Document:

Exhibit 10.1

 

AFFINITY GAMING, LLC

3440 West Russell Road

Las Vegas, NV 89118

 

October 27, 2011

 

Hand Delivered

Ferenc B. Szony

c/o Affinity Gaming, LLC

3440 West Russell Road

Las Vegas, NV 89118

 

Dear Ferenc:

 

This letter (the “Letter Agreement”) confirms your offer of employment with Affinity Gaming, LLC (the “Company”) under the following terms and conditions, and replaces all previous agreements and understandings, whether written or oral, between you, on the one hand, and the Company and its predecessors and affiliates, on the other, with respect to your employment with the Company.

 

1.               Position and Responsibilities.

 

(a)          You will be employed by the Company in the position of Chief Operating Officer. Where required by the Company, you will also provide services at no extra remuneration to any entity affiliated with the Company.  You will be based at the Company’s headquarters in Las Vegas, Nevada, but may be required to travel on business from time to time, as the Company requires.

 

(b)         Your hiring and continued employment with the Company is conditioned upon your continued compliance with all applicable federal, state and local laws, rules and regulations, and your maintaining all necessary licenses, qualifications and certificates of suitability issued by any gaming or liquor authority with jurisdiction over your employment.

 

(c)          You shall at all times act in accordance with all staff manuals, policies and procedures of the Company, including any amendments, alterations and additions made from time to time thereto.  To the extent any terms of this Letter Agreement conflict with any terms of any written manuals, policies and procedures of the Company, the terms of this Letter Agreement shall govern.

 

(d)         You shall report directly to the Company’s Chief Executive Officer, but this reporting relationship may change in accordance with the business requirements of the Company.

 

(e)          During your employment, you shall devote your whole time and attention to your duties and responsibilities under this Letter Agreement. You agree not to accept any outside employment without the prior written consent of both Affinity and the Company.

 

 

2.               Commencement and Term.

 

(a)          Your employment under this Letter Agreement will commence on January 1, 2012 (the “Effective Date”) and, unless sooner terminated as provided herein, will expire on December 31, 2012 (the “Term”).

 

(b)         Notwithstanding the foregoing, Company employees are employed on an “at-will” basis.  This means that either you or the Company can terminate your employment at any time and for any reason, with or without notice, subject to the provisions of the Executive Severance Agreement described in Section 6, if and to the extent applicable to any termination.  Moreover, if you resign during the Term, you will be required to give the Company sixty (60) days notice in writing.  The Company will have the right in its sole and absolute discretion to discontinue your services at any point during the notice period and to cease providing any further compensation to you pursuant to Section 3 or any benefits pursuant to Section 4.

 

3.               Remuneration.

 

(a)          Your base salary will be paid at the rate of three hundred fifty thousand dollars ($350,000.00) per year, in installments on a bi-monthly basis in accordance with the Company’s payroll practices in effect from time to time, and subject to applicable taxes.

 

(b)         On January 3, 2012, you will receive a one-time, lump sum payment in the amount of twenty-five thousand dollars ($25,000.00), subject to applicable taxes, to compensate you for the 2012 adjustment in paid time off accrual described in Section 4(a).

 

(c)          You will be eligible to receive a one-time, lump sum retention bonus in the amount of fifty thousand dollars ($50,000.00), subject to applicable taxes, on December 31, 2012, provided you do not resign your employment and are not terminated for Cause (as defined in the Executive Severance Agreement) prior to the expiration of the Term.

 

(d)         You will be eligible to receive a performance-based incentive bonus, according to the Company’s practices in effect from time to time, and subject to applicable taxes, which will be determined based on the Company’s actual performance with respect to specified objectives for the applicable fiscal year relative to a budget for such fiscal year that has been approved by the Board, and your performance, with eligibility for a bonus of up to fifty percent (50%) of your base salary.  Unless otherwise provided in the Executive Severance Agreement, bonuses are not earned or paid on a pro-rated basis and are subject to your continued employment at the time of payment.

 

4.               Benefits.

 

(a)          You will receive paid time off each year to the same extent as other executives of the Company, which will be accrued pro-rata on a monthly basis and will be subject to the Company’s policies regarding paid time off.  Effective January 1, 2012, the value of your accrued paid time off will be determined by multiplying the paid time off hours you have accrued times the hourly rate of the base salary set forth in this Agreement.

 

(b)         Subject to you complying with and satisfying the applicable requirements of the Company plans, you will be entitled to participate in the Company’s standard medical, dental and life insurance plans.  The Company reserves the right to change the terms of or eliminate its benefit programs at any time, without notice.

 

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5.               Representations.

 

You represent that you are free to accept employment with the Company without any contractual restrictions, express or implied, with respect to any other employer.

 

6.               Executive Severance Agreement and Duty of Loyalty Agreement.

 

You will be eligible to receive the Severance Package described in the Executive Severance Agreement that is provided with and made a part of this Letter Agreement in the event that your employment is terminated without Cause (as defined therein) before the expiration of the Term, subject to the other terms and conditions set forth in the agreements.

 

7.               Severability.

 

If any provision of this Letter Agreement is held by any court of competent jurisdiction to be invalid or unenforceable, in whole or in part, the remaining provisions of this Letter Agreement shall continue in full force and effect.

 

8.               Assignability.  This Letter Agreement, together with the Executive Severance Agreement and Duty of Loyalty Agreement between you and the Company and dated as of this date (a) shall not be assigned by you without the express written consent of the Chief Executive Officer or Board of Directors of the Company, and (b) may be freely assigned by the Company provided that the assignee assumes in writing all of the duties and obligations of the Company.

 

9.               Entire Agreement.

 

This Letter Agreement, together with the attachments, contains the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, between the parties relating to the subject matter set forth herein.  All agreements between the Company and any of its predecessors or affiliates, on the one hand, and you, on the other hand, including without limitation that certain Executive Employment Agreement dated March 7, 2008 between you and Herbst Gaming, Inc., are or have been terminated as of the date immediately prior to the Effective Date (or such earlier date as provided in such agreements), and as of the Effective Date have been superseded by this Letter Agreement and any attachments hereto.  No subsequent agreement or representation, and no change, modification or extension of this Letter Agreement shall be binding on the Company unless it is set forth in writing signed by you and the Company.

 

10.         Law and Jurisdiction.

 

(a)          Your employment with the Company and the provisions of this Letter Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without regard to any conflict of laws provisions thereof.

 

(b)         Unless arbitration is otherwise required by any other agreement between you and the Company, any action or proceeding arising out of or relating to this Letter Agreement and your employment with the Company shall be submitted to the exclusive jurisdiction of the state or federal courts located in Clark County, Nevada.  You and the Company expressly consent to the jurisdiction of, and venue in, such courts and specifically waive any defense of inconvenient forum.  Both parties further waive the right to a trial by jury, except as such waiver is prohibited by the laws applicable to the specific action or proceeding.

 

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Please sign, date and return the enclosed duplicate of this Letter Agreement, in order to acknowledge your agreement to its terms and conditions.

 

	
Sincerely,
    	
 
    
	
 
    	
 
    
	
/s/   David D. Ross
    	
 
    
	
David   D. Ross
    	
 
    
	
Chief   Executive Officer
    	
 
    

 

 

THE ABOVE REFLECTS MY UNDERSTANDING AND MY AGREEMENT WITH RESPECT TO MY EMPLOYMENT BY AFFINITY GAMING, LLC.

 

 

	
/s/   Ferenc B. Szony
    	
 
    
	
Ferenc   B. Szony
    	
 
    
	
 
    	
 
    
	
Dated:
    	
10/28/11
    	
 
    
			

 

	
Attachments:
    	
Executive   Severance Agreement
    
	
 
    	
Duty   of Loyalty Agreement
    

 

4Exhibit 10.2

 

EXECUTIVE SEVERANCE AGREEMENT

 

THIS EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”) is entered into as of the Effective Date (as defined below), between Affinity Gaming, LLC, a Nevada limited liability company (the “Company”), and Ferenc B. Szony, 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 or to perform the Executive’s duties and responsibilities to the reasonable satisfaction of the Chief Executive Officer or Board of Directors of the Company;

 

(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; 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 or other professional advisors, will likely cause any Gaming Authority to: (A) fail to license, qualify or approve the Company or an affiliate to own and operate a gaming business; (B) grant any such licensing, qualification or approval only upon terms and conditions that are unacceptable to the Company; (C) significantly delay any such licensing, qualification or approval process; or (D) revoke or suspend any existing license.

 

 

(b)   “Effective Date” means the Effective Date of the Letter Agreement to which this Agreement is attached.

 

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

 

(d)   “Cash Compensation” means the annualized base salary provided by the Company to the Executive, as set forth in the Letter Agreement.

 

2.     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 December 31, 2012 (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 without reasonable accommodation, the Company shall provide the Executive with the following (collectively, the “Termination Payments”): (i) Cash Compensation 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 Cash Compensation and to provide the benefits Executive 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.     Severance Payments.

 

(a)   Termination Without Cause.  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),

 

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the Executive shall be entitled to the Termination Payments plus the following “Severance Package”, in lieu of any other compensation and benefits whatsoever:

 

(i)    continued payment of the Executive’s Cash Compensation until the end of the Term;

 

(ii)   the retention bonus set forth in Section 3(c) of the Letter Agreement to which this Agreement is attached; and

 

(iii)  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.

 

(b)   Resignation.  In the event the Executive resigns from his employment, and in consideration the protections provided the Company under the Duty of Loyalty Agreement, the Company may, in its sole and absolute discretion, provide the Severance Package to the Executive in addition to making the Termination Payments.

 

5.     Conditions to Payment.

 

(a)   General Release.  Receipt of the payments described in Section 4 shall, in the sole and absolute discretion of the Company, 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 Exhibit 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)   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.

 

(d)   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.

 

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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) 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

 

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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 7 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 Company’s Chief Executive Officer or Board of Directors.

 

(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.

 

(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

 

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which shall remain in full force and effect.  If any provision of this Agreement is adjudicated by an arbitrator pursuant to Section 6 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 laws 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.

 

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

 

	
THE “COMPANY”
    	
 
    	
THE   “EXECUTIVE”
    
	
Affinity Gaming, LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/   David D. Ross
    	
 
    	
/s/   Ferenc B. Szony
    
	
 
    	
David   D. Ross, Chief Executive Officer
    	
 
    	
Ferenc   B. Szony
    

 

6

 

EXHIBIT A

 

GENERAL RELEASE [FORM]

 

In consideration of my receipt from Affinity 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 each of their employees, members, stockholders, officers, directors, managers and agents, successors heirs and assigns (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 the Company or 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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