Exhibit 10.2

 

FORM OF EXECUTIVE SEVERANCE AGREEMENT

 

THIS EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”) is entered into on
January 21, 2011, and effective as of the Effective Date (as defined below),
between Herbst Gaming, LLC, a Nevada limited liability company (the “Company”),
and Chris Krabiel, an individual (the “Executive”).

 

1.                                       Definitions.

 

(a)                                  “Cause” means one or more of the following:

 

(i)                                     the indictment of, or formal charge
against, the Executive for any felony or any other offense involving
embezzlement or misappropriation of funds, or any act of moral turpitude,
dishonesty or lack of fidelity; or the Executive’s admission of having engaged
in the same;

 

(ii)                                  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;

 

(iii)                               the Executive’s failure to obey the
reasonable and lawful orders of the Board of Directors of the Company (the
“Board”) or the Chief Executive Officer;

 

(iv)                              the Executive’s misconduct or gross negligence
in the performance of, or willful disregard of, his duties and responsibilities
to the Company;

 

(v)                                 the denial, revocation or suspension of a
license, qualification or certificate of suitability to the Executive by any
Gaming Authority or the reasonable likelihood that the same will occur;

 

(vi)                              the Executive’s refusal to submit to, or
testing positive for unlawful substances as a result of, random drug testing,
and/or

 

(vii)                           any action or failure to act by the Executive
that the Company reasonably believes, as a result of a communication or action
by any Gaming Authority or on the basis of the Company’s consultations with its
gaming counsel and/or other professional advisors, will likely cause any Gaming
Authority 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.

 

(b)                                 “Effective Date” means January 10, 2011.

 

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(c)                                  “Gaming Authority” means any governmental
authority that holds regulatory, licensing or permit authority over gambling,
gaming or casino activities.

 

(d)                                 “Salary” means the annualized base salary
provided by the Company to the Executive.

 

2.                                       The Duty of Loyalty Agreement.
Simultaneous with the execution of this Agreement, and as a condition of the
Company’s willingness to provide the protections described herein, the Executive
is executing a Duty of Loyalty Agreement that provides protections to the
Company. Both this Agreement and the Duty of Loyalty Agreement are attached to,
and made a part of, the Letter Agreement between the Company and the Executive
of the same date.

 

3.                                       Term.

 

(a)                                  The Executive’s employment with the Company
shall commence on the Effective Date and shall continue until the second (2 nd)
anniversary thereof (the “Term”). However, in accordance with the Letter
Agreement, the Executive will give the Company sixty (60) calendar days’ written
notice of his intent to resign. Upon the effective date of any such resignation,
as well as any termination for Cause or due to death or incapacity that prevents
the Executive from performing the essential functions of his position, the
Company shall provide the Executive with the following (collectively, the
“Termination Payments”): (i) Salary through the Executive’s last day of active
employment; (ii) payment for any accrued but unused vacation days;
(iii) reimbursement for expenses incurred but not yet reimbursed by the Company;
and (iv) such vested rights to other benefits as may be provided in applicable
pension and welfare plans of the Company, according to the terms and provisions
of such plans, other than any plan providing for severance or termination
payments.

 

(b)                                 At any time during any notice period as
described above, the Company may dispense with the Executive’s services, as long
as the Company continues to pay the Executive his Salary and to provide the
benefits he was receiving as the time notice is given. Except as provided in
Section 4, if applicable, no other payments or benefits will be due and owing to
the Executive upon termination.

 

4.                                       Termination of Employment without
Cause.

 

(a)                                  Severance Payments. In the event the
Executive’s employment is terminated prior to the expiration of the Term by the
Company without Cause, which shall not include any termination by the Company
due to the Executive’s death or incapacity that prevents the Executive from
performing the essential functions of his position, the Executive shall be
entitled to the Termination Payments and the following “Severance Package”, in
lieu of any other compensation and benefits whatsoever:

 

(i)                                     continued payment of the Executive’s
Salary until the second (2 nd) anniversary of the Effective Date;

 

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(ii)                                  continued participation in the Company’s
group medical plan pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1986 (“COBRA”) at no cost to the Executive until the earlier of the last
day of the month in which the last payment is made to the Executive pursuant to
Section 4(a)(i) above and the date on which the Executive first becomes eligible
for coverage provided by any other entity following termination; and

 

(iii)                               if the Executive’s employment is terminated
without Cause at any time prior to the end of the Term, he shall be paid the
guaranteed twenty percent (20%) of his base salary payable pursuant to
Section 3(b) of the Letter Agreement, pro-rated to reflect the portion of the
Term he was employed prior to termination, and payable at the same time as such
bonuses are paid to other executives of the Company.

 

(b)                                 Expiration of the Term. If the Executive’s
employment is not terminated prior to the last date of the Term, but the Company
elects not continue the Executive’s employment after the Term expires, he
(i) shall be paid the guaranteed bonus of twenty percent (20%) of his base
salary in accordance Section 3(b) of the Letter Agreement, and (ii) will be
eligible for up to an additional thirty percent (30%) of his base salary in
accordance Section 3(b) if and to the extent the specified objectives are
achieved, any such bonus or bonuses payable at the same time as such bonuses are
paid to other executives of the Company

 

5.                                       Conditions to Payment.

 

(a)                                  General Release. Receipt of the payments
described in Section 4 shall be contingent upon and subject to the Executive’s
execution (within forty-five (45) days following the date of termination of
employment) and non-revocation of a General Release substantially in the form
attached hereto as Attachment A.

 

(b)                                 Timing of Payments. The installment payments
will begin on the sixtieth (60th) day following the effective date of the
Executive’s termination, with the first such payment to include any amounts
attributable to payroll periods occurring prior to such date, provided, however,
that, to the extent that the payments are exempt from Section 409A (as defined
below), such exempt payments shall be made beginning with the first payroll date
following the effectiveness of the General Release.

 

(c)                                  Forfeiture of Payments. Without limiting
any other damages that may be available to the Company, the Executive will
forfeit his right to the payments described in Section 4 if he violates the Duty
of Loyalty Agreement.

 

(d)                                 Non-Duplication of Payments or Benefits.
Notwithstanding the foregoing, no payments or benefits otherwise due to the
Executive upon termination of his employment shall result in a duplication of
payments or benefits provided under Section 4.

 

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(e)                                  Exclusive Remedies. The Executive shall
have no rights, remedies or claims for damages, at law, in equity or otherwise
with respect to any termination of the Executive’s employment by the Company
other than as set forth in Section 3 and Section 4.

 

6.                                       Dispute Resolution.

 

(a)                                  In the event a dispute arising under this
Agreement and/or the termination of the Executive’s employment (each, a
“Dispute”), the parties agree to hold a meeting to attempt in good faith to
negotiate a resolution of the Dispute prior to pursuing other available
remedies.

 

(b)                                 If, within thirty (30) days after such
meeting or after good faith attempts to schedule such a meeting have failed, the
parties have not succeeded in negotiating a resolution of the Dispute, the
Dispute shall be submitted to binding and confidential arbitration before the
American Arbitration Association or another nationally recognized alternative
dispute resolution service (any such entity, an “ADR Service”) located in Clark
County, Nevada, subject to the ADR Service’s Rules for Employment Arbitration.

 

(c)                                  The arbitration will be conducted before a
single independent and impartial arbitrator selected in accordance with the
procedures of the ADR Service or as otherwise mutually agreed.

 

(d)                                 Any award will be based on and accompanied
by a written opinion signed by the arbitrator and will contain findings of fact,
conclusions of law and the reasons upon which the award is based.

 

(e)                                  In any action or proceeding relating to
this Agreement, the Executive’s full measure of damages shall not exceed the
maximum amounts payable under Section 4, unless any such limitation is otherwise
prohibited by the laws applicable to the specific Dispute.

 

7.                                       Taxes.

 

(a)                                  All amounts payable pursuant to this
Agreement shall be subject to such withholding taxes and other taxes as may be
required by law.

 

(b)                                 The parties agree that this Agreement is
intended to comply with the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended, and the regulations and guidance promulgated
thereunder (“Section 409A”) or an exemption from Section 409A, and shall be
interpreted accordingly.

 

(c)                                  A termination of employment shall not be
deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination is also a “separation from
service” within the meaning of Section 409A. If the Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)

 

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of the Code, any installment payment otherwise due the Executive during the
first six (6) months following Executive’s termination of employment that is not
exempt from Section 409A either as separation pay or as a short term deferral
under applicable Treasury regulations will be held until and paid on the day
following the expiration of such six (6) month period, without interest. Each
payment under this Agreement shall be treated as a separate payment for purposes
of Section 409A.

 

(d)                                 Nothing in this Section 6 shall be construed
as a guarantee by the Company of any particular tax effect to the Executive
under this Agreement. The Company shall not be liable to the Executive for any
tax, penalty, or interest imposed on any amount paid or payable hereunder by
reason of Section 409A, or for reporting in good faith any payment made under
this Agreement as an amount includible in gross income under Section 409A.

 

8.                                       Miscellaneous.

 

(a)                                  Notices. Any notice given to either party
shall be in writing and shall be deemed to have been given when delivered
personally or sent by a nationally recognized overnight carrier, duly addressed
to the party concerned at the address indicated below the signature lines of
this Agreement or to such address as a party may subsequently give notice.

 

(b)                                 Assignability. This Agreement shall not be
assigned by the Executive without the express written consent of the Board of
Directors of the Company.

 

(c)                                  Entire Agreement. This Agreement contains
the entire agreement between the parties and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, between the parties relating to the subject matter set forth herein, with
the exception of the Duty of Loyalty Agreement and the Letter Agreement to which
this Agreement and the Duty of Loyalty Agreement are attached. The parties
acknowledge and agree that any prior agreements between the Company or any
affiliate, on the one hand, and the Executive, on the other hand, have been
terminated as of the date immediately prior to the Effective Date (or such
earlier date as provided in such agreements), and have been superseded by this
Agreement, the Duty of Loyalty Agreement, and the Letter Agreement to which both
this Agreement and the Duty of Loyalty Agreement are attached.

 

(d)                                 Amendment or Waiver. This Agreement cannot
be changed, modified or amended without the consent in writing of both parties.
No waiver by either party at any time of any breach by the other party of any
condition or provision of this Agreement shall be deemed a waiver of a similar
or dissimilar condition or provision at the same or at any prior or subsequent
time. Any waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.

 

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(e)                                  Severability. The provisions of this
Agreement shall be severable, and the invalidity, illegality or unenforceability
of any provision of this Agreement shall not affect, impair or render
unenforceable this Agreement or any other provision hereof, all of which shall
remain in full force and effect. If any provision of this Agreement is
adjudicated by an arbitrator pursuant to Section 5 or by a court of competent
jurisdiction to be invalid, illegal or otherwise unenforceable, but such
provision may be made valid, legal and enforceable by a limitation or reduction
of its scope, the parties agree to abide by such limitation or reduction as may
be necessary so that said provision shall be enforceable to the fullest extent
permitted by law.

 

(f)                                    Governing Law. This Agreement shall be
governed by and construed under the laws of the State of Nevada, disregarding
any conflict of law principles that would otherwise provide for the application
of the substantive law of another jurisdiction.

 

(g)                                 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.

 

(h)                                 Waiver of Jury Trial. Each party waives, to
the fullest extent permitted by law, any right it or he may have to a trial by
jury in respect of any litigation arising out of or relating to this Agreement
and Executive’s employment by the Company.

 

(i)                                     Acknowledgment. The Executive
acknowledges that he has been given a reasonable period of time to review this
Agreement before signing it and has had an opportunity to secure counsel of his
own. By executing this Agreement, the Executive certifies that he has fully read
and completely understands the terms, nature and effect of this Agreement. The
Executive further acknowledges that he is executing this Agreement freely,
knowingly and voluntarily and that the Executive’s execution of this Agreement
is not the result of any fraud, duress, mistake, or undue influence whatsoever.
In executing this Agreement, the Executive has not relied on any inducements,
promises, or representations by the Company other than as stated in this
Agreement.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be effective
as of the Effective Date.

 

THE “COMPANY”

 

THE “EXECUTIVE”

Herbst Gaming, LLC

 

 

 

 

 

 

 

 

By:

/s/ David D. Ross

 

/s/ Chris Krabiel

 

David D. Ross

 

Chris Krabiel

 

 

 

 

Its:

Chief Executive Officer

 

 

 

3440 West Russell Road

Las Vegas, Nevada 89118

 

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GENERAL RELEASE

 

In consideration of my receipt from Herbst Gaming, LLC (the “Company”) of the
Severance Package, as that term is defined in that certain Executive Severance
Agreement, dated              , 2011 (the
“Agreement”), I,                       , hereby release and forever discharge
the Company and its parents, subsidiaries and affiliates, and their employees,
members, stockholders, officers, directors, managers and agents (collectively,
the “Releasees”) from any and all liabilities, claims, obligations, demands and
causes of action of any kind or nature, in law, equity or otherwise, known or
unknown, suspected or unsuspected, disclosed and undisclosed, which I have, or
claim to have, against any of the Releasees arising from or relating to my
employment with any of the Releasees and the termination of my employment.

 

This General Release includes, without limiting the generality of the foregoing,
claims arising under any federal, state or local statute, ordinance or
regulation, including the Age Discrimination in Employment Act of 1967, the
Americans with Disabilities Act, the Family and Medical Leave Act, Title VII of
the Civil Rights Act of 1964 and the Civil Rights Act 1991, the Civil Rights Act
of 1866, and the Employee Retirement Income Security Act of 1974, all as
amended, and any similar federal, state or local statutes, ordinances or
regulations, and claims in the nature of a breach of contract, claims for
wrongful discharge, emotional distress, defamation, fraud or breach of the
covenant of good faith and fair dealing, tort and wage or benefit claims.

 

The General Release set forth above specifically excludes: (i) actions brought
to enforce the terms of this General Release, (ii) if applicable, vested rights
to which I may be entitled under any Company benefit plans, which entitlement
shall be determined in accordance with the provisions of those plans (excluding
any plan, policy or practice providing for severance or termination payments
upon termination of employment), and (iii) any rights or claims that, as a
matter of law, cannot be released or waived.

 

If I violate the terms of this General Release or the Duty of Loyalty Agreement
that was entered into at the same time as the Agreement, I agree I will repay
the Severance Package and will pay the Releasees’ costs and reasonable
attorneys’ fees incurred to enforce the same, in addition to any other damages
that may be available.

 

I acknowledge that this General Release is knowing and voluntary and that the
consideration given for this General Release is in addition to anything of value
to which I was already entitled from any of the Releasees.

 

I have been advised by the Company to carefully consider the matters set forth
in this General Release and to consult with such professional advisors as I deem
appropriate, including a lawyer of my own choice. I acknowledge I have had at
least twenty-one (21) days from my receipt of this General Release to consider
the terms and conditions set forth herein, and I understand that I have the
later of seven (7) days following my execution of this General Release and my
final day of employment with the Company to revoke my signature, in which event
this General Release shall not be effective or binding on me, and I will not
receive any portion of the Severance Package. I further understand fully and
acknowledge the terms and consequences of this General Release, and I
voluntarily accept them.

 

AGREED TO AND ACCEPTED BY, INTENDING TO BE LEGALLY BOUND:

 

 

 

 

Dated:

 

[Executive]

 

 

 

 

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