EXHIBIT 10.47
DEFERRED COMPENSATION AGREEMENT
DEFERRED COMPENSATION AGREEMENT (this "Agreement"), dated as of
February 2, 1999 (the "Effective Date"), by and between Harveys Casino Resorts,
a Nevada corporation (the "Company"), and Xxxx Xxxxxxxxxx (the "Executive"), an
employee of the Company or a Subsidiary of the Company.
Executive and the Company have entered into that certain Stock Option
and Restricted Stock Award Agreement (the "Award Agreement"), of even date
herewith, which provides, among other things, for the automatic deferral
pursuant to this Agreement of restricted shares of Class A Common Stock and
restricted shares of Class B Common Stock of the Company (the "Deferred
Shares"), at such time as the value of such restricted shares would otherwise be
includable in Executive's gross income (the "Deferral Date"). Executive and the
Company may also enter into additional agreements ("Additional Award
Agreements") regarding shares of restricted stock (also referred to as "Deferred
Shares") providing for an identical deferral mechanism to that set forth in the
Award Agreement.
1. AMOUNT DEFERRED; DEFERRAL PERIOD.
(a) The number of Deferred Shares to be deferred under this
Agreement shall be as determined under the Award Agreement or the relevant
Additional Award Agreement, as applicable.
(b) The deferral period shall commence on the Deferral Date and
shall continue until the occurrence of a Distribution Event as set forth in
Section 5 hereof.
2. DEEMED INVESTMENT IN SHARES OF COMPANY COMMON STOCK.
(a) As of the Deferral Date, the Deferred Shares shall be deemed
to be invested in an identical number of shares of the same class of Company
capital stock as the Deferred Shares themselves (the "Deemed Deferred Shares" or
the "Deemed Shares").
(b) The Company shall establish an unfunded bookkeeping
account (the "Account") to track the number of Deemed Shares held on
Executive's behalf. The Account shall at all times prior to the occurrence of
a Distribution Event be unfunded and Executive's rights under the Account
shall be subject to claims of
the general creditors of the Company. The Executive shall have no voting
rights and no rights to receive a distribution of dividends with respect to the
Deemed Shares, except as provided in Section 2(d) below.
(c) The value of the Account on any date shall be as determined
by applying the Fair Market Value Formula to the Deemed Deferred Shares;
PROVIDED, that from and after the effective date of Executive's termination of
employment by the Company without Cause (as defined in the Award Agreement), the
value of the Account shall be determined as the LESSER of (x) the value of the
Deemed Deferred Shares as determined under the Fair Market Value Formula as of
such valuation date and (y) the value of the Deemed Deferred Shares as of the
effective date of such termination as determined under the Fair Market Formula,
as increased at the rate of 12% per year, compounded annually, from such
effective date through such valuation date; and PROVIDED, further, that from and
after the effective date of Executive's termination of employment for any reason
other than by the Company without Cause, including without limitation by reason
of Executive's death or disability, the value of the Account shall be determined
as the LESSER of (x) the value of the Deemed Deferred Shares as determined under
the Fair Market Value Formula as of such valuation date and (y) the value of the
Deemed Deferred Shares as of the effective date of such termination as
determined under the Fair Market Value Formula, as increased at the rate of 8%
per year, compounded annually, from such effective date through such valuation
date.
(d) On any date prior to a Distribution Event that dividends
are distributed by the Company to its stockholders in respect of the Class A
Common Stock or Class B Common Stock, each Deemed Share credited to the
Account shall, as applicable, be credited with a dividend equivalent, which
shall be a dollar amount equal to the dividends, if any, payable by the
Company on such date, either in cash or property, in respect of a share of
such class of Common Stock. In the case of dividends payable in property, the
amount of the dividend equivalent shall be based on the fair market value of
such property at the time of distribution of the dividend, as determined in
good faith by the Board of Directors of the Company (the "Board"). The
dividend equivalents so credited to the Account shall be automatically
converted as of the dividend distribution date into Deemed Shares (or
fractions thereof) based upon the Fair Market Value of such Deemed Shares as
of such date.
3. ADJUSTMENTS. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or similar
change affecting the Class A or Class B Common Stock, or any other class of
shares of Company
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capital stock to which the Deemed Shares may from time to
time relate, an equitable substitution or proportionate adjustment shall be
made in the kind and number of Deemed Shares held under the Account as may be
determined in good faith by the Board.
4. FAIR MARKET VALUE. For purposes of this Agreement, "Fair
Market Value" (when capitalized, unless the context clearly indicates
otherwise) means, as of any given date, (A) if the Common Stock is publicly
traded, the closing sale price of the Common Stock on such date (or the
nearest preceding date on which the Common Stock was traded) as reported in
the Western Edition of THE WALL STREET JOURNAL, or (B) if the Common Stock is
not publicly traded, the fair market value of the Common Stock as determined
by the Board in good faith.
5. DISTRIBUTION EVENTS. (a) Upon the occurrence of a Mandatory
Distribution Event (as defined in Section 5(b)), the value of the Account as
of the date of such Mandatory Distribution Event shall be paid in whole to
Executive at the election of the Company (i) in cash, (ii) in shares of
Company capital stock, or (iii) a combination of cash or shares of Company
capital stock, in each case having a Fair Market Value equal to the value of
the Account as of the date of such Mandatory Distribution Event. Upon the
occurrence of a Special Distribution Event, the Executive shall be
distributed shares of Company capital stock having a Fair Market Value equal
to the lesser of the Applicable Value (as defined in Section 5(c)) and the
value of the Account as of the date of such Special Distribution Event. In
addition, at any time on or following the effective date of Executive's
termination of employment, the Company shall have the right, in its sole and
absolute discretion, to distribute the value of the Account, in whole or in
part (a "Permissive Distribution Event" and, together with a Mandatory
Distribution Event and a Special Distribution Event, a "Distribution Event"),
at the election of the Company (i) in cash, (ii) in shares of Company capital
stock, or (iii) a combination of cash or shares of Company capital stock, in
each case having a Fair Market Value equal to the value of the Account (or
portion thereof being distributed) as of the date of such Permissive
Distribution Event, PROVIDED, that after giving effect to the distribution
and the election, the Tax Liability Condition (as defined in Section 5(c))
for the Permissive Distribution Event would be satisfied with respect
thereto. Except as necessary to satisfy the Tax Liability Condition, the
shares distributed in connection with a Mandatory Distribution Event or a
Permissive Distribution Event need not be Marketable Securities (as defined
in Section 5(d)).
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(b) The first to occur of the following events shall constitute
a Mandatory Distribution Event:
(i) The earliest date following the closing of an Initial
Public Offering (as such term is defined in Section 6(e)) upon which all
underwriter lock-up arrangements applicable to Executive, if any, shall
have expired; PROVIDED, that after giving effect to the distribution and
the election referred to in Section 5(a), the Tax Liability Condition (as
defined below) for the Mandatory Distribution Event would be satisfied with
respect thereto;
(ii) The occurrence of a Change in Control (as defined under
the Award Agreement); PROVIDED, that after giving effect to the
distribution and the election referred to in Section 5(a) (assuming the
Deemed Shares represented Common Stock for the purposes of this
calculation), the Tax Liability Condition (as defined below) for the
Mandatory Distribution Event would be satisfied with respect thereto; and
(iii) The last day of the Company's fifteenth fiscal
year commencing after the Effective Date (the "Maximum Deferral
Distribution Event").
A Special Distribution Event shall occur each time that Executive
has the opportunity to sell Restricted Securities (as defined in the
Stockholders Agreement, of even date herewith, among the Company and certain
stockholders (the "Stockholders Agreement"), pursuant to Section 2.5 or 3.1
(under an effective registration statement) of the Stockholders Agreement.
(c) For purposes of this Section 5, (i) the Tax Liability
Condition shall be satisfied if, in respect of any Distribution Event, the sum
of any cash and Marketable Securities represented by the Deemed Shares would
equal or exceed Executive's Tax Liability in respect of such Distribution Event;
and (ii) the Applicable Value shall be the dollar amount obtained by dividing
the maximum income tax rate (federal, state and local) for Executive in the
state and locality of his residence for income tax purposes as determined
pursuant to Section 5(e), including without limitation impositions in respect of
Medicare, into the dollar value of the total consideration which is comprised of
cash and Marketable Securities to which Executive would be entitled to receive
pursuant to the Stockholders Agreement as a result of the Special Distribution
Event.
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(d) For purposes of this Section 5, Marketable Securities shall
mean shares of capital stock of or other equity interests in any entity that,
upon distribution to Executive, are freely tradeable by Executive under the
Securities Act of 1933, as amended (the "Securities Act"), and are not subject
to any contractual restrictions or limitations imposed by the Company on the
rights of Executive to sell such shares.
(e) For purposes of this Section 5, Executive's Tax Liability in
respect of any Distribution Event shall mean the product of (i) the maximum
income tax rate (federal, state and local) for Executive in the state and
locality of his residence for income tax purposes, including without limitation
impositions in respect of Medicare and (ii) the amount of income to be
recognized by Executive upon such Distribution Event, in each case as determined
by the Company's independent auditors, a copy of which determination shall be
provided to Executive. For purposes of the immediately preceding sentence, if
Executive shall be subject to income taxation in more than one state, the
maximum rate of taxation for each such state shall be taken into account
proportionately based on the extent to which the income so recognized would be
treated under applicable law as having been earned in or otherwise having a
relevant nexus with such state for income tax purposes.
(f) The value of the Account shall be distributed to Executive
within five business days following the occurrence of the Distribution Event or,
if later, within five business days after the final determination of the Fair
Market Value of the Account pursuant to Section 4.
(g) Executive hereby agrees that commencing upon and for the
180-day period following a Mandatory Distribution Event pursuant to clause
(b)(i) above (which Mandatory Distribution Event does not also constitute a
Special Distribution Event), Executive shall not, directly or indirectly, sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any shares of
Common Stock to be distributed to Executive pursuant to such Distribution Event
other than (a) shares having a Fair Market Value no greater than Executive's Tax
Liability in respect of such Distribution Event and (b) such number of shares as
may be sold by Executive, subject to the volume limitations of Rule 144(e) under
the Securities Act as if Rule 144 applied to such sale and as if Executive were
an affiliate of the Company for such purposes.
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6. CALL RIGHTS. (a) In the event all or any portion of the
value of the Account is distributed to the Executive pursuant to Section 5
prior to the Company's Initial Public Offering in shares of capital stock or
other equity interests of any entity that are not Marketable Securities (the
"Illiquid Distributed Shares"), the Company shall have the right (the
"Call"), exercisable at any time prior to the Company's Initial Public
Offering (the "Call Exercise Period") by giving written notice to the
Executive pursuant hereto, to purchase any or all of the Illiquid Distributed
Shares in exchange for an amount in cash equal to the Fair Market Value of
such Illiquid Distributed Shares as of the date on which such notice is
provided (the "Call Price"); PROVIDED, that if Executive is exercising
"tag-along" rights pursuant to Section 2.5 of the Stockholders Agreement,
then until completion of such tag-along offer, the Call Price shall not be
less than the price per share attainable by Executive under such tag-along
offer.
(b) The closing with respect to the exercise of the Call shall
take place at the Company's executive offices within 30 days following the date
the Company provides Executive written notice of its intention to exercise the
Call or, if later, within five business days after the final determination of
the Fair Market Value of the Illiquid Distributed Shares pursuant to Section 4.
(c) Notwithstanding any other provision hereof, the Company may
assign, without the consent of the Executive, its rights under this Section 6;
PROVIDED, that no such assignment shall release the Company from its obligations
hereunder.
(d) Notwithstanding anything herein or in the Stockholders
Agreement to the contrary, during the Call Exercise Period the Call shall
continue to apply to the Illiquid Distributed Shares following any transfer
thereof by the Executive under any circumstances, including pursuant to any
arrangement, proceeding, decree, judgment, order or application of law relating
to the division of property for domestic relations purposes.
(e) The Call shall terminate upon the closing of the Company's
Initial Public Offering. For purposes of this Agreement, "Initial Public
Offering" shall mean the closing of a public offering pursuant to an effective
registration statement under the Securities Act covering shares of the Company's
Common Stock, which shares are approved for listing or quotation on the New York
Stock Exchange, American Stock Exchange or Nasdaq National Market.
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7. STOCKHOLDERS AGREEMENT. Executive is a party to the
Stockholders Agreement and Executive and the Company agree that any shares of
Company capital stock issuable to Executive under this Agreement shall be
subject in all respects to the Stockholders Agreement, the provisions of
which shall be deemed to be incorporated herein by reference.
8. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by first class mail,
certified or registered with return receipt requested, or by a nationally
recognized overnight delivery service to the respective parties named below:
If to Company: Harveys Casino Resorts
Highway 50 and Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, Xxxxxx 00000
Attention: Corporate Secretary
Facsimile: 000-000-0000
with a copy to: Colony Capital, Inc.
1999 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: 000-000-0000
and a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile: 213-687-5600
If to the Executive: Xxxx Xxxxxxxxxx
000 Xxxx Xxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Either party hereto may change such party's address for notices by notice
duly given pursuant hereto.
9. WITHHOLDING REQUIREMENTS. Executive shall, no later than the
date amounts become payable hereunder pursuant to a Distribution Event, pay
to the
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Company, or make arrangements satisfactory to the Company, including, as
applicable, by means of any cash distributable pursuant to Section 5,
regarding payment of any federal, state, or local taxes or other amounts of
any kind required by law to be withheld with respect to such Distribution
Event. The obligations of the Company hereunder shall be conditional on the
making of such payments or arrangements, and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to Executive.
10. FAILURE TO ENFORCE NOT A WAIVER. The failure to enforce at
any time any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
11. GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Nevada without regard to its
principles of conflict of laws.
12. AMENDMENTS. This Agreement may be amended or modified at any
time only by an instrument in writing signed by each of the parties hereto.
13. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. This Agreement shall
not constitute or be evidence of any agreement or understanding, express or
implied, that the Executive has a right to continue as an employee of the
Company or any Subsidiary or affiliate of the Company for any period of time
or at any specific rate of compensation.
14. DISPUTE RESOLUTION. Any dispute arising under this Agreement
shall be resolved in accordance with the arbitration provisions of the Award
Agreement and such arbitration provisions shall be deemed to be incorporated
herein by this reference.
15. MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act for such period as the
Company or its underwriters may request (such period not to exceed 180 days
following the date of the applicable offering), the Executive shall not,
directly or indirectly, sell, make any short sale of, loan, hypothecate,
pledge, offer, grant or sell any option or other contract for the purchase
of, purchase any option or other contract for the sale of, or otherwise
dispose of or transfer, or agree to engage in any of the foregoing
transactions with respect to, any shares of Company capital stock acquired
under this
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Agreement without the prior written consent of the Company or its
underwriters, PROVIDED, that the Executive shall not be required to be
subject to "lock-up" restrictions that are more restrictive than such
restrictions to which any other Employee Stockholder (as defined in the
Stockholders Agreement) having commensurate job duties and responsibilities
in the Company is subject, or that would prevent the Executive from
effectuating a sale pursuant to Section 2.5 of the Stockholders Agreement or
Section 3.1 of the Stockholders Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
HARVEYS CASINO RESORTS
By /s/ Xxxx X. XxXxxxxxxx
---------------------------------
Name: Xxxx X. XxXxxxxxxx
Title: Chief Financial Officer
/s/ Xxxx Xxxxxxxxxx
-----------------------------------
XXXX XXXXXXXXXX
Address: 000 Xxxx Xxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
SCHEDULE
Pursuant to the Instructions to Item 601 of Regulation S-K, the registrant is
filing only the foregoing copy of the foregoing document, which is
substantially identical in all material respects except as to the parties
thereto and the address for notices as certain other documents required to be
filed as an exhibit to this Form 10-K. The registrant has omitted to file five
other agreements which differ from the foregoing document only in that each of
Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxxx
and Xxxxx X. Xxxxx, Xx. are parties thereto instead of Xxxx Xxxxxxxxxx, and in
that such parties' respective notice addresses are different. The registrant
undertakes to file copies of such documents at the request of the Commission.
