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Exhibit 10(iii)(A)(7)
DEFERRED COMPENSATION AGREEMENT
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THIS AGREEMENT is made on the 23rd day of December
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1996, by and between CLIPPER CRUISE LINE, INC., a Delaware
corporation (hereinafter referred to as the "Corporation"), on
behalf of and with the authority of the Combined Clipper Group
as hereinafter identified and defined, and PAUL H. DUYNHOUWER,
an individual, residing in the County of St. Louis, State of
Missouri (hereinafter referred to as "Employee").
WHEREAS, Employee has been employed by the Corporation
since August 1, 1989;
WHEREAS, Employee has been and is interested in reducing
his compensation in exchange for potential benefits to be
received at a later point in time;
WHEREAS, the Corporation and Employee entered into a
deferred incentive bonus arrangement on March 8, 1991,
effective January 1, 1990, entitled Memorandum of Agreement,
which has been subsequently amended on October 1, 1994
(hereinafter collectively "Memorandum of Agreement");
WHEREAS, the Corporation wishes to continue to offer
Employee the opportunity of future benefits as encouragement
for continued performance; and
WHEREAS, except for the effective date, the Corporation
and Employee wish to revise and restate in its entirety the
Memorandum of Agreement as hereinafter provided.
NOW, THEREFORE, for and in consideration of the above
premises and the mutual promises and covenants contained
herein the parties agree as follows:
1. The Corporation agrees to continue to employ
Employee and Employee agrees to continue to serve the Corporation
in such capacity as the Board of Directors of the Corporation
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(hereinafter "Board") may designate from time to time, as has been the
arrangement since August 1, 1989, and continuing to the present and
continuing in the future until terminated by either party on at least
one hundred eighty (180) days advance written notice to the other
party.
2. Employee will devote such an amount of his time,
attention, skill and efforts as may be reasonably necessary to
the performance of his duties for the Corporation during the
term of his employment with the Corporation.
3. In addition to such regular salary (which salary
shall increase by 5% on August 1, 1997, August 1, 1998, and
August 1, 1999) and other compensation as may be agreed to
between the Corporation and Employee from time to time
independent of this Agreement, the Corporation agrees that
Employee will be eligible to receive a bonus in an amount
determined below:
(a) Subject to the provisions hereof and to the
vesting schedule and other provisions of paragraph 4
hereof, Employee will accrue a bonus for each full
calendar year during which he is employed by the
Corporation between 1990 and 1999. The parties agree
that Exhibit 1 hereto properly calculates this bonus for
the years 1990 through 1995. For each full calendar year
that the Employee is employed by the Corporation between
1996 and 1999, the bonus shall be calculated as follows:
(i) Fifty Thousand Dollars ($50,000.00); plus
(ii) Five percent (5%) of the first One
Million Dollars ($1,000,000.00) of the Pre-Tax
Earnings (as defined in subparagraph (b) hereof), of
the Combined Clipper Group (as defined in
subparagraphs (d) hereof); plus
(iii) Ten percent (10%) of the Pre-Tax
Earnings of the Combined Clipper Group in excess of
One Million Dollars ($1,000,000.00).
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(b) For purposes of this Agreement, Pre-Tax
Earnings shall mean the net income or loss before taxes
of the Combined Clipper Group as shown on the audited
financial statements of the Combined Clipper Group,
adjusted:
(i) to exclude any interest expense charged to
the Combined Clipper Group by Windsor, Inc., or
Intrav, Inc., or any other affiliate of Windsor,
Inc., or Intrav, Inc., as long as any such company
is the sole shareholder of the companies in the
Combined Clipper Group;
(ii) to exclude any corporate management
charges or allocations of corporate expenses in
excess of One Hundred Twenty-Five Thousand Dollars
($125,000.00), as indexed for years subsequent to
1991 by the Consumer Price Index; provided, however,
the exclusion created by this subparagraph (iii)
shall not apply to expenses apportioned among the
Combined Clipper Group for the proportionate share
of items billed in total for the Corporation and
other Windsor, Inc., or Intrav, Inc., subsidiaries
or affiliates, including Windsor Building rent,
insurance costs, and employee benefit program
administrative costs;
(iii) to exclude, for the year in which it is
made, the payment to Employee set forth in paragraph
6 below; and
(iv) to exclude depreciation and interest
expenses related to the Yorktown Clipper and the
Nantucket Clipper (including but not limited to
expenses related to the early retirement of the debt
on said vessels); provided, however, that in lieu of
the actual depreciation and interest expenses for
the Yorktown Clipper and the
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Nantucket Clipper, the following amounts will
be charged as the combined depreciation and interest
expenses for the year specified:
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1996 $2,300,000
1997 $2,214,000
1998 $2,118,000
1999 $2,011,000
The Corporation will provide to Employee a statement
outlining the manner of the Pre-Tax Earnings calculation
and the results of the calculation no later than sixty
(60) days subsequent to the end of each calendar year
from 1996 to 1999.
(a) If the Pre-Tax Earnings of the Combined Clipper
Group for any calendar year covered by this Agreement are
a loss, such negative amount will be carried forward to
reduce any Pre-Tax Earnings of subsequent years for
purposes of computing the annual bonus amount referenced
in subparagraph (a) above. Notwithstanding the foregoing
if any Pre-Tax Earnings loss is due to loss of revenue
arising from damage to ships and therefore the inability
of said ships to make any journeys (an example of such an
event is the Alaskan Rock Incident in 1993 where the
Yorktown Clipper, after an accident, could not be used
for a substantial period of time and many booked trips
had to be canceled creating a loss of revenue) then the
Pre-Tax Earnings loss to the extent it arises from such
unusual incident will not be carried forward to future
years and therefore will not reduce Pre-Tax Earnings in
subsequent years. Any unapplied loss carry-forwards at
the end of the term of this Agreement will expire without
effect on prior years' annual bonus computations.
(b) For purposes of this Agreement, the Combined
Clipper Group consists of the Corporation, Republic
Cruise Line, Inc., a Delaware corporation, Liberty Cruise
Line, Inc., a Delaware corporation, Clipper Adventure
Cruises, Inc., a Delaware corporation, and any successors
thereto.
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(c) The bonus amounts as defined and calculated
hereunder, as vested, will accrue ten percent (10%)
interest per year compounded annually for each year from
the first day of the year following the year for which
the bonus was earned.
2. The annual bonus accumulated from year to year is
hereinafter referred to as the Deferred Compensation Amount
which shall be administered as follows:
(a) Yearly, as of December 31, of each year, the
Corporation shall credit to a book reserve (hereinafter
referred to as the "Deferred Compensation Account")
established for this purpose, the vested portion of the
bonus amount as described in this Agreement (including
the vested portion of any interest thereon), until said
amount is paid to Employee or his designated
beneficiary(ies).
(b) Title to and beneficial ownership of the
Deferred Compensation Account and all funds, if any,
contained therein shall at all times remain the sole
property of the Corporation. Employee and his designated
beneficiary(ies) shall not have any property interest
whatsoever in said investment vehicle or in any other
specific assets of the Corporation.
(c) The Employee shall be vested in the Deferred
Compensation Amount pursuant to the following schedule:
Year of Service Percentage
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1990 10%
1991 20%
1992 30%
1993 40%
1994 50%
1995 60%
1996 70%
1997 80%
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1998 90%
1999 100%
Credit toward vesting shall be given for all years
where the Employee is employed on January 1 of such year
and continues to be employed through at least July 2 of
such year; provided, however, that credit shall not be
given for any year during which or after the year in
which the Employee gives notice of his intent to resign
his employment.
If Employee's employment terminates due to death or
disability, then the Employee shall become one hundred
percent (100%) vested in the Deferred Compensation
Amount.
1. The Employee shall be entitled to the vested balance
of the Deferred Compensation Amount, paid on the date and in
the manner specified below:
(a) Except as provided in subparagraph (b), the
Employee shall be entitled to the vested portion of the
Deferred Compensation Amount payable in a lump sum on
April 1, 2000.
(b) Notwithstanding the provisions of subparagraph
(a), if Employee's employment with the Corporation
terminates prior to January 1, 2000, the vested portion
of the Deferred Compensation Amount shall be paid to the
Employee or the Employee's beneficiary within ninety (90)
days of the termination.
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1. The parties acknowledge that it is presently
anticipated that the stock of the Combined Clipper Group will
be sold by Windsor, Inc., to Intrav, Inc., effective
December 31, 1996. In lieu of any other consideration to
which Employee might be entitled due to this transaction,
including but not limited to consideration that might be due
to him under the Memorandum of Agreement, Employee will be
paid a lump sum of One Million Dollars ($1,000,000), from
which all applicable payroll taxes and other deductions will
be made, on the later of December 31, 1996, or the date that
the stock of the Combined Clipper Group is sold by Windsor,
Inc., to Intrav, Inc. Assuming that the payment called for in
this Paragraph 6 is made, the parties agree that nothing in
this Deferred Compensation Agreement or in any other contract
in existence between them gives Employee a right to any monies
as a result of any subsequent or other change of control of
the Corporation or of the Combined Clipper Group, and that if
any such right does exist, it is hereby superseded and
extinguished. In the event that the payment called for in
this Paragraph 6 is not made on or before January 31, 1997,
the parties agree that they will negotiate in good faith to
clarify the change of control provision in the Memorandum of
Agreement.
2. Employee shall have the right to designate a
beneficiary or beneficiaries to receive benefits hereunder in
the case of Employee's death. The beneficiary(ies) referred
to in this Paragraph may be designated or changed by Employee
(without the consent of any prior beneficiary or the
Corporation) on a form provided by the Corporation and
delivered to the Corporation before Employee's death. If no
such beneficiary shall have been designated or no designated
beneficiary shall survive Employee, the payments payable under
paragraph 3 shall be payable to Employee's probate estate.
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3. Nothing contained in this Agreement and no action
taken pursuant to the provisions of this Agreement shall
create or be construed to create a trust of any kind, or a
fiduciary relationship between the Corporation and Employee,
his designated beneficiary(ies) or any other person. Any
funds which may be invested under the provisions of this
Agreement shall continue for all purposes to be a part of the
general funds of the Corporation and no person other than the
Corporation shall, by virtue of the provisions of this
Agreement, have any interest in such funds or in any assets in
which said funds are invested. To the extent that any person
acquires a right to receive payments from the Corporation
under this Agreement, said rights shall be no greater than the
rights of any unsecured general creditor of the Corporation.
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4. The right of Employee or any other person to the
payment of deferred compensation or other benefits under this
Agreement shall not be assigned, transferred, pledged, or
encumbered except by Will or by the laws of descent and
distribution.
5. Nothing contained in this Agreement shall be
construed to alter Employee's status as an at-will employee of
the Corporation.
6. Any deferred compensation payable under this
Agreement shall not be deemed salary or other compensation to
Employee for the purpose of computing benefits to which
Employee may be entitled under any pension plan or other
arrangements of the Corporation for the benefit of its
employees. Furthermore, the Corporation agrees not to treat
the amount of any deferred compensation payable under this
Agreement as salary for purposes of deducting said amount on
its corporate income tax return or making any withholding on
said amount for Employee's benefit or for the purposes of
Social Security until said amount is received by Employee
(except for Medicare tax withholdings or any other taxes
required to be withheld by law).
7. The Corporation agrees to file all necessary returns
and reports by the laws of the United States or the State of
Missouri in regard to this Deferred Compensation Agreement or
any fund created under this Agreement.
8. Any notice required to be sent pursuant to the terms
of this Agreement shall be deemed delivered if sent to the
other party by first class, U.S. Mail, postage prepaid to the
following address:
To the Corporation: Clipper Cruise Line, Inc.
7711 Bonhomme Avenue
St. Louis, Missouri 63105
Employee: Paul H. Duynhouwer
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10603 Greywick Lane
St. Louis, Missouri 63141
Any party may change their address listed herein by sending
the other party notice of such change in the same manner as
all other notices under this Agreement.
1. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors,
subsidiaries and assigns, and the Employee and his heirs,
executors, administrators and legal representatives.
2. This Agreement shall be construed in accordance and
governed by the laws of the State of Missouri.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be executed by its duly authorized officer and
the Employee has hereunto set his hand as of the day and year
first above written.
CORPORATION:
CLIPPER CRUISE LINE, INC.
By: /s/ Wayne L. Smith
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Title: Director
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EMPLOYEE:
/s/ Paul H. Duynhouwer
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PAUL H. DUYNHOUWER
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