EMPLOYMENT AGREEMENT
This Agreement is entered into as of the 3rd___ day of December________,
2004, by and between ARROW-MAGNOLIA INTERNATIONAL LP, a Texas limited
partnership ("Employer"), and Xxxx Xxxxxx ("Employee"). This agreement will
be effective upon closing of the merger between ARROW-MAGNOLIA INTERNATIONAL
LP and ARROW-MAGNOLIA INTERNATIONAL, INC.
RECITALS
A. Employer desires to employ Employee and Employee desires to be
employed by Employer to serve and perform such duties at such times and
places and upon such terms and conditions as hereinafter provided;
B. Contemporaneously with the execution hereof, a merger occurred whereby
Employer was the surviving entity and pursuant to which all stock owned by
Employee in Employer's predecessor was purchased and, in consideration
therefor, Employee has agreed to grant to Employer a covenant not to
disclose certain information relating to Employer's business and a covenant
not to compete with Employer;
C. Employer and Employee desire to set forth in writing the terms and
conditions of their agreement and understandings.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good consideration, Employer and Employee agree as
follows:
1. Employment. Employer hereby agrees to the employment of Employee and
Employee hereby accepts the employment with Employer upon the terms and
conditions herein stated.
2. Term. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin as of the closing of the
merger , and shall terminate thirty six (36) months thereafter ; provided,
however, that the term of this Agreement shall be renewed and extended for
an additional 1 year period if both Employer or Employee mutually agree in
writing not less than six (6) months prior to the beginning of such
additional 1 year period.
3. Compensation.
(a) Salary. For services rendered by Employee under this Agreement,
Employer shall pay Employee a salary each year, payable in twenty-four
(24) equal semi-monthly installments, as follows:
Period Annual Salary
Starting on the date of the closing $150,000
of the merger and for the next 12
months
Starting at the end of the end of $160,000
the first period, listed above, and
for the next 12 months
Starting at the end of the second $170,000
period, listed above, and for the
next 12 months
(b) Bonuses. On or before 31 days following the end of the first
period, listed above, , Employer shall also pay to Employee a bonus equal
to a percentage, as set forth below, of Employee's annual salary for the
first 12 month period based upon the gross revenues ("AMI Revenues") of
Employer received during such 12 month period in accordance with the
following:
AMI Annual Revenue Thresholds Percentage of Annual Salary
If AMI Revenues equal or exceed 25%
$12,500,000 but are less than
$13,000,000
If AMI Revenues equal or exceed 50% plus an additional 1% for each
$13,000,000 but are less than additional $20,000 of AMI Revenues
$14,000,000 in excess of $13,000,000
If AMI Revenues exceed $14,000,000 100%
If the AMI Revenues exceed $14,250,000 the Employee will earn an
additional $12,000.
The AMI Revenue Thresholds shall be reset by Employer for each subsequent
calendar year and/or other incentive targets can be set. For purposes of
this paragraph 3(b), AMI Revenues shall be calculated by the certified
public accountant ("CPA") that normally prepares the financial statements
of Employer. The determinations of the CPA shall be conclusive and
binding on all of the parties hereto.
(c) Tax Differential Payment. Employer shall pay to Employee, on or
before April 1, 2005 the amount of $41,229 in cash.
(d) Automobile. Employer shall also provide to Employee the use of a
mutually agreeable automobile that will be leased by the Company. The
current automobile provided by Employer to Employee will be sold and the
proceeds will be retained by Employer. During the term of this
Agreement, Employer shall pay all reasonable maintenance and insurance
expenses associated with such leased automobile. For a period of thirty
(30) days after termination of this Agreement, unless such termination is
as a result of any of the "Cause Events," as hereinafter defined,
Employer shall assign to Employee Employer's rights, if any, to purchase
such automobile from the lessor.
(e) Withholding. The salary and any other compensation paid to Employee
shall be subject to any and all such payroll and withholding deductions
as are required by the laws of any jurisdiction, federal, state or local,
with taxing authority with respect to such salary and other compensation.
4. Duties. To the best of Employee's ability, Employee shall serve as
Employer's Vice President of Marketing in charge of house accounts and/or
other activity as determined by the Employer. As requested by Employer,
Employee shall be involved in all aspects of marketing and sales,
participating in developing and implementing marketing and sales strategies,
budgets, plans, hiring, training, mentoring and any other work assigned to
Employee by Employer.
5. Extent of Services. Employee shall devote substantially all of
Employee's time and energy during normal business hours to the furtherance
of Employer's business. During the term of this Agreement, Employee shall
not, directly or indirectly, alone or as a member of any business entity, or
as an officer, director or stockholder of any corporation, be engaged in or
concerned with any other commercial or business duties or pursuits which
would require such substantial services on the part of Employee that
Employee, in Employer's sole opinion, would be unable to perform the
services required to be performed by Employee, as determined by the
Employer.
6. Working Facilities and Staff. Employee shall be furnished with such
facilities, staff and services as are suitable to Employee's position and
adequate for the performance of Employee's duties.
7. Expenses. Employer will reimburse Employee for all such expenses which
Employer, in Employer's sole discretion, deems are reasonably incurred for
promoting the business of Employer, upon the presentation by Employee, on a
timely basis, of an itemized account of such expenditures.
8. Vacations. During the term of this Agreement, Employee shall be
entitled, during each year of employment with Employer, to a vacation in
accordance with the established company policy of Employer, during which
time Employee's compensation hereunder shall be paid in full.
9. Insurance Subsidy. During the term of the agreement, the Company shall
pay 50% of the premium for mutually agreeable disability insurance policy
which Employee has already obtained. Additionally, during this time the
Company shall pay the premium (currently $ 1,000 annually) for a $100,000
life insurance policy, with Employee's spouse as beneficiary.
10. Fringe Benefits. During the term of this Agreement, Employer shall
provide to Employee and Employee shall be entitled to participate in such
group medical insurance, pension, profit sharing, life insurance and other
employee benefit plans on terms and conditions as are comparable to vice
presidents employed by Employer.
11. Disability and Death. If Employee is unable to perform Employee's
services by reason of illness or incapacity for a period of more than thirty
(30) consecutive days, the compensation otherwise payable to Employee during
the continued period of such illness or incapacity shall be reduced by fifty
percent (50%), net of disability insurance. Employee's full compensation
shall be reinstated upon Employee's return to employment and the discharge
of Employee's full duties hereunder. Notwithstanding anything herein to the
contrary, Employer may terminate this Agreement at any time after Employee
shall be absent from Employee's employment, for whatever cause, for a
continuous period of more than forty-five (45) consecutive days or absence
of 50% or more of normal work hours during any three month period, and all
obligations of the Employer hereunder, including Employer's obligation to
pay Employee the compensation provided in paragraph 3 hereof, shall
immediately cease upon any such termination. All of Employer's obligation
hereunder, including Employer's obligation to pay Employee the compensation
provided in paragraph 3 hereof, shall cease immediately upon Employee's
death. The determination of all periods of time under this paragraph 11
shall be calculated by including (and counting) all vacation days, weekends,
holidays and other days off which occur within the applicable period.
12. Termination for Cause. Employer may terminate Employee's employment
under this Agreement upon (10) days' notice to Employee after the occurrence
of any of the following events ("Cause Events").
(a) Any failure by Employee to faithfully perform the covenants and
agreements of Employee herein stated if such breach and/or failure to
perform is not remedied within thirty (30) days after written notice
thereof from the Company specifying in reasonable detail the nature of
the breach or failure and the steps necessary to remedy;
(b) Willful, gross misconduct by Employee in connection with the
performance of the covenants and agreements of Employee herein stated;
(c) If Employee violates any law, rule or regulation which violation
materially adversely affects Employer;
(d) If Employee violates any of the provisions of paragraphs 15 or 16;
(e) If Employee converts any property of Employer;
(f) If Employee is convicted of any felony; or
(g) If Employee is convicted of any lesser crime or offense involving
property or business of Employer.
In the event of a dispute as to whether a Cause Event has occurred, upon the
request of Employer or Employee, such dispute shall be resolved pursuant to
the expedited procedures of the commercial arbitration rules of the American
Arbitration Association regardless of the amount in controversy, with each
party to bear its own arbitration costs and expenses. The parties stipulate
that the hearing locale for any such arbitration proceeding will be Dallas,
Texas. Judgment upon the award rendered as a result of such arbitration may
be entered in any court having jurisdiction thereof. The parties further
stipulate that the provisions hereof shall be a complete defense to any
suit, action or proceeding instituted in any federal, state or local court
or before any administrative tribunal with respect to any controversy or
dispute arising out of or relating to whether a Cause Event has occurred.
Upon termination of Employee's employment under this Agreement as a result
of a Cause Event, all of Employer's obligation hereunder, including
Employer's obligation to pay Employee the compensation provided in paragraph
3 hereof, shall immediately cease. Nothing contained herein shall be
construed as limiting in any manner any of the rights or remedies available
to Employer pursuant to this Agreement or otherwise with respect to such
Cause Event.
13. Expiration of Term. In the event this Agreement is terminated due to
expiration of the term of this Agreement as set forth in paragraph 2 hereof,
all of Employer's obligations hereunder, including Employer's obligation to
pay Employee the compensation provided in paragraph 3 hereof, shall
immediately cease.
14. Other Termination by Employer. Employment hereunder is at will and in
the event Employer terminates Employee's employment hereunder for any reason
other than as provided in paragraphs 11, 12 or 13, Employee will continue to
receive for one year the salary provided in paragraph 3(a) above and a
continuation under the employee group term medical insurance plan for a
period of one year. Employee will have the option to buy out the automobile
lease as set forth in paragraph 3(c) above. All other benefits will be
terminated and all of Employer's other obligations hereunder shall
immediately cease.
15. Disclosure of Information. Employee acknowledges that, in and as a
result of Employee's employment with Employer, Employee has and will be
making use of, acquiring, developing and/or adding to confidential
information of special and unique value relating to such matters as
Employer's products, trade secrets, systems, procedures, manuals,
confidential reports, customer and supplier lists, and other information,
data and displays, whether or not patented or copyrighted, as well as the
nature and type of product sold by Employer, the identity of Employer's
suppliers and customers, the products and methods used and preferred by
Employer's customers, and the prices paid by such customers (collectively
hereinafter referred to as the "Confidential Information"). As a material
inducement to Employer to enter into this Agreement and to pay to Employee
the compensation referred to in paragraph 3 hereof (as well as any
additional benefits referred to herein), Employee covenants and agrees that
Employee and Employee's partners, agents, representatives, servants,
employers, employees and any and all other persons acting, directly or
indirectly, for or with Employee shall not, at any time during or following
the term of Employee's employment hereunder, directly or indirectly, for any
purpose whatsoever, divulge or disclose any of the Confidential Information
which has been obtained by or disclosed to Employee and shall not at any
time during or following the term of Employee's employment hereunder,
directly or indirectly, use, for any purpose whatsoever, any of the
Confidential Information for Employee's benefit or for any purpose, whether
or not beneficial to Employee, except for the purpose of permitting Employee
to perform the services for Employer contemplated by this Agreement.
Employee further covenants and agrees that all such Confidential Information
shall be the exclusive property of Employer and, upon the expiration of this
Agreement, Employee shall deliver to Employer all Confidential Information
then in the possession, custody or control of Employee and without regard to
the form in which such Confidential Information is stored or the media for
storage for such Confidential Information.
16. Covenants Against Competition. Employee acknowledges that Employee's
services to be rendered hereunder are of a special and unusual character
that have a unique value to Employer, the loss of which cannot adequately be
compensated by damages in an action at law. In view of the unique value to
Employer of the services of Employee for which Employer has contracted
hereunder, in consideration of the amounts paid to Employee for the purchase
of Employee's stock in Employer's predecessor, and as a material inducement
to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in paragraph 3 hereof, (as well as any additional
benefits referred to herein), Employee covenants and agrees that Employee
and Employee's partners, agents, representatives, servants, employers,
employees and any and all other persons acting, directly or indirectly, for
or with Employee shall not, during the term of this Agreement and for a
period of three (3) years thereafter, within the continental United
States:
(a) Distribute or offer for sale, whether as agent, sales
representative, distributor or otherwise, any product competitive with
any product then sold by Employer;
(b) Engage in, directly or indirectly, any business in competition with
any business of Employer then existing; or
(c) Solicit for employment or employ any employee of Employer.
17. Reasonableness of Restrictions. Employee has carefully read and
considered the provisions of paragraph 15 and 16 hereof and having done so,
agrees that the restrictions set forth in such paragraphs (including, but
not limited to, the time period restriction and the geographical areas of
restriction set forth in paragraphs 15 and 16) are fair and reasonable and
are reasonably required for the protection of the interests of Employer, its
officers, directors and other employees. Notwithstanding the foregoing, in
the event that any of the provisions of paragraphs 15 and 16 shall be held
to be invalid or unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not included therein. In the event that any
provision of paragraph 15 or 16 relating to time period and/or areas of
restriction shall be declared by a court of competent jurisdiction to exceed
the maximum time period or areas such court deems reasonable and
enforceable, such time period and/or areas of restriction shall be deemed to
become and thereafter be the maximum time period and/or areas which such
court deems reasonable and enforceable.
18. Equitable Relief; Accounting for Profits. In the event of a breach or
threatened breach of any of the provisions of paragraphs 15 or 16, Employer,
in addition to and not in limitation of any other rights or remedies
available to Employer at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by Employee or
by Employee's partners, agents, representatives, servants, employers,
employees and/or any and all persons, directly or indirectly, acting for or
with Employee. Employee further covenants and agrees that if Employee shall
violate any of Employee's covenants and agreements pursuant to paragraphs 15
and 16 above, Employer shall also be entitled to an accounting and repayment
of all profits, compensations, commissions, remunerations and/or other
benefits which Employee, directly or indirectly, may realize as a result of,
growing out of or in connection with, any such violation. Such remedy shall
be in addition to and not in limitation of any injunctive relief or other
rights or remedies that Employer is or may be entitled to at law or in
equity or under this Agreement. In any action brought by Employer against
Employee for the breach of this Agreement, Employer shall be entitled to
recover Employer's costs and expenses, including expert witness fees and
reasonable attorneys' fees.
19. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and shall be deemed to have
been given if personally delivered or if deposited in the United States
mail, by certified mail, with proper postage prepaid thereon, addressed as
follows:
If to Employer:
ARROW-MAGNOLIA INTERNATIONAL LP
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx Xxxx
If to Employee:
Xxxx Xxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
or to such other address as either party may hereafter advise the other by
notice given in accordance with the provisions hereof.
20. Waiver of Breach. The waiver by Employer of a breach of any provision
of this Agreement by Employee shall not operate or be construed as a waiver
of any subsequent breach by Employee.
21. Assignment. Employer may assign this Agreement to any successor in
interest of Employer's business. The rights and obligations of the parties
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of Employer and Employee; provided, however, that
Employee may not assign this Agreement without the prior written consent of
Employer.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same Agreement.
23. Governing Law. This Agreement shall be construed in accordance with,
and the rights and duties of the parties hereto shall be governed by, the
internal laws of the State of Texas.
24. Entire Agreement. This instrument contains the entire Agreement of the
parties pertaining to Employee's employment by Employer, superseding all
other agreements, whether oral or written, express or implied. It may not
be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
25. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any one or more of the
provisions hereof shall not affect the validity and enforceability of the
other provisions hereof.
26. Construction. Every covenant, term and provision of this Agreement
shall be construed simply according to its fair meaning and not strictly for
or against any party.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above set forth.
ARROW-MAGNOLIA INTERNATIONAL LP
By AM Management LLC, General
Partner
By
___________________________________
Xxxxx Xxxx, Manager
Employer
________________________________________
Xxxx Xxxxxx
Employee
