EXHIBIT 10.49
RETENTION AGREEMENT ("Agreement"), dated as of March 15, 2003, by
and between Pueblo International, LLC, a Delaware limited liability
company and Pueblo Entertainment, Inc., a Delaware corporation (the
"Companies"), which are wholly owned subsidiaries of Nutritional Sourcing
Corporation, a Delaware corporation ("NSC") and Xxxxxxxx X. Xxxxxxx (the
"Executive").
WHEREAS, the Companies acknowledge the existence of various risks
and uncertainties in connection with the competitive marketplace in Puerto
Rico and the U.S. Virgin Islands and with matters involving NSC and its
current Chapter 11 proceedings;
WHEREAS, the Companies believe it is in the best interests of the
Companies to take appropriate actions to insure continuity of key
management and desire to induce Executive to remain in the employ of the
Companies, notwithstanding such risks and uncertainties;
WHEREAS, the Companies have requested Executive to remain in the
employ of the Companies, on the terms and conditions hereafter set forth
and Executive is willing to accept such terms; and
WHEREAS, considering the foregoing, the Executive and the
Companies agree to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Companies and the Executive (the
"Parties") hereby agree as follows:
1. Employment, Duties, Acceptance and Term
1.1 The Companies hereby employ the Executive and the Executive agrees
to be so employed pursuant to the terms hereof. The Executive shall
report directly to the Chief Executive Officer of the Companies or
such person's designee ("Executive Supervisor").
1.2 The Executive shall devote Executive's full business time and attention
to the business of the Companies, including such duties and
responsibilities to which Executive is assigned pursuant to this
Agreement, during the period of employment hereunder. Notwithstanding,
with prior approval of Executive Supervisor, Executive may serve as an
officer or director of community-related, professional, or industry
related organizations, so long as such activity does not interfere with
Executive's responsibilities hereunder.
1.3 The Executive's employment under this Agreement shall commence as of
March 15, 2003 (the "Commencement Date") and end on the third
anniversary of the Commencement Date, subject to the provisions of
Section 3 of this Agreement (the "Employment Period").
2. Compensation and Benefits
2.1 Base Salary. During the Employment Period, the Companies will pay to
Executive a Base Salary at the annual rate of One Hundred Fifty
Thousand U.S. Dollars ($150,000.00), to be paid in substantially equal
installments on a weekly basis, subject to applicable payroll
withholdings and deductions. The Executive Supervisor shall review the
Base Salary on an annual basis and, at the Executive Supervisor's
discretion, may increase the Base Salary. All compensation and
benefits payable to Executive pursuant to this Agreement will be paid
by or on behalf of Pueblo International, LLC directly to the Executive
but shall be the joint and several liability of the Companies.
2.2 Annual Incentive Compensation. If the Executive meets the annual
performance criteria established by the Board of Managers and/or Board
of Directors (hereafter, collectively, "Board of Directors") of the
Companies under the Companies' Key Management Incentive Opportunity
Program (KMIO), the Companies shall pay to the Executive, within ninety
(90) days of the close of each fiscal year end or portion of such year
during the Employment Period, a KMIO bonus ("KMIO Incentive
Compensation") in such amount as determined by the KMIO formulas. The
Board of Directors of the Companies shall review the KMIO Incentive
Compensation Program on an annual basis and, at their discretion will
approve the performance targets for each fiscal year.
2.3 Special Incentive Compensation. The Executive is also a participant in
the Special Incentive Program (SIP) covered under a separate agreement,
which will terminate on August 1, 2003 unless mutually extended.
2.4 The Companies shall pay or reimburse the Executive for all reasonable
business and travel expenses actually incurred or paid by the Executive
during the period of employment hereunder in the performance of
services under this Agreement, upon timely presentation of expense
statements or vouchers or such other supporting information as
Companies may require.
2.5 The Companies shall provide Executive with an automobile allowance of
$175.00 per week.
2.6 The Companies shall provide to the Executive medical and disability
benefits and insurances and coverage under applicable employee benefit
plans currently provided generally to senior executives of the
Companies pursuant to the terms, conditions and limitations of the
Companies' plans and its regulations in effect and as they may be
modified from time to time. However, because the Executive's
employment is covered by this Agreement, the Executive is not eligible
to participate in or seek coverage under any separation or severance
plan, policy or benefit or similar program, other than as provided in
this Agreement.
2.7 The Executive shall be entitled to paid vacation per calendar year in
accordance with the policies of the Companies in effect from time to
time.
2.8 The Executive's principal work location is in San Xxxx, Puerto Rico.
Executive's principal work location may not be changed from San Xxxx,
Puerto Rico nor can Executive's business travel obligations be
materially increased without the prior written consent of Executive.
3. Termination of Employment Relationship
3.1 The Companies may at any time, by written notice to Executive,
terminate Executive's employment hereunder and this Agreement for
"Cause" as of the date of such notice. For purposes of this Agreement,
"Cause" shall be defined as any of the following:
(i) the commission by the Executive, in connection with the
performance of Executive's duties or obligations hereunder, of
acts of dishonesty, gross negligence or willful misconduct; which
act (or failure to act) the Executive Supervisor, in the exercise
of Executive Supervisor's discretion, determines materially
affects adversely, the value, reliability or performance of the
Executive in regard to Executive's employment by the Companies;
or
(ii) the conviction of the Executive of (or pleading nolo contendere
or similar plea by the Executive to) any felony or serious
violation of law which the Executive Supervisor, in the exercise
of Executive Supervisor's discretion, determines materially
affects adversely, the value, reliability or performance of the
Executive in regard to Executive's employment by the Companies;
or
(iii) the Executive's refusal or neglect to comply with the reasonable
and prudent directions and/or instructions of the Executive
Supervisor consistent with the terms of this Agreement, and the
Executive's failure to cure such alleged material default, refusal
or failure within ten (10) calendar days from date of receipt of
the written notice from the Executive Supervisor to Executive of
such default, refusal or failure; or
(iv) the Executive's material breach of any of the Executive's
obligations (including the obligation to comply with all of the
Companies' material policies and procedures) to the Companies and
the Executive's failure to cure such alleged material breach with
ten (10) calendar days from the date of receipt of the written
notice from the Executive Supervisor to Executive of such alleged
material breach; or
(v) Executive's willful and continued failure to substantially
perform Executive's duties with the Companies, or any subsidiary
of the Companies, as such duties may reasonably be defined from
time to time by the Executive Supervisor or the Board of
Directors of the Companies (other than any such failure resulting
from Executive's incapacity due to physical or mental illness)
after a written demand for substantial performance is delivered
to Executive by the Board of Directors of the Companies, which
demand specifically identifies the manner in which the Board of
Directors of the Companies believes that Executive has not
substantially performed Executive's duties; or
(vi) a material and documented breach of the Executive's covenants
under Section 4 of this Agreement.
For purposes of this Agreement, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable
belief that that Executive's action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
directions of the Executive Supervisor, authority given pursuant to a
resolution duly adopted by the Board of Directors of the Companies or
based upon the advice of counsel for the Companies shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for
"Cause" unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote
of not less than 75% of the entire membership of the Board of Directors
of the Companies (excluding the Executive if he is a member of the
Board of Directors of the Companies) at a meeting of the Board of
Directors of the Companies called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity to be heard before the Board of Directors of the
Companies), finding that, in the good faith opinion of the Board of
Directors of the Companies, the Executive is guilty of the conduct
described above, and specifying the particulars thereof in detail.
In the event of termination for "Cause" pursuant to this Section 3.1,
the Companies shall be liable and shall pay to the Executive only that
portion of the Base Salary pursuant to Section 2.1 which has been fully
earned and unpaid as of the date of the Executive's receipt of such
written notice from the Board of Directors of the Companies. The
Executive shall not be entitled to KMIO Incentive Compensation on
account of the year in which the Executive is terminated if for
"Cause." The Executive will be entitled to all accumulated and unused
vacation pay regardless of the reason for termination, in addition to a
fair estimate of all benefits accrued but not yet paid under the SIP
arrangement and any pending medial or business expenses up to such
date.
3.2 The Companies may, at any time during the term of this Agreement, by
written notice to the Executive, terminate the Executive's employment
hereunder "Without Cause" (which shall include termination due to death
or disability of the Executive) as of the date of such notice to
Executive by the Board of Directors of the Companies. In the event of
such termination "Without Cause" pursuant to this Section 3.2, the
Companies shall pay the Executive, within ten (10) days of the date of
notice of termination the following amounts: (a) an amount equal to
Executive's annual Base Salary then in effect; (b) a pro-rated portion
of the current year's KMIO Incentive Compensation, to be determined
based upon the actual sales and EBITDA results year to date as of the
most recently completed four week fiscal period compared with the KMIO
annual targets prorated for the short period multiplied by the amount
of base compensation received as of the effective termination date;
(c) advance the estimated amount to be paid under SIP arrangement based
upon reasonable and available projections resulting in a SIP award and
this advanced amount is to be increased or partially repaid based upon
the eventual actual and final SIP calculations; and (d) an amount equal
to continuation of automobile allowance, medical and other insurance
benefits for one year.
This Section 3.2 also applies in the event of a deemed termination
"Without Cause" which shall occur if, upon a "change of control" of the
Companies and/or NSC, the Executive is not guaranteed in the
Executive's good faith judgment the same position, title and
responsibilities with a new financially responsible owner, under terms
and conditions at least as favorable to the Executive in all material
respects as those contained in this Agreement. "Change of control"
includes a change in the majority of the ultimate equity ownership or
control for whatever reason, whether involving consideration or not.
3.3 If payments are due Executive pursuant to this Section 3, then the
Companies shall pay to Executive an amount which, on an after-tax basis
(including federal income and excise taxes and state and local income
taxes), equals the excise tax, if any, imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), upon Executive
by reason of "parachute payments" (as defined in Section 280G(b)(2) of
the Code) made by the Companies.
4. Protection of Confidential Information, Non-Competition
4.1 Executive and Companies acknowledge that the services Executive
provides to the Companies are unique (for purposes of this Section 4
the term "Companies" shall include the entity owning the Companies as
well as all entities owned by the Companies). Executive and Companies
further acknowledge that the business knowledge and relationships of
the Executive acquired during Executive's employment with the Companies
is a critical asset of the Companies. In addition, the Executive's
work for the Companies will bring the Executive into close contact with
many confidential affairs of the Companies that are not readily
available to the public and plans for future developments of the
Companies. Accordingly, the Executive hereby agrees that, as a
material and essential condition of Executive's employment by the
Companies and in consideration of this Agreement and the compensation
and other benefits provided for herein, the Executive is subject to and
encumbered by the restrictive covenants set forth in this Section 4 and
that the Companies shall have the right to enforce these restrictive
covenants.
4.1.1 The Executive hereby covenants, warrants and agrees that the Executive
will not, during the period of Executive's employment hereunder or at
any time thereafter, directly or indirectly divulge, use, furnish,
disclose or make available to anyone any Confidential Information,
except as may be necessary for Executive to communicate on a "need to
know" basis in the ordinary course of performing Executive's duties as
an employee of the Companies.
4.1.2 For purposes of this Agreement, "Confidential Information" shall mean
any and all information, data and knowledge that (i) has been created,
discovered, developed or otherwise become known to the Companies
(including, without limitation, information, data and knowledge
created, discovered, developed, or made known by the Executive during
the period of or arising out of Executive's employment by the
Companies) or in which property rights have been assigned or otherwise
conveyed to the Companies, which information, data or knowledge has
commercial value in the business in which the Companies is engaged,
except such information, data or knowledge as is or becomes known to
the public without violation of the terms of this Agreement, or (ii)
arises out of or relates to the business affairs of the Companies
(including without limitation, any information which the Companies
considers to be privileged). By way of illustration, but not
limitation, Confidential Information includes financial information,
supply and service information, marketing information, personnel
information, customer information, trade secrets, business and customer
links and relations, customer lists, contact lists or information,
processes, know-how, improvements, discoveries, developments, designs,
inventions, training methods, sales techniques, marketing plans,
strategies, forecasts, new products, unpublished financial statements
or parts thereof, budgets, projections, licenses, prices, costs, and
employee, customer and supplier lists or parts thereof, terms of supply
or service contracts, terms of agreements between customers and the
Companies and any information relating to the business affairs of the
Companies, in whatever form maintained. The Executive further
acknowledges that such Confidential Information would inevitably be
disclosed were he to become employed by, engaged by or otherwise
provide competitive services to a competitor of the Companies.
4.1.3 All ideas, creations, improvements and other works of authorship
created, developed, written or conceived by Executive at any time
during Executive's employment by the Companies and relating to the
Companies' business are works for hire within the scope of Executive's
employment and shall be the property of the Companies free of any claim
whatsoever by Executive and any person claiming any rights or interests
through the Executive.
4.1.4 The Executive hereby covenants, warrants and agrees that he shall not,
directly or indirectly, make or retain a copy of, nor make or cause to
be made any notes of, nor remove or cause to be removed from the
premises of the Companies, any document, notation or recording, whether
mechanically or electronically or physically or mentally or otherwise
maintained or copied, incorporating any trade secret or other
Confidential Information belonging to or relating to the Companies
unless such copying or making of notes is necessary for the proper and
efficient discharge of Executive's duties on behalf of the Companies,
provided, however, the Executive shall return such document, papers,
copies or notes to the Companies forthwith after the authorized purpose
has ceased or has been completed or on the demand of the Companies.
4.1.5 In the event of the termination of employment of the Executive, whether
by the Companies or by the Executive and for whatever reason, the
Executive hereby covenants, warrants and agrees that the Executive will
immediately deliver to the Companies, within three (3) days of such
termination or as directed by the Board of Directors of the Companies:
(i) all Confidential Information in whatever form it is maintained or
it exists; (ii) all other documents, reports, notes, customer lists,
customer data, business plans, specifications, programs, computer
printouts and data and all other materials of any nature, whether
originals or reproductions and in whatever form maintained or they
exist, pertaining to the Companies, the business affairs of the
Companies or the Executive's work with the Companies, and the Executive
will not, directly or indirectly, take or possess, or deliver to any
other person or entity, any of the foregoing or any reproduction or
variation of any of the foregoing; and (iii) any and all other property
or equipment which is properly the property of the Companies.
4.2 During the period of the Executive's employment and for a period of
three (3) months following the voluntary or involuntary termination of
Executive's employment hereunder for "Cause," the Executive hereby
covenants, warrants and agrees that the Executive will NOT, as an
individual, agent, partner, investor, officer or employee of a
corporation or any other entity or in any other capacity, directly or
indirectly (i) solicit or induce, or in any manner attempt to solicit
or induce, any person employed by or acting as an agent of the
Companies to leave his or her employment with or engagement by the
Companies to join another enterprise or companies which is engaged in a
similar business and competes with the Companies in Puerto Rico and/or
the U.S. Virgin Islands as an employee or agent; or (ii) hire, contract
with or otherwise employ or engage any former or current employee,
agent or consultant of the Companies to join another common enterprise
or entity which is engaged in a similar business and competes with the
Companies in Puerto Rico and/or the U.S. Virgin Islands in any of their
business areas or interests. In the event the Companies breaches its
obligations under Section 2 or 3.2 of this Agreement, this Section 4.2
shall be null and void.
4.3 During the period of Executive's employment and for a period of
three (3) months following the voluntary or involuntary termination of
Executive's employment hereunder for "Cause," the Executive shall NOT,
as an individual, agent, partner, investor, officer or employee of a
corporation or any other entity or in any other capacity, directly or
indirectly (i) induce or attempt to induce any customer or supplier of
the Companies to cease being a customer or supplier of the Companies;
or (ii) induce or attempt to induce any customer or supplier of the
Companies to become a customer or supplier of any person, firm or
corporation which in any way competes with the Companies in Puerto Rico
and/or the U.S. Virgin Islands in any of their business areas or
interests; or (iii) enter the employ of, or render any services to, any
person, firm or corporation which in any way competes with the
Companies in any of their business areas or interests in Puerto Rico
and/or the U.S. Virgin Islands, (iv) interfere with the business
relationships or prospective business relationships of the Companies;
or (v) otherwise compete with the Companies in Puerto Rico and/or the
U.S. Virgin Islands. In the event the Companies breaches its
obligations under Section 2 or 3.2 of this Agreement, this Section 4.2
shall be null and void.
4.4 If the Executive commits a material breach of any of the provisions of
Section 4.1, 4.2 or 4.3 hereof, the Companies shall have the right and
remedy to have the provisions of this Agreement specifically enforced
by way of a temporary restraining order and/or a preliminary and/or
permanent injunction by any court having jurisdiction, without the
posting of any bond or security by the Companies, it being acknowledged
and agreed by the Executive and the Companies that any such breach will
cause irreparable injury to the Companies and that money damages will
not provide an adequate remedy to the Companies. Such right and remedy
shall be in addition to, and not in lieu of, any other rights and
remedies available to the Companies under law or in equity. Further,
should the Companies commence an action for injunctive relief, the
Companies shall have the right in the same proceeding and court to seek
and obtain money damages caused by such breach.
4.5 If any of the covenants or other provisions contained in Section 4.1,
4.2, or 4.3, or any part thereof, is hereafter construed to be invalid
or unenforceable in any respect, the same shall not affect the
remainder of the covenant, covenants or provisions which shall be given
the maximum effect possible without regard to the invalid portions and
the remainder shall then be fully enforceable.
4.6 If any of the covenants or other provisions contained in Section 4.1,
4.2, or 4.3, or any part thereof, is held to be unenforceable because
of the duration of such provision or the geographical or
product/business area covered thereby, the parties agree that such
provisions shall be reformed and construed to reduce the duration
and/or area of such provision to the extent necessary for
enforceability and, in its reduced form, said provision shall then be
fully enforceable.
4.7 The Parties hereto intend to and hereby irrevocably confer exclusive
jurisdiction to enforce the covenants and other provisions contained in
Sections 4.1, 4.2 and 4.3, upon the courts in the Commonwealth of
Puerto Rico and further expressly agree not to assert that any action
brought in such courts has been brought in an inconvenient forum. The
Parties further agree that, to the fullest extent permitted by law,
valid service of process may be undertaken by certified mail to the
addresses in Section 5.
4.8 The covenants and other provisions of this Section 4 shall survive the
termination of this Agreement or the voluntary or involuntary
termination of the Executive's employment regardless of the
circumstances of such termination.
5. Notices
All notices or other communications given pursuant hereto by one party
to another shall be in writing and deemed given when (a) delivered by
hand, (b) sent by fax/telecopier (with receipt confirmed), provided
that a copy is mailed the same day by registered or certified mail,
postage prepaid, return receipt requested, or (c) when received by the
addressee, if sent by Express Mail, Federal Express or other express
delivery service (receipt requested), in each case to the appropriate
addresses and fax/telecopier numbers for the Companies and the
Executive set forth below (or to such other address and/or
fax/telecopier number as any party may designate by notice to the
others from time to time).
If to the Companies:
Pueblo International, LLC
Pueblo Entertainment, Inc.
c/o Finser Corporation
000 Xxxxxxxx Xxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Telephone No. (000) 000-0000
Fax. No. (000) 000-0000
Attention: General Counse
If to the Executive at:
000 Xx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Telephone No. (000) 000-0000
Fax No. (000-000-0000
E-mail: xxxxxxxxxxx@xxx.xxx
6. General
6.1 Except as otherwise provided in Section 4, any dispute or controversy
arising out of or related to this Agreement, the Executive's employment
with the Companies or the termination of that employment shall be
resolved exclusively by arbitration, conducted before a panel of three
(3) arbitrators in San Xxxx, Puerto Rico, in accordance with the
applicable rules for arbitration of employment disputes of the American
Arbitration Association ("AAA"), the CPR Institute for Dispute
Resolution ("CPR") or JAMS/Endispute then in effect. The choice of the
AAA, CPR or JAMS/Endispute arbitration rules shall be made by the party
initiating arbitration. The Companies shall pay the administrative
costs of the AAA and the arbitrators' reasonable costs and fees. The
Executive is responsible for Executive's own attorneys' fees and other
fees and expenses, if any, with respect to the Executive's conduct of
the arbitration. The arbitrator is expressly empowered to award
reasonable attorneys' fees and expenses to the prevailing party as well
as all other remedies to which the party would be entitled if the
dispute were resolved in court. The arbitrator shall not have the
authority to alter or amend any lawful policy, procedure or practice of
the Companies or agreement to which the Companies are a party or the
substantive rights or defenses of either party under any statute,
contract, constitution or common law. The decision and award of the
arbitrators is final and binding. The arbitrators shall promptly issue
a written decision in support of their award. Judgment upon the award
rendered by the arbitrators may be entered in any court of competent
jurisdiction. The Federal Arbitration Act or any applicable
Commonwealth of Puerto Rico law shall govern the application and
enforcement provision of this Section.
6.2 The article headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.
6.3 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings, written or oral, relating
to the subject matter hereof.
6.4 This Agreement may not be amended, modified, superseded or waived,
except by a written instrument executed by both 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, or any similar provision or policy applicable to any
other individual, shall in no manner affect the right of either party
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.
6.5 This Agreement shall be subject to and governed by the laws of the
Commonwealth of Puerto Rico.
6.6 This Agreement may be executed in any number of counterparts each of
which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
6.7 A telecopy signature on this Agreement shall have the same force and
effect as an original signature.
7. Severability
If any provision of this Agreement is hereafter construed to be invalid
or unenforceable in any respect, the same shall not affect the
remaining provisions of this Agreement, without regard to the invalid
portion, and any such invalid provisions shall be reformed and
construed to the extent necessary to permit their enforceability so as
to reflect the intent of the parties hereto.
8. Representation
The Companies and the Executive represent and warrant that each is
fully authorized and empowered to enter into this Agreement and the
performance of each of their respective obligations under this
Agreement will not violate any agreement between each of them and any
other person, firm or organization.
9. Survivorship
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment or this Agreement
to the extent necessary to the intended preservation of such rights and
obligations.
10. Successors and Assigns
The respective rights and obligations of the Companies under this
Employment Agreement shall inure to the benefit of and shall be binding
upon the respective successors and assigns of the Companies. This
Employment Agreement is assignable by the Companies to any corporate
entity which acquires directly or indirectly by merger, consolidation,
purchase or otherwise, all or substantially all of the assets or stock
of the Companies. Upon such assignment, the Companies shall not be
released from liability hereunder. This Employment Agreement shall
not be assignable by the Executive, but may become part of the
Executive's estate in case of death.
11. Effective Date
This Agreement shall become effective and enforceable on the execution
of this Agreement by all Parties (the "Effective Date").
[Signatures on next page]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PUEBLO INTERNATIONAL, LLC
By /s/ Xxxxxxx X. Xxxx, III
Name: Xxxxxxx X. Xxxx, III
Title: President and Chief
Executive Officer
PUEBLO ENTERTAINMENT, INC.
By /s/ Xxxxxxx X. Xxxx, III
Name: Xxxxxxx X. Xxxx, III
Title: President and Chief
Executive Officer
/s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
