Xxxx X. Xxxxx
Executive Employment Agreement
o Term. August 1, 1996 - December 31, 1999.
o End-of-Term. After 12/31/98, Company may give notice of non-renewal; term
extends for 12 months. After 12/31/99, term extends on one-day-at-a-time
basis until notice of non-renewal given; then, term extends for 12 months.
o Base Salary. $217,500 per year; if adjusted upward at sole discretion of
Company, increased amount becomes Base Salary.
o Bonus. If Company achieves the percentage of business plan set forth
below, Employee receives performance bonus of the corresponding percentage
of Base Salary; provision for alternative discretionary bonus.
Percentage of Percentage of
Cigar EBITDA Base Salary
------------- -------------
85% 50%
90 75
95 90
100 100
105 110
110 125
115 150
o Death. Base Salary paid until death; prorated performance bonus paid if
otherwise due for the year in which Employee dies.
o Disability. Company may terminate Agreement after six months. Base salary,
reduced by any disability benefits received by Employee, paid until
Company terminates; prorated performance bonus paid if otherwise due for
the year in which Agreement is terminated.
o Benefits. Standard Company officer benefits. Also, term life insurance
aggregating $750,000.
o Cause. Upon gross neglect, conviction of felony, conviction of any crime
relating to Company property, willful misconduct or material breach by
employee or material prejudice to Company, Company can terminate without
further liability.
o Company Breach. Employee receives Base Salary, performance bonuses and all
benefits for longer of balance of term or 12 months; if end-of-term
provisions are in effect, for balance of 12 month period; prorated
performance bonus paid if otherwise due for balance of term; employee
obligated to mitigate.
o Other Provisions. Protection of confidential information, non-compete
during term, assignment of inventions, legal fees to employee if he
prevails in action for breach or injunction; legal fees to Company if it
prevails in action for injunction.
This summary page is for convenience of reference only. It shall not constitute
a part of the Agreement
Employment Agreement
EMPLOYMENT AGREEMENT, dated as of August 1, 1996, between
Consolidated Cigar Corporation, a Delaware corporation (the "Company") and Xxxx
X. Xxxxx (the "Executive").
WHEREAS, the Company wishes to employ the Executive, and the
Executive wishes to accept such employment, on the terms and conditions set
forth in this Agreement;
Accordingly, the Company and the Executive hereby agree as follows:
1. Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the
Executive for the Term (as defined in Section 2.1), to render exclusive and
full-time services to the Company as Senior Vice President and Chief Financial
Officer or in such other executive position as may be mutually agreed upon by
the Company and the Executive, and to perform such other duties consistent with
such position as may be assigned to the Executive by the Board of Directors or
any officer of the Company senior to the Executive.
1.2 Acceptance. The Executive hereby accepts such employment
and agrees to render the services described above. During the Term, the
Executive agrees to serve the Company faithfully and to the best of the
Executive's ability, to devote the Executive's entire business time, energy and
skill to such employment, and to use the Executive's best efforts, skill and
ability to promote the Company's interests. The Executive further agrees to
accept election, and to serve during all or any part of the Term, as an officer
or director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be.
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in Fort
Lauderdale, Florida, subject to reasonable travel requirements on behalf of the
Company.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's
employment under this Agreement (the "Term") shall commence on August 1, 1996
and shall end on December 31, 1999 or such later date to which the Term is
extended pursuant to Section 2.2.
2.2 End-of-Term Provisions. At any time on or after December
31, 1998 the Company shall have the right to give written notice of non-renewal
of the Term. In the event the Company gives such notice of non-renewal, the Term
automatically shall be extended so that it ends twelve months after the last day
of the month in which the Company gives such notice. From and after January 1,
2000, unless and until the Company gives written notice of non-renewal as
provided in this Section 2.2, the Term automatically shall be extended
day-by-day; upon the giving of such notice by the Company, the Term
automatically shall be extended so that it ends twelve months after the last day
of the month in which the Company gives such notice.
2.3 Special Curtailment. The Term shall end earlier than the
original December 31, 1999 termination date provided in Section 2.1 or any
extended termination date provided in Section 2.2, in either case if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $217,500, less such deductions or amounts to be withheld as required
by applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2 Bonus. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive will be eligible to receive a
bonus with respect to each calendar year included within the Term computed in
accordance with the provisions of the next two succeeding sentences. If, with
respect to any calendar year, the Company achieves EBITDA of at least the
percentage set forth in the table below of its business plan for such year, such
bonus shall be the percentage set forth in the table below of Base Salary with
respect to the year for
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which the bonus (any such bonus, a "performance bonus") was earned:
Percentage of Percentage of
EBITDA in Business Plan Base Salary
----------------------- -------------
85% 50%
90 75
95 90
100 100
105 110
110 125
115 150
In the event that the Term or this Agreement is terminated other than pursuant
to Section 4.3, the Executive shall be entitled to receive a prorated
performance bonus (if such a bonus is otherwise payable) with respect to (A) the
year in which the Term or this Agreement terminated or, (B) in the event of a
termination pursuant to Section 4.4, the year in which the Executive was last
entitled to receive any payments of Base Salary, in an amount equal to (x) the
percentage of Base Salary otherwise payable as a performance bonus with respect
to such year multiplied by (y) a fraction, the numerator of which is the number
of whole months elapsed from the beginning of such year to the date as of which
the Term or this Agreement terminated or the last day as of which the Executive
is entitled to receive payments of Base Salary, as applicable and the
denominator of which is 12. A performance bonus or other bonus, if either or
both are earned in accordance with this Agreement, shall be paid no later than
March 31st of the year next following the year with respect to which such bonus
was earned. The maximum bonus payable pursuant to this Section 3.2 shall be
$1,000,000 with respect to any calendar year. The bonus payable hereunder on
account of calendar years commencing after December 31, 1996 shall be subject to
approval by the shareholders of the Company of the bonus plan described herein.
3.3 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, upon presentation of expense statements or vouchers or such other
supporting information as the Company customarily may require of its officers
provided, however, that the maximum amount available for such expenses during
any period may be fixed in advance by the Chairman, the Vice Chairman or the
Chief Executive Officer of the Company.
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3.4 Vacation. During the Term, the Executive shall be entitled
to a vacation period or periods of four (4) weeks taken in accordance with the
vacation policy of the Company during each year of the Term. Vacation time not
used by the end of a year shall be forfeited, except that one week of vacation
pay may be "banked" in accordance with Company policy.
3.5 Fringe Benefits. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, non-qualified benefit restoration plan,
group insurance or other so-called "fringe" benefit plan which the Company
provides to its executive employees generally. Such benefits include the right
to the use of an automobile as is currently available to the Company's executive
employees. During the Term, the Company will provide the Executive with term
life insurance having a death benefit which, when aggregated with the death
benefit provided in the group term life insurance, if any, available to
executive employees of the Company generally, will equal $750,000. In addition,
the Company shall "gross up" the income imputed to the Executive under federal
and any applicable state income tax laws for his personal use of the
Company-furnished automobile and for any life insurance furnished to the
Executive, such that the Executive effectively will suffer no personal cost for
such fringe benefits.
4. Termination.
4.1 Death. If the Executive dies during the Term, the Term
shall terminate forthwith upon the Executive's death and the Company shall have
no obligation hereunder to make any payments to the Executive's beneficiaries on
account of any period of time after such termination. After such termination,
the Executive's beneficiaries shall receive any benefits to which the Executive
or such beneficiaries may be entitled under any fringe benefit program that may
have been provided by the Company pursuant to Section 3.5.
4.2 Disability. If, during the Term the Executive becomes
disabled or incapacitated to the extent he is unable to perform his duties
hereunder ("Totally Disabled") for a period of six (6) consecutive months, the
Company shall have the right at any time thereafter, so long as the Executive is
then still Totally Disabled, to terminate the Term upon sending written notice
of termination to the Executive. If the Company elects to terminate the Term by
reason of the Executive becoming Totally Disabled, the Company shall have no
obligation
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hereunder to make any payments to the Executive on account of any period of time
after such termination. After such termination, the Executive shall receive any
benefits to which he may be entitled under any fringe benefit program that may
have been provided by the Company pursuant to Section 3.5. While the Executive
is Totally Disabled prior to the Term being terminated, Base Salary payable
pursuant to Section 3.1 shall be reduced by any other benefits payable to the
Executive under any disability plan provided for hereunder or otherwise
furnished to the Executive by the Company.
4.3 Cause. In the event of gross neglect by the Executive of
the Executive's duties hereunder, conviction of the Executive of any felony,
conviction of the Executive of any lesser crime or offense involving the
property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of any material
portion of the Executive's duties hereunder, breach by the Executive of any
material provision of this Agreement or any other conduct on the part of the
Executive which would make the Executive's continued employment by the Company
materially prejudicial to the best interests of the Company, the Company may at
any time by written notice to the Executive terminate the Term and, upon such
termination, this Agreement shall terminate and the Executive shall be entitled
to receive no further amounts or benefits hereunder, except any as shall have
been earned to the date of such termination.
4.4 Company Breach. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled to
terminate the Term upon 60 days' prior written notice to the Company. Upon such
termination, or in the event the Company terminates the Term or this Agreement
other than pursuant to the provisions of Section 4.2 or 4.3, the Company shall
continue to provide the Executive (i) payments of Base Salary, in the manner and
amount specified in Section 3.1, (ii) performance bonuses, in the manner and
amount specified in Section 3.2 and (iii) fringe benefits and additional
benefits in the manner and amounts specified in Section 3.5 until the end of the
Term (as in effect immediately prior to such termination) or, if the Company has
not then given written notice of non-renewal pursuant to Section 2.2, for a
period of twelve months after the last day of the month in which termination
described in this Section 4.4 occurred, whichever is longer (the "Damage
Period"). The Company's obligations pursuant to this Section 4.4 are subject to
the Executive's duty to mitigate damages by seeking other employment provided,
however, that the Execu-
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tive shall not be required to accept a position of lesser importance or of
substantially different character than the position held with the Company
immediately prior to the effective date of termination or in a location outside
of the Fort Lauderdale, Florida metropolitan area. To the extent that the
Executive shall earn compensation during the Damage Period (without regard to
when such compensation is paid), the Base Salary and bonus payments to be made
by the Company pursuant to this Section 4.4 shall be correspondingly reduced.
4.5 Litigation Expenses. Except as provided for in Section
5.7, if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is rendered
in favor of the Executive, the Company shall reimburse the Executive for all
expenses (including reasonable attorneys' fees) incurred by the Executive in
connection with such action, suit or proceeding. Such costs shall be paid to the
Executive promptly upon presentation of expense statements or other supporting
information evidencing the incurrence of such expenses.
5. Protection of Confidential Information; Non-Competition.
5.1 In view of the fact that the Executive's work for the
Company will bring the Executive into close contact with many confidential
affairs of the Company not readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know how",
trade secrets, customer lists, pricing policies, operational methods, technical
processes, formulae, inventions and research projects, and other business
affairs of the Company, learned by the Executive heretofore or hereafter, and
not to disclose them to anyone outside of the Company, either during or after
the Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written consent.
The foregoing prohibitions shall include, without limitation, directly or
indirectly publishing (or causing, participating in, assisting or providing any
statement, opinion or information in connection with the publication of) any
diary, memoir, letter, story, photograph, interview, article, essay, account or
description (whether fictionalized or not) concerning any of the foregoing,
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publication being deemed to include any presentation or reproduction of any
written, verbal or visual material in any communication medium, including any
book, magazine, newspaper, theatrical production or movie, or television or
radio programming or commercial; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
5.2 During the Term, the Executive shall not, directly or
indirectly, enter the employ of, or render any services to, any person, firm or
corporation engaged in any business competitive with the business of the Company
or of any of its subsidiaries or affiliates; the Executive shall not engage in
such business on the Executive's own account; and the Executive shall not become
interested in any such business, directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent, employee, trustee,
consultant, or in any other relationship or capacity provided, however, that
nothing contained in this Section 5.2 shall be deemed to prohibit the Executive
from acquiring, solely as an investment, up to five percent (5%) of the
outstanding shares of capital stock of any public corporation.
5.3 If the Executive commits a breach, or threatens to commit
a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting a breach of any of
the provisions of the preceding paragraph, and the Executive hereby agrees to
account for and pay over such Benefits to the Company.
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Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2,
or any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2,
or any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 5.1 and 5.2 upon the
courts of any state within the geographical scope of such covenants. In the
event that the courts of any one or more of such states shall hold such
covenants wholly unenforceable by reason of the breadth of such covenants or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other states within the geographical scope of such covenants as to
breaches of such covenants in such other respective jurisdictions, the above
covenants as they relate to each state being for this purpose severable into
diverse and independent covenants.
5.7 In the event that any action, suit or other proceeding in
law or in equity is brought to enforce the covenants contained in Sections 5.1
and 5.2 or to obtain money damages for the breach thereof, and such action
results in the award of a judgment for money damages or in the granting of any
injunction in favor of the Company, all expenses (including reasonable
attorneys' fees) of the Company in such action, suit or other proceeding shall
(on demand of the Company) be paid by the Executive. In the event the Company
fails to obtain a judgment for money damages or an injunction in favor of the
Company, all expenses (including reasonable attorneys' fees) of the Executive in
such action, suit or other proceeding shall (on demand of the Executive) be paid
by the Company.
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6. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a) promptly
disclose such Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Inventions for the
United States and foreign countries; (c) sign all papers necessary to carry out
the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 If any Invention is described in a patent application or
is disclosed to third parties, directly or indirectly, by the Executive within
two years after the termination of the Executive's employment by the Company, it
is to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert
any rights to any Invention as having been made or acquired by the Executive
prior to the date of this Agreement, except for Inventions, if any, disclosed to
the Company in writing prior to the date hereof.
7. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds
of the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
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8. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, charges and expenses incurred or
sustained by the Executive in connection with any action, suit or proceeding to
which the Executive may be made a party by reason of the Executive being an
officer, director or employee of the Company or of any subsidiary or affiliate
of the Company.
9. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
Consolidated Cigar Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000-0000
Attn: Chief Executive Officer
If to the Executive, to:
Xxxx X. Xxxxx
00000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
10. General.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the Executive's employment by the
Company, and supersedes all prior agreements, arrangements and understandings,
written
10
or oral, relating to the Executive's employment by the Company, including,
without limitation, the Employment Agreement dated as of July 1, 1995 (the
"Prior Agreement") between the Company and the Executive, which Prior Agreement
is deemed terminated hereby and of no further force or effect. No
representation, promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations, hereunder (i) to any affiliate
or (ii) to third parties in connection with any sale, transfer or other
disposition of all or substantially all of the business or assets of the
Company; in any event the obligations of the Company hereunder shall be binding
on its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
11. Subsidiaries and Affiliates.
11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by the
corporation or other business entity in question, and the term "affiliate" shall
mean and include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
CONSOLIDATED CIGAR CORPORATION
By: /s/ Xxxx X. Xxxx
------------------------------
Xxxx X. Xxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxx
------------------------------
Xxxx X. Xxxxx
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