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EXHIBIT 10.1

 

 

SECOND AMENDMENT TO EMPLOYMENT
AGREEMENT

 

 

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT (this “Second Amendment”), made this 4th day
of May, 2005, 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 (“Executive”).

 

WHEREAS, the Executive has been employed by
the Company in the capacity of President, Chief Executive Officer and Chairman
of the Company pursuant to an Employment Agreement between the Company and the
Executive dated September    , 2001 (the “Original
Employment Agreement”), as amended by that certain First Amendment to
Employment Agreement dated as of December 22, 2004 (the “First Amendment”)
(collectively, the “Existing Employment Agreement”).

 

WHEREAS, the Executive and the Company desire
to amend the terms of the Existing Employment Agreement to conform to the
requirements set forth in Section 409A of the Internal Revenue Code of
1986 (the “Code”), as amended by the American Jobs Creation Act of 2004 (“Section 409A”).

 

WHEREAS, the Executive and the Company desire
to amend the terms of the Existing Employment Agreement to correct the
erroneous omission of the Commonwealth of Pennsylvania for purposes of the
computation of the Adjusted Factor Average.

 

Now, therefore, the parties, in reliance upon
the mutual promises and covenants herein contained, do hereby agree as follows,
effective as of the date set forth above:

 

1.                                       Recitals;
Capitalized Terms.  The recitals as
set forth above are hereby incorporated herein by reference as though more
fully set forth.  Except to the extent
otherwise defined herein, capitalized terms shall have the meaning ascribed to
them in the Existing Employment Agreement.

 

2.                                       Conformity
with Section 409A.  The Existing
Employment Agreement, as amended by this Second Amendment (collectively, the “Employment
Agreement”) is intended to meet the requirements of Section 409A,
including, but not limited to, Paragraphs (2), (3), and (4) of Section 409A(a).  Notwithstanding any provision of this
Employment Agreement to the contrary, to the extent of any conflict between the
terms and conditions of this Employment Agreement and the requirements of Section 409A,
the requirements of Section 409A shall govern.

 

3.                                       Annual Bonus.  The last sentence of Section 4(b) of
the Original Employment Agreement, as amended and restated by Section 4 of
the First Amendment, is hereby replaced with, and superceded by, the following:

 

“Each Annual Bonus shall be payable to the
Executive on May 1st of the calendar year following the
calendar year then completed.”

 

 

4.                                     Long-Term
Performance Bonus – Adjusted Factor Average.  Section 4(c)(iii) of the Original
Employment Agreement, as amended and restated in its entirety by Section 5(III)
of the First Amendment, is hereby amended to include the acquisition of a
racetrack (including a license to build and operate a racetrack) in the
Commonwealth of Pennsylvania as an additional event giving rise to a 1.0
addition to the Factor Average for purposes of determining the Adjusted Factor
Average.

 

5.                                     Long-Term
Performance Bonus – Time of Payment. 
The first sentence of the concluding paragraph of Section 4(c) of
the Existing Employment Agreement, as amended and restated by 5(IV) of the
First Amendment, is hereby amended and restated in its entirety as follows:

 

“The Long-Term
Performance Bonus determined pursuant to Sections 4(c)(i)-(iv) shall be
payable to Executive (subject to the withholding by the Company from such
payment of an amount sufficient to satisfy any applicable withholding taxes) as
follows: (a) if the Executive is employed by the Company on May 1,
2007, the Long Term Performance Bonus shall be payable to the Executive on May 1,
2007 or (b) if the Executive is not employed by the Company on May 1,
2007, the Long Term Performance Bonus shall be payable upon the later of (i) May 1st
of the calendar year following the last calendar year of the Period of
Employment or (ii) six months following the Executive’s separation from
service.”

 

The balance of the concluding paragraph of Section 4(c) of
the Existing Employment Agreement shall remain unchanged.

 

6.                                     Deferred
Compensation Trust.  Section 4(g) of
the Employment Agreement (Deferred Compensation Trust), as re-lettered by the
First Amendment, is hereby amended and restated in its entirety as follows:

 

“In order to
facilitate the payment of the Company’s deferred payment obligation, at the
time that the Company would otherwise make a payment to Executive but for the Section 162
Maximum, the Company shall deposit an amount of cash equal to the amount which
is being deferred into a “rabbi trust” to be known as the Deferred Compensation
Trust (the “Trust”) to be established by the Company with an independent
corporate trustee acceptable to the Company and Executive. The Trust shall be
in substantially the form attached hereto as Exhibit A.  Amounts deferred for periods ending on or
before December 31, 2004 pursuant to Section 4(f) and this Section 4(g),
and the earnings thereon, shall be paid to the Executive at the earliest time
possible without being nondeductible by the Company under Section 162 of
the Code.  Amounts deferred for periods
ending after December 31, 2004 pursuant to Section 4(f) and this
Section 4(g), and the earnings thereon, shall be paid to the Executive six
months following the Executive’s separation from service.  It is understood and agreed by the parties
that (i) the Trust shall remain subject to the claims of the Company’s
general creditors; (ii) any income tax payable with respect to the Trust
shall be the sole obligation and responsibility of the Company (and shall not
reduce the assets in the Trust so long as the Trust remains a “grantor trust”
for federal income tax

 

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purposes); and (iii) the establishment
of the Trust shall not relieve the Company of its liability to pay amounts due
under this Agreement except to the extent that payments are made by the Trust
to the Executive or his estate in accordance with the terms of this Agreement
and the Trust”.

 

7.                                       Amendment to Section 4(k)
of the Agreement.  The text added by
the First Amendment to the end of Section 4(k) of the Original Employment
Agreement is hereby amended and restated in its entirety as follows (and,
accordingly, Section 4(k) of the Employment Agreement shall contain the
following text):

 

“Until September 1, 2008, Executive
shall have the non-transferable right, exercisable by the provision of written
notice to the Board of Directors, (a) to purchase the house and real
property located at One Riverside Drive, New Cumberland, West Virginia, and/or
certain surrounding acreage acquired by the Company in 2004 (as described on Schedule 4(k)),
for a purchase price equal to the fair market of such house, real property, and
surrounding acreage (as such fair market value is determined pursuant to Section 7(g) of
this Employment Agreement) and/or (b) to purchase the furnishings therein
for a price equal to the then-depreciated book value.  The purchase shall be consummated as promptly
as practicable after provision of the notice, but in any event within six
months thereafter.  The purchase rights
created hereby shall (i) be subject to compliance with the Company’s Third
Amended and Restated Credit Agreement with Wells Fargo Bank, N.A. as agent bank
as such agreement may be amended or restated from time to time and (ii) not
prevent the Company from selling any of such real or personal property at any
time prior to September 1, 2008 and thus shall not be deemed as an
encumbrance or defect with respect to the Company’s title to such
property.  Upon the consummation of the
purchase by Executive contemplated by this Section 4(k), the Company shall
be released from the obligations under the first three sentences of this Section 4(k),
and such provisions shall be of no further force or effect.”

 

8.                                       Amendment to Section 5(g) of
the Agreement.  Section 5(g) of
the Employment Agreement, as amended and restated by the First Amendment, is
hereby amended and restated in its entirety as follows:

 

“Upon the termination of the Executive’s
Period of Employment or Period of Relationship pursuant to Section 2 or Section 5
(other than for Cause) hereof, the Executive shall have the right to purchase
from the Company for a price equal to the then-depreciated book value (i) the
furnishings in the Executive’s office at the Company’s headquarters and/or (ii) any
passenger automobiles owned by the Company and generally used by the Executive;
provided, however, that Executive’s right pursuant to this Section 5(g) shall
not prevent the Company from selling any of such personal property during the
Period of Employment and thus shall not be deemed as an encumbrance or defect
with respect to the Company’s title to such property.  Further, with respect to any purchases
pursuant to this Paragraph 5(g), the Executive shall have forty-five (45) days
in which to notify the Company of his

 

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intent to exercise such right, with closing
to occur within a reasonable time thereafter. 
Executive’s rights hereunder shall not be transferable.”

 

9.                                       Fair Market
Determined by an Appraisal.  The
following is added to the Employment Agreement as Section 7(g):

 

“In the event the Executive exercises his
right, pursuant to Section 4(k), to purchase the house and real property
located at One Riverside Drive, New Cumberland, West Virginia, and/or the
surrounding acreage described on Schedule 4(k), the Company shall promptly
appoint an appraiser to determine the value of such real property.  If Executive disagrees with the
determinations of such appraiser, the Executive may appoint his own
appraiser.  In respect to those items
upon which the appraisers disagree, they shall together appoint a third
appraiser, who shall determine items and shall render a written report of his
opinion with respect thereto.  The values
contained in such written report shall be used to determine the purchase price
of such house and real property, and surrounding acreage.  All appraisal costs shall be paid by the
Company.”

 

10.                               Scope of Amendment.  Except to the extent expressly amended
herein, the terms and conditions of the Existing Employment Agreement shall
govern.

 

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

 

	
   

  	
   

  	
  MTR GAMING GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  \s\ Edson R.
  Arneault

  	
   

  	
  \s\ Donald
  J. Duffy  (5/13/05)

  	
   

  
	
  Edson R. Arneault

  	
   

  	
  Donald J.
  Duffy,

  Chairman of the Compensation

  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  \s\ LC
  Greenwood

  	
   

  
	
   

  	
   

  	
  LC
  Greenwood,

  Member of the Compensation

  Committee

  

 

4EXHIBIT 10.2

 

 

AMENDMENT TO DEFERRED
COMPENSATION AGREEMENT

 

 

 

AMENDMENT TO DEFERRED COMPENSATION AGREEMENT

 

This AMENDMENT
TO DEFERRED COMPENSATION AGREEMENT (this “Amendment”), made this                
day of        , 2005, 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 (“Executive”).

 

WHEREAS, the Executive is a party to a
Deferred Compensation Agreement dated as of January 1, 1999 (the “Existing
Deferred Compensation Agreement”).

 

WHEREAS, the Executive and the Company desire
to amend the terms of the Existing Deferred Compensation Agreement to conform
to the requirements set forth in Section 409A of the Internal Revenue Code
of 1986 (the “Code”), as amended by the American Jobs Creation Act of 2004 (“Section 409A”).

 

Now, therefore, the parties, in reliance upon
the mutual promises and covenants herein contained, do hereby agree as follows,
effective as of the date set forth above:

 

1.                                       Recitals;
Capitalized Terms.  The recitals as
set forth above are hereby incorporated herein by reference as though more
fully set forth.  Except to the extent
otherwise defined herein, capitalized terms shall have the meaning ascribed to
them in the Existing Deferred Compensation Agreement.

 

2.                                       Conformity
with Section 409A.  The Existing
Deferred Compensation Agreement, as amended by this Amendment (collectively,
the “Deferred Compensation Agreement”) is intended to meet the requirements of Section 409A,
including, but not limited to, Paragraphs (2), (3), and (4) of Section 409A(a).  Notwithstanding any provision of this
Deferred Compensation Agreement to the contrary, to the extent of any conflict
between the terms and conditions of this Deferred Compensation Agreement and
the requirements of Section 409A, the requirements of Section 409A
shall govern.

 

3.                                       Election of
Number of Years.  Section 1.04
of the Existing Deferred Compensation Agreement is hereby amended and restated
in its entirety as follows:

 

“The Executive hereby irrevocably elects, for
purposes of Section 1.02, above, that the retirement benefits shall be
computed and paid over a fifteen (15) year period.”

 

4.                                       Election
in the Event of the Termination of Employment Prior to Retirement.

 

(a)                                  Section 2.03 of
the Existing Deferred Compensation Agreement is hereby amended and restated in
its entirety as follows:

 

“In the event (i) Executive resigns his
employment (other than for Good Reason) or (ii) Executive’s employment is
terminated for Cause, then the Company shall not be obligated to make any
further premium payments for the life insurance policy.  The Company shall maintain the policy
(without additional premium payments) until Executive’s retirement or death.”

 

 

(b)                                 Section 2.04 of
the Existing Deferred Compensation Agreement is hereby amended and restated in
its entirety as follows:

 

“In the event (i) Executive resigns his
employment for Good Reason or (ii) Executive’s employment is terminated
without Cause, then the Company shall pay the next five premiums on the
insurance policy as and when they become due.”

 

(c)                                  The following is
added to the Deferred Compensation Agreement as new Section 2.05:

 

“For purposes of this Deferred Compensation
Agreement, the terms “Cause” and “Good Reason” shall have the meaning assigned
to such terms in the Employment Agreement dated September 28, 2001, as amended,
between the Company and the Executive.

 

5.                                     Scope of
Amendment.  Except to the extent
expressly amended herein, the terms and conditions of the Existing Deferred
Compensation Agreement shall govern.

 

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  (5/13/05)

  	
   

  
	
  Edson R. Arneault

  	
   

  	
  Donald J.
  Duffy,

  Chairman of the Compensation

  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  \s\ LC
  Greenwood

  	
   

  
	
   

  	
   

  	
  LC
  Greenwood,

  Member of the Compensation

  Committee

  

 

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