EXHIBIT 10(d)(7)
EMPLOYMENT AGREEMENT
Agreement, made and entered into as of the 2nd day of November, 1999, by
and between INTER*ACT ELECTRONIC MARKETING, INC., a North Carolina corporation
(the "Company"), and XXXXXXX X. XXXXXXX (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to assure the continuing services of the
Employee, the Employee desires to continue employment with the Company, and each
desires to enter into an agreement embodying the terms of such employment;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee, and the Employee
hereby accepts employment with the Company, for the term set forth in paragraph
2 below, in the position and with the duties and responsibilities set forth in
paragraph 3 below, and upon the other terms and conditions hereinafter stated.
2. TERM. The term of this Agreement shall commence as of the date
hereof, and unless otherwise terminated as hereinafter provided, shall continue
for an initial term of three years and from year to year thereafter until
terminated by either party. The Agreement may be terminated at the end of the
initial term or at the end of any subsequent year (a "Termination Date") by
written notice by either party to the other, given not less than six months nor
more than one year prior to the Termination Date reflected in such notice.
3. DUTIES; POSITION. The Employee is engaged as Chief Executive Officer
of the Company. The Employee shall be responsible for such duties as are
commensurate with his office that may from time to time be assigned to the
Employee by the Company's Board of
Directors. The Employee will use his best efforts to faithfully serve the
Company and promote its best interests and will devote substantially all of his
working hours to the Company. Nothing herein shall prohibit the Employee from
engaging in the management of his personal business and affairs so long as such
activities do not substantially interfere with the performance of his duties
hereunder.
4. COMPENSATION. In consideration of the services to be rendered by the
Employee to the Company and in consideration of the Employee's other covenants
hereunder, the Employee will receive an initial base salary at the rate of
$50,000 per annum (such salary as it may be increased from time to time being
hereafter referred to as "Base Salary"), payable at such intervals as may be
established by the Company from time to time for salary payments to its senior
management employees. The Employee shall receive such increases in his Base
Salary as the Board of Directors of the Company may from time to time approve in
its discretion, provided, however, that the Employee's Base Salary will be
reviewed not less often than annually and the annual increase shall not be less
than 5% of the then Base Salary, and, provided further, that upon the occurrence
of a Liquidity Event, the Employee's Base Salary shall automatically be
increased to $250,000 per annum. No decreases in Base Salary may be effected
without the written consent of the Employee. The Employee shall also be eligible
to receive such bonuses as the Board of Directors may, in its discretion, deem
appropriate, from time to time. For purposes of this Agreement, "Liquidity
Event" shall mean (i) completion of an initial public offering by the Company,
or (ii) a sale of all or substantially all of the Company, by means of a merger,
a share exchange, a sale of assets or otherwise, for an aggregate equity value
(excluding debt) of not less than $200,000,000.
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5. EMPLOYEE BENEFITS. The Employee will be entitled to participate, in
accordance with the provisions thereof, in any employee benefit plans and
programs made available by the Company to its executive management employees
generally and the Company agrees to continue, in a form no less favorable to the
Employee, those benefits currently in effect.
6. BUSINESS EXPENSE REIMBURSEMENTS. During the period of his employment
under this Agreement, the Employee will be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred by him in performing his duties
hereunder upon presentation by the Employee, from time to time, of an itemized
account of such expenses and appropriate documentation therefor.
7. TERMINATION OF EMPLOYMENT.
a. Death. In the event of the death of the Employee during his
employment under this Agreement, the following payments shall be made to
the Employee's designated beneficiary, or, in the absence of such
designation, to the estate or other legal representative of the
Employee: (i) the Employee's then Base Salary shall be continued for a
period of one year following the date of his death, and (ii) such
bonuses and incentive compensation as shall have been earned by the
Employee and not paid to him at the time of his death. Any other rights
and benefits the Employee's estate or any other person may have under
employee benefit plans and programs of the Company in the event of the
Employee's death shall be determined in accordance with the terms of
such plans and programs.
b. Disability. In the event of the disability of the Employee
during his employment under this Agreement (a "Disability"), the
Employee's then Base Salary will
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be continued for a period of one year following occurrence of the
Disability or until commencement of payments to the Employee equal to
not less than 60% of the Employee's Base Salary under the terms of
disability insurance provided by the Company for the benefit of the
Employee, whichever first occurs. For purposes of this Agreement,
"Disability" shall mean the inability, by reason of bodily injury or
physical or mental disease, or any combination thereof, of the Employee
to perform his customary or other comparable duties with the Company. In
the event the parties are unable to agree as to whether the Employee is
suffering a Disability, the Employee and the Company shall each select a
physician and the two physicians so chosen shall make the determination
or, if they are unable to agree, they shall select a third physician,
and the determination as to whether the Employee is suffering a
Disability shall be based upon the determination of a majority of the
three physicians. Any other rights and benefits the Employee may have
under employee benefit plans and programs of the Company generally in
the event of the Employee's Disability shall be determined in accordance
with the terms of such plans and programs.
c. Termination for Cause. Nothing herein shall prevent the
Company from terminating the Employee's employment at any time for Cause
(as hereinafter defined). Upon termination for Cause, the Employee shall
receive his Base Salary only through the date of termination, and
neither the Employee nor any other person shall be entitled to any
further payments from the Company, for salary, unpaid bonuses or any
other amounts. Any rights and benefits the Employee may have under
employee benefit plans and programs of the Company generally following a
termination of the Employee's
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employment for Cause shall be determined in accordance with the terms of
such plans and programs. For purposes of this Agreement, termination for
Cause shall mean termination due to (i) continued willful or gross
neglect of duties for 30 days following receipt by the Employee of one
or more written warnings from the Board of Directors of the Company
specifying in detail the duties neglected, (ii) incapacity due to
continuing alcohol or drug addiction, (iii) continued intentional
refusal to perform the duties for which employed 30 days following
receipt by the Employee of one or more written warnings from the Board
of Directors of the Company specifying in detail the Employee's
misconduct, (iv) fraud or embezzlement committed against the Company, or
(v) the Employee's conviction for a felony.
d. Change in Position or Employment Conditions; Termination
Other Than for Cause Following a Change in Control. The Employee may
terminate his employment immediately upon written notice to the Company
upon the occurrence, following a "change in control" of the Company, of
any one of the following events: (i) his authority and/or responsibility
are substantially reduced, without his consent, below that described in
paragraph 3, (ii) the Employee is required to change his residence or
principal place of business from Charlotte, North Carolina, or (iii) the
travel obligations of the Employee are, without his consent, increased
materially above those in effect on the date of this Agreement. If the
Employee's employment is terminated pursuant to this paragraph 8(d) or
if the Employee's employment is terminated by the Company without cause
following a change in control, the Employee shall be entitled to receive
an amount equal a severance payment in an amount equal to his average
annual total cash compensation for the
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immediately preceding two fiscal years of the Company, multiplied by
2.99 (the "Severance Payment"). Upon entitlement, the Severance Payment
will be payable in cash or by certified check within thirty (30) days
following termination of the Employee's employment. Notwithstanding
anything to the contrary contained herein, in the event that any portion
of the Severance Payment received or to be received by the Employee,
together with any other payments received by him, whether paid or
payable pursuant to the terms of this Plan or any other plan,
arrangement or agreement with the Company or any other person or entity,
would not be deductible in whole or in part by the Company in the
calculation of its federal income tax by reason of Section 280G of the
Internal Revenue Code or would cause, either directly or indirectly, an
"excess parachute payment" to exist within the meaning of said Section
280G, the Severance Payment payable shall be reduced until no portion of
the Severance Payment would fail to be deductible by reason of being an
"excess parachute payment." In the event that any dispute arises as to
whether an "excess parachute payment" exists, the appropriate
calculations shall be made by the Company's regularly employed
independent public auditors and delivered to the Employee in writing
within 30 days following the date for payment of the Severance Payment,
and the Company will warrant to the Employee the accuracy of the
calculations and the information on which they are based.
For purposes of this paragraph 7(d), a "change of control" shall be
deemed to have occurred upon the occurrence of any of the following
events:
i. Any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") but
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excluding any employee benefit plan of the Company) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of
the Company's outstanding securities then entitled ordinarily
(and apart from rights accruing under special circumstances) to
vote for the election of directors; or
ii. Individuals who are "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least
a majority of the Board of Directors; or
iii. The Board of Directors shall approve a sale of
more than 90% of the assets of the Company; or
iv. Any merger, consolidation, or like business
combination or reorganization of the Company is consummated that
resulted in the occurrence of any event described in clause (i)
or (ii) above.
For purposes of the foregoing, "Continuing Directors" shall mean (i) the
directors of the Company in office on the date hereof and (ii) any successor to
any such director (and any additional director) who after the date hereof (y)
was nominated or selected by a majority of the Continuing Directors in office at
the time of his nomination or selection and (z) who is not an "affiliate" or
"associate" (as defined in Regulation 12B under the Exchange Act) of any person
who is the beneficial owner, directly or indirectly, of securities representing
50% or more of the combined voting power of the Company's outstanding securities
then entitled ordinarily to vote for the election of directors.
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8. COVENANTS NOT TO COMPETE.
a. The Employee hereby promises and agrees that during the term
of this Agreement or for a period of one year following the termination
of his employment with the Company, whichever later occurs:
i. He will not, directly or indirectly, own any
interest in, manage, operate, control, be employed by, render
consulting or advisory services to, or participate in or be
connected with the management or control of any business that is
then (A) a competitor of the Company, including but not limited
to Catalina Marketing Corporation, Planet U, CoolSavings and
Actmedia, Inc. or any affiliate thereof, or (B) engaged in the
business of displaying and/or dispensing electronic discounts,
coupons, recipes or other promotions through inter-active
terminals or other customer interface systems in grocery or
other retail stores or through the Internet, and any other
business activity that the Company may engage in during the
course of the Participant's employment (an "electronic marketing
system") in competition with the Company in the Territory;
ii. He will not, directly or indirectly, influence or
attempt to influence any retail store customer or any product
manufacturer customer of the Company to discontinue its use of
the Company's services or to divert such business to any other
person, firm or corporation;
iii. He will not, directly or indirectly, interfere
with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Company and any of its
respective suppliers, principals, distributors, lessors or
licensors; and
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iv. He will not, directly or indirectly, solicit any
employee of the Company, whose base annual salary at the time of
the Participant's termination was $30,000 or more, to work for
any person, firm or corporation.
b. It is the desire and intent of the parties that the
provisions of paragraph 8(a) shall be enforced to the fullest extent
permitted under the laws and public policies of each jurisdiction in
which enforcement is sought. Accordingly, if any particular portion of
paragraph 8(a) shall be adjudicated to be invalid or unenforceable,
such adjudication shall apply only with respect to the operation of
that portion in the particular jurisdiction in which such adjudication
is made, and all other portions shall continue in full force and effect.
c. It is expressly agreed that the provisions and covenants in
this paragraph 8 shall not apply and shall be of no force or effect in
the event that the Company fails to honor its obligations hereunder.
d. The purposes of this Section 8, the "Territory" shall mean
the United States, the United Kingdom, continental Europe and any other
geographic area in which the Company is operating an electronic
marketing system immediately prior to a termination of the Employee's
employment with the Company.
9. INJUNCTIVE RELIEF. The Employee acknowledges and agrees that the
Company would suffer irreparable injury in the event of a breach by him of any
of the provisions of paragraph 8 of this Agreement and that the Company shall be
entitled to an injunction restraining him from any breach or threatened breach
thereof. Nothing herein shall be construed, however, as prohibiting the Company
from pursuing any other remedies at law or in equity which it may
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have for any such breach or threatened breach of any provision of paragraph 8
hereof, including the recovery of damages from the Employee.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Employee and his personal representatives,
estate and heirs and to the Company and its successors and assigns, including
without limitation any corporation or other entity to which the Company may
transfer all or substantially all of its assets and business (by operation of
law or otherwise) and to which the Company may assign this Agreement. The
Employee may not assign this Agreement or any part hereof without the prior
written consent of the Company, which consent may be withheld by the Company for
any reason it deems appropriate.
11. ENTIRE AGREEMENT. This Agreement, together with any written
agreements and similar documents entered into between the Company and the
Employee under any stock option, stock compensation or similar employee benefit
plans maintained by the Company or otherwise, contains the entire agreement of
the parties with respect to the employment of the Employee by the Company and
supersedes and replaces all other understandings and agreements, whether oral or
in writing, if any, previously entered into by the parties with respect to such
employment.
12. AMENDMENT; WAIVER. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver is agreed to in
writing and signed by the Employee and by a duly authorized officer of the
Company. No waiver by either party of any breach by the other party of any
provision of this Agreement shall be deemed a waiver of any other breach.
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13. NOTICES. All notices or other communications given pursuant to this
Agreement shall be in writing and either delivered personally or by prepaid
registered or certified mail, return receipt requested. Notices and other
communications mailed to the Employee shall be addressed to his last address as
shown on the personnel records of the Company, and notices and other
communications to the Company shall be addressed to Inter*Act Electronic
Marketing, Inc., 00 Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, Attn: President. Either
party may change the address to which notices are to be mailed pursuant to this
paragraph 13, by written notice given in accordance herewith. Any notice
pursuant to this paragraph 13 shall be effective for all purposes on the date
delivered or mailed as herein provided.
14. SEVERABILITY. If any one or more of the provisions contained in this
Agreement shall be invalid, illegal, or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provision shall not in any way be affected or impaired thereby.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws and judicial decisions of the State of North Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
INTER*ACT ELECTRONIC MARKETING, INC.
By: /s/ Xxx X. Xxxxxxxxx
Title: President
/s/ Xxxxxxx X. Xxxxxxx (SEAL)
Xxxxxxx X. Xxxxxxx
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