EXHIBIT 10.15
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of the 19th day of February, 1999 between
Commemorative Brands, Inc., Austin, Texas (the "Company"), Xxxxxx X. Xxxxx
("Executive") and Xxxxxx Xxxxxx Partners II, L.P. ("Castle").
WHEREAS, Executive maintains his own business and holds himself out
to the public as engaging in the management services business, a business
which he is customarily engaged; and
WHEREAS, Executive is qualified and experienced to perform the
services called for under this agreement; and
WHEREAS, the Company desires to contract with Executive for
management services; and
WHEREAS, Castle agrees to guaranty the performance of Company's
obligations under this agreement.
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto, intending to
be legally bound and having full authority and capacity to do so, do hereby
agree as follows:
1. APPOINTMENT OF MANAGER
The Company hereby appoints Executive to provide management services
with respect to the operations and businesses of the Company. Executive
hereby accepts the appointment upon the terms and subject to the conditions
provided for herein.
2. DUTIES AND RESPONSIBILITIES
During the term, Executive shall use his skills and render services
to the best of his abilities in supervising, managing and conducting the
operations and business of the Company. Executive shall devote such amount of
his time and effort to the Company as the performance of his duties shall
reasonably require; provided, however, that it is specifically understood
that Executive is engaged in other management services for other customers
and that the foregoing therefore shall not prevent Executive from devoting
time and efforts to business affairs which are unrelated to this agreement,
so long as they do not materially interfere with the performance of his
duties hereunder. If Company believes that such outside activities do
materially interfere with the performance of Executive's duties hereunder,
the Company shall provide Executive with fourteen days' notice to respond to
and cure such allegation. Executive shall hold positions of President and
Chief Executive Officer of the Company. In his role hereunder, Executive
shall have the executive authority, responsibilities and duties typically
held by the Chief Executive Officer of the Company
including, without limitation by enumeration, complete decision making
responsibility for all aspects involved in managing and operating the
Company's sales, marketing, accounting, financial, manufacturing, human
resource, and engineering functions. Executive is at all times subject to the
authority of the Company's Board of Directors.
3. EMPLOYMENT RELATIONSHIP
It is specifically understood that, subject to the provisions of
this agreement, Executive shall have complete control over the means, manner
and method by which he will perform those services contracted for hereunder,
the times at which those services will be performed, and the sequence of
performance of those services. Executive agrees that he will perform those
services in a timely, ethical and professional manner.
4. COMPENSATION
For his services to be rendered hereunder, Executive shall receive a
retainer of $70,000, cash compensation of $70,000 per month, equity
compensation of $110,000 per month and, if applicable, a tax-offset payment,
to be paid as follows:
(a) RETAINER, CASH COMPENSATION. Executive shall be paid an
initial retainer of $70,000, payable upon acceptance of this agreement by the
Company. Thereafter, Executive shall receive monthly payments of $70,000, with
the first such payment payable the first of the month following commencement
of Executives services hereunder, and subsequent payments due no later than
the first of the month thereafter for the term of this agreement. This shall
result in total payments under this paragraph 4(a) of $420,000 for the six
month term of the agreement.
(b) EQUITY COMPENSATION. If Castle makes an additional equity
investment in the Company within six months of the date of this agreement, the
Company shall issue to Executive $660,000 of the same securities acquired by
Castle, valued at the same price as Castle's investment. If Castle does not
make the contemplated investment within six months of the date of this
agreement and the Company's condition improves during the six month period (as
determined by a licensed certified public accountant practicing at a major
accounting firm who is acceptable to the parties), Executive will be
compensated for the equity portion of his compensation with a cash payment of
$660,000 (i.e., $110,000 per month); provided that Executive may elect to
receive existing securities of the Company which are worth $660,000, valued
using the February 17, 1999 Castle valuation, in lieu of the cash payment. If
Castle does not make the contemplated investment within six months of the date
of this agreement and the Company's condition does not improve during the six
month period (as determined by a licensed certified public accountant
practicing at a major accounting firm who is acceptable to the parties), the
Executive will be compensated for the equity portion of his compensation with
existing securities of the Company which are worth $660,000, valued using the
February 17, 1999 Castle valuation. The stock issuance or cash payment
provided by this paragraph (b) shall be made within two (2) weeks following
the date which is six months after the date of this agreement. Notwithstanding
the foregoing, in the event of a change in control of the Company, Executive
shall have the right to
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elect to receive the equity portion of his compensation under this paragraph
in (i) a cash payment of $660,000 prior to the effective date of the change
in control or (ii) in securities of the Company.
(c) TAX-OFFSET PAYMENT. The parties recognize that the
issuance of securities to Executive under paragraph (b) above will result in a
tax obligation for Executive. The Company agrees that if Executive receives
any form of non-cash compensation under (b) above and the EBITDA Test mutually
agreed upon by the parties is satisfied, the Company shall make a tax-offset
payment to Executive at the time the securities are issued. The tax-offset
payment shall be calculated to be equal to Executives federal income tax,
state income tax and employment tax on both the non-cash compensation under
(b) above and the tax-offset payment under this paragraph (c), using
Executives highest marginal tax rates. The Company agrees that if Executive
receives any form of non-cash compensation under (b) above and the EBITDA Test
mutually agreed upon by the parties is not satisfied, the Company shall make a
loan to Executive in an amount sufficient to pay Executives federal income
tax, state income tax and employment tax, using Executives highest marginal
tax rates with an interest rate equal to the applicable federal rate for
determining imputed income.
The loan shall be due and payable upon an initial public offering of
the Company or upon Executives sale or other disposition of the acquired
stock; provided that Executive may elect to transfer the acquired stock to
the Company in complete satisfaction of the loan obligation.
Each of the obligations under this paragraph 4 are guaranteed by
Castle pursuant to the guarantee attached hereto and made part hereof as
Exhibit A.
5. EXPENSES, REIMBURSEMENT
The Company shall promptly reimburse Executive for all reasonable
costs and expenses incurred by Executive in connection with or arising out of
this agreement, including actual out-of-pocket costs and expenses for travel,
transportation, lodging and meals, temporary living expenses, lease payments
for an automobile if required by Executive, and Executives direct costs such
as facsimile, telephone, Federal Express, United Parcel Service,
administrative, word processing and secretarial services. Executive agrees to
promptly document all such costs and expenses. The Company shall also
reimburse Executive for his reasonable and actual attorneys fees incurred in
connection with the preparation of this agreement, not to exceed the sum of
$5,000. The foregoing expense obligations are guaranteed by Castle pursuant
to the guarantee attached hereto and made part hereof as Exhibit A.
6. TERM, TERMINATION
This agreement shall be for an initial term of six months,
commencing no later than thirty days after acceptance of this agreement by
Company as indicated by its signature below. However, it is specifically
understood that paragraphs 7 (Indemnification) and 8 (Confidentiality) shall
survive the termination of this agreement. This agreement shall terminate
prior to the expiration of the six-month term upon the death or permanent
disability of Executive, upon written notice by
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Executive to the Company, upon Executive's voluntarily ceasing to perform any
services hereunder, or upon the mutual agreement of Executive and the
Company, in writing. In such event, Executive shall receive a pro rata
portion of the cash and equity compensation provided under paragraph 4,
calculated through the date of his termination. If the Company terminates the
agreement prior to the six-month term without Executive's consent, the
Company shall remain obligated for all of its obligations under the agreement.
This agreement may be extended beyond its initial six-month term by
the Company for a reasonable additional period. In such event, the terms of
this agreement shall apply to the additional period and Executive shall
continue to receive the compensation provided under paragraph 4 (i.e., cash
compensation of $70,000 per month, equity compensation of $110,000 per month
and a tax-offset for any non-cash compensation).
7. INDEMNIFICATION
The Company shall indemnify, defend and hold Executive harmless from
and against any and all damages, liabilities, losses, costs, claims and
expenses ("Damages"), including, but not limited to, actual attorneys' fees
and expenses, resulting from or arising out of or in connection with
Executive's performance of his duties and rendering of services under this
agreement; except if a court having competent jurisdiction shall have
determined by final judgment that the damages resulted directly from the
willful malfeasance or criminal conduct of Executive in the performance of
his services. Company shall maintain and provide Directors and Officers
liability insurance coverage covering Executive's services hereunder.
Executive shall cooperate fully with the Company in the defense of all claims
that may arise and which are covered by this indemnification clause. Company
shall have the right to compromise or defend all such claims, and such
compromise or defense shall be at the Company's sole cost and expense. This
indemnification shall be in addition to any indemnities and liability
limitations applicable to Officers, Directors, agents or Executives of the
Company that are mandated or permitted under applicable law. The foregoing
indemnification obligations are guaranteed by the Castle pursuant to the
guarantee attached hereto and made a part hereof as Exhibit A. This
agreement's hold harmless provision shall survive indefinitely.
8. CONFIDENTIALITY
During the term of this agreement and so long as such information
remains proprietary, Executive will not in any manner, directly or
indirectly, disclose, divulge, discuss or communicate to any other person or
entity, or use for the benefit of any person or entity other than the Company
and its investors, any confidential information of the Company.
9. AMENDMENT OR MODIFICATION, WAIVER
No provision of this agreement may be amended or waived unless such
amendment or waiver is agreed to in writing, signed by a duly authorized
representative of the Company and by the Executive. No waiver by any party
hereto of any breach by the other party of any condition or
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provision of this agreement to be performed by such other party shall be
deemed a waiver of a similar or dissimilar condition or provision at the same
time, any prior time or any subsequent time.
10. NOTICES
Any and all notices or consents required or permitted to be given
under this agreement shall be in writing or by written telecommunication and
delivered either by hand delivery or by Registered or Certified Mail, Return
Receipt Requested, to the relevant addresses set out below, in which event
they shall be deemed to have been duly given upon receipt.
If to Executive, at: Xxxxxx X. Xxxxx
00 Xxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000-0000
If to Company, at: Xxxx X. Xxxxxx
Chairman & Chief Executive Officer
Xxxxxx Xxxxxx, Inc.
000 Xxxx 00xx Xx.
Xxx Xxxx, XX 00000
11. SURVIVAL OF AGREEMENTS
Except as set forth herein, all agreements, covenants,
representations and warranties made herein shall survive the execution and
delivery of this agreement and shall continue in full force and effect.
12. SUCCESSORS AND ASSIGNS
This agreement may not be assigned by Executive without the prior
written consent of the Company, except that it may be freely assigned without
such consent to any corporation or other entity which is owned or controlled,
directly or indirectly, by the Executive. This agreement may not be assigned
by the Company without prior written consent of Executive, other than to the
Company's successor in the case of a merger or consolidation involving the
Company. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
13. ARBITRATION
All disputes, claims, or grievances arising under or out of this
agreement, specifically including, but not limited to, claims of a breach of
this agreement by the other party, shall be processed exclusively pursuant to
the General Arbitration Act of the State of New Jersey, Section 2A:24-1 ET.
SEQ. of the New Jersey Statutes. The method of selection of the arbitrator,
the rules of arbitration, and all other procedural matters relating to any
arbitration proceeding under this
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agreement shall be governed by the rules of the American Arbitration
Association, and any such arbitration proceeding shall be held in the State
of New Jersey.
14. ENTIRE AGREEMENT
This agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior
written agreements and negotiations and oral understandings, if any, and it
may not be amended, supplemented or discharged except by an instrument in
writing signed by the parties hereto.
15. COUNTERPARTS
This agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which
shall be deemed one and the same agreement. A photocopy or facsimile
reproduction of this agreement and any signatures shall be deemed as
effective as the original.
16. SEVERABILITY
Any provision of this agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
17. GOVERNING LAW
This agreement will be governed by and construed in accordance with
the laws of the State of New Jersey, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, the parties hereto accept the agreement, and
have caused this agreement to be executed and delivered by their respective
duly authorized representatives, as of the date of execution noted below.
Company: Commemorative Brands, Inc.
February 19, 1999 By: /s/ Xxxxx X. Xxxxxxxx
--------------------------- ----------------------------------
Date Its: Member, Board of Directors
February 19, 1999 By: /s/ Xxxxxx X. Xxxxx
--------------------------- ----------------------------------
Date Xxxxxx X. Xxxxx
Castle: Xxxxxx Xxxxxx Partners II, L.P.
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By: Xxxxxx Xxxxxx, Inc., Manager
February 19, 1999 By: /s/ Xxxxx X. Xxxxxxxx
--------------------------- ----------------------------------
Date Name: Xxxxx X. Xxxxxxxx
Title: Vice President
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EXHIBIT A
GUARANTY OF PERFORMANCE
For value received, as an inducement to, and in consideration of,
Executive entering into this Management Agreement, Xxxxxx Xxxxxx Partners II,
L.P. ("Castle"), a large shareholder of the Company, hereby guarantees
Executive, without notice or demand, the full and timely performance by the
Company of the Company's compensation, expense and indemnification
obligations described in paragraphs 4, 5, and 7 of the attached Management
Agreement. The provisions of this guaranty are and shall be construed to be
an absolute, continuing, unconditional and unlimited guarantee of such
payments and performance. Executive may proceed against Castle immediately
upon any breach by Company of paragraphs 4, 5, or 7 of this Management
Agreement, and the liability of Castle hereunder shall continue in full force
and effect until all obligations and liabilities of Company pursuant to
paragraphs 4, 5, or 7 of this Management Agreement are fully satisfied and
discharged and shall not be reduced, affected, discharged or impaired, in
whole or in part, by reason of (a) the bankruptcy, reorganization,
dissolution or cessation of business of Company; (b) any change, amendment or
modification of any of the terms and conditions of this Management Agreement;
(c) any waiver of, or failure or delay in exercising, any right of Executive
under this Management Agreement; (d) any renewal of this Management
Agreement, whether or not effected with the consent of, nor notice to,
Company, Executive or Castle. Castle may be sued hereunder by Executive with
or without joining Company and without first or contemporaneously suing
Company or otherwise seeking or proceeding to collect from it. Castle hereby
waives any right to notice of acceptance of this guaranty, notice of any
modification, extension, renewal or substitution of the Management Agreement,
notice of any default by the Company, and any other notice, whether similar
or dissimilar to the foregoing.
Xxxxxx Xxxxxx Partners II, L.P.
By: Xxxxxx Xxxxxx, Inc., Manager
February 19, 1999 By: /s/ Xxxxx X. Xxxxxxxx
--------------------- ----------------------------------
Date Name: Xxxxx X. Xxxxxxxx
Its: Vice President
(seal)
ATTEST: _____________________________
Name: ___________________
Title:___________________
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