Exhibit 10.2


 


AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


 


THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made as
of the 1st day of October, 2009, by and between MTR Gaming Group, Inc. (“MTR”
or the “Company”), having an address of State Route 2 South, Chester,
West Virginia 26034, and David R. Hughes, having an address of c/o MTR Gaming
Group, Inc., State Route 2 South, Chester, WV 26034 (“Executive”).


 


WHEREAS,
Executive is an employee of the Company, serving as its Corporate Executive
Vice President and CFO.


 


WHEREAS,
the Company and Executive entered into an Employment Agreement effective May 15,
2008, which Employment Agreement has been amended from time to time (the “Original
Agreement”); and


 


WHEREAS,
the Company wishes to continue to employ Executive and further wishes to enter
into this Agreement with Executive in order to afford Executive certain
long-term benefits as well as to reflect the terms and conditions of Executive’s
continued employment relationship to the Company.


 


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


 


1.             Term.  (a) The Company hereby agrees to
continue to employ Executive, and Executive agrees to serve the Company, in the
capacity indicated above from the date hereof to August 11, 2011 (the “Term”),
on the terms and conditions set forth herein.


 


(b)           Commencing ninety (90) days
prior to the end of the Term the parties will negotiate in good faith to extend
the Term of this Agreement for at least one (1) additional year including
reasonable compensation/benefits based upon Executive’s contributions to the
Company.  If the parties are unable to
reach an agreement to extend the Term within such 90 day period, then at the
expiration of the Term Company shall pay to Executive all unpaid Base Salary
(as hereinafter defined) and Discretionary Cash Bonus (as hereinafter defined)
due and payable hereunder for the balance of the Term in cash (subject to
income and employment tax withholdings) within ten (10) days after the
date of the expiration of the Term. In addition, the Company shall pay
Executive severance benefits of: (x) an amount equal to Executive’s Base
Salary (as hereafter defined) for the final year of the Term, payable in twelve
(12) monthly installments commencing the first day of the calendar month next
following the


 

















 


end
of the Term; (y) an amount equal to Executive’s Discretionary Cash Bonus
(as hereafter defined) determined by the highest amount of any Discretionary
Cash Bonus declared during the Term or in the event such expiration occurs
prior to the declaration of any Discretionary Cash Bonus, based on the minimum
Discretionary Cash Bonus payable pursuant to Section 3(b) hereof),
payable in twelve (12) monthly installments commencing the first day of the
calendar month next following the end of the Term, and (z) a monthly
amount so Executive, Executive’s spouse and dependants will be able to continue
to receive without interruption the health benefits they received during the
Term until the earlier of August 11,2012, a date on which Executive
accepts employment with or provides service to, in any capacity, any other
business or entity in exchange for compensation.  Notwithstanding anything to the contrary, Section 4(c) hereof
and not this Section 1(b) shall apply if a Change in Control (as
hereinafter defined) occurs during the Term.


 


2.     Duties and
Services.  During the
Term, Executive agrees to serve the Company as its Corporate Executive Vice
President and CFO of MTR Gaming, and in such other office of MTR and/or its
Affiliates to which Executive may be elected or appointed, and to perform such
other reasonable and appropriate duties as may be requested of Executive by the
President and CEO of the Company (the “CEO”), in accordance with the
terms herein set forth.  Executive shall
devote such of his/her time, energy and skill during regular business hours to
the business and affairs of the Company and its Affiliates and to the promotion
of their interests as is required.  Executive
shall report directly to and shall be subject to the direction of the Company’s
Chief Executive Officer.  Executive shall
perform those duties customarily performed by the Chief Financial Officer of a
publicly traded corporation, including but not limited to assuming primary
responsibility for the Company’s reporting and disclosure requirements imposed
by the Securities and Exchange Commission and Nasdaq.


 


3.     Compensation.


 


(a)           Base Salary.  The base salary of the Executive for services
pursuant to the terms of this Agreement (the “Base Salary”) shall be
$410,000 per year, payable in bi-monthly installments or on such other terms as
may mutually be agreed upon by the Company and Executive.  Executive’s base salary shall be subject to
an automatic cost-of-living increase of five percent (5%) on January 1st of each year of this Agreement, and shall be
subject to periodic increase by the Company’s Compensation Committee in its
sole discretion.


 


(b)           Discretionary
Cash Bonus.  Executive
shall be entitled to periodic cash bonuses of a minimum of 25% of Base Salary,
payable on January 1st of each year of the Term with
the ability to earn additional discretionary bonuses at the sole discretion of
the Company’s Compensation Committee (such minimum or higher amount, a “Discretionary
Cash Bonus”).


 


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(c)           Benefit Plans
and Fringe Benefits.  Executive
shall receive such employment fringe benefits and shall be entitled to
participate in other employee benefit plans, including without limitation any
health insurance, pension plan, profit-sharing plan, savings plan, life
insurance and disability insurance plans and the like made available by the
Company now or in the future to its executives, subject to and on a basis consistent
with the terms, conditions and overall administration of such benefit plans.


 


(d)           Long Term
Incentives.  Executive
shall participate in any and all of the Company’s long term incentive plans and
in any other incentive plan that the Company provides for its employees.


 


(e)           Automobile
Allowance.  During the
Period of Employment, Executive shall be entitled to $700 per month toward the
lease or purchase, insurance and maintenance of an automobile.


 


(f)            Vacation.  Executive shall be entitled to five (5) weeks
of paid vacation annually to be taken at a time or times mutually satisfactory
to Executive and the Company.  Accrued
vacation time not utilized by Executive due to business commitments may be
carried over to the following year (provided, however, that Executive shall not
in any event utilize more than six weeks of vacation in any twelve month
period) or paid to Executive at the end of the year as additional compensation
at Executive’s election.


 


(g)           Expenses.  All travel and other expenses incident to the
rendering of services by Executive hereunder, including the expenses associated
with gaming licensing in any state in which the Company or one of its
affiliates requests Executive to become licensed, shall be paid by the Company.  The Company shall also provide Executive a
Company cellular telephone, or, at the Company’s election, reimburse Executive
for the cost of a cellular phone and monthly service charges maintained by
Executive.  If any such expenses are paid
in the first instance by Executive, the Company shall reimburse him/her
therefore on presentation of the appropriate documentation, or otherwise
required under the Company’s policy with respect to such expenses.


 


(h)           Working
Facilities.  The Company
shall provide Executive with an office, secretarial, administrative and other
assistance, and such other facilities and services as shall be suitable to his
position and appropriate for the performance of his duties.


 


4.     Early Termination.


 


(a)           For Cause.  Executive may be discharged by the Company “For
Cause” (as hereafter defined), in which event the Term shall cease and
terminate and neither party shall have any further obligations or duties under
this Agreement, except that the Company shall pay to Executive all unpaid Base 


 


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Salary
and unpaid Discretionary Cash Bonus then due and payable hereunder, in cash
(subject to income and employment tax withholdings) within thirty (30) days
after the date of the early termination of the Term.


 


For
purposes of this Section 4(a), “For Cause” shall mean: (i) Executor’s
conviction of a felony; (ii) Executor’s embezzlement or misappropriation
of funds or property of the Company or any of its affiliates (the “Affiliates”);
(iii) Executive’s consistent refusal to substantially perform, or willful
misconduct in the substantial performance of, his duties and obligations
hereunder; (iv) Executive’s engaging in activity that the CEO determines
in the CEO’s reasonable judgment would result in the suspension or revocation
of any video lottery, pari-mutuel, or other gaming license or permit held by
MTR or any of its subsidiaries; or (v) a determination by any state gaming
regulatory agency that Executive is not suitable to hold his position or
otherwise to participate in a gaming enterprise in the state in question.


 


(b)           Death;
Disability.  The Term
shall cease and terminate upon the earliest to occur of the following events: (i) the
death of Executive, or (ii) at the election of the CEO (subject to the
Americans With Disabilities Act), the inability of Executive by reason of
physical or mental disability to continue the proper performance of his duties
hereunder for a period of 180 consecutive days. 
Upon early termination of the Term as a result of the Executive’s death
or disability, and in consideration for Executive or his beneficiaries
releasing the Company from any claims, damages or causes of action, the Company
shall pay to Executive or his estate, as the case may be, an amount equal to
the greater of (x) all unpaid Base Salary and any unpaid Discretionary
Cash Bonus for the remainder of the Term (subject to income and employment tax
withholdings), or (y) an amount equal to one times (100%) of Executive’s
then-applicable annual Base Salary (as hereafter defined) and Discretionary
Cash Bonus in either event, payable in cash within ten (10) days after the
date of such early termination of the Term.


 


(c)           Change in Control. If Executive’s
employment is terminated for any reason following a “Change in Control” (as
hereafter defined), then upon such termination, the Company shall pay Executive
severance benefits of an amount equal to two times (200%) Executive’s then
annual Base Salary, payable one-half (50%) in cash within thirty (30) days of
the date Executive’s employment terminates and the balance in twelve (12) equal
monthly installments commencing the first day of the calendar month next
following the termination of employment and a monthly amount so Executive,
Executive’s spouse and dependants will be able to continue to receive without
interruption the health benefits they received during the Term of the Agreement
until the earlier of the second anniversary of the date of Executive’s
termination of employment and the date on which Executive accepts employment
with or provides service to, in any capacity, any other business or entity in
exchange for compensation.  Executive
shall have no obligation to mitigate damages.


 


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For
purposes of this Agreement, “Change in Control” shall mean the occurrence of
any of the following events: (i) an acquisition of any voting securities
of Company by any person or group immediately after which such person or group
has beneficial ownership of more than 50% of the combined voting power of
Company’s then outstanding voting securities; 
or  (ii) the consummation of (A) a
merger, consolidation or reorganization involving Company, unless the company
resulting from such merger, consolidation or reorganization (the “Surviving
Corporation”) shall adopt or assume this Agreement and the stockholders of
Company immediately before such merger, consolidation or reorganization, own
more than 50% of the combined voting power of the Surviving Corporation in
substantially the same proportion as their ownership immediately before such
merger, consolidation or reorganization, (B) a complete liquidation or
dissolution of Company, or (C) a sale or transfer of all or substantially
all of the assets of Company.


 


(d)           Without Cause. In the event
Executive is discharged by the Company for any reason not covered in Sections 4(a) through
4(c) hereof, in exchange for Executive releasing the Company from any
claims, damages or causes of action, the Company shall pay to Executive (x) all
unpaid Base Salary (as hereinafter defined) and any unpaid Discretionary Cash
Bonus (as hereinafter defined) for the balance of the Term in cash (subject to
income and employment tax withholdings) within ten (10) days after the
date of termination employment. In addition, the Company shall pay Executive
severance benefits of: (x) an amount equal to Executive’s then-annual Base
Salary, payable in twelve (12) equal monthly installments commencing the first
day of the calendar month next following the termination of employment; (y) an
amount equal to Executive’s then-annual Discretionary Cash Bonus (determined by
the highest amount of any Discretionary Cash Bonus declared during the Term,
or, in the event such termination occurs prior to the declaration of any
Discretionary Cash Bonus, based on the minimum Discretionary Cash Bonus payable
pursuant to Section 3(b) hereof), payable in twelve (12) monthly
installments commencing the first day of the first full calendar month
following the termination of employment; and (z) a monthly amount so Executive,
Executive’s spouse and dependants will be able to continue to receive without
interruption the health benefits they received during the Term of the Agreement
until the earlier of the second anniversary of the date of Executive’s and the
date on which Executive accepts employment with or provides service to, in any
capacity, any other business or entity in exchange for compensation.  Executive shall have no obligation to
mitigate damages.


 


(e)           Executive’s
Termination for Good Reason. Executive may terminate
his employment for “Good Reason” upon 90 days’ written notice to Company (which
notice the Company may waive or reduce in time at its sole discretion), by
resigning his employment with the Company. In the event of early termination of
the Term pursuant to the preceding sentence, and in consideration 


 


5

















 


for
Executive’s or his heirs’ and beneficiaries’ releasing the Company from any
claims, damages or causes of action, the Company shall then upon the early
expiration of the Term, pay to Executive (x) all unpaid Base Salary (as
hereinafter defined) and any unpaid Discretionary Cash Bonus (as hereinafter
defined) for the balance of the Term, in cash (subject to income and employment
tax withholdings) within ten (10) days after the date of termination
employment. In addition, the Company shall pay Executive severance benefits of:
(x) an amount equal to Executive’s annual Base Salary, payable in twelve
(12) monthly installments commencing the first day of the calendar month next
following the termination of employment; (y) an amount equal to Executive’s
then applicable Discretionary Cash Bonus (as hereafter defined; and determined
by dividing the highest amount of any incentive compensation paid to Executive
in respect of the full year immediately preceding the date of termination, or
in the event such termination occurs prior to the payment of any annual bonus,
based on the minimum Discretionary Cash Bonus payable pursuant to Section 3(b) hereof),
payable in twelve (12) monthly installments commencing the first day of the
first full calendar month following the termination of employment, and (z) a
monthly amount so Executive, Executive’s spouse and dependants will be able to
continue to receive without interruption the health benefits they received
during the Term of the Agreement until the earlier of the second anniversary of
the date of Executive’s termination for good reason and the date on which
Executive accepts employment with or provides service to, in any capacity, any
other business or entity in exchange for compensation.  Executive shall have no obligation to
mitigate damages.


 


For the purposes of this Agreement, “Good Reason”
exists if, without Executive’s express written consent (except as contemplated
by this Agreement or in connection with the termination For Cause, or under the
circumstances described in Section 4(a) hereof), (i) the
responsibilities of Executive are substantially reduced or altered, (ii) Executive’s
Base Salary is reduced without his consent, or (iii) Executive’s offices
are relocated anywhere other than within a fifty (50) mile radius of the
Company’s corporate headquarters in Wexford, Pennsylvania, or (iv) Robert
Griffin ceases to serve as CEO of MTR, or (v) Executive’s reporting line
of authority is altered so he no  longer
reports directly to the CEO; provided, however, that if Executive terminates
this Agreement for one or more of the reasons stated in clauses (i) or
(ii), Employer shall have a period of thirty (30) business days after actual
receipt written notice of Executive’s assertion of Good Reason to cure the
basis for such assertion, and, in the event of a cure (or the commencement of
steps reasonably designed to result in prompts cure), the assertion of Good
Reason shall be null and void and Executive’s employment shall continue
pursuant to the terms hereof. 
Notwithstanding anything to the contrary, the payment provisions of Section 4(c) hereof
shall supersede the provisions of this Section 4(e), in the event that
Executive terminates this Agreement for Good Reason following a Change in
Control.


 


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(f)            Executives Termination Without Good Reason. Executive
shall have the right to terminate this Agreement without Good Reason for any
reason upon sixty (60) days advance written notice to Company, following which
neither party hereto shall have any further obligations or duties under this
Agreement, except that the Company shall pay to Executive all unpaid Base
Salary and unpaid Discretionary Cash Bonus then due and payable hereunder, in
cash (subject to income and employment tax withholdings) within thirty (30)
days after the date of the early termination of the Term.


 


(g)           IRC Section 409A.  Because the parties hereto intend that any
payment under this Agreement shall be paid in compliance with Section 409A
of the Internal Revenue 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 such taxes, penalties or interest thereunder.  Consequently, notwithstanding any provision
of this Agreement to the contrary, if Executive is a “specified employee” as
defined in Section 409A, Executive shall not be entitled to any payments
on the date of termination of his employment until the earlier of (i) the
date which is six (6) months after the termination date for any reason
other than death, or (ii) the date of Executive’s death.  Any amounts otherwise payable to Executive
following the date of termination that are not so paid by reason of this Section 4(g) shall
be paid immediately after the date that is six (6) months after the
termination date (of, if earlier, the date of Executive’s death).  The provisions of this Section 4(g) shall
only apply, if ,and to the extent required to comply with Section 409A in
a manner that Executive is not subject to additional taxes and/or penalties
under Section 409A.


 


(h)           IRC Section 4999.  In the event that, as a result of payments to
or for the benefit of Executive under this Agreement or otherwise in connection
with a termination for Good Reason, any state, local or federal taxing
authority imposes any taxes on Executive (other than regular income taxes) that
would not be imposed but for the occurrence of a Change of Control, including
any excise tax under Section 4999 of the Internal Revenue Code and any
successor or comparable provision, then, in addition to any benefits provided
for under this Section 4, Employer (including any successor to Employer)
shall pay to Executive at the time any such tax becomes payable an amount equal
to the amount of any such tax imposed on Executive, plus taxes or additional
income.  For the avoidance of doubt, in
the event that the Executive receives a payment pursuant to this Section 4(h),
the Employer shall not pay and/or reimburse the Executive for the regular
income taxes imposed with respect to such payment.


 


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5.               Confidentiality and
Non-Competition.


 


(a)           The Company and
Executive acknowledge that the services to be performed by Executive under this
Agreement are unique and extraordinary and, as a result of such employment,
Executive will be in possession of confidential information and trade secrets
(collectively, “Confidential Material”) relating to the business
practices of the Company and its Affiliates. 
Executive agrees that he will not, directly or indirectly: (i) disclose
to any other person or entity either during or after his employment by the
Company; or (ii) use, except during his employment by the Company in the
business and for the benefit of the Company or any of its Affiliates, any
Confidential Material acquired by Executive during his employment by the
Company, without the prior written consent of the Company or otherwise than as
required by law or any rule or regulation of any federal or state
authority.  Upon termination of his
employment with the Company for any reason, Executive agrees to return to the
Company all tangible manifestations of Confidential Materials and all copies
thereof, not to disparage the Company, and for a period of one year from the
date of such termination not to solicit for employment or hire any employee of
the Company.  All programs, ideas,
strategies, approaches, practices or inventions created, developed, obtained or
conceived of by Executive during the term hereof by reason of his engagement by
the Company, shall be owned by and belong exclusive to the Company, provided
that they are related in any manner to the Company’s business or that of any of
its Affiliates.  Executive shall: (i) promptly
disclose all such programs, ideas, strategies, approaches, practices,
inventions or business opportunities to the Company, and (ii) execute and
deliver to the Company, without additional compensation, such instruments as
the Company may require from time to time to evidence its ownership of any such
items.


 


(b)           Executive
agrees that during the Term he will not become a stockholder, director,
officer, employee or agent of or consultant to any corporation, or member of or
consultant to any partnership or other entity, or engage in any business as a
sole proprietor or act as a consultant to any such entity, or otherwise engage,
directly or indirectly, in any enterprise, in each case which competes with any
business or activity engaged in, or known by Executive to be contemplated to be
engaged in, by the Company or any of its Affiliates within one hundred (100)
miles of any location in which the Company or any affiliates does business or
in which Executive has knowledge that the Company or any of its Affiliates
contemplates doing business; provided, however, that competition shall not
include the ownership (solely as an investor and without any other
participation in or contact with the management of the business) of less than
five percent (5%) of the outstanding shares of stock of any corporation engaged
in any such business, which shares are regularly traded on a national
securities exchange or in an over-the-counter market.


 


(c)           Executive
agrees that for a period of one (1) year from date of his separation from
employment for any reason, other than in connection with a termination pursuant
to Section 4(c), 4(d) and 4(e), he will not accept employment as an
executive with any racetrack or casino within fifty (50) miles of 


 


8

















 


any
racetrack or casino owned or operated by the Company or its affiliates;
provided that, Executive’s obligations under this Section 5 shall
terminate upon a default by the Company of any of its payment obligations under
this Agreement.


 


(d)           Executive
agrees that the remedy at law for any breach by him of this Section 5 will
be inadequate and that the Company shall be entitled to injunctive relief.


 


6.               General.  This Agreement is further governed by the
following provisions:


 


(a)           Notices.  Any notice or other communication required or
permitted to be given hereunder shall be made in writing and shall be delivered
in person, by facsimile transmission or mailed by prepaid registered or
certified mail, return receipt requested, addressed to the parties at the
address stated above or to such other address as either party shall have
furnished in writing in accordance with this Section.  Such notices or communications shall be
effective upon delivery if delivered in person or by facsimile and either upon
actual receipt or three (3) days after mailing, whichever is earlier, if
delivered by mail.


 


(b)           Parties in
Interest.  This
Agreement shall be binding upon and insure to the benefit of Executive and his
beneficiaries, and it shall be binding upon and inure to the benefit of the
Company and any corporation succeeding to all or substantially all of the
business and assets of the Company by merger, consolidation, purchase of assets
or otherwise.


 


(c)           Arbitration.  Any disputes arising under the terms of the
Agreement shall be settled by binding arbitration between the parties in the
Wexford, Pennsylvania area in a proceeding held under the rules of the
American Arbitration Association.  In
such proceeding, each party shall choose one arbitrator and the two so chosen
shall choose a third arbitrator.  The
vote of two of the arbitrators shall be sufficient to determine an award.  Arbitration proceedings shall be commenced
within thirty (30) days from the date of the claimant’s request for arbitration
to the other party.  Notwithstanding
anything herein to the contrary, the arbitrators shall have no authority to
grant either party any consequential, incidental, punitive or special damages.


 


(d)           Entire
Agreement.  This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Executive by the
Company including the Original Agreement, and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever.  Any modification of this
Agreement will be effective only if it is in writing signed by the parties.


 


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(e)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without giving effect to the choice of law or conflicts of law rules and
laws of such jurisdiction.


 


(f)            Severability.  In the event that any term or condition
contained in this Agreement shall for any reason be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or condition of this Agreement, but this Agreement shall be construed as if
such invalid or illegal or unenforceable term or condition had never been
contained herein.


 


(g)           No Breach.  Executive warrants and represents to the
Company that neither his entering nor performing this Agreement will violate
the terms of any contract or covenant to which Executive is a party or by which
he is bound.


 


(h)           Indemnification.  The Company shall indemnify, defend and hold
the Executive harmless, to the extent permitted by law, including the payment
of reasonable attorneys’ fees, if the Company does not directly provide
Executive’s defense, from and against any and all civil claims made by anyone,
including, but not limited to, a corporate entity, company, other employee,
agent, patron or member of the general public with respect to any claims that
assert as a basis, any acts, omissions or other circumstances involving the
performance of Executive’s employment duties hereunder unless such claim is
finally determined by a court of competent jurisdiction to arise from Executive’s
gross negligence or willful, intentional and/or wanton act.


 


[SIGNATURES TO APPEAR ON THE FOLLOWING PAGE]


 


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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/
  David R. Hughes

  	
   

  	
  /s/
  Steven M. Billick

  
	
  David
  R. Hughes

  	
   

  	
  Steven
  M. Billick,

  
	
   

  	
   

  	
  Chairman of the Compensation

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James V. Stanton

  
	
   

  	
   

  	
  James
  V. Stanton

  
	
   

  	
   

  	
  Member of the Compensation

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Raymond K. Lee

  
	
   

  	
   

  	
  Raymond
  K. Lee

  
	
   

  	
   

  	
  Member of the Compensation

  
	
   

  	
   

  	
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Robert F. Griffin

  
	
   

  	
   

  	
  Robert
  F. Griffin

  
	
   

  	
   

  	
  President and Chief Executive

  
	
   

  	
   

  	
  Officer