Exhibit 10.25
EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS EMPLOYMENT AND NONCOMPETE AGREEMENT ("Agreement"), made and entered
into as of the _____ day of January, 1997, by and between XXXXX X. XXXXXX, an
individual resident of Charlotte, North Carolina ("Employee") , and PCA
INTERNATIONAL, INC., a North Carolina corporation with its principal executive
offices located in Matthews, North Carolina (the "Company").
IN CONSIDERATION, of the promises and the mutual covenants contained
herein, 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 a Senior Vice President, subject to the order,
supervision and direction of the Chief Operating Officer of the Company (the
"COO"), or another officer of the Company as determined by the Chief Executive
Officer (the "CEO").
2. Duties. Employee shall serve the Company as a Senior Vice President 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 COO. Employee shall act at all
times in compliance, in ail 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 COO 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 one (1) year 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
accordance with the Company's normal payroll practices, 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 COO and CEO and
adjusted upward as Employee's performance, the performance of the Company and
other pertinent factors warrant.
5. Termination Without Cause.
(a) The Board of Directors or the CEO may terminate Employee's
employment at any time, without cause. In the event of a termination during,
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at the end of, or after the Term of Employment, other than a Termination for
Cause, as hereinafter defined, the Company will pay to Employee as severance One
Hundred Ninety Five Thousand and No/100 Dollars ($195,000.00) $70,000.00 of
which shall be payable within 15 days following termination and $125,000.00 of
which shall be payable in twelve (12) equal consecutive monthly installments
beginning with the month following the month of termination. Such payments shall
be made in accordance with the Company's normal payroll practices, subject to
applicable federal and state income and social security tax withholding
requirements.
(b) Employee understands and agrees that this Agreement will not be
renewed at the end of the Term of Employment. In the event the Company does not
offer employment to Employee at the end of the Term of Employment or at any time
thereafter upon the same or better terms and conditions as set forth herein,
such event shall be deemed a termination other than a Termination for Cause and
Employee shall be paid the severance set forth in subparagraph (a) above.
(c) In the event Employee decides to terminate his employment with the
Company during the Term of Employment the Company will pay Employee $70,000.00
within 15 days following such termination.
(d) In the event Employee decides to terminate his Employment with the
Company at any time after the Term of Employment, the Company will pay Employee
$70,000.00 within 15 days following such Termination and $125,000 in twelve (12)
equal consecutive monthly installments beginning with the month following the
month of termination. Such payments shall be made in accordance with the
Company's normal payroll practices, subject to applicable federal and state
income and social security tax withholding requirements.
(e) The provisions of subparagraphs (b) and (d) shall survive the end of
the Term of Employment.
(f) In the event any of the monthly payments due hereunder shall become
more than three (3) months past due, Employee shall have the option to
accelerate the remaining payments due hereunder so that they shall be due and
payable in full.
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 due to an insured disability,
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
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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 subject to the provisions of Section 2 hereof, 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 during the Term of Employment.
(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 vested stock option grants and the payment to
Employee of $70,000.00 within 15 days following such Termination for Cause. The
provisions of this subparagraphs (c) shall survive the end of the Term of
Employment.
(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, Bonus and Tenure. 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. Employee shall have the right to fully
participate in any bonus program to the same extent as that provided to other
Senior Vice Presidents or other similarly situated executives. For all purposes
related to Employee's tenure as an employee, his tenure at American Studios,
Inc. shall be added to his tenure at the Company.
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 that are consistent with Company policies and practices, are
reasonably related to the business of the Company and have been approved,
generally or specifically, verbally or in writing, by the COO or 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.
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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 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. or any subsidiary thereof ("Wal-Mart");
4. any affiliate of Wal-Mart, including without limitation Sam's
Wholesale Club, HYPERMART*USA and Wal-Mart SuperCenters (a "Wal-Mart
Affiliate");
5. KMart Corporation or any subsidiary thereof ("KMart");
6. any affiliate of KMart, including without limitation KMart
SuperCenters (a "KMart Affiliate");
7. PETsMART, Inc. or any subsidiary thereof ("PETsMART");
8. any affiliate of PETsMART (a "PETsMART Affiliate");
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9. any current or prospective institutional customer ("Institutional
Customer");
10. CPI Corp.;
11. Lifetouch National School Studios, Inc.;
12. any Wal-Mart store that does business with the Company during the
Term of the Covenants;
13. any Wal-Mart Affiliate store that does business with the Company
during the Term of the Covenants;
14. any Wal-Mart store with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
15. any Wal-Mart Affiliate store with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
16. any PETsMART store that does business with the Company during the
Term of the Covenants;
17. any PETsMART Affiliate store that does business with the Company
during the Term of the Covenants;
18. any PETsMART store with which the Company previously conducted
business but no longer conducts business or the Board of Directors
reasonably expects to do business during the Term of the Covenants;
19. any PETsMART Affiliate store with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
20. any Institutional Customer with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
21. any KMart store that does business with the Company during the Term
of the Covenants;
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22. any KMart store that does business with the Company during the Term
of the Covenants;
23. any KMart store with which the Company previously conducted business
but no longer conducts business or the Board of Directors reasonably
expects to do business during the Term of the Covenants;
24. any KMart Affiliate store with which the Company previously
conducted business but no longer conducts business or the Board of
Directors reasonably expects to do business during the Term of the
Covenants;
25. Xxxxx, X.X. de C.V.;
26. Aurrera, S.A. de C.V., a subsidiary of Xxxxx, X.X. de C.V.;
27. any other subsidiary of Xxxxx, X.X. de C.V.;
28. Clan Xxxxx;
29. Expressly Portraits;
30. 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 store or 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
31. 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;
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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;
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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;
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;
53. Canada;
54. Puerto Rico;
55. South America;
56. Latin America;
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57. Asia;
58. China; and
59. 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 9(b) and 9(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.
(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 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
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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 refer@ed 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 a.ssistance 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.
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
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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:
If to Employee: Xxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
If to the Company: PCA International, Inc.
000 Xxxxxxxx-Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
With copies to: Xxxxxx X. Xxxxxx
XXXXXXXX, XXXXXXXX & XXXXXX, P.A.
One Independence Center
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(000) 000-0000
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
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foregoing, no notice of change of address shall be effective until the date of
receipt hereof.
16. Stock Option Grant. Employee will be granted an option to purchase
25,000 shares of the Company's common stock on the date hereof, having an
exercise price equal to 100% of the closing price at which a share of Common
Stock trades on the date of the grant's Effective Date, all as defined in the
PCA International, Inc. 1996 Omnibus Long Term Compensation Plan (the "Plan"), a
copy of which is attached hereto as Exhibit B. Such option shall be treated as a
nonqualified stock option for federal income tax purposes. Such option shall
terminate on a date that is ten (10) years following the date of grant;
provided, however, that if Employee's employment with the Company is terminated
prior to such date such option shall terminate three (3) months following such
termination, unless such termination occurs as a result of employee's death or
disability in which event such options shall terminate twelve (12) months
following such termination. Such options shall become exercisable in five (5)
equal annual increments on each of the first, second, third, fourth and fifth
anniversaries of the date of grant.
IN WITNESS WHEREOF, Xxxxx X. Xxxxxx has set his hand and seal hereto and
PCA International, 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:
_________________________(SEAL)
XXXXX X. XXXXXX
COMPANY:
PCA INTERNATIONAL, INC.
By:____________________________
Xxxx Xxxxxx
President and 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.
