1
EXHIBIT 99(c)(9)
EMPLOYMENT AND NONCOMPETE AGREEMENT
THIS EMPLOYMENT AND NONCOMPETE AGREEMENT ("Agreement"), made and
entered into as of the _____ day of January, 1997, by and between J. ▇▇▇▇▇▇
▇▇▇▇, ▇▇., an individual resident of Gastonia, 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 an Executive Vice President, General
Counsel and Assistant to the Chief Executive Officer, subject to the order,
supervision and direction of the Chief Executive Officer of the Company (the
"CEO") (the "CEO").
2. Duties. Employee shall serve the Company as an Executive Vice
President, General Counsel and Assistant to the Chief Executive Officer 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 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 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").
2
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 Two Hundred and Fifty Thousand Dollars ($250,000.00), 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
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. However, in
the event of a termination during, at the end of or after the Term of
Employment, other than a Termination for Cause, as hereinafter defined, the
Company will pay in equal monthly installments the following severance:
(i) if such termination occurs during the first 12 months hereof,
the Base Rate for the balance of the term of this Employment Agreement;
(ii) if such termination occurs after the first 12 months hereof, but
prior to the end of the Term of Employment, 200% of the Base Rate. 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
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 in a lump sum within 10 days of such termination
severance equal to the Base Rate.
(c) Notwithstanding anything herein to the contrary, Employee may
terminate this Employment Agreement at any time after the first 12 months
hereof and receive the following severance:
-2-
3
(i) if such termination occurs during the second 12 months hereof,
200% of the Base Rate payable in equal monthly installments;
(ii) if such termination occurs during the third 12 months hereof,
100% of the Base Rate payable in equal monthly installments; or
(iii) if such termination occurs at any time after the first 36
months hereof, 100% of the Base Rate payable in equal monthly installments.
(d) The provisions of sub-paragraph (b) and (c)(iii), above, shall
survive the end of the Term of Employment.
(e) 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 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
-3-
4
of this Agreement, including without limitation voluntary termination of this
Agreement during the first 12 months of this Employment Agreement.
(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 and rights under vested 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, 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 Executive 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 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
-4-
5
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 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");
-5-
6
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");
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;
-6-
7
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;
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. ▇▇▇▇▇, ▇.▇. de C.V.;
26. Aurrera, S.A. de C.V., a subsidiary of ▇▇▇▇▇, ▇.▇. de
C.V.;
-7-
8
27. any other subsidiary of ▇▇▇▇▇, ▇.▇. de C.V.;
28. ▇▇▇▇ ▇▇▇▇▇;
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;
7. The State of Connecticut;
8. The State of Delaware;
9. The District of Columbia;
10. The State of Florida;
-8-
9
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;
-9-
10
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;
-10-
11
55. South America;
56. Latin America;
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
-11-
12
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 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
-12-
13
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.
(j) Notwithstanding anything herein to the contrary, any
participation in or engagement in the Lines of Business by Interactive
Solutions, Inc., a North Carolina corporation, or any successor thereto, or by
▇▇▇▇▇ ▇▇▇▇▇▇▇, a resident of North Carolina, shall be a breech of this Section
9 by Employee.
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.
-13-
14
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: J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company: PCA International, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
One Independence Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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
-14-
15
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.
16. Stock Option Grant. Employee will be granted an option to
purchase 150,000 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"). 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. Such options shall become exercisable
on the earlier of (i) the termination of this Employment Agreement by Employee,
(ii) the termination by the Company without Cause of this Employment Agreement
or (iii) in three (3) equal annual increments on each of the first, second, and
third anniversaries of the date of grant. Upon the death of Employee during
such 10-year period, the options granted hereunder shall be transferred to his
estate or as directed by his will.
IN WITNESS WHEREOF, J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. 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)
J. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
COMPANY:
PCA INTERNATIONAL, INC.
By: ______________________________
▇▇▇▇ ▇▇▇▇▇▇
President and CEO
-15-
16
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 Executive Vice Presidents or similarly situated executives.
