Exhibit 10.1

 

CONFIDENTIAL AGREEMENT TO AMEND EMPLOYMENT AGREEMENTS

 

This Confidential Agreement to Amend Employment Agreements (“Agreement”) is
entered into by and between Affinity Gaming f/k/a Affinity Gaming, LLC and
Herbst Gaming, LLC (“Affinity”) and Donna Lehmann (“Ms. Lehmann”).

 

WHEREAS, Affinity employs Ms. Lehmann as its Senior Vice President, Chief
Financial Officer and Treasurer pursuant to a January 11, 2011 Letter Agreement,
as amended as of May 6, 2011, October 31, 2011, December 27, 2012, and
February 25, 2014 (“Letter Agreement”);

 

WHEREAS, Affinity and Ms. Lehmann entered into an Executive Severance Agreement
as of January 11, 2011, as amended as of October 31, 2011, and December 27, 2012
(“Severance Agreement”);

 

WHEREAS, Affinity and Ms. Lehmann entered into a Duty of Loyalty Agreement as of
January 11, 2011, as amended as of October 31, 2011, and December 27, 2012
(“Loyalty Agreement” and, together with the Letter Agreement and Severance
Agreement, the “Employment Agreements”);

 

WHEREAS, the Employment Agreements expire by their terms on February 15, 2015;
and

 

WHEREAS, the parties desire to extend and further amend the Employment
Agreements by this Amendment;

 

WHEREAS, pursuant to the Affinity Gaming Amended and Restated 2011 Long Term
Incentive Plan (“LTIP”), a Nonqualified Option Agreement dated March 30, 2011
(“March 2011 Option Agreement”), and an Amendment to Nonqualified Option
Agreement dated May 17, 2011 (“May 2011 Amended Option Agreement” and, together
with the March 2011 Option Agreement, the “2011 Option Agreements”), Affinity
awarded Ms. Lehmann an option to purchase 13,636.4 shares of common stock (“2011
Stock Options”), each at an exercise price of $10.00 per share, none of which
Ms. Lehmann has exercised; and

 

WHEREAS, pursuant to the LTIP and a Nonqualified Option Agreement dated
February 25, 2014 (“2014 Option Agreement” and, together with the 2011 Option
Agreement, the “Stock Option Agreements”), Affinity awarded Ms. Lehmann 27,574
Stock Options (“2014 Stock Options” and, together with the 2011 Stock Options,
the “Stock Options”), each at an exercise price of $11.61 per share, none of
which Ms. Lehmann has exercised; and

 

WHEREAS, pursuant to the LTIP and a Restricted Stock Unit Agreement dated
February 24, 2012, as amended by letter agreement on December 17, 2012
(“Restricted Stock Agreement”), Affinity awarded Ms. Lehmann 7,318 Restricted
Shares of Common Stock (“Restricted Shares”), none of which Ms. Lehmann has
sold; and

 

WHEREAS, on February 15, 2013, in lieu of any award in 2013 under the LTIP,
Affinity entered into a Cash Award Agreement with Ms. Lehmann calling for
vesting and payment to Ms. Lehmann of $42,500 on each of January 1, 2014, 2015
and 2016, the first two payments of which have vested and been paid; and

 

--------------------------------------------------------------------------------

 

NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement and for other good and valuable consideration, the adequacy and
receipt of which each party expressly acknowledges, Ms. Lehmann and Affinity
agree as follows:

 

1.  Extension of Employment.  Ms. Lehmann’s employment with Affinity under the
terms of the Employment Agreements shall be extended to and including March 31,
2015 (“New Expiration Date”), after which her employment with Affinity shall
terminate.

 

2.  Extension Bonus.  In consideration of her agreeing to the extension in
Paragraph 1 above, and provided that Ms. Lehmann complies with the terms of this
Agreement and does not revoke this Agreement as set forth in Paragraph 13.B
below, Affinity will pay Ms. Lehmann the sum of $139,875, less customary
deductions on the first regular payday following the end of the revocation
period in Paragraph 13.B, below, and in the same manner by which Affinity paid
Ms. Lehmann’s regular paychecks.

 

3.  Health Insurance and Other Employment Benefits.  Provided that Ms. Lehmann
complies with her obligations set forth in Paragraph 1 above and timely elects
to continue her current Affinity group health insurance coverage through COBRA,
Affinity either will reimburse Ms. Lehmann or pay directly the group health
insurance premiums from after the New Expiration Date through the earlier of
(i) June 30, 2015, or (ii) the date that she becomes eligible for group health
insurance coverage from another employer, irrespective of whether she actually
enrolls in such coverage.  Ms. Lehmann agrees to notify Affinity no later than
three business days prior to becoming eligible for such coverage.  All other
employment benefits that Affinity provided Ms. Lehmann terminate as of the New
Expiration Date in accordance with the respective plan terms.

 

4.  Paid Time Off.  Affinity will pay Ms. Lehmann her accrued but unused paid
time off as of the New Expiration Date, less customary deductions, on the first
regular pay day following the end of the revocation period in Paragraph 13.B,
below.

 

5.  Stock Option Exercise.  Ms. Lehmann acknowledges that she must exercise the
Stock Options on or before June 30, 2015 in accordance with Sections 5 and 11 of
the Stock Option Agreements and Section 5.5.2 of the LTIP.  Ms. Lehmann further
acknowledges that any Stock Options not exercised as of June 30, 2015 will
expire, and Ms. Lehmann will have no further right to exercise any remaining
Stock Options and such Stock Options will be forfeited and canceled.

 

6.  Restricted Shares.  In further consideration of her agreeing to the
extension in Paragraph 1 above, and provided that Ms. Lehmann complies with the
terms of this Agreement and does not revoke this Agreement as set forth in
Paragraph 13.B, below, Affinity shall purchase 4,878 of the Restricted Shares
owned by Ms. Lehmann, which are the Restricted Shares that vested in 2013 and
2014, for a purchase price of $47,560, following the end of the revocation
period in Paragraph 13.B, below.  The remaining 2,440 Restricted Shares, which
represent the Restricted Shares that vested in 2015, will not be purchased by
Affinity and shall continue to belong to Ms. Lehmann to hold or dispose of in
her sole discretion, subject to the terms and conditions of the Restricted Stock
Agreement and the LTIP.

 

2

--------------------------------------------------------------------------------

 

7.  Cash Award.  Ms. Lehmann acknowledges and agrees that the Cash Award
Agreement will terminate as of the New Expiration Date and therefore the payment
due thereunder on January 1, 2016, will not vest and will not be paid to her,
and Ms. Lehmann will have no further rights under the Cash Award Agreement.

 

8.  Expenses.  Affinity will reimburse Ms. Lehmann for all business expenses
that she incurs through the New Expiration Date, in accordance with Affinity’s
policy for expense reimbursement.

 

9.  Total Payments and Benefits.  The payments and benefits described in this
Agreement constitute the entirety of the monies and benefits that Affinity shall
be required to pay to Ms. Lehmann for her services through the New Expiration
Date including, but not limited to, any bonus payment.  Ms. Lehmann hereby
expressly waives any right to any payment or benefit not described in this
Agreement based upon her status as an employee, former employee, shareholder,
former shareholder, or any other relationship to Affinity.

 

10.  Return of Affinity Property.  Ms. Lehmann agrees that, at the end of the
business day on the New Expiration Date, she will return to Affinity all of its
and its affiliates’ property in her possession or under her control including,
but not limited to, all Affinity credit cards, tapes, records, manuals, files,
keys, security cards, computers, electronic devices, cell phones, other
equipment, confidential and proprietary information, and all copies thereof.

 

11.  Reaffirmation and Extensions of Post-Employment Obligations and
Cooperation.  Ms. Lehmann represents and warrants that she is in full compliance
with her obligations set forth in Paragraphs 3 (Confidential Information and
Other Company Property), 4 (Intellectual Property), 5 (Non-Interference with
Business Relationships), 6 (Non-Solicitation), and 7 (Non-disparagement) of the
Loyalty Agreement, and she agrees to abide by her continuing obligations set
forth in the Loyalty Agreement, and as further amended herein.  Ms. Lehmann
agrees the obligations in Paragraph 5 of her Loyalty Agreement shall extend to
and including March 31, 2015, and her obligations in Paragraph 6 of her Loyalty
Agreement shall extend to and including March 31, 2016.  Ms. Lehmann further
acknowledges and agrees that her obligations under the Loyalty Agreement apply
equally to those shareholders of Affinity that have representatives on
Affinity’s Board of Directors (collectively with their affiliates, “Board
Shareholders”) and to the Board Shareholder’s portfolio companies.  Ms. Lehmann
agrees to make herself reasonably available by telephone through March 31, 2016
in the event that Affinity needs information from her concerning matters about
which she had knowledge during her employment with Affinity.

 

12.  Investor Contact.  Ms. Lehmann agrees not to contact any investor in a fund
managed by any Board Shareholder or any prospective investor that is considering
investing in a fund managed by any Board Shareholder.  Should any such investor
or prospective investor contact Ms. Lehmann, she agrees to refrain from
communicating with that investor or prospective investor and will immediately
communicate to the President and Chief Executive Officer of the Board
Shareholder to whose fund the investor or potential investor pertains the
circumstances of the investor or prospective investor contact.

 

3

--------------------------------------------------------------------------------

 

13.  Delivery and Cooperation Obligations.  Affinity’s obligations to provide
and Ms. Lehmann’s receipt of the payments and benefits described in Paragraphs 2
and 3 above are contingent upon and subject to:

 

A.                                    Ms. Lehmann’s execution and return to
Affinity of the General Release of Claims set forth in Appendix A to this
Agreement no earlier than March 31, 2015, and no later than April 3, 2015;

 

B.                                    Ms. Lehmann not revoking her signature on
the General Release of Claims within seven days after the date she signed;

 

C.                                    Ms. Lehmann’s satisfactory completion of
the audit of the Company’s 2014 financial statements and the preparation of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2014; and

 

D.                                    Ms. Lehmann’s continued cooperation with
Company personnel, consultants and auditors, and making herself reasonably
available by telephone through June 30, 2015 in the event that the Company needs
information from her concerning the preparation of the Company’s 2015 Proxy
Statement, the review of the Company’s first quarter 2015 financial statements
and other matters about which she had knowledge during her employment with the
Company.

 

14.  Third Party Beneficiary.  Ms. Lehmann acknowledges and agrees that the
Board Shareholders are express third party beneficiaries of her obligations
hereunder and have full rights to enforce the terms of this Agreement and the
Employment Agreements against her as if each was a signatory hereto.

 

15.  Confidential Agreement.  The terms of this Agreement are confidential.  
Accordingly, Ms. Lehmann agrees not to disclose the terms of this Agreement to
anyone other than to her spouse, attorneys, accountants, and financial and tax
advisors, except as required by law.  Should Ms. Lehmann disclose the terms of
this Agreement to any of those individuals, Ms. Lehmann shall ensure that those
individuals abide by the non-disclosure provisions of this paragraph.  Should
Ms. Lehmann be required by law to disclose any term of this Agreement, she will
give Affinity prompt notice of the circumstances so that Affinity has an
opportunity to challenge such disclosure in court. Affinity may disclose the
terms of this Agreement as required by law or regulation.

 

16.  Entire Agreement.  This Agreement, the Employment Agreements, the Stock
Option Agreements, the Restricted Stock Agreement, and the LTIP constitute the
entire agreement and understanding of Ms. Lehmann and Affinity with regard to
the matters described herein, and supersede any and all prior and/or
contemporaneous agreements and understandings, oral or written, between
Ms. Lehmann and Affinity.  To the extent this Agreement conflicts with any of
the Employment Agreements, this Agreement controls.

 

4

--------------------------------------------------------------------------------

 

17.  Counterparts.  This Agreement may be executed in counterparts, each of
which taken together shall constitute one and the same instrument.  Facsimile or
electronic transmission of an executed counterpart of this Agreement shall be
deemed to constitute due and sufficient delivery of such counterpart, and such
signatures shall be deemed original signatures for purposes of enforcement and
construction of this Agreement.

 

MS. LEHMANN AND AFFINITY EXPRESSLY AFFIRM THAT EACH HAS READ THIS AGREEMENT,
EACH UNDERSTANDS ITS TERMS, AND EACH INTENDS TO BE BOUND THEREBY.

 

DONNA LEHMANN

 

AFFINITY GAMING

 

 

 

 

 

 

  /s/ Donna Lehmann

 

By:

/s/ Michael Silberling

 

 

 

Michael Silberling

 

 

 

Chief Executive Officer

 

 

 

    Dated: February 17, 2015

 

Dated: February 17, 2015

 

5

--------------------------------------------------------------------------------

 

APPENDIX A

 

GENERAL RELEASE OF CLAIMS

 

In consideration of the payments set forth in the foregoing Fifth Amendment to
Letter Agreement, Fourth Amendment to Executive Severance Agreement, and Fourth
Amendment to Duty of Loyalty Agreement (“Amendment”) between me and Affinity
Gaming (“Affinity”), and for other good and valuable consideration, the receipt
and sufficiency of which I expressly acknowledge, I agree as follows:

 

1.                                      I, and anyone claiming through me, agree
to fully, finally, and forever release and discharge Affinity and its
predecessors, successors, assigns, and affiliates, and each of the foregoing’s
respective past, present, and future owners, members, officers, principals,
directors, partners, employees, investors, agents, attorneys, and
representatives (the “Released Parties”), from any and all claims, causes of
action, and demands of any nature whatsoever in law or in equity, both known or
unknown, asserted or unasserted, foreseen or unforeseen, which I now have, have
ever had, or may have against any of the Released Parties arising from the
beginning of time up to and including the date of my execution of this General
Release including, but not limited to, any and all claims related in any way to
my employment or cessation of employment with Affinity or my ownership or
termination of ownership of Affinity Stock Options and/or Restricted Shares. 
The released claims include, but are not limited to, all claims that I could
have been asserted or that could have been asserted on my behalf against any of
the Released Parties in any federal, state, or local court, commission,
department, or agency, or under any common law theory or under any fair
employment, employment, contract, tort, federal, state, or local law,
regulation, ordinance, or executive order including under the following laws as
amended from time to time: Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Civil Rights Act of 1866, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Older Workers’
Benefit Protection Act, the Employee Retirement Income Security Act, the Family
and Medical Leave Act, and the Nevada Fair Employment Practices Act.   I
represent and warrant that I have not filed or initiated any legal proceeding
against any of the Released Parties and that no such legal proceeding has been
filed or initiated on my behalf.  Notwithstanding the above, I acknowledge that
this General Release does not apply to any claim that cannot be waived under
applicable law.

 

2.                                      I acknowledge that I have been informed
of my right to consult with a lawyer of my choice and that I have had sufficient
time to consult with a lawyer before signing this General Release.  I also
acknowledge that I am entitled to a period of at least 21 days within which to
consider this General Release.

 

3.                                      I understand that I may revoke this
General Release within seven days from the date of my execution of it upon
written notice to Michael Silberling, Chief Executive Officer, Affinity Gaming,
3755 Breakthrough Way, Suite 300, Las Vegas, Nevada 89135.  I further understand
that if I do not revoke this General Release within that seven day period, this
Agreement will become effective on the eighth day following my execution of this
General Release and I shall have no further right to revoke this General
Release.

 

--------------------------------------------------------------------------------

 

4.                                      I understand that I may not sign this
General Release before March 31, 2015 and that I must return the signed General
Release to Affinity on or before April 3, 2015, or I will not receive all of the
payments set forth in the Amendment.

 

I REPRESENT AND WARRANT THAT I HAVE READ THIS GENERAL RELEASE, I UNDERSTAND ITS
TERMS, AND I INTEND TO BE LEGALLY BOUND THEREBY.

 

 

DONNA LEHMANN

 

 

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

Dated:                              , 2015

 

 

2

--------------------------------------------------------------------------------