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EXHIBIT 10.36    
  

 
 

EXECUTIVE EMPLOYMENT AGREEMENT    
  

    This Employment Agreement (this "Agreement"), dated as of the 1st day of August      , 2001, between Herbst Gaming, Inc., a
Nevada corporation, and E-T-T, Inc., a Nevada corporation (together with their successors or assigns as permitted under this Agreement, collectively, the "Company"), and
Mary E. Higgins, an individual (the "Executive"). 

    The
Company desires to employ the Executive and enter into this Agreement embodying the terms of such employment and the Executive desires to enter into this Agreement and to accept
such employment. 

    In
consideration of the mutual covenants and for other good and valuable consideration, the Company and the Executive (individually a "Party" and together the "Parties") agree as
follows: 

1.  DEFINITIONS  

    (a) "Salary" shall mean the salary provided for in Section 4 below 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, Executive by a civil or criminal court of competent jurisdiction for a felony or any other offense involving embezzlement or
misappropriation of funds, or any act of moral turpitude, dishonesty or lack of fidelity; 

    ii)  the
indictment of 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 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 Executive; 

    v)  the
denial, revocation or suspension of a license, qualification or certificate of suitability to Executive by any of the Gaming Authorities; and 

    vi) any
action or failure to act by 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: (i) fail to license, qualify and/or approve the Company to own
and operate a gaming business; (ii) grant any such licensing, qualification and/or approval only upon terms and conditions which are unacceptable to the Company; (iii) significantly
delay any such licensing, qualification and/or approval process; or (iv) revoke or suspend any existing license. 

    (e) "Confidential Information" shall mean information in whatever form, including, without limitation, information that
is written, electronically stored, orally transmitted, or memorized, that is, in the Company's opinion, of commercial value to the Company and that is created, discovered, developed, or otherwise
becomes known to the Company, or in which property rights are held, assigned 

 

to, or otherwise acquired by or conveyed to the Company, including, without limitation, any idea, knowledge, know-how, process, system, method, technique, research and development,
technology, software, technical information, trade secret, trademark, copyrighted material, reports, records, documentation, data, customer or supplier lists, tax or financial information, business or
marketing plan, strategy, or forecast. Confidential information does not include information that is or becomes generally known within the Company's industry through no act or omission by the
Executive, provided, however, that the compilation, manipulation, or other exploitation of generally known information may constitute Confidential Information. 

    (f)  "Disability" shall mean the Executive's inability, for a period of six (6) consecutive months, to render
substantially the services provided for in Section 3 below by reason of mental or physical disability, whether resulting from illness, accident or otherwise, where the existence of Disability
shall be determined in the sole and absolute discretion of the Company. 

    (g) "Term of Employment" shall mean the initial five-year period specified in Section 2 below and if,
but only if, automatically renewed as provided in Section 2, shall include the period of such renewal. 

2.  TERM OF EMPLOYMENT  

    (a) The
Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, in the position and with the duties and responsibilities as
set forth in Section 3 below for the Term of Employment, subject to the terms and conditions of the Agreement. 

    (b) The
initial Term of Employment shall commence on August 1, 2001 and shall, unless sooner terminated as provided in Section 7, terminate at
11:59 p.m. (P.D.T.) on August 1, 2006; provided that the Term of Employment shall automatically renew for successive one-year periods unless (i) it has sooner
terminated as provided in Section 7 or (ii) either Party has notified the other in writing at least sixty (60) days prior to the otherwise scheduled expiration of the Term of
Employment that such Term of Employment shall not so renew. 

3.  POSITION, DUTIES AND AUTHORITIES  

    (a) During
the Term of Employment, the Executive shall be employed as Chief Financial Officer with the duties, responsibilities and authorities customarily associated
with such positions for other businesses of the same size and in the same industry, together with any other duties of a senior executive nature as may be reasonably requested by the Board from time to
time, which may include duties for one or more subsidiaries or affiliates of the Company. In performing the Executive's duties under this Agreement, the Executive shall perform such duties subject to
supervision and in accordance with the policies and directives established by the Board. 

    (b) The
Executive is permitted to engage in charitable, community and business affairs, managing personal investments and serving as a member of boards of directors of
industry associations or non-profit or for profit organizations and companies so long as such activities do not materially interfere, in the opinion and reasonable discretion of the Board,
with the Executive carrying out his duties and responsibilities under this Agreement. Thereafter, not less often than on January 1 of each year, the Executive shall disclose in writing to the
Board any changes to the information with respect to involvement in such entities or organizations. 

4.  SALARY  

    During the Term of Employment, the Executive shall be paid by the Company a Salary payable in accordance with the Company's payroll practices in effect from
time to time at an annualized rate of Two Hundred Fifty Thousand Dollars and no/100th Dollars ($250,000), inclusive of a non-discretionary 

2

 

bonus; subject to a five percent (5%) increase on January 1 of each year following the commencement date of this Agreement. 

5.  EMPLOYEE BENEFIT PROGRAMS  

    During the Term of Employment, the Executive and his dependents shall be entitled to participate in, at the Company's expense, whatever employee benefit plans
the Company endorses to obtain, if the Company in its sole discretion elects to obtain, such as, but not in limitation, medical, surgical, hospitalization, dental and visual insurance coverage. If the
Company obtains an employee benefit plan, the Company will pay all expenses for these insurance program(s) or plan(s). 

6.  BUSINESS EXPENSE REIMBURSEMENT AND PREQUISITES  

    (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. 

7.  TERMINATION OF EMPLOYMENT  

    (a) Termination Due to Death or Disability. In the event of the cessation of the Executive's employment under this
Agreement due to death or Disability, the Executive or the Executive's legal representatives, as the case may be, shall be entitled to: 

    (i)  (A)
in the case of death, continued Salary at the rate in effect at the time of death for a period of twelve (12) months following the month in which such
cessation of employment due to death occurs, or (B) in the case of Disability, Salary at the rate in effect at the determination of Disability through the date of such determination of
Disability; 

    (ii) reimbursement
for expenses incurred but not yet reimbursed by the Company; and 

    (iii) any
other compensation and benefits to which the Executive or legal representatives may be entitled to under the applicable plans, programs and agreements of the
Company. 

    (b) Termination by the Company for Cause. At any time after learning of an event constituting Cause, the Company may
elect to give the Executive written notice of its intention to terminate for Cause, specifying in such notice the event forming the basis for Cause. Subject only to the following sentence, termination
shall be effective immediately upon delivery of notice hereunder. If the written notice is of an event constituting Cause under Section 1(d)(i) or 1(d)(v), and if the event is capable of
being cured,
the Company may allow the Executive to have ten (10) Business Days following actual receipt of the notice of termination in which to cure, so long as the Executive advises the Company in
writing within forty-eight (48) hours of receiving the notice of termination of the Executive's intention to attempt cure. In the event the Executive's employment is terminated by the Company
for Cause, the Executive shall be entitled to: 

    (i)  Salary
at the rate in effect at the time of termination through the date of termination of employment; 

    (ii) reimbursement
for expenses incurred but not yet reimbursed by the Company; and 

    (iii) any
other compensation and benefits to which the Executive may be entitled under applicable plans, programs and agreements of the Company. 

3

 

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)), the Executive shall be entitled to those items described in the subparagraphs (i) through (iii) below. Termination
Without Cause shall be effective immediately, unless a later date is stated, upon delivery of a written notice of such termination from the Company to the Executive. 

    (i)  an
amount equal to twelve (12) months of Salary (the "Salary Termination Payment"). The Executive may elect, at the Executive's option, to receive the
Salary Termination Payment either (A) in equal monthly installments over a one (1) year period commencing on the next regularly scheduled payday upon termination of the Executive's
employment, or (B) in a lump-sum payment within ten (10) Business Days following termination of the Executive's 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. 

    (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 e entitled to: 

    (i)  Salary
at the rate in effect at the time of termination through the date of termination of employment; 

    (ii) reimbursement
for expenses incurred but not yet reimbursed by the Company; and 

    (iii) any
other compensation and benefits to which the Executive may be entitled under applicable plans, programs and agreements of the Company. 

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 the Agreement, the
Executive shall be under no obligation to seek other employment, and there shall be no offset against amounts due the Executive under the 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 the Agreement in the event of any termination of employment
with the Company are in the nature of severance payments, or liquidated damages which 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.  SPECIAL SEVERANCE COMPENSATION  

    In the event that Executive's employment with the Company is terminated pursuant to Section 7(c) or 7(d) and such termination (i) occurs on or
before June 30, 2005 and (ii) the Company exceeded its 

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expense budget (including capital expenses) by 20%; Executive shall receive a lump sum severance payment as follows: 

	If on or before December 31, 2001	 	$	375,000.00
	If on or before December 31, 2002	 	$	300,000.00
	If on or before December 31, 2003	 	$	225,000.00
	If on or before December 31, 2004	 	$	125,000.00
	If on or before December 31, 2005	 	$	50,000.00

9.  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, accountants, 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. 

10. 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 (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 term 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. 

11. 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 Sections 9 or 10 of this Agreement 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. 

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    (c) 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 7 of this Agreement. 

12. 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 12, 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. 

    (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 she 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 12 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 are 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 Statutes 78.751 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 of directors, 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 which 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. 

13. 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 the Agreement may be assigned or transferred by the Executive or the Company except that (a) 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 

6

 

of the Company, as contained in the Agreement, either contractually or as a matter of law, and (b) 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 the
Agreement in circumstances described in clause (a) of the preceding sentence. 

14. REPRESENTATION  

    The Company and the Executive respectively represent and warrant to each other that each respectively is fully authorized and empowered to enter into the
Agreement and that their entering into the Agreement and the performance of their respective obligations under the 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. 

15. 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. 

16. 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 provision of the 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. 

17. 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 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 9 and 10 (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 Executive that such determination not bar or in any way 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). 

18. 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. 

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19. 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. The Parties each hereby consent 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 arbitration provisions of
Section 20 of this Agreement. 

20. SETTLEMENT OF DISPUTES  

    Except for equitable actions seeking to enforce the provisions of Sections 9 and 10 of this Agreement 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. 

21. 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: 

    If
to the Company or the Board: 

Herbst
Gaming, Inc.

3440 West Russell Road

Las Vegas, Nevada 89118

Attn: President 

    If
to the Executive: 

Mary
E. Higgins

3211 Ashby Avenue

Las Vegas, Nevada 89102 

22. 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. 

23. 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. 

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24. TAXES  

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

25. ACKNOWLEDGMENT  

    The Executive acknowledges that she has been given a reasonable period of time to study this Agreement before signing it and has had an opportunity to secure
counsel of his own. The Executive certifies that she has fully read and completely understands the terms, nature, and effect of this Agreement. The Executive further acknowledges that she 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. 

26. WAIVER OF JURY TRIAL  

    Each Party waives, to the fullest extent permitted by applicable 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 induced to enter into this Agreement by, among
other things, the mutual waivers and certifications set forth in this section. 

    In
Witness Whereof, the undersigned have executed the Agreement as of the date first written above. 

	 	The "Company"

Herbst Gaming, Inc	 	The "Executive"
	

By:	

/s/ Troy D. Herbst	
 	

/s/ Mary E. Higgins
	 	
	 	
 Mary E. Higgins
	Its:	Secretary & Treasurer	 	 
	 	
	 	 
	 	

E-T-T, Inc.	
 	

 
	

By:	

/s/ Troy D. Herbst
	
 	

 
	

Its:	

Secretary & Treasurer
	
 	

 

9

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EXHIBIT 10.36

EXECUTIVE EMPLOYMENT AGREEMENTPrepared by MERRILL CORPORATION

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EXHIBIT 10.37    
  

 
 

HERBST GAMING, INC.
  
    EXECUTIVE OFFICER AND
  CASH BONUS PLAN    
  

	1.
	PURPOSE.

    This
Executive Officer and Cash Bonus Plan (the "Plan") is intended to advance the interests of Herbst Gaming, Inc. (the "Company"), its stockholders and its subsidiaries by
establishing (i) compensation payable to Timothy P. Herbst, Executive Vice President and Troy D. Herbst, Executive Vice President, Secretary and Treasurer; and (ii) specific
performance-based goals for the award of cash bonuses to the Company's executive officers who are also stockholders of the Company, upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business. 

	2.
	ADMINISTRATION
OF THE PLAN. 

    The
Plan shall be administered by the Board of Directors of the Company (the "Board") or by a committee consisting of not less than two "outside" directors as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Committee"); provided, however, that if all members of the Board are not
"outside" directors within the meaning of such definition, the Board shall appoint such a Committee. The Board may from time to time remove members from the Committee, fill all vacancies in the
Committee, however caused, and may select one of the members of the Committee as its chairman. 

    The
Committee shall hold its meetings at such times and places as it may determine, shall keep minutes of its meetings and, except as provided in Paragraph 6, shall adopt,
amend and revoke such rules or procedures as it may deem proper; provided, however, that it may take action only upon the agreement of a majority of the whole Committee. Any action that the Committee
shall take through a written instrument signed by a majority of its members shall be as effective as though it had been taken at a meeting duly called and held. The Committee shall report all actions
taken by it to the Board. 

    The
Committee shall have full and final authority in its discretion, subject to the provisions of the Plan, to under certain circumstances, determined compensation payable to Timothy
and Troy Herbst, grant cash bonuses pursuant to the Plan, construe and interpret the Plan and to make all other determinations and take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations shall be conclusively binding for all purposes and upon all persons. 

	3.
	COMPENSATION
AND BENEFITS FOR EXECUTIVE OFFICERS. 

    The
compensation payable to each of Timothy P. Herbst and Troy D. Herbst on an annual basis in 2001 is $150,000. The amount of compensation payable to Timothy Herbst and Troy Herbst
shall be increased each January 1, commencing with the calendar year 2002, by 5% over the prior year's compensation. 

    In
the event that one or both of Timothy or Troy Herbst become full-time employees of the Company, the compensation payable to Timothy or Troy Herbst shall be set by the
Committee. In no event shall the Committee adjust the compensation payable to Timothy or Troy Herbst, respectively, to an amount in excess of the compensation payable to Edward J. Herbst pursuant to
the Employment Agreement among the Company, E-T-T, Inc. and Edward J. Herbst dated August 1, 2001. 

    Timothy
and Troy Herbst and their dependents shall be entitled to participate in, at the Company's expense, whatever employee benefit plans the Company endorses to obtain, if the
Company elects to obtain, such as, but not in limitation, medical, surgical, hospitalization, disability, dental and visual 

 

insurance coverage, and retirement or 401(k) plans. Also, Timothy and Troy Herbst shall be entitled to all other perquisites and benefits provided to other senior level executives of the Company. 

	4.
	MAXIMUM
AMOUNT OF BONUSES. 

    The
maximum aggregate amount of cash bonuses to be awarded for the year ended December 31, 2001 under the Plan shall be $150,000. The maximum aggregate amount of cash bonus to
be awarded for the year ending December 31, 2002 under the Plan shall be $450,000. The maximum aggregate amount of cash bonuses shall be increased each January 1, commencing with the
calendar year 2003, by 5% over the prior year's maximum aggregate amount. 

    No
bonus shall be awarded to the Participants (defined in paragraph 5 below) for the calendars year ending 2001 and 2002 unless the Company achieves EBITDA of
$36.5 million and $40.0 million, respectfully. Thereafter, in order for the Participants to receive a bonus the Company's financial performance must exceed financial targets established
for such year by the Committee. 

    EBITDA
means income from operations plus depreciation and amortization, interest income, gain on sales of assets and pre-opening expenses. 

	5.
	PROCEDURE
FOR AWARD OF BONUSES. 

    No
bonus awarded pursuant to the Plan may be paid prior to December 15 of the calendar year for which such bonus is awarded. Any bonus awarded pursuant to the Plan shall be
reflected in approved minutes of a Committee meeting. 

	6.
	PARTICIPANTS. 

    Cash
bonuses may be awarded under the Plan only to the Company's executive officers who are also stockholders of the Company. 

	7.
	AMENDMENT,
SUSPENSION AND TERMINATION OF THE PLAN. 

    The
Committee may at any time suspend or terminate the Plan or may amend it from time to time in such respects as the Committee may deem advisable so that bonuses awarded under the
Plan conform to any changes in the law or in any other respect which the Committee may deem to be in the best interests of the Company; provided, however, that without approval of a majority of the
shares voting on the matter in a vote by the stockholders of the Company, no such amendment shall increase the maximum annual bonus payable to any participant, accelerate the time for the payment of
any bonus or change the class of eligible participants. Unless the Plan shall previously have been terminated by the Committee or as provided in Paragraph 7, the Plan shall terminate seven
years after the Effective Date. 

	8.
	EFFECTIVE
DATE OF THE PLAN AND STOCKHOLDER APPROVAL. 

    The
Effective Date of the Plan shall be August  , 2001, the date of its adoption by the Board, subject however to its approval by the stockholders of the Company
representing a majority of the shares voting on the matter at the first stockholders' meeting after the Effective Date. 

2

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EXHIBIT 10.37

HERBST GAMING, INC. EXECUTIVE OFFICER AND CASH BONUS PLAN

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