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EXHIBIT 10.1

EMPLOYMENT AND NON-COMPETITION AGREEMENT

      THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “Agreement”) is made effective as of
August 10, 2005, between HOME INTERIORS & GIFTS, INC., a Texas corporation (together with its
successors and assigns, the “Company”), and EUGENIA B. PRICE (the “Executive”).

      WHEREAS, the Executive is currently employed by the Company pursuant to an Employment
Agreement, dated effective as of January 1, 2003, between the Company and the Executive (the
“Prior Employment Agreement”);

      WHEREAS, the Company’s desires to continue to employ the Executive in an executive capacity
with the Company, and the Executive desires to continue to be employed by the Company in said
capacity; and

      WHEREAS, in connection with the execution of this Agreement, the Executive and the Company
agree that this Agreement amends, restates, and supersedes the Prior Employment Agreement.

      NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

      1. Employment Period. The Company agrees to employ the Executive, and the Executive
agrees to be employed by the Company, in accordance with the terms and conditions of this
Agreement, for the period commencing as of the date of this Agreement and continuing until
December 31, 2005 (the “Employment Period”); provided, however, that such Employment Period (i)
shall be extended for successive terms of one (1) year unless either party advises the other in
writing, at least one hundred twenty (120) days prior to the end of the initial term, or any
annual extension thereof, that it will not agree to extend this Agreement, and (ii) may be
terminated in accordance with Section 3 and Section 4, below.

      2. Terms of Employment.

            (a) Position and Duties.

      (i) During the Employment Period, the Executive shall have the title of Senior
Vice President, Sales and Marketing of the Company and shall report to the Chief
Executive Officer of the Company or such other member of executive management as
shall be designated by the Chief Executive Officer. The Executive shall have such
powers and duties as may from time to time be assigned or delegated to her by
appropriate officers of the Company, or, in the absence of such assignment or
delegation, shall have such powers and duties as are normally associated with and
inherent in such position.

      (ii) During the Employment Period, excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote such time
as shall be necessary (which shall not be less than forty (40) hours during a
regular work week), up to and including substantially all of her business time, to
the business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the

 

 

Executive’s reasonable best efforts to perform faithfully, effectively and
efficiently such responsibilities. The Executive will use her reasonable best
efforts to promote the success of the Company’s business, and will cooperate fully
with the Board of Directors and executive management of the Company.
Notwithstanding the foregoing, nothing herein prohibits Executive from serving on
corporate, civic or charitable board or committee, or from delivering lectures and
fulfilling speaking engagements, or managing personal investments; provided that
such activities do not significantly interfere with Executive’s obligations
hereunder.

(b) Compensation.

      (i) Base Salary. During the Employment Period, the Executive shall
receive, at such intervals and in accordance with such Company policies as may be
in effect from time to time, an annual salary (pro rata for any partial year) equal
to Three Hundred Thousand and No/100 Dollars ($300,000.00), payable in equal
installments in accordance with the Company’s normal practices, but no less often
than monthly (the “Annual Base Salary”), which Annual Base Salary shall be subject
to increase, as determined in the sole discretion of the Board of Directors of the
Company.

      (ii) Annual Bonus. The Executive shall be eligible to participate in
the Company’s Key Employee Bonus Plan applicable to senior executives of the
Company (the “Annual Bonus”) for the fiscal year of the Company ending December 31,
2005 and thereafter during the term of this Agreement, as may be extended from year
to year, as approved by the Board of Directors of the Company in good faith, and
subject to such other criteria as may be recommended by management and established
by the Board of Directors of the Company from time to time. The Annual Bonus (or
portion thereof) shall be in an amount up to sixty percent (60%) of Executive’s
Annual Base Salary, paid in cash promptly following delivery to the Board of
Directors of the Company of audited financial statements of the Company for the
fiscal year for which the Annual Bonus (or pro rated portion) is earned or awarded,
unless electively deferred by the Executive pursuant to any deferral programs or
arrangements that the Company may make available to the Executive.

      (iii) Additional Discretionary Bonus. For the fiscal year ending
December 31, 2005 only, if the Executive does not receive an Annual Bonus, the
Executive will be eligible to receive a discretionary bonus of up to ten percent
(10%) of Executive’s Annual Base Salary (the “Discretionary Bonus”). The amount of
the Discretionary Bonus, if any, shall be determined by the Company’s Chief
Executive Officer in such person’s sole and absolute discretion and shall be based
upon the achievement by the Executive of certain objective and/or subjective goals
to be established by the Executive and the Company’s Chief Executive Officer.

      (c) Incentive, Savings and Retirement Plans. During the term of the
Executive’s employment, the Executive shall be entitled to participate in all incentive,
savings, and retirement plans, practices, policies and programs applicable generally to

 

 

management-level employees of the Company (“Investment Plans”) as determined by and at
the discretion of the Board of Directors of the Company.

      (d) Welfare Benefit Plans. During the term of the Executive’s employment, the
Executive and/or the Executive’s family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans, practices,
policies and programs (“Welfare Plans”) provided by the Company (including, without
limitation, medical, prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent offered
and applicable generally to other management-level employees of the Company and to the
extent the Executive is eligible under the terms of the Welfare Plans. In addition, during
the term of Executive’s employment, the Company shall (A) pay all medical, dental and
vision insurance costs for the Executive and the Executive’s family, including all premiums
and co-payments, and (B) increase the Executive’s and family members’ annual maximum dental
covered expenses from $1,000 to $5,000.

      (e) Expenses. During the term of the Executive’s employment, the Executive
shall be entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by the Executive at the request of, or on behalf of, the Company and in performance
of the Executive’s duties under this Agreement, and in accordance with the policies,
practices and procedures of the Company. The Executive must file expense reports with
respect to such expenses in accordance with the Company’s normal policies.

      (f) Vacation and Holidays. During the term of the Executive’s employment, the
Executive shall be entitled to paid vacation of three (3) weeks per year and paid holidays
in accordance with the plans, policies, programs and practices of the Company for its
employees. Such vacation shall be taken at such time or times reasonably acceptable to the
Company.

      (g) Automobile. During the term of the Executive’s employment and upon the
request of the Executive, the Company shall lease a vehicle for the Executive with such
monthly lease, fuel, maintenance and insurance costs as are reasonable and customary for
other similarly situated executives of the Company. Upon termination of the Executive’s
employment for any reason, the Executive shall be entitled to purchase such vehicle at the
then-current trade-in value as determined by the National Auto Research Black Book
published by Hearst Holdings.

      (h) Physical Exam. During the term of the Executive’s employment, the Company
shall reimburse the Executive for all costs associated with Executive’s physical exam at
the Cooper Clinic or a similar facility; provided, that the Executive shall only be
reimbursed for the costs of one such exam during each calendar year.

3. Termination of Employment.

      (a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. If the Disability of
the Executive has occurred during the Employment Period (pursuant to the definition of
Disability set forth below), the Company shall give to the Executive no less than thirty
(30) days written notice in accordance with Section 11(b) hereof of its intention to
terminate the Executive’s employment based upon Disability. In such event,

 

 

the Executive’s employment with the Company shall terminate effective on the later of
30 days from the date specified in such notice or the date that Executive’s disability
benefits begin (the “Disability Effective Date”). For purposes of this Agreement,
“Disability” shall mean the Executive’s inability to perform her duties and obligations
hereunder for a period of one hundred twenty (120) consecutive days or any one hundred
twenty (120) days in any twelve (12) month period due to mental or physical incapacity as
determined by a physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative (such agreement as to acceptability not to
be withheld unreasonably).

      (b) Termination by the Company. The Company may terminate the Executive’s
employment during the Employment Period with or without Cause. If termination by the
Company is without Cause, the Company shall give Executive ten (10) days prior written
notice of the Company’s intent to do so. For purposes of this Agreement, “Cause” means: (i)
the Executive’s material breach of this Agreement or any other document, agreement or
contract to which the Executive and the Company are a party, which constitutes a material
nonperformance by the Executive of her obligations and duties hereunder or thereunder, as
reasonably determined by the Board of Directors of the Company, which is not remedied within
ten (10) business days after receipt of written notice from the Company in accordance with
Section 11(b), specifying such breach; (ii) the Executive’s failure to adhere to any
material written policy of the Company, which is not remedied within thirty (30) days after
receipt of written notice from the Company specifying such failure; (iii) the Executive’s
appropriation (or attempted appropriation) of a material business opportunity of the
Company, including, without limitation, attempting to secure or securing, any personal
profit in connection with any transaction entered into on behalf of the Company; (iv) the
Executive’s commission of (or attempt to commit) an act of fraud, illegality, theft or
dishonesty toward the Company in the course of employment with the Company that relates to
the Company’s assets, activities, operations or other employees; (v) the Executive’s
conviction of, the indictment for (or its procedural equivalent), or the entering of a
guilty plea or plea of no contest or deferred adjudication with respect to, a felony, the
equivalent thereof, or any other crime with respect to which imprisonment is a possible
punishment; (vi) the Executive’s absence from her duties without the consent of the
Company’s Board of Directors for more than ten (10) consecutive business days for reasons
other than vacation authorized under this Agreement, illness or injury; (vii) a material
breach by the Executive of Section 6 or Section 9 hereof; or (viii) the failure of the
Executive to carry out, or comply with, in any material respect any directive of the Board
of Directors consistent with the terms of this Agreement, which is not remedied within
thirty (30) days after receipt of written notice from the Company specifying such failure.

      (c) Voluntary Termination by Executive. Notwithstanding anything in this
Agreement to the contrary, the Executive’s employment may be terminated during the
Employment Period by the Executive for good reason or no reason, provided the Executive
gives three (3) months prior written notice to the Company of the Executive’s intention to
do so.

      (d) Termination for Good Reason. The Executive may terminate her employment at
any time for Good Reason. For purposes of this Agreement, “Good Reason” shall mean (i) any
reduction, approved by the Board of Directors without the

 

 

Executive’s written consent, in the Executive’s title or the Executives’ Base Salary
other than under a circumstance that constitutes Cause; provided, that any such
reduction or alteration in the Executive’s title without the Executive’s consent during the
thirty-day cure period applicable to subparagraph (viii) of Section 3(b) shall not
constitute Good Reason; (ii) any alteration, approved by the Board of Directors without the
Executive’s written consent, in the Executive’s duties, which alteration results in duties
that are not commensurate with Executive’s title in businesses of similar size and
complexity (it being understood that alterations in Executive’s duties are contemplated
during the term of this Agreement), other than under a circumstance that constitutes Cause;
provided, that any such alteration in the Executive’s duties without the
Executive’s consent during the thirty-day cure period applicable to subparagraph (viii) of
Section 3(b) shall not constitute Good Reason; and (iii) a change, without the Executive’s
written consent, of more than fifty (50) miles in the office or location where the
Executive is based. Notwithstanding the above, the occurrence of any of the events
described above will not constitute Good Reason unless the Company fails to cure any such
event within thirty (30) days after receipt from the Executive of the Notice of Termination
(as defined in Section 3(e)).

      (e) Notice of Termination. Any termination by the Company (for Cause or
otherwise), or by the Executive, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 1l(b).

      (f) Date of Termination. “Date of Termination” means: (i) the date of receipt
of a Notice of Termination, or any later date specified therein, and (ii) if the
Executive’s employment is terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be.

4. Obligations of the Company upon Termination.

      (a) Termination by the Company Other Than For Cause. If the Company
terminates the Executive without Cause, other than in connection with death or Disability
as described in Section 4(b) below, or fails to renew this Agreement beyond the initial
term ending December 31, 2005, or any extension term, or if the Executive terminates this
Agreement for Good Reason, the Company shall pay to the Executive: (i) in a lump sum in
cash within thirty (30) days after the Date of Termination (1) the sum of the Executive’s
applicable Annual Base Salary through the Date of Termination to the extent not theretofore
paid (“Accrued Obligations”), (2) any amount arising from the Executive’s participation in,
or benefits under, any Investment Plans (“Accrued Investments”), which amounts shall be
payable in accordance with the terms and conditions of such Investment Plans, and (3)
severance pay in an amount equal to twelve (12) months of the Executive’s Annual Base
Salary (“Severance Pay”); and (ii) any earned but unpaid Annual Bonus in respect of any
full fiscal year ended prior to the date the Executive’s employment is terminated, payable
in a lump sum in cash at such time as such Annual Bonus otherwise would be payable
(“Accrued Bonus”), but not a prorated or partial bonus with respect to the time period
between the end of the previous full fiscal year and the date the Executive’s employment is
terminated.

      (b) Termination by the Company for Death or Disability. If the Executive’s
employment is terminated by reason of the Executive’s death or Disability during the
Employment Period, the Company shall pay to her legal representatives: (i) in a lump

 

 

sum in cash within thirty (30) days after the Date of Termination the aggregate
Accrued Obligations; (ii) the Accrued Investments, which shall be payable in accordance
with the terms and conditions of the Investment Plans; and (iii) any Accrued Bonus, which
shall be payable at such time as such Annual Bonus otherwise would be payable. The Company
shall have no further payment obligations to the Executive or her legal representatives
under this Agreement.

      (c) Termination by the Company for Cause or by Executive. If the Executive’s
employment shall be terminated by the Company for Cause or terminated by the Executive,
during the Employment Period, the Company shall have no further payment obligations to the
Executive other than for payment of Accrued Obligations (which shall be paid within thirty
(30) days after the Date of Termination), Accrued Investments (which shall be payable in
accordance with the terms and conditions of the Investment Plans) and Accrued Bonus (which
shall be payable at such time as such Annual Bonus otherwise would be payable).

      (d) Change of Control. If following the occurrence of a Change of Control (or
following the execution of a definitive agreement that, upon consummation, would result in
a Change of Control), if the Company terminates the Executive other than for Cause, or
other than in connection with death or Disability as covered by Section 4(b) above,
or fails to renew this Agreement beyond the initial term ending December 31, 2005 or any
extension term, or if the Executive terminates her employment for Good Reason, the Company
shall: (i) pay to the Executive all Accrued Benefits in a lump sum in cash within ten (10)
days after the Date of Termination, (ii) pay to the Executive a severance payment equal to
eighteen (18) months of the Executive’s Annual Base Salary, (iii) pay to the Executive any
Accrued Bonus, payable in a lump sum in cash at such time as such Annual Bonus otherwise
would be payable pursuant to the last sentence of Section 2(b)(ii), and (iv) for a
period of twelve (12) months from the Date of Termination, pay all medical, dental and
vision insurance costs for the Executive and the Executive’s family, including all premiums
and co-payments. 

      For purposes of this Section 4(d), the following definitions shall apply:

      “Affiliate” shall mean, as to any Person, a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common
control with, such Person;

      “Change of Control” shall mean the first to occur of the following events: (i) any
sale, lease, exchange, or other transfer (in one transaction or series of related
transactions) of all or substantially all of the assets of the Company to any Person or
Group, other than one or more members of the HMC Group, or (ii) the acquisition by any
Person or Group other than one or more members of the HMC Group of the power, directly or
indirectly, to vote or direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Company;

      “Group” shall have the meaning given such term in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations and interpretations
thereunder;

 

 

      “HMC Group” shall mean Hicks, Muse, Tate & Furst Incorporated, its Affiliates, and
their respective employees, officers, partners, and directors (and members of their
respective families and trusts for the primary benefit of such family members); and

      “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, trust, or other entity.

      (e) Full Settlement; Mitigation. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The Company
shall not be liable to the Executive for any damages in addition to the amounts payable
under Section 4 arising out of the termination of the Executive’s employment, for any
reason, prior to the end of the Employment Period; provided, however, that the Company
shall be entitled to seek damages from the Executive for any breach of Sections 6, 7, or 9
hereof or criminal misconduct.

      5. Ownership of Intellectual Property. Any and all inventions, trade secrets,
copyrights, patents or other intellectual property rights relating to the Business (as defined
below) prepared or created by the Executive during the Employment Period (together with all
extension and renewal rights), shall be owned exclusively by the Company, its successors and
assigns, absolutely and forever, and for all uses and purposes whatsoever and free from the
payment of any royalty or compensation whatsoever to Executive. In the event any such items may
not, by operation of law, be deemed the property of the Company, the Executive hereby assigns to
the Company, for no additional consideration, all rights, including intellectual property rights,
in such items. The Executive shall execute such documents, and provide such assistance as the
Company may reasonably request to give full effect to the provisions of this Section 5. This
provision shall survive the termination of this Agreement.

      6. Confidential Information.

      (a) The Executive acknowledges that during the Employment Period and as part of her
employment, the Executive will be and has been afforded access to confidential information
of the Company and its Affiliates, as defined herein. The Executive further acknowledges
that for purposes of this Agreement, “Affiliates” shall be defined as any corporation,
partnership, limited liability company or other entity controlling, controlled by or under
common control with the Company, all of which have trade, business, and financial secrets
and other confidential and proprietary information, including, but not limited to, product
information, designs and formulas, processes, pricing and cost information, sales and
marketing strategies, and identities of suppliers and displayers, and that such
confidential information constitutes valuable, special and unique property of the Company
and its Affiliates (collectively, the “Confidential Information”). As defined herein,
Confidential Information shall not include (i) public information or information that is
generally known to other persons or entities; (ii) information that is or becomes available
to the Executive on a non-confidential basis from a source other than the Company and its
Affiliates, provided that such source was not known by Executive to be bound by a
confidentiality agreement with the Company and its Affiliates or to be otherwise prohibited
from transmitting the information to Executive by a contractual, legal or fiduciary
obligation; (iii) information that was within the Executive’s possession prior to its being
furnished to the Executive by or on behalf of

 

 

the Company and its Affiliates, including, without limitation, product and marketing
information possessed by Executive prior to employment by the Company, provided that the
source of such information was not known by the Executive to be bound by a confidentiality
agreement with the Company and its Affiliates or to be otherwise prohibited from
transmitting the information to Executive by a contractual, legal or fiduciary obligation;
or (iv) information required to be disclosed by the Executive pursuant to a subpoena or
court order, or pursuant to a requirement of a governmental agency or law of the United
States of America or a state thereof or any governmental or political subdivision thereof;
provided, however, that the Executive shall take all reasonable steps, at the cost of the
Company, to prohibit disclosure of such Confidential Information pursuant to subsection
(iv) herein.

      (b) The Executive also acknowledges that public disclosure of such Confidential
Information could have an adverse effect on the Company and its business and that the
provisions of this Section 6 are reasonable and necessary to prevent the improper use or
disclosure of Confidential Information.

      (c) In consideration of the compensation and benefits to be paid or provided to the
Executive by the Company under this Agreement, the Executive covenants that both during and
after the Employment Period, the Executive shall (i) hold Confidential Information in
confidence; (ii) not disclose, disseminate, publish or release (either directly or
indirectly) Confidential Information to any person (other than Company employees and other
persons to whom it is appropriate to disclose such Confidential Information in order to
carry out the Executive’s duties or to pursue the best interests of the Company or to whom
the Company has authorized the Executive to disclose such information and then only to the
extent that such Company employees and other persons authorized by the Company have a need
for such knowledge); and (iii) not use any Confidential Information for the benefit of any
person or entity other than the Company.

      (d) If the Executive becomes legally compelled to disclose any Confidential
Information, she will provide the Company with prompt written notice of such requirement
prior to disclosure so that the Company may seek appropriate relief. If such relief is not
obtained, then the Executive will furnish only that portion of the Confidential Information
that the Executive is legally required to furnish and will use commercially reasonable
efforts to assist the Company in obtaining assurances that such Confidential Information
will be accorded confidential treatment.

      7. Surrender of Materials Upon Termination. Upon termination of the Executive’s
employment for any reason, the Executive shall immediately return to the Company all originals
and/or copies, in whatever form, of any and all Confidential Information and any other property of
the Company and its Affiliates, which are in the Executive’s possession, custody or control,
whether or not provided by the Company.

      8. Successors.

      (a) This Agreement is personal to the Executive and shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

 

      (b) This Agreement shall inure to the benefit of and be binding upon the Company and
its successors and assigns.

      (c) The Company may assign this Agreement only to an assignee that agrees to perform
this Agreement in the same manner and to the same extent that the Company would be required
to perform if no such succession had taken place. The failure of any assignee of the
Company to expressly assume to perform this Agreement in writing, which is not remedied
within ten (10) business days after receipt of written notice from the Executive in
accordance with Section 11(b), notifying Company or Company’s assignee of such failure,
shall, at the election of Executive, be deemed to be a termination of this Agreement
without cause.

9. Non-Competition and Non-Solicitation.

      (a) The Executive acknowledges that: (i) the services to be performed by her under
this Agreement are of a special, unique, unusual, extraordinary, and intellectual
character; (ii) the Business is international in scope and the Company’s and its
Affiliates’ products are marketed throughout the United States and the world; (iii) the
Company competes with other businesses both nationally within the United States and
internationally; and (iv) the provisions of this Section 9 are reasonable and necessary to
protect the Business. For purposes of this Agreement, the term “Business” shall mean the
Company’s and its Affiliates’ production and sale of home decorative and garden decorative
products of the types offered for sale by the Company and its Affiliates as of the date of
this Agreement and during the Employment Period.

      (b) In consideration of the acknowledgments by the Executive, and in consideration of
the compensation and benefits to be paid or provided to the Executive by the Company, the
Executive agrees that she will not, directly or indirectly:

      (i) during the Employment Period, except in the course of her employment
hereunder, and during the Post-Employment Period, engage in, invest in, own, manage,
operate, finance, control, or participate in the ownership, management, operation,
financing or control of, be employed by, or render services to, (1) any business
whose products or services compete with the Business, anywhere within the United
States or within foreign countries in which the Company or its Affiliates conduct
the Business, or (2) any business that utilizes a direct sales or multi-level sales
format to sell consumer products anywhere within the United States;

      (ii) whether for the Executive’s own account or for the account of any other
person, at any time during the Employment Period and the Post-Employment Period,
solicit business from (either directly or indirectly) or sell products to any
customer of the Company or its Affiliates, including without limitation, customers
with whom the Executive had personal contact prior to Executive’s employment with
the Company;

      (iii) whether for the Executive’s own account or the account of any other
person, at any time during the Employment Period and the Post-Employment Period,
solicit, employ, or otherwise engage as an employee, independent contractor, or
otherwise, any person who is or was at the time of such

 

 

solicitation, employment or engagement an employee, consultant or independent
contractor of the Company or its Affiliates or in any manner induce or attempt to
induce any employee of the Company or its Affiliates to terminate her employment
with the Company or its Affiliates; or

      (iv) at any time during or after the Employment Period, and during the
Post-Employment Period, disparage the Company or its Affiliates or any of their
shareholders, partners, members, other holders of equity in the Company, directors,
officers, employees, or agents or any Affiliate of the foregoing.

      (c) If any covenant in this Section 9 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with respect to
scope, time, and geographic area, and such lesser scope, time, or geographic area, or all
of them, as a court of competent jurisdiction may determine to be reasonable, not
arbitrary, and not against public policy, will be effective, binding, and enforceable
against the Executive.

      (d) The period of time applicable to any covenant in this Section 9 will be extended
by the duration of any conduct which the Executive knew or should reasonably have known
violated such covenant.

      (e) The Executive will, while the covenant under this Section 9 is in effect, give
written notice to the Company, within ten (10) days after accepting any other employment or
consulting arrangement, of the identity of the Executive’s new employer or contractor and
all of the material duties and services to be provided by the Executive in such employment
or retention, which shall not require disclosure by the Executive of any terms of
compensation. The Company may notify such new employer that the Executive is bound by this
Agreement and, at the Company’s election, furnish such new employer with a copy of this
Agreement or relevant portion thereof.

      (f) The term “Post-Employment Period” means the one (1) year period beginning on the
date of termination of the Executive’s employment with the Company.

      (g) The Executive acknowledges that the geographic boundaries, scope of prohibited
activities, and time duration of the preceding paragraphs are reasonable in nature and are
no broader than are necessary to maintain the confidentiality and the goodwill of the
Company’s and the Affiliates’ proprietary information, plans and services and to protect
the other legitimate business interests of the Company and the Affiliates.

      10. Effect of Agreement on Other Benefits. The existence of this Agreement shall not
prohibit or restrict the Executive’s entitlement to full participation in the employee benefit and
other plans or programs in which management-level employees of the Company are eligible to
participate.

      11. Miscellaneous.

      (a) Jurisdiction and Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without reference to principles of
conflict of laws. Any legal action to enforce or interpret any provision of

 

 

this Agreement shall be brought exclusively in Dallas County, Texas. By execution and
delivery of this Agreement, the Executive accepts and consents to for himself, the
jurisdiction of the Courts of the State of Texas, County of Dallas.

      (b) Notice. All notices and other communications hereunder shall be in writing
and shall be given by hand delivery, by overnight courier (providing proof of delivery) or
by registered or certified mail, return receipt requested, postage prepaid, addressed as
follows:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	Eugenia B. Price
	 

	 	 	 	4640 Irvin Simmons Dallas,
	 

	 	 	 	Texas 75229
	 
	 	 	 	 
	 

	 	If to the Company:
	 	Home Interiors & Gifts, Inc.
	 

	 	 	 	1649 Frankford Road West
	 

	 	 	 	Carrollton, Texas 75007
	 

	 	 	 	Attn: President/CEO

or to such other address as either party shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually received by
the addressee.

      (c) Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never comprised a
portion of this Agreement; and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such illegal,
invalid or unenforceable provision there shall be added automatically as part of this
Agreement a provision as similar-in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

      (d) Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.

      (e) Obligations Contingent on Performance. The obligations of the Company
hereunder, including its obligation to pay the compensation provided for herein, are
contingent upon the Executive’s performance of the Executive’s obligations hereunder.

      (f) Waiver. The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

      (g) Injunctive Relief and Additional Remedy. The Executive acknowledges that
money damages would be both incalculable and an insufficient remedy for a breach of Section
6 or 9 by the Executive and that any such breach would cause the Company irreparable harm.
Accordingly, the Company, in addition to any other remedies at law or

 

 

in equity it may have, shall be entitled, without the requirement of posting of bond
or other security, to equitable relief, including injunctive relief and specific
performance, in connection with a breach of Section 6 or 9 by the Executive. If the
Executive breaches in any material respect any of the material provisions of Section 6 or
9, following termination of Executive’s employment, the Company will have the right to
cease making any payments otherwise due to the Executive under this Agreement.

      (h) Entire Agreement; Amendments. The provisions of this Agreement constitute
the complete understanding and agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written,
between or among the parties hereto. This Agreement may not be amended orally, but only by
an agreement in writing signed by the parties hereto or their respective successors and
legal representatives.

      (i) Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same Agreement.

      (j) Covenants of Sections 6 and 9 are Essential and Independent Covenants. The
covenants by the Executive in Sections 6 and 9 are essential elements of this Agreement,
and without the Executive’s agreement to comply with such covenants, the Company would not
have entered into this Agreement or employed or continued the employment of the Executive.
The Company and the Executive have independently consulted their respective counsel and
have been advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by the Company.

      (k) Section Headings; Construction. The captions or headings of Sections in
this Agreement are provided for convenience only and are not part of the provisions hereof
and shall have no force or effect. Whenever the terms “hereof”, “hereby”, “herein”, or
words of similar import are used in this Agreement they shall be construed as referring to
this Agreement in its entirety rather than to a particular section or provision, unless the
context specifically indicates to the contrary. Any reference to a particular “Section” or
“paragraph” shall be construed as referring to the indicated section or paragraph of this
Agreement unless the context indicates to the contrary. The use of the term “including”
herein shall be construed as meaning “including, without limitation.”

(Signature Page Follows)

 

 

      EXECUTED to be effective as of August 10, 2005.

	 	 	 	 	 
	 	EXECUTIVE:

 	 
	 	/s/ Eugenia B. Price
 	 
	 	Eugenia B. Price, Individually 	 
	 	 	 
	 

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	HOME INTERIORS & GIFTS, INC.,	 	 
	 	 	a Texas corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael D. Lohner	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	    Michael D. Lohner	 	 
	 

	 	 	 	    President and CEOexv10w1

 

EX 10.1

AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

     This AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this
“Amendment”) is dated as of July 1, 2005 by and among (i) Silverleaf Resorts, Inc., a Texas
corporation (the “Borrower”), (ii) Sovereign Bank, a federally chartered savings bank
(“Sovereign”), and any other lending institutions from time to time party thereto (collectively,
the “Banks”), and (iii) Sovereign Bank, a federally chartered savings bank, as agent for itself and
the other Banks (the “Agent”).

W I T N E S S E T H:

     WHEREAS, the Borrower, the Banks, and the Agent have entered into that certain Second Amended
and Restated Revolving Credit Agreement, dated as of July 30, 2004 (the “Credit Agreement”),
pursuant to which the Banks have extended credit to the Borrower on the terms set forth therein;

     WHEREAS, the Borrower has requested that the Banks and the Agent agree to delete the covenant
in the Credit Agreement concerning the Standby Management Agreement and amend certain other
provisions; and

     WHEREAS, the Banks, the Agent and the Borrower have agreed to such deletion and amendments,
subject to and on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     1. Definitions. All capitalized terms used herein and not expressly defined herein
shall have the same respective meanings given to such terms in the Credit Agreement.

     2. Amendments to Credit Agreement.

     2.1. Amendments to Section 1.1 of the Credit Agreement.

     2.1.1. The definition of the term “Collateral” is hereby amended and restated in its
entirety as follows:

 

 

     “Collateral. All the property, rights and interests of the Borrower and its
Subsidiaries that are or are intended to be subject to the security interests and mortgages
created by the Security Documents, including, without limitation, the Consumer Loan
Collateral, the Standby Servicing Agreement, and all the Inventory Collateral and Consumer
Loan Collateral under and as defined in the Inventory and Receivables Facility.”

     2.1.2. The definition of the term “Loan Documents” is hereby amended by adding the
words “the Negative Pledges,” immediately after the words “the Servicing Agreement,”.

     2.1.3. Section 1.1 of the Credit Agreement is hereby amended by inserting the
following definitions in proper alphabetical order:

     “CapitalSource. CapitalSource Finance LLC, a Delaware limited liability
company.”

     “CapitalSource Documents. The documents listed on Schedule 1.1(g) hereto.”

     “CapitalSource Facility. Those certain credit facilities provided by
CapitalSource to the Borrower pursuant to the CapitalSource Documents.”

     “Intercreditor Agreement. The Amended and Restated Intercreditor Agreement,
dated as of May 26, 2005, among the Agent, Textron, CapitalSource and Resort Funding.”

     “Negative Pledges. The documents listed in Schedule 1.1(f) hereto.”

     “Resort Funding. Resort Funding LLC, a Delaware limited liability company.”

     “Resort Funding Documents. The documents listed on Schedule 1.1(h) hereto.”

     “Resort Funding Facility. That certain credit facility provided by Resort
Funding to the Borrower pursuant to the Resort Funding Documents.”

     2.1.4. The definition of the “Required Consumer Loan Documents” is hereby amended by
adding to the end of clause (1) thereof the following:

-2-

 

“In the case of any promissory note or comparable instrument of indebtedness signed by a
consumer borrower in respect of an Interval at the Oak ‘N Spruce Resort, such promissory
note or comparable instrument shall include the language required by 16 C.F.R. § 433.”

     2.1.5. The definition of “Security Documents” is hereby amended by deleting the words
“the Standby Management Agreement Assignment,”, “the Assignments of Developments Rights”
and “the Assignment of Management Agreement,”.

     2.1.6. Section 1.1 of the Credit Agreement is hereby amended by deleting each of the
following defined terms in their entirety:

     “Standby Management Agreement Assignment. The Assignment of Standby
Management Agreement, dated as of April 30, 3002, among the Borrower, the Standby Manager,
and the Agent, as amended by Amendment No. 1 of even date herewith, pursuant to which the
Borrower assigns all of its rights under the Standby Management Agreement to the Agent.

     Standby Management Agreement. The Consulting Agreement, executed by the
parties on April 27, 2002 and April 29, 2002, between the Standby Manager and the Borrower,
as amended by the letter agreement, dated March 22, 2004, pursuant to which the Standby
Manager (1) monitors the operations of the Borrower and the Silverleaf Club and the
Borrower’s compliance with the Business Plan, (2) assists the Borrower with the preparation
of the reports deliverable to the Banks by the Borrower pursuant to this Credit Agreement,
and (3) assumes the management of the Eligible Projects upon the occurrence of an Event of
Default in accordance with the terms of this Credit Agreement.

     Standby Manager. J&J Limited, Inc., or such other Person selected by the
Borrower and acceptable to the Agent, in its sole discretion, to act as standby manager in
accordance with the Standby Management Agreement.”

     2.2. Amendment to Section 5.8 of the Credit Agreement. Section 5.8 of the Credit Agreement is
hereby amended and restated in its entirety as set forth below:

     “5.8. Cross Collateralization. The Collateral also secures the obligations
of the Borrower under the Inventory and Receivables Facility. Upon repayment of the Loan
and the satisfaction by the Borrower of all of the Obligations, the Collateral shall
continue to secure the Inventory and Receivables Facility, as provided in the

-3-

 

documents evidencing and securing the Inventory and Receivables Facility. The
Borrower further acknowledges and agrees that upon repayment in full of the Inventory and
Receivables Facility, the Agent’s security interest in the collateral securing such
facility shall automatically become a first priority security interest securing the
Borrower’s Obligations hereunder and the Borrower shall take such steps as the Agent may
request to deliver such collateral to the Agent and to confirm the Agent’s first priority
security interest therein. The Agent hereby acknowledges and agrees that it will release
and terminate its interest in and rights under the Standby Servicing Agreement upon
Textron’s release and termination (in form and substance satisfactory to the Agent) of
Textron’s rights under and interests in the servicing agreement between Textron and the
Standby Servicer.”

     2.3. Amendment to Section 6.10 of the Credit Agreement. The penultimate sentence of Section
6.10 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“The Borrower has no knowledge of any default or event of default under any of the Textron
Documents, the CapitalSource Documents, the Resort Funding Documents, or any other
documents evidencing any other material Indebtedness of the Borrower or any of its
Subsidiaries, except as disclosed to the Banks in writing, and none of Textron,
CapitalSource, Resort Funding or any other lender has accelerated any loan obligation of
the Borrower or any of its Subsidiaries on account of any such specified default or event
of default.”

     2.4. Amendment to Section 6.29 of the Credit Agreement. Section 6.29 of the Credit Agreement
is hereby amended and restated in its entirety as set forth below:

     “6.29. Standby Servicer. The Standby Servicing Agreement is in full force
and effect and has not been modified, amended, or terminated, other than the First
Amendment to Backup Servicing Agreement dated as of April 19, 2002 and the Amendment No. 2
to Backup Servicing Agreement dated May 4, 2005.”

     2.5. Amendment to Section 6.32. The first sentence of Section 6.32 is hereby amended and
restated in its entirety as follows:

     “6.32. Other Facilities. There is no event of default or event which, with
the passage of time, notice or both, would constitute an event of default under any of the
Textron Facility, the CapitalSource

-4-

 

Facility, the Resort Funding Facility or any other facility representing material
Indebtedness of the Borrower or any of its Subsidiaries and each of the Borrower and its
Subsidiaries is in good standing under all of such facilities.”

     2.6. Amendment to Section 7.2 of the Credit Agreement. Section 7.2 of the Credit Agreement is
hereby amended and restated in its entirety as set forth below:

     “7.2. Maintenance of Office; Management. The Borrower will maintain its
chief executive office at 1221 Riverbend, Suite 120, Dallas, Texas or at such other place
in the United States of America as the Borrower shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon the Borrower in respect of the
Loan Documents may be given or made. Unless replaced by another manager in accordance with
the terms of the Loan Documents, the Borrower shall remain engaged in the active management
of the Eligible Projects and shall continue to perform duties substantially similar to
those presently performed as provided in the management agreement relating to each Eligible
Project.”

     2.7. Amendment to Section 7.18.1. Section 7.18.1 of the Credit Agreement is hereby amended by
deleting the words “, subject to the Intercreditor Agreement”.

     2.8. Amendment to Section 7.20 of the Credit Agreement. Section 7.20 of the Credit Agreement
is hereby amended and restated in its entirety as set forth below:

     “7.20. Standby Servicing Agreement. The Borrower will maintain the Standby
Servicing Agreement in full force and effect.”

     2.9. Amendment to Section 7.24 of the Credit Agreement. Section 7.24 of the Credit Agreement
is hereby amended and restated in its entirety as follows:

     “7.24. Textron Facility, CapitalSource Facility, Resort Funding Facility, DZ
Bank Securitization, Textron Securitization, Bond Holder Exchange Transaction and Other
Indebtedness. The Borrower and its Subsidiaries will comply with each of the
terms and conditions of the Textron Documents, the CapitalSource Documents, the Resort
Funding Documents, the DZ Bank Documents, the Textron Securitization Documents, the Bond
Holder Exchange Documents, and the documents evidencing any other material Indebtedness of
the Borrower or any of it Subsidiaries and will promptly deliver to the Banks, upon receipt
by Borrower or any of its Subsidiaries, copies of

-5-

 

any notices received by Borrower or any of its Subsidiaries in connection with any of
the foregoing credit facilities.”

     2.10. Amendment to Section 8.21 of the Credit Agreement. Section 8.21 of the Credit Agreement
is hereby amended by deleting the words “the Standby Management Agreement,”.

     2.11. Amendment to Section 9.3 of the Credit Agreement. Section 9.3 of the Credit Agreement
is hereby amended by inserting the following words after the reference to the “Heller Facility” in
the first sentence thereof: “, the CapitalSource Facility, the Resort Funding Facility”.

     2.12. Amendment to Section 10.17 of the Credit Agreement. Section 10.17 of the Credit
Agreement is hereby amended and restated in its entirety as set forth below:

     “10.17. Servicing Agreements. Each of the Servicing Agreement and the
Standby Servicing Agreement shall be in full force and effect.”

     2.13. Amendment to Section 10.20 of the Credit Agreement. Section 10.20 of the Credit
Agreement is hereby amended and restated in its entirety as set forth below:

     “10.20. [Intentionally Omitted].”

     2.14. Amendment to Section 12.1. Clauses (f) and (g) of Section 12.1 of the Credit Agreement
are hereby amended and restated in their entirety as follows:

     “(f) the Borrower or any of its Subsidiaries shall fail to pay when due, or within any
applicable period of grace, any obligation for borrowed money (including, without
limitation, any obligation under the Textron Facility, the CapitalSource Facility, the
Resort Funding Facility, the New Notes, the Inventory and Receivables Facility, the DZ Bank
Securitization, or the Textron Securitization), or credit received in respect of any
Capitalized Leases in excess of $100,000, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money or credit received (including, without limitation, the New Notes
and the agreements and instruments entered into by the Borrower in connection with the
CapitalSource Facility, the Resort Funding Facility, the Textron Facility, the Inventory
and Receivables Facility, the DZ Bank Securitization, the Textron Securitization, or the
New Notes), or in respect of any Capitalized Leases in excess of $100,000 for such period of time as

-6-

 

would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof, or any such holder or
holders shall rescind or shall have a right to rescind the purchase of any such
obligations;

     (g) an event of default shall occur under the DZ Bank Securitization, the Textron
Securitization, the Textron Facility, the CapitalSource Facility, the Resort Funding
Facility, the New Notes or the Inventory and Receivables Facility;”

     2.15. Amendment to Section 12.4 of the Credit Agreement. Section 12.4 of the Credit Agreement
is hereby amended and restated in its entirety as set forth below:

     “12.4. Standby Servicer. Upon an Event of Default, the Agent may, without
demand or notice of any nature whatsoever, terminate any then existing servicing agreement
and replace any then existing servicer with the Standby Servicer or such other servicer as
the Agent may select in its sole and absolute discretion. Upon an Event of Default, at the
election of the Agent, the Borrower agrees that the Standby Servicer or such other servicer
as the Agent may select in its sole and absolute discretion may assume control over the
servicing of the Consumer Loan Collateral or any other consumer loans pledged to the Agent,
reporting to the Banks.”

     2.16. Amendment to Schedules to the Credit Agreement. Exhibits A, B and C to this Amendment
shall be attached to the Credit Agreement as Schedule 1.1(f), Schedule 1.1(g) and Schedule 1.1(h),
respectively.

     3. Representations and Warranties; No Default. The Borrower hereby represents and
warrants to the Banks and the Agent as follows:

     (a) Representations and Warranties in Credit Agreement. Each of the
representations and warranties of the Borrower contained in the Credit Agreement, as
amended by this Amendment, or in any document or instrument delivered pursuant to or in
connection with the Credit Agreement (including, without limitation, this Amendment) are
true as of the date hereof and no Default or Event of Default has occurred and is
continuing.

     (b) Authority, No Conflicts, Etc. The execution, delivery and performance of
this Amendment (i) are within the corporate authority

-7-

 

of the Borrower, (ii) have been duly
authorized by all necessary corporate proceedings on behalf of the Borrower, (iii) do not
conflict with or result in any material breach or contravention of any provision of law,
statute, rule, or regulation to which the Borrower is subject or any judgment, order, writ,
injunction, license, or permit applicable to the Borrower so as to materially adversely
affect the assets, business, or any activity of the Borrower, and (iv) do not conflict with
any provision of the corporate charter or bylaws of the Borrower or any agreement or other
instrument binding upon the Borrower. The execution, delivery, and performance of this
Amendment will result in a valid and legally binding obligation of the Borrower enforceable
against it in accordance with the terms and provisions hereof.

     4. Effect of Amendment. Except as expressly set forth herein, this Amendment does not
constitute an amendment or waiver of any term or condition of the Credit Agreement or any other
Loan Document, and all such terms and conditions shall remain in full force and effect and are
hereby ratified and confirmed in all respects. Nothing contained in this Amendment shall be
construed to imply a willingness on the part of the Agent or any Bank to grant any similar or other
future amendments of any of the provisions of the Credit Agreement or the other Loan Documents.
Nothing contained herein shall in any way prejudice, impair or otherwise adversely affect any
rights or remedies of the Agent and the Banks under the Credit Agreement or any other Loan
Document.

     5. Counterparts. This Amendment may be executed in any number of counterparts, each
of which taken together shall constitute one agreement.

     6. Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto.

     7. Governing Law. THIS AMENDMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID STATE OF
NEW YORK. THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AMENDMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING

-8-

 

MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN §18 OF THE CREDIT AGREEMENT. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

[Remainder of page intentionally left blank.]

-9-

 

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date
first above written.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	SILVERLEAF RESORTS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/S/ HARRY J. WHITE, JR.
	 

	 	 	 	 
	 	 	Name: Harry J. White, Jr.
	 	 	Title: CFO
	 
	 	 	 	 
	 	 	AGENT AND BANK:
	 
	 	 	 	 
	 	 	SOVEREIGN BANK
	 
	 	 	 	 
	 

	 	By:
	 	/S/ JOHN BAER
	 

	 	 	 	 
	 	 	Name: John Baer
	 	 	Title: Vice President

Exhibits attached to Agreement and not filed herewith:

Exhibit A: Schedule 1.1(f) Negative Pledges

Exhibit B: Schedule 1.1(g) CapitalSource Documents

Exhibit C: Schedule 1.1(h) Resort Funding Documents

-10-

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