Exhibit 10.4
Three-year Agreement
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 23rd day of October, 1996,
by and between Xxxxxxx International, Inc., a Delaware corporation ( "Xxxxxxx
International") and J. Xxxxxx Xxxx, III (the "Executive");
W I T N E S S E T H
WHEREAS, Xxxxxxx International proposes to employ the Executive in the
operations of Xxxxxxx International and Xxxxxxx International is desirous of
affording Executive incentives in connection therewith;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, Xxxxxxx International and Executive
hereby agree as follows:
ARTICLE I
EMPLOYMENT
SECTION 1.1. EMPLOYMENT. Xxxxxxx International hereby employs the
Executive as Executive Vice President - Sales and Marketing of Xxxxxxx
International and such other offices of Xxxxxxx International or the Affiliated
Corporations as the board of directors of Xxxxxxx International may from time to
time determine to perform such duties and discharge such functions in and about
the business and affairs of Xxxxxxx International and the Affiliated
Corporations as the board of directors of Xxxxxxx International may from time to
time determine. Executive agrees, during the term hereof, to diligently and in
good faith perform and discharge such duties and functions and Executive shall
devote all of his working time, energy and ability exclusively to the
performance of his duties hereunder. During the term hereof, Executive shall not
directly or indirectly engage or participate in the operations or management of,
or render any services to, any other businesses or enterprises.
SECTION 1.2. BASIC COMPENSATION. Xxxxxxx International agrees to pay
Executive a base annual salary of $251,160.00 through the first anniversary date
of the Effective Date of this Agreement (as hereinafter defined) and for the
balance of the term of this Agreement an increase in such amount as is mutually
agreeable, but in no event less than the change in the CPI over the applicable
term. Basic compensation payable under this Section shall be payable in
accordance with such practices and procedures as are generally applicable to
other employees of Xxxxxxx International.
SECTION 1.3. EXPENSE REIMBURSEMENT. Xxxxxxx International shall
reimburse reasonable and necessary out-of-pocket business expenses, such as
travel, lodging, long distance telephone calls and the like, consistent with
such policies as Xxxxxxx International may promulgate from time to time for its
senior executives upon submission by Executive of appropriate receipts therefor.
SECTION 1.4. FRINGE BENEFITS. While Executive is in the employ of
Xxxxxxx International, Xxxxxxx International agrees to provide to Executive
those benefits generally provided to all salaried employees of Xxxxxxx
International (with the exception of life insurance benefits), and in addition
Executive will participate in the Company's Supplemental Pension Program at the
Senior Executive level and will have continued coverage under an individual life
insurance policy or policies under an arrangement which is comparable to that
which the Executive has now. Such benefits shall include payment of $575 per
month by Xxxxxxx International on behalf of the Executive of leased car expenses
plus payment of insurance, maintenance, cost of repairs and gas. In addition,
Xxxxxxx International will pay Executive an amount per year calculated to
provide Executive with sufficient additional income to cover any additional
federal income tax due with respect to the $575 per month payment to him
described in this paragraph, to the end that such payment of $575 will be
effectively revenue neutral for federal income tax. Such additional payment
will be made on a monthly basis, unless Xxxxxxx International and the Executive
agree otherwise.
Xxxxxxx International Group Inc. ("Xxxxxxx Group"), the Parent of Xxxxxxx
International intends to adopt a Stock Option Plan for selected employees and
directors of Xxxxxxx Group and the Affiliated Corporations contingent upon the
successful completion of the contemplated public offering of stock of Xxxxxxx
Group. The plan, if adopted, will be extended to the Executive and shall be in
addition to the basic compensation and bonus payable under Sections 1.2 and 1.6
hereof, respectively. Xxxxxxx International reserves the absolute right to
determine the extent of its application to the Executive all without any
liability to the Executive.
SECTION 1.5. SEVERANCE. If Xxxxxxx International terminates the
employment of the Executive WITHOUT CAUSE at any time during the three (3 )
year period (the "Three-Year Term") ending on the third anniversary of the
Effective Date of this Agreement (as hereinafter defined) , Xxxxxxx
International shall continue to pay to the Executive: (1) basic compensation as
set forth in Section 1.2 hereof for the remainder of the Three-Year Term or
until the Executive's earlier death or Disability, (2) notwithstanding any
contrary provision contained in any formal written bonus plan described in 1.6
below, the target bonus described in Section 1.6 below pro-rated to the date of
termination, and (3) the Fringe Benefits described in 1.4 above for the
remainder of the term of this Agreement or until the Executive's earlier death.
Items 1, 2 and 3 above are collectively referred to as "Severance". However, in
lieu of the Severance described above, Executive may elect to receive whatever
severance he would have been entitled to, absent this Agreement, under the
current or then in effect Xxxxxxx International severance policy. Also, should
the Executive become Disabled during a period when he is entitled to receive the
Severance described in paragraph (1) above (basic compensation) and he is
covered by a long-term disability plan of Xxxxxxx International or an Affiliated
Corporation and determined to be entitled to
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coverage under such plan, then and in that event he will receive disability
payments under that plan in lieu of any further payments under paragraph (1)
above. It is agreed that any termination of employment is without prejudice to
any other remedy to which Xxxxxxx International may be entitled, either by law,
in equity or under this Agreement. The Severance described above shall represent
liquidated damages and shall mitigate damages (if any), which may otherwise be
payable to the Executive.
Xxxxxxx International has the absolute right to terminate this Agreement,
and the employment of the Executive hereunder, FOR CAUSE without any further
obligation to the Executive in respect of the Severance to the Executive
hereunder. For purposes of this Agreement, CAUSE includes, but is not limited to
any of the following:
(i) Executive's material breach of the terms of this Agreement or any
other legal obligation to Xxxxxxx International or an Affiliated
Corporation;
(ii) Executive's fraud, dishonesty, negligence, misconduct or other
deliberate action which causes injury to Xxxxxxx International or any
of its Affiliated Corporations or to their respective reputations or
which results in a material loss to Xxxxxxx International or an
Affiliated Corporation; or an act of the Executive involving moral
turpitude or a serious crime resulting in a conviction by a court or
tribunal of competent jurisdiction or a plea of "nolo contendere"; or
(iii) willful breach in the performance by Executive of his material duties
hereunder resulting in demonstrable economic harm to Xxxxxxx
International or an Affiliated Corporation and which Executive
shall not have taken steps in good faith to cure within ninety (90)
days after notice from the Board of Directors; PROVIDED, HOWEVER, that
it is understood and agreed that failure to meet the business plan of
Xxxxxxx International alone or errors in judgment made by Executive
in good faith shall not constitute CAUSE hereunder.
The Executive shall not be entitled to Severance under this Section 1.5 if
the employment of the Executive is terminated for any of the following
reasons:
(i) the Executive terminates this Agreement at any time;
(ii) death of the Executive; provided, however, that in the event of his
death being the cause of his termination, Executive will receive the
item described in paragraph (2) (target bonus) of Section 1.5 above;
(iii) the Disability of the Executive; provided, however, that in the event
of his Disability being the cause of his termination, Executive will
receive the items described in paragraphs (2)(target bonus) and
(3)(Fringe Benefits) of Section 1.5 above; or
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(iv) the Executive is terminated FOR CAUSE as described above.
SECTION 1.6. BONUS. Xxxxxxx International has a formal written bonus
program for certain of its executives which presently covers the Executive.
Such written bonus program shall continue to apply to the Executive and shall be
in addition to the basic compensation payable under Section 1.2 hereof. Xxxxxxx
International reserves the absolute right to amend, replace or terminate, from
time to time, any such written bonus program and to determine the extent of its
application, all without any liability to the Executive. The bonus, if any,
payable under this Section 1.6 shall be paid in accordance with the terms of the
formal written bonus program adopted by Xxxxxxx International.
SECTION 1.7. TERM. The term of this Agreement shall commence on the later
of January 1, 1997 or the date of the closing of the Offerings described in the
registration statement relating to the proposed public offering of the Common
Stock of Xxxxxxx Group (herein called the "Effective Date") and continue through
the third anniversary of the Effective Date, provided, however, that Executive
shall have the continuing option to immediately terminate the employment
provided by Section l.l hereof by giving two weeks' notice thereof to Xxxxxxx
International and Xxxxxxx International shall have the continuing option to
immediately terminate the employment provided by Section 1.1 hereof by giving
written notice thereof to Executive which notice may be effective immediately.
Upon any such termination, all of the rights and obligations set forth in this
Article I shall terminate provided, only, that Xxxxxxx International shall pay
to Executive the Severance, if any, payable under Section 1.5 hereof.
SECTION 1.8. PLACE OF EMPLOYMENT. The performance of Executive's duties
hereunder will require travel and will include involvement with businesses and
projects away from [Jacksonville, Florida.]
ARTICLE II
NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
AND NON-COMPETITION.
SECTION 2.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION AND NON-COMPETITION.
2.1.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. (a) The Executive
acknowledges that it is the policy of Xxxxxxx International to maintain as
secret and confidential all information heretofore or hereafter acquired,
developed or used by Xxxxxxx International or any Affiliated Corporation
relating to its business, operations, employees and customers (all such
information is hereinafter referred to as "Confidential Information"). The
parties hereto recognize that the Executive's services are special and unique,
and that by reason of the employment the Executive has acquired and will acquire
Confidential Information. Confidential Information shall not include any
information which (1) is or becomes generally available to the public other than
as a result of a disclosure by Executive, (2) is in the possession of Executive
prior to the date of rendering any services to Xxxxxxx International and was
not received directly or indirectly from Xxxxxxx
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International, or (3) is independently developed by Executive without the use of
information received directly or indirectly from Xxxxxxx International or
revealed pursuant to this Agreement. Executive recognizes that all such
Confidential Information is the property of Xxxxxxx International.
(b) In consideration of the Executive's employment by Xxxxxxx International
pursuant to this Agreement, the Executive agrees that:
(1) except as required by the duties of his employment, without the
prior written consent of Xxxxxxx International, the Executive shall
never, directly or indirectly, either during or after the term of this
Agreement, use, publish, disseminate or otherwise disclose in any
manner any Confidential Information obtained during his employment
with Xxxxxxx International or any Affiliated Corporation; and
(2) both during and after the term of this Agreement , the Executive
shall exercise all due and diligent precautions to protect the
integrity of the business plans, customer lists, statistical data and
compilations, agreements, contracts, memoranda, manuals, trade secrets
or other documents and materials of Xxxxxxx International and any
Affiliated Corporation which embody any Confidential Information, and
upon either the termination of the Executive's employment or
expiration of the term of this Agreement, the Executive shall return
to Xxxxxxx International all such documents or materials, including
any computer encoded material (and copies thereof) which are in the
possession or under the control of the Executive. The Executive
agrees that the provisions of this Section 2.1 are reasonably
necessary to protect the proprietary rights of Xxxxxxx International
in the Confidential Information and its trade secrets, good will and
reputation;
PROVIDED, HOWEVER, the foregoing shall not prevent Executive from responding to
a valid subpoena of a governmental agency or to a valid court order or as
otherwise required by law.
2.1.2 NON-COMPETITION. Executive hereby covenants that, for a period
of twelve months next following the date of termination of his employment
(except if such termination occurs as a result of the expiration of the
Three-Year Term), Executive shall not be engaged or interested (whether as a
proprietor, partner with another, shareholder, agent or consultant of, employee
of or lender to, another) in any business which competes, directly or
indirectly, with the tobacco businesses of Xxxxxxx International or any tobacco
business of an Affiliated Corporation; provided that if the employment of
Executive is terminated by Xxxxxxx International WITHOUT CAUSE, the foregoing
covenant shall not apply (without affecting the obligations hereinafter
contained in this Section 2.1 in respect of disclosures or solicitations by
Executive) unless the Executive shall have been paid Severance pursuant to
Section 1.5 hereof, in which event the covenant period shall continue for the
period that Severance is paid.
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For a period of one year following the date of termination of his
employment, Executive agrees not to offer employment to, not to initiate
discussions of the nature of any prospective employment opportunities with, and
not to otherwise solicit any director, officer or employee of Xxxxxxx
International or any Affiliated Corporation (or any person who was an employee
of Xxxxxxx International or any Affiliated Corporation within 180 days of the
date of Executive's termination of employment) on his own behalf, on behalf of
any employer of the Executive, on behalf of any entity with which the Executive
is acting as a consultant or with which the Executive is then otherwise
affiliated.
The provisions of this Section 2.1 shall survive the termination of the
employment hereunder or expiration of the term of this Agreement.
2.2 XXXXXXX INTERNATIONAL'S RIGHT TO INJUNCTIVE RELIEF. The Executive
acknowledges that his services are of a unique character which gives them a
special value to Xxxxxxx International. The Executive further acknowledges that
any breach or threatened breach by the Executive of any of the provisions of
this Article II will result in irreparable and continued harm to Xxxxxxx
International and its Affiliated Corporations for which Xxxxxxx International
and its Affiliated Corporations would have no adequate remedy at law.
Therefore, in addition to any other remedy which Xxxxxxx International may have
at law or in equity, Xxxxxxx International shall be entitled to injunctive
relief or other equitable remedies in the event of any such breach or threatened
breach. The provisions of this Article II shall survive the termination of the
Employment or the expiration of the term of this Agreement.
2.3 INVALIDITY OF COVENANTS. The parties acknowledge that the laws and
public policies of the State of Delaware and various other states of the United
States may differ as to the validity and enforceability of the covenants
contained in Article II. It is the intention of the parties that activities of
the Executive be restricted only to the extent necessary for the protection of
legitimate business interests of Xxxxxxx International, that the provisions of
this Agreement shall, to the fullest extent permissible under law and public
policy, be enforced by the courts and construed under the laws of the State of
Delaware, and that any part of Article II adjudicated to be invalid or
unenforceable shall not affect the validity or enforceability of any other part
of Article II or this Agreement. Accordingly, if any part of Article II shall
be adjudicated to be invalid or unenforceable in any action or proceeding in
which the Executive, or the Executive's heirs, executors or administrators and
Xxxxxxx International, its successors or assigns, are parties, either in its
entirety or as modified as to duration, territory or otherwise, then such part
shall be deemed to be amended so as to be enforceable or, if required, deleted
from this Agreement, as the case may be, in order to render the remainder of
Article II valid and enforceable.
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ARTICLE III
DEFINITIONS AND GENERAL PROVISIONS
SECTION 3.1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings set forth below:
AFFILIATED CORPORATION: "Affiliate Corporation" or "Affiliate" shall mean
any corporation or other entity, directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with
Xxxxxxx International.
DISABILITY: Disability shall mean Total Disability as defined in the
Xxxxxxx International long-term disability plan which currently provides
that "Total Disability" means "the inability of the Participant to perform
the normal duties of his or her regular occupation, except that if benefits
have been paid for twenty-four (24) months of any continuous disability,
then for the balance of the period of disability after such twenty-four(24)
months, the inability of the Participant to perform any and every duty of
any gainful occupation for which he or she is reasonably fitted by training,
education, or experience", or as defined by any substitute plan which
provides long-term disability coverage for the Executive, or in the event
that the executive is not covered by such a plan, Disability shall mean:
"the physical or mental incapacity of Executive for a period of more than
sixty consecutive days, the determination of which by the board of directors
of Xxxxxxx International shall be conclusive on the parties hereto.
PARENT: Any person, corporation or other entity which holds in excess of
50% of the issued and outstanding equity securities of Xxxxxxx
International.
SECTION 3.2. WITHHOLDING TAXES. Xxxxxxx International may withhold from
any payment to be made under this Agreement (and transmit to the proper taxing
authority) such amount as it may be required to withhold under any federal,
state or other law.
SECTION 3.3. ADMINISTRATION. Xxxxxxx International and its executive
officers shall have full power to interpret, construe and administer this
Agreement, including authority to determine any dispute or claim with respect
thereto. The determination of Xxxxxxx International in any matter, made in good
faith, shall be binding and conclusive upon Executive and all other persons
having any right or benefit hereunder.
SECTION 3.4. NOTICES. All notices, requests and other communications from
any of the parties hereto to the other shall be in writing and shall be
considered to have been duly given or served when personally delivered to any
individual party, an executive officer of any corporate party, or on the first
day after the date of deposit with Federal Express or other overnight courier
for next day delivery, postage prepaid, or on the third day after deposit in the
United States mail, certified or registered, return receipt requested, postage
prepaid, or on the date of telecopy, fax or similar telephonic transmission
during normal business hours, provided that the recipient has
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specifically acknowledged by telephone receipt of such telecopy, fax or
telephonic transmission; addressed, in all cases, to the party at his or its
address set forth below, such other address as such party may hereafter
designate by written notice to the other party:
(i) If to Xxxxxxx International to:
Xx. Xxxxxxx X. Xxxxxxx
Xxxxxxx International, Inc.
00 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
FACSIMILE 000 000-0000
(ii) If to Executive to:
J. Xxxxxx Xxxx, III
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
SECTION 3.5. BINDING EFFECT. The provisions of this Agreement shall not
give Executive any rights to continue to be employed or otherwise retained by
Xxxxxxx International or any Affiliated Corporation. Except as so provided,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, the respective successors and assigns of Xxxxxxx International and the
beneficiaries, personal representatives and heirs of Executive. Xxxxxxx
International may assign this Agreement to any subsidiary or Affiliate of
Xxxxxxx International so long as the Executive's duties and principal business
location shall not differ substantially from those set forth in this Agreement.
SECTION 3.6. CONTROLLING LAW. This Agreement shall be construed, and the
legal relations between the parties determined, in accordance with the laws of
the State of Delaware.
SECTION 3.7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original without the
production of the others, but all of which together shall constitute one and the
same instrument.
SECTION 3.8. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and may
not be varied, modified or amended except by a writing signed by the parties to
be charged. The making, execution and delivery of this Agreement by the parties
hereto have been induced by no representations, statements, warranties or
agreements of the other except those herein expressed.
SECTION 3.9. HEADING. The division of this Agreement into sections and
paragraphs and the titles assigned thereto is only a matter of convenience for
reference and shall not define or limit any of the terms or provisions thereof.
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SECTION 3.10 EFFECTIVE DATE. The Effective Date of this Agreement shall be
the later of January 1, 1997 or the date of the closing of the Offerings
described in the registration statement relating to the proposed public offering
of the Common Stock of Xxxxxxx Group; provided that it is understood that this
Agreement will not become effective in any event unless the closing of the
Offerings occurs.
IN WITNESS WHEREOF, the individual party has hereunto set his hand and the
corporate party has caused these presents to be executed by a proper officer
thereunto duly authorized all as of the day and year first above written.
XXXXXXX INTERNATIONAL, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Xxxxxxx X. Xxxxxxx
(Chairman of the Executive Committee)
/s/ J. XXXXXX XXXX, III
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J. Xxxxxx Xxxx, III
Executive
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