Exhibit 10.2
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this
“ Agreement ”) is entered into on May 14,
2008 (the “ Effective Date ”), between Herbst
Gaming, Inc., a Nevada corporation (together with their
successors or assigns as permitted under this Agreement,
collectively, the “ Company ”), and Troy D.
Herbst, an individual (the “ Executive
”).
The
Company desires to continue to employ the Executive and to enter
into this Agreement embodying the terms of such employment, and the
Executive desires to enter into this Agreement and accept such
employment.
In
consideration of the mutual covenants and for other good and
valuable consideration, the Company and the Executive (individual a
“ Party ” and together the “
Parties ”) agree as follows:
1.
Definitions
(a)
“ Salary ” shall mean the salary provided for in
Section 4 subject to such increases as may be made from
time to time.
(b)
“ Board ” shall mean the Board of Directors of
the Company.
(c)
“ Business Day ” shall mean any day other than a
weekend, a federal or Nevada state holiday or a vacation day for
the Executive.
(d)
“ Cause ” shall mean:
(i)
the conviction of, or judgment against, the Executive by a civil or
criminal court of competent jurisdiction for a felony or any other
offense involving embezzlement or misappropriation of funds, or any
act of moral turpitude, dishonesty or lack of fidelity;
(ii)
the indictment of the Executive by a state or federal grand jury of
competent jurisdiction or the filing of a criminal complaint or
information, for a felony or any other offense involving
embezzlement or misappropriation of funds, or any act of moral
turpitude, dishonesty or lack of fidelity;
(iii)
the confession by the Executive of embezzlement or misappropriation
of funds, or any act of moral turpitude, dishonesty or lack of
fidelity;
(iv)
the payment (or, by the operation solely of the effect of a
deductible, the failure of payment) by a surety or insurer of a
claim under a fidelity bond issued for the benefit of the Company
reimbursing the Company for a loss due to the wrongful act, or
wrongful omission to act, of the Executive;
(v)
the denial, revocation or suspension of a license, qualification or
certificate of suitability to the Executive by any of the Gaming
Authorities; and
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(vi)
any action or failure to act by the Executive that the Company
reasonably believes, as a result of a communication or action by
the Gaming Authorities or on the basis of consultations with its
gaming counsel and/or other professional advisors, will likely
cause any of the Gaming Authorities to: (A) fail to
license, qualify and/or approve the Company to own and operate a
gaming business; (B) grant any such licensing, qualification
and/or approval only upon terms and conditions that are
unacceptable to the Company; (C) significantly delay any such
licensing, qualification and/or approval process; or
(D) revoke or suspend any existing license.
(e)
“ Confidential Information ” shall mean
information in whatever form, including, without limitation,
information that is written, electronically stored, orally
transmitted, or memorized, that is, in the Company’s opinion,
of commercial value to the Company and that is created, discovered,
developed, or otherwise becomes known to the Company, or in which
property rights are held, assigned to, or otherwise acquired by or
conveyed to the Company, including, without limitation, any idea,
knowledge, know-how, process, system, method, technique, research
and development, technology, software, technical information, trade
secret, trademark, copyrighted material, reports, records,
documentation, data, customer or supplier lists, tax or financial
information, business or marketing plan, strategy, or
forecast. Confidential Information does not include
information that is or becomes generally known within the
Company’s industry through no act or omission by the
Executive; provided, however , that the compilation,
manipulation or other exploitation of generally known information
may constitute Confidential Information.
(f)
“ Disability ” shall mean the Executive’s
inability, for a period of six (6) consecutive months, to
render substantially the services provided for in
Section 3 by reason of mental or physical disability,
whether resulting from illness, accident or otherwise, where the
existence of Disability shall be determined in the sole and
absolute discretion of the Company.
(g)
“ Term of Employment ” shall mean the initial
period specified in Section 2 and if, but only if,
automatically renewed as provided in Section 2 , shall
include the period of such renewal.
2.
Term of Employment
(a)
The Company hereby employs the Executive and the Executive hereby
accepts employment with the Company, in the position and with the
duties and responsibilities as set forth in Section 3
for the Term of Employment, subject to the terms and conditions of
this Agreement.
(b)
The initial Term of Employment shall commence as of the Effective
Date and shall, unless sooner terminated as provided in
Section 7, terminate at 11:59 p.m. (Pacific
Standard Time) on December 31, 2009; provided that the Term
of Employment shall automatically renew for successive one
(1) year periods unless (i) it has sooner terminated as
provided in Section 7 or (ii) either Party has
notified the other in writing at least sixty (60) days prior to the
otherwise scheduled expiration of the Term of Employment that such
Term of Employment shall not so renew.
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3.
Position, Duties and Authorities
(a)
During the Term of Employment, the Executive shall be employed as
Chief Executive Officer, Secretary and Treasurer with the duties,
responsibilities and authorities customarily associated with such
positions for other businesses of the same size and in the same
industry, together with any other duties of a senior executive
nature as may be reasonably requested by the Board from time to
time, which may include duties for one or more subsidiaries or
affiliates of the Company. It is contemplated that the
Executive will also continue to serve as a member of the
Board. In performing the Executive’s duties under this
Agreement, the Executive shall perform such duties subject to
supervision and in accordance with the policies and directives
established by the Board.
(b)
The Executive is permitted to engage in charitable, community and
business affairs, managing personal investments and serving as a
member of boards of directors of industry associations or
non-profit or for profit organizations and companies so long as
such activities do not materially interfere, in the opinion and
reasonable discretion of the Board, with the Executive carrying out
his duties and responsibilities under this Agreement.
Thereafter, not less often than on January 1 of each renewal
year, the Executive shall disclose in writing to the Board any
changes to the information with respect to involvement in such
entities or organizations.
4.
Salary
During the Term of Employment, the Executive
shall be paid by the Company a Salary payable in accordance with
the Company’s payroll practices in effect from time to time
at an annualized rate of Nine Hundred Seventy-Three Thousand, Eight
Hundred Forty-Five and 34/100 Dollars ($973,845.34); the Salary is
subject to a five percent (5%) increase on January 1 of each
year following the Effective Date. The first such increase
shall take effect in January 2009.
5.
Employee Benefit Programs
During the Term of Employment, the Executive
and his dependents shall be entitled to participate in, at the
Company’s expense, whatever employee benefit plans the
Company endorses to obtain, if the Company in its sole discretion
elects to obtain, such as, but not in limitation, medical,
surgical, hospitalization, dental and visual insurance coverage.
If the Company obtains an employee benefit plan, the Company
will pay all expenses for these insurance program(s) or
plan(s).
6.
Business Expense Reimbursement and Perquisites
(a)
During the Term of Employment, the Executive shall be entitled to
receive reimbursement by the Company, upon submission of adequate
documentation, for all reasonable out-of-pocket expenses incurred
by the Executive in performing services under this Agreement.
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(b)
During the Term of Employment, the Executive shall be entitled to
all other perquisites and benefits provided to other senior level
executives of the Company (as referenced in Exhibit A attached
hereto).
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7.
Termination of Employment
(a)
Termination Due to Death or Disability . In the event
of the cessation of the Executive’s employment under this
Agreement due to death or Disability, the Executive or the
Executive’s legal representatives, as the case may be, shall
be entitled to:
(i)
(A) in the case of death, continued Salary at the rate in
effect at the time of death for a period of twenty-four (24) months
following the month in which such cessation of employment due to
death occurs, or (B) in the case of Disability, Salary at the
rate in effect at the determination of Disability through the date
of such determination of Disability;
(ii)
reimbursement for expenses incurred but not yet reimbursed by the
Company; and
(iii)
any other compensation and benefits to which the Executive or legal
representatives may be entitled to under the applicable plans,
programs and agreements of the Company.
(b)
Termination by the Company for Cause . At any time
after learning of an event constituting Cause, the Company may
elect to give the Executive written notice of its intention to
terminate for Cause, specifying in such notice the event forming
the basis for Cause. Subject only to the following sentence,
termination shall be effective immediately upon delivery of notice
hereunder. If the written notice is of an event constituting
Cause under Section 1(d)(i) or 1(d)(v) , and if
the event is capable of being cured, the Company may allow the
Executive to have ten (10) Business Days following actual
receipt of the notice of termination in which to cure, so long as
the Executive advises the Company in writing within forty-eight
(48) hours of receiving the notice of termination of the
Executive’s intention to attempt cure. In the event the
Executive’s employment is terminated by the Company for
Cause, the Executive shall be entitled to:
(i)
Salary at the rate in effect at the time of termination through the
date of termination of employment;
(ii)
reimbursement for expenses incurred but not yet reimbursed by the
Company; and
(iii)
any other compensation and benefits to which the Executive may be
entitled under applicable plans, programs and agreements of the
Company.
The
Executive’s entitlement to the foregoing shall be without
prejudice to the right of the Company to claim or sue for any
damages or other legal or equitable remedy to which the Company may
be entitled as a result of such Cause; provided, however ,
that offset shall not be available to the Company in any
event.
(c)
Termination without Cause . In the event the
Executive’s employment is terminated by the Company without
Cause (which shall not include a termination pursuant to
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Section 7(a) ) (“
Termination Without Cause ”), the Executive shall be
entitled to those items described in the subparagraphs
(i) through (iii) of this
Section 7(c) below. Termination Without
Cause shall be effective immediately, unless a later date is
stated, upon delivery of a written notice of such termination from
the Company to the Executive.
(i)
an amount equal to twelve (12) months of Salary (the “
Salary Termination Payment ”). The Executive may
elect, at the Executive’s option to recei
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