Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on
February 26, 2010 and effective as of January 1, 2010 (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 David D. Ross, 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 RINDS,
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 HOLD, 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 PERIOD
SPECIFIED IN SECTION 2.

 

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 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 THE EARLIER OF
(I) DECEMBER 31, 2010 AND (II) THE SUBSTANTIAL CONSUMMATION DATE (AS DEFINED IN
THE COMPANY’S FIRST AMENDED JOINT PLAN OF REORGANIZATION FILED JULY 22, 2009, AS
CONFIRMED BY THE AMENDED ORDER CONFIRMING DEBTORS’ FIRST AMENDED PLAN OF
REORGANIZATION ISSUED JANUARY 22, 2010 (THE “PLAN”)).

 

3.                                       Position, Duties and Authorities

 

(A)                                  DURING THE TERM OF EMPLOYMENT, THE
EXECUTIVE SHALL BE EMPLOYED AS CHIEF OPERATING OFFICER/GAMING AND SHALL SERVE AS
A MEMBER OF THE OFFICE OF THE CEO WITH THE DUTIES, RESPONSIBILITIES AND
AUTHORITIES CUSTOMARILY ASSOCIATED WITH SUCH POSITION FOR OTHER BUSINESSES OF

 

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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.  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.

 

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 Six Hundred Thousand Dollars ($600,000).

 

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).  Without limitation, the Executive shall be entitled to
participate in the Company’s 2010 Incentive Plan on the terms approved by the
Board in its sole discretion.

 

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.

 

(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).

 

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 THROUGH THE EXPIRATION OF THE TERM OF EMPLOYMENT, OR (B) IN THE CASE OF
DISABILITY, SALARY THROUGH THE DATE OF SUCH DETERMINATION OF DISABILITY;

 

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(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 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 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)                                     SALARY THROUGH THE EXPIRATION OF THE
TERM OF EMPLOYMENT, PROVIDED THAT SUCH CONTINUED PAYMENT OF SALARY SHALL BE
CONTINGENT UPON AND SUBJECT TO THE EXECUTIVE’S EXECUTION (WITHIN 45 DAYS
FOLLOWING THE DATE OF TERMINATION OF EMPLOYMENT) AND NON-REVOCATION OF A RELEASE
OF CLAIMS IN FAVOR OF THE COMPANY IN A FORM SATISFACTORY TO THE COMPANY;

 

(II)                                  REIMBURSEMENT FOR EXPENSES INCURRED BUT
NOT YET REIMBURSED BY THE COMPANY; AND

 

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(III)                               ANY OTHER COMPENSATION AND BENEFITS TO WHICH
THE EXECUTIVE MAY BE ENTITLED UNDER APPLICABLE PLANS, PROGRAMS AND AGREEMENTS OF
THE COMPANY.

 

(D)                                 VOLUNTARY TERMINATION.  A “VOLUNTARY
TERMINATION” SHALL MEAN A TERMINATION OF EMPLOYMENT BY THE EXECUTIVE ON HIS OWN
INITIATIVE.  IN THE EVENT OF A VOLUNTARY TERMINATION, THE EXECUTIVE SHALL BE
ENTITLED TO:

 

(I)                                     SALARY 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.

 

A Voluntary Termination shall not, solely due to a Voluntary Termination, be
deemed a breach of this Agreement and shall be effective upon the expiration of
sixty (60) days after written notice is delivered to the Company, unless another
period of time is agreed to in writing by the Parties.

 

(E)                                  NO MITIGATION; NO OFFSET.  IN THE EVENT OF
ANY TERMINATION OF THE EXECUTIVE’S EMPLOYMENT UNDER THIS AGREEMENT, THE
EXECUTIVE SHALL BE UNDER NO OBLIGATION TO SEEK OTHER EMPLOYMENT, AND THERE SHALL
BE NO OFFSET AGAINST AMOUNTS DUE THE EXECUTIVE UNDER THIS AGREEMENT ON ACCOUNT
OF ANY REMUNERATION ATTRIBUTABLE TO ANY SUBSEQUENT EMPLOYMENT THAT THE EXECUTIVE
MAY OBTAIN.

 

(F)                                    NATURE OF PAYMENTS.  ANY AMOUNTS DUE THE
EXECUTIVE UNDER THIS AGREEMENT IN THE EVENT OF ANY TERMINATION OF EMPLOYMENT
WITH THE COMPANY ARE (I) IN THE NATURE OF SEVERANCE PAYMENTS, OR (II) LIQUIDATED
DAMAGES THAT CONTEMPLATE BOTH DIRECT DAMAGES AND CONSEQUENTIAL DAMAGES THAT THE
EXECUTIVE MAY SUFFER AS A RESULT OF THE TERMINATION OF EMPLOYMENT, OR BOTH, AND
ARE NOT IN THE NATURE OF A PENALTY.

 

8.                                       Covenants to Protect Confidential
Information

 

The Executive shall not, during the Term of Employment or anytime thereafter,
without prior written consent of the Company, divulge, publish or otherwise
disclose to any other person any Confidential Information regarding the Company
except in the course of carrying out the Executive’s responsibilities on behalf
of the Company (e.g., providing information to the company’s attorneys,
accounts, bankers, etc.) or if required to do so pursuant to the order of a
court having jurisdiction over the subject matter or a summons, subpoena or
order in the nature thereof of any legislative body (including any committee
thereof and any litigation or dispute resolution method against the Company
related to or arising out of this Agreement) or any governmental or
administrative agency.

 

9.                                       Non-Solicitation

 

Except with the prior written consent of the Board, the Executive shall not
solicit customers, clients or employees of the Company or any of its affiliates
for a period of twelve

 

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(12) months after the date of the expiration or termination of this Agreement. 
Without limiting the generality of the foregoing, the Executive will not, for a
period of twelve (12) months after the date of the expiration or termination of
this Agreement, willfully canvas or solicit any such business in competition
with the business of the Company from any customers of the Company with whom the
Executive had contact during, or of which the Executive had knowledge solely as
a result of, his performance of services for the Company pursuant to this
Agreement.  The Executive will not, for a period of twelve (12) months after the
date of the expiration or termination of this Agreement, directly or indirectly
request, induce or advise any customers of the Company with whom the Executive
had contact during the terms of this Agreement to withdraw, curtail or cancel
their business with the Company.  The Executive will not, for a period of twelve
(12) months after the date of the expiration or termination of this Agreement,
induce or attempt to induce any employee of the Company to terminate his or her
employment with the Company.

 

10.                                 Remedies.

 

(A)                                  THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT
IMMEDIATE AND IRREPARABLE HARM, FOR WHICH DAMAGES WOULD BE AN INADEQUATE REMEDY,
WOULD OCCUR IN THE EVENT ANY OF THE PROVISIONS OF SECTION 8 OR 9 WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. 
ACCORDINGLY, THE EXECUTIVE AGREES THAT THE COMPANY SHALL BE ENTITLED TO AN
INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF SUCH PROVISIONS OF THIS
AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS THEREOF WITHOUT
THE NECESSITY OF PROVING ACTUAL DAMAGES OR SECURING OR POSTING ANY BOND OR
PROVIDING PRIOR NOTICE, IN ADDITION TO ANY OTHER REMEDY TO WHICH IT MAY BE
ENTITLED AT LAW OR EQUITY.

 

(B)                                 NOTHING HEREIN CONTAINED IS INTENDED TO
WAIVE OR DIMINISH ANY RIGHTS THE COMPANY MAY HAVE AT LAW OR IN EQUITY AT ANY
TIME TO PROTECT AND DEFEND ITS LEGITIMATE PROPERTY INTERESTS (INCLUDING ITS
BUSINESS RELATIONSHIP WITH THIRD PARTIES), THE FOREGOING PROVISIONS BEING
INTENDED TO BE IN ADDITION TO AND NOT IN DEROGATION OR LIMITATION OF ANY OTHER
RIGHTS THE COMPANY MAY HAVE AT LAW OR EQUITY.

 

(C)                                  THE EXECUTIVE SHALL HAVE NOT 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 7.

 

11.                                 Indemnification

 

(A)                                  THE COMPANY SHALL INDEMNIFY THE EXECUTIVE
TO THE FULLEST EXTENT PERMITTED BY NEVADA LAW IN EFFECT AS OF THE DATE HEREOF
AGAINST ALL COSTS, EXPENSES, LIABILITIES AND LOSSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS’ FEES, JUDGMENTS, FINES, PENALTIES, ERISA EXCISE TAXES AND
AMOUNTS PAID IN SETTLEMENT) REASONABLY INCURRED BY THE EXECUTIVE IN CONNECTION
WITH A PROCEEDING.  FOR THE PURPOSES OF THIS SECTION 11, A “PROCEEDING” SHALL
MEAN ANY ACTION, SUIT OR PROCEEDING BY REASON OF THE FACT THAT THE EXECUTIVE IS
OR WAS AN OFFICER, DIRECTOR OR EMPLOYEE, TRUSTEE OR AGENT OF ANY OTHER ENTITY AT
THE REQUEST OF THE COMPANY.  THE INDEMNIFICATION ALLOWED BY THIS SECTION DOES
NOT INCLUDE SUITS INITIATED BY THE EXECUTIVE AGAINST THE COMPANY.

 

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(B)                                 THE COMPANY SHALL ADVANCE TO THE EXECUTIVE
ALL REASONABLE COSTS AND EXPENSES INCURRED BY THE EXECUTIVE IN CONNECTION WITH A
PROCEEDING WITHIN TWENTY (20) DAYS AFTER RECEIPT BY THE COMPANY OF A WRITTEN
REQUEST FOR SUCH ADVANCE.  SUCH REQUEST SHALL INCLUDE AN ITEMIZED LIST OF THE
COSTS AND EXPENSES AND AN AGREEMENT BY THE EXECUTIVE TO REPAY THE AMOUNT OF SUCH
ADVANCE IF IT IS DETERMINED BY A COURT OF COMPETENT JURISDICTION THAT HE IS NOT
ENTITLED TO BE INDEMNIFIED BY THE COMPANY AGAINST SUCH COSTS AND EXPENSES.

 

(C)                                  THE EXECUTIVE SHALL NOT BE ENTITLED TO
INDEMNIFICATION UNDER THIS SECTION 11 UNLESS THE EXECUTIVE MEETS THE STANDARD OF
CONDUCT SPECIFIED IN THE NEVADA REVISED STATUTES.  ACTIONS THAT FAIL TO MEET THE
AFOREMENTIONED STANDARD OF CONDUCT SHALL INCLUDE, BUT ARC NOT LIMITED TO, THE
FAILURE TO ACT IN GOOD FAITH, FAILURE TO ACT IN THE BEST INTERESTS OF THE
COMPANY, BREACH OF THE DUTY OF LOYALTY, MISAPPROPRIATION OF BUSINESS
OPPORTUNITIES, VIOLATION OF THE PROVISIONS OF THE ARTICLES OF INCORPORATION OR
THE BYLAWS OF THE COMPANY, VIOLATION OF STATE OR FEDERAL SECURITIES LAWS AND
VIOLATION OF CRIMINAL LAW.  NOTWITHSTANDING THE FOREGOING, TO THE EXTENT
PERMITTED BY LAW, NEITHER NEVADA REVISED STATUTE, AS AMENDED, SECTION 78.7502
NOR ANY SIMILAR PROVISION SHALL APPLY TO INDEMNIFICATION UNDER THIS SECTION, SO
THAT IF THE EXECUTIVE IN FACT MEETS THE APPLICABLE STANDARD OF CONDUCT, THE
EXECUTIVE SHALL BE ENTITLED TO SUCH INDEMNIFICATION WHETHER OR NOT THE COMPANY
(WHETHER BY THE BOARD, THE STOCKHOLDERS, INDEPENDENT LEGAL COUNSEL OR OTHER
PARTY) DETERMINES THAT INDEMNIFICATION IS PROPER BECAUSE THE EXECUTIVE HAS MET
SUCH APPLICABLE STANDARD OF CONDUCT.  NEITHER THE FAILURE OF THE COMPANY TO HAVE
MADE SUCH A DETERMINATION PRIOR TO THE COMMENCEMENT BY THE EXECUTIVE OF ANY SUIT
OR ARBITRATION PROCEEDING SEEKING INDEMNIFICATION, NOR A DETERMINATION BY THE
COMPANY THAT THE EXECUTIVE HAS NOT MET SUCH APPLICABLE STANDARD OF CONDUCT,
SHALL CREATE A PRESUMPTION THAT THE EXECUTIVE HAS NOT MET THE APPLICABLE
STANDARD OF CONDUCT.

 

(D)                                 THE COMPANY SHALL NOT SETTLE ANY PROCEEDING
OR CLAIM IN ANY MANNER THAT WOULD IMPOSE ON THE EXECUTIVE ANY PENALTY OR
LIMITATION WITHOUT THE EXECUTIVE’S PRIOR WRITTEN CONSENT.  NEITHER THE COMPANY
NOR THE EXECUTIVE WILL UNREASONABLY WITHHOLD ITS OR THE EXECUTIVE’S CONSENT TO
ANY PROPOSED SETTLEMENT.

 

12.                                 Assignability; Binding Nature

 

This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs and assigns.  No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Executive or
the Company except that (i) such rights or obligations of the Company may be
assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or
as a matter of law, and (ii) such obligations of the Company may be transferred
by the Executive by will or pursuant to the laws of descent or distribution. 
The Company shall take all reasonable legal action necessary to effect such
assignment and assumption of the Company’s liabilities, obligations and duties
under this Agreement in circumstances described in clause (i) of the preceding
sentence.

 

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13.                                 Representation

 

The Company and the Executive respectively represent and warrant to each other
that each respectively is fully authorized and empowered to enter into this
Agreement and that their entering into this Agreement and the performance of
their respective obligations under this Agreement will not violate any agreement
between the Company or the Executive respectively and any other person, firm or
organization or any law or governmental regulation.

 

14.                                 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.  The Parties acknowledge and agree that the
letter agreement dated as of May 29, 2009 between the Parties has been
terminated as of the date immediately prior to the Effective Date, and has been
superseded by this Agreement.

 

15.                                 Amendment or Waiver

 

This Agreement cannot be changed, modified or amended without the consent in
writing of both the Executive and the Company.  No waiver by either Party at any
time of any breach by the other Party of any condition or provisions 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.

 

16.                                 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, ail of which shall remain in full force and effect.  If any provision of
this Agreement is adjudicated by a court of competent jurisdiction as invalid,
illegal or otherwise unenforceable, but such provision may be made 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.  The Parties further intend
to and hereby confer jurisdiction to enforce the covenants contained in Sections
8 and 9 (the “Restrictive Covenants”) upon the courts of any jurisdiction within
the geographical scope of such Restrictive Covenants.  If the courts of any one
or more of such jurisdictions hold any Restrictive Covenant unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
Company and the Executive that such determination not bar or in any affect the
right of the Company to the relief provided for in this Section in the Courts of
any other jurisdiction within the geographical scope of such Restrictive
Covenant as to breaches of such Restrictive Covenant in such other respective
jurisdictions (such Restrictive Covenant as it relates to each jurisdiction
being, for this purpose, severable into diverse and independent covenants),

 

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17.                                 Survival

 

The respective rights and obligations of the Parties shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

 

18.                                 Governing Law

 

This Agreement shall be governed by and construed under the law of the State of
Nevada, disregarding any principles of conflicts of law that would otherwise
provide for the application of the substantive law” of another jurisdiction. 
Each Party hereby irrevocably consents to the jurisdiction and venue of the
state courts of Clark County, Nevada and the United States district courts with
jurisdiction in Nevada with respect to any matter arising out of or relating to
this Agreement other than matters that are subject to the arbitrations
provisions of Section 19.

 

19.                                 Settlement of Disputes

 

Except for equitable actions seeking to enforce the provisions of Sections 8 and
9 which may be brought by a court in any competent jurisdiction, in the event a
dispute, claim or controversy arises between the Parties relating to the
validity, interpretation, performance, termination or breach of this Agreement
(collectively, a “Dispute”), the Parties agree to hold a meeting regarding the
Dispute, attended by individuals with decision-making authority, to attempt in
good faith to negotiate a resolution of the Dispute prior to pursuing other
available remedies.  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
resolved through final and binding arbitration to be held in Nevada in
accordance with the rules and procedures for employment disputes of the American
Arbitration Association.  The prevailing party in such proceeding shall be
entitled to recover the costs of the arbitration from the other party,
including, without limitation, reasonable attorneys’ fees.

 

20.                                 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 certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may
subsequently give notice of:

 

9

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If to the Company or the Board

 

Herbst Gaming, Inc.
3440 West Russell Road
Las Vegas, Nevada  89118
Attention:  General Counsel

 

If to the Executive:

 

David D. Ross
c/o Herbst Gaming, Inc.
3440 West Russell Road
Las Vegas, Nevada  89118

 

21.                                 Headings

 

The headings of the Sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.

 

22.                                 Counterparts

 

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

 

23.                                 Taxes

 

The Salary payable is stated in gross amounts and shall be subject to such
withholding taxes and other taxes as may be required by law.

 

24.                                 Acknowledgment

 

The Executive acknowledges that he has been given a reasonable period of tune to
study this Agreement before signing it and has had an opportunity to secure
counsel of his own.  By the execution of 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 does not rely
on any inducements, promises, or representations by the Company other than that
which is stated in this Agreement.

 

25.                                 Waiver of Jury Trial

 

Each Party waives, to the fullest extent permitted by law, any right it 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.  Each party
(a) certifies that no representative, agent or attorney of the other Party has
represented, expressly or otherwise, that such other Party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it has been

 

10

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induced to enter into this Agreement by, among other things, the mutual waivers
and certifications set forth in this Section.

 

26.                                 Section 409A Compliance

 

(A)                                  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.  THE COMPANY
SHALL UNDERTAKE TO ADMINISTER, INTERPRET, AND CONSTRUE THIS AGREEMENT IN A
MANNER THAT DOES NOT RESULT IN THE IMPOSITION ON THE EXECUTIVE OF ANY ADDITIONAL
TAX, PENALTY, OR INTEREST UNDER SECTION 409A.  EACH PAYMENT UNDER THIS AGREEMENT
SHALL BE TREATED AS A SEPARATE PAYMENT FOR PURPOSES OF SECTION 409A.

 

(B)                                 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 AND, FOR PURPOSES OF ANY SUCH
PROVISION OF THIS AGREEMENT, REFERENCES TO A “TERMINATION,” “TERMINATION OF
EMPLOYMENT” OR LIKE TERMS SHALL MEAN “SEPARATION FROM SERVICE.”  IF THE
EXECUTIVE IS DEEMED ON THE DATE OF TERMINATION TO BE A “SPECIFIED EMPLOYEE”
WITHIN THE MEANING OF THAT TERM UNDER SECTION 409A(A)(2)(B) OF THE CODE, THEN
WITH REGARD TO ANY PAYMENT OR THE PROVISION OF ANY BENEFIT THAT IS OTHERWISE
CONSIDERED DEFERRED COMPENSATION UNDER SECTION 409A PAYABLE ON ACCOUNT OF A
“SEPARATION FROM SERVICE,” AND THAT IS NOT EXEMPT FROM SECTION 409A AS
INVOLUNTARY SEPARATION PAY OR A SHORT-TERM DEFERRAL (OR OTHERWISE), SUCH PAYMENT
OR BENEFIT SHALL BE MADE OR PROVIDED AT THE DATE WHICH IS THE EARLIER OF (I) THE
EXPIRATION OF THE SIX (6)-MONTH PERIOD MEASURED FROM THE DATE OF SUCH
“SEPARATION FROM SERVICE” OF THE EXECUTIVE OR (II) THE DATE OF THE EXECUTIVE’S
DEATH (THE “DELAY PERIOD”).  UPON THE EXPIRATION OF THE DELAY PERIOD, ALL
PAYMENTS AND BENEFITS DELAYED PURSUANT TO THIS SUBSECTION 26(B) (WHETHER THEY
WOULD HAVE OTHERWISE BEEN PAYABLE IN A SINGLE SUM OR IN INSTALLMENTS IN THE
ABSENCE OF SUCH DELAY) SHALL BE PAID OR REIMBURSED TO THE EXECUTIVE IN A LUMP
SUM WITHOUT INTEREST, AND ANY REMAINING PAYMENTS AND BENEFITS DUE UNDER THIS
AGREEMENT SHALL BE PAID OR PROVIDED IN ACCORDANCE WITH THE NORMAL PAYMENT DATES
SPECIFIED FOR THEM HEREIN

 

(C)                                  WITH REGARD TO ANY PROVISION HEREIN THAT
PROVIDES FOR REIMBURSEMENT OF COSTS AND EXPENSES OR IN-KIND BENEFITS, EXCEPT AS
PERMITTED BY SECTION 409A, ALL SUCH PAYMENTS SHALL BE MADE ON OR BEFORE THE LAST
DAY OF CALENDAR YEAR FOLLOWING THE CALENDAR YEAR IN WHICH THE EXPENSE OCCURRED.

 

27.                                 Miscellaneous

 

The Company acknowledges that the Executive is in discussions with the holders
of the Senior Credit Facility Claims (as defined in the Plan) regarding the
Executive’s employment by Reorganized Herbst Gaming (as defined in the Plan)
subsequent to the Substantial Consummation Date, and consents to the entry into
an employment agreement with Reorganized Herbst Gaming by the Executive during
the Term, provided such employment agreement is not effective until after the
Substantial Consummation Date.

 

11

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[Signature Page Follows]

 

12

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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, Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Troy D. Herbst

 

/s/ David D. Ross

 

Troy D. Herbst

 

David D. Ross

 

 

 

 

Its:

Chief Executive Officer

 

 

 

[Signature Page to David D. Ross Employment Agreement]

 

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Exhibit A

 

David D. Ross

 

Benefit Items

 

 

 

 

 

 

 

 

 

401(k) Match

 

Yes

 

Per plan design

 

 

 

 

 

Health/Dental/Vision

 

Yes

 

 

 

 

 

 

 

Short-term disability

 

Yes

 

 

 

 

 

 

 

Long-term disability

 

Yes

 

 

 

 

 

 

 

Life insurance

 

Yes

 

2x annual salary

 

 

 

 

 

Travel related expenses

 

Yes

 

 

 

 

 

 

 

Company credit card

 

Yes

 

 

 

 

 

 

 

Automobile allowance

 

Yes

 

$26,000 (annual)

 

 

 

 

 

2010 HGI Management Incentive Plan

 

Yes

 

As approved by Board of Directors

 

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