EMPLOYMENT AND CONSULTING AGREEMENT
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EMPLOYMENT AND CONSULTING AGREEMENT made as of January 21, 1997 by and
among GENERAL CIGAR CO., INC., a Delaware corporation ("GCC") with its
principal office at 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
Xxxxxx Xxxxxxxxxx ("Executive") c/o Villazon & Company, Inc., 00 Xxxx Xxx,
Xxxxx Xxxxxx Xxxxx, XX 00000
WITNESSETH:
WHEREAS, GCC simultaneously with the execution of this Agreement is
acquiring all of the assets of Villazon, pursuant to an Asset Purchase
Agreement dated as of December 20, 1996 (the "Purchase Agreement");
WHEREAS, upon acquiring the assets of Villazon, GCC shall assign all such
assets to its subsidiary, Villazon & Company, Inc., a Delaware Corporation
("New Villazon"). Unless the context otherwise requires, a reference to GCC
in this Agreement shall be deemed to include New Villazon.
WHEREAS, capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Purchase Agreement;
WHEREAS, Villazon is, and has for many years been, engaged in the
Business;
WHEREAS, Executive has been Chairman of Villazon, a principal shareholder
of Villazon, has unique experience in all aspects of the Business and is the
principal officer of the operations of Villazon based at Upper Saddle River,
New Jersey, principally comprising the sale, marketing and distribution of
cigars and other tobacco products produced by Villazon and HATSA (the
"Position");
WHEREAS, GCC desires to continue the services of Executive in connection
with the Business; and
WHEREAS, Executive is willing to continue to act in the capacities
provided for herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties agree as follows:
1. SERVICES. (a) During the Initial Term (hereinafter defined) GCC hereby
engages Executive and Executive hereby accepts such engagement, to act as a
principal executive of GCC and Chairman of New Villazon with respect to the
Business and to continue to discharge the duties historically associated with
his Position. During the Initial Term Executive's services shall cover all
aspects of the Business relating to his Position and he shall serve as such
principal executive subject to the direction of the Board of Directors of GCC
and Xxxxx X. Xxxxxxx, Xx., Chief Executive Officer. Executive shall also
participate in a planning management committee comprised of himself, Xxxxx
Xxxxxxx, Xxxxx X. Xxxxxxx, Xx., Xxxxx X. Xxxxxxx, Xx., and Xxxxxx X. XxXxxxxx
which
will meet periodically in person or by conference call to identify areas of
opportunity where GCC can collaborate with Villazon and HATSA to their mutual
benefits.
(b) SERVICES DURING CONSULTING TERM. During the Consulting Term
(hereinafter defined) Executive shall consult with respect to all aspects of
the Business including product development and customer and supplier
relations. He shall also at the reasonable request and expense of GCC attend
GCC and industry meetings and trade shows. Executive in connection with his
duties during the Consulting Term shall not be required to be away from his
principal residence for more than 14 days a year.
(c) SERVICES DURING NON-COMPETITION TERM. During the Non-Competition Term
(hereinafter defined) Executive shall provide such advice as shall be
required by GCC from time to time and shall on the request of GCC participate
not more than 7 days a year in the aggregate at trade shows. During the
Non-Competition Term Executive's services other than at trade shows shall not
require him to travel without his consent.
2. TERM. (a) The Initial Term of this Agreement ("Initial Term") and the
engagement of Executive hereunder shall commence as of the date hereof and
shall continue (unless sooner terminated as hereinafter provided) for the
period from the date hereof to and including the final day of January, 2000.
The Consulting Term shall commence the following day and end the final day of
January, 2001. The Non-Competition Term shall commence the following day and
end the final day of January, 2002, PROVIDED, HOWEVER, that the
non-competition obligation hereof shall terminate if there is a default on
the Installment Note or the Stockholder Loan Note ("Notes") held by
Executive. Term shall mean the period from the date hereof to the final day
of January, 2002.
3. EXCLUSIVITY OF SERVICES/TRADE SECRETS. (a) During the Initial Term,
Executive will render his services to GCC on an exclusive basis. During the
Term Executive shall devote his best efforts to his activities hereunder.
During the Initial Term his services hereunder shall require his full time
participation at the office and manufacturing locations of GCC and Villazon
in Upper Saddle River, New Jersey and temporarily at such other locations as
the parties shall agree. Thereafter during the Consulting Term Executive
shall devote such time as may be required to fulfill the services required as
specified in Section 1(b). During the Non-Competition Term the sole required
services to be performed shall be those specified in Section 1(c) hereof. As
used herein, the term full time participation shall mean such participation
as the Executive has provided to Villazon during 1996.
(b) Executive shall not, directly or indirectly, during the Term enter
into or in any manner take part in or lend his name, counsel or assistance to
any venture, business or endeavor, either as proprietor, principal, partner,
consultant, advisor, agent or independent contractor or in any other capacity
whatsoever
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including investing in or receiving a royalty or share of the profits or
compensation of any nature form any such venture for a purpose competitive
with the Business or, to his knowledge, any Affiliate, as defined in the
Securities Act of 1933, (an "Affiliate") of GCC during the Term PROVIDED,
HOWEVER, that (i) ownership, including beneficial ownership by him or his
family, of less than 1% of any class of the capital stock of a corporation
whose securities are regularly traded on a national securities exchange or in
the over-the-counter market provided that no services are rendered to such
corporation shall not be deemed to violate this provision; (ii) neither his
ownership of a director or indirect interest in Xxxxxxx (as owned on the date
hereof) nor, while such ownership continues, his management of Xxxxxxx (to
the extent managed by him heretofore) shall be deemed to violate this
provision, so long as the business of Xxxxxxx is not materially different
from its business as at the date hereof; and (iii) neither his ownership of a
direct or indirect interest in Tinder Box International, L.T.D. ("Tinder
Box") nor, while such ownership continues, his participation in management
and as a director of Tinder Box shall be deemed to violate this provision.
(c) Except (i) as specifically authorized in writing by GCC or (ii) in
accordance with the proper performance of his duties hereunder Executive
agrees that he will not at any time during the Term of thereafter disclose or
use any secrets or any confidential and/or proprietary information, knowledge
or data pertaining to the Business or other enterprise or business with which
he would be prohibited from competing hereunder, including, without
limitation, the Business processes, trade secrets, tobacco purchasing
sources, methods, customer lists, know-how, machines, manufacturing
procedures, tobacco blends or flavorings of GCC or the Business.
(d) Executive shall not at any time during the Term or thereafter seek to
hire for any purpose any person, other than a relative of his, employed by
Villazon or GCC within the last 36 months or at any time during the Term.
(e) It is the intention of GCC to make the covenants of this Agreement
binding only to the extent that it may be lawfully done under existing
applicable laws. In the event that any part of any covenants contained in this
Agreement is determined by a court of law to be overly broad, thereby making
the covenants unenforceable, the parties hereto agree, and it is their
desire that such court shall substitute a reasonable judicially enforceable
limitation in place of the offensive part of the covenant, and that as so
modified the covenant shall be as fully enforceable as set forth herein by
the parties themselves in the modified form.
(f) Executive consents and agree to the enforcement of this Agreement by
GCC, upon determination of a breach hereof, by means of a temporary and/or
permanent injunction and/or decree of specific performance issued by any
court having jurisdiction thereof. The undertakings and agreements by
Executive herein shall not be construed as any limitation upon the
enforcement of this
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Agreement and such remedies, including damage awards, shall be cumulative and
in addition to any other rights or remedies which GCC may have at law or in
equity.
4. COMPENSATION. During the Initial Term GCC shall pay Executive,
bi-weekly, $250,000 per year. No other payments shall be due hereunder.
Executive upon appropriate accounting shall be reimbursed for his reasonable
expenses in providing services hereunder.
5. OPTIONS. The parties anticipate that General Cigar Holdings, Inc.
("Parent"), the parent of GCC, will shortly consummate an initial public
offering of its common stock ("IPO"). Upon such IPO, Executive shall be
entitled to receive options, pursuant to Parent's employee stock ownership
plan ("Plan"), for a number of shares of common stock of Parent with an
exercise price equal to $360,000. The terms and conditions of such options,
including exercise price and vesting date, shall be the same as the options
granted to other officers participating in the Plan.
6. REPRESENTATIONS AND WARRANTIES. GCC represents and warrants to
Executive that this Agreement has been duly authorized, executed and
delivered by GCC and constitutes a legal, valid and binding obligation of GCC.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EXECUTIVE. Executive
represents and warrants to GCC that this Agreement has been duly authorized,
executed and delivered by Executive and constitutes a legal, valid and
binding obligation of Executive. Executive represents and warrants that
neither the execution and delivery of this Agreement, nor his performance
hereunder will violate any agreement, arrangement or duty to which he is
subject, and agrees to hold GCC harmless from any loss, cost or expense
arising from any litigation or threatened litigation relating to his
engagement hereunder.
8. TERMINATION OF EMPLOYMENT.
(a) Executive's employment hereunder may be terminated for (i) death
or incapacity to provide full services hereunder either for a consecutive
three-month period or for an aggregate of four months in any nine-month
period; (ii) material breach of fidelity or loyalty to GCC, or dishonesty in
any material transaction with GCC; (iii) failure or refusal to perform
expected functions of a principal executive on behalf of GCC during the
Initial Term including all services or duties provided for pursuant to
Section 1(a) or his reduced duties during the rest of the Term; and (iv) the
knowing and willful engaging by Executive in material misconduct injurious to
GCC monetarily or otherwise. Termination of this Agreement pursuant to this
Section 8(a) shall result in the forfeiture by Executive of all compensation
not paid hereunder as of the date of termination and such other damages and
other remedies as may be determined by a court of competent jurisdiction.
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(b) Executive may terminate his employment hereunder without cause
upon giving 60 days written notice of termination to GCC at the address set
forth above. Termination of this Agreement pursuant to this Section 8(b)
shall result in the Executive ceasing to be entitled to any compensation and
other benefits and perquisites as set forth herein as of the date of
termination.
(c) Executive may terminate this Agreement immediately in the event
GCC breaches any material term of this Agreement and fails to cure the same
within 5 business days after receiving written notice thereof. Upon
termination pursuant to Section 8 (c) Executive shall have all remedies as
are available at law.
(d) All duties of Executive under Section 3 hereof shall survive any
termination of this Agreement unless a default occurs in the Notes held by
Executive.
9. WAIVERS AND MODIFICATIONS. No waiver by any of the parties hereto of
any breach by the other of any provision hereof shall be deemed to be a
waiver of any later or other breach hereof, or as a waiver of any such or
other provision of this Agreement. This Agreement sets forth all of the terms
of the understandings among the parties with references to the subject matter
set forth herein and may not be waived, changed, discharged or terminated
orally or by any course of dealing among the parties, but only by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
10. EMPLOYEE BENEFITS. Executive shall be entitled to continue to receive
such employee benefits and perquisites as were received by him during the
past year as an employee of Villazon. Executive shall also participate in the
Plan as set forth in paragraph 5 hereof, Parent's incentive compensation plan
and such other employee benefit plans as may be generally available to
executives of Parent.
11. BINDING EFFECT. This Agreement shall inure to the benefit of, and be
binding upon, each of the parties hereto and his or its successors and
assigns. The rights, duties and obligations of Executive hereunder may not be
assigned under any circumstances.
12. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and all
parties hereto consent to jurisdiction in the New York State Courts and to
service of process by certified mail.
13. MISCELLANEOUS. The headings of the Section of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof or to affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written.
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XXXXXX XXXXXXXXXX
By: /s/ Xxxxxx Xxxxxxxxxx
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GENERAL CIGAR CO., INC.
By: /s/ [illegible]
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Secretary
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