EXHIBIT 10.20
LONG TERM INCENTIVE BONUS AGREEMENT
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This Agreement ("Agreement") is entered into on June 12, 1997, between
Empress Casino Joliet Corporation, an Illinois corporation, 0000 Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxx 00000 hereinafter referred to as the "Company," and Xxxxxx X.
Xxxxxxx, 0000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000, hereinafter referred to as
the "Employee," to be effective as of June 23, 1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of the bonus to be paid to Employee under
certain specified circumstances.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. Definitions.
(a) "Affiliated Companies" shall mean the Company, Empress Casino
Xxxxxxx Corporation and LMC Leasing, Ltd., each of which is sometimes referred
to as an "Affiliated Company".
(b) "Base Value" shall mean (i) with respect to the combined
Affiliated Companies, $325 million, (ii) with respect to the Company only,
$146 million, and (iii) with respect to Empress Casino Xxxxxxx Corporation and
LMC Leasing, Ltd., combined, $179 million.
(c) "Benchmark Value" shall mean
(i) In the case of a Change in Control on account of other than
an initial public offering of the stock of one or more of the Affiliated
Companies, the aggregate net amount received by the Affiliated Companies,
or the shareholders of the Affiliated Companies, less any debt for borrowed
money of the Affiliated Company(ies) with respect to which the Change in
Control occurred that is not assumed by the buyer, plus any cash retained
by such Affiliated Company(ies). If a Change in Control occurs with respect
to one or more Affiliated Company, but not all Affiliated Companies, then
the Benchmark Value shall be determined solely with regard to the specific
Affiliated Companies with respect to which the Change in Control occurs.
To the extent that proceeds are received by the Affiliated Companies or the
shareholders of the Affiliated Companies in other than cash or deferred
installments of cash, the such other consideration shall be valued in good
faith by the Company, for purposes of determining the Benchmark Value.
(ii) In all other cases other than those described in the
foregoing provisions of this paragraph 1.(c), an amount equal to (A) the
Combined EBITDA
multiplied by 5, plus (B) cash held by the Affiliated Companies, less (C)
debt of the Affiliated Companies (other than trade payables).
Benchmark Value shall be determined by the Company's independent
accountants, as of the end of the prior fiscal year in the cases described
in paragraph l.(c)(ii) a month in which the termination of employment or
Change in Control occurs.
(d) "Cause" shall have the meaning ascribed to it in the Employment
Agreement.
(e) "Change in Control" shall mean (i) the sale of all or
substantially all of the stock or assets of the one or more Affiliated
CoJnpanies to one or more third parties who are not, immediately preceding such
transaction shareholders of an Affiliated Company, (ii) the merger of the one or
more Affiliated Companies into or with another company in which a controlling
interest is not owned by one or more shareholders of an Affiliated Company, or
(iii) an initial public offering of the stock of one or more of the Affiliated
Companies; provided, however, that the disposition by one or more of the
Affiliated Companies of one or more vessels, without a transfer of the
operating business shall not be deemed to be a "Change in Control".
(f) "Combined EBITDA" shall mean the combined earnings before
interest, taxes, depreciation and amortization of the Affiliated Companies.
(g) "Disability" shall have the meaning ascribed to it in the
Employment Agreement.
(h) "Employment Agreement" shall mean the Employment Agreement
between Employee and the Company effective as of June 23, 1997.
2. Long-Term Incentive Bonus
(a) General. Subject to the terms and conditions described below, in
the event of (i) the termination of Employee's employment with the Company for
reasons other than Cause or (ii) a Change in Control, the Company shall pay to
Employee a bonus, in addition to any bonus to which he may be entitled under the
Employment Agreement, equal to 3.913% of the excess, if any, of the Benchmark
Value of the Affiliated Companies as of the date of termination of employment or
Change in Control, whichever is applicable, over the Base Value of the
Affiliated Companies.
(b) Minimum Bonus During First Twelve Months. Notwithstanding
anything contained herein to the contrary, in the event of a Change of Control
occurring during the period beginning on the date of this Agreement and enting
twelve (12) months thereafter, Employee shall be entitled to receive a bonus
equal to the greater of (i) the bonus determined in accordance with paragraph
2.(a) or (ii) $1,000,000.00.
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(c) Maximum Bonus. Notwithstanding anything contained herein to the
contrary, in the event of a termination of Employee's employment with the
Company, the maximum amount that Employee shall be entitled to receive under
paragraph 2.(a) shall be $10,000,000.00. In the event of a Change in Control,
there shall be no limit on the amount of the bonus that Employee shall be
entitled to receive under paragraph 2(a).
3. Vesting in Bonus.
(a) General. In the event that Employee's termination of employment
occurs before the end of business on June 22, 1999, shall have no vested
interest in the bonus and this Agreement shall terminate. Upon completion of
two full years of employment, Employee shall become vested with respect to 30%
of the bonus. Upon completion of the initial three (3) year term of employment,
Employee shall become vested with respect to 40% of the bonus. Thereafter,
Employee will become vested with respect to an additional 10% of the bonus on
and after each of the next succeeding six (6) anniversary dates of the last day
of the initial employment term, provided he is still employed on such
anniversary date, such that he will be 100% vested in the bonus after completing
nine (9) years of employment. In the event that Employee's termination of
employment occurs prior to the time that he is 100% vested in the bonus, only
that portion of the bonus in which Employee is vested shall be payable to him
hereunder.
(b) Change Control. Notwithstanding the provisions of paragraph
3.(a), in the event of a Change in Control, Employee shall be 100% vested in the
bonus, regardless of Employee's period of service.
4. Time and Method of Payment.
(a) Termination of Employment Other Than for Reasons of Death,
Disability. The vested amount of the a bonus that becomes payable to Employee
hereunder following termination of Employee's employment for reasons other
than death or Disability, determined in accordance with paragraphs 2 and 3,
shall be made to Employee (or in the event of Employee's death after termination
of employment, to Employee's estate) in cash, in thirty-six (36) equal monthly
installments, beginning as of the first day of the month following the later of
the month in which Employee attains age 55 or the month in which Employee's
employment terminates.
(b) Termination of Employment for Reasons of Death, Disability. The
vested amount of the a bonus that becomes payable to Employee hereunder
following termination of Employee's employment on account of death or
Disability, determined in accordance with paragraphs 2 and 3, shall be made to
Employee (or in the event of Employee's death, to Employee's estate) in cash, in
one hundred and twenty (120) equal monthly installments, beginning as of the
first day of the month following the month in which Employee dies or the month
in which Employee's employment terminates on account of Disability, whichever is
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applicable. Notwithstanding the immediately preceding, in the event that
Employee (or Employee's estate) is still receiving installment payments as of
the date he attains (or would have attained) age 55, the remaining amount due as
of such date shall be paid to Employee (or Employee's estate) in thirty-six (36)
equal monthly installments, beginning as of the first day of the month following
the month in which Employee attains (or would have attained) age 55.
(c) Change in Control other Than IPO. The vested amount of the a
bonus that becomes payable to Employee hereunder on account of a Change in
Control other than an initial public offering of the stock of an Affiliated
Company, 7, determined in accordance with paragraphs 2 and 3, shall be made to
Employee in cash, or deferred installments of cash, at the same time(s) as
shareholders in the Affiliated Company with respect to which the Change in
Control occurs are paid.
(d) Change in Control on Account of IPO. The vested amount of the a
bonus that becomes payable to Employee hereunder on account of a Change in
Control by reason of an initial public offering of the stock of an Affiliated
Company, determined in accordance with paragraphs 2 and 3, shall be made in that
number of shares of stock of the Affiliated Company with respect to which the
initial public offering occurs, the value of which is equal to the bonus payable
hereunder, based upon the initial price of such shares offered to the public in
the initial public offering. Such shares will be transferrable by Employee only
if such securities have been registered under the federal Securities Act of
1933, as amended (the "Act"), or pursuant to an exemption from registration
available to Employee under the Act. To the extent that Employee is subject to
withholding taxes on a bonus payable hereunder in shares of stock, the Company
may loan to Employee, upon such terms and conditions as Employee and the Company
shall agree, an amount sufficient to satisfy the withholding obligation with
respect to such shares of stock, such loan to be secured by the shares of stock
received by Employee hereunder.
5. Continuation of Agreement in Event of Change in Control. In the event
of a Change in Control with respect to one or more of the Affiliated Companies,
but not all of the Affiliated Companies, Employee shall receive a bonus
hereunder with respect to the Affiliated Company(ies) with respect to which the
Change in Control occurred. In addition, this Agreement shall continue with
respect to those Affiliated Companies with respect to which no Change in Control
has occurred.
6. Parachute Payments. To the extent that any amount payable hereunder is
a "parachute payment" within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended, thc provisions of Section 10 of the Employment
Agreement, or any successor section thereto or replacement section therefor,
shall govern.
7. Miscellaneous.
(a) No Assignment. The benefits payable hereunder may not be
voluntarily or involuntarily assigned or alienated and are not subject to the
claims of creditors.
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(b) No Guarantee of Employment. Nothing in the Agreement shall be
construed as a contract of employment or be deemed to confer upon Employee the
right to be retained in the service of the Company or any Affiliated Company,
nor shall it interfere with the right of the Company or any Affiliated Company
to discharge or otherwise deal with Employee without regard to the existence of
this Agreement.
(c) No Funding. All benefits hereunder are payable, as and when they
come due, solely from the general assets of the Company or from Empress Casino
Xxxxxxx Corporation.
(d) Facility of Payment. When, in the Company's opinion, the Employee
is under a legal disability or is incapacitated in any way so as to be unable to
manage his affairs, the benefits hereunder may be paid to Employee, Employee's
spouse, or to a duly appointed guardian or conservator, custodian, adult
relative, or directly for the benefit, of Employee, as the Company shall in its
discretion determine. Any such payments shall constitute a complete discharge
therefor.
(e) Withholding for Taxes. Notwithstanding any other provisions of
this Agreement, all payments hereunder shall be subject to any applicable
withholding for all federal, state ant local taxes income, employment or excise
taxes. In the event that payment hereunder is made to Employee in shares of
stock in accordance with paragraph 4.(d), Employee will provide the Company
with the funds, if any are necessary, to discharge any income tax and FICA tax
withholding obligations of the Company relating to the shares received by
Employee, either through withholding from the Employee's subsequent salary or
bonus payments or through a direct cash payment to the Company by Employee.
(f) Governing Law. This Agreement shall be construed and administered
according to the laws of the State of Illinois to the extent that such laws are
not preempted by the laws of the United States of America.
(g) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of both the Company and Employee and their respective
successors, assigns, heirs, and legal representatives, but neither this
Agreement nor any rights hereunder may be assigned by the Company or Employee
without the written consent of the other party.
(h) Amendments. No amendments or variations of the terms and
conditions of this Agreement shall be valid unless the same is in writing and
signed by all of the parties hereto.
(i) Savings Clause. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such
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invalidity, illegality, or enforceability shall not effect the validity and
enforceability or any other provision hereof.
8. Allocation. The Company and the Employee acknowledge that, concurrent
herewith, Employee is entering into a Long Term Incentive Bonus Agreement with
Empress Casino Xxxxxxx Corporation (the "Empress Hammond Agreement") and that
the benefits payable to Employee under this Agreement are not intended to
duplicate the benefits payable to Employee from Empress Casino Xxxxxxx
Corporation. The Company will cooperate with Empress Casino Xxxxxxx Corporation
to fairly allocate costs and expenses of the bonus payable hereunder to Employee
in a manner (i) commensurate with the relative efforts and time commitment
provided by Employee to the Company and to Empress Casino Xxxxxxx Corporation,
in the case of a bonus which is payable following a termination of employment
and (ii) consistent with the Change in Control, in the case of a bonus which is
payable following a Change in Control. Notwithstanding the right of the Company
and Empress Casino Xxxxxxx Corporation to allocate costs and expenses as set
forth herein, as between Employee and the Company and Empress Casino Xxxxxxx
Corporation, the liability of the Company hereunder and Empress Casino Xxxxxxx
Corporation under the Empress Hammond Agreement to Employee shall be joint and
several as to both agreements.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Employee, in one or more counterparts, each of which shall be deemed an
original, as of the date first written above.
EMPRESS CASINO JOLIET EMPLOYEE:
CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxx
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Chairman of the Board Xxxxxx X. Xxxxxxx
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