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