EXHIBIT 5
AMENDMENT OF EMPLOYMENT AGREEMENT
This AMENDMENT OF EMPLOYMENT AGREEMENT, made effective this 16th day of
February, 1998, by and between MTR Gaming Group, Inc. ("MTR" or the
"Company"), on the one hand, and Thomas K. Russell, on the other hand, is an
amendment of an Employment Agreement dated May 10, 1994 (the
"EmploymentAgreement).
WHEREAS, Russell is presently employed by MTR pursuant to the Employment
Agreement and holds various directorships and offices with the Company and
various of its affiliates; and
WHEREAS, Russell's personal circumstances require him to reduce his time
commitment to the Company and the Company desires to accommodate Russell's
needs:
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties to this Amendment Of Employment Agreement, meaning to be
bound, do hereby agree as follows:
1. Amendment of Agreement. As of the date of execution of this
Amendment Of Employment Agreement (the "Effective Date"), the terms of
Russell's employment by the Company shall be governed by this Amendment Of
Employment Agreement. As of the Effective Date, none of the parties shall
have any further rights or obligations under the Employment Agreement.
2. Resignation From All Directorships and Offices. Russell hereby
resigns from all of the directorships and offices that he currently holds
with the Company and its corporate affiliates (Mountaineer Park, Inc.,
Mountaineer Magic, Inc., ExCal Energy Corporation, Crystal Exploration Co.,
Inc., and Golden Palace Casinos, Inc.) (referred to herein collectively as
the "Companies"). Russell also hereby resigns from membership on any
committees of the Companies.
3. Liability Insurance. In the event that (i) the Company maintains
liability insurance on behalf of its officers and directors; and (ii) the
provider of such insurance provides coverage for former officers and
directors without additional premium (as is the case with the director's and
officer's insurance currently carried by the Company), then the Company
shall include Russell in such insurance. Russell acknowledges that the
Company provides no guarantee that it will in the future be able to obtain
such insurance on acceptable terms, or at all, or that the Company will
choose to carry such insurance.
4. Consideration. In consideration of Russell's resignations as set
forth in Section 2 above, and his other agreements contained herein, and
subject to the terms and conditions of this Agreement, the Companies shall,
upon the execution and delivery of this Agreement, pay Russell the sum of
$99,676.94, offset by any advances or payroll received by Russell from the
Company subsequent to December 31, 1997. In addition, Russell shall be
entitled to receive from the Companies and to retain as his property, at book
value, the furniture and office equipment listed on
Schedule 1 appended hereto.
5. Release and Indemnification.
(a) Release. Except for the obligations expressly provided herein,
and except as expressly limited below, Russell on the one hand, and the
Companies on the other hand, hereby release and discharge each other and
their respective predecessors, successors, assigns, employees, shareholders,
officers, directors, agents, attorneys, representatives, affiliates,
accountants, insurers, and heirs from and against any and all claims,
demands, causes of action, charges of wrongful termination, judgments,
awards, obligations, damages, attorney's fees, liabilities, costs, and
expenses whatsoever, whether known or unknown, suspected or unsuspected,
fixed or contingent, apparent or concealed, which the parties ever had, now
have, or may in the future claim to have against the released parties
(whether directly or indirectly), or any of them, by reason of any act,
omission, obligation, matter, cause, or thing occurring on or prior to the
Effective Date, including but not limited to any claim arising out of or
relating to Russell's employment by the Companies pursuant to the Employment
Agreement, or otherwise. However, this release does not apply to any claim
that any of the Companies ever had, now has, or may in the future claim to
have by reason of Russell's (i) fraud; (ii) embezzlement or misappropriation
of funds or property of any of the Companies; (iii) breach of the common law
duty of loyalty; or (iv) intentional or willful misconduct; the Company
reserves the right to assert claims based on or arising out of such conduct.
The parties acknowledge that they are aware of Section 1542 of the
California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
To the fullest extent permitted by law, each of the parties expressly
waives this section and the benefits thereof and of any similar law or rule.
(b) Indemnification. To the fullest extent permitted by law, MTR
shall indemnify and save and hold harmless Russell from and against any and
all claims, demands, liabilities, costs, and expenses, including judgments,
fines, or amounts paid on account (whether in settlement or otherwise), and
reasonable expenses, including attorney's fees actually and reasonably
incurred, to the extent that Russell is made a party to any action, suit or
proceeding or if a claim or liability is asserted against Russell (whether or
not in the right of any of the Companies), by reason of the fact that he was
or is an officer or director, or active in such capacity on behalf of any of
the Companies or any predecessor or successor thereof whether or not the same
shall proceed to judgment or be settled or otherwise brought to a
conclusion. However, the Companies shall not have any obligation under this
provision if the claim asserted against Russell is based on or arises
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out of any or all of the following: (i) conduct of Russell that was not in
the course and scope of his employment; (ii) Russell's bad faith conduct;
(iii) conduct of Russell that was not reasonably in the best interests of the
Companies; or (iv) Russell's intentional or willful misconduct. Furthermore,
to the fullest extent permitted by law, Russell shall indemnify ad save and
hold harmless the companies from and against any and all claims, demands,
liability, costs ad expenses, including judgments, fines or amounts paid on
account (whether in settlement or otherwise), and reasonable expenses
including attorneys' fees actually and treasonably incurred, to the extent
that any of the Companies is made a party to any action, suit or proceeding
or if any claim of liability is asserted against any of the Companies
(whether or not the same shall proceed to judgment or be settled or otherwise
brought to a conclusion), based on or arising out of any or all of the
following: (i) conduct of Russell that was not in the course ad scope of his
employment; (ii) Russell's bad faith conduct; (iii) conduct of Russell that
was not reasonably in the best interest of the Companies; or (iv) Russell's
intentional or willful misconduct.
6. Appointment as Assistant to the President. From and after the
Effective Date, Russell shall be employed by the Company as an Assistant to
the President pursuant to the terms and conditions set forth below:
(a) Term. This Amendment Of Employment Agreement shall be in
effect for a term of twenty months, commencing on January 1, 1998 and
terminating September 15, 1999 (the "Termination Date").
(b) Responsibilities. During the term of this Amendment Of
Employment Agreement, Russell shall perform such tasks as shall be assigned
to him from time to time, at reasonable times and upon reasonable notice, by
the President of the Company. Russell will not be expected to devote more
than fifteen (15) hours per month to the business of the Companies.
(c) Salary. The Company shall pay Russell a salary of $1,000 per
month.
(d) Medical Insurance. Through the Termination Date, and to the
extent such insurance remains available to Russell, the Company shall provide
to Russell the medical insurance that Russell was receiving from the Company
as of the day prior to the Effective Date; provided, however, that (i) the
Company shall not under any circumstances itself become Russell's insurer;
and (ii) the Company's sole obligation pursuant to this Section 3(d) shall be
limited to the amount of the premium being charged for Russell's medical
insurance as of the day prior to the Effective Date plus 20%.
(e) Termination.
For Cause. In the event Russell's employment under this Amendment Of
Employment Agreement is terminated by the Company for cause, the Company
shall have no further obligations or duties under this Agreement, except for
obligations accrued at the date of termination. The term "Cause" shall mean
(i) conviction of a felony, (ii) embezzlement or misappropriation of funds or
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property of the Company or any of its affiliates, (iii) consistent refusal to
substantially perform, or willful misconduct in the substantial performance
of, his duties and obligations hereunder; (iv) engaging in activity that the
Board of Directors determines in its reasonable judgment would result in the
suspension or revocation of any video lottery, parimutuel, or other gaming
license or permit held by the Company or any of its subsidiaries; or (v)
breach of the duty of confidentiality or duty of loyalty as described in
Paragraphs 7 and 8 hereof. In addition, Russell's employment shall cease and
terminate for cause upon either (i) Russell's death; (ii) Russell's
resignation.
(2) Without Cause. The Company may terminate Russell's
employment without cause on three (3) business days' notice; provided,
however, that in the event of such termination without cause, MTR shall (i)
within ten (10) business days thereafter pay Russell all amounts that would
otherwise become due as of the Termination Date; and (ii) nevertheless
provide Russell medical insurance through the Termination Date.
(f) Expenses. All travel and other expenses incident to the
rendering of services by Russell hereunder shall be paid by the Company. If
any such expenses are paid in the first instance by Russell, the Company
shall reimburse him therefor on presentation of the appropriate documentation
required by the Internal Revenue Code of 1986, as amended (the "Code"), or
Treasury Regulations promulgated thereunder, or otherwise required under the
Company's policy with respect to such expenses. The Company recognizes that
Russell resides in California and may be required from time to time to travel
outside that area. Reimbursement of any expense incurred by Russell in
excess of $1,000 in a calendar month shall be conditioned on prior approval
of the president of the Company.
(g) Cooperation in Litigation; Right to Counsel. To the extent
the Company requires Russell's services as consultant or witness in
connection with litigation in which the Company may be involved or have an
interest, and litigation involving the business of the Company in which
Russell may be a named party, Russell shall cooperate with the Company and
its counsel in the handling of such litigation. In any such litigation in
which Russell is a named party, the Company will provide Russell a defense by
counsel reasonably acceptable to the Company. In the case styled Mountaineer
Park, Inc. v. Manypenny, Russell acknowledges that separate counsel is not
necessary and expressly consents to his continued representation by
Mountaineer Park, Inc.'s in-house legal counsel.
7. Non-Disclosure.
Non-Disclosure. Russell acknowledges that by virtue of his
positions with the Companies he has acquired trade secrets and confidential
and proprietary information concerning the Companies' plans, strategies,
operations, finances, costs, programs, ideas, approaches, practices and
inventions (the "Proprietary Information"). Russell agrees to hold all such
Proprietary Information in confidence and not to directly or indirectly
disclose, use or publish and Proprietary information without the Companies'
prior consent. Russell agrees to return to the Companies all tangible
manifestations of Proprietary Information (and all copies thereof) within
sixty (60) days following
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the Effective Date. Notwithstanding the foregoing, Russell will not be
liable for the disclosure of any Proprietary Information if such Proprietary
Information: (i) is now, or through no default on the part of Russell
hereafter becomes, generally known to the public, or (ii) is disclosed by
Russell pursuant to a court order or any law, rule or regulation. If Russell
believes that he is required to disclose any Proprietary Information pursuant
to a court order of laws, rules or regulations, he shall provide reasonable
notice to the Companies of his intention to do so. Any Proprietary
Information created, developed, obtained or conceived by Russell prior to the
Effective Date shall be owned by and belong exclusively to the Companies. By
the Effective Date, Russell shall, without additional compensation, disclose
to the Companies all Proprietary Information that he has created, developed,
obtained or conceived. Russell shall execute and deliver to the Companies
without additional compensation, such documents as the Companies may
reasonably require from time to time to evidence their ownership of any such
items. The obligations under this Section 7(a) shall expire on the fifth
(5th) anniversary of the Effective Date.
(b) Injunctive Relief. Russell agrees that the remedy at law for
any breach by him of this Section 7 will be inadequate and that the Companies
will be entitled to injunctive relief in addition to all other available
remedies.
(c) Trade Secrets Act. Nothing in this Amendment Of Employment
Agreement is intended to limit any remedies that the Companies may have under
the Uniform Trade Secrets Act (California Civil Code Section 3426), or
otherwise available under law.
8. Confidentiality. The parties agree that this Amendment Of
Employment Agreement and the terms thereof are strictly confidential and that
they will not disclose or publish this Amendment Of Employment Agreement or
any of its terms to any other person or entity (other that their own
attorneys, accountants or staff on a need-to-know basis) without the other
parties' express written consent, except pursuant to a court order or any
law, rule or regulation. If one of the parties believes that he or it is
required to disclose this Amendment Of Employment Agreement or any of its
terms pursuant to a court order or any law, rule of regulation, he or it
shall provide reasonable notice to the other party of his or its intention to
do so. Provided, however, that Russell hereby consents to the publication of
a description of the Amendment Of Employment Agreement in its periodic
filings with the U. S. Securities & Exchange Commission and including a copy
of this Amendment Of Employment Agreement as an exhibit thereto. Further,
Russell hereby acknowledges that his resignations referred to in Paragraph 2
of this Amendment Of Employment Agreement are not the result of any
disagreement with the Company on any matter relating to its operations,
policies, practices or procedures within the meaning of Item 6 of Form 8-K.
9. Obligations Conditioned on Parties' Performance. Each of Russell
and the Companies agrees that all of their respective obligations under this
Amendment Of Employment Agreement are expressly conditioned on the compliance
by the other party with its obligations under this Amendment Of Employment
Agreement and that in the event of any material breach by Russell, on the one
hand, or the Companies on the other hand, the other party hereto shall have
no further obligations under this Employment Agreement.
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10. Careful Consideration And Revocation. Russell hereby
acknowledges that he has had twenty-one (21) days to consider this Amendment
Of Employment Agreement carefully before executing it and that he executes it
freely after consultation with counsel of his own choice. Russell further
acknowledges that he understands that he has seven (7) calendar days
(beginning on January 1, 1998) to revoke this Amendment Of Employment
Agreement by delivering notice of revocation to the Company pursuant to
Paragraph 11, infra, and further acknowledges that the payment made pursuant
to Paragraph 4, supra, must be returned to the Company along with his notice
of revocation.
11. General. This Amendment Of Employment 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, by overnight delivery service
or mailed by prepaid registered of certified mail, return receipt requested,
addressed to the parties at the addresses stated below or such other
addresses as the parties may designate by notice in the manner set forth
herein. Such notices of communications shall be effective upon delivery if
delivered in person or by facsimile, on the next business day if sent by
overnight delivery service, and either upon actual receipt or three (3) days
after mailing, whichever is earlier, if delivered by mail.
If to the Companies: MTR Gaming Group, Inc.
Attention: Edson R. Arneault
Route 2 South
Chester, West Virginia 26034
If to Thomas K. Russell: 32 Antibes
Laguna Niguel, California 92677
(b) Parties in Interest. This Amendment Of Employment Agreement
shall be binding upon and inure to the benefit of Russell and his successors,
administrators, assigns, heirs and executors, and it shall be binding upon
and inure to the benefit of the Companies and any corporation succeeding to
all of substantially all of the business and assets of the Company by merger,
consolidation, purchase of assets or otherwise.
(c) Arbitration. Any disputes between the parties, including but
not limited to any dispute concerning the validity of this Amendment Of
Employment Agreement or the interpretation or breach of any of its term,
shall be settled by arbitration between the parties in
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Orange County, California 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 the
award. However, Russell agrees that the Companies may seek interim relief
(temporary restraining order, preliminary injunction, etc.) in any court of
competent jurisdiction with respect to any breach or alleged breach by
Russell of Section 7 of the Agreement
(d) Entire Agreement. This Amendment Of Employment Agreement
supersedes any and all other agreements, either oral, written or implied,
between the parties hereto including but not limited to the May 10, 1994
Employment Agreement, and contains all of the covenants and agreements
between the parties with respect to their relationship in any manner
whatsoever. Any modification of this Amendment Of Employment Agreement will
be effective only if it is in writing signed by each of the parties hereto.
(e) Governing Law. This Amendment Of Employment Agreement shall
be governed by and construed in accordance with the laws of the State of
California.
(f) Severability. In the event that any term or condition
contained in this Amendment Of Employment 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 Amendment Of Employment
Agreement, but this Amendment Of Employment Agreement shall be construed as
if such invalid or illegal or unenforceable term or condition had never been
contained herein.
(g) Legal Advice. Russell acknowledges that the Companies have
encouraged him to obtain independent legal advice concerning this Amendment
Of Employment Agreement.
(h) Counterparts. This Amendment Of Employment Agreement may be
executed in any number of counterparts, each of which shall constitute an
original of this Amendment Of Employment Agreement, and all of which together
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment Of
Employment Agreement as of the day and year first above written.
MTR GAMING GROUP, INC. EXCAL ENERGY CORPORATION
By: /s/ Edson R. Arneault By: /s/ Edson R. Arneault
-------------------------- --------------------------------
Edson R. Arneault, President Edson R. Arneault, President
MOUNTAINEER PARK, INC. MOUNTAINEER MAGIC, INC.
By: /s/ Edson R. Arneault By: /s/ Edson R. Arneault
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Edson R. Arneault, President Edson R. Arneault, President
THOMAS K. RUSSELL GOLDEN PALACE CASINOS, INC.
By: /s/ Thomas K. Russell By: /s/ Edson R. Arneault
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Thomas K. Russell Edson R. Arneault, President
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