AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), entered into as of the
15th day of October, 1998, by and between Classic Trends International,
Inc., a Texas corporation ("Employer") and Xxxxxxxx X. Xxxxxx ("Employee").
W I T N E S S E T H:
WHEREAS, Employer and Employee are parties to an employment agreement
entered in October 1995;
WHEREAS, Employer and Employee desire to amend and restate such
employment agreement; and
WHEREAS, Employer and Employee agree that the employment agreement
entered in October 1995 is superceded by this amended and restated employment
agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment with Employer upon the terms and conditions hereinafter
set forth.
2. DUTIES. Subject to the power of the Board of Directors of Employer
to elect and remove officers, Employee will serve Employer as its President
and will faithfully and diligently perform the services and functions
relating to such office(s) or otherwise reasonably incident to such office,
provided that all such services and functions will be reasonable and within
Employee's area of expertise. Employee will, during the term of this
Agreement (or any extension thereof), devote his full time, attention and
skills and best efforts to the promotion of the business of Employer. The
foregoing will not be construed as preventing Employee from making
investments in other businesses or enterprises provided that (a) Employee
agrees not to become engaged in any other business activity that interferes
with his ability to discharge his duties and responsibilities to Employer and
(b) Employee does not violate any other provision of this Agreement.
3. TERM. The term of this Agreement will commence as of the date
hereof and will end on October 15, 2008, unless earlier terminated by either
party pursuant to the terms hereof. The term of this Agreement is referred
to herein as the "Term." The Term of this agreement is to be extended
automatically for additional successive periods of one year ("Additional
Term"), unless the employment of Employee is terminated as provided herein.
4. COMPENSATION. As compensation for the services rendered under this
Agreement, Employee will be entitled to receive the following:
(a) MANAGEMENT FEE. Commencing on the date hereof, Employee will
be paid a minimum management fee of $7,000 per month, payable in accordance
with the then current payroll policies of Employer or as otherwise agreed to
by the parties ("Management Fee"). At any time and from time to time the
Management Fee may be increased for the remaining portion of the term if so
determined by the Board of Directors of Employer after a review of Employee's
performance of his duties hereunder.
(b) INCENTIVE COMPENSATION. The Employer agrees during the term
of this Agreement that the Employer, as is applicable, will pay to Employee a
sales commission equal to a percentage, as specified on Schedule 1 attached
hereto, of the then wholesale price of each product or service sold
(including sales in foreign markets) by Employer, or an affiliate of Employer
or pursuant to any arrangement between Employer, an affiliate of Employee and
a third party. Each sales commission to be paid to Employee from the sale of
products and/or services will be due and payable by the 10th day of each
month from receipts of actual paid invoices from the preceding months.
Employee shall receive a computer print-out of all sales of products and
services from the Company and shall have the right to examine all financial
and accounting records at his discretion during normal business hours. In
addition, Employee shall be entitled to receive an additional sales
commission, based on the formula set forth in Schedule 1 attached hereto, of
the wholesale price of each additional product or service sold by Employer,
an affiliate of Employer or pursuant to any arrangement between Employer, an
affiliate of Employee and a third party. This sales commission shall be paid
by Employer, or other third party, as is applicable, by the 10th day of each
month from receipt of the actual paid invoice from the proceeding months.
Employee shall receive a computer print-out of all sales from Employer and
shall have the right to examine all financial and accounting records at his
discretion during normal business hours. This additional compensation shall
be deemed "Incentive Compensation." All calculations of the Incentive
Compensation shall be made in accordance with the accounting methods then
employed by the Employer. In the event Employee is terminated by, or
voluntarily terminates his employment with Employer, Employee shall be
entitled to Incentive Compensation for such period from the date of this
Agreement until termination, to be calculated by Employer's independent
auditor based upon unaudited financial statements, payable within 30 days of
termination.
(c) EXPENSES. Upon submission of a detailed statement and
reasonable documentation, Employer will reimburse Employee in the same manner
as other executive officers for all reasonable and necessary or appropriate
out-of-pocket travel and other expenses incurred by Employee in rendering
services required under this Agreement.
(d) AUTOMOBILE. Employer will supply Employee with an automobile
and be responsible for all expenses related thereto throughout this
Agreement. Employer shall furnish Employee a gasoline allowance calculated as
the actual miles driven by Employee for Employer's business purposes,
multiplied by the maximum allowable reimbursement amount as set by the
Internal Revenue Service.
(e) BENEFITS; INSURANCE.
(i) MEDICAL, DENTAL AND VISION BENEFITS. During this
Agreement, Employee and his dependents will be entitled to receive such
group medical, dental and vision
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benefits as Employer may provide to its other employees, provided such
coverage is reasonably available, or be reimbursed if Employee is carrying
his own similar insurance.
(ii) LIFE INSURANCE. During this Agreement, Employer agrees to
continue to provide, at no cost to Employee, life insurance benefits in the
amount of $1,000,000, for the benefit of 50% to Employer and 50% to
Employee's beneficiary; provided such coverage is reasonably available.
(iii) DISABILITY INSURANCE. During this Agreement, Employer
agrees to provide, at no cost to Employee, disability insurance
("Disability Insurance") sufficient to provide, in the event Employee
becomes disabled, payments that will be made evenly over the balance of the
Term and/or Additional Term, as the case may be, of this Agreement equal to
Employee's base management fee as of the date of disability; provided such
coverage is reasonably available.
(iv) OTHER BENEFITS. During the Term, Employee will be
entitled to receive such other benefits as Employer currently provides or
such additional benefits as Employer may provide for its executive officers
in the future.
5. TERMINATION. This Agreement and the employment relationship
created hereby will terminate upon the occurrence of any of the following
events:
(a) The death of Employee;
(b) The "Disability" (as hereinafter defined) of Employee;
(c) Written notice to Employee from Employer of termination for "Just
Cause" (as hereinafter defined);
(d) The voluntary termination of employment by Employee; or
(e) The "Constructive Termination" of employment of Employee (as
hereinafter defined).
(f) The expiration of the Term or any Additional Term, provided
notice is given by Employer to Employee prior to six months from expiration
of the Term or Additional Term.
For purposes of Section 5(b), "Disability" of Employee means
disability of such a nature and degree that it satisfies the requirements of
the Disability Insurance policy and the insurer of such policy has
acknowledged in writing that it will be making full payment of the amount
required under the policy.
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For purposes of Section 5(c), "Just Cause" means (i) Employee
has willfully and intentionally failed to substantially perform his duties as
specified under this Agreement; or (ii) Employee's criminal conviction by any
state or federal court of any illegal act (other than minor traffic
violations or minor misdemeanors) in connection with his employment with the
Employer that could reasonably be expected to materially adversely affect the
Employer.
For purposes of Section 5(e), any of the following actions or
events, unless consented to in writing by Employee, will be deemed to be a
constructive termination by Employer of Employee's employment hereunder
("Constructive Termination"):
(i) Employer demotes Employee to a lesser position than as
provided in Section 2 or causes a significant reduction of Employee's
authority and/or responsibilities under this Agreement; or
(ii) Employer decreases Employee's salary below the minimum
level provided in Section 4(a) or reduces the employee benefits and
perquisites to which Employee is entitled below the levels provided in
Sections 4(b), (d) or (e).
Notwithstanding the foregoing, a Constructive Termination under (i) or (ii)
above will not occur unless, within 60 days after learning of the action
described herein as the basis for a Constructive Termination, Employee will
advise Employer in writing that he intends to terminate his employment under
this Agreement because of a Constructive Termination and Employer does not,
within 10 days after receipt of such written notice, correct such action and
provide Employee with a written notice of such correction; provided that in
the event of a Constructive Termination under (ii) above, such correction
will require Employer to pay to Employee an amount equal to the difference
between the amount of compensation to which Employee was entitled prior to
the reduction and the amount of compensation actually received by Employee
from the date of reduction to the date Employer reinstates Employee's Salary
to the level provided in Section 4(a).
6. OBLIGATIONS OF EMPLOYER UPON TERMINATION.
(a) In the event of the termination of Employee's employment
pursuant to Section 5(a), (b), (c) or (d), Employee will be entitled only to
the compensation and Incentive Compensation earned by him hereunder as of the
date of such termination (plus life insurance or disability benefits).
(b) In the event of the termination of Employee's employment
pursuant to Section 5(e), Employee will be entitled to receive Incentive
Compensation, the automobile allowance, medical, dental and vision benefits,
life insurance, disability insurance and other benefits provided in the
Agreement for the entire Term of the Agreement, plus the greater of (i) one
year of base compensation at the then base management fee or (ii) the
remaining base compensation at the then base management fee that would have
been paid to Employee during the Term.
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7. WAIVER OF BREACH. The waiver by any party hereto of a breach of
any provision of this Agreement will not operate or be construed as a waiver
of any subsequent breach by any party.
8. COSTS. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party will be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which he or it may be entitled.
9. NOTICES. Any notices, consents, demands, requests, approvals and
other communications to be given under this Agreement by either party to the
other will be deemed to have been duly given if given in writing and
personally delivered or within two days if sent by mail, registered or
certified, postage prepaid with return receipt requested, as follows:
If to Employer: Classic International, Inc.
00000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
If to Employee: Xxxxxxxx X. Xxxxxx
0000 Xxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Notices delivered personally will be deemed communicated as of actual receipt.
10. ENTIRE AGREEMENT. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
11. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective
during this Agreement, such provision will be fully severable and this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there will be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
12. GOVERNING LAW. This Agreement and the rights and obligations of
the parties will be governed by and construed and enforced in accordance with
the substantive laws (but not the rules governing conflicts of laws) of the
state of Texas. The parties agree that this agreement will performable in
Xxxxxx County, Texas.
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13. CAPTIONS. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
14. GENDER AND NUMBER. When the context requires, the gender of all
words used herein will include the masculine, feminine and neuter and the
number of all words will include the singular and plural.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which will
constitute one and the same instrument, but only one of which need be
produced.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EMPLOYER:
CLASSIC TRENDS INTERNATIONAL, INC.
By /s/ XXXXXX X. XXXXXXX
-------------------------------------
XXXXXX X. XXXXXXX, Chairman
EMPLOYEE:
/s/ XXXXXXXX X. XXXXXX
---------------------------------------
XXXXXXXX X. XXXXXX
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SCHEDULE 1
SALES COMMISSIONS FOR INCENTIVE COMPENSATION
COMBINED MONTHLY SALES(1)
0 - 10,000 bottles(2) 5.00% of wholesale price
10,001 - 20,000 bottles 4.50% of wholesale price
20,001 - 30,000 bottles 4.00% of wholesale price
30,001 - 40,000 bottles 3.50% of wholesale price
40,001 - 100,000 bottles 3.25% of wholesale price
Over 100,000 bottles 3.00% of wholesale price
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(1) In the event additional products are not distributed in containers, or if
this formula is not readily applicable to revenue sources, the parties to
this Agreement will negotiate a reasonable incentive compensation package
of not less than 5% of the wholesale price of the product sold or 2% of the
gross revenues, whichever is greater.
(2) In the event that products are distributed in containers other than
bottles, the term bottles will be replaced by the appropriate container.
