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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Agreement (this "Agreement") made as of the _____ day of
____________, 1996, by and between DiMark, Inc. (the "Employer") and Xxxxxxx X.
Xxxx (the "Employee"), and Xxxxx-Xxxxx Communications, Inc., a Delaware
corporation ("Xxxxx-Xxxxx"), solely with respect to Sections 5.06 and 5.07
hereof.
W I T N E S S E T H:
WHEREAS, Employee is, and for some time in the past has been a
valued employee of Employer; and
WHEREAS, the Employer and Employee now wish to enter into this
Agreement of employment on the terms and conditions set forth hereafter,
thereby replacing any prior agreement of employment between Employer and
Employee;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and intending to be legally bound, the parties hereto hereby
agree as follows:
Article 1. CAPACITY AND DUTIES
1.01. Employment; Acceptance of Employment. The Employer
hereby employs Employee, and Employee hereby accepts employment by the
Employer, subject to all the terms and conditions hereafter set forth.
1.02. Capacity. Employee shall serve Employer as Vice
Chairman of the Board and Chief Executive Officer and shall have the duties and
responsibilities incident to that position. Employee shall, at the request of
the Board of Directors, serve as an officer of or director of one or more of
Employer's subsidiaries, at no additional compensation.
1.03 Duties. During the term of this Agreement, Employee
shall devote his full attention and his best efforts to the performance of such
duties as shall be designated from time to time by Employer's Board of
Directors.
Article 2. TERM OF EMPLOYMENT; TERMINATION
2.01. Term. Unless earlier terminated as hereafter
provided, this Agreement shall commence on the date hereof and shall expire on
______________________, 2001.
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2.02. Termination.
(a) Death. The employment of Employee under this
Agreement shall immediately terminate upon the death of Employee.
(b) Disability. In the event that Employee is
for any reason unable to perform the duties to be performed by Employee
hereunder for a period of 180 consecutive days (or for any 200 out of 365
consecutive days) by reason of Employee's disability, the Board of Directors of
the Employer shall have the option to terminate the employment of Employee
under this Agreement effective upon its giving written notice to Employee at
any time following the expiration of such 180-day period (or such 200 days).
The term "disability" as used in this Section 2.02(b) means the inability
because of injury or sickness to perform the substantial and material duties of
the Employee's offices with Employer.
(c) Discharge for Cause. The employment of
Employee under this Agreement shall terminate immediately if the Employer
discharges Employee for cause. For purposes of this Agreement, "cause" shall
mean willful and deliberate unlawful misconduct by the Employee or breach by
the Employee of the provisions of this Agreement which, in any case, is
detrimental in a material way to the interests of Employer. It is the
understanding of the parties hereto that the failure of the Employer to operate
profitably shall not constitute cause for terminating Employee's employment
hereunder.
(d) Good Reason. Employee may terminate his
employment for "good reason." For purposes of this Agreement, "good reason"
shall mean:
(i) the assignment to Employee of any
duties inconsistent in any material respect with Employee's position,
authority, duties or responsibilities as contemplated by Section 1.02 of this
Agreement, or any other action by Employer which results in a material
diminution or material adverse change in such position, authority, duties or
responsibilities;
(ii) any failure by the Company to comply
with any of the provisions of Article 3 of this Agreement, other than an
immaterial, or an isolated and inadvertent, failure not occurring in bad faith
and which is remedied by Employer promptly after receipt of notice thereof
given by the Employee;
(iii) Employer's requiring Employee to be
based at any office or location other than the Philadelphia, Pennsylvania
metropolitan area;
(iv) any purported termination by
Employer of Employee's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Employer to
comply with and satisfy Section 5.01 of this Agreement.
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(e) Notice of Termination. Any termination of
Employee's employment, other than a termination by reason of death, shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision of this Agreement relied upon,
(ii) if applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated, and (iii) specifies the termination date (which
date shall, except as otherwise expressly provided in this Article 2, be not
more than 15 days after the giving of such Notice). The failure by Employee to
set forth in the Notice of Termination any fact or circumstances which
contribute to a showing of "good reason," or the failure by Employer to set
forth in the Notice of Termination any fact or circumstances which contribute
to a showing of "cause," shall not waive any right of either party hereunder or
preclude either party from asserting such facts or circumstances in enforcing
such party's rights hereunder.
(f) Certain Terminations
(i) If Employee's services should be
terminated (A) by Employer for any reason other than for "cause" as defined in
Section 2.02(c) hereof, or (B) by Employee for "good reason" as defined in
Section 2.02(d), any stock options then held by Employee shall become fully
vested and exercisable as of the date of such termination.
(ii) If Employee's services should be
terminated (A) by Employer for any reason other than for Employee's death,
Employee's disability for the period set forth in Section 2.02(b) hereof, or
for "cause" as defined in Section 2.02(c) hereof, or (B) by Employee for "good
reason" as defined in Section 2.02(d), Employee's base salary under Section
3.01 hereof, as of the date of such termination, shall continue to be paid by
Employer for the balance of the term hereof without any duty to mitigate
damages, but subject to diminution in the event Employee elects to be employed
in another capacity.
Article 3. COMPENSATION
3.01. Cash Compensation. During the term of this
Agreement, as compensation for services to the Employer pursuant to this
Agreement, the Employer shall pay to Employee a base salary of $350,000 per
year in accordance with the normal payroll practices of Employer.
3.02. Employee Bonus Program. Employee shall have the
right to participate in a bonus program established each year by the president
of Xxxxx-Xxxxx Direct Marketing with a bonus potential of 0-60% of base salary.
3.03. Insurance. Employer shall obtain and maintain during
the term hereof disability income insurance covering Employee in the event this
Agreement is terminated as a result of Employee's disability (as defined in
Section 2.02(b) hereof). Such disability income insurance shall be in amounts
and on other terms no less favorable to Employee than those in effect on the
date of this Agreement.
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3.04. Fringe Benefits. During the term hereof, Employer
shall provide Employee with the same fringe benefits, including life and health
insurance, vacation, and retirement programs, it provides to its other senior
executives, but in no event shall the benefits so provided be less favorable to
Employee in amounts and other provisions than those in effect on the date
hereof.
Article 4. CERTAIN COVENANTS
4.01. Protection of Confidential Information.
(a) Employee agrees that he will not at any time
during or following his employment by Employer, without Employer's prior
written consent, divulge to any other Person any "Confidential Information" in
Employee's possession. "Confidential Information" shall include, without
limitation, trade secrets, methods or practices developed by Employer or one of
its Affiliates, customer or client names and addresses, personnel information,
information relating to negotiations with clients or prospective clients of
Employer or one of its Affiliates, proprietary software, data bases,
programming or data transmission methods, or copyrighted materials (including
without limitation, brochures, layouts, letters, art work, copy, photographs or
illustrations). It is expressly understood that the foregoing list shall be
illustrative only and is not intended to be an exclusive or exhaustive list of
"Confidential Information."
(b) Upon termination of employment for any reason
whatsoever, regardless of whether either party may be at fault, Employee will
return to Employer all physical Confidential Information in Employee's
possession.
4.02. Non-Competition; Non-Solicitation of Employer's
Clients. Employee agrees, for so long as Employee remains employed by
Employer, and for a period of five (5) years following the later to occur of
(A) the termination of Employee's employment with Employer and (B) the
termination of payments to Employee pursuant to this Agreement, Employee shall
not, directly or indirectly, as an owner, employee, consultant or otherwise,
engage in the direct marketing business in the continental United States or any
foreign country in which Employer or one of its Affiliates is engaged in the
direct marketing business as of the Applicable Date, provided, however, that if
Employer fails to make any payment to Employee required by Section 2.02(f) of
this Agreement and such failure continues for five business days after notice
to Employer, then the covenant set forth in this Section 4.02 shall immediately
terminate and be of no further force or effect. Without limiting the
generality of the foregoing, for the period stated above, Employee shall not,
directly or indirectly, as an owner, employee, consultant or otherwise, solicit
business from any Person, or any Affiliate of a Person, to which Employer or
one of its Affiliates has either (i) provided services during the term of
Employee's employment by Employer, or (ii) extended a formal written proposal
to provide services within two (2) years prior to the Applicable Date. As used
herein, "Applicable Date" means the date on which the employment relationship
between Employee and Employer (or any Affiliate of Employer) is terminated, or
if such relationship has not been terminated, the date on which this covenant
is violated.
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4.03. Non-Solicitation of Employees.
(a) Employee agrees, for so long as Employee
remains employed by Employer, and for a period of five (5) years following the
later to occur of (A) the termination of Employee's employment with Employer
and (B) the termination of payments to Employee pursuant to this Agreement,
Employee shall not, either for Employee's own account, or on behalf of any
other Person, solicit, suggest or request that any other Person employed by
Employer or one of its Affiliates leave such employment for the purpose of
becoming employed by Employee or any other Person, provided, however, that if
Employer fails to make any payment to Employee required by Section 2.02(f) of
this Agreement and such failure continues for five business days after notice
to Employer, then the covenant set forth in this Section 4.03(a) shall
immediately terminate and be of no further force or effect.
(b) Employee agrees, for a period of five (5)
years following the later to occur of (A) the termination of Employee's
employment with Employer and (B) the termination of payments to Employee
pursuant to this Agreement, neither Employee, nor any Person controlled by
Employee, shall hire any Person whose last position was as an employee of
Employer or one of its Affiliates, provided, however, that if Employer fails to
make any payment to Employee required by Section 2.02(f) of this Agreement and
such failure continues for five business days after notice to Employer, then
the covenant set forth in this Section 4.03(b) shall immediately terminate and
be of no further force or effect.
4.04. Extent of Restrictions.
If any court having jurisdiction shall find that any part of
the restrictions set forth in this Agreement are unreasonable in any respect,
it is the intent of the parties that the restrictions set forth herein shall
not be terminated, but that this Agreement shall remain in full force and
effect to the extent (as to time periods and other relevant factors) that the
court shall find reasonable.
4.05. Remedies of Employer.
Employee acknowledges that the restrictions contained in
Section 4.01 through 4.03 of this Agreement correctly set forth the
understanding of the parties at the time this Agreement is entered into, are
reasonable and necessary to protect the legitimate interests of Employer, and
that any violation will cause substantial injury to Employer. In the event of
any such violation, Employer shall be entitled, in addition to any other
remedy, to preliminary or permanent injunctive relief. The waiver by Employer
of a breach of any provision of this Agreement by Employee shall not operate or
be construed as a waiver by Employer of any other or subsequent breach by
Employee.
4.06. Counsel Fees.
If Employer engages counsel to enforce the terms of this
Article 4 against Employee, and the court determines that Employee has violated
the terms of this Article 4,
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Employee shall reimburse Employer for its costs of enforcement, including
reasonable attorneys' fees and costs of suit. If the court determines that
employee has not violated the terms of this Article 4, Employer shall reimburse
Employee for its reasonable attorneys' fees and costs of suit.
4.07. Definitions.
Terms used in this Article 4 shall have the following
meanings:
(a) The term "Employer" shall mean the Employer,
and its successor and assigns.
(b) The term "Person" shall include a natural
individual, as well as any other legally created entity, including partnership,
limited partnership, trust or corporation.
(c) The term "Affiliate" of a Person shall mean
any entity controlled by, controlling or under common control with such Person.
Article 5. MISCELLANEOUS
5.01. Assignment. This Agreement shall not be assignable
by Employee and shall be assignable by Employer only to a person, firm or
corporation which may become a successor in interest to the Employer with
respect to the business or a portion of the business presently operated by it.
Employer will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of Employer to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform if no such succession had taken place.
5.02. Entire Agreement. This writing represents the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and it may not be altered or amended except by an agreement in writing.
5.03. Binding Effect. Subject to Section 5.01, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs, executors and administrators.
If any provision of this Agreement shall be or become illegal or unenforceable
in whole or in part for any reason whatsoever, the remaining provisions shall
nevertheless be deemed valid, binding and subsisting.
5.04. Governing Law. This Agreement has been negotiated
and executed within the Commonwealth of Pennsylvania, and the validity,
interpretation and enforcement of this Agreement shall be governed by the laws
of Pennsylvania.
5.05. Headings. The headings of paragraphs in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
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5.06 Other Payments. Employer and Employee acknowledge
that, as further consideration to Employee for entering into this Agreement and
the Non-competition Agreement contained herein and terminating his prior
employment agreement, Employee is receiving, as of the date hereof, a payment
of $3,000,000 from Xxxxx-Xxxxx, which is allocable as follows, (i) $_________
with respect to the Non-Competition Agreement, (ii) $500,000 as a signing
bonus, and (iii) $__________ as a termination payment.
5.07 Xxxxx-Xxxxx Guaranty. Xxxxx-Xxxxx hereby agrees to
guarantee the payment obligations of Employer pursuant to the terms of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
DIMARK, INC.
By:
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Title:
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Xxxxxxx X. Xxxx
XXXXX-XXXXX COMMUNICATIONS, INC.,
solely with respect to Sections
5.06 and 5.07 of this Agreement
By:
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Title:
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