EXHIBIT 10.3
DEFERRED COMPENSATION AGREEMENT
This Agreement, made and entered into this 1st day of June, 1999, by and
between MTR GAMING GROUP, INC. ("MTR" or the "Company"), a Delaware corporation
having its principal office at Xxxxx Xxxxx 0 Xxxxx, Xxxxxxx, Xxxx Xxxxxxxx
00000, together with all of its subsidiaries whether now existing or hereafter
formed or acquired, and XXXXXX X. XXXXX (the "Executive"), residing at 00 Xxxxx
Xxxxxx, Xxxxxxxxx, XX 00000. Capitalized terms not defined herein shall have the
meanings set forth in the February 1, 1999 Employment Agreement between
Executive and the Company.
WHEREAS, the Executive has served on the Board of Directors since September
of 1995 and has been employed by the Company since February of 1999 and is
presently Vice President and Assistant Secretary of the Company and its
Mountaineer Park, Inc. subsidiary; and
WHEREAS, the Executive's service to the Company has been of exceptional
merit and benefit to the Company resulting in its profitable growth; and
WHEREAS, the ability and experience of the Executive are of such value to
the Company that the Company wishes to more adequately compensate the Executive
for his past and future service by providing special retirement and survivorship
income benefits to him.
NOW, THEREFORE, in consideration of the Executive's past and future
services and the mutual promises and covenants herein, it is agreed as follows:
ARTICLE 1 - RETIREMENT BENEFITS
1.01 If the Executive continues in the employment of the Company until
attaining his normal retirement age, which is 65, the Company shall
pay him equal annual benefits, as determined in 1.02 below, starting
three (3) months after retirement, for the number of years elected by
the Executive in 1.04. If the Executive's employment is terminated
prior to his attaining retirement age, the Company shall pay him the
benefits as determined in 2.01-2.03.
1.02 The initial annual benefit shall be determined as the level annual
amount which MTR could obtain by making level annual loans from the
cash values of the life insurance policy described in Article 3, for
the period of years elected by the Executive, assuming the cash values
are credited at the then current interest rate paid by the insurance
company on the cash values, and that the policy stays in force through
the insured's age 95, divided by the reciprocal of the combined
federal and state income tax brackets of the Company at the date of
retirement. The initial annual amount so determined will be continued
for three (3) years
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and then redetermined at each three (3) year period thereafter based
on the then current interest rate credited by the insurance company at
that time.
1.03 If the Executive dies subsequent to his retirement date but prior to
the completion of the annual benefit payments, the remaining amounts
shall be continued to such beneficiary or beneficiaries as the
Executive had designated in writing filed with the Company. In the
absence of any designation of beneficiary, any amounts remaining
unpaid at the death of the Executive shall be payable in one lump sum
to the executor(s) or administrator(s) of the Executive's estate.
1.04 The Executive shall elect the number of years that the retirement
benefits shall be computed and paid in accordance with 1.02 above, by
a designation in writing filed with the Company at least one year
prior to his retirement date. In the absence of an effective
election, a fifteen (15) year period will be used for the benefit
period.
ARTICLE 2 - DEATH OR TERMINATION OF
EMPLOYMENT PRIOR TO RETIREMENT
2.01 In the event the Executive dies while employed by the Company at any
time after the date of this Agreement but prior to attaining the
retirement date, the Company will first recover its premium outlay and
then, pay the remainder of the proceeds of the insurance policy
referred to in Article 3 in equal annual benefits for ten (10) years
to the beneficiary(ies) the Executive designated in writing filed with
the Company, pursuant to Section 2.02 below.
2.02 The total benefit amount paid in the equal annual installments shall
be determined by dividing the amount of the death benefit (after
recovery of the premium outlay) from the life insurance policy
described in Article 3, by the reciprocal of the combined federal and
state income tax bracket of the Company in the year the Executive
dies. The annual payments shall begin the first day of the third
month following the death of the Executive. If no beneficiary is
designated, or the beneficiary(ies) die before the completion of the
ten (10) year period, the total amount or balance due shall be paid in
one lump sum to the executor(s) or administrator(s) of the Executive's
estate.
2.03 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. At Executive's election, the
Company will either (a) pay to Executive in a lump sum the cash value
of the life insurance policy (after recovery of the premium outlay);
(b) assign the life insurance policy to Executive (provided that
Executive gives the Company a collateral assignment of the policy in
an amount equal to the aggregate premium outlay); or (c) maintain the
policy (without additional premium payments) until Executive's
retirement or death.
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2.04 In the event (i) Executive resigns his employment for Good Reason; or
(ii) Executive's employment is terminated without Cause, then (a) the
Company shall pay the next five premiums on the insurance policy as
and when they become due; and (b) the Executive shall have the same
rights set forth in clauses (a) through (c) of Section 2.03 above.
ARTICLE 3 - LIFE INSURANCE POLICY
3.01 The life insurance policy deemed to be used to determine the amount of
benefits provided by this Agreement shall be Security Mutual Life
Policy #1243144 issued 4/99.
3.02 Notwithstanding the above, except as may be set forth in the
Executive's Employment Agreement, there is no requirement that the
Company must purchase any life insurance policy on the Executive, but
in the event it does so, it shall not be required to continue or
maintain the policy, shall have no restrictions on its ownership
rights, and the Executive shall have no rights, title or interest
therein.
ARTICLE 4 - DISABILITY PRIOR TO RETIREMENT
4.01 If the Executive shall become totally and permanently disabled before
retirement such that he is unable to perform his duties in a manner
satisfactory to the Company, and the Company terminates Executive's
employment pursuant to the Employment Agreement, then such termination
for disability shall be deemed a termination without Cause pursuant to
Article 2, provided, however, that in the event the Executive's death
should occur after such severance, no death benefits will be payable
by the Company under this Agreement.
ARTICLE 5 - VESTING
5.01 The deferred compensation benefit provided by this Agreement shall
vest fully, immediately upon the full execution of this Agreement and
the ratification of the Employment Agreement by the board of directors
of the Company.
ARTICLE 6 - UNFUNDED AND UNSECURED
6.01 The rights of the Executive or beneficiary under this Plan are purely
contractual and shall not be funded or secured in any way. Payments
to the Executive or his beneficiary hereunder shall be made only from
the general assets of the Company, and no person, other than the
Company, shall have any interest in such assets, including any life
insurance policy that the Company may acquire on the Executive for
purposes of this Agreement. Such assets and insurance are available
to satisfy the claims of the Company's general creditors and, to the
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extent any person acquires a right to receive payments from the
Company under the terms of this Plan, such rights shall be no greater
than the right of any unsecured general creditor of the Company.
ARTICLE 7 - ADMINISTRATION AND CLAIMS
7.01 The Company shall make all determinations as to rights to benefits
under this Agreement. Any decision by the Company denying a claim for
benefits under this Agreement shall be stated in writing and delivered
or mailed to the Executive or beneficiary having made such claim.
Such decision shall set forth the specific reasons for the denial and
shall notify the Executive or beneficiary, as appropriate, of the
opportunity for a full and fair review of the decision denying such
claim.
7.02 Any notice, consent, or demand required or permitted to be given under
the terms of this Agreement shall be in writing, and shall be signed
by the party giving or making the same. Any such notice, consent, or
demand shall be effective as of (i) the date personally delivered,
(ii) if sent by electronic means, on the date sent, or (iii) if sent
by mail, three (3) business days after the date deposited with United
States Postal Service, postage prepaid and addressed to the intended
receiver at his last known address as shown in the records of the
Company.
7.03 ARTICLE 8 - NON-ALIENABILITY
8.01 Neither the Executive nor any beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, mortgage,
commute, or otherwise encumber in advance any of the benefits payable
hereunder, nor shall said benefits be subject to seizure for the
payment of any debts or judgments or be transferable by operation of
law in the event of bankruptcy, insolvency, or otherwise, in the event
the foregoing restriction is violated, all benefits shall cease and
terminate.
ARTICLE 9 - NOT AN EMPLOYMENT AGREEMENT
9.01 This Agreement shall not be deemed to constitute an employment
contract between the Company and the Executive, nor shall any
provision herein modify the Employment Agreement between the Company
and the Executive or restrict the right of the Company to discharge
the Executive, or restrict the Executive from terminating his
employment. In the event that any provision of the Employment
Agreement and this Agreement conflict, the Employment Agreement shall
govern.
ARTICLE 10 - NOT A SALARY DEFERRAL
10.01 The benefits provided by the Agreement are granted by the Company as
additional benefits to the Executive and are not part of any salary
reduction plan or arrangement deferring a bonus or a salary increase.
The Executive has
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no option to take any current payment or bonus in lieu of these
additional benefits.
ARTICLE 11 - PARTICIPATION IN OTHER PLANS
11.01 Nothing contained in this Agreement shall be construed to alter,
abridge, or in any manner affect the rights and privileges of the
Executive to participate in any pension, profit sharing or other
retirement or other benefit plan the Company may now or hereafter
provide.
ARTICLE 12 - BENEFITS AND BURDENS
12.01 This Agreement shall be binding on and inure to the benefit of the
Executive and his personal representative, and it shall be binding on
the Company and any person or entity that shall succeed to
substantially all the Company's assets.
ARTICLE 13 - REVOCATION OR AMENDMENT
13.01 The Company and the Executive may agree, in writing, to amend or
revoke this Agreement at any time.
ARTICLE 14 - GOVERNING LAW, ETC.
14.01 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Delaware, excluding
that state's choice of law principles.
14.02 ARBITRATION. The Company and the Executive recognize that in the
event that a dispute should arise between them concerning the
interpretation or implementation of this Agreement, length and
expensive litigation will not afford a practical resolution of the
issues within a reasonable time. Consequently, each party agrees that
all disputes, disagreements, and questions of interpretation
concerning this agreement are to be submitted for resolution to the
American Arbitration Association (the "Association") in an arbitration
proceeding conducted in Xxxxxxx County, West Virginia or such other
location as the parties may agree. The Company or the Executive may
initiate arbitration proceedings at any time by giving notice to the
other in accordance with the rules of the Association. The
Association shall designate a single arbitrator to conduct the
proceeding, but the Company and the Executive, may, as a matter of
right, require the substitution of a different arbitrator chosen by
the Association. Each such right of substitution may be exercised
only one time. The arbitrator shall not be bound by the rules of
evidence and procedure of the courts of the State of West Virginia but
shall be bound by the substantive law applicable to this agreement.
The decision of the arbitrator, absent fraud, duress, incompetence or
gross and obvious error of fact, shall be final and binding upon the
parties and shall be enforceable in
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courts of proper jurisdiction. Following written notice of a request
for arbitration, the Company and the Executive shall be entitled to an
injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this agreement, except as
otherwise provided herein. THE PARTIES HEREBY WAIVE THEIR RIGHTS TO
TRIAL BY JURY WITH RESPECT TO ANY COURT ACTION RELATING TO THIS
AGREEMENT.
14.03 VALIDITY. The invalidity or enforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
14.04 HEADINGS. The headings of the articles and sections of the Agreement
are for convenience only and shall not control or affect the meaning
or construct or limit the scope or intent of any of the provisions of
this Agreement.
14.05 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall in no event affect the validity or enforceability
of any other provision of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
first set forth above.
MTR GAMING GROUP, INC.
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
RETIREMENT BENEFITS - In accordance with Paragraph 1.04 of the Agreement, I
elect that my retirement benefits be determined and paid over a period of 15
years, reserving the right to change the period at any time up until one year
prior to my normal retirement date as specified in Paragraph 1.01.
/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
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BENEFICIARY - In accordance with Paragraphs 1.03 and 2.01 of the Agreement, I
designate my beneficiary(ies) as Xxxxxxx X. Xxxxx, reserving the right to change
said beneficiary at any time by appropriate written notice to the Company.
/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX
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