and
otherwise commercializing gaming equipment, games, and operating systems
for gaming equipment and related products and services throughout the
United States and in Canada and other countries (the "Business").
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B.
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The
Company and Employee want to create a Fixed employment relationship that
protects the Company with appropriate confidentiality and non-compete
covenants and rewards the Employee for performing his obligations for the
full term of this contract or such shorter term as may be created by his
earlier termination by the Company or its successors pursuant to this
Agreement.
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C.
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The
Company and employee desire that Employee be employed by the Company on
the terms and conditions of this
Agreement.
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D.
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Nothing
contained in this Agreement precludes the Company and Employee from
extending, renegotiating, or otherwise modifying Employee's employment
relationship by mutual agreement of the Company and
Employee.
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E.
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The
Company and Employee have previously entered into an employment agreement
dated February 23, 2004, as amended on June 5, 2007 and July 10, 2008 (the
“Previous Agreement”).
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F.
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The
Company and Employee desired 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”).
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AGREEMENT
In
consideration of the mutual promises contained herein, Employee and the Company
agree as follows:
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1. Employment. The Company
hereby employs Employee as its Chief Executive Officer and Chairman of the Board
of Directors. Employee shall perform the duties of those positions and shall
perform such other related duties as the Company's Board of Directors may direct
from time to time. Employee's employment with the Company is for the period
beginning February 23, 2004 through October 31, 2009,
but may be terminated earlier in accordance with the provisions of this
Agreement, or extended or otherwise modified by the mutual agreement of Employee
and the Company.
2. Salary and Benefits. During
the period from February 23, 2004 through October 31, 2009. (a) Employee shall
be paid an annual base salary of Four Hundred Thousand Dollars ($400,000.00),
paid in the same intervals as other employees of the Company; and (b) for each
fiscal year during which Employee is employed through October 31, 2009, Employee
will be eligible to receive an executive bonus in accordance with the terms and
conditions of the executive bonus program as authorized each year by the Board
of Directors of the Company. Employee has received a stock option grant to
purchase one hundred sixty-five thousand (165,000) shares of the Company's
common stock in accordance with, and subject to, the terms and conditions
imposed by the Board of Directors at its February 23rd, 2004 meeting and the
Company's Employee Stock Option Plans. This stock option grant will vest and
become exercisable in accordance with the terms and conditions imposed by the
Board of Directors including the following:
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A.
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Fifty-five
thousand (55,000) shares will become exercisable the earlier of October
31st
2005 or the date on which the Company's closing stock price has increased
by thirty (30) per cent from its closing price on February 23rd
2004.
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B.
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Fifty-
five thousand (55,000) shares will become exercisable the earlier of
October 31st
2005, or the date on which the Company's closing stock price has increased
by forty (40) per cent from its closing price on February 23rd
2004.
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C.
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Fifty-five
thousand (55,000) shares will become exercisable the earlier of April
30`h,
2006, or the date on which the Company's closing stock price has increased
by fifty (50) per cent from its closing price on February 23rd,
2004.
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The Board
does not anticipate making additional stock option grants to the Employee during
the term of this contract. However, future Stock Option grants to the Employee
are at the discretion of the Company's Board of Directors. Employee's salary is
set on the expectation that (except for vacation days and holidays) Employee's
full time will be devoted to Employee's duties hereunder. In addition, in the
event that the Company's shareholders approve a restricted stock plan, the
Company's Board of Directors will develop a performance based bonus plan that
provides the employee with an opportunity to receive shares of restricted stock.
The Company agrees to provide Employee with the benefits it provides its
executive team. Employee will not, however, be eligible to participate in the
Company's non-executive bonus program.
3. Strategic Performance Bonus.
The Board of Directors of the Company believes that long-range, strategic
planning is among the most important duties of the Company's
Chief
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Executive
Officer, including identifying and working toward the successful growth and
diversification of the Company and the creation and maintenance of a succession
plan for the Company's executives. In order to motivate and reward Employee
regarding these duties, the Company's Board of Directors, in its discretion, may
grant employee special bonuses based upon specific factors determined by the
Company's Board of Directors from time to time and communicated to
Employee.
4. Outside Consulting. Employee
shall devote Employee's full-time and best efforts to the Company. Employee may
render consulting services to other businesses from time to time if Employee
first obtains the consent of the Board of Directors of the Company.
5. Non-competition. In
consideration of the provisions of this Agreement, Employee shall not, while
employed full-time by the Company or its successor:
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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.
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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 or divert or attempt to solicit or divert
any of the employees or agents of the Company or its affiliates or
successors to work for or represent any competitor of the Company or its
affiliates or successors or to call upon any of the customers of the
Company or its affiliates or
successors.
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In
further consideration of the provisions of this Agreement Employee is entering
into a Covenant Not to Compete Agreement effective February 23rd 2004
covering Employee during the three year period immediately following his last
day of employment
6. 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 working 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
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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 unpublished 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.
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(f)
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Employee
understands that Employee's employment with the Company creates a
relationship of trust and confidence
between
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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. 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
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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.
7. Early Termination by the Company for
Just Cause. The Company may terminate Employee for just cause. In the
event the Company (or its successor) terminates the Employee for just cause, in
consideration of the Company's obligations under this Agreement, the Employee
will remain bound under the Covenant Not to Compete Agreement entered into
between the Company and Employee effective February 23rd, 2004 for a period of
three years immediately following his last day of employment, and the
confidentiality obligations contained in Section 6 for as long as the
information covered by Section 6 remains confidential. Termination for "just
cause" shall include, but not be limited to:
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(a)
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dishonesty
as to a matter which is materially injurious to the
Company;
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(b)
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the
commission of a willful act or omission which materially injures the
business of the Company;
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(c)
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a
violation of any material provision of this Agreement, including, in
particular, the provisions of Sections 4 and 5
hereof;
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(d)
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any
determination by a gaming regulatory body that Employee is found
unsuitable as a key employee qualifier, or the actions of the Employee
result in the loss of a gaming license that permits the Company to engage
in business within a jurisdiction;
or
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(e)
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a
determination in good faith by the vote of all outside members of the
Company's Board of Directors that the Employee has failed to make a good
faith effort to perform his duties as assigned by the Board of Directors;
provided, that if the Company desires to terminate Employee for the
reasons stated in subsection 7(d), it shall first give Employee written
notice of such intention, stating the specific reasons for the
termination, and Employee shall have thirty (30) days from the date of
receipt of such notice to cure the alleged wrongdoing to the reasonable
satisfaction of the outside members of the Company's Board of
Directors.
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8. Employee's Voluntary Termination and
Employee's Termination Without Cause. In the event Employee voluntarily
terminates his employment with the Company (or its successor), in the event the
Company (or its successor) terminates the Employee without just cause or in the
event the Company (or its successor) does not renew this Agreement on terms at
least as favorable to Employee as Employee is receiving on February 23, 2004,
then Employee will be bound under the confidentiality obligations of Section 6
for as long as the information remains confidential and the Covenant Not to
Compete Agreement entered into between the Company and Employee effective
February 23rd,
2004. Voluntary termination of employment means any termination by
the Employee except for one made in response to an
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9. attempt
by the Company to terminate Employee for just cause under Section 7. Voluntary
termination includes a termination caused by the death of Employee or
“Disability” of Employee for more than six (6) months. For purposes
of this Agreement and the Covenant Not to Compete Agreement, a Disability shall
not be deemed to have occurred with respect to treatment of payments considered
to be “deferrals” under Code Section 409A unless the disability constitutes a
“Disability” under Code Section 409A.
10. Part-time
Employment. Subject to Section 22 hereof, in the event that
Employee’s full-time employment is terminated by the Company during the term of
this Agreement without “just cause” (as defined in Section 7), or if the Company
does not offer to renew this Agreement on terms at least as favorable to
Employee as Employee is receiving on February 23, 2004, then, during the two
year and nine month period (the “Part-Time Employment Period”) following
Employee’s last day of his full-time employment, Employee will be paid each
month, as Employee’s sole remedy, an amount determined as follows: Employee's
annualized base salary as of his last day of full-time employment will be added
to Employee's average annual bonus awarded under the annual executive bonus
program over the last three (3) years of Employee’s full-time employment.
Subject to Section 22, the resulting amount will be paid to Employee over the
Part-Time Employment Period immediately following the last day of his full-time
employment, in equal amounts, at the same intervals as other employees of the
Company are being paid.
Employee's salary during the Part-time
Employment Period is set on the expectation that Employee's time will be spent
as reasonably needed to perform his duties to assist the Company's new Chief
Executive Officer and Chairman of the Board. The Company will not require that
Employee travel more than two (2) nights per month during his Part-time
Employment Period. The Company agrees to provide Employee with the general
benefits it provides its non-executive employees during his Part-time Employment
Period. Employee will not, however, receive any vacation, be eligible to
participate in the Company's non-executive bonus program, nor will Employee be
eligible to participate; in the Company's executive bonus program and the
executive stock option plan. Notwithstanding anything in this
Agreement to the contrary, the Employee shall perform services during such
period described in this Section 9 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
full-time employment.
10. Change in Control. For the
purposes of this Agreement, "Change in Control" of the Company shall be defined
the same as the conditions for acceleration of an employee's stock options,
pursuant to the Company's 2003 Stock Option Plan as amended (the "Plan"),. Any
compensation or payments to Employee resulting from a Change in Control shall be
determined in its entirety under the terms provided in the Covenant Not to
Compete Agreement. In the event of a Change in Control Employee will reasonably
cooperate with the Company and exercise his stock options in a way as to not
hinder the progress or closing of the transaction, and in no event later than
three (3) months following the closing.
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Stock Options. All stock
options granted at any time to Employee shall vest in accordance with the terms
and conditions set forth in the applicable grant by the Board and, as otherwise
may be applicable, with any relevant terms and conditions of the 2003 Stock
Option Plan as amended (the "Plan"), to the extent that said options are from
the Plan, or, for any options issued out of the New Plan, then pursuant to the
New Plan.
11. 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.
12. Company Policies. During
the term of Employee's employment, Employee shall engage in no activity or
employment which may conflict with the interest of the Company, and Employee
shall comply with all policies and procedures of the Company including, without
limitation, all policies and procedures pertaining to ethics.
13. Independent Covenants.
The covenants on the part of the Employee contained in Sections 5 and 6
hereof shall be construed as agreements independent of any other provision in
this Agreement; 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 to
enforcement by the Company of those covenants.
14. Injunctive Relief; Attorneys' Fees.
In recognition of the irreparable harm that a violation by Employee of
any of the covenants contained in Sections 5 and 6 hereof would cause the
Company, the Employee agrees that, in addition to any other relief afforded by
law, an injunction (both temporary and permanent) against such violation or
violations may be issued against him or her and every other person and entity
concerned thereby, it being the understanding of the parties that both damages
and an injunction shall be proper modes of relief and are not to be considered
alternative remedies. Employee consents to the issuance of such injunction
relief without the posting of a bond or other security. In the event of any such
violation, THE EMPLOYEE AGREES TO PAY THE COSTS, EXPENSES AND REASONABLE
ATTORNEYS' FEES INCURRED BY THE COMPANY IN PURSUING ANY OF ITS RIGHTS WITH
RESPECT TO SUCH VIOLATIONS, IN ADDITION TO THE ACTUAL DAMAGES SUSTAINED BY THE
COMPANY AS A RESULT THEREOF.
16. 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.
17. Entire Agreement. This
Agreement is the entire agreement of the parties hereto concerning the subject
matter hereof and supersedes and replaces any oral or written existing
agreements between the Company and the Employee relating generally to the same
subject matter. The Company and Employee hereby acknowledge that there are no
agreements or understandings of any nature, oral or written, regarding
Employee's employment, apart from this Agreement.
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18.
18. Severability. It is further
agreed and understood by the parties hereto that if any provision of this
Agreement should be determined by a 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.
19. 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.
20. Heirs, Successors and Assigns.
The terms, conditions, 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 and assigns.
21. Health Care
Benefit. Unless Employee is terminated by Company for “just
cause” (as defined in Section 7), then during the Part-Time Employment Period
and thereafter, until Employee’s death, Employee shall be eligible to
participate in the Company’s health care (medical and dental) plan as a Class 2
employee, which benefit shall provide the same health care coverage for Employee
and his family as they were then receiving on the last date of Employee’s
full-time employment with the Company. Subject to Section 22, the
Company shall pay the entire cost of this health care coverage for Employee and
his family for as long as the Employee desires said coverage.
22. Code Section 409A
Compliance.
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(a)
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This
Agreement is intended to comply with Section 409A of the Code (to the
extent applicable) and, to the extent it would not adversely impact the
Company, the Company agrees to interpret, apply and administer this
Agreement in a manner necessary to comply with such requirements and
without resulting in any diminution in the value of payments or benefits
to the Employee. Notwithstanding any other provisions of this Agreement,
the Company does not guarantee that payments will be exempt or comply with
Section 409A of the Code, nor will the Company indemnify, defend or hold
harmless Employee with respect to the tax consequences of any such
failure.
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(b)
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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 9 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).
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(c)
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Notwithstanding
anything to the contrary in this Agreement, if the Company determines (i)
that on the date the Employee’s employment with the
Company
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(d)
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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 22 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.
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(e)
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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.
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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the day, month and year first
above written.
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EMPLOYER:
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EMPLOYEE:
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SHUFFLE
MASTER, INC.
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▇▇▇▇
▇▇▇▇▇▇▇▇
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BY: /s/ ▇▇▇▇▇
▇▇▇▇▇
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BY: /s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
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ITS: Executive Vice President, General
Counsel and Corporate Secretary
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APPROVED:
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COMPENSATION
COMMITTEE
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BY: /s/ ▇▇▇
▇▇▇▇▇▇
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ITS: Chairman
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