Exhibit 10.35
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT dated as of November
30, 2001 (this "Agreement"), by and between Horseshoe Gaming Holding Corp., a
Delaware corporation (the "Company"), and Xxxx Xxxxxx (the "Executive").
WHEREAS, the purpose of this Agreement is to afford the Executive
additional security concerning his employment with the Company by providing for
certain payments to the Executive in the event that there is a Change in Control
(as defined below) of the Company;
WHEREAS, the provisions of this Agreement shall only be effective in the
event that there is a Change in Control, and nothing in this Agreement extends
or expands the Executive's present rights concerning employment with the Company
in the absence of a Change in Control or is intended to create a contract,
guarantee or promise of continued employment by the Company or alter the
compensation that the Executive could reasonably expect in the absence of a
Change in Control; and
WHEREAS, the Company and the Executive entered into an Executive
Severance Agreement dated as of August 21, 2000 (the "Original Agreement") and
have agreed to certain amendments to the Original Agreement which are reflected
in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein, and for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
SECTION 1. Term of Agreement; Certain Definitions.
1.1 Term of Agreement. This Agreement shall be effective immediately
upon its execution by the parties hereto and shall remain in effect until the
earliest of: (A) the termination of the Executive's employment with the Company
for any reason whatsoever prior to the announcement of a transaction which, if
consummated, would constitute a Change in Control (an "Announcement"); (B) the
termination of Executive's employment with the Company for Cause after an
Announcement and within ninety (90) days following a Change in Control; or (C)
ninety (90) days after the date of a Change in Control.
1.2 Certain Definitions. The following terms, as used in this
Agreement, shall be deemed to mean the following:
(1) "Cause" shall have the meaning ascribed to it in the
Employment Agreement, except that "Cause" does not include for purposes
of this Agreement death or Disability (as defined in the Employment
Agreement).
(2) "Change in Control" shall mean each of the following
occurring:
(1) prior to the completion of an Initial Public Offering by
the Company, the failure at any time of (a) Xxxx X. Xxxxxx, (b)
Xxxxxxx Xxxx, (c) Peri Xxxx Xxxxxx or any Affiliate of the persons
described in clause (a), (b) or (c) above (collectively, "Excluded
Persons") as a group to own and control at least forty percent (40%)
of the issued and outstanding Equity Interests of the Company;
(2) after the completion of an Initial Public Offering by
the Company, the acquisition, in one or more transactions, of
beneficial ownership by (i) any person or entity (other than an
Excluded Person) or (ii) any group of persons or entities (excluding
any group in which Excluded Persons beneficially own in the
aggregate at least seventy-five percent (75%) of the equity and
voting interests beneficially owned by the group) who constitute a
group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), in either
case, of Equity Interests of the Company such that, as a result of
such acquisition, such person, entity or group beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act), directly
or indirectly, thirty percent (30%) or more of the voting power of
Equity Interests of the Company entitled to vote in the election of
directors of the Company then outstanding; provided, however, that
no Change of Control shall be deemed to have occurred if (x)
Excluded Persons beneficially own, in the aggregate, at such time, a
greater percentage of the total voting power of Equity Interests of
the Company entitled to vote in the election of directors of the
Company than such other person, entity or group or (y) at the time
of such acquisition, Excluded Persons (or any of them) possess the
ability (by contract or otherwise) to elect, or cause the election
of, a majority of the members of the Board of Directors of the
Company;
(3) any merger or consolidation of the Company with or into
any person or any sale, transfer or other conveyance, whether direct
or indirect, of all or substantially all of the assets of the
Company on a consolidated basis, in one transaction or a series of
related transactions, if immediately after giving effect to such
transaction or transactions, any person or group (excluding any
group in which Excluded Persons beneficially own in the aggregate at
least seventy-five percent (75%) of the equity and voting interests
beneficially owned by the group) is or becomes the beneficial owner,
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directly or indirectly, of thirty percent (30%) or more of the total
voting power of Equity Interests of the surviving or transferee
person; provided, however, that no Change of Control shall be deemed
to have occurred if (A) Excluded Persons beneficially own, in the
aggregate, at such time, (x) forty percent (40%) or more of the
total voting power of Equity Interests of the surviving or
transferee person and (y) a greater percentage of the total voting
power of Equity Interests of the surviving or transferee Person than
such other person or group or (B) after giving effect to such
transaction, Excluded Persons (or any of them) possess the ability
(by contract or otherwise) to elect, or cause the election of, a
majority of the members of the Board of Directors of the Company;
(4) during any period of twelve (12) consecutive months after
January 1, 1999, individuals who at the beginning of any such twelve
(12) month period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of
Directors or whose nomination for election by shareholders of the
Company was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously
so approved, including new directors designated in or provided for
in an agreement regarding the merger, consolidation or sale,
transfer or other conveyance, of all or substantially all of the
assets of the Company, if such agreement was approved by a vote of
such majority of directors), cease for any reason to constitute a
majority of the Board of Directors of the Company then in office;
(5) the Company owns or operates fewer than two (2) gaming
facilities; or
(6) the Company adopts a plan of liquidation.
For all purposes of this Agreement, an Announcement in respect of a
Change in Control shall be deemed to have been made on the date the
Company (or a person authorized by the Company) shall have issued a
press release or otherwise made a statement intended for public
dissemination describing or announcing the execution of a definitive
agreement relating to a transaction which, if consummated, will have
constituted a Change in Control, provided that either that transaction
or another transaction constituting a Change in Control and resulting
from such announcement is subsequently consummated.
For purposes of the foregoing, the "Equity Interest" of any person
means any shares, interests, participations or other equivalents
(however designated) in such person's equity, and shall in any event
include any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness that is not itself
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otherwise capital stock), warrants, options, participations or other
equivalents of or interests (however, designated) in stock issued by, or
partnership, participation or membership interests in such person.
For purposes of the foregoing, "Affiliate", as applied to any
person, means any other person directly or indirectly controlling,
controlled by, or under common control with, that person, any spouse,
immediate family member or relative of such person or any trust for the
benefit of, or established by, any of such persons. For the purposes of
this definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"),
as applied to any person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting
securities or by contract or otherwise.
(3) "Employment Agreement" shall mean the employment agreement
by and between the Company and the Executive dated as of November 30,
2001, as the same may be amended from time to time.
SECTION 2. Compensation Upon Change in Control.
2.1 Payment Upon Change in Control. If Executive is employed by the
Company on the date of an Announcement and either (i) Executive is employed by
the Company ninety (90) days following the Change in Control or (ii) the
Executive's employment is terminated by the Company, at any time after an
Announcement and prior to the expiration of ninety (90) days after the Change in
Control (x) for any reason other than Cause or (y) by reason of the Executive's
death or Disability (as defined in the Employment Agreement), then ninety (90)
days following the closing of the transaction constituting the Change in Control
the Company shall pay to the Executive (or in the event of the Executive's
death, the Executive's estate) a lump-sum cash amount equal to the product of
(x) 2.99 and (y) the sum of (1) Executive's annual base salary as then in effect
and (2) the maximum amount of any bonus or incentive compensation to which the
Executive would be entitled for the year in which the Change in Control occurred
(calculated by assuming that all performance goals or targets are satisfied and
that the Executive was employed for the entire year).
2.2 Re-instatement of Equity Incentives. In the event of a Change in
Control where the Executive's employment by the Company had been terminated for
any reason other than Cause after the date of the announcement of a transaction
which, if consummated, would constitute a Change in Control, then,
notwithstanding any term or provision in any stock option or stock appreciation
right or any equity incentive plan or agreement to the contrary, on the date of
the Change of Control any stock options or stock appreciation rights which were
canceled by reason of such termination of employment shall be re-instated and
instead treated as if for all purposes of such stock options or stock
appreciation rights the Executive had remained in the employ of the Company
until one day after such Change in Control.
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2.3 Termination of Employment Agreement and Rights to Other
Severance Payments. In the event of a Change in Control, then notwithstanding
any inconsistent term or provision of the Employment Agreement, the Executive
and the Company agree that the Executive's Employment Agreement shall terminate
as of the date of such Change in Control. Thereupon, the Executive shall become
an "at will" employee of the Company, and neither the Company nor the Executive
shall have any further duties, obligations or liabilities to the other under, or
by reason of, such Employment Agreement, except in respect of the liability of
the Executive under those provisions of the Employment Agreement that survive
its termination as set forth therein. Furthermore, the receipt by the Executive
of the payments under this Agreement shall be in lieu of any other severance
payments then or thereafter required to be made to the Executive pursuant to
Subsection 8C of the Employment Agreement.
2.4 Limitation on Payments. If, prior to the closing of the
transaction that would constitute a Change in Control, the Company shall not be
exempt from the provisions of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), then the provisions of this Section 2.4 shall apply.
Notwithstanding any other provision herein to the contrary if the Company shall
not be exempt from the provisions of Section 280G of the Code, then, in the
event that the Executive becomes entitled to any payments under this Agreement
and any portion of such payments or benefits, when combined with any other
payments or benefits provided to the Executive (including, without limiting the
generality of the foregoing, by reason of any stock options and any amounts
payable to the Executive pursuant to SARs or any compensation realized by the
Executive upon the exercise of Options, granted under the Company's Equity
Incentive Plan), in the absence of this Section 2.4, would be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code, then the amount payable
to the Executive under this Agreement shall be reduced such that none of the
amounts payable to the Executive under this Agreement and any other payments or
benefits received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive's employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control or any person
having such a relationship with the Company or such person as to require
attribution of stock ownership between the parties under Section 318(a) of the
Code) shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code. For purposes of applying the foregoing sentence, if in
the opinion of tax counsel selected by the Company's independent auditors and
acceptable to the Executive, such payments or benefits (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, then such amounts shall be excluded
from any such calculation. Furthermore, in determining the maximum amount of the
payments to the Executive which would not constitute a parachute payment within
the meaning of Sections 280G(b)(1) and (4), the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
2.5 Escrow. To facilitate and ensure the payment of the amount
provided in Section 2.1 hereof to Executive and other executives of the Company
who are parties to executive severance agreements with the Company substantially
similar to this Agreement (collectively, the
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"Affected Executives") as a result of the Change in Control, the Company agrees
to establish, upon the closing of any Change in Control, an escrow arrangement
to provide for the payment upon satisfaction of the applicable conditions of all
amounts payable to the Affected Executives by reason of such Change in Control
under this Agreement and all substantially similar agreements. The Company shall
pay all of the costs and expenses associated with any such escrow arrangement.
SECTION 3. Arbitration. In the event of any dispute or controversy
between the Company and Executive with respect to any of the matters set forth
herein, both the Company and Executive agree to submit such dispute or
controversy to binding arbitration, to be conducted in Indiana pursuant to the
then prevailing rules and regulations of the American Arbitration Association.
In such arbitration, the prevailing party shall be entitled, in addition to any
award made in such proceeding, to recover all of its costs and expenses incurred
in connection therewith, including, without limitation, attorneys' fees.
SECTION 4. No Mitigation. The Executive shall have no obligation to take
any action to mitigate or offset any amounts payable by the Company hereunder by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date of
termination of the Executive's employment or otherwise.
SECTION 5. Notices. All notices required or desired to be given under
this Agreement shall be in writing and shall be deemed to have been duly given:
(i) on the date of service if served personally on the party to whom notice is
to be given; (ii) on the date of receipt by the party to whom notice is to be
given if transmitted to such party by courier or by telefax, provided that in
the case of a copy sent by telefax, a copy is mailed as set forth below on the
date of transmission; or (iii) on the third day after mailing if mailed to the
party to whom notice is given by registered or certified mail, return receipt
requested, postage prepaid to the following addresses, or to such other address
as may be provided from time to time by one party to the other:
To the Company:
Horseshoe Gaming Holding Corp.
00000 X. Xxxx Xxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
Phone: (000) 000-0000
with a copy to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Phone: (000) 000-0000
To the Executive:
Xxxx Xxxxxx
00000 Xxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
SECTION 6. General Provisions
6.1 Amendments. This Agreement may be amended only pursuant to a
written instrument executed by the Company and Executive. It shall not be
reasonable for either the Company or Executive to rely on any oral statements or
representations by the other party that are in conflict with the terms of this
Agreement.
6.2 Severability. If any provision of this Agreement shall be
determined to be invalid or unenforceable by a court of competent jurisdiction,
the remaining provisions of this Agreement shall remain in full force and effect
to the fullest extent permitted by law.
6.3 Successors and Assigns. This Agreement and the obligations of
the Company hereunder shall be binding upon and shall be assumed by any
successor of the Company including without limitation, any corporation or
corporations acquiring directly or indirectly all or substantially all of the
assets of the Company, whether by merger, consolidation, sale or otherwise (and
such successor shall thereafter be deemed "the Company" for purposes of this
Agreement), but shall not otherwise be assignable by the Company. The Company
shall take all actions necessary to insure that such corporation or transferee
is bound by the provisions of this Agreement. The term "the Executive" shall
wherever appropriate be interpreted to include the Executive's estate.
6.4 Governing Law. This Agreement shall be construed, interpreted
and governed in accordance with the internal laws of the State of Delaware,
without reference to rules relating to conflicts of law.
6.5 Entire Agreement. This Agreement and the Employment Agreement
contain the entire agreement between the parties hereto with respect to the
matters contemplated herein and supersedes all prior agreements or
understandings among the parties related to such matters. Without limiting the
generality of the foregoing, the Original Agreement is superseded in all
respects by this Agreement and shall have no further force or effect.
6.6 Headings. The section headings contained in this Agreement are
for the convenience of reference only and shall not affect the construction of
any provision of this Agreement.
6.7 Survival. Notwithstanding the termination of the term of this
Agreement, the duties and obligations of the Company, if any, following the
termination of the Executive's
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employment following a Change in Control shall survive indefinitely.
6.8 Withholding. The Company may deduct and withhold from any
payments hereunder the amount which the Company, in its reasonable judgment, is
required to deduct and withhold for any federal, state or local income or
employment taxes.
6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
HORSESHOE GAMING HOLDING CORP.
By: ________________________________
Name: Xxxx Xxxxxx
Title: Vice Chairman of the
Board of Directors
EXECUTIVE
____________________________________
Xxxx Xxxxxx
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