EXHIBIT 10.10
AGREEMENT
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THIS AGREEMENT (the "Agreement") is made and entered into by and
between Premium Cigars International, Ltd., an Arizona corporation ("PCI") and
Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx"). PCI and Xxxxxxxxx are collectively referred
to herein as the "Parties."
R E C I T A L S:
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X. Xxxxxxxxx entered an Employment Agreement with PCI dated June 13,
1997 (the "Employment Agreement").
X. Xxxxxxxxx entered an Amendment to Employment Agreement with PCI on
November 19, 1997 (the "Amendment").
C. PCI terminated Xxxxxxxxx'x employment on March 1, 1998.
D. PCI and Xxxxxxxxx have certain disputes regarding Xxxxxxxxx'x
xxxxxxxxx compensation and other sums payable to Xxxxxxxxx.
E. Without any admission of liability by either Party, the Parties
desire to avoid and resolve any further dispute or litigation regarding any
compensation or payments to Xxxxxxxxx from the Company.
F. It is of utmost importance to PCI that Xxxxxxxxx not compete with
PCI after his termination and PCI wishes to extend the current covenant
not-to-compete in Xxxxxxxxx'x Employment Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
1. Settlement Contingent Upon PCI's Simultaneous Settlement with Xxxxx
X. Xxxxx and Xxxx X. Xxxxxxxxx. This settlement is contingent upon PCI's
entering into separate settlement agreements with both Xxxxx X. Xxxxx and Xxxx
X. Xxxxxxxxx regarding certain compensation and other payments that they are
claiming. If PCI has not entered into such settlement agreements with Xxxxxx X.
Xxxxxxxxx and Xxxx X. Xxxxxxxxx on or before 5:00 p.m. on March 3, 1998, then
this Agreement shall be null and void and of no force and effect whatsoever
against PCI or Xxxxxxxxx.
2. Payment. Provided that the contingency in Paragraph 1 is met, PCI
shall pay Xxxxxxxxx, within ten (10) business days after the execution of this
Agreement, the sum of Forty Thousand Dollars ($40,000.00) (the "Payment"). The
Payment is an amount which was
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negotiated by the Parties in exchange for the release of claims set forth in
paragraph 7 herein and in exchange for the extension of the covenant
not-to-compete in the Employment Agreement.
3. Severance Compensation. Xxxxxxxxx acknowledges the sole remaining
amount of severance compensation to be paid is $63,000, which PCI shall pay
bi-weekly over a period of 39 weeks. PCI shall also pay Xxxxxxxxx $73.85 per
bi-weekly period until the nine (9) months following his termination is
completed, as a cash payment in lieu of the health insurance premium for
Xxxxxxxxx at the time of his termination. Xxxxxxxxx will be responsible to
obtain his own health insurance. Xxxxxxxxx acknowledges that, except for the
severance compensation described in this Paragraph, the Payment and the 20,000
options to purchase PCI Common Stock, which rights have vested and approved by
the Board of Directors as described in Paragraph 2 (i) and (ii) of the
Amendment, and any applicable ongoing compensation as a director, he has been
paid for all services rendered to the PCI as an employee and has no right to any
additional employment compensation or employment benefits of any kind from PCI.
Xxxxxxxxx acknowledges that he is not entitled to any vacation or compensation
in lieu of vacation. Xxxxxxxxx acknowledges that the payment of severance
compensation remains subject to the conditions of the Employment Agreement,
including, without limitation, the conditions of Paragraph 7 of the Employment
Agreement as that Section relates to paragraphs 8, 9 & 10 of the Employment
Agreement.
4. Withholding. PCI shall make no deduction or withholding from the
Payment or payment in lieu of health insurance premium in Paragraphs 2 and 3, in
reliance upon Xxxxxxxxx affirmative representation that he will be solely
responsible for any and all taxes and other amounts owed on such payments.
5. Employment Agreement.
a. Compensation. Except for the Payment and severance
compensation described in paragraphs 2 and 3 herein, Xxxxxxxxx hereby
waives any and all rights to any monetary or other compensation under
the Employment Agreement. Xxxxxxxxx expressly acknowledges that he has
been paid in full for all services rendered to PCI prior to the date of
this Agreement, including without limitation wages and vacation pay
through the date of termination.
b. No Options or Bonus. Except for the options described in
Paragraph 2(ii) of the Amendment, Xxxxxxxxx expressly waives any right
to any options or bonuses which have been or may in the future be
offered to any employee of PCI.
c. Continuing Obligations; Extension of Covenant Not To
Compete. Notwithstanding anything contained within this Agreement to
the contrary, Xxxxxxxxx expressly acknowledges that his obligations
pursuant to Paragraphs 8, 9, 10 and 13 of the Employment Agreement
relating to Customer Records, Confidential Information and the Covenant
Not To Compete and PCI's remedies under the Employment Agreement for
Xxxxxxxxx'x violations of said provisions and Miscellaneous Provisions
provided therein shall continue and remain in full force and effect for
the term set forth in the
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Employment Agreement. However, in exchange for the Payment, the term of
the Covenant Not To Compete as set forth in paragraph 10(b) of the
Employment Agreement shall be extended for an additional six (6) months
for a total of 18 months from the date of Xxxxxxxxx'x termination from
PCI. During the duration of the Covenant Not To Compete, Xxxxxxxxx
shall present to the Board any potential conflict with such covenant
and a majority of the Board of Directors shall determine whether an
actual conflict exists with the business of the Company (which is cigar
distribution).
6. Status as a Director. This Agreement shall not affect Xxxxxxxxx'x
status as a director of PCI, and Xxxxxxxxx shall be entitled to the compensation
paid to, or options granted to, outside directors and Xxxxxxxxx shall be treated
as an outside director effective upon the date of termination of his employment
with PCI.
7. Release of Claims. Except for the obligations created by and the
rights expressly reserved within this Agreement, Xxxxxxxxx does hereby and
forever discharge PCI and each of its respective stockholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
consultants, affiliates, lawyers, and all persons acting by, through, under, or
in concert with them, or any of them, of and from any and all manner of action
or actions, cause or causes of action, in law or in equity, suits, liabilities,
claims, demands, damages, losses, costs or expenses, of any nature whatsoever,
(hereinafter collectively "claims") arising out of or relating to the Employment
Agreement or Xxxxxxxxx'x employment with PCI. As stated more particularly in
Paragraph 8 herein, both Parties expressly reserve the right to bring an action
to enforce this Agreement and the obligations and rights expressly reserved
herein. It is the Parties intention that the foregoing release shall be
effective as a full and final accord and satisfaction, and as a bar to all
claims against PCI as set forth above, except for an action to enforce this
Agreement or any rights expressly reserved within this Agreement.
8. Further Actions. The Parties may plead this Agreement as a full and
complete defense to, and as the basis for an injunction against, any action,
suit or other proceeding which either Party may institute, prosecute or attempt
in breach of this Agreement.
9. Costs. The Parties will bear their own costs, expenses and
attorneys' fees, whether taxable or otherwise, incurred in or arising out of or
connected with the negotiation of this Agreement and the disputes settled
herein.
10. Construction of this Agreement. This Agreement has been freely
entered into by the Parties. PCI has been represented by counsel and PCI advised
Xx. Xxxxxxxxx of his right to seek counsel, but Xx. Xxxxxxxxx elected to
represent himself. The validity, effect and performance of this Agreement shall
be governed and construed by the laws of the State of Arizona. This Agreement
shall be construed liberally to effect its purpose, and the Parties waive any
rule requiring strict construction against or in favor of either Party. The
Agreement shall be construed as if drafted by the Parties jointly.
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11. Integration Clause. This Agreement embodies the full and complete
understanding and agreement between the Parties with respect to the matters
addressed herein. This paragraph may be waived or modified only in a writing
signed by the party to be charged.
12. Severability. If any term of this Agreement shall be found invalid,
void or unenforceable, that term shall be severed from this Agreement and the
remaining terms enforced as specified herein.
13. Prevailing Party. In any action arising out of this Agreement, the
prevailing party or parties shall be entitled to an award of reasonable
attorneys' fees and costs incurred in such action, which award shall be made by
the Court, and shall be in addition to any other relief to which such party or
parties are entitled. The Parties expressly consent to the jurisdiction and
venue of Maricopa County, Arizona Superior Court for the resolution of any
future disputes.
14. Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the Parties, their officers, directors,
representatives, agents, employees, attorneys, heirs, personal representatives,
successors and assigns.
15. No Admission of Liability. The Parties agree that this final
compromise and settlement is not and shall not be used as an admission of
liability or responsibility.
16. Counterparts. This Agreement may be executed in counterparts which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this 3rd day of March, 1998.
PREMIUM CIGARS INTERNATIONAL, LTD.
By /s/ Xxxx X. Xxxxxxxxx /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx, President Xxxx X. Xxxxxxxxx
and Chief Executive Officer
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