EXHIBIT 10.11(a)
EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS EMPLOYMENT AND NONCOMPETE AGREEMENT ("Agreement"), made and entered
into as of the ____ day of ________, 1998, by and between XXXX XXXXXX, an
individual resident of Charlotte, North Carolina ("Employee"), and PCA
INTERNATIONAL, INC., a North Carolina corporation with its principal
executive offices located in Matthews, North Carolina (the "Company").
BACKGROUND STATEMENT
On June 9, 1997, Employee and the Company entered into an Employment and
Noncompete Agreement (the "Prior Employment Agreement"). The Prior
Employment Agreement has terminated in accordance with paragraph 5(a)(iii)
thereof and Employee has been paid the amounts due thereunder. The Company
now desires to ensure that the services of Employee will continue to be
available to it on a mutually satisfactory basis. In the course of his
employment with the Company, Employee has had access to trade secrets and
proprietary information of the Company and will, as an employee of the
Company, continue to have access to trade secrets and proprietary information
of the Company. Accordingly, Employee has and will continue to acquire the
knowledge and ability to compete with the Company. The Company has offered
Employee an employment agreement on the terms and pursuant to the conditions
hereof, including the stability and security provided to Employee by the
arrangement provided for herein. The parties agree that the execution and
delivery of this Employment Agreement is a condition precedent to the
benefits extended to Employee hereunder. Employee agrees that the benefits
provided for herein are adequate and sufficient consideration for the
covenants made by Employee hereunder, including, without limitation, the
covenants not to compete.
IN CONSIDERATION of the promises and the mutual covenants contained
herein, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions stated herein, and
in consideration of Employee's obligations and covenants, including without
limitation, those obligations and covenants set forth in Section 6 hereof,
the Company agrees to employ Employee on an active and full-time basis, and
Employee accepts such employment, as President, Chief Executive Officer and a
member of the Board of Directors, subject to the order, supervision and
direction of the Board of Directors of the Company (the "Board").
2. Duties. Employee shall serve the Company as President, Chief
Executive Officer and a Director and shall devote substantially all of his
business time, skill and best efforts to the business of the Company and
faithfully perform such executive, administrative and supervisory duties as
may be prescribed by the Board. Employee shall act at all times in
compliance, in all material respects, with all policies, rules and decisions
adopted from time to time by the Board of
which Employee shall have received written notice. The Board shall deal with
the Employee in good faith and shall not require that Employee be required to
relocate his residence, travel to the extent that he must spend more nights
away from home than are reasonably required to further the Company's
business, or perform tasks which would be demeaning or degrading to one in
his position.
3. Term of Employment; Evergreen Provisions. (a) The term of
Employee's employment by the Company hereunder shall commence as of the date
hereof, _______, 1998, and shall continue for a period of four (4) years
after such commencement date or to such later date to which the term of this
Agreement may be extended pursuant to this Section 3 (the "Term of
Employment"). The Term of Employment shall be evergreen and shall be
extended automatically for one day effective at 5:00 p.m. of each day. As a
result, the remaining Term of Employment shall always be, and never be less
than, four (4) years.
4. Base Compensation and Benefits. (a) The annual base compensation
rate to be paid to Employee for the services to be rendered hereunder shall
be Three Hundred Fifty Thousand Dollars ($350,000.00), payable in accordance
with the Company's normal payroll practices, subject to applicable federal
and state income and social security tax withholding requirements (the "Base
Rate").
(b) Employee's Base Rate may be reviewed from time to time by the
Board and adjusted upward as Employee's performance, the performance of the
Company and other pertinent factors warrant at any time during the term of
this Agreement.
(c) Employee shall have the right to fully participate in any
Management Bonus Program to the same extent or greater than as previously
provided to Employee prior to the execution of this Agreement. Any bonus
payable to Employee under such Management Bonus Program shall be paid in a
manner consistent with the Company's past practice with respect to payment of
bonuses. Notwithstanding the foregoing, any bonus opportunity provided to
Employee under a current or future Management Bonus Program shall at least
equal an opportunity to earn up to sixty percent (60%) of the Base Rate for
the year to which such bonus relates. Any operating or financial objectives
on an annual basis related to the payment of the annual bonus award to the
Employee will be consistent with and equal to the same operating or financial
objectives for any of the Company's other senior executives.
(d) Employee shall be entitled to receive such benefits as were
afforded to Employee prior to the execution of this Agreement including but
not limited to the following:
(i) Employee shall be entitled to twenty-one (21) days of
paid vacation during each year of employment plus all Company sponsored
holidays;
(ii) Employee shall be entitled to sick leave in accordance
with the plans and policies established by the Company for all employees;
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(iii) Employee shall be entitled to such medical insurance,
life insurance and disability and salary continuation benefit programs, if
any, as are provided by the Company to its employees from time to time; and
(iv) Employee shall be entitled to participation in the
Company's 401K Plan, pension plan and/or profit sharing plans.
(e) The Company shall reimburse Employee for those expenses that are
incurred by him in connection with the performance of his duties under this
Agreement, are consistent with Company policies and practices, and are
reasonably related to the business of the Company.
5. Events of Termination. (a) The following shall be events of
termination under this Agreement: (i) termination by the Company without
cause; (ii) termination as a result of Employee's death or total disability
(as defined in the long term disability plan maintained by the Company); and
(iii) termination by the Company for Cause. The effective date for all such
terminations shall hereafter be referred to as the "Termination Date".
(b) In the event of a termination of this Agreement in accordance
with subparts (i) or (ii) above, within ten (10) business days after the
Termination Date, the Company shall pay to Employee, (or, in the event of his
death, his written designee or, if he has no written designee, to his spouse
or, if he leaves no spouse and has no written designee, to his estate,) in
cash a lump sum amount equal to forty-eight (48) months of average monthly
compensation received during the preceding five (5) year period and
calculated as follows: Employee's total cash and non-cash compensation from
the Company as reported on line one (1) of his form W-2s (total wages, tips,
and other compensation) for the five (5) calendar year period immediately
preceding the Termination Date will be divided by sixty (60) to determine an
average monthly compensation rate for the prior five (5) year period and then
such amount shall be multiplied by forty-eight (48). In addition, all
options or other rights to acquire the Company's Common Stock, $.20 par value
per share, (the "Stock") previously granted to Employee shall immediately
become fully vested without any further action on behalf of either Employee
or the Company and notwithstanding any contrary provision in any stock option
plan, agreement or similar document and Employee shall have a period
beginning on the Termination Date and ending twelve months thereafter to
exercise any stock options or right to acquire the Stock.
(c) The Board of Directors shall have the right at any time,
without advance notice, to terminate Employee's employment for cause, as
hereinafter defined ("Termination for Cause") or without cause. Termination
for Cause shall mean termination because of conviction by a court of
competent jurisdiction of theft from the Company, conviction by a court of
competent jurisdiction of embezzlement of the Company's funds, conviction by
a court of competent jurisdiction of falsification of the Company's records,
conviction by a court of competent jurisdiction of fraud committed against
the Company, conviction by a court of competent jurisdiction of a felonious
criminal act involving the Company or while engaged in conduct of the
Company's business, incompetence due to the use of or reporting to work under
the influence of alcohol, narcotics, other unlawful drugs or controlled
substances, legal incapacity, insanity, act or
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acts involving dishonesty or misconduct which have or may reasonably be
expected to have a material adverse effect on the business or reputation of
the Company, breach of fiduciary duty to the Company, willful and substantial
failure to perform stated duties or lawful directives of the Board subject to
the provisions of Section 2 hereof, or material breach of any provision of
this Agreement.
(d) In the event of a Termination for Cause, Employee shall have
no right thereafter to receive any compensation or other benefits from the
Company, except for base salary accrued but unpaid and expenses incurred but
not repaid to Employee, in each case only until the effective date of
Termination for Cause, and COBRA and rights under vested stock option grants,
401(k), vacation plans and other accrued and vested employee benefits.
(e) The provisions of Section 6 hereof shall continue to be
binding on the parties hereto notwithstanding the termination without cause
or Termination for Cause of Employee.
6. Noncompetition, Secrecy and Inventions.
(a) Employee specifically acknowledges and agrees that his
employment with the Company will bring him in personal contact with accounts
and customers of the Company, and will enable him to acquire valuable
information as to the nature and character of the business of the Company and
the requirements of the accounts and customers of the Company. Employee
acknowledges and agrees that in the event he were to become employed by some
other employer or enter the same or similar business as the Company on his
own or in conjunction with others in competition with the Company, such
personal contacts with the customers and accounts of the Company and the
knowledge of such valuable information would give to Employee an unfair
competitive advantage.
Throughout the Term of Employment and for a period of two (2) years
thereafter (Employee's Term of Employment and the two-year period thereafter,
together, the "Term of the Covenants"), Employee shall not, directly or
indirectly, as principal, agent, manager, employee, partner, shareholder,
director, officer, consultant or otherwise, participate in or engage in the
Lines of Business, as hereinafter defined; provided, however, that Employee
may own up to one percent (1%) of the outstanding securities of any
corporation which is engaged in the Lines of Business, so long as such
securities are traded on a national securities exchange or are included in
the National Association of Securities Dealers Quotation System. "Lines of
Business" for purposes of this Section 6 shall mean the provision of portrait
photography services through itinerant or traveling operations or permanent
studios or any other portrait photography service, the processing or
developing of photographic film in connection with such provision and any
other lines of business in which the Company may engage during the Term of
Employment.
(b) In performing the covenants set forth in this Section 6 (all
of the covenants of Employee set forth in this Section 6, together, the
"Covenants Not to Compete"), Employee shall not, without limitation, during
the Term of the Covenants engage in the Lines of Business with any of the
following:
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1. any client, account or customer of the Company, or any subsidiary or
affiliate of the Company, that has done business with the Company or
such affiliate or subsidiary within two (2) years of the date of any
alleged competitive act by Employee;
2. any client, account or customer of the Company, or any subsidiary or
any affiliate of the Company, that has transacted any business with
the Company within the twelve months preceding the date of this
Agreement;
3. Wal-Mart Stores, Inc. or any subsidiary thereof ("Wal-Mart");
4. any affiliate of Wal-Mart, including without limitation Sam's
Wholesale Club, HYPERMART*USA and Wal-Mart SuperCenters (a "Wal-Mart
Affiliate");
5. KMart Corporation or any subsidiary thereof ("KMart");
6. any affiliate of KMart, including without limitation KMart
SuperCenters (a "KMart Affiliate");
7. PETsMART, Inc. or any subsidiary thereof ("PETsMART");
8. any affiliate of PETsMART (a "PETsMART Affiliate");
9. any current or prospective institutional customer ("Institutional
Customer");
10. CPI Corp.;
11. Lifetouch National School Studios, Inc.;
12. any Wal-Mart store that does business with the Company during the Term
of the Covenants;
13. any Wal-Mart Affiliate store that does business with the Company
during the Term of the Covenants;
14. any Wal-Mart store with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
15. any Wal-Mart Affiliate store with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
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16. any PETsMART store that does business with the Company during the Term
of the Covenants;
17. any PETsMART Affiliate store that does business with the Company
during the Term of the Covenants;
18. any PETsMART store with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
19. any PETsMART Affiliate store with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
20. any Institutional Customer with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
21. any KMart store that does business with the Company during the Term of
the Covenants;
22. any KMart store that does business with the Company during the Term of
the Covenants;
23. any KMart store with which the Company previously conducted business
but no longer conducts business or the Board of Directors reasonably
expects to do business during the Term of the Covenants;
24. any KMart Affiliate store with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
25. Xxxxx, X.X. de C.V.;
26. Aurrera, S.A. de C.V., a subsidiary of Xxxxx, X.X. de C.V.;
27. any other subsidiary of Xxxxx, X.X. de C.V.;
28. Xxxx Xxxxx;
29. Expressly Portraits;
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30. any employee or former employee of the Company, whose employment with
the Company terminated less than two (2) years prior to Employee's
association with such employee or former employee, within a ten-mile
radius of any Wal-Mart store or any store in which the Company has
engaged in the Lines of Business within six (6) months prior to
Employee's engaging in the Lines of Business; or
31. any person or entity in the geographic areas listed in paragraph 10(c)
hereinbelow.
(c) In performing the Covenants Not to Compete, Employee shall not,
without limitation, during the Term of the Covenants engage in the Lines of
Business in any of the following geographic areas:
1. The United States of America;
2. The State of Alabama;
3. The State of Arizona;
4. The State of Arkansas;
5. The State of California;
6. The State of Colorado;
7. The State of Connecticut;
8. The State of Delaware;
9. The District of Columbia;
10. The State of Florida;
11. The State of Georgia;
12. The State of Idaho
13. The State of Illinois;
14. The State of Indiana;
15. The State of Iowa;
16. The State of Kansas;
17. The State of Kentucky;
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18. The State of Louisiana;
19. The State of Maine;
20. The State of Maryland;
21. The State of Massachusetts;
22. The State of Michigan;
23. The State of Minnesota;
24. The State of Mississippi;
25. The State of Missouri;
26. The State of Montana
27. The State of Nebraska;
28. The State of Nevada
29. The State of New Hampshire;
30. The State of New Jersey;
31. The State of New Mexico
32. The State of New York;
33. The State of North Carolina;
34. The State of North Dakota;
35. The State of Ohio;
36. The State of Oklahoma;
37. The State of Oregon;
38. The State of Pennsylvania;
39. The Commonwealth of Puerto Rico;
40. The State of Rhode Island;
41. The State of South Carolina;
42. The State of South Dakota;
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43. The State of Tennessee;
44. The State of Texas;
45. The State of Utah
46. The State of Vermont;
47. The State of Virginia;
48. The State of Washington;
49. The State of West Virginia;
50. The State of Wisconsin;
51. The State of Wyoming;
52. Mexico;
53. Canada;
54. Puerto Rico;
55. South America;
56. Latin America;
57. Asia;
58. China; and
59. Counties in each State of the United States where the Company has
customers.
(d) As applied to the categories of persons, firms and entities and
geographic areas covered by the Covenants Not to Compete, the provisions of
paragraphs 6(b) and 6(c), respectively, shall be completely severable and
independent, and any invalidity or unenforceability thereof as applied to any
of such persons, firms or entities or geographic areas shall not affect the
validity or enforceability thereof as applied to any one or more of the other
persons, firms or entities or geographic areas.
(e) Throughout the Term of the Covenants, Employee shall not directly
or indirectly cause or attempt to cause any supplier or customer of the
Company, or any of its subsidiaries or affiliates, or any governmental body
or public agency, not to do business with the Company or such subsidiary or
affiliate or to transfer all or part of its business from the Company, or
such subsidiary or affiliate, or otherwise interfere or attempt to interfere
with any business
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relationship between the Company, or any of its subsidiaries or affiliates,
and any of such suppliers, customers, government bodies or public agencies.
(f) Employee acknowledges that irreparable injury will result to the
Company from any breach of the Covenants Not to Compete and there is no
adequate remedy at law to redress a breach or threatened breach of the
Covenants Not to Compete As a result of the foregoing, Employee agrees that
the parties seeking to enforce any of such provisions shall be entitled to an
injunction or other equitable relief against Employee to restrain him from
such breach, and Employee waives any claim or defense that the Company has an
adequate remedy at law for any such breach; provided, however, that nothing
contained herein shall prohibit the Company, or any subsidiary or affiliate
of the Company, from pursuing any other remedy it may have, including without
limiting the generality of the foregoing the recovery of damages.
(g) If any court determines that any provision of this Section 6, or
any part thereof, is invalid or unenforceable, the remainder of this Section
6 shall not thereby be affected and shall be given full effect, without
regard to the invalid portions. If any court determines that any provision
of this Section 6, or any part thereof, is unenforceable because of the
duration or geographic scope of such provision, the parties agree that such
court shall have the power to reduce the duration or scope of such provision,
as the case may be, and the parties agree to request the court to exercise
such power, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. The provisions of this Section 6 shall
survive the termination of this Agreement, for whatever reason.
(h) At all times, both during and after the termination of his
employment, Employee shall keep and retain in confidence and shall not,
without the prior written consent of the Company, disclose to any persons,
firm or corporation or otherwise use for his own benefit or the benefit of
another any of the proprietary, confidential or secret information or trade
secrets of the Company. Further, Employee and the Company agree to keep
confidential the terms and conditions of this Agreement except for such
disclosure as may be required (i) in the event of a breach of this Agreement,
(ii) compulsion by law or court order, or (iii) as may be required by any
applicable provision of law.
(i) In consideration of employment, and the compensation paid to
Employee as an employee of the Company, Employee hereby recognizes as the
exclusive property of, and assigns, transfers and conveys to, the Company
without further consideration each invention, discovery or improvement
(hereinafter collectively referred to as "inventions") made, conceived,
developed or first reduced to practice by Employee (whether alone or jointly
with others) during the Term of Employment or within one (1) year thereafter
which relates in any way to Employee's work at the Company or any of its
subsidiaries or affiliates. Employee will communicate to the Company current
written records of all such inventions, which records shall be and remain the
property of the Company. Upon request by the Company, Employee will at any
time execute documents assigning to the Company, or its designees, any such
invention or any patent application or patent granted therefor, and will
execute any papers relating thereto. Employee also will give all reasonable
assistance to the Company, or its designee, regarding any
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litigation or controversy in connection with his inventions, patent
applications, or patents, all expenses incident thereto to be assumed by the
Company.
7. Governing Law. This Agreement shall be construed and governed
under the laws of the State of North Carolina.
8. Binding Nature. Except as expressly provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and assigns. The obligations
and covenants of Employee are personal in nature and, as such, are not
assignable by him.
9. Entire Agreement; Prior Oral Agreement; Amendment. This Agreement
contains the entire agreement of the parties with respect to the matters set
forth herein and supersedes all prior written and prior or contemporaneous
oral agreements or understandings of the parties hereto. This Agreement
confirms and sets forth the prior oral agreement of the parties as to the
terms and conditions of Employee's employment by the Company stated herein,
including without limitation, the obligations and covenants of Employee set
forth in Section 6 hereof, and Employee's agreement to enter into a written
employment agreement with the Company, as of the date his employment by the
Company commenced, stating such terms and conditions. This Agreement may be
changed or amended only by an agreement in writing signed by both parties
hereto.
10. Severability, Invalidity or Unenforceability. The severability,
invalidity or unenforceability of any paragraph or part of any paragraph
herein shall not in any way affect the validity or enforceability of any
other paragraph or any part of any other paragraph.
11. Prior Agreements and Covenants of Employee. Employee hereby
warrants and represents that he is not a party to any agreement or binding
obligation, oral or written, that would prevent his employment by the
Company, and Employee's execution of this Agreement and his fulfillment of
his duties and obligations hereunder do not and will not violate the
provisions of any agreement, contract, loan document or other binding written
or oral obligation.
12. Time of the Essence. Time is of the essence.
13. Arbitration. Any dispute arising in connection with this Agreement
(other than with respect to Section 6) shall be finally and conclusively
determined in accordance with the rules of the American Arbitration
Association of Charlotte, North Carolina, whose determination shall be final
and binding on the parties, be entitled to be enforced to the fullest extent
permitted by law and be entered in any court of competent jurisdiction. Each
party shall pay all fees, costs and expenses, including legal fees and
expenses, incurred by such party in connection with any such arbitration, and
the fees, costs and expenses of any arbitrator(s) appointed or selected
pursuant to this Section 13 shall be shared equally by the parties hereto.
14. Indemnification. To the fullest extent permitted or required by
the laws of the State of North Carolina, the Company shall indemnify and hold
harmless (including the
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advance payment of expenses) Employee, in accordance with the terms of such
laws, if Employee is made a party, or threatened to be made a party, to any
threatened, pending, or contemplated suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that
Employee is or was an officer or director of the Company or any subsidiary or
affiliate of the Company, against expenses (including reasonable attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any such action, suit or
proceeding. The Company's obligations under this paragraph will survive the
termination of this Agreement for any reason whatsoever.
15. D&O Liability Insurance. During the Term of Employment, the
Company shall maintain customary directors' and officers' liability insurance.
16. Notices. Any notice, offer, acceptance or other document required
or permitted to be given pursuant to any provisions of this Agreement shall
be in writing, signed by or on behalf of the person giving the same, and (as
elected by the person giving such notice) delivered by hand or mailed to the
parties at the following addresses by registered or certified mail, postage
prepaid, return receipt requested, or by a third party company or
governmental entity providing delivery services in the ordinary course of
business, which guarantees delivery on a specified date:
If to Employee: Xxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to the Company: PCA International, Inc.
000 Xxxxxxxx-Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With copies to: Xxxxxx X. Xxxxxx
XXXXXXXX, XXXXXXXX & XXXXXX, P.A.
One Independence Center
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(000) 000-0000
or to such other address as any party hereto may designate by complying with
the provisions of this Section 16.
Such notice shall be deemed given (i) as of the date of written
acknowledgment by Employee or an officer of the Company if delivered by hand,
(ii) seventy-two (72) hours after deposit in United States mail if sent by
registered or certified mail or (iii) on the delivery date guaranteed by the
third party delivery service if sent by such service.
Rejection or other refusal to accept or inability to deliver because of
changed address of which no notice has been received shall not affect the
date upon which the notice is deemed to have been given pursuant hereto.
Notwithstanding the foregoing, no notice of change of address shall be
effective until the date of receipt hereof.
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IN WITNESS WHEREOF, Xxxx Xxxxxx has set his hand and seal hereto and PCA
International, Inc. has caused this Agreement to be executed and sealed in
its name by its duly authorized officials as of the day and year first above
written.
EMPLOYEE:
-----------------------------(SEAL)
XXXX XXXXXX
COMPANY:
PCA INTERNATIONAL, INC.
By:
---------------------------
----------------------------
Chairman of the Board
By:
---------------------------
Xxxxx X. Xxxxxx
Senior Vice President and Chief
Financial Officer
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