Exhibit 99.11
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), dated as of the ______ day of
_____________, 1994, is made by and between DUTY FREE INTERNATIONAL, INC., a
Maryland corporation (the "Company"), and XXXX X. XXXXX (the "Consultant").
The Company desires to retain the services of the Consultant, and the
Consultant is willing to render such services, in accordance with the terms
hereinafter set forth. Accordingly, the Company and the Consultant agree as
follows:
ARTICLE I
Duties
1.01 DUTIES. The Consultant shall advise and consult with the
Company as to matters pertaining to the Business (as defined in Section 7.08)
and shall render such services of an advisory or consultative nature to the
Company or its affiliates, all as requested by the Board of Directors of the
Company (the "Board") or the Chief Executive Officer, provided that such
additional services and any business travel shall not be inconsistent with the
Consultant's services with the Company immediately prior to the Effective Date.
Consultant shall not be required to devote more than 48 days in any one year to
the performance of his duties hereunder. The Consultant shall report solely to
the Board and to the Chief Executive Officer of the Company.
1.02 SERVICE ON BOARD. The Consultant shall not be required to serve
on the Board or the Board of Directors of any subsidiary of the Company, or any
committee of any such Board, provided, however, that if requested by the
Consultant, the Board shall nominate the Consultant to serve on the Board and
the Executive Committee of the Board. In such a case, the Consultant agrees to
waive any fee (but not stock options) to which he might otherwise be entitled by
reason of serving as a non-employee director of the Company.
ARTICLE II
Term of Agreement
2.01 TERM. Subject to the termination provisions hereinafter
provided, the term (the "Contract Term) of this Agreement shall commence on
January 1, 1995 (the "Effective Date") and end on December 31, 1999, but the
Contract Term shall automatically be extended for successive one year periods
thereafter, unless on or before the September 30 prior to the beginning of any
such one year period, either party provides written notice to the other of its
intention not to further extend the Agreement.
ARTICLE III
Compensation
3.01 FEE. During the Contract Term, the Company shall pay or cause
to be paid to the Consultant in cash in installments not less frequently than
monthly, an annual fee ("Annual Fee") equal to $150,000 for each year of the
Contract Term.
3.02 BONUS. The Company may, in its discretion, pay to the
Consultant an annual bonus for any fiscal year of the Company and any portion
thereof during the Contract Term ("Bonus") based upon such criteria as the
Company, in its sole discretion, shall determine.
3.03 OUTSTANDING STOCK OPTIONS. The parties agree that the Company
will recommend to the Compensation Committee of its Board of Directors (the
"Committee") that options that were granted to the Consultant under the
Company's 1989 Stock Option Plan (the "Option Plan") and were outstanding and
exercisable immediately prior to the Effective Date remain outstanding and
exercisable until the earliest occurrence of any of the following: (1) December
31, 1997, (2) termination of this Agreement by the Company for Cause of by the
Executive for other than Good Reason, and (3) expiration of the 10 year option
term. The Company will further recommend to the Committee that options that
were granted to the Consultant under the Plan and were outstanding but
unexercisable immediately prior to the Effective Date shall remain outstanding
and become exercisable in accordance with the vesting schedule applicable to
such options,
and once exercisable shall remain exercisable for the period specified in the
preceding sentence.
ARTICLE IV
Other Benefits
4.01 WELFARE BENEFITS. During the Contract Term, the Consultant and
the Consultant's family, as applicable, shall receive medical and life insurance
coverage that is comparable to such coverage to which the Consultant and the
Consultant's family were entitled immediately prior to the Effective Date.
After the Contract Term, the Consultant shall continue to receive such medical
and life insurance coverage for the remainder of his lifetime, provided,
however, that the Consultant shall reimburse the Company for its cost of
providing such coverage.
4.02 EXPENSES. During the Contract Term, the Consultant shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Consultant in the performance of his duties hereunder upon the Company's
receipt of accountings in accordance with practices, policies and procedures
applicable to executives of the Company.
4.03 OFFICE AND SUPPORT STAFF. During the Contract Term, the
Consultant shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to personal secretarial and other
assistance, provided with respect to executives of the Company, and appropriate
to the Consultant's position and responsibilities.
4.04 AUTOMOBILE. The Company will provide an automobile of the
Consultant's choice (which choice may include a reasonable domestic or foreign
car consistent with past practice for Consultant) and all expenses of operation
and maintenance, including the appropriate insurance. The automobile provided
hereunder shall be replaced, upon the timely request of the Consultant, with a
new such car every two years. The Consultant shall maintain adequate
contemporaneous records concerning the use of the automobile.
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ARTICLE V
Termination
5.01 TERMINATION FOR CAUSE OR OTHER THAN FOR GOOD REASON. If, before
the end of the Contract Term, the Company terminates this Agreement for Cause or
the Consultant terminates this Agreement other than for Good Reason, then the
Company shall pay immediately on the Date of Termination to the Consultant that
portion of the Consultant's Annual Fee which is accrued but unpaid as of such
Date of Termination, but the Consultant will not be entitled to receive any
other compensation, benefits or rights under this Agreement. If the Company
terminates this Agreement for Cause, it shall provide the Consultant with a
statement of the Date of Termination and the reason for such termination.
5.02 TERMINATION FOR DEATH OR DISABILITY. If, before the end of the
Contract Term, the Consultant dies or suffers a Disability, the Company shall
pay to the Consultant (a) within 30 days after the Date of Termination an amount
which is equal to the sum of (i) that portion of the Consultant's Annual Fee
which is accrued but unpaid as of the Date of Termination and (ii) the amount of
any Bonus accrued for any fiscal year which ended during the Contract Term prior
to the Date of Termination, but which is unpaid as of the Date of Termination,
and (b) within 30 days after the determination of the performance for the fiscal
year in which the Date of Termination ("Termination Year") occurs, a pro rata
bonus ("Pro Rata Bonus") which shall be equal to the product of:
(1) the Bonus to which the Consultant would have been entitled for
the Termination Year if the Agreement had remained in effect for the entire
year, multiplied by
(2) a fraction, the numerator of which is the number of days in the
Termination Year which elapsed through the Date of Termination, and the
denominator of which is the total number of days in the Termination Year;
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but the Consultant will not be entitled to receive any other compensation,
benefits or rights under this Agreement.
5.03 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If, before the end
of the Contract Term, this Agreement is terminated by the Company without Cause,
or by the Consultant for Good Reason at a time at which facts supporting a
determination of Cause do not exist, the Company shall pay to the Consultant the
following: (a) immediately on the Date of Termination in a lump sum in cash an
amount equal to the sum of (1) that portion of the Consultant's Annual Fee which
is accrued but unpaid as of the Date of Termination, (2) any Bonus accrued
during any fiscal year which ended during the Contract Term and prior to the
Date of Termination, but which is unpaid as of the Date of Termination, (3) the
Consultant's Pro Rata Bonus determined under the provisions of Section 5.02(b),
and (4) the present value (determined using the "applicable Federal rate
(short-term)" within the meaning of Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code")) of the Consultant's Annual Fee and Bonus that would have
been paid during the remaining unexpired Contract Term had the Consultant's
engagement continued until the end of the Contract Term, assuming that the Bonus
that would have been paid is equal to the average of the annual Bonuses payable
for all prior fiscal years that ended within the Contact Term, and (b) the
continuation during the remainder of the Contract Term of the benefits not
specifically dealt with in Section 5.03(a) to which the Consultant is entitled
during the Contract Term under Sections 4.01, 4.03 and 4.04 hereof; but the
Consultant will not be entitled to receive any other compensation, benefits or
rights under this Agreement. Notwithstanding the foregoing, the amount of any
medical benefits provided by Section 5.03(b) shall be reduced, except as
otherwise provided by law, by the amount of any medical benefits to which the
Consultant is otherwise entitled on or after the Date of Termination.
5.04 OTHER TERMINATION BENEFITS. In addition to any amounts or
benefits payable upon termination of this Agreement and except as otherwise
provided herein, the Consultant shall be entitled to any payments or benefits
explicitly provided under the terms of any plan, policy or program of the
Company or as otherwise required by applicable law. Notwithstanding the
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foregoing, the period of medical coverage provided hereunder shall offset the
period of coverage required by "COBRA" pursuant to Section 4980B of the Code and
Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as
amended.
ARTICLE VI
Certain Definitions
6.01 "DISABILITY" means any medically determinable physical or mental
impairment that can be expected to last for a continuous period of not less than
six months, and that renders the Consultant unable to perform all material
duties required under this Agreement, or that renders the Consultant unable to
perform all material duties required under this Agreement for at least 180 days
during any 360-day period. The date of the determination of Disability is the
date on which the Consultant is certified as having incurred a Disability by a
physician acceptable to the Company; provided that the Consultant shall be
examined by such a physician for these purposes at the reasonable request of the
Company.
6.02 "CAUSE" means a finding by the Board or, if directed by the
Board to consider whether or not such a finding should be made, the Compensation
Committee of the Board or any other Board committee consisting of directors who
are not employees of the Company ("Committee"), to the effect that:
(a) the Consultant has been convicted of any felony or other crime
involving dishonesty;
(b) the Consultant engaged in any serious misconduct (excluding (A)
the failure of the Consultant to achieve business goals and objectives, (B)
other actions by the Consultant which are reasonably believed by the Consultant
to be in the best interests of the Company and (C) any act or omission with
respect to which a determination could properly have been made by the Board that
the Consultant met the applicable standard of conduct for indemnification or
reimbursement under the By-Laws of the Company, any applicable indemnification
agreement or the laws and regulations under which the Company is governed, in
each case in
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effect at the time of such act or omission) in the course of the Consultant's
engagement which, in the reasonable judgment of the Board (or, if applicable,
Committee), materially injures the Company, financially or otherwise;
(c) the Consultant habitually neglected his duties (other than on
account of physical or mental incapacity), excluding bad judgment or negligence,
provided that either (A) he received from the Company notice of habitual neglect
of duties ("Notice of Neglect") where no prior notice of any instance of neglect
of duties was given, and he failed to cure such habitual neglect within 15 days
of receiving such notice, or (B) the Consultant received notice of an instance
of neglect of duties and failed to cure before such neglect became habitual; or
(d) the Consultant materially breached this Agreement, provided that,
if such breach is both inadvertent and nonrecurring, the Consultant received
written notice by the Company of such breach ("Notice of Breach") and failed to
cure full such breach within 15 days after receiving such notice.
6.03 "GOOD REASON" means the occurrence of any one of the following
events, but only if the Company fails to cure such event within 15 days after
written notice from the Consultant:
(a) assignment to the Consultant of any duties materially and
adversely inconsistent with those contemplated by Article I hereof.
(b) the failure of the Company to assign this Agreement to a
successor to the Company by merger or similar transaction or sale of all or
substantially all of the assets of the Company,
(c) the material failure by the Company to comply with the
provisions of this Agreement,
(d) the Company's requiring the Consultant to be based at any office
or location more than 50 miles from his office or location as of the Effective
Date,
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(e) any material adverse change to the terms and conditions of the
Consultant's engagement under this Agreement.
6.04 "DATE OF TERMINATION" means the date as of which the
Consultant's engagement by the Company is terminated by the Company or by the
Consultant for any reason including, but not limited to, death or Disability.
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ARTICLE VII
Miscellaneous
7.01 INDEMNIFICATION. The Company shall indemnify and hold the
Consultant harmless to the same extent as officers or directors of the Company
against judgements, fines, amounts paid in settlement and reasonable attorneys
fees incurred by the Consultant in connection with the defense or as a result of
any action, proceeding (or appeal of any action or proceeding) in which the
Consultant is made or is threatened to be made a party by reason of the fact
that he is a consultant of the Company, but in no event shall this indemnity
extend to any act that would constitute "Cause" hereunder.
7.02 ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof (other than those arising under Section
7.08, to the extent necessary for the Company to avail itself of the rights and
remedies provided under Section 7.08), shall be submitted to arbitration in [New
York] in accordance with the Rules of the American Arbitration Association, and
judgment upon the award may be entered in any court having jurisdiction thereof.
7.03 BENEFICIARY. If the Consultant dies prior to receiving all of
the fees and bonuses payable hereunder, such fees and bonuses shall be paid in a
lump sum payment to the beneficiary designated in writing by the Consultant
("Beneficiary") or if no such Beneficiary is designated, to the Consultant's
estate.
7.04 NONALIENATION OF BENEFITS. Benefits payable under this
Agreement shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution or
levy of any kind, either voluntary or involuntary, prior to actually being
received by the Consultant, and any such attempt to dispose of any right to
benefits payable hereunder shall be void.
7.05 SEVERABILITY. If all or any part of this Agreement is declared
by any court or governmental authority to
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be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any portion of this Agreement not declared to be unlawful or invalid.
Any paragraph or part of a paragraph so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such paragraph or part of a paragraph to the fullest extent possible while
remaining lawful and valid. If any court determines that any of the covenants
contained in Section 7.08 is unenforceable because of the duration or
geographical scope of such provisions, the duration or scope of such provisions,
as the case may be, shall be reduced so that such provision becomes enforceable
and, in its reduced form, such provision shall then be enforceable and shall be
enforced.
7.06 AMENDMENT AND WAIVER. This Agreement shall not be altered,
amended or modified except by written instrument executed by the Company and the
Consultant. A waiver of any term, covenant, agreement or condition contained in
this Agreement shall not be deemed a waiver of any other term, covenant,
agreement or condition, and any waiver of any default in any such term,
covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
7.07 NOTICES. All notices and other communications hereunder shall
be in writing and delivered by hand or by firstclass registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:
Duty Free International, Inc.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Chief Consultant Officer
If to the Consultant:
Xxxx X. Xxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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Either party may from time to time designate a new address by notice given in
accordance with this Section 7.07. Notice and communications shall be effective
when actually received by the addressee.
7.08 CONFIDENTIAL INFORMATION; NON-COMPETE. The Consultant
acknowledges that (1) the principal business of the Company and its affiliates
is the sale of duty free merchandise at retail and wholesale (the "Business");
(2) the Consultant's work for the Company has given and will continue to give
him access to the confidential and proprietary information of the Company and
its affiliates not readily available to the public; and (3) the agreements and
covenants of the Consultant contained in this Section 7.08 are essential to the
business and goodwill of the Company and its affiliates. Accordingly, the
Consultant covenants and agrees that:
(a) The Consultant shall at all times keep secret and retain in
strictest confidence, and shall not use for the benefit of himself or others,
except in connection with the business and affairs of the Company and its
affiliates, all confidential matters relating to the Business and to the Company
and its affiliates learned by the Consultant heretofore or hereafter, directly
or indirectly, from the Company or any of its affiliates, including, without
limitation, all software systems, trade secrets, customer lists and similar
property (the "Confidential Information") and shall not, except in connection
with the business and affairs of the Company, disclose the Confidential
Information to anyone outside of the Company and its affiliates except with the
express written consent of the Company and except for Confidential Information
which (1) is at the time of receipt or thereafter becomes publicly known through
no wrongful act of the Consultant, (2) is received from a third party not under
an obligation to keep such information confidential and without breach of this
Agreement or (3) is required to be disclosed by legal order or subpoena.
(b) During the period commencing on the date of this Agreement and
terminating on the fifth anniversary of the date of the end of the Contract Term
(the "Restricted Period"), the Consultant shall not in any geographical area in
which the Company during the Contract Term engages in the Business,
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directly or indirectly: (1) engage in the Business for the Consultant's own
account; (2) render any services which constitute engaging in the Business in
any capacity to any person (other than as provided herein or at the direction of
the Company or its affiliates); or (3) become interested in any person engaged
in the Business (other than the Company or its affiliates) as a partner,
shareholder, principal, agent, trustee, consultant or in any other relationship
or capacity; PROVIDED, HOWEVER, that notwithstanding anything to the contrary
set forth above the Consultant may own, directly or indirectly, solely as a
passive investment, securities of any person which are traded on any national
securities exchange or NASDAQ if the Consultant (A) is not a controlling person
of, or a member of a group which controls, such person and (B) does not,
directly or indirectly, own five percent (5%) or more of any class of securities
of such person.
7.09 CERTAIN TAX CONSEQUENCES. Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Consultant (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 7.09) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are
incurred by the Consultant with respect to such excise tax (such excise tax,
together with any such interest and penalties are hereinafter collectively
referred to as the "Excise Tax"), then the Consultant shall be entitled to
receive an additional payment (an "Excise Gross-Up Payment") in an amount such
that after payment by the Consultant of all taxes (including any interest and
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and interest and penalties imposed with respect thereto), and
Excise Tax imposed on the Excise Gross-Up Payment, the Consultant retains an
amount of the Excise Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. All determinations required to be made under this Section 7.09,
including whether and when an Excise Gross-Up Payment is required and the amount
of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Company's accounting firm, which shall
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provide detailed supporting calculations both to the Company and to the
Consultant within fifteen business days of the receipt of notice from the
Consultant that there has been a Payment, or such earlier time as is requested
by the Company. In the event that the accounting firm is serving as accountant
or auditor for the individual, entity or group effecting the change of control,
the Consultant shall appoint another nationally recognized accounting firm to
make the determinations required hereunder. All fees and expenses of the
accounting firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 7.09, shall be paid by the Company to the
Consultant within five days of the receipt of the accounting firm's
determination. Any determination by the accounting firm shall be binding upon
the Company and the Consultant.
7.10 COUNTERPART ORIGINALS. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
7.11 ENTIRE AGREEMENT. This Agreement forms the entire agreement
between the parties hereto with respect to any severance payment and with
respect to the subject matter contained in this Agreement.
7.12 SURVIVAL. Anything contained in this Agreement to the contrary
notwithstanding, the provisions of Section 7.08, and the other provisions of
this Agreement relevant to the enforcement thereof (to the extent necessary to
effectuate the survival of Section 7.08), shall survive any termination of this
Agreement.
7.13 APPLICABLE LAW. The provisions of this Agreement shall be
interpreted and construed in accordance with the laws of the State of
Connecticut, without regard to its choice of law principles.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
DUTY FREE INTERNATIONAL, INC.
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By: /s/ Xxxxxx Xxxxxxx
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/s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
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