EXHIBIT 10.3
EMPLOYMENT AND NON-COMPETE AGREEMENT
This Employment and Non-Compete Agreement (the "Agreement"), is made as
of this 8th day of March, 2001 by and between JDK ENTERPRISES, INC. (the
"Company") and XXXXXXX X. XXXXXX ("Employee").
RECITALS:
A. Employee is currently an employee of the Company;
B. Simultaneously with the execution of this Agreement, the Company,
all of the individual shareholders of the Company, United American Companies,
Inc. ("UAC") and JDK Acquisition Corp. (a wholly-owned subsidiary of UAC) have
entered into that certain Merger Agreement (the "Merger Agreement").
C. Subject to the consummation of the transactions contemplated by the
Merger Agreement (the "Closing"), the Company and Employee desire to enter into
this Agreement to set forth the terms of Employee's employment relationship with
the Company.
NOW, THEREFORE, for and in consideration of the compensation and
benefits to be provided to Employee by the Company hereunder, the services and
the covenant not to compete provided herein by Employee, and other good and
valuable consideration, the parties agree as follows:
1. Definitions.
(a) "Company Customer" means (i) any person, firm, corporation
or other entity which at the time of the termination of the Term of Employment
was, or within one (1) year prior thereto had been, a customer of Company in
connection with any Competitive Activity (defined below), or (ii) any person,
firm, corporation or other entity which the Company has targeted and contacted
in the three (3) months immediately preceding the termination of Employee's
employment for the purpose of establishing a customer relationship in connection
with any of the Competitive Activity referred to above.
(b) "Competitive Activity" means the wholesale or retail sale
of mens, ladies and childrens apparel.
(c) "Confidential Information" means any information or
material which is proprietary to the Company or UAC or designated as
Confidential Information by the Company or UAC, whether or not owned or
developed by the Company or UAC, which is not generally known other than by the
Company or UAC, and which Employee may obtain knowledge of through or as a
result of the relationship established hereunder with the Company or UAC.
Confidential Information also includes any information which the Company or UAC
obtains from any third party which the Company or UAC treats as proprietary or
designates as Confidential Information. Without limiting the generality of the
foregoing, Confidential Information includes, without limitation, the following
types of information and other information of a similar nature (whether or not
reduced to writing or still in
development): designs, concepts, drawings, ideas, inventions, specifications,
techniques, discoveries, models, data, source code, object code, documentation,
diagrams, flow charts, research, development, processes, procedures, know-how,
new product or new technology information, marketing techniques and materials,
marketing plans, timetables, strategies and development plans (including
prospective trade names or trademarks), customer names, employee lists, and
other information related to customers, pricing policies, and financial
information. Confidential Information shall not include information that (i) is
now or later becomes generally available to the public (other than as a result
of a breach of this Agreement); (ii) is independently developed by Employee
after his employment with the Company is terminated or otherwise ceases; (iii)
Employee lawfully obtains from any third party who has lawfully obtained such
information (unless Employee knows the Company and/or UAC treats such
information as confidential); or (iv) is later published or generally disclosed
to the public by the Company or UAC.
(d) "For Cause" with regard to Employee means any one of the
following, as reasonably determined by the Company's Board of Directors: (i) The
commission of any act by Employee that, if prosecuted, would constitute a
felony, or the commission of or conviction for, or the pleading by Employee of
no contest to, any crime or act of dishonesty, fraud, moral turpitude, or
discrimination or harassment; (ii) The failure by Employee (other than due to
his death or disability as addressed in Section 5(a) below) to continue to work
on a full time basis for the Company; (iii) Drug or alcohol abuse by Employee;
and (iv) The failure by Employee to perform or observe any provision of this
Agreement, and such failure has not been cured within ten (10) business days
after written notice from the Company to Employee.
2. Employment. For the Term of Employment (as defined in Section 3
below), the Company will employ Employee as Chief Operating Officer ("COO") or
in a substantially similar position relative to the Company's business. Employee
shall devote his full business time and best efforts to rendering services on
behalf of the Company. Employee shall perform such duties as are concomitant
with the position as set forth above or as otherwise determined by the Board of
Directors of the Company. The Company shall not require Employee to relocate his
personal residence outside of Alamance County, North Carolina; provided,
however, the Company may require Employee to travel from time to time on
business related trips outside of North Carolina.
3. Term of Employment. The term of Employee's employment with the
Company hereunder shall commence upon the date of Closing (the "Closing Date")
and shall terminate sixty (60) months from the Closing Date, unless terminated
earlier pursuant to Section 5 below (the "Term of Employment").
4. Compensation for Employment Duties. During the Term of Employment,
Employee will be entitled to receive the following compensation and benefits in
consideration of his duties as stated in Section 2 above:
(a) Base Salary. The Company agrees to pay Employee an annual
salary of $93,000.00 (the "Base Salary") payable on normal payroll payment
dates. The Base Salary may be increased by the Company's Board of Directors from
time to time based upon Employee's performance and the performance of the
Company. The Base Salary shall remain at least this amount provided gross
revenues and/or
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net profits of the Company do not fall below the Company's gross revenues and/or
net profits as reflected in the Company's 2001 year end financial statements.
All payments are subject to such deductions and withholdings as required by law
and under Company policy or practice.
(b) Bonuses. Employee will be eligible to receive a
discretionary bonus to be determined by the Company's Board of Directors, which
will be based upon increases over budget for gross revenues, EBITDA and free
cash-flow available to UAC.
(c) Employee Benefits. Employee will be entitled to
participate (or continue to participate as the case may be) in employee benefits
programs provided and made available to all salaried employees at the Company
(the "Employee Benefits"). Employee may participate in any similar plan adopted
by UAC to the extent permitted by and subject to: (i) applicable law, (ii) the
terms and conditions of the Company's current benefits programs, and (iii) the
terms and conditions of any employee benefits programs adopted by UAC.
(d) Stock Options. As soon as practicable following the
Closing, Employee will be granted stock options to purchase 100,000 shares of
UAC common stock pursuant to a Stock Option Plan to be adopted by the Board of
Directors of UAC, with such terms, conditions, and restrictions, including
exercise price and vesting schedule, as determined by the UAC Board of
Directors.
(e) Expenses. The Company shall reimburse Employee for all
reasonable business expenses incurred by Employee in connection with the
business of the Company subject to compliance with the expense reimbursement
policies of the Company and in sufficient detail to comply with Internal Revenue
Services regulations.
5. Termination and Severance.
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(a) The Term of Employment shall terminate automatically if
Employee dies or becomes totally disabled from performing his job
responsibilities for a period of six (6) months or more, whereupon Employee (or
his estate) will be entitled to all Base Salary and Employee Benefits which have
accrued through the date of death or such disability.
(b) The Company may at any time, without advance notice,
terminate the Term of Employment subject to the following:
(1) In the event of a termination not For Cause,
Employee shall receive (i) all Base Salary and Employee Benefits accrued through
the date of Employee's termination, and (ii) one year's Base Salary payable as
severance in equal installments based on normal payroll payment dates or sooner
in the discretion of the Company's Board of Directors (items (i) and (ii) herein
are collectively referred to as the "Severance Payment"). Notwithstanding
anything herein to the contrary, on the date of Employee's termination not For
Cause, Employee expressly acknowledges that the Company shall have no further
obligation to provide any payments to Employee other than the Severance Payment
and such other payments, if any, required under any of the Company's employee
benefit plans in which the Employee is participating on the date the Employee's
employment with the Company is terminated not For Cause.
(2) In the event of a termination For Cause, Employee
shall receive all Base Salary and Employee
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Benefits accrued through the date of Employee's termination. Employee expressly
acknowledges that upon Employee's termination For Cause, the Company shall have
no further obligation to provide any payments other than accrued but unpaid Base
Salary and Employee Benefits and such other payments, if any, required under any
of the Company's employee benefit plans in which the Employee is participating
on the date the Employee's employment with the Company is terminated For Cause.
(3) All payments made pursuant to this Section 5 are
subject to such deductions and withholdings as required by law and under Company
policy or practice.
6. Advisory Committee. Within a reasonable time after the Closing, the
Board of Directors of the Company shall form an advisory committee by
designating the identity and number of individuals to serve on such committee
(the "Advisory Committee"). The Advisory Committee shall exercise such authority
as determined by the Board of Directors. The Employee shall serve on the
Advisory Committee during the Employee's employment with the Company along with
others to be named by the Board of Directors.
7. Confidential Information. Employee acknowledges that during
Employee's employment with the Company, he will have access to Confidential
Information, and Employee agrees that he will not make any unauthorized use or
disclosure, or otherwise misappropriate, such Confidential Information during
the Term of Employment or at any time thereafter.
8. Covenant Not to Compete.
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(a) Employee agrees that he will not, during the Employee's
employment with the Company (whether for the Term of Employment contemplated by
this Agreement or longer) and for a period of three (3) years after such
employment has terminated or ended (for whatever reason): (i) Solicit, encourage
or support any employee or independent contractor of the Company to terminate
his or her relationship with the Company, who has not ceased to be an employee
or independent contractor of the Company for a period of three (3) years; (ii)
Solicit, encourage or support any supplier of goods or services to the Company
to discontinue doing, reduce the amount of, or transfer all or part of its
business with the Company or otherwise interfere or attempt to interfere with
any business relationship between the Company or any of such suppliers, (iii)
Solicit, encourage or support any Company Customer to discontinue doing, reduce
the amount of or transfer all or part of its business with the Company; or (iv)
Engage in any Competitive Activity within the United States as an employee,
agent, officer, consultant, adviser, director, or owner of any interest in
(except for ownership of a minor percentage of stock in a "public" competitor)
any entity that engages in any Competitive Activity, or provide any financing or
other credit enhancement related thereto.
(b) Employee acknowledges that all of the provisions of this
Section 8 are fair and necessary to protect the interests of the Company.
Employee acknowledges and agrees that irreparable injury will result to the
Company from any breach of this Section 8, and that there is no adequate remedy
at law to redress a breach or threatened breach. As a result of the foregoing,
Employee acknowledges and agrees that the parties seeking to enforce any
provisions of this Section 8 shall be entitled to an injunction or other
equitable relief against him to restrain him from such breach; provided that
nothing contained herein shall prohibit the Company, or any of its subsidiaries
or affiliates, from
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pursuing any other remedy it may have. Such injunctive relief shall not preclude
the Company from recovering whatever damages it can establish.
(c) Notwithstanding anything herein to the contrary, the
Employee shall not be subject to the provisions of paragraphs (a) and (b) of
this Section 8 if the Company fails to timely satisfy all payments to the
Employee required by Section 5(b)(2) of this Agreement; provided, however, a
waiver to any such payments by the Employee shall not be construed as relieving
the Employee from complying with paragraphs (a) and (b) of this Section 8 unless
the Board of Directors expressly consent in writing to such waiver.
9. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand (with written confirmation of receipt), (ii)
three (3) days following deposit in the United States Mail, with proper postage,
or (iii) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the addresses as
set forth below (or to such other addresses as a party may designate by notice
to the other parties):
EMPLOYEE:
--------
Xxxxxxx X. Xxxxxx
-------------------------
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COMPANY: JDK Enterprises, Inc.
--------
c/o United American Companies, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
10. Surrender of Materials Upon Termination. Promptly upon termination
of Employee's employment with the Company, whether voluntary or otherwise,
Employee shall surrender to the Company all property belonging to the Company,
including, but not limited to, Confidential Information, equipment and supplies,
records, notes, materials, drawings, photographs, computer-generated or
computer-retrievable data, computer programs, customer lists, and other writings
or recordings of any kind relating to the actual or anticipated business of the
Company or to Confidential Information. Employee agrees that Employee shall have
no proprietary interest in any work product developed or used by Employee and
arising out of employment by the Company or prior ownership of the Company.
11. Severability. If for any reason the provisions of any portion of
this Agreement shall be declared invalid or unenforceable, the invalid or
unenforceable provision or provisions shall to that extent be deemed removed and
the remaining provisions shall continue to be enforced according to their terms.
Any provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
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12. Entire Agreement. This Agreement is intended to be the final
expression of the Company's agreement and is the full and complete statement of
the terms and conditions thereof, notwithstanding any representation or
statement to the contrary made by or on behalf of the Company. The Company and
Employee agree that any and all prior agreements (oral or written) between the
Company and Employee are hereby revoked. This Agreement may be modified or
amended only by written instrument signed by each of the parties.
13. Survival of All Covenants. Notwithstanding any provision of this
Agreement to the contrary, if the employment of the Employee with the Company
hereunder is terminated or ended for any reason, the provisions and covenants of
this Agreement shall nevertheless remain in full force and effect in accordance
with their respective terms and shall be enforceable in law and/or equity after
Employee's termination.
14. Assignment; Successors and Assigns. In no case shall Employee
assign any of his rights or obligations under this Agreement. Subject only to
the preceding sentence, this Agreement shall be binding in all respects upon,
and inure to the benefit of, the successors and assigns of the parties.
15. Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of North Carolina without giving effect to
its choice of law principles or provisions.
16. Condition Precedent. The effectiveness of this Agreement and the
obligations hereunder is specifically contingent upon the Closing.
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IN WITNESS WHEREOF, the undersigned hereby executed this Employment and
Non-Compete Agreement as of the day and year first above written.
COMPANY:
JDK ENTERPRISES, INC.
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
[CORPORATE SEAL]
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxx (SEAL)
-----------------------------------
Xxxxxxx X. Xxxxxx, Individually
