Exhibit 10.17
AGREEMENT
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This Employment Agreement ("Agreement") is entered into on June 12, 1997,
between Empress Casino Hammond Corporation, an Indiana corporation, 825 Empress
Drive, Hammond, Indiana 46320 hereinafter referred to as the "Company," and
Joseph J. Canfora, 825 Empress Drive, Hammond, Indiana 46320, 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 Employee's employment as President of
the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DUTIES. The Employee shall serve as President of the Company. As
such, the Employee shall have the responsibilities and duties as set forth in
the bylaws of the Company and such other duties commensurate with the position
of president and chief operating officer of entities comparable to the Company,
including responsibility for implementing all resolutions adopted by the
Company's Board of Directors. During the term of this Agreement, Employee shall
devote his full business time and attention to the business affairs of the
Company and Empress Casino Joliet Corporation (with whom Employee is entering a
like employment agreement) and shall use his best efforts, skills and abilities
to promote the Company's interests. The Employee shall report regularly to the
Board of Directors of the Company. The Company agrees that this Agreement shall
not preclude the Employee from engaging in other civic, charitable and gaming
industry activities. In addition, subject to the approval of a majority of the
members of the Company's Board of Directors (which approval shall not be
withheld without reason), Employee may serve as a member of the board of
directors of corporations other than the Company.
2. TERM. The initial term of employment pursuant to this Agreement shall
begin on June 23, 1997, and, subject to the provisions hereof, shall continue
until the close of business on June 22, 2000. The term of this Agreement shall
be automatically extended thereafter for successive twelve (12) month periods,
provided that neither party has given written notice to the other party at least
one hundred and eighty (180) days prior to the end of the current term that such
term shall not be extended. The original termination date of June 22, 2000, and
any automatic extensions thereof shall be hereinafter defined as the "Next
Scheduled Termination Date."
3. COMPENSATION.
a. BASE SALARY. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee a base salary at the rate of Five
Hundred
Thousand Dollars ($500,000) per year, payable on the same timetable as the
regular payroll of the Company, less any salary earned by Employee from Empress
Casino Joliet Corporation.
b. BONUS. In addition, the Company will pay to the Employee for each
fiscal year that the Employee is employed by the Company pursuant to this
Agreement, a bonus in an amount determined in accordance with Schedule A
attached hereto and incorporated herein by reference. This amount shall be
payable to Employee as soon as practicable after the completion of the audit of
the Company's books and records following the end of the Company's fiscal year.
In any year in which the Employee is not employed for a full fiscal year, the
Employee shall be entitled to receive a pro rata portion of the bonus which
would otherwise be payable, based on the number of days Employee was actually
employed during such year; provided, however, that if Employee is terminated for
"Cause" (as defined in Section 9) or if the Employee resigns, other than at the
expiration of the term of this Agreement, Employee shall not be entitled to a
pro rata bonus hereunder with respect to the year in which Employee's employment
terminates. In any year with respect to which (i) Employee is not employed on
the last day of such fiscal year and (ii) Employee is entitled to receive a pro
rata bonus, as described in the preceding sentence, the amount of such bonus,
prior to such pro ration, shall be the amount of Employee's bonus for the prior
fiscal year.
c. ADJUSTMENTS TO BASE SALARY AND BONUS. The Chief Executive Officer of
the Company may, in his sole discretion, increase (but not decrease) the
Employee's Base Salary and Bonus to take into account conditions outside the
control of Employee.
4. OFFICE FACILITIES. The Company shall furnish the Employee with a
private office, supplies, secretarial assistance, equipment, and such other
facilities and services suitable to his position and adequate for the
performance of his duties.
5. EXPENSES.
a. GENERAL. Employee is authorized, in carrying out his duties and
responsibilities hereunder, to make reasonable expenditures on behalf of the
Company for meetings, dues, journals, travel, entertainment, and appropriate
gifts. The Company will promptly reimburse the Employee for such expenditures
upon his compliance with the expense reimbursement policies of the Company in
effect from time to time.
b. RELOCATION EXPENSES. The Company agrees to reimburse Employee for
100% of his reasonable expenses incurred in relocating Employee and his
dependants from the Kansas City, Missouri area to the Chicago, Illinois area,
including but not limited to the cost of transporting household goods, the cost
of house hunting trips for Employee and Employee's spouse (including meals,
lodging and rental car), the cost of storing Employee's household goods until
such time as Employee finds permanent housing in the Chicago, Illinois area, and
the cost of transporting Employee, his dependents and any household pets to the
Chicago area. In addition, the Company agrees to pay or to reimburse Employee
for the cost of a real estate
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relocation service, such service to be mutually agreed upon, to guarantee the
sale of Employee's current residence at fair market value.
c. TEMPORARY HOUSING. The Company agrees to reimburse Employee for the
cost of temporary housing in the Chicago, Illinois area for a period not to
exceed ninety (90) days from the date of this Agreement, such reimbursement not
to exceed Fifteen Thousand Dollars ($15,000).
6. VACATIONS. Employee shall be entitled to twenty (20) vacation days
per calendar year (based on a five (5) day work week) to be taken in accordance
with the Company's normal vacation policies in effect from time to time;
provided, however, that vacation days available but not used by Employee in a
calendar year may not be cumulated or carried over into subsequent years. These
vacation days shall be concurrent with and not in addition to the vacation
provided by Empress Casino Joliet Corporation.
7. AUTOMOBILE. The Company shall provide Employee with, or reimburse
Employee for, a luxury automobile mutually selected by Employee and the Company,
for Employee's exclusive use. The automobile may be replaced by Employee after
it has been in service three years or, if leased, upon expiration of the lease.
Employee's expenses of automobile maintenance, repair and insurance shall be
reimbursed by the Company in accordance with the expense reimbursement policies
of the Company. This provision shall be implemented as necessary to avoid
duplication of benefits provided by Empress Casino Joliet Corporation.
8. EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS.
a. GENERAL. Employee shall be entitled to participate in all of the
employee benefit plans and fringe benefits which the Company makes available to
its employees on the same terms and conditions as any other executive level
employee of the Company, except as otherwise provided in this Agreement and
except to the extent necessary to avoid duplication of benefits provided by
Empress Casino Joliet Corporation.
b. LIFE INSURANCE. During the term of this Agreement, including any
extensions thereof, the Company shall provide, subject to Employee's
insurability, Employee with a term life insurance policy, with the beneficiaries
to be designated by Employee, in addition to any life insurance benefits that
may be available to Employee under the terms of any group term life insurance
plan offered to employees of the Company generally, in an amount equal to
$4,000,000. In the event of the termination of Employee's employment with the
Company, Employee shall have the right, subject to the terms and conditions of
such policy, to assume and continue at his own expense such policy. This
provision shall be implemented as necessary to avoid duplication of benefits
provided by Empress Casino Joliet Corporation.
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9. TERMINATION.
a. CAUSE. This Agreement shall terminate without any liability to or
upon the Company other than to pay Base Salary for services rendered prior to
the date of termination and and Bonus for years prior to the year in which the
termination occurs, to the extent earned but not yet paid, if Employee is
terminated for "Cause." "Cause" shall be defined as: (i) Employee's theft or
embezzlement or attempted theft or embezzlement of money or tangible or
intangible assets or property of the Company or its employees; (ii) any act or
acts of moral turpitude by Employee materially injurious to the interest,
property, operations, business or reputation of the Company; (iii) Employee's
conviction of a felony materially injurious to the interest, property,
operations, business or reputation of the Company; (iv) gross negligence or
willful misconduct in the performance of Employee's duties; (v) Employee's
willful neglect of his duties under this Agreement; (viii) Employee's failure
to pass a drug test administered by the Company and/or failure to obtain,
suspension or revocation of Employee's gaming license in Indiana.
b. DEATH OR DISABILITY. In the event of the death or "Disability" of
Employee, this Agreement shall terminate without any liability to or upon the
Company other than (i) to pay Base Salary and earned benefits for services
rendered prior to the date of termination, and Bonus for years prior to the year
in which the termination occurs, to the extent earned but not yet paid, (ii) to
pay a pro rata Bonus determined as set forth in Section 3 for the year in which
the termination occurs; (iii) to make all payments of Base Salary required
hereunder to the Employee through the next Scheduled Termination Date of this
Agreement; and (iv) in the case of Disability, to continue to provide health
insurance to Employee under the health insurance program provided by the Company
to employees generally, from time to time, through the next Scheduled
Termination Date of this Agreement, provided that Employee makes any required
employee contributions therefor. Employee's right to continue health care
coverage under applicable law shall commence as of the date that Employee's
health care coverage under this Section 9. ends. "Disability" shall be defined
as Employee's inability, as determined reasonably and in good faith by the
Company, acting in consultation with a physician selected by it, to the extent
reasonably and in good faith necessary, due to illness, accident, injury,
physical or mental incapacity or other disability, effectively to carry out his
duties under this Agreement for ninety (90) consecutive days or shorter periods
aggregating ninety (90) days (whether or not consecutive) during any one-year
period.
c. RESIGNATION. In the event that Employee resigns his employment with
the Company, other than at the expiration of the term of this Agreement, the
Company shall have no liability other than to pay Base Salary and earned
benefits for services rendered prior to the date of resignation and Bonus for
years prior to the year in which the resignation occurs, to the extent earned
but not yet paid, and, except as required by applicable law, he shall not be
entitled to any compensation or benefits beyond his last day of employment.
Employee agrees to provide not less than sixty (60) days written notice to the
Company prior to his resignation.
d. TERMINATION WITHOUT CAUSE. If the Company terminates Employee's
employment for reasons other than Cause, death, Disability or Change in Control
(as defined in the
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Long-Term Incentive Agreement entered into between the parties), this Agreement
shall terminate, without any liability to or upon the Company other than (i) to
pay Base Salary and earned benefits for services rendered prior to the date of
termination, and Bonus for years prior to the year in which the termination
occurs, to the extent earned but not yet paid, (ii) to pay a pro rata Bonus
determined as set forth in Section 3 for the year in which the termination
occurs, such Bonus to be payable within thirty (30) days following termination
of employment, (iii) to make all payments of Base Salary required hereunder to
the Employee through the Next Scheduled Termination Date of this Agreement (the
"Severance Period"), and (iv) to continue to provide health insurance to
Employee under the health insurance program provided by the Company to employees
generally, from time to time, through the next scheduled termination date of
this Agreement, provided that Employee makes any required employee contributions
therefor. Employee's right to continue health care coverage under applicable law
shall commence as of the date that Employee's health care coverage under this
Section 9 ends upon the close of the Severance Period.
10. CHANGE IN CONTROL. Notwithstanding anything contained herein, or in
any other agreement between the Company and Employee, or benefit or compensation
plan under which the Employee participates, to the contrary, in the event that
any amounts due Employee hereunder or under any other plan or program of the
Company or other agreement between the Company and Employee, constitute
"parachute payments", within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the amount of such parachute
payments, when reduced by the federal excise taxes due and owing on such
parachute payments, if any, is less than the amount Employee would receive if he
were paid only three (3) times his "base amount", as that term is defined in
section 280G of the Code, then, in lieu of all payments hereunder which are
parachute payments, Employee shall be paid, in cash, an amount equal to three
(3) times his base amount less one dollar ($1.00). The determinations to be
made with respect to this Section 10 shall be made by an independent auditor
jointly selected by the parties.
11. INDEMNIFICATION. Employee shall have the benefit of indemnification
as provided under applicable law and the bylaws of the Company. The Company
shall cause Employee to be covered by the current policies of directors' and
officers' liability insurance covering directors and officers of the Company,
copies of which have been provided to Employee, in accordance with their terms,
to the maximum extent of the coverage available for any director or officer of
the Company. The Company shall use commercially reasonable efforts to cause the
current policies of directors' and officers' liability insurance covering
directors and officers of the Company to be maintained throughout the term of
Employee's employment with the Company and for such period thereafter as may be
necessary to continue to cover acts of Employee during the term of his
employment (provided that the Company may substitute therefor, or allow to be
substituted therefor, policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect).
12. CONFIDENTIAL INFORMATION. Employee, during the period of his
employment by the Company and thereafter, irrespective of whether the
termination of his employment is voluntary or involuntary, will not directly or
indirectly (without the Company's
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prior written consent), use for himself, or use for or disclose to any other
party, any confidential information regarding the Company. For purposes of this
Agreement, such confidential information shall include any data or information
regarding the business of the Company or any subsidiary or affiliate of the
Company that is not generally known to the public, including without limitation
any confidential information or data regarding the plans of the Company or its
affiliates or the business methods of the Company or its affiliates not in
general use by others.
13. NON-SOLICITATION. Employee agrees, that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason, he will not,
directly or indirectly, on his own behalf or on behalf of any other person or
entity, solicit, induce or attempt to solicit or induce: (i) any then current
employee, representative, or independent contractor of the Company or its
affiliates to terminate or modify his, her or its employment or business
relationship with the Company or such affiliate; (ii) any then current customer
of the Company or its affiliates with which Employee had personal contact during
his employment or about which Employee had access to confidential information
regarding such customer to terminate or modify its use of the Company's, or such
affiliate's, products and services; or (iii) any then current vendor, supplier,
service provider, or other business relation of the Company or its affiliates to
terminate or modify his, her or its relationship with the Company or such
affiliate.
14. NON-COMPETITION. Employee agrees that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason other than (i)
termination at the Next Scheduled Termination Date of the Agreement or (ii)
termination without Cause, in the counties of Lake, Cook, Kane, Will, DuPage or
McHenry, in the State of Illinois, and the counties of Lake, Porter and LaPorte,
in the State of Indiana, he will not, directly or indirectly, on his own behalf
or on behalf of any other person or entity, represent, engage in, be employed
by, furnish consulting services to, or have any interest in (whether as an
agent, director, officer, owner, partner, principal, proprietor, representative,
shareholder, or otherwise) any business located in the aforementioned counties
that is competitive with the Company's, or such affiliate's, products or
services in such counties or that would benefit from access to the Company's, or
such affiliate's, confidential information (as defined in Section 12).
Employee's ownership, in itself, of one percent or less of the outstanding
publicly traded securities of any class of a corporation shall not be violation
of this Section 14 so long as Employee does not participate in the conduct of
the business of such corporation, in such counties.
15. REASONABLE RESTRICTIONS. Employee acknowledges that the covenants
contained in Sections 12, 13 and 14 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Company's confidential
information, trade secrets, and near permanent, permanent and/or long-standing
relationships with its customers, and will not materially affect Employee's
ability to be employed after his employment with the Company . Employee further
agrees that in the event of an actual, attempted, or threatened breach by
Employee of Section 12, 13 or 14 of this Agreement, the Company shall be
entitled to injunctive relief to enjoin such conduct in addition to any other
available legal or equitable remedies.
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16. WAIVER OF BREACH. The waiver by the Company or Employee of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by the Company or Employee.
17. 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.
18. 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.
19. 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 invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
20. NOTICE. All notices provided for by this Agreement shall be in
writing and shall be transmitted either by actual delivery of the notice into
the hands of the parties hereunto entitled, or by the mailing of such notice in
the United States Mail to the address, as set forth above, or such other address
as such party shall have provided to the other by written notice, of the parties
entitled thereto by certified or registered mail, return receipt requested. The
notice shall be deemed to be received in case of actual delivery on the date of
its actual receipt by the parties entitled thereto and in case of delivery by
mail on the date of the return receipt.
21. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Indiana. This
Agreement is subject to review by the Indiana Gaming Commission and may be
subsequently disapproved or canceled by the Indiana Gaming Commission in
accordance with applicable rules.
22. CONFIDENTIALITY OF AGREEMENT. The Company and the Employee agree not
to disclose the terms of this Agreement to any third party, except as may be
required by law. A copy of this Agreement shall be filed with the Indiana
Gaming Commission.
23. ALLOCATION. The Company and the Employee acknowledge that, concurrent
herewith, Employee is entering into an agreement pursuant to which he will serve
as President of Empress Casino Joliet Corporation (the "Empress Joliet
Agreement") and that the compensation and benefits earned by Employee under this
Agreement are not intended to duplicate the compensation and benefits earned by
Employee from Empress Casino Joliet Corporation. The Company will cooperate
with Empress Casino Joliet Corporation to fairly allocate costs and expenses in
the employment of Employee in a manner commensurate with the relative efforts
and time commitment provided by Employee to the Company and to Empress Casino
Joliet
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Corporation. Notwithstanding the right of the Company and Empress Casino
Joliet Corporation to allocate costs and expenses as set forth herein, as
between Employee and the Company and Empress Casino Joliet Corporation, the
liability of the Company hereunder and Empress Casino Joliet Corporation under
the Empress Joliet Agreement to Employee shall be joint and several as to both
agreements.
IN WITNESS WHEREOF, this Agreement has been executed, in one or more
counterparts, each of which shall be deemed to be an original, by the Company
and Employee as of the date first written above.
EMPRESS CASINO HAMMOND EMPLOYEE:
CORPORATION
By: _________________________________ ____________________________________
Chairman of the Board Joseph J. Canfora
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SCHEDULE A continued
SCHEDULE A
TO THE EMPLOYMENT AGREEMENT (THE "AGREEMENT") BETWEEN
EMPRESS CASINO JOLIET CORPORATION (THE "COMPANY")
AND
JOSEPH J. CANFORA (THE "EMPLOYEE")
Except as set forth below, the amount of the Bonus to which Employee is entitled
under Section 3.b. of the Agreement, shall be determined in accordance with the
following table, as determined by the Company's independent accountants, of the
Company, Empress Casino Hammond Corporation and LMC Leasing, Ltd.
(collectively, the "Affiliated Companies"):
Combined EBITDA Amount of Bonus
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$100 million or less The amount of the Bonus, if any, shall be
determined by the Board of Directors of the
Company, in its sole discretion
In excess of $100 million 3.913% of one-half of the combined
after-tax earnings of the Affiliated
Companies less Base Salary
The bonus level shall be determined based on the combined earnings of the
Affiliated Companies before net interest expense, taxes, depreciation and
amortization ("Combined EBITDA") for the fiscal year for which the Bonus is
being determined. The Bonus is calculated with reference to combined earnings
of the Affiliated Companies after interest expense, depreciation, amortization
and taxes for such year.
In the event of a Change in Control (as defined in the Long-Term Incentive
Agreement entered into between the parties) with respect to one or more of the
Affiliated Companies, then, with respect to the year in which such Change in
Control occurs, Employee shall receive a pro rata Bonus with respect to the
company(ies) with respect to which a Change in Control has occurred, and shall
receive a Bonus, with respect to remaining company(ies) (the "On-going
Company(ies)"), in each case determined on the basis of the combined EBITDA of
the Affiliated Companies in the fiscal year prior to the fiscal year in which
such Change in Control occurs, multiplied by a fraction, the numerator of which
is the portion of the combined EBITDA for such prior fiscal year which is
attributable to (i) the company(ies) with respect to which the Change in Control
occurred, in the case of the Bonus with respect to such company(ies) and (ii)
the On-going Company(ies), in the case of the Bonus with respect to such
company(ies), and the denominator of which is the total combined EBITDA of the
Affiliated Companies for such prior fiscal year.
SCHEDULE A continued
EXAMPLE OF BONUS CALCULATION
ASSUMPTIONS:
1. Combined earnings of the Affiliated Companies before net interest
expense, income taxes, depreciation and amortization ("Combined
EBITDA") is $105 million
2. The sum of net interest expense, depreciation and amortization
for the Affiliated Companies is $37 million
3. Combined federal, state and local income tax rate is presently
43% (paid at the shareholder level for S-corporations)
CALCULATION OF BONUS:
The bonus level is based on the Combined EBITDA of $105 million. Therefore, the
bonus level is 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies.
Combined after-tax earnings is equal to the Combined EBITDA less interest
expense, taxes, depreciation and amortization:
Combined after-tax earnings = Combined EBITDA minus (the sum of interest,
depreciation and amortization) minus (taxes on Combined EBITDA less
interest, depreciation and amortization)
Combined after-tax earnings = $105 million - $37 million - (43% x ($105
million- $37 million))
Combined after-tax earnings = $105 million - $37 million - $29.24 million
Combined after-tax earnings = $38,760,000
Bonus is equal to 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies less Base Salary
Bonus = (3.913% x (50% x Combined after-tax earnings)) - Base Salary
Bonus = (3.913% x (50% x $38,760,000)) - $500,000
Bonus = (3.913% x $19,380,000) - $500,000
Bonus = $758,339.40 - $500,000
Bonus = $258,339.40
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