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EXHIBIT 10.21
EMPLOYMENT AGREEMENT BETWEEN
THE SOURCE INFORMATION MANAGEMENT COMPANY
AND S. XXXXXX XXXXXX
This Agreement is entered into February 6, 2001 as of February 1, 2001,
between THE SOURCE INFORMATION MANAGEMENT COMPANY, a Missouri corporation
("Company"), and S. XXXXXX XXXXXX ("EXECUTIVE").
WHEREAS, EXECUTIVE is a founder of the business of the Company and is
presently serving as Chairman and Chief Executive Officer of the Company and has
made significant contributions to the Company during the term of his employment;
and
WHEREAS, the Company and EXECUTIVE desire that EXECUTIVE continue to be
employed by the Company under the terms and conditions set forth in this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Employment. The Company hereby employs EXECUTIVE, and EXECUTIVE hereby
accepts such employment from the Company, upon the terms and conditions set
forth in this Agreement. EXECUTIVE represents that his employment by the Company
under the terms of this Agreement will not violate or result in a breach of any
agreement or obligation to which EXECUTIVE is a party or by which he may be
bound.
2. Position and Duties of EXECUTIVE. During EXECUTIVE's employment by the
Company, EXECUTIVE shall exercise the authority and perform the duties of the
Chairman and Chief Executive Officer of the Company. EXECUTIVE shall at all
times faithfully, industriously and to the best of his ability, experience and
talents, perform all of the duties of the aforementioned office and all other
duties described in this Agreement.
3. Term of Employment. The term of EXECUTIVE's employment under this Agreement
shall extend from February 1, 2001 through January 31, 2004. This Employment
Agreement may also be terminated at any time prior to the expiration of the
aforesaid term of employment upon the earlier occurrence of any of the following
events:
(a) By mutual written consent of the Company and EXECUTIVE;
(b) Immediately upon EXECUTIVE's death;
(c) By the Company, upon the permanent total disability of EXECUTIVE
which, for purposes hereof, shall be deemed to have occurred upon the first
anniversary of the date of an event resulting in a continuing condition which
prevents EXECUTIVE from discharging EXECUTIVE's principal duties hereunder;
(d) By the Company, immediately upon written notice to EXECUTIVE, for
Cause, as hereinafter defined;
(e) By EXECUTIVE, immediately upon at least thirty days' written
notice to Company, in the event of the failure of Company to maintain Employment
Conditions, as hereinafter defined.
The term "Cause" as used in this Agreement shall mean (i) the
conviction of EXECUTIVE of a felony or (ii) the material breach by EXECUTIVE of
any of EXECUTIVE's obligations under this Agreement or any other agreement
between Company and EXECUTIVE.
Notwithstanding the foregoing, an act or event shall not entitle either
party to terminate this Agreement if it is of such a nature that substantially
all detriment otherwise resulting therefrom can be cured and eliminated by
appropriate action, and the offending party causes such action to be taken,
within ten days following written notice thereof from the other party.
The Company shall be deemed not to have maintained "Employment
Conditions" for purposes of this Agreement if any of the following events or
conditions shall occur or exist: (i) the withdrawal by Company from EXECUTIVE of
any substantive part of EXECUTIVE's responsibilities, duties or authority as
previously discharged or exercised for the benefit of the Company without
EXECUTIVE's consent; (ii) the assignment by Company to EXECUTIVE of substantive
additional duties or responsibilities which are inconsistent with the duties or
responsibilities previously discharged or exercised for the benefit of the
Company, without EXECUTIVE's consent; (iii) the relocation of EXECUTIVE's
principal place of employment without EXECUTIVE's consent to a place outside the
St. Louis metropolitan area; (iv) the removal of EXECUTIVE from the office of
Chairman and Chief Executive Officer of Company without EXECUTIVE's consent; (v)
the harassment of EXECUTIVE intended, designed or which would have the
foreseeable effect of causing EXECUTIVE to resign or abandon EXECUTIVE's
employment with Company;
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or (vi) the material breach by Company of this Agreement or any other agreement
to which Company and EXECUTIVE are a party.
4. Compensation.
(a) As compensation for EXECUTIVE's services under the Agreement, the
Company shall pay EXECUTIVE, for the fiscal year beginning on February 1, 2001,
an annual base rate of compensation (the "Base Compensation") of Four Hundred
Twenty-Five Thousand Dollars ($425,000) and, for each of the fiscal years
beginning February 1, 2002 and February 1, 2003, Base Compensation of Five
Hundred Thousand Dollars ($500,000), which Base Compensation shall be payable at
such intervals as the Company pays its other senior executive employees, but in
any event, not less frequently than semi-monthly.
(b) In addition to EXECUTIVE's Base Compensation, EXECUTIVE shall be
entitled to receive a bonus (the "Annual Bonus") each year in an amount of up to
100% of EXECUTIVE's Base Compensation for such year. The Annual Bonus will have
two components and be calculated as follows:
(i) Fifty percent (50%) of the Annual Bonus (the "Business
Plan Bonus") will be based upon the Company's consolidated net income for the
fiscal year ("Actual Income") with respect to which such Bonus is to be paid as
it relates to the Company's targeted consolidated net income set forth in the
Company's business plan as approved by the Board of Directors for such fiscal
year ("Plan Income"). If the Company achieves Actual Income equal to not less
than the following percentages of Plan Income, EXECUTIVE's Business Plan Bonus
with respect to such year shall be a percentage of the maximum Business Plan
Bonus (50% of Base Compensation) to be agreed to by the Executive and the
Compensation Committee as soon as practicable after the date of this Agreement:
Actual Income Percentage of
to Plan Income Maximum Business Plan Bonus
100% 100%
90%
80%
75%
(ii) The remaining 50% of the Annual Bonus will be
discretionary with the Compensation Committee of the Company's Board of
Directors, and shall be based upon criteria established by the Compensation
Committee in consultation with the EXECUTIVE prior to or early in the fiscal
year.
5. Expenses; Fringe Benefits; Options.
(a) The Company will pay directly, or reimburse EXECUTIVE, for such
items of reasonable and necessary expense as are authorized by the Company and
incurred by EXECUTIVE in the interest of the business of the Company. All such
expenses paid by EXECUTIVE will be reimbursed by the Company upon the
presentation by EXECUTIVE of an itemized account of such expenditures,
sufficient to support their deductibility to the Company for federal income tax
purposes (without regard to whether or not the Company's deduction for such
expenses is limited for federal income tax purposes), within thirty (30) days
after the date such expenses are incurred.
(b) The Company will provide EXECUTIVE with health and life insurance
and other fringe benefits normally accorded the Company's executive officers
(which may entail employee contributions); provided, however, that the foregoing
shall not obligate the Company to continue any such benefits in force, or to
maintain such benefits at their present standards and levels, at any time as to
such class of employees. EXECUTIVE shall also be entitled to participate in all
other insurance and retirement plans, retirement benefits, death benefits,
salary continuation benefits and other perquisites and fringe benefits generally
available for the senior executive officers of The Company.
(c) The Company will, on the date this Agreement is executed, grant to
EXECUTIVE options to purchase an aggregate of 300,000 shares of the Company's
common stock (the "Option") under the Company's Omnibus Stock Option Plan at an
exercise price equal to 100% of the closing sale price reported by Nasdaq on the
date of grant. The Option will be exercisable as to 100,000 shares on the date
of grant. The Option will first become exercisable as to an additional 100,000
shares on the earlier of (i) February 1, 2002 if the closing sale price of the
Company's common stock on such date is not less than $8 per share, or (ii) on
the first trading day thereafter (not later than May 15, 2002) on which the
average of the closing sale price of the Company's common stock for five (5)
consecutive trading days is at least $8 per share; provided, however, that the
Option shall lapse and be forfeited with respect to such 100,000 shares if
neither of such conditions is satisfied by May 15, 2002. The Option will first
become exercisable as to the final 100,000
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shares on the earlier of (i) February 1, 2003 if the closing sale price of the
Company's common stock on such date is not less than $14 per share, or (ii) on
the first trading day thereafter (not later than May 15, 2003) on which the
average of the closing sale price of the Company's common stock for five (5)
consecutive trading days is at least $14 per share; provided, however, that the
Option shall lapse and be forfeited with respect to such 100,000 shares if
neither of such conditions is satisfied by May 15, 2003. The term of the Option
will be five (5) years.
6. Covenants of EXECUTIVE. EXECUTIVE covenants to and agrees with the Company
as follows:
(a) Except as required in EXECUTIVE's duties to the Company,
EXECUTIVE will not disclose or divulge to any person, entity, firm or company,
or use for EXECUTIVE's benefit or the benefit of any other person, entity, firm
or company, directly or indirectly, as the same may exist during the term of
EXECUTIVE's employment by the Company or at the date of such termination, any
knowledge, information, business methods, techniques, devices, customer lists,
supplier lists, business plans, software, programs or other data of the Company,
without regard to whether all of the foregoing matters will be otherwise deemed
confidential, material or important, the parties stipulating that as between
them, the same are important, material and confidential and greatly affect the
effective and successful conduct of the business and the goodwill of the
Company;
(b) During the term of EXECUTIVE's employment with the Company and
thereafter for a period of one (1) year, EXECUTIVE will not, in any manner,
directly or indirectly with or through any other person or entity:
(i) Solicit, divert, take away or interfere with any of the
customers, trade, suppliers, business, patronage, employees or agents of the
Company, or employ any person who was an employee of the Company at any time
during the two year period prior to the date of such employment; or
(ii) Engage, directly or indirectly, either personally or as
an employee, partner, associate, officer, manager, agent, advisor, associate,
consultant or otherwise, or by means of any corporate or other entity or device,
in competition with the business of the Company in the United States or Canada
as such business exists on the date of EXECUTIVE's cessation of employment, or
as to which the Company has formulated definitive plans, of which EXECUTIVE has
knowledge, to enter into during the term of this Agreement or as of the date of
the cessation of EXECUTIVE's employment.
(c) As consideration for the covenants contained in Section 6(a) and
(b), the Company will pay the Executive $250,000 in cash in twelve (12) equal
annual installments beginning on February 28, 2004.
(d) It is the intention of the parties to restrict the activities of
EXECUTIVE under paragraph 6(b)(ii) only to the extent necessary for the
protection of the business interests of the Company, and the parties
specifically covenant and agree that should any of the provisions thereof, under
any set of circumstances, be determined by a court having jurisdiction to be too
broad for that purpose or invalid or unenforceable for any reason, it is the
intention and agreement of the parties that such provisions shall be so
interpreted and applied by such court in such a narrower sense as shall be
necessary to make the same valid and enforceable to the maximum extent possible,
consistent with the intent of the parties expressed in this Agreement.
(e) The covenants and agreements of EXECUTIVE contained in paragraph
6(a) and (b) shall be construed as independent of any other provision of this
Agreement and given for valuable independent consideration, and the existence of
any defense, claim or cause of action against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of such covenants and agreements.
7. Documents. Upon the cessation of EXECUTIVE's employment with the Company,
for any reason, all documents, records, software, programs, models, financial
statements and projections, notebooks, invoices, statements and correspondence,
including copies thereof, relating to the business of the Company then in
EXECUTIVE's possession or under EXECUTIVE's control, whether prepared by
EXECUTIVE or others, will be left with or returned to the Company, it being
recognized and agreed that each of the foregoing constitutes property of the
Company.
8. Remedies.
(a)At the expiration of the initial term, or any extension thereof, or
the termination of this Agreement by mutual consent of the parties, the death of
EXECUTIVE or for Cause, unless otherwise agreed by the Company and EXECUTIVE,
the obligation of the Company to pay further compensation to EXECUTIVE shall
cease, provided, however, that all other obligations hereunder (including the
obligation of the Company to pay to EXECUTIVE compensation earned by Executive
through the date of such termination) of either party to the other party at the
time of such expiration or termination shall not be affected by such termination
or expiration;
(b) In the event this Agreement is terminated by the Company as a
result of the permanent total disability of EXECUTIVE, EXECUTIVE shall be
entitled to receive one-half EXECUTIVE's base compensation and full benefits
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provided for in this Agreement for a period of the shorter of (i) twenty-four
(24) months following the date of such termination or (ii) the period from the
date of such termination through January 31, 2004 plus any earned but unpaid
bonus.
(c) In the event this Agreement is terminated by EXECUTIVE as a result
of the Company's failure to maintain Employment Conditions, EXECUTIVE shall be
entitled to receive EXECUTIVE's base compensation and full benefits provided for
in this Agreement for the period from the date of such termination through
January 31, 2004 plus any accrued but unpaid bonus.
(d) The Company and EXECUTIVE agree that the following provisions shall
immediately and automatically become operational upon the occurrence of a
Hostile Change of Control (as defined in Schedule I hereto), without further
action on the part of either the Company or EXECUTIVE:
(i) In the event of the involuntary termination or significant
reduction in the position, duties or responsibilities of EXECUTIVE (a
"Termination"), EXECUTIVE shall be entitled to an additional bonus (the
"Severance Bonus"), payable within sixty (60) days of the occurrence of the
Termination, equal to the sum of (i) the aggregate of the Base Compensation that
would be earned by EXECUTIVE hereunder if he had remained in the Company's
employ from the date of such termination until January 31, 2004 (the "Remaining
Term") and (ii) an amount equal to the aggregate Annual Bonus EXECUTIVE would
have earned for the Remaining Term if all criteria for payment of the Annual
Bonus were achieved at maximum levels for each of the periods within the
Remaining Term.
(ii) All options to purchase shares of the common stock of the
Company held by EXECUTIVE pursuant to a stock option or other incentive
compensation plan of the Company ("Stock Options") shall be fully vested and
exercisable.
(iii) All restrictions on restricted stock of the Company held
by EXECUTIVE pursuant to a restricted stock or other incentive compensation plan
of the Company (the "Restricted Stock") that may result in the forfeiture of
such stock shall terminate.
(iv) All agreements with the Company by EXECUTIVE to refrain
from selling any securities of the Company shall terminate.
(e) In the event that any payment or benefit received or to be received
by EXECUTIVE in connection with a Hostile Change in Control or the termination
of EXECUTIVE's employment (whether payable pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company or any
affiliate of the Company) (the "Total Payments") would not be deductible (in
whole or in part) as a result of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), the Severance Bonus shall be reduced until no
portion of the Total Payments is caused to be not deductible as result of
Section 280G of the Code. For purposes of this limitation (i) no portion of the
Total Payments, the receipt or enjoyment of which EXECUTIVE shall have
effectively waived in writing prior to the date of payment of the Severance
Bonus, shall be taken into account, (ii) no portion of the Total Payments shall
be taken into account which, in the opinion of the Company's independent
auditors, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, (iii) the Severance Payment shall be reduced
only to the extent necessary so that the Total Payments (other than those
referred to in clause (i) or (ii)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code, and (iv) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
(f) It is expressly agreed that the breach or evasion of the terms of
this Agreement by EXECUTIVE will result in immediate and irreparable injury to
the Company, for which the payment of money damages would be an inadequate
remedy, and will authorize recourse to the equitable remedies of injunction and
specific performance, as well as to all other legal or equitable remedies to
which the Company may be entitled. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity,
by statute or otherwise. The election of any one or more remedies by the Company
shall not constitute a waiver of the right to pursue other available remedies.
(g) In the event the Company or EXECUTIVE institutes a suit at law or
in equity for the purpose of enforcing the provisions of this Agreement, the
prevailing party in any such action shall be entitled to recover reasonable
attorneys' fees and expenses and related costs and expenses, in addition to any
other judgment, award or remedy to which the prevailing party may be entitled.
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9. Severability. All agreements and covenants herein contained are severable,
and in the event any of them shall be held to be invalid by any competent court,
this Agreement shall continue in full force and effect and, subject to
subparagraph 6(c), shall be interpreted as if such invalid agreements or
covenants were not contained herein.
10. Waiver or Modification. No waiver, amendment or modification of this
Agreement or any portion hereof shall be valid unless in writing and duly
executed by the party to be charged therewith. The failure of the Company or
EXECUTIVE to exercise or otherwise act with respect to any of its or his rights
hereunder in the event of a breach of any of the terms or conditions hereof by
the other shall not be construed as a waiver of such breach, nor prevent the
Company or EXECUTIVE, as the case may be, from thereafter enforcing strict
compliance with any and all of the terms and conditions hereof.
Notices. All notices, requests, demands, consents or other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or mailed by certified, registered or Express mail, return
receipt requested, or next business day courier service (such as Federal
Express), if to the Company, to:
The Source Information Management Company
Attention: Secretary
Xxx Xxxx Xxxxx Xxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Copy to:
Members of Board of Directors
at their addresses set forth
in the records of the Company
and, if to EXECUTIVE, to:
S. Xxxxxx Xxxxxx
00 Xxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
or to such other address to which a party gives notice to the other in
accordance with this paragraph 11.
11. Construction.
(a) This Employment Agreement shall be governed by and construed under
the laws of the State of Missouri, provided that the sole and absolute venue for
purposes of suit shall be St. Louis County, Missouri, notwithstanding the place
of execution hereof or the performance of any acts under this Agreement and any
other jurisdiction.
(b) For purposes of paragraph 6, references to the Company shall
include all companies or other entities controlled by. controlling, or under
common control with the Company, whether such control is exercised through
ownership or other direction of the management or policies of any such company
or entity, and all licensees of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
THE SOURCE INFORMATION
MANAGEMENT COMPANY
By: /s/ W. Xxxxx Xxxxxxx /s/ S. Xxxxxx Xxxxxx
-------------------- --------------------
W. Xxxxx Xxxxxxx S. Xxxxxx Xxxxxx
Secretary and Chief Financial Officer
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SCHEDULE I
A Hostile Change in Control shall be deemed to have occurred as of the first
date that any of the following transactions or events occurs unless such
transaction is approved in advance by a majority of the "approved directors" (as
defined below):
(A) Any individual, corporation (other than the Company),partnership,
trust, association, pool, syndicate. or any other entity or any group of persons
acting in concert becomes the beneficial owner, as that concept is defined in
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, as the result of any one or more
securities transactions (including gifts and stock repurchases but excluding
transactions with EXECUTIVE), of securities of the Company then possessing fifty
percent (50%) or more of the voting power for the election of directors of the
Company; or
(B) "approved directors" shall constitute less than a majority of the
entire Board of Directors of the Company, with "approved directors" defined to
mean the members of the Board as of the date of this Agreement and any
subsequently elected members of such Board who shall be nominated or approved by
a majority of the approved directors on the Board prior to such election; or
(C) the Company shall have entered into a binding agreement for a Sale
of the Company, as defined below, and shall have received all required
corporate, regulatory and other approvals for consummating such transaction. For
the purposes of this subdivision (C), "Sale of the Company" shall mean (i) any
consolidation, merger or stock-for-stock exchange involving the Company or the
securities of the Company in which the holders of voting securities of the
Company immediately prior to the consummation of such transaction own, as a
group, immediately after such consummation, voting securities of the Company
(or, if the Company does not survive such transaction, voting securities of the
corporation surviving such transaction) having less than fifty percent (50%) of
the total voting power in an election of directors of the Company (or such other
surviving corporation), or (ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company to a party which is not controlled by or under
common control with the Company.
