Exhibit 10.9

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”), dated as of
the 15th day of October, 2008, by and between MTR Gaming Group, Inc., a Delaware
corporation having its principal office at State Route 2 South, Chester, West
Virginia 26034, together with all of its subsidiaries whether now existing or
hereafter formed or acquired (collectively, the “Company”), and Edson R.
Arneault, One Riverside Drive, New Cumberland, West Virginia (the “Executive”).

 

WHEREAS, the Executive is employed by the Company in the capacity of President
and Chief Executive Officer pursuant to an Employment Agreement between the
Company and the Executive dated as of October 18, 2006, as amended by that
certain First Amendment to Employment Agreement dated as of August 28, 2008
(collectively, the “Employment Agreement”);

 

WHEREAS, the Executive and the Company are also parties to a Deferred
Compensation Agreement dated as of January 1, 1999, as amended (the “Deferred
Compensation Agreement”);

 

WHEREAS, the Employment Agreement provides that the Period of Employment is
scheduled to expire on December 31, 2008 and the Executive has indicated that he
does not wish to continue employment after that date;

 

WHEREAS, the Company has identified a replacement for the Executive and would
like to engage said replacement prior to December 31, 2008;

 

WHEREAS, the Executive is willing to accommodate the Company’s plans by
terminating the Period of Employment on October 31, 2008 (the “Termination
Date”);

 

WHEREAS, the Employment Agreement provides for the payment by the Company to the
Executive of an Annual Bonus and also provides that the Executive shall have the
right to purchase from the Company the real and personal property described
therein; and

 

WHEREAS, the Company and the Executive have agreed that, (i) in consideration
for the Executive’s agreement to early termination of his employment and (ii) in
lieu of any and all payments that would otherwise become due and payable to the
Executive from and after the date hereof under the Employment Agreement (except
as expressly set forth herein), the Company will convey to the Executive the
real and personal property and make the payments described herein.

 

Now, therefore, the parties, in reliance upon the mutual promises and covenants
herein contained, do hereby agree as follows:

 

1.                                      RECITALS.  THE RECITALS AS SET FORTH
ABOVE ARE HEREBY INCORPORATED HEREIN BY REFERENCE AS THOUGH MORE FULLY SET
FORTH.  EXCEPT AS OTHERWISE DEFINED HEREIN, CAPITALIZED TERMS SHALL HAVE THE
MEANING SET FORTH IN THE EMPLOYMENT AGREEMENT.

 

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2.                                      TERMINATION DATE.  THE PERIOD OF
EMPLOYMENT SHALL TERMINATE ON THE TERMINATION DATE AND, UPON THE TERMINATION
DATE, THE EXECUTIVE SHALL CEASE TO BE EMPLOYED BY THE COMPANY.

 

3.                                      PAYMENTS & CONVEYANCES TO THE
EXECUTIVE.  IN LIEU OF ANY AND ALL PAYMENTS THAT WOULD OTHERWISE BECOME DUE AND
PAYABLE TO THE EXECUTIVE FROM AND AFTER THE DATE HEREOF UNDER THE EMPLOYMENT
AGREEMENT (EXCEPT AS EXPRESSLY SET FORTH HEREIN), THE COMPANY WILL CONVEY TO THE
EXECUTIVE THE FOLLOWING REAL AND PERSONAL PROPERTY AND MAKE THE FOLLOWING CASH
PAYMENTS TO THE EXECUTIVE:

 

A.                                       THE HOUSE AND REAL PROPERTY LOCATED AT
ONE RIVERSIDE DRIVE, NEW CUMBERLAND, WEST VIRGINIA, THE FURNISHINGS CONTAINED
THEREIN, AND THE SURROUNDING ACREAGE DESCRIBED IN SCHEDULE 4(J) OF THE
EMPLOYMENT AGREEMENT;

 

B.                                      THE FURNISHINGS CONTAINED IN THE
EXECUTIVE’S OFFICE AT THE COMPANY’S HEADQUARTERS;

 

C.                                       A BONUS PAYMENT IN THE GROSS AMOUNT OF
FOUR HUNDRED THOUSAND DOLLARS ($400,000.00), LESS ALL APPLICABLE TAXES REQUIRED
BY LAW AND AUTHORIZED DEDUCTIONS;

 

D.                                      COMPENSATION AND EXPENSE REIMBURSEMENT
PURSUANT TO SECTIONS 4(A), (E), (F), (G), (I) AND (J) OF THE EMPLOYMENT
AGREEMENT WILL CONTINUE TO BE PAID TO THE EXECUTIVE THROUGH THE TERMINATION
DATE; AND

 

E.                                       THE DEFERRED AMOUNTS HELD IN THE TRUST,
TOGETHER WITH THE EARNINGS THEREON WILL BE PAID TO THE EXECUTIVE IN THE MANNER
PROVIDED FOR IN SECTION 7.

 

4.                                      THE EXECUTIVE WILL BE RESPONSIBLE FOR
PAYING ANY TAXES, INTEREST, PENALTIES OR OTHER AMOUNTS DUE ON THE PAYMENT AND
BENEFITS DESCRIBED IN SECTION 3 (EXCEPT FOR THE EMPLOYER’S PORTION OF WAGE TAXES
DUE IN RELATION TO SECTION 3) AND SHALL INDEMNIFY THE COMPANY AND HOLD IT
HARMLESS FOR ANY TAXES, INTEREST, PENALTIES OR OTHER AMOUNTS THAT THE COMPANY
BECOMES REQUIRED TO PAY AS A RESULT OF NOT WITHHOLDING THE APPROPRIATE AMOUNTS
FROM SUCH PAYMENT AND BENEFITS.  PRIOR TO OR CONCURRENTLY WITH THE CONVEYANCE BY
THE COMPANY TO THE EXECUTIVE OF THE REAL AND PERSONAL PROPERTY DESCRIBED IN
SECTION 3, THE EXECUTIVE SHALL DELIVER (OR CAUSED TO BE DELIVERED TO THE
COMPANY) FUNDS IN THE AMOUNT OF $598,500 FOR PURPOSES OF FEDERAL, STATE AND
LOCAL TAX WITHHOLDING RELATED TO SUCH CONVEYANCE.

 

5.                                      PREMIUMS UNDER THE DEFERRED COMPENSATION
AGREEMENT.  THE COMPANY SHALL PAY THE PREMIUMS ON THE INSURANCE POLICIES
UNDERLYING THE DEFERRED COMPENSATION AGREEMENT AS PROVIDED FOR IN SCHEDULE A OF
THIS AMENDMENT UNTIL THE EXECUTIVE REACHES THE AGE OF SIXTY-FIVE (65).

 

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6.                                      MAINTENANCE OF ONE RIVERSIDE DRIVE. 
DURING THE PERIOD PRIOR TO THE CONVEYANCE BY THE COMPANY TO THE EXECUTIVE OF THE
HOUSE LOCATED AT ONE RIVERSIDE DRIVE, THE COMPANY SHALL CONTINUE TO MAINTAIN THE
HOUSE IN THE MANNER PREVIOUSLY PROVIDED IN SECTION 4(H) OF THE EMPLOYMENT
AGREEMENT AND EXECUTIVE SHALL BE PERMITTED TO RESIDE IN THE HOUSE FROM THE DATE
HEREOF UNTIL THE DATE OF CONVEYANCE.  FURTHER, IF THERE IS A CASUALTY LOSS
BETWEEN THE DATE HEREOF AND THE DATE OF CONVEYANCE, THE COMPANY SHALL ASSIGN TO
EXECUTIVE ANY INSURANCE PROCEEDS RELATED TO SUCH CASUALTY LOSS.

 

7.                                      TIMING OF PAYMENTS.  THE COMPENSATION
AND EXPENSE REIMBURSEMENT DESCRIBED IN SECTIONS 3(D) AND SECTION 5 SHALL BE PAID
BY THE COMPANY IN ACCORDANCE WITH ITS CUSTOMARY PRACTICE.  SUBJECT TO SECTION 8,
BELOW, THE CONVEYANCE OF THE REAL AND PERSONAL PROPERTY DESCRIBED IN SECTIONS
3(A) AND (B), THE BONUS PAYMENT DESCRIBED IN SECTION 3(C), AND THE TRUST AMOUNTS
DESCRIBED IN SECTION 3(F) SHALL OCCUR ON MAY 1, 2009.

 

8.                                      SECTION 409A.  BECAUSE THE PARTIES
HERETO INTEND THAT ANY PAYMENT UNDER THIS AGREEMENT SHALL BE PAID IN COMPLIANCE
WITH SECTION 409A OF THE CODE (“SECTION 409A”) AND ALL REGULATIONS, GUIDANCE AND
OTHER INTERPRETATIVE AUTHORITY THEREUNDER, SUCH THAT THERE WILL BE NO ADVERSE
TAX CONSEQUENCES, INTEREST OR PENALTIES AS A RESULT OF SUCH PAYMENTS, THE
PARTIES HEREBY AGREE TO MODIFY THE TIMING (BUT NOT THE AMOUNT) OF ANY PAYMENT
HEREUNDER TO THE EXTENT NECESSARY TO COMPLY WITH SECTION 409A AND AVOID
APPLICATION OF ANY ADDITIONAL TAXES, OR ANY PENALTIES OR INTEREST THEREUNDER.   
THE PROVISIONS OF THIS SECTION 8 SHALL ONLY APPLY IF, AND TO THE EXTENT,
REQUIRED TO COMPLY WITH SECTION 409A IN A MANNER SUCH THAT THE EXECUTIVE IS NOT
SUBJECT TO ADDITIONAL TAXES AND/OR PENALTIES UNDER SECTION 409A.

 

9.                                      TERMINATION OF EXISTING EMPLOYMENT
AGREEMENT.  THE COMPANY AND THE EXECUTIVE AGREE THAT THE EMPLOYMENT AGREEMENT AS
WELL AS ANY OTHER PRIOR WRITTEN OR ORAL AGREEMENTS WITH RESPECT TO EMPLOYMENT
SHALL TERMINATE AS OF THE TERMINATION DATE.  UPON THE TERMINATION OF THE
EMPLOYMENT AGREEMENT, NEITHER PARTY TO THE EMPLOYMENT AGREEMENT OR ANY OTHER
PRIOR WRITTEN OR ORAL AGREEMENTS WITH RESPECT TO THE EMPLOYMENT OF THE EXECUTIVE
SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS, EXCEPT THAT (A) THE COMPANY SHALL
REMAIN OBLIGATED TO CONVEY THE REAL AND PERSONAL PROPERTY, AND TO MAKE THE
PAYMENTS, DESCRIBED IN SECTIONS 3 AND 5 OF THIS AMENDMENT, (B) THE EXECUTIVE
SHALL CONTINUE TO BE BOUND BY THE CONFIDENTIALITY PROVISIONS SET FORTH IN
SECTION 6(A) OF THE EMPLOYMENT AGREEMENT, (C) THE EXECUTIVE SHALL REMAIN
ENTITLED TO RECEIVE THE BENEFITS TO THE EXTENT MAINTAINED AND OFFERED BY THE
COMPANY TO WHICH HE WOULD OTHERWISE BE ENTITLED TO RECEIVE IN THE EVENT OF THE
EXPIRATION OF THE EMPLOYMENT AGREEMENT OR TERMINATION OTHER THAN FOR CAUSE
PURSUANT TO THE EMPLOYMENT AGREEMENT IN THE ABSENCE OF THIS AMENDMENT, NAMELY,
THOSE BENEFITS PROVIDED FOR UNDER THE DEFERRED COMPENSATION AGREEMENT, THE
COMPANY’S RETIREMENT PLAN, AND THE INSURANCE POLICIES AS PROVIDED FOR IN
SCHEDULE A OF THIS AMENDMENT.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.

 

 

 

 

MTR GAMING GROUP, INC.

 

 

 

 

 

 

\s\ Edson R. Arneault

 

\s\ Donald J. Duffy

Edson R. Arneault

 

Donald J. Duffy, 

 

 

Chairman of the Compensation

 

 

Committee

 

 

 

 

 

 

 

 

\s\ LC Greenwood

 

 

LC Greenwood,

 

 

Member of the Compensation

 

 

Committee

 

 

 

 

 

 

 

 

\s\ Edson R. Arneault

 

 

Edson R. Arneault

 

 

President and Chief Executive

 

 

Officer

 

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