EXHIBIT 10.3
Xxxxxxx X. XxXxxxx
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. $275,000 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.
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
Xxxxxxx X. XxXxxxx (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 Executive Vice President
and Chief Operating 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 Exec- utive'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 ser-
vices 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 $275,000, 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
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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 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, howev-
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er, 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.
3.4 Vacation. During the Term, the Exec-
utive 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. 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 provid-
ed 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 process-
es, 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:
Xxxxxxx X. XxXxxxx
00000 Xxxxxx Xxxxx
Xxxx Xxxxx, 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
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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, modi-
fied, 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.
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/ Xxxxxxx X. XxXxxxx
-----------------------------
Xxxxxxx X. XxXxxxx
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