EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS EMPLOYMENT AND NONCOMPETE AGREEMENT ("Agreement"), made and
entered into as of the 14th day of September, 1996, by and between ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, an individual resident of Charlotte, North Carolina ("Employee"), and
AMERICAN STUDIOS, INC., a North Carolina corporation with its principal
executive offices located in Charlotte, North Carolina (the "Company").
W I T N E S S E T H
WHEREAS, the Company desires to employ Employee as an Executive Vice
President - Operations and Employee desires to be employed by the Company in
this position.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein and specifically the increase in severance pursuant
to section 5, below, over that provided in Employee's prior Agreement with the
Company, 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 9 hereof, the
Company agrees to employ Employee on an active and full-time basis, and Employee
accepts such employment, as Executive Vice President - Operations, subject to
the order, supervision and direction of the Board of Directors of the Company
(the "Board of Directors") and the Chief Executive Officer of the Company (the
"CEO").
2. Duties. Employee shall serve the Company as Executive Vice President
- Operations and shall devote his full 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 of
Directors or the CEO. 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 Directors of which Employee shall have received written
notice. The Board of Directors and the CEO 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. The term of Employee's employment by the Company
hereunder shall commence as of the date hereof and shall continue for a period
of three (3) years after such commencement date (the "Term of Employment").
4. Base Compensation. The base annual compensation rate to be paid to
Employee for the services to be rendered hereunder ("Base Rate") throughout the
Term of Employment, except to the extent adjusted as provided below, shall be
One Hundred and Twenty-Five Thousand Dollars ($125,000.00), payable in equal
biweekly installments, subject to applicable federal and state income and social
security tax withholding requirements. Employee's Base Rate may be reviewed from
time to time by the CEO and the Board of Directors or a committee thereof and
adjusted upward as Employee's performance, the performance of the Company and
other pertinent factors warrant.
5. Termination Without Cause. The Board of Directors or the CEO may
terminate Employee's employment at any time, without cause, but in the event of
a termination other than a Termination for Cause, as hereinafter defined, the
Company will pay, either in a lump sum or in 26 equal bi-weekly payments, at the
option of the Company, an amount equal to the then Base Rate to Employee as
additional compensation. In the event the Company does not offer to renew this
Agreement at the end of the Term of Employment upon the same or better terms and
conditions, such termination of this Agreement and Employee's employment shall
be deemed a termination other than a Termination for Cause.
If Employee's employment with ASI is terminated within two years following a
Change in Control Event, as defined below, or if Employee's employment by ASI is
terminated prior to a Change in Control Event at the request of any individual
or entity acquiring ownership and control of ASI, Employee shall be entitled to
receive, in a lump sum payable within ten (10) days of such termination, two (2)
times the Employee's then Base Rate as additional compensation.
Each of the following events shall constitute a Change in Control Event:
o Any person or entity of whatsoever nature, including without
limitation an individual, corporation, partnership, limited liability
company or trust, either singly or together with that person's or
entity's affiliates or associates (as "affiliate" or "associate" are
defined in connection with Rule 12b-2 of the Securities Exchange Act of
1934) is or becomes the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of
securities of ASI representing fifty percent or more of the then
outstanding securities entitled to vote in the election of directors of
ASI and in any filing made under Section 13(d) of the Securities
Exchange Act of 1934 or otherwise states an intention to acquire or
exercise
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control of ASI or to otherwise influence management.
o A public announcement is made of a tender or exchange offer by any
person or entity, including without limitation an individual, company,
corporation, partnership, limited liability company or trust, for fifty
percent or more of the outstanding shares of ASI entitled to vote in
the election of directors, and the Board of Directors approves or fails
to oppose that tender or exchange offer in its statements in Schedule
14D-9 under the Exchange Act.
o The stockholders of ASI approve a merger or consolidation of ASI with
any other corporation or partnership (or, if no such approval is
required, the consummation of such a merger or consolidation of ASI),
other than a merger or consolidation that would result in the
securities of ASI entitled to vote in the election of directors
outstanding immediately before the consummation thereof continuing to
represent (either by remaining outstanding or by being converted into
voting shares of the surviving entity or of a parent of the surviving
entity) fifty percent or more of the combined voting power of the
voting shares of the surviving entity (or its parent) outstanding
immediately after that merger or consolidation.
6. Termination for Cause.
(a) The Board of Directors or the CEO shall have the right at
any time, without advance notice, to terminate Employee's employment for cause,
as hereinafter defined ("Termination for Cause").
(b) Termination for Cause shall mean termination because of
Employee's death, inability to perform his duties hereunder, theft from the
Company, embezzlement of the Company's funds, falsification of the Company's
records, fraud committed against the Company, commission 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 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 of Directors, the CEO or other officer of the Company designated by the
CEO, or material breach of any provision of this Agreement, including without
limitation voluntary termination of this Agreement.
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(c) 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 COBRA, rights under stock option grants.
(d) The provisions of Section 9 hereof shall continue to be
binding on the parties hereto notwithstanding the termination without cause or
Termination for Cause of Employee.
7. Fringe Benefits. Employee shall be entitled to receive such fringe
benefits, including vacation and employee benefit plans, if any, as are set
forth on Exhibit A hereto.
8. Expenses. 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 reasonably related to the business of the Company and have
been approved, generally or specifically, verbally or in writing, by the CEO.
9. 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 9 shall mean the provision of portrait photography services through
itinerant or traveling
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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 9
(all of the covenants of Employee set forth in this Section 9, 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:
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.;
4. any affiliate of Wal-Mart Stores, Inc., including without limitation
Sam's Wholesale Club, HYPERMART*USA and Wal-Mart SuperCenters
("Wal-Mart Affiliate");
5. PCA International, Inc.;
6. CPI Corp.;
7. Lifetouch National School Studios, Inc.;
8. any Wal-Mart Stores, Inc. store that does business with the Company
during the Term of the Covenants;
9. any Wal-Mart Affiliate store that does business with the Company
during the Term of the Covenants;
10. any Wal-Mart Stores, Inc. store with which the Board of Directors
reasonably expects to do business during the Term of the Covenants;
11. any Wal-Mart Affiliate store with which the Board of Directors
reasonably expects to do business during the Term of the Covenants;
12. the Wal-Mart Stores, Inc. stores and Wal-Mart Affiliate stores with
which the Company is doing business as of the date of this Agreement;
13. ▇▇▇▇▇, ▇.▇. de C.V.;
14. Aurrera, S.A. de C.V., a subsidiary of ▇▇▇▇▇, ▇.▇. de C.V.;
15. any other subsidiary of ▇▇▇▇▇, ▇.▇. de C.V.;
16. 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 Stores, Inc. store or
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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
17. 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;
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;
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41. The State of South Carolina;
42. The State of South Dakota;
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; or
53. 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 10(b) and 10(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 relationship between the Company, or any of its subsidiaries or
affiliates, and any of such suppliers, customers, government bodies or public
agencies, unless directed by the Board of Directors of the Company to so do.
(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
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damages.
(g) If any court determines that any provision of this Section
9, or any part thereof, is invalid or unenforceable, the remainder of this
Section 9 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 9, 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 9 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 litigation or controversy in
connection with his inventions, patent applications, or patents, all expenses
incident thereto to be assumed by the Company.
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10. Governing Law. This Agreement shall be construed and governed under
the laws of the State of North Carolina.
11. 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.
12. 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 9 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.
13. 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.
14. 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.
15. 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:
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If to Employee: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company: American Studios, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
With copies to: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party hereto may designate by complying with the
provisions of this Section 15.
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.
IN WITNESS WHEREOF, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ has set his hand and seal hereto
and American Studios, 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:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Company:
AMERICAN STUDIOS, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
-----------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
CEO
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EXHIBIT A
FRINGE BENEFITS
1. Employee shall be entitled to twenty (20) days paid vacation during
the first year of employment and twenty (20) days paid vacation each year of
employment thereafter. Vacation time is not cumulative.
2. Employee shall be entitled to sick leave in accordance with the
plans and procedures established by the Board of Directors.
3. Employee shall be entitled to such life insurance and disability
insurance or other disability benefits, if any, as are provided by the Company
to its employees from time to time.
4. Employee shall be entitled to receive benefits as are afforded to
other similarly situated employees.
