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EXHIBIT 10.23
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT ("Agreement") is made as
of August 3, 2000, by and between THE SOURCE INFORMATION MANAGEMENT COMPANY, a
Missouri corporation (the "Corporation") and XXXXX XXXXXX ("Employee"), an
individual residing at 000 Xxxx Xxxx, Xxxxx Xxxxxxxx, Xxx Xxxx 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; Termination of Brand Agreement
The Corporation employs Employee, and Employee accepts employment by
the Corporation upon all of the terms and conditions set out in this Agreement.
II Positions and Duties
2.1 Positions. Employee shall serve as President/Chief Executive Officer of
Source Displays and Executive Vice President of the Corporation during the term
of this Agreement. Employee shall report directly to the Vice Chairman and Chief
Operating Officer of The Source Information Management Company ("Source").
2.2 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.
2.3 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.
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2.4 Place of Performance. Employee shall carry out his duties and
responsibilities hereunder principally in and from the New York City
metropolitan area. The Corporation agrees that it may not require, for any
reason whatsoever, Employee to relocate from his residence in the New York City
metropolitan area to another geographic location.
III Term of Employment
3.1 Initial Term. The term of Employee's employment under this Agreement
shall commence as of August 1, 2000 and continue until midnight on July 31, 2003
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 $300,000 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.
V Bonus
5.1 Signing Bonus. As an inducement to accept employment, the Employee
shall be entitled to receive immediately a signing bonus of $100,000 upon the
execution of this Agreement by Employee and the Corporation.
5.2 Guaranteed Bonus. The Employee shall be entitled to receive an annual,
guaranteed bonus of $150,000.00 for each of the Corporation's fiscal year ending
January 31, 2001, 2002 and 2003 (the "Guaranteed Bonus"). The Guaranteed Bonus
shall be due and payable thirty (30) days after the close of the Corporation's
fiscal year. The Guaranteed Bonus is not discretionary and the Employee shall be
entitled to receive the Guaranteed Bonus as long as the Employee is employed by
the Corporation on the date of payment and this Agreement is still in effect. In
the event of the termination of the Employee's employment by the Employee (other
than for "Actual Default" (as defined in Article XIII) by the Corporation) or by
the Corporation for "Cause" (as defined in Section 9.1), Employee shall forfeit
the Guaranteed Bonus. The Guaranteed Bonus shall be paid for the remaining term
of this Agreement if the Employee's employment is terminated by the Employee for
Actual Default (as defined in Article XIII) or by the Corporation for any reason
other than Cause (as defined in Section 9.1).
5.3 Discretionary Bonus. The Employee may be paid at the discretion of the
Compensation Committee of the Board of Directors an additional bonus of $100,000
for each of the Corporation's fiscal year ending January 31, 2001, 2002 and 2003
(the "Discretionary Bonus"). The Discretionary Bonus, if awarded, shall be due
and payable thirty (30) days after the close of the Corporation's fiscal year.
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, and (ii) immediate
participation in the health plan of the Corporation (or one of its affiliates)
and, thereafter, if such plan is no longer provided by the Corporation,
participation in the health plan available to and on the same basis as senior
executives of Source and its affiliates or a plan substantially comparable
thereto. In addition, the
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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.
As an inducement for Employee to work for the Corporation, Employee
will receive options to purchase an aggregate of 200,000 shares of Source's
common stock at an exercise price of $7.84 (the fair market value per share as
of August 3, 2000). The options shall vest as to 66,666 shares immediately upon
the granting of the options, another 66,666 shares on August 1, 2001, and as to
66,667 shares on August 1, 2002. In the event of the termination of the
Employee's employment by the Employee (other than for "Actual Default" (as
defined in Article XIII) by the Corporation) or by the Corporation for "Cause"
(as defined in Section 9.1), all options will terminate. If the Employee's
employment is terminated by the Employee for Actual Default (as defined in
Article XIII) or by the Corporation for any reason other than Cause (as defined
in Section 9.1) all options shall immediately vest and shall not be forfeited by
Employee prior to December 13, 2008.
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.
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 and a pro
rata portion of the annual bonus assuming all performance goals have been
achieved plus (y) an amount equal to six months of Employee's Base Salary and a
pro rata portion of the Guaranteed Bonus.
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.
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
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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 Employee shall receive the Guaranteed Bonus for such period.
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 receive the Guaranteed Bonus.
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 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;
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b. Secret or confidential matters of a business nature such as,
but not limited to, information about costs, purchasing, profits, market, sales
or 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.
11.3 Notification of Subsequent Employers. The Corporation may notify any
person, firm, or corporation employing Employee or evidencing an intention to
employ Employee as to the existence and provision of this Agreement.
11.4 Remedies. Employee understands and acknowledges 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 or (iii)
transporting front-end fixtures by truck. 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 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 or parent of the Corporation (an "Affiliate"); this
prohibition includes customers existing at the present time or prospective or
past customers solicited, sold to or served by Corporation or an Affiliate
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 an Affiliate.
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 extend 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.
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, 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
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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.
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 Delaware 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: /s/ Xxxxx Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Its: President/COO
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EMPLOYEE
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
