EXHIBIT
10.1


SEPARATION,
CONSULTING AND GENERAL RELEASE AGREEMENT


 


This Separation, Consulting and General Release
Agreement (this “Agreement”) is being entered into by and between Source
Interlink Companies, Inc. (“Source” or the “Company”) and Jason Flegel (“Flegel”)
(collectively, the “Parties”) as of the date of Flegel’s execution of this
Agreement (the “Date of this Agreement”), subject to the provisions of Section
5(b) below.


WHEREAS, Flegel was employed by the Company pursuant
to an Executive Employment Agreement dated as of February 28, 2005 (the “Employment
Agreement”);


WHEREAS, subject to the provisions of Section 5(b)
below, the Parties wish to terminate their employment relationship and the
Employment Agreement on mutually acceptable terms and conditions effective as
of October 31, 2007; and


THEREFORE in consideration of the foregoing promises
and the terms and conditions set forth below, the Parties agree as follows:


1.                  Termination.  Subject to the provisions of Section 5(b)
below, Flegel acknowledges (a) the termination of the Employment Agreement, and
(b) the termination of his employment from any and all positions within the
Company or any of its affiliates, as an employee and/or officer effective as of
5:00 p.m. on October 31, 2007 (the “Termination Date”), and hereby resigns from
such positions.  In consideration of the
foregoing, the Company shall pay to Flegel the sum of One Hundred Twenty
Thousand ($120,000) (the “Termination Fee”) which shall be payable in six equal
installments of $20,000 each on the 15th day of each calendar month
commencing on November 15, 2007 such that the final installment shall be paid
on April 15, 2008.  Subject to the
provisions of Section 4 below, Flegel understands that he is giving up any right
or claim to compensation or benefits of employment with the Company beyond the
Termination Date, including without limitation, any compensation, benefits or
other rights under the Employment Agreement, except that he shall be entitled
to the compensation and benefits provided in this Agreement.


2.                  Consulting Agreement.  Provided that Flegel timely signs and
delivers, and does not revoke, this Agreement, Flegel shall become a consultant
to the Company upon the terms set forth herein.


a.             Term.  The term of Flegel’s consulting arrangement
shall begin on the Termination Date and end on April 30, 2008, unless earlier
terminated due to Flegel’s death or disability (the “Term”).


b.             In
the event of a termination of Flegel’s consulting services for Disability or
death, the Company shall have no obligation to provide any future payments or
benefits 


 

















pursuant to this Agreement after the date of Disability or
death, except the Company shall remain obligated to pay the Termination Fee as
set forth in Section 1, any Earned but Unpaid Compensation as set forth in
Section 2(e) and any un-reimbursed expenses incurred during the Term as set
forth in Section 2(i).  For purposes of
the preceding sentence, “Disability” shall mean a determination by the Board
that Flegel has been unable to perform consulting services effectively for
thirty (30) or more consecutive days, or for sixty (60) or more days in any
calendar year. For purposes of this Section 2(b) and Section 11(c) below, “Earned
but Unpaid” with respect to the compensation provided for in Section 2(e) shall
mean that all events required to have occurred for Flegel to be entitled to
payment of compensation have occurred during the Term and within the time frame
required under Section 2(e), but the compensation has not yet been paid.


                                c.             Reporting Relationship.  Flegel shall report to James R. Gillis or
such senior-level executive(s) as James R. Gillis may designate from time to
time (the “Supervisor”).


                                d.             Duties.  The Company hereby appoints Flegel as an
independent consultant to the Company, and Flegel hereby accepts such
appointment.  During the Term, Flegel
shall provide such consulting services to the Company and its subsidiaries, as
the Supervisor may reasonably request, from time to time, in connection with
the business opportunities described in Schedule A to this Agreement.  This Agreement does not create any employment
or agency relationship between Flegel and the Company.  The relationship of Flegel during the Term
will be solely as an independent contractor to the Company.  The Company has not authorized Flegel to, and
Flegel acknowledges that he has no authority to, commit, bind or speak for the
Company, and Flegel shall not knowingly do any act which might cause any third
party to reasonably believe that Flegel has the power or authority to contract
or incur any commitment on behalf of Company, or that Flegel is an employee or
agent of Company.  Subject to Section 11
below, the Company agrees and acknowledges that Flegel shall be permitted to
have a financial interest in, work for, consult with, advise, assist or
otherwise be connected with any other business or enterprise during the
Term.  In addition, the Company agrees
that Flegel’s employment by or performance of services for or on behalf of his
father, S. Leslie Flegel (“SLF”) or another party on behalf of SLF, or the
solicitation of Flegel’s employment or service by, for or on behalf of SLF or
by another party on behalf of SLF will not be a violation of Section 13d of the
Separation, Consulting and General Release Agreement between SLF and the
Company dated November 10, 2006, and the Company shall provide a letter to SLF
to such effect. The foregoing sentence shall not constitute a consent to or
waiver of any provision of this Agreement, including those set forth in Sections
10 and 11 hereof.


                                e.             Consulting Compensation
Payments.  As compensation to Flegel for
the services to be performed by him during the Term under the consulting
arrangement with the Company, Flegel shall receive from the Company the four payments
described in Schedule A, in each case payable not later than 15 days after the
execution of the agreement or agreements which are described as being part of
the project to be completed under the applicable part of Schedule A.


 

















The Company shall have sole and absolute discretion to
determine whether or not to pursue the 
agreement or agreements which are described as being part of the project
to be completed under Schedule A and nothing in this Agreement shall be
interpreted to obligate the Company to pursue such agreement(s) or approve or
agree to any such agreement(s); provided however that the Company and Flegel
agree to deal with each other in good faith with respect to the pursuit of the
projects by the stated completion date, as is described in Schedule A.  If the Company pursues such any such
agreement or or agreements, then the Company shall have sole and absolute
discretion to accept or reject any proposed terms related thereto and to elect
not to enter into any definitive agreement(s). 
If the Company elects for any reason not to pursue any such agreement or
agreements, or pursues but ultimately elects for any reason not to enter into
definitive agreement(s) on or before the stated completion date, the Company
shall have no liability to Flegel and no obligation pay Flegel any of the
compensation payments referenced above.


                                f.              Healthcare Insurance.  During the Term, the Company shall provide
Flegel with healthcare insurance substantially similar to that provided to
Flegel immediately prior to the execution of this Agreement under and subject
to the same terms and conditions (including without limitation contribution to
premiums, deductibles, co-payments and caps) as are applicable to executive
officers generally during the Term. 
Flegel shall not be entitled to participate in the Execucare
Program.  To accomplish this provision,
the Company shall, if at all possible, provide for Flegel’s participation in
the Company’s healthcare insurance plan. In the event that the Company cannot
include Flegel in the Company’s healthcare insurance plan, the Company may
satisfy its obligations under this Section by paying a proportionate part of
Flegel’s COBRA premium so long as he remains eligible for COBRA benefits during
the Term.  Flegel may elect to continue
or commence COBRA coverage at the end of the Term.


                                g.             Except as set forth in Section
2(f), Flegel acknowledges that during the Term and as an independent
contractor, Flegel will not be eligible for or receive any benefits for which
employees of the Company are eligible. 
Notwithstanding the above, Flegel will assume responsibility and pay for
the three life insurance policies (issued by First Colony) on his life owned
and/or paid for by the Company and the Company agrees to cooperate with Flegel
to effectuate his assumption of ownership and responsibility for such policies.


                                h.             Expense Reimbursement.  The Company shall pay directly, or shall
reimburse Flegel for, reasonable and necessary expenses approved in advance by
the Supervisor and incurred by Flegel during the Term in the interest of the
business of the Company.  The Company
acknowledges that Flegel is likely to be required to travel to perform his
duties under Section 2(d) of this Agreement. 
Flegel’s travel expenses and accommodations shall be consistent with Company’s
regular practices for senior executives’ travel.  All such expenses paid by Flegel shall be
promptly reimbursed by the Company upon presentation by Flegel of an itemized
account of such expenditures, sufficient to support their deductibility by the
Company for federal income tax purposes (without regard to whether or not the
Company’s deduction for such


 


 

















expenses is limited for federal
income tax purposes), such submissions to be made within thirty (30) days after
the date such expenses are incurred.


                                i.              Accrued Vacation.  Notwithstanding Section 4.6 of the Employment
Agreement, the Company shall pay Flegel a total of $18,269.60 as full
compensation for Flegel’s unused vacation days that have accrued for 2007
through the Termination Date.  Subject to
Section 4 of this Agreement, such payment shall be paid to Flegel on the same
date as the payment of his final paycheck due under the Employment Agreement.


3.                  Sole Financial Obligation.  The compensation and benefits set forth in
Section 1 and 2 of this Agreement are the sole and exclusive financial
obligations of the Company to Flegel under this Agreement or otherwise in
connection with Flegel’s employment, consulting, or the termination of his
employment or consulting. 
Notwithstanding the above, Flegel’s rights under any applicable
retirement, deferred compensation, 401k, pension, stock, stock option or
restricted stock plan shall not be modified by this Agreement, and his rights
shall be consistent with the provisions of such plans and agreements entered
into pursuant to those plans.  Flegel
understands that, leaving aside any rights under any applicable retirement,
deferred compensation, 401k, pension, stock, stock option or restricted stock
plan and leaving aside Flegel’s right to indemnification under applicable law
and the Company’s articles and bylaws for claims brought against him arising
out of his service as an officer of the Company and its subsidiaries and
affiliates, he is otherwise giving up any and all rights and benefits of
employment.


4.                  Tax Withholding.  The Company shall withhold from any payment
or benefit under Section 2 of this Agreement any and all withholding taxes it
believes are required by applicable law, and to otherwise take all actions it
believes necessary to satisfy it obligations to pay such withholding
taxes.  With regard to payments and
benefits provided under Section 2 of this Agreement and subject to the
foregoing sentence, the Company will not withhold any state or federal FICA or
other withholding taxes, social security taxes, Medicare taxes, disability or
other insurance payments or any other taxes, assessments or payments
(collectively, “Employment Taxes”).  To
the extent applicable, the Company will issue to Flegel an Internal Revenue
Service Form 1099 at the time, in the manner and containing the information
required by the Internal Revenue Code of 1985, as amended (the “Code”).  To the extent not withheld, Flegel shall be
solely responsible for the payment of any and all Employment Taxes and any
other taxes, assessments or payments owed in connection with its receipt of
compensation paid by Company hereunder.


5.                  Release by Flegel.


a.             General Release. In exchange
for the payments and benefits provided in this Agreement, Flegel does hereby
settle, waive, release and forever discharge the Company, its parent,
subsidiary and affiliate corporations, and each of their respective past and
present parents, subsidiaries, affiliates, associates, owners, members,
stockholders, predecessors, successors, assigns, employees, agents, directors,
officers, partners, representatives, lawyers, and all persons acting by,
through, under, or in concert with them, or any of them (collectively, the “Company
Releasees”), of and from any and all manner of claims or causes of action, in
law or 


 


 

















in
equity, of any nature whatsoever, known or unknown, fixed or contingent
(hereinafter called “Claims”), that Flegel now has or may hereafter have
against the Company Releasees by reason of any and all contracts, agreements,
acts, omissions, events or facts occurring or existing prior to the date
hereof.  The Claims released hereunder
include, without limitation, any alleged breach of the Employment Agreement;
any express or implied employment agreement; any alleged torts or other alleged
legal restrictions relating to Flegel’s employment and the termination thereof;
and any alleged violation of any federal, state or local statute or ordinance
including, without limitation, Title VII of the Civil Rights Act of 1964, as
amended, 42 USC Section 2000, et  seq.; Americans with
Disabilities Act, as amended, 42 U.S.C. § 12101 et  seq.;
the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et
seq.; Age Discrimination in Employment Act, as amended, 29 USC Section
621, et  seq.; Civil Rights Act of 1866, and Civil Rights Act of
1991; 42 USC Section 1981, et  seq.; Equal Pay Act, as amended, 29
USC Section 206(d); regulations of the Office of Federal Contract Compliance,
41 CFR Section 60, et  seq.; the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. § 2101 et seq.; the Family
and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.;
the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et
seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C.
§ 1001 et  seq.; the Rehabilitation Act of 1973, as amended;
the Florida Human Relations Act; the Florida Civil Rights Act of 1992; any
applicable collective bargaining agreements; and/or any other local, state or
federal law, regulation or ordinance governing or relating to the employment
relationship.  This release shall not
apply to the Company’s obligations hereunder, to any vested retirement, 401k,
pension, stock, stock option, or restricted stock plan benefits, rights under
the Company’s Nonqualified Excess Plan effective January 1, 1997, rights under
the Company’s Deferred Compensation Plan effective July 1, 2005 or to Flegel’s
right to indemnification under applicable law and the Company’s articles and
bylaws for claims brought against him arising out of his service as an officer
of the Company and its subsidiaries and affiliates.


b.             Older Worker’s Benefit
Protection Act.


Flegel agrees and expressly acknowledges that this
Agreement includes a waiver and release of all claims which he has or may have
under the Age Discrimination in Employment Act of 1967, as amended, 29
U.S.C. § 621, et  seq. (“ADEA”).  The following terms and conditions apply to
and are part of the waiver and release of the ADEA claims under this Agreement:


                                (1)           This paragraph and this Agreement are
written in a manner calculated to be understood by him.


 


                                (2)           The waiver and release of claims
under the ADEA contained in this Agreement does not cover rights or claims that
may arise after the date on which he signs this Agreement.


 


                                (3)           This Agreement provides for
consideration in addition to anything of value to which he is already entitled.


 


                                (4)           Flegel has been advised to consult an
attorney before signing this Agreement.


 


 

















                                                                                                (5)           Flegel
has been granted twenty-one (21) days after he is presented with this Agreement
to decide whether or not to sign this Agreement.  If he executes this Agreement prior to the
expiration of such period, he does so voluntarily and after having had the
opportunity to consult with an attorney, and hereby waives the remainder of the
twenty-one (21) day period.


 


                                                                                                (6)           Flegel
has the right to revoke this general release within seven (7) days of
signing this Agreement.  In the event
this general release is revoked, this Agreement will be null and void in its
entirety.


 


If he wishes to revoke this agreement, Flegel shall
deliver written notice stating his intent to revoke this Agreement to the
Supervisor on or before 5:00 p.m. on the seventh (7th) day after the
date on which he signs this Agreement.


c.             No Assignment.  Flegel represents and warrants to the Company
Releasees that there has been no assignment or other transfer of any interest
in any Claim that Flegel may have against the Company Releasees, or any of
them.  Flegel agrees to indemnify and
hold harmless the Company Releasees from any liability, claims, demands,
damages, costs, expenses and attorneys’ fees incurred as a result of any person
asserting such assignment or transfer of any right or claims under any such
assignment or transfer from Flegel.


d.             No Actions.  Flegel represents and warrants that he is not
presently aware of any injury for which he may be eligible for workers’
compensation benefits.  Flegel agrees
that if Flegel hereafter commences, joins in, or in any manner seeks relief
through any suit arising out of, based upon, or relating to any of the Claims
released hereunder or in any manner asserts against the Company Releasees any
of the Claims released hereunder, then Flegel will pay to the Company Releasees
against whom such claim(s) is asserted, in addition to any other damages caused
thereby, all attorneys’ fees incurred by such Company Releasees in defending or
otherwise responding to said suit or Claim. 
Provided, however, that Flegel shall not be obligated to pay the Company
Releasees’ attorneys’ fees to the extent such fees are attributable to claims
under the Age Discrimination in Employment Act or a challenge to the validity
of the release of claims under the Age Discrimination in Employment Act.  Notwithstanding the foregoing, Flegel does
not limit, waive or release any (and specifically reserves) all rights and
remedies, in law and in equity, to enforce the terms of this Agreement.


6.                  No Admission.  Flegel and the Company further understand and
agree that neither the payment of money nor the execution of this Release shall
constitute or be construed as an admission of any liability whatsoever by
Flegel or the Company Releasees.  The
Company further agrees that Flegel’s performance of his duties and
responsibilities was at all times satisfactory and in accordance with the
Employment Agreement.


7.                  Severability.  The provisions of this Agreement are
severable, and if any part of this Agreement is found to be unenforceable, the
other paragraphs (or portions thereof) shall remain fully valid and
enforceable.


 

















8.                  Confidentiality.  The terms of this Agreement are to be kept
confidential by Flegel and the Company. 
Notwithstanding the foregoing, nothing shall prevent or restrict Flegel
from disclosing the terms of this Agreement to (i) immediate family and/or professionals
who advise Flegel with respect to financial or legal matters after Flegel has
obtained such persons’ agreement to respect the confidentiality provisions
herein, (ii) local, state or federal tax authorities, and/or (iii) as required
by applicable law.  The Parties
acknowledge, however, that the Company may have an obligation to disclose this
Agreement, or the terms thereof, by law and/or rule or regulation of the SEC
and/or NASDAQ and, as such, the Agreement, or the terms thereof, may not, in
fact, be kept confidential by the Company. 
Accordingly, to the extent the Company is obligated to disclose this
Agreement, or the terms thereof, Flegel shall be permitted to disclose the same
information.


9.                  No
Disparagement/Professional Conduct. 
Flegel further agrees not to disparage the Company, its products or any
Company Releasees.  Company further
agrees, as a condition to Flegel’s execution of this Agreement, not to
disparage Flegel.


10.                Protection of Confidential
Information and Property.


a.             Flegel acknowledges that, except
for information that from time to time has been properly disclosed by the
Company in public filings and announcements and commercial dealings, the
Company has or may have a legitimate need for and/or interest in protecting the
confidentiality of all information and data pertaining to the business and
affairs of the Company and its subsidiaries, including without limitation
information and data relating to (i) manufacturing operations and costs, (ii)
distribution and servicing methods and costs, (iii) merchandising techniques,
(iv) sales and promotional methods, (v) customer, vendor and personnel
relationships and arrangements, (vi) research and development projects, (vii)
information and data processing technologies, and (viii) strategic and tactical
plans and initiatives (all such information and data, other than that which has
been properly disclosed as aforesaid, being hereinafter referred to as “Confidential
Information”).


b.             Flegel acknowledges that, in the
course of his employment and consultancy, (i) he has participated and/or will
participate in the development of Confidential Information, (ii) he has been
and/or will be involved in the use and application of Confidential Information
for corporate purposes, and (iii) he otherwise has been and/or will be given
access to and entrusted with Confidential Information for corporate purposes.


c.             Flegel agrees that, during the
Term, he shall possess and use the Confidential Information solely and
exclusively to protect and advance the interests of the Company and the Company’s
controlled subsidiaries; and that at all times thereafter, he (i) shall
continue to treat the Confidential Information as proprietary to the Company,
and (ii) shall not make use of, or divulge to any third party, all or any part
of the Confidential Information unless and except to the extent so authorized
in writing by the Company or required by judicial, legislative or regulatory
process.  Flegel may use Confidential
Information in connection with the business opportunities described in Schedule
A, unless the Company notifies Flegel in writing that such use is prohibited.


 

















d.             Flegel acknowledges that during his
employment he created and/or was furnished with, and during the Term, he will
create and/or be furnished with (i) materials that embody or contain
Confidential Information (in written and electronic form) and (ii) other
tangible items that are the property of the Company and its subsidiaries.  Flegel agrees that, upon expiration, or other
termination of the Term, or sooner if the Company so requests, he shall
promptly deliver to the Company all such materials and other tangible items so
created and/or furnished, including without limitation drawings, blueprints,
sketches, manuals, letters, notes, notebooks, reports, lists of customers and
vendors, personnel lists, computer disks and printouts, computer hardware and
printers, and that he shall not retain any originals or copies of such
materials, or any of such tangible items, unless and except to the extent so authorized
in writing by the Company.


e.             Flegel agrees to inform all
prospective employers and consulting clients of the content of this Section 10
and of Section 11 of this Agreement prior to his acceptance of employment and
consulting engagements.


11.                Restrictions against
Competition and Solicitation.


a.             Flegel agrees that, during the Term
and the Restricted Period (defined in Section 11(b)(1) below), he shall not in
any way, directly or indirectly, manage, operate, control, accept employment or
a consulting position with or otherwise advise or assist or be connected with,
or own or have any financial interest in, any Competitive Enterprise (defined
in Section 11(b)(2) below).


b.             For purposes of this Section 11:


                                                                (1)           “Restricted Period” means the twenty
four (24) month period beginning on May 1, 2008;


                                                                (2)           “Competitive Enterprise” means any
person or business organization engaged, directly or indirectly, in the
business of (i) designing, manufacturing and marketing front-end fixtures,
shelving and other display equipment and accessories for use by retail stores;
(ii) distribution and fulfillment of magazines, books, pre-recorded music and
video and video games, (iii) rendering third party billing and collection
services with respect to claims for manufacturer rebates and incentive payments
payable to retailers respecting the sale of magazines, periodicals, confections
and general merchandise, and/or (iv) providing sales and marketing data
and analyses to retailers and vendors of products distributed by the Company.


 


It is understood and agreed
that Flegel shall not be deemed to violate the provisions of this Section 11
solely by virtue of his performance of the duties described in Section 2.d. of
this Agreement during the Term.


c.             Without limitation of the Company’s
rights and remedies under this Agreement or as otherwise provided by law or in
equity, it is understood and agreed between the parties that the right of
Flegel to receive any future payments otherwise due under this Agreement shall
be suspended and canceled if and for so long as he is in violation of the 


 

















foregoing
covenant not to compete, except the Company shall remain obligated to pay any
Earned but Unpaid Termination Fee as set forth in Section 1, any Earned but
Unpaid Compensation as set forth in Section 2(e), and any un-reimbursed
expenses incurred during the Term as set forth in Section 2(h).


d.             Flegel agrees further that, during
the Term and the Restricted Period, he will not, directly or indirectly, either
for himself or on behalf of any other person or entity, employ or attempt to
employ or solicit the employment or services of any person who is at that time,
or has been within six (6) months immediately prior thereto, employed by the
Company or any subsidiary of the Company.


12.                Injunctive Relief and Costs.


a.             Flegel acknowledges that any
violation of the provisions of Sections 10 and 11 of this Agreement may cause
substantial and irreparable harm to the Company and its subsidiaries (and their
constituencies), and that the nature and magnitude of the harm may be difficult
or impossible to measure precisely or to compensate adequately with monetary
damages.


b.             Flegel agrees that the Company
shall have the right to enforce his performance of and compliance with any and
all provisions of Sections 10 and 11 by seeking a restraining order and/or an
order of specific performance and/or other injunctive relief against Flegel
from a Florida court of competent jurisdiction, at any time or from time to
time, if it appears that Flegel has violated or is about to violate any such
provision.


c.             The provisions of this Section 12
are in addition to, and not in lieu of, any other rights and remedies that may
be available to the Company for breach of any portion of this Agreement.


13.                Choice of Law.  The Parties acknowledge and agree that this
Agreement shall be interpreted in accordance with Florida law without regard to conflict of laws principles.  All disputes arising under or relating to
this Agreement or the breach of this Agreement shall be brought exclusively in
the federal or state courts of Florida, only if such disputes are not subject
to arbitration under Section 19 of this Agreement.


14.                Compliance With Company
Policies.  Flegel acknowledges that
he has received and read and understands the intent and purposes of the Company’s
Code of Business Conduct and Ethics. 
Flegel shall comply with all lawful rules and policies of the Company,
as in effect from time to time.


15.                Successors and Assigns.  This Agreement shall be binding upon, and
shall inure to the benefit of, Flegel and the Company and their respective
heirs, legal representatives, successors and assigns.


16.                Effect of Business
Combination Transactions.  In the
event of the merger or consolidation of the Company with any unrelated
corporation or corporations, or of 


 

















the sale by the Company of a major
portion of its assets or of its business and good will, to an unrelated third
party, this Agreement shall remain in effect and be assigned and transferred to
the Company’s successor in interest as an asset of the Company, and the Company
shall cause such assignee to assume the Company’s obligations hereunder.


17.                Sole and Entire Agreement.  This Agreement (including the schedules
hereto) represents the sole and entire agreement among the Parties and
supersedes all prior agreements (including the Employment Agreement),
negotiations, and discussions between the Parties hereto and/or their
respective counsel.  Any agreement
amending or superseding this Agreement must be in writing, signed by duly authorized
representatives of the Parties, specifically reference this Agreement; and
state the intent of the Parties to amend or supersede this Agreement.


18.                Arbitration.  Except as provided in Section 12 regarding
the Company’s right to seek an injunction, the Parties hereby agree to submit
any claim or dispute arising out of or relating to the terms of this Agreement,
as to Flegel’s employment, or as to the termination of Flegel’s employment to
private and confidential arbitration by a single neutral arbitrator.  Subject to the terms of this Section, the
arbitration proceedings shall be governed by the rules of AAA applicable to
employment disputes as they may be in effect from time to time, and shall take
place in Miami, Florida.  The arbitrator
shall be appointed by agreement of the Parties hereto or, if no agreement can
be reached, by AAA pursuant to its rules. 
The decision of the arbitrator shall be rendered in writing and be final
and binding on all Parties to this Agreement, and judgment thereon may be
entered in any court having jurisdiction. 
The arbitrator’s fees and/or any other fees payable to AAA shall be
shared in accordance with the rules of AAA. 
The Parties shall each bear their own attorneys’ fees, witness expenses,
expert fees and other costs, except to the extent they may be awarded otherwise
by the arbitrator in accordance with applicable law.  This arbitration procedure is intended to be
the sole and exclusive method of resolving any claim between the Parties, and
each of the Parties hereby waives any right to a jury trial with respect to
such claims.


19.                Headings.  The headings in this Agreement are provided
solely for the Parties’ convenience, and are not intended to be part of, nor to
affect or alter the interpretation or meaning of this Agreement.


20.                Construction of Agreement.  Both Parties have been represented by, or had
the opportunity to be represented by counsel in connection with this
Agreement.  Any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.


21.                Counterparts.  For the convenience of the Parties hereto,
this Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.


 

















Date: 10.27.07


	
   

  	
  SOURCE INTERLINK
  COMPANIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Wm D. Bailey

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
  CAO

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


	
   

  	
  FLEGEL

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: 10.30.07

  	
  /s/ Jason Flegel

  	
   

  
	
   

  	
  Jason Flegel