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EXHIBIT 10.11
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT ("Agreement") is made as of
the 14th day of December, 1998, by and between THE SOURCE INFORMATION MANAGEMENT
COMPANY, a Missouri corporation (the "Corporation") and XXXXX X. XXXXXX
("Employee"), an individual currently residing at 00-00 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Corporation desires to employ Employee and Employee desires to
accept such employment on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises herein contained, the adequacy of which is hereby acknowledged, the
Corporation and Employee hereby agree as follows.
I. EMPLOYMENT
The Corporation employs Employee, and Employee accepts employment by the
Corporation upon all of the terms and conditions set out in this Agreement. This
Agreement supersedes Employee's Employment Agreement (the "Brand Agreement")
dated May 20, 1998 with Brand Manufacturing Corporation ("Brand"), which is
hereby terminated. Employee acknowledges and agrees that Brand has no further
obligations under the Brand Agreement.
II. POSITIONS AND DUTIES
2.1 POSITIONS. Employee shall serve as President of the Corporation during
the term of this Agreement.
2.2 DUTIES, RESPONSIBILITIES AND INVOLVEMENT. Employee will report to the
Vice Chairman and Chief Operating Officer (the "COO") of the Corporation.
Subject to direction by the COO, Employee will be an executive officer of the
Corporation with primary responsibility for the operations of the Corporation's
subsidiaries engaged in front-end fixture manufacture and design,
Source-Chestnut Display Systems, Inc., Source-MYCO, Inc., Source-U.S. Marketing
Services, Inc. and Source-Xxxxxx, Inc. (collectively, the "Front-End
Subsidiaries"). Employee shall also have such other responsibilities as may be
assigned to him from time to time by the
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COO or by the Chief Executive Officer of the Corporation that are customarily
performed by a person serving as president of a business such as the
Corporation's business.
The Board of Directors of the Corporation may change this job description
as dictated by business need, provided such change is consistent with
Employee's position as President of the Corporation.
2.3 COMMITMENT TO CORPORATION. Employee shall devote so much of Employee's
time, attention and energies to the business of the Corporation as shall be
necessary for the performance of his responsibilities hereunder, and shall not
during the term of this Agreement be engaged in any other business activity
which requires his personal time and attention whether or not such business
activity is pursued for gain, profit or other pecuniary advantage. This shall
not be construed as preventing Employee from investing Employee's assets in such
form or manner consistent with the restrictions in Section 12.1, below, as will
not require any services on the part of Employee in the operation or affairs of
the entities in which such investments are made.
2.4 COMPLIANCE. Employee agrees to abide by the Articles of Incorporation
and By-Laws of the Corporation and such reasonable rules and regulations as are
adopted from time to time by the Board of Directors of the Corporation in each
case which are not inconsistent with this Agreement and which are communicated
to Employee.
2.5 PLACE OF PERFORMANCE. Employee shall carry out his duties and
responsibilities hereunder principally in and from the High Point, North
Carolina metropolitan area. The Corporation agrees that it may not require,
for any reason whatsoever, Employee to relocate from his residence in High
Point, North Carolina to another geographic location.
III. TERM OF EMPLOYMENT
3.1 INITIAL TERM. The term of Employee's employment under this Agreement
shall commence on December 14, 1998 and continue until midnight on January 31,
2001 unless terminated as provided in this Agreement.
3.2 RENEWAL OR ADJUSTMENT. At the end of the initial term, this Agreement
may be extended, renewed or adjusted upon the mutual agreement of Corporation
and Employee.
IV. COMPENSATION
4.1 REGULAR COMPENSATION. For all services rendered by Employee in any
capacity, Employee shall be entitled to receive regular compensation at the
rate of $250,000 per annum ("Base Salary"). Such compensation shall be payable
in accordance with the Corporation's normal payroll procedures as determined
from time to time by the Board of Directors of Corporation but not less than
monthly.
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4.2 WITHHOLDING. All payments of regular compensation shall be less such
amounts as are required to be withheld by federal, state or local law.
V. BONUS
5.1 ANNUAL BONUS. Employee shall be entitled to receive an annual bonus of
$50,000 for each of the Corporation's fiscal year ending January 31, 2000, 2001
and 2002 if the aggregate earnings before interest, taxes, depreciation and
amortization ("EBITDA") of the Front-End Subsidiaries (as determined by the
Corporation's auditors) exceed $9,000,000 for such year, and an additional bonus
equal to 5% of the amount (if any) by which aggregate EBITDA of the Front-End
Subsidiaries exceeds $9,000,000 for such year, provided that such bonus shall
not exceed $250,000 in the aggregate with respect to any year. Employee may also
be entitled to participate in the Corporation's executive bonus pool based upon
his overall performance at the discretion of the CEO and the Chief Operating
Officer of the Corporation.
VI. FRINGE BENEFITS; OPTIONS
Employee shall be entitled to participate with other executive officers of
the Corporation, so long as Employee meets the applicable eligibility
requirements, in such employee fringe benefit plans as may be authorized and
adopted from time to time by the Board of Directors of the Corporation. The
Corporation may furnish, withdraw or modify such benefits for Employee as the
Board of Directors of the Corporation shall determine from time to time within
its discretion. Notwithstanding the immediately preceding sentence, Employee
will be entitled to (i) four weeks' paid vacation per year, (ii) reimbursement
for initiation fees, dues and all other membership expenses for one country club
in North Carolina which is approved by the COO and (iii) immediate participation
in the Corporation's health plan. In addition, the Corporation shall assume the
lease of the automobile currently used by Employee (or, if it is unable to
assume the lease, the Corporation will make all lease payments thereon), make
such automobile available to Employee and pay all expenses of operation and
maintenance of and insurance on such automobile.
Employee will, upon the effective date of this Agreement, receive options
to purchase an aggregate of 202,000 shares of the Corporation's common stock at
an exercise price equal to $7,813 per share (the closing sale price on the date
of this Agreement). The options shall vest as to 66,666 shares on each of
January 1, 2000, 2001 and as to 66,667 shares on January 1, 2002. In the event
of the termination of Employee's employment by Employee (other than for "Actual
Default" (as defined below) by the Corporation) or by the Corporation for
"Cause" (as defined below), all unvested options will terminate. No options
(whether vested or unvested) shall terminate or be forfeited by Employee prior
to December 13, 2008 for any other reason whatsoever. Additional options may be
granted at the discretion of the Board of Directors.
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VII. EXPENSES
Reasonable expenses for promoting the business of the Corporation including
expenses for transportation, promotion, entertainment, travel, telephone, and
similar items shall be subject to reimbursement to the extent authorized for
reimbursement by the Corporation in accordance with reasonable rules and
regulations adopted by the Board of Directors. Such expenses as are so
authorized for reimbursement shall be paid for by the Corporation or reimbursed
to Employee upon Employee's presenting to the Corporation an itemized expense
statement with respect thereto. If Employee and the Corporation agree that
Employee will move from his present location, he will be entitled to
reimbursement of all reasonable moving expenses.
VIII. DEATH OR DISABILITY OF EMPLOYEE
In the event of Employee's death during the term of this Agreement (whether
Employee is then actively engaged in the performance of services for the
Corporation or is being compensated for disability), this Agreement shall
terminate immediately and Employee's estate shall be entitled to receive from
the Corporation an amount equal to the compensation due up until the date of
Employee's death.
If at any time during the term an independent licensed physician selected
by the Board of Directors of the Corporation determines that Employee has been
or will be unable, as a result of physical or mental illness or incapacity, to
perform his duties hereunder for a period of four consecutive months or for an
aggregate of more than six months in any twelve-month period (a "Permanent
Disability"), Employee's employment hereunder may be terminated by the Board
upon 30 days' written notice to Employee. If Employee's employment is terminated
by reason of Permanent Disability, Employee shall be entitled to receive from
the Corporation only the sum of (x) the unpaid portion of the Base Salary then
in effect which has accrued to the date of termination PLUS (y) an amount equal
to six months of Employee's Base Salary.
IX. TERMINATION OF EMPLOYMENT
9.1 TERMINATION BY THE CORPORATION. The Corporation may terminate
Employee's employment pursuant to this Agreement for "Cause". For purposes
hereof, "Cause" shall mean conviction by Employee of a felony or acts of gross
negligence, fraud, embezzlement or willful misconduct by Employee in carrying
out his obligations or responsibilities to the Corporation, as determined in the
reasonable discretion of the Board of Directors of the Corporation; provided
that, in the case of termination as a result of Employee's gross negligence, the
Corporation shall give Employee thirty (30) days' written notice of such gross
negligence, and termination for Cause shall occur only if the Employee shall
have failed or refused to remedy such action within such thirty (30) day period.
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In the event of such termination by the Corporation for Cause, the
Corporation shall be obligated to continue to pay Employee the Base Salary due
Employee under this Agreement up to the termination date and Employee will be
entitled to no further compensation from the Corporation.
In the event the Corporation terminates Employee's employment pursuant to
this Agreement for any reason other than Cause, the Corporation shall be
obligated to continue to pay Employee the Base Salary and provide the benefits
due Employee under this Agreement for the balance of the scheduled term of this
Agreement and Employees shall remain eligible to receive a pro rata portion of
the annual bonus with respect to the year of termination to the extent the
EBITDA targets set forth in Section 5.1 hereof are achieved.
9.2 TERMINATION BY EMPLOYEE. Employee may terminate Employee's employment
pursuant to this Agreement in the event that the Corporation, during the term of
this Agreement, shall be in Actual Default (as defined herein) under any
provision of this Agreement, by giving written notice to the Corporation of
Employee's intention to terminate this Agreement.
In the event of any such termination by Employee, the Corporation shall
continue to pay Employee the Base Salary and provide the benefits due Employee
under this Agreement for the balance of the scheduled term of the Agreement so
long as Employee continues to perform all of Employee's duties in accordance
with the terms of this Agreement up to the termination date stated in Employee's
written notice and Employee shall remain eligible to receive a pro rata portion
of the annual bonus with respect to the year of termination to the extent EBITDA
targets set forth in Section 5.1 hereof are achieved.
9.3 COOPERATION BY EMPLOYEE. Following any such notice of termination,
Employee shall fully cooperate with the Corporation in all matters relating to
the winding up of Employee's pending work on behalf of the Corporation and the
orderly transfer of any such pending work to such other employees of the
Corporation as may be designated by the Corporation; and to that end the
Corporation shall be entitled to such full-time or part-time services of
Employee as Corporation may reasonably require during all or any part of the
period from the time of giving any such notice until the effective date of such
termination provided that Employee is compensated at the rate set forth in
Section IV hereof for such services performed.
9.4 SETTLEMENT OF ACCOUNTS. After any termination of this Agreement, all
compensation and amounts due to Employee with respect to work performed or
expenses incurred prior to the date of termination shall be reconciled with
amounts due to the Corporation from Employee (if any). Each party shall be
entitled to offset against any amounts that may be due to the other party such
amounts as are due from such other party to it or him excluding any amounts
under the contemplated Agreement and Plan of Merger to which the Corporation
will acquire by subsidiary merger U.S. Marketing Services, Inc. The parties
shall proceed expeditiously to
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accomplish the foregoing, and the resulting amount due from one party to
the other shall be paid promptly after it is determined; PROVIDED, that during
the pendency of any dispute over such resulting amount, each party shall pay to
the other all undisputed amounts.
X. FILES AND RECORDS
All files, records, documents, reports and other written instruments
concerning customers of the Corporation, including, without limitation, clients
and customers consulted, interviewed or served by Employee during the term of
this Agreement shall belong to and remain the property of the Corporation.
XI. CONFIDENTIAL INFORMATION
11.1 NONDISCLOSURE BY EMPLOYEE. Employee will not, except as authorized by
the Corporation, during or at any time after the termination of Employee's
employment with the Corporation, directly or indirectly, use for himself or
others, or disclose, communicate, divulge, furnish to, or convey to any other
person, firm, or corporation, any secret or confidential information, knowledge
or data of the Corporation or that of third parties obtained by Employee during
the period of his employment with the Corporation and such information,
knowledge or data includes, without limitation, the following:
a. Secret or confidential matters of a technical nature such as, but
not limited to, methods, know-how, formulae, compositions, processes,
discoveries, manufacturing techniques, inventions, computer programs, and
similar items or research projects involving such items;
b. Secret or confidential matters of a business nature such as, but
not limited to, information about costs, purchasing, profits, market, sales
of lists of customers; or
c. Secret or confidential matters pertaining to future developments
such as, but not limited to, research and development or future marketing
or merchandising.
11.2 SURRENDER OF INFORMATION. Employee, upon termination of his
employment with the Corporation, or at any other time upon the Corporation's
written request, shall deliver promptly to the Corporation all drawings,
blueprints, manuals, letters, notes, notebooks, reports, sketches, formulae,
computer programs and similar items, memoranda, lists of customers, and all
other materials and copies thereof relating in any way to the Corporation's
business which contain confidential information and which were in any way
obtained by Employee during the term of his employment with the Corporation
which are in his possession or under his control; and Employee will not make or
retain any copies of any of the foregoing and will so represent to the
Corporation upon termination of his employment.
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11.3 NOTIFICATION OF SUBSEQUENT EMPLOYERS. The Corporation may notify any
person, firm, or corporation employing Employee or evidencing at intention to
employ Employee as to the existence and provisions of this Agreement.
11.4 REMEDIES. Employee understands and acknowledge that such confidential
information or other commercial ideas mentioned herein are unique and that the
disclosure or use of such matters or any other secret or confidential
information other than in furtherance of the business of the Corporation would
reasonably be expected to result in irreparable harm to the Corporation. In
addition to whatever other remedies the non-breaching party and/or its
successors or assigns may have at law or in equity, each party specifically
covenants and agrees that, in the event of default under or breach of this
Agreement, the non-breaching party and/or its successors and assigns shall be
entitled to apply to any court of competent jurisdiction to enjoin any breach,
threatened or actual, by the breaching party, and/or to xxx to obtain damages
for default under or any breach of this Agreement. In the event of default
under or breach of this Agreement, each of the Corporation and Employee hereby
agrees to pay all costs of enforcement and collection of any and all remedies
and damages under this Agreement incurred by the non-breaching party, including
reasonable attorneys' fees as determined by a court of competent jurisdiction.
XII. LIMITATION ON COMPETITION
12.1 NON-COMPETITION AGREEMENT. During the period of employment and for a
period of two (2) years after expiration or termination of this Agreement, for
Cause or by Employee (other than termination by Employee pursuant to Section
9.2, above, as a result of Actual Default by Corporation), Employee shall not,
within the United States of America, directly or indirectly as an owner,
employee, consultant or otherwise, individually or collectively, acquire an
interest in (other than Employee's ownership of not more than 2% of the
outstanding equity securities of a publicly-traded company), become an employee
of or consultant to a person or entity engaged in the business of (i) designing,
manufacturing, marketing or distributing front-end fixtures for use by retail
stores or (ii) the third party billing and collecting of rebates for magazines
or other products sold at the checkout of mass market retailers. Employee agrees
that the area, in light of the character of the industry, and the duration of
this limitation are reasonable under the circumstances, considering Employee's
position with the Corporation and other relevant factors, and that in all
likelihood this will not constitute a serious handicap to Employee in securing
future employment. Notwithstanding the foregoing, in the event this Agreement
terminates upon expiration of its term (including any extension or renewal
thereof), the provisions of this Section 12.1 will terminate unless, on or prior
to such date of expiration, the Corporation shall have notified Employee in
writing of its election to extend the provisions of this paragraph for a period
of one year or two years. During the First year of any such extension, the
Corporation shall pay Employee an aggregate of $125,000, payable in equal
monthly installments as the fee for such extension. If the extension is for two
years, the Corporation shall pay Employee in the second year of such extension
an aggregate amount equal to $150,000 in equal monthly installments during the
second year of such extension.\
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12.2 NONSOLICITATION AGREEMENT. Employee will not, either during employment
or during the period of two (2) years after expiration or termination of this
Agreement, for Cause or by Employee, directly or indirectly, either for himself
or for any other person or entity, take any action or perform any services which
are designed to or in fact call upon, compete for, solicit, divert, or take
away, or attempt to divert or take away, any of the customers of Corporation or
of any subsidiary of the Corporation; this prohibition includes customers
existing at the present time or prospective or past customers solicited, sold to
or served by Corporation or any subsidiary of the Corporation during the five
(5) years prior to termination or expiration of this Agreement.
12.3 NON-HIRE AGREEMENT. Employee will not, either during employment or
during the period of two (2) years after expiration or termination of this
Agreement, for Cause or by. Employee, directly or indirectly, either for himself
or for any other person or entity, induce, employ or attempt to employ any
person who is at that time, or has been within six (6) months immediately prior
thereto, employed by the Corporation or any subsidiary of the Corporation.
12.4 REMEDIES. It is further agreed that, if Employee shall violate the
foregoing prohibitions, the Corporation shall be entitled to seek specific
performance of these covenants, and Employee shall pay all costs and attorneys'
fees, as determined by a court of competent jurisdiction, incurred by the
Corporation in enforcing the aforesaid covenants if the Corporation is
successful in so doing after a final adjudication of the matter. If any of the
foregoing covenants is not enforceable to the full extent provided, it shall be
and remain enforceable to the extent permitted by law, and a court is authorized
by the parties to modify such covenant to make it reasonable and, as so
modified, enforce it.
12.5 TERMINATION OF PROVISIONS. Notwithstanding the provisions hereof
regarding termination of this Agreement, the provisions of this Section shall
remain in full force and effect provided for hereunder.
XIII. ACTUAL DEFAULT
In the event Employee believes that the Corporation has failed to fulfill
any of its obligations under this Agreement, Employee shall give the Corporation
written notice of such default specifying the nature thereof, If within thirty
(30) days after the giving of such notice, the Corporation has failed or refused
to remedy such default, Employee may by notice in writing declare the
Corporation to be in actual default ("Actual Default") of this Agreement and
proceed in the manner otherwise provided for herein. The provisions of this
Section are intended to provide a means whereby the Corporation will have an
opportunity to cure any such alleged default before Employee shall be entitled
to attempt to terminate this Agreement. The giving of such notice and the
expiration of the thirty (30) day period provided for herein shall not, however,
prevent the Corporation from establishing that no default did in fact exist.
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XIV. GENERAL PROVISIONS
14.1 WAIVER. The waiver by either party of a breach or violation of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach hereof.
14.2 SEVERABILITY. Should any one or more sections of this Agreement be
found to be invalid, illegal, or unenforceable in any-respect, the validity,
legality and enforceability of the remaining sections contained herein shall
not in any way be affected or impaired thereby. In addition, if any section
hereof is found to be partially enforceable, then it shall be enforced to that
extent.
14.3 NOTICES. Any and all notices required or permitted to be given under
this Agreement shall be sufficient if furnished in writing and personally
delivered or sent by registered or certified mail to the last known residence
address of Employee or to Corporation, c/o The Source Information Management
Company, 00000 Xxxxxxx Xxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000 or such other place
as it may subsequently designate in writing.
14.4 GOVERNING LAW. This Agreement shall be interpreted, construed and
governed according to the laws of the State of Missouri.
14.5 SECTION HEADINGS. The section headings contained in this Agreement
are for convenience only and shall in no manner be construed to limit or define
the terms of this Agreement.
14.6 COUNTERPARTS. This Agreement shall be executed in two or more
counterparts, each of which shall be deemed an original and together they shall
constitute one and the same Agreement, with at least one counterpart being
delivered to each party hereto.
14.7 ASSIGNABILITY. The Corporation shall have the right to assign this
Agreement to a third party which purchases substantially all of the then assets
of the business formerly operated by it.
14.8 SUCCESSORS AND ASSIGNS BOUND. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
14.9 ENTIRE AGREEMENT. This is the entire and only Agreement between the
parties respecting the subject matter hereof. This Agreement may be modified
only by a written instrument executed by all parties hereto.
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14.10 INDEMNIFICATION. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was performing services under this Agreement, then the Corporation shall
indemnify Employee against all expenses (including attorneys' fees and
disbursements), judgments, fines and amounts paid in settlement, as actually and
reasonably incurred by Employee in connection therewith to the fullest extent
provided by Missouri law.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers, and Employee has executed this
Agreement as of the date first written above.
THE SOURCE INFORMATION MANAGEMENT
COMPANY
By: _______________________________
Name: S. Xxxxxx Xxxxxx
Its: Chairman & CEO
EMPLOYEE
___________________________________
XXXXX X. XXXXXX
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