Employment Agreement
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of May 17, 1996,
between NATIONAL TOBACCO COMPANY, L.P. (the "Company") and XXXXXX X. XXXXX, XX.
(the "Executive").
STATEMENT OF PURPOSE
In connection with the recapitalization of the Company and the formation of
NTC Holding, LLC as the parent of the Company, the Company and the Executive
desire to enter into this Agreement.
AGREEMENT
1. Employment, Duties and Acceptance. (a) The Company shall employ the
Executive during the Term (as hereinafter defined) as the President and Chief
Executive Officer of the Company.
(b) The Executive hereby accepts such employment and agrees to render his
services to the Company on a full-time basis. The Executive further agrees to
accept election and to serve during all or any part of the Term or any Renewal
Term as an officer, director or representative of any subsidiary or affiliate of
the Company, without any compensation therefor other than that specified in this
Agreement. The Executive shall report directly to the management committee (the
"Management Committee") of NTC Holding, LLC, the parent of the Company.
(c) The duties to be performed by the Executive hereunder shall be
performed primarily in New York, New York, subject to reasonable travel
requirements on behalf of the Company. The Company shall not relocate the
Executive outside of New York, New York, without his prior written consent,
which may be withheld in the Executive's discretion. The Executive shall be
entitled to such amounts of paid vacation time as are comparable to that
provided to other senior executives of the same or similar stature.
2. Term of Employment. As used herein, the "Term" means the period
commencing as of May 17, 1996, and ending on May 16, 1999, and shall
automatically renew thereafter for successive periods of one (1) year (each a
"Renewal Term") unless either party gives written notice of termination of the
Agreement at least ninety (90) days prior to the end of the Term or any Renewal
Term. Unless otherwise specified, further references in this Agreement to the
Term shall include any applicable Renewal Term.
3. Compensation. (a) During the Term, the Company agrees to pay to the
Executive a salary in cash (the "Salary") as compensation for the services to be
performed by him as provided herein. The Salary shall be paid at the rate of
$300,000 per annum (it being understood that the Salary for 1996 shall be in
proportion to the number of days remaining in the year), less such deductions or
amounts to be withheld as shall be required by applicable
law and regulations. The Salary shall be paid in equal monthly installments or
more frequently in accordance with the Company's salaried payroll payment
policy. The Salary shall be reviewed annually and may be increased at the sole
discretion of the Compensation Committee of the Management Committee.
(b) In addition to the Salary, the Executive shall also be eligible
throughout the Term to receive cash bonuses (each a "Bonus") in accordance with
the Company's Bonus Plan, attached hereto as Exhibit A, based on the Company's
audited financial statements for the applicable year and payable after delivery
of such financial statements.
(c) In addition to the foregoing, the Executive shall be entitled to all
rights and benefits for which he shall be eligible under any other incentive
program, retirement, retirement savings, profit-sharing, pension or welfare
benefit plan, life, disability, health, dental, hospitalization and other forms
of insurance and all other so-called "fringe" benefits or perquisites, in each
case at the highest level which the Company shall from time to time provide for
any of its senior executives of the same or similar stature.
4. Termination. (a) If during the Term the Executive shall die, the
Executive's legal representative shall be entitled to receive in cash an amount
calculated as the sum of (i) any accrued and unpaid Salary to the date of such
death and (ii) any accrued and unpaid Bonus to the date of such death, including
any Bonus for the year in which the termination occurs, calculated by reviewing
the Company's performance for such entire year and prorating any such Bonus for
the number of days elapsed during such year prior to such termination. In
addition, the Executive (or his legal representative) shall be entitled to
receive any insurance proceeds payable pursuant to any insurance provided
pursuant to Section 3(c) hereof.
(b) If during the Term the Executive shall become physically or mentally
disabled, whether totally or partially, so that he is unable substantially to
perform his services hereunder for a period of at least 90 days out of any
twelve consecutive months (which condition is referred to herein as the
Executive becoming "Disabled"), the Company may at any time prior to the 90th
day after the last day of such twelfth consecutive month, by written notice to
the Executive, terminate the Executive's employment, in which event the
Executive (or his legal representative) shall be entitled to receive in cash an
amount calculated as the sum of (i) any accrued and unpaid Salary to the date of
such notice and (ii) any accrued and unpaid Bonus to the date of such notice,
including any Bonus for the year in which the termination occurs, calculated by
reviewing the Company's performance for such entire year and prorating any such
Bonus for the number of days elapsed during such year prior to such termination.
In addition, the Executive (or his legal representative) shall be entitled to
receive any disability benefits payable pursuant to any plan referred to in
Section 3(c) hereof. Nothing herein contained shall be deemed to limit or
abrogate any insurance or other similar benefits available to the Executive.
(c) The Executive's employment may be terminated by the Company during the
Term for Cause (as hereinafter defined). If during the Term the Executive's
employment shall be lawfully terminated by the Company for Cause or the
Executive shall voluntarily resign without Good Reason (as hereinafter defined),
the Company's obligation to pay Salary
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and Bonus for the benefit of the Executive, and the Executive's obligation to
render services hereunder for the benefit of the Company, shall cease on the
date of such termination or resignation; provided, however, that within 30 days
of the date of such termination or resignation, the Company shall pay the
Executive in cash (i) an amount calculated as the sum of any accrued and unpaid
Salary to such date and (B) any accrued and unpaid Bonus for any year preceding
such termination or resignation and (ii) all business expenses, amounts payable
under any benefit plan or program or other amounts that were accrued or incurred
but unpaid or unreimbursed at such date.
As used herein, the term "Cause" shall mean only (i) a felony conviction of
the Executive (as determined by a court of competent jurisdiction, not subject
to further appeal), (ii) the commission by the Executive of an act of fraud or
embezzlement against the Company or any of its affiliates (as determined by a
court of competent jurisdiction, not subject to further appeal), (iii) gross
misconduct which is demonstrably willful and deliberate on the Executive's part
and which is materially detrimental to the Company or any of its affiliates,
(iv) any material breach by the Executive of any agreement with the Company or
any affiliate thereof not cured within 20 days after receiving written notice
thereof or (v) gross insubordination to the organizational authority of the
Company consisting of the Executive's continued failure to take specific action
which is within his individual control and consistent with his status as a
senior executive of the Company and his duties and responsibilities hereunder
after written notice from the Company of not less than 20 days, provided that
such notice shall clearly specify that a failure to take such action may
constitute "Cause" for termination under this Agreement.
As used herein, the term "Good Reason" means any of the following:
(i) the assignment to the Executive of any duties inconsistent with
his status as President and Chief Executive Officer of the Company or a
material adverse alteration in the nature or status of his responsibilities
from those provided herein or the transfer of a significant portion of such
responsibilities to one or more other persons;
(ii) the failure by the Company to pay or provide to the Executive,
within 30 days of a written demand therefor, any amount of compensation or
any benefit which is due, owing and payable pursuant to the terms hereof or
of any applicable plan, program, arrangement or policy; or
(iii) the breach in any material respect by the Company of any of its
other obligations or agreements set forth herein and the failure by the
Company to cure such breach within 20 days after written notice thereof
from the Executive.
(d) If during the Term the Executive's employment shall be terminated by
the Company without Cause (and other than pursuant to Section 4(b)) or by the
Executive for Good Reason, the Executive shall be entitled to receive in cash
severance pay equal to 12 months of the Executive's then current Salary, payable
in monthly installments. The Executive shall also receive any benefits under any
benefit plan or program of the Company to which the Executive would otherwise be
entitled pursuant to the terms of such plan or program through the Term, or
pursuant to any applicable state or federal law; provided, that
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the Executive shall only be entitled to receive a Bonus for the year in which
the termination occurs, prorated and calculated as provided in Sections 4(a) and
(b).
(e) During the term of the Executive's employment with Company and for
twelve months after the date of termination of Executive's employment (the
"Noncompetition Period"), Executive hereby agrees not to Compete with the
Company. For purposes of this section, the term Compete means:
(i) soliciting or counseling, personally or by or on behalf of any
person, firm or corporation, the employment of any employee of Company, or
requesting, inducing or attempting to influence any employee of the Company
to terminate his employment with Company; or
(ii) directly or indirectly (A) requesting, inducing or attempting to
influence any supplier of goods or services to Company to curtail or cancel
any business it transacts with Company; or (B) requesting, inducing or
attempting to influence any customer of Company to curtail or cancel any
business they may transact with Company; or (C) engaging in any business
that the Company is engaged in as of the date of such termination (whether
as an officer, director, partner, emploee or other owner).
Notwithstanding the foregoing, the provisions of this Section 4(e) shall be
effective only during such period for which the Executive receives severance pay
pursuant to Section 4(d) hereof.
(f) The Company acknowledges and agrees that the Executive shall have no
duty at any time to seek other employment or to mitigate his damages hereunder.
The amounts payable to the Executive under this Agreement shall be paid
regardless of whether the Executive obtains other employment.
5. Expenses. In the event that the Executive institutes any legal action to
enforce his rights under, or to recover damages from breach of, this Agreement,
the Executive, if he is the prevailing party, shall be entitled to recover from
the Company any actual expenses for attorneys' fees and disbursements reasonably
incurred by him.
6. Assignment. This Agreement is binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, neither party shall assign or transfer any rights
or obligations hereunder, except that the Company may assign or transfer this
Agreement to (a) a successor corporation in the event of a merger,
consolidation, or transfer or sale of all or substantially all of the assets, of
the Company or (b) an affiliate of the Company; provided that no such assignment
referred to in the foregoing clause (a) or (b) shall relieve the Company from
liability for its obligations hereunder. Any purported assignment, other than as
provided above, shall be null and void.
7. Indemnification. The Company shall indemnify the Executive in accordance
with its Third Amended and Restated Agreement of Limited Partnership, a copy of
which has
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been delivered to the Executive, against all costs, charges and expenses
incurred or sustained by him in connection with any action, suit or proceeding
to which he may be made a party by reason of his being an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company. The
Company's obligations under this Section 7 shall survive any termination of this
Agreement or the Executive's employment hereunder.
9. Notices. All notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing and shall be
delivered personally or sent by prepaid telegram, telex, facsimile transmission,
overnight courier or mailed, first-class, postage prepaid by registered or
certified mail, as follows:
If to the Company: National Tobacco Company, L.P.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Executive: Xxxxxx X. Xxxxx, Xx.
Xx. 0, Xxx 000
Xxxx, Xxxxxxx 00000
Fax: (000) 000-0000
or such other address as either party shall designate by notice in writing to
the other in accordance herewith. Any such notice shall be deemed given when so
delivered personally, by telex, facsimile transmission or telegram, or if sent
by overnight courier, one day after delivery to such courier by the sender or if
mailed, five days after deposit by the sender in the U.S. mails.
10. Waiver. No waiver of any provision of this Agreement or modification or
amendment of the same shall be effective, binding or enforceable unless in
writing and signed by the party to be charged therewith.
11. Governing Law. 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 within such State.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
NATIONAL TOBACCO COMPANY, L.P.
By its General Partner:
NATIONAL TOBACCO FINANCE CORPORATION
By:
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Name:
Title:
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Xxxxxx X. Xxxxx, Xx.
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