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EXHIBIT 10.20
January 4, 1999
Xx. Xxxxxx X. Xxxxxxx
0000 Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xxxx:
Reference is made to the Second Amended and Restated Employment
Agreement (the "Employment Agreement"), entered into as of October 1, 1995, by
and between Horseshoe Gaming, Inc., a Nevada corporation (the "Company"), and
you, as the "Employee," which terminated in accordance with its terms on July
31, 1998.
Pursuant to the Employment Agreement, Horseshoe Gaming, L.L.C., (the
"LLC") had the right, upon the Employee's termination, to purchase (the "Call
Right"), and the Employee had the right to cause the LLC to purchase (the "Put
Right") the Employee's Fully Vested Ownership Interest (as defined in the
Employment Agreement) at a purchase price equal to the fair market value of the
Fully Vested Ownership Interest, calculated in accordance with the Employment
Agreement (the "Purchase Price") (the Call Right and the Put Right are referred
to together as the "Put/Call Options").
The Employment Agreement was modified by letter agreement dated October
19, 1998 (the "Letter Agreement"), between the Employee, the Company and the
LLC, pursuant to which the time for exercising the Put/Call Options was extended
until July 31, 1999.
The LLC and you, as the Employee, hereby agree as follows:
1. The LLC shall not exercise its Call Right and the Employee shall not
exercise his Put Right until January 1, 2001 (the "Termination Date").
2. In consideration of Employee entering into this letter agreement, the
LLC shall make advances to the Employee against the Purchase Price in the sum of
one hundred and fifty thousand dollars ($150,000) per year (the "Advance") for a
period of two years, commencing January 1, 1999. The Advance for calendar year
1999 shall be paid in a lump sum in January 1999 and the Advance for calendar
year 2000 shall be payable in equal installments during the first week of each
month. No later than January 15, 2001, the Employee shall repay to
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January 4, 1999
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the LLC all outstanding Advances plus accrued interest.
3. All outstanding Advances shall bear interest at a rate of 7.00% per
year, compounded annually.
4. The LLC shall have the right to offset against outstanding Advances
and accrued interest the amount of all cash distributions which otherwise would
have been made by the LLC to the Employee under this letter agreement other than
those amounts distributed to the Employee for payment of taxes due in respect of
his proportionate share of income generated by the LLC.
5. The Employee's Fully Vested Ownership Interest shall be held by the
LLC as collateral for the Advance, and the Employee may not assign, transfer,
pledge or otherwise encumber his interest in the LLC other than as permitted in
the LLC Agreement.
6. After the Termination Date, the Employee may exercise the Put Right
and the LLC may exercise the Call Right pursuant to the exercise terms described
in the Employment Agreement and the Employee's Fully Vested Ownership Interest
shall be acquired by the Company at the Purchase Price. Any Advances and accrued
interest remaining outstanding shall be offset against the Purchase Price and if
the Purchase Price is insufficient to cover such outstanding amounts, the
Employee shall remain liable to the Company for the difference. Nothing herein
shall limit the Employee's obligation to repay his outstanding loans and accrued
interest thereon due to the Company which shall also be offset against the
Purchase Price and the Employee shall remain liable to the Company for any
outstanding balance.
7. In the event that, prior to the Termination Date, the Employee's
Fully Vested Ownership Interest is purchased by the LLC or the Employee sells
his Fully Vested Ownership Interest to a third party under any circumstances
permitted by the LLC Agreement, including, without limitation, in connection
with any sale of the LLC to a third party or a public offering of interests in
the LLC, the proceeds from such purchase or sale which otherwise would have been
paid to the Employee shall be applied first towards repayment of all outstanding
Advances and Company loans and all interest accrued thereon.
Other than as set forth in this letter agreement, the Employment
Agreement and the Letter Agreement shall not be deemed to have been modified.
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January 4, 1999
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Please indicate your acknowledgment and agreement with the foregoing by
signing in the space indicated below.
Sincerely,
HORSESHOE GAMING, INC.
By: ____________________________________
Xxxx X. Xxxxxx
Chief Executive Officer and Chairman
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc., Manager
By: ____________________________________
Xxxx X. Xxxxxx
Chief Executive Officer and Chairman
ACKNOWLEDGED AND ACCEPTED
this ____ day of January, 1999
______________________________
Xx. Xxxxxx X. Xxxxxxx
