Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 8th day of April, 1994 by and between Culbro Corporation, a New York
corporation ("Culbro"), and Xxx X. Xxxxx ("Green").
WHEREAS, Green is employed by Culbro in an executive capacity and Culbro
desires to secure the continued services of Green, which are considered by
Culbro to be valuable to it, for an extended period of time upon the terms and
conditions herein provided; and
WHEREAS, Green desires to continue in the full and active employ of Culbro
in accordance with the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the premises and of the respective
covenants and agreements herein contained, the parties hereto hereby covenant
and agree as follows:
1. EMPLOYMENT. Culbro hereby agrees to employ Green, and Green hereby agrees
to remain an employee of Culbro, on the terms and conditions set forth herein,
for the period commencing April 8, 1994 and expiring on April 7, 1999 unless
sooner terminated as hereafter set forth. Subject to the terms of this
Agreement, the period referred to in this Paragraph 1 shall be referred to as
the "Employment Period."
2. POSITION AND DUTIES.
(a) During the Employment Period, Green shall occupy the position and
perform the duties of Executive Vice President - Finance and Administration and
Treasurer of Culbro (which duties shall be of the same general nature as those
performed by the chief financial officer of similarly situated companies and
substantially the same as those previously performed by Green) and shall perform
such other duties not inconsistent with his position as may be assigned to him
from time to time by the Board of Directors of Culbro (the "Board"), including
duties in respect of The Xxx Xxxx Company and any other subsidiary or affiliate
of Culbro.
(b) Green shall devote his best efforts and full business time to the
diligent, faithful, efficient, and competent performance of his duties and
responsibilities hereunder and will not engage in any other ventures or
enterprises (other than certain affiliations of which Culbro is aware which pre-
date the Employment Period) without the consent of the Board.
3. COMPENSATION.
(a) Base Compensation. Subject to the provisions of Paragraph 5 hereof,
Green shall receive an annual base salary of $340,000, payable in substantially
equal periodic installments. Green's annual base salary shall be reviewed at
least annually by the Compensation Committee of the Board (the "Compensation
Committee") and may be increased in the sole discretion of the Compensation
Committee.
(b) Bonus. In connection with the close of each fiscal year of Culbro
through the fiscal year ending prior to the end of the Employment Period, the
Compensation Committee shall review the services provided by Green and the
performance of Culbro for such fiscal year and shall award Green such bonus, if
any, as the Compensation Committee in its sole discretion shall determine,
provided that the bonus in respect of any fiscal year of Culbro shall not exceed
50% of Green's base salary for such fiscal year.
(c) Benefits. Green shall be entitled to participate in or receive
benefits during the Employment Period under all employee benefit plans or
programs of Culbro, including but not limited to term life insurance,
hospitalization and surgical and major medical coverage, vacations and holidays,
long-term disability, long term performance, pension, 401(k) and other fringe
benefits which are from time to time generally made available to executives of
Culbro, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans or arrangements.
(d) Expenses. During the Employment Period Green shall be entitled to
receive reimbursement for reasonable expenses actually incurred by him in the
performance of his duties (in accordance with past practice and the policies and
procedures established by the Board for executive officers of Culbro), provided
that any such expenses shall be reimbursable only to the extent that Green
properly accounts therefor in accordance with established policy, and further
provided that political contributions shall under no circumstances be
reimbursable.
4. STOCK OPTIONS.
(a) Grant of Option. Culbro hereby grants to Green the option (the
"Option") to purchase 125,000 shares of Culbro's Common Stock ("Common Stock")
at an exercise price of $4.00 per share.
(b) Exercisability. The Option shall become exercisable with respect to
20% of the shares of Common Stock covered thereby on the first anniversary of
the date of this Agreement and with respect to an additional 20% of the shares
of Common Stock covered hereby on each of the next four succeeding
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anniversaries of the date of this Agreement; provided, however, that if Green
dies or Culbro terminates his employment as a result of his Disability prior to
the fifth anniversary of the date of this Agreement, a portion of the Option,
prorated to the date of his death or termination, that would otherwise have
become exercisable on the anniversary of the date of this Agreement next
succeeding his death or termination, shall immediately become exercisable. The
portion of the Option which has become exercisable as aforesaid shall be
referred to herein as the "Vested Stock Options". Except as otherwise stated
herein, each Vested Stock Option shall expire and cease to be exercisable on and
after the tenth anniversary of its having becoming exercisable as aforesaid and,
except as provided in Paragraph 5 in each specific case, on or after the date
Green ceases to be an employee of Culbro or its subsidiaries. The Vested Stock
Options may be exercised in whole or in part and from time to time by the
delivery of written notice to the Secretary of Culbro specifying the number of
shares exercised, accompanied by payment in full of the exercise price of such
shares of Common Stock. The exercise price of the shares of Common Stock as to
which the Option is exercised shall be paid to Culbro at the time of exercise in
cash, provided that the Compensation Committee in its sole discretion may permit
Green to pay the exercise price by delivery of outstanding shares of Common
Stock owned by Green and duly endorsed to Culbro or by any other arrangement for
the payment of the exercise price as it deems advisable. As soon as practicable
after receipt of such payment, Culbro shall deliver to Green a certificate or
certificates for the shares of Common Stock so purchased.
(c) The Option is nontransferable and during Green's lifetime maybe
exercised only by Green.
(d) Section 162(m) Disallowance. Green will use his reasonable best
efforts to schedule his exercise of the Option so that the exercise of the
Option will not result in a disallowance of a deduction on Culbro's federal
income tax return for any year under section 162(m) of the Internal Revenue Code
of 1986, as amended (a "Disallowance"). The Option may not be exercised in any
year prior to the last tax year of Culbro in which it is exercisable ("The Last
Year") to the extent that the exercise of the Option would result in a
Disallowance. If Green delivers notice of exercise of the Option in The Last
Year, but exercise of the Option in The Last Year would result in a
Disallowance, then, at Culbro's option, the Option shall not be exercised in The
Last Year and the period during which the Option is exercisable shall be
extended for up to two years, during which years the Options originally sought
to be exercised in The Last Year shall be exercised so as to minimize any
Disallowance. All determinations as to whether an Option would result in a
Disallowance shall be made by the Compensation Committee in its sole discretion
after taking into account all compensation of Green.
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(e) Purchase Not for Distribution. At such time or times as Green may
exercise the Option, Culbro may require Green to represent in writing that he is
acquiring shares of Common Stock under the Option for his own account and not
with a view to or for sale in connection with any distribution thereof, and that
Green will not sell or otherwise dispose of any such shares of Common Stock
except in compliance with the Securities Act of 1933 and the rules and
regulations thereunder. Green recognizes that the shares of Common Stock
acquired under the Option may be subject to certain transfer restrictions under
the securities laws of the United States.
(f) Adjustments. In the event of any stock split, dividends (other than
ordinary cash dividends), distribution, combination, reclassification,
recapitalization, merger, consolidation, liquidation or other similar change or
transaction of or by Culbro which changes the character or amount of the shares
of Common Stock while the Option is outstanding but unexercised, the Board shall
make such adjustments in the exercise price of Common Stock subject to the
Option as shall be equitable and appropriate in order to make the Option, as
nearly as may be practicable, equivalent to the Option immediately prior to such
change.
(g) Additional Options; Previously Acquired Options. Other than the
Option described above, during the Employment Period Green shall not receive any
compensatory awards of Common Stock or Options to purchase Common Stock under
any other plan or arrangement maintained or hereafter adopted by Culbro;
however, any option to purchase Common Stock granted to Green prior to the date
of this Agreement shall remain outstanding in accordance with its terms.
(h) Change in Control. In the event that the group consisting of the
Cullman and Ernst families and trusts for their benefit, partnerships in which
members of the Cullman and Ernst families hold substantial direct and indirect
interests, and charitable foundations and trusts of which members of the Cullman
and Ernst families are directors or trustees (the "Cullman Group") own less than
40% of Culbro's Common Stock, then the Option shall become exercisable in its
entirety notwithstanding Paragraph 4(b) of this Agreement.
5. TERMINATION.
(a) Death. If Green's employment terminates by reason of his death,
Green's designated beneficiary or personal representative shall be entitled to
any unpaid portion of his annual base salary prorated to the date of death and
shall be entitled to exercise the Option, to the extent it was exercisable by
Green on the date of his death or become exercisable by virtue of his death,
within one year of Green's death but in no event
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later than the date the Option would have expired if Green had lived. Green's
designated beneficiary or personal representative shall also be entitled to a
prorated portion of any bonus awarded to Green by the Compensation Committee
with respect to the year of his death. Green's designated beneficiary or
personal representative shall be eligible for those death benefits, if any,
available under the employee benefit plans and programs of Culbro and in which
Green has participated.
(b) Disability. If Culbro terminates Green's employment, as a result of
Green's Disability, as hereinafter defined, Green shall be entitled to any
unpaid portion of his annual base salary prorated to the date of such
termination. For purposes of this Agreement, "Disability" shall mean Green's
inability to discharge his duties and responsibilities under this Agreement due
to either his physical or mental incapacity for a period of four (4) consecutive
months or for an aggregate of five (5) months in any eight (8) consecutive month
period. In the event Culbro terminates Green's employment due to Disability, he
shall be entitled to continue participation in the employee benefit plans and
programs of Culbro if and to the extent permitted by such plans. In the event
Culbro terminates Green's employment due to Disability, he may exercise the
Option, to the extent it was a Vested Stock Option on the date his employment
terminated or became exercisable by virtue of such termination, within one year
of such date, but in no event later than the date the Option would have expired
in accordance with its terms.
(c) Voluntary Termination. In the event of a voluntary termination of
employment by Green, Green shall be entitled to an unpaid portion of his annual
base salary prorated to the date of such termination. He may exercise the
Option, to the extent it was a Vested Stock Option on the date his employment
terminated, within 90 days from such event, but in no event later than the date
the Option would have expired in accordance with its terms.
(d) Termination for Cause. Culbro may terminate Green's employment
hereunder for Cause. For purposes of this Agreement the term "Cause" shall mean
gross negligence and gross misconduct which is materially injurious to Culbro or
any of its subsidiaries, conviction of a felony or its equivalent under local
law after appeal, continued failure by Green substantially to perform his
employment duties and obligations (other than any such failure resulting from
his Disability), or material violation of Paragraphs 6, 7 or 8 of this
Agreement. Upon a termination of employment by Culbro for Cause, Green shall be
entitled to an unpaid portion of his annual base salary prorated to the date of
such termination. Other than Options which have already been exercised, no
Vested Stock Options may be exercised in the event that Green's employment has
been terminated for Cause.
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(e) Termination Without Cause. A "Termination Without Cause" shall mean a
termination of Green's employment (i) by Culbro other than due to the events
described in Paragraph 5(a), 5(b), 5(c) and 5(d) respectively; or (ii) by Green
following: (A) a reduction, without his prior written consent, in his then
current annual base salary, (B) the loss, without his prior written consent, of
his title or position as Executive Vice President - Finance and Administration,
(C) a significant diminution, without his prior written consent, of his ongoing
duties and responsibilities as Executive Vice President - Finance and
Administration, (D) a significant diminution, without his prior written consent,
of his benefits, or (E) his being required to report, without his prior written
consent, to any person not a member of the Cullman Group. Culbro shall have the
right to terminate Green in a Termination Without Cause at any time. In
addition, a Termination Without Cause shall be deemed to have taken effect if
Green shall have delivered a written notice to the Board within two months of
the occurrence of one of the events listed in clause (ii) above, stating which
one of those events has occurred and stating that he is terminating his
employment pursuant to the provisions of Paragraph 5(e) of this Agreement.
If a Termination Without Cause occurs, Green shall be entitled to a cash
payment equal to 150% of his current annual base salary in effect on the date of
termination. Furthermore, if a Termination Without Cause occurs during the
first thirty (30) months of the Employment Period, the Option shall immediately
become a Vested Stock Option with respect to (i) 87,500 shares of Common Stock,
less (ii) the number of shares of Common Stock which had previously become
Vested Stock Options pursuant to Paragraph 4(b). If a Termination Without Cause
occurs during the last thirty (30) months of the Employment Period, the Option
shall immediately become a Vested Stock Option with respect to all shares of
Common Stock covered thereby. Green may exercise the Vested Stock Options for a
period of 90 days following his Termination Without Cause.
6. AGREEMENT NOT TO COMPETE. Green agrees that in consideration of the
benefits defined in this Agreement, until 18 months following the termination of
his employment and regardless of the reason for any termination of employment
(whether voluntary or involuntary and whether for Cause or otherwise), Green,
except when acting on behalf of Culbro or any affiliate thereof, shall not
engage in, be employed directly or indirectly by, hold a greater than one (1)
percent equity interest in, or provide advise or act as a consultant to, any
person or entity which is, or is about to be, engaged in any business
substantially the same as any business engaged in (or actively being planned to
be engaged in) by Culbro or its subsidiaries without Board approval. For
purposes of this preceding sentence, a real estate business shall not be
considered substantially the same as a business engaged in by Culbro or its
subsidiaries unless that real estate business is conducted, in whole or in part,
in the greater Hartford, Connecticut area.
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7. NONSOLICITATION. Green agrees that until three years following the
termination of this Agreement (regardless of whether his employment is
continuing hereunder or has been terminated), he shall not, except when acting
on behalf of Culbro or any affiliate of Culbro:
(i) directly or indirectly solicit any person, corporation, partnership or
other business entity which is, at the time of such solicitation, a customer of
Culbro or its subsidiaries or affiliates, for the purpose of engaging in any
business transactions of the nature performed by or conducted by Culbro or its
subsidiaries at any time during this three year period with any such customer;
or
(ii) directly or indirectly employ, solicit for employment, or advise or
recommend to any other person that he employ or solicit for employment, any
person employed at that time by Culbro or its affiliates. This Paragraph shall
not be construed to prohibit Green from responding, in accordance with Culbro
policy, to reference requests received from prospective employers of former
employees, if such reference requests are not related to an activity by Green
prohibited under this Agreement; or
(iii) solicit any employee of Culbro or its subsidiaries to terminate his
employment.
8. NONDISCLOSURE.
(a) Green agrees that during the Employment Period and until three
years following the termination of this Agreement, Green shall not, without the
prior written consent of the Board or a person authorized thereby, disclose or
use (except (1) in the course of his employment hereunder and in furtherance of
the business of Culbro or its affiliates or (2) when required to do so by a
court of competent jurisdiction, by any governmental agency having supervisory
authority over the business of Culbro, or by any administrative body or
legislative body (including a committee thereof) with purported or apparent
jurisdiction to order Green to divulge, disclose or make accessible such
information) any confidential information or proprietary data of Culbro or its
subsidiaries; provided, however, that confidential information shall not include
any information known generally to the public (other than as a result of
unauthorized disclosure by Green) or any information of a type not otherwise
considered confidential or proprietary by persons engaged in the same business
or a business similar to that conducted by Culbro or its subsidiaries.
(b) Green agrees that upon termination of his employment with Culbro,
for any reason, he will return to Culbro immediately any property, customer
lists, information, forms, formulae, plans, documents or other written or
computer material, software or firmware, or copies of the same, belonging to
Culbro or
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its subsidiaries, or any of their customers, within his possession, and will not
at any time thereafter copy or reproduce the same, except that he may retain
personal notes, notebooks and diaries. Green further agrees that he will not
retain or use for his own account at any time any trade names, trademark,
service xxxx, or other proprietary business designation used or owned in
connection with the business of Culbro or its subsidiaries.
9. CONTINUATION OF EMPLOYMENT. Unless the parties otherwise agree in writing,
continuation of Green's employment with Culbro beyond the expiration of the
Employment Period shall be deemed an employment at will and shall not be deemed
to extend any of the provisions of this Agreement, and Green's employment may
thereafter be terminated at will by Green or Culbro.
10. SUCCESSORS AND ASSIGNS. This Agreement and all rights hereunder shall inure
to the benefit of and be enforceable by Green's personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by Culbro's successors and assigns. This Agreement is personal in
nature and shall not be assignable by Green without the written consent of the
Board. Culbro may not assign or transfer this Agreement or any right or
obligation hereunder to any other person, firm, corporation or entity except (i)
in connection with any transfer of a majority of the assets of Culbro, or (ii)
with the written consent of Green.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive law but not the choice of law rules of the State
of New York.
12. ARBITRATION. Any dispute or controversy arising under this Agreement
relating to money damages or in connection with the interpretation of this
Agreement shall be arbitrated and settled before and pursuant to the commercial
rules of the American Arbitration Association which are then in effect.
13. AMENDMENT. No amendment, modification or waiver of this Agreement or any of
its provisions shall be binding upon either party unless made in writing and
signed by all parties.
14. VALIDITY. It is the desire and intent of the parties that the provisions of
this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, the invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect, nor shall the invalidity or unenforceability of any portion or any
provision of this agreement affect the validity or enforceability of th4e
balance of such provisions.
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15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.
16. ENTIRE AGREEMENT. This Agreement, constitutes the entire Agreement between
the parties hereto with respect to the subject matter hereof, and supersedes all
other prior agreement, understandings and arrangement between the parties
hereto, all of which are merged herein. There are no restrictions, promises,
warranties, covenants or undertakings other than those expressly set forth
herein or incorporated herein by reference.
17. WAIVER. The observation or performance of any condition or obligation
imposed upon Green hereunder may be waived only upon the written consent of the
Board. Such waiver shall be limited to the terms thereof and shall not
constitute a waiver of any other condition or obligation of Green under this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
CULBRO CORPORATION:
By: /s/ Xxxxx X. Xxxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxxx, Xx.
President
XXX X. XXXXX:
By: /s/ Xxx X. Xxxxx
------------------------------
Xxx X. Xxxxx
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FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
BETWEEN CULBRO CORPORATION AND XXX X. XXXXX
This First Amendment to the Employment Agreement between Culbro
Corporation, and Xxx X. Xxxxx, is made by and between Culbro Corporation, a
New York corporation ("Culbro"), and Xxx X. Xxxxx, an individual ("Green"),
effective April 8, 1994.
WITNESSETH
WHEREAS, Culbro and Green have entered into an Employment Agreement,
dated as of April 8, 1994 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement as set forth below;
and
WHEREAS, at the April 11, 1996 Annual Meeting of Shareholders, Culbro's
shareholders approved in principle the amendments to the Agreement set forth
below;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Section 3(b) of the Agreement is hereby amended in its entirety to
read as follows:
(b) Bonus. In connection with the close of each fiscal
year of Culbro through the fiscal year ending prior to the end of the
Employment Period, the Compensation Committee shall review the services
provided by Green and the performance of Culbro for such fiscal year and
shall award Green such bonus, if any, as the Compensation Committee in its
sole discretion shall determine, provided, however, that if performance
targets set forth in any bonus plan in which Green participates are met at
the 100% level, Green shall receive a bonus equal to 50% of his base salary
for the fiscal year to which such bonus plan relates ("Target Bonus"), and
provided further that Green shall be eligible, at the discretion of the
Compensation Committee, to receive a bonus in excess of the Target Bonus with
respect to any fiscal year in which such performance targets are met at a
greater than 100% level.
2. Section 4(d) of the Agreement is hereby amended in its entirety to
read as follows:
(d) Section 162(m) Disallowance. Green will use his
reasonable best efforts to schedule his exercise of the Option so that the
exercise of the Option will not result in a disallowance of a deduction on
Culbro's federal income tax return for any year under section 162(m) of the
Internal Revenue Code of 1986, as amended (a "Disallowance"). The Option may
not be exercised in any year prior to the last tax year of Culbro in which it
is exercisable ("The Last Year") to the extent that the exercise of the
Option would result in
a Disallowance, unless such exercise is specifically approved by the Section
162(m) Subcommittee of the Compensation Committee (the "Section 162(m)
Subcommittee") and such approval is ratified by the Compensation Committee.
If Green delivers notice of exercise of the Option in The Last Year, but
exercise of the Option in The Last Year would result in a Disallowance, then,
at Culbro's option, the Option shall not be exercised in The Last Year and
the period during which the Option is excercisable may be extended for up to
two years, during which years the Options originally sought to be exercised
in The Last Year shall be exercised so as to minimize any Disallowance. All
determinations as to whether an Option would result in a Disallowance shall
be made by the Section 162(m) Subcommittee and Compensation Committee in
their sole discretion after taking into account all compensation of Green.
3. All other provisions of the Agreement shall continue as therein
provided, except that to the extent that any provision of the Agreement
shall conflict with this Amendment the provisions of this Amendment
shall control.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be signed as of January 11, 1997.
CULBRO CORPORATION:
By: /s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------
Its: President
-------------------------
XXX X. XXXXX:
By: /s/ Xxx X. Xxxxx
-------------------------
Xxx X. Xxxxx
