EMPLOYMENT AGREEMENT
AGREEMENT, made as of the 24th day of October, 1995, by and
between DIRECTAMERICA CORPORATION, a Delaware corporation (the "Company"), a
wholly- owned subsidiary of National Media Corporation ("National Media"), and
XXXX X. XXXXX ("Executive").
W I T N E S S E T H
WHEREAS, Executive is willing to serve the Company on a
full-time basis during the term hereof, subject to the terms and conditions
hereinafter set forth; and
WHEREAS, the Company desires to employ Executive in accordance
with the terms hereof.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth, it is agreed as follows:
1. Employment. The Company hereby employs Executive, and
Executive hereby accepts employment from the Company, upon the terms and
conditions hereinafter set forth.
2. Term of Employment. The term ("Term") of this Agreement
shall commence as of October 24, 1995 (the "Commencement Date") and shall
continue thereafter until the fifth anniversary of the Commencement Date (the
"Initial Termination Date"), unless sooner terminated in accordance with the
terms hereof. The Term of this Agreement shall be automatically renewed for
successive one-year periods, and the Termination Date shall be automatically
extended accordingly, unless this Agreement is terminated by either party upon
six (6) months' written notice prior to the end of the then current Term. As
used herein, "Term" shall refer to the initial Term of this Agreement as
extended by any renewal Term then in effect; and "Termination Date" shall refer
to the last day of the Term of this Agreement, as it may have been extended.
3. Duties. Executive shall be engaged as, and hold the
positions of, Chairman and Chief Executive Officer of the Company. Executive
shall also serve as an Executive Vice President of National Media. Executive
shall have such authority and responsibilities as are normally attendant thereto
and agrees to perform such duties and render such services consistent therewith,
and as may from time to time be reasonably required of him by the Company.
Executive shall devote his full business time, attention and best efforts to the
affairs of the Company during the term of this Agreement. Executive will report
directly to the Company's Board of Directors (the "Board") and the Chief
Executive Officer of National Media.
4. Compensation and Reimbursement for Expenses.
4.1 Base Salary. The Company shall pay to Executive a
minimum base salary of Three Hundred Thousand Dollars ($300,000.00) per annum
(as the same may be increased from time to time, the "Base Salary"). The Base
Salary shall be payable in accordance with the Company's regular payroll
practices in effect from time to time and shall be subject to annual review and
adjustment as the Board deems appropriate. The Base Salary may be increased or
decreased from time to time in the discretion of the Company's Board; provided,
however, that Executive's Base Salary shall at no time be less than Three
Hundred Thousand Dollars ($300,000.00).
4.2 Annual Bonus. In addition to the other amounts payable
to Executive hereunder, Executive shall participate in National Media's
Management Incentive Plan ("MIP"), provided, however, that the amount payable to
Executive under the terms of the MIP for National Media's Plan Year (as defined
in the MIP) ending March 31, 1996 shall be prorated for the period from the
Commencement Date through March 31, 1996 in accordance with the number of days
in such Plan Year during which Executive is employed by the Company pursuant to
this Agreement. The amount of bonus payable under the MIP shall be based on
performance (including, but not limited to, Executive's ability to operate the
Company within the budgets reasonably established by National Media) in
accordance with the provisions of the plan, as determined by the Compensation
Committee of National Media's Board of Directors.
If this Agreement is not renewed at the end of any Term
because of notice given by the Company pursuant to Paragraph 2 of this
Agreement, Executive shall still be eligible to receive fifty percent (50%)
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of any bonus to which Executive would have been entitled under the MIP for the
Plan Year during which the Agreement was terminated.
4.3 Reimbursement of Expenses. The Company will promptly
reimburse Executive, upon receipt of vouchers therefor, for all reasonable and
necessary expenses incurred by Executive for travel, entertainment and
miscellaneous and other business expenses which are incurred in connection with
the performance of his duties hereunder. Such reimbursements shall be made in
accordance with the Company's regular reimbursement procedures and practices in
effect from time to time for similarly situated officers of the Company or of
National Media and its other subsidiaries.
5. Fringe Benefits.
5.1 General. Executive shall be entitled to participate in
any and all fringe and other benefit programs generally available to the
officers of National Media and its subsidiaries, including without limitation,
stock option plans, incentive plans, profit sharing plans, thrift and savings
plans, insurance plans, supplemental insurance and benefit plans. However,
nothing contained in this subparagraph 5.1 shall be construed as requiring the
Company or National Media generally to maintain any such fringe benefit program
or to make any discretionary grant to Executive thereunder.
5.2 Plans. Executive shall be entitled to participate in any
employee benefit and/or welfare plans, including but not limited to health,
medical, and savings investment plans sponsored by the Company for its, or
National Media for its and its subsidiaries', officers and/or employees, and
receive any other benefits generally applicable to officers of the Company or
those of National Media and its other subsidiaries.
5.3 DirectAmerica Employee Bonus Plan. Executive shall be
entitled to participate in the Company's Employee Bonus Plan (the "Employee
Bonus Plan") in effect as of the date hereof. No amendment, change or
modification may be made to the Employee Bonus Plan without Executive's prior
written consent if the result of such amendment, change or modification would be
materially adverse to the interests of Executive. In the event Executive
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terminates his employment by the Company pursuant to Subparagraph 9.1(c) of this
Agreement, Executive shall be entitled to participate, until the Termination
Date, in all Bonus Pools (as defined in the Employee Bonus Plan) established
under the Employee Bonus Plan which are based upon sales or royalties generated
during a period in which Executive was employed by the Company.
5.4 Life Insurance.
(a) Purchase. Provided that Executive is insurable at rates
that are comparable to those obtainable on other persons of similar age and
position in good health (if Executive is classified in a higher risk category he
may elect to pay the excess premium cost to obtain the coverage), during the
Term of this Agreement, the Company shall provide Executive, or at the option of
Executive, Executive's Life Insurance Trust, with a Company-paid term life
insurance policy in the face amount of $1,000,000. At Executive's option,
Executive may obtain an insurance policy in lieu of a policy provided by the
Company hereunder, and the Company shall pay premiums therefor as set forth in
invoices presented to the Company; provided the Company shall not be required to
pay premiums in excess of the out-of-pocket costs it would otherwise have
incurred had it purchased a policy in accordance with the first sentence of this
subparagraph 5.4(a). The owner of such life insurance policy shall be Executive
or Executive's Life Insurance Trust, as directed by Executive.
(b) Payment of Premiums. The Company shall timely pay all
premiums for such life insurance whether provided by the Company for Executive
or by Executive's Life Insurance Trust for the Executive.
(c) Medical Examination. Executive agrees to submit to all
medical examinations, supply all information and execute all documents required
by the insurance company in connection with the issuance of a policy for such
insurance as well as for any key man insurance the Company or National Media may
desire to maintain on Executive's life. The Company shall reimburse Executive
for any costs incurred by Executive for any such medical examinations.
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5.5 Automobile Allowance. The Company shall pay Executive a
monthly automobile allowance of Eight Hundred Dollars ($800.00) which shall be
deemed to compensate Executive for all automobile related costs, including, but
not limited to, insurance, fuel, maintenance, wear and tear, etc..
5.6 Club Memberships. The Company shall pay Executive's
reasonable dues and membership fees (up to a maximum reimbursement of $2000.00
per annum) in one (1) health and/or eating club of Executive's choice.
Executive's club-related expenses other than dues and membership fees may be
reimbursed to Executive by the Company in accordance with the provisions and
requirements of subparagraph 4.3 hereunder.
5.7 Vacations; Holidays; Sick Leave. Executive shall be
entitled to such number of paid vacation days in each calendar year as are
generally awarded to senior executive officers of National Media, but not less
than three (3) weeks in any calendar year (prorated in any calendar year during
which Executive is employed hereunder for less than the entire year in
accordance with the number of days in such calendar year during which he is so
employed). Executive shall not be permitted to carry over any portion of
Executive's accrued but unused vacation time from one fiscal year to the next
fiscal year; provided, however, that in the event applicable law renders the
preceding clause unenforceable, Executive shall be permitted to carry over
accrued but unused vacation time, but in no event shall Executive be permitted
to accrue at any time more than three (3) weeks' vacation time. Executive shall
also be entitled to all paid holidays and sick leave as are generally awarded to
senior executives of National Media.
6. Restriction on Transfer of National Media Common Stock.
Executive shall not, without the prior written consent of National Media (which
consent will not be unreasonably withheld), agree to or permit the sale,
disposition or other transfer by him and/or his Permitted Transferees (as
defined below) of more than 37,219 shares of National Media Common Stock in any
three (3) month period during the Term (the "Transfer Restriction"). This
Paragraph 6 shall in no way restrict or limit Executive's ability to (a)
transfer shares of National Media Common Stock to his immediate family members
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or to a trust or trusts for the benefit of his immediate family members for
estate planning purposes or (b) pledge shares of National Media Common Stock to
a financial institution as security for debt incurred by Executive (all
transferees permitted by clause (a) and (b) are referred to herein as "Permitted
Transferees"); provided, however, that Executive and such Permitted Transferees
shall (i) be bound by the Transfer Restriction and (ii) execute, prior to any
such transfer to such Permitted Transferee, such documents as may be reasonably
requested by the Company or National Media to evidence such Transfer
Restriction.
In the event that Executive's employment by the Company is
terminated by the Company for any reason other than pursuant to subparagraph
9.1(b) hereof, the provisions of this Paragraph 6 shall terminate and be of no
further force or effect.
7. Non-Disclosure. Executive shall not at any time during the
Term of this Agreement or thereafter, except as properly required in the conduct
of the business of the Company and as authorized by the Company, or as otherwise
required by law or court order, disclose or authorize anyone else to disclose
any secret, proprietary or confidential information, material or matter relating
to the Company or any of its customers.
8. Covenant Not to Compete. From the Commencement Date through
the fifth anniversary of the Commencement Date, Executive shall not, without the
prior written consent of the Company, engage directly or indirectly in any
television infomercial venture or any television infomercial production
activities which is competitive with the business of the Company or of National
Media and shall not be an officer, director, employee, independent contractor or
Substantial Owner of any such restricted business. "Substantial Owner" as used
herein shall mean an owner of at least five percent (5%) of the beneficial
equity or voting interests in a subject restricted business. Notwithstanding the
foregoing, if Executive terminates this Agreement pursuant to subparagraph
9.1(c) hereof the restrictions described above shall terminate as of the date of
such Termination.
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Executive acknowledges that the obligations and restrictions
contained in this Paragraph 8, in view of the nature of the business in which
the Company is engaged, are reasonable and necessary in order to protect the
legitimate interests of the Company and that any violation thereof would result
in irreparable injury to the Company. Executive understands and agrees that the
remedies at law for any breach of the forgoing covenant may be inadequate and
that the Company may be entitled to, in addition to all other remedies which it
may have, enforcement of this Agreement by injunctive relief or by decree of
specific performance in a court of competent jurisdiction. If one or more of the
provisions contained in this Paragraph 8 shall for any reason be held to be
excessively broad in scope, subject or otherwise, to be unenforceable at law,
such provision or provisions shall be construed by the appropriate judicial body
by limiting or reducing it or them, as the case may be, so as to be enforceable
to the maximum extent compatible with applicable law then in existence.
9. Termination.
9.1 Executive's employment under this Agreement shall
terminate upon the occurrence of any of the following:
(a) Death or Disability. If Executive dies or becomes
"Permanently Disabled" (meaning that, in the opinion of an independent physician
selected by the Company and reasonably satisfactory to Executive or his
representative, he is unable to perform his duties hereunder due to partial or
total mental or physical disability for an aggregate of 180 days (whether or not
consecutive) in any consecutive twelve (12) month period).
(b) Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment if the Executive, in the
reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured, or
commenced in good faith to cure, such breach within thirty (30) days after
notice; (ii) embezzles or converts to his own use any funds of the Company or
any client or customer of the Company; (iii) converts to his own use or
unreasonably destroys any property of the Company without the Company's consent;
(iv) is convicted of a felony; (v) is adjudicated as mentally incompetent; or
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(vi) is habitually intoxicated or is diagnosed by an independent medical doctor
to be addicted to a controlled substance or any drug whatsoever. Notwithstanding
the foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until the Executive has received thirty (30) days' prior written
notice (the "Dismissal Notice") of such termination. In the event Executive does
not dispute such determination within thirty (30) days after receipt of the
Dismissal Notice, Executive shall not have the remedies provided pursuant to
Paragraph 11 of this Agreement.
(c) Company Breach. In the event of the Company's material
breach of any provisions of this Agreement, Executive shall have the right to
terminate his employment hereunder; provided that Executive shall give written
notice to the Company of his intent to so terminate setting forth the basis for
such termination, and the Company shall then have thirty (30) days after receipt
of such notice to cure the subject breach.
9.2 Early Termination by Executive. Executive shall be
entitled to terminate this Agreement for any reason or no reason at all
effective on the third anniversary of the Commencement Date by giving the
Company written notice of such intention at least ninety (90) days prior to the
effective date of such third anniversary.
9.3 Termination Obligations of Executive. In the event
Executive's employment under this Agreement is terminated, Executive, or his
legal representative in case of termination by death or Executive's physical or
mental incapacity to serve, shall:
(a) by the close of the next business day following
termination, resign from all corporate and board positions held in National
Media, the Company and any of their respective subsidiaries and affiliated
companies;
(b) promptly return to a representative designated by the
Company all property, including but not limited to, automobiles, keys,
identification cards and credit cards of the Company or any of its subsidiaries
or affiliated companies; and
(c) incur no further expenses or obligations on behalf of
the Company or any of its subsidiaries and affiliated companies.
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10. Termination Compensation.
10.1 Compensation. Subject to the terms of subparagraph 10.2
hereof, in the event that Executive shall terminate his employment under this
Agreement pursuant to subparagraph 9.1(c) above, or if the Company shall
terminate Executive's employment under this Agreement prior to the Termination
Date for any reason other than those set forth in subparagraphs 9.1(a) or (b),
the Company shall (a) pay Executive or, in the event of Executive's death
following termination, Executive's estate (i) his full Base Salary through the
date of termination at the rate in effect at the time notice of such termination
is given; and (ii) in lieu of any further salary or other payments to Executive
hereunder for periods subsequent to the date of termination, the Company shall
pay as liquidated damages to Executive in accordance with the terms of
subparagraph 10.2 hereof an amount equal to his full Base Salary through the
Termination Date calculable at the then current Base Salary and (b) maintain in
full force and effect for the continued benefit of Executive through the earlier
of the Termination Date or Executive obtaining similar benefits through other
employment, all employee benefit plans and programs in which Executive was
entitled to participate immediately prior to Executive's discharge or
resignation, provided that Executive's continued participation is possible under
the general terms and provisions of such benefit plans and programs and
otherwise in accordance with applicable law. In the event that Executive's
participation in any such benefit plan or program is barred, the Company shall
make all reasonable efforts to arrange to provide Executive with benefits
substantially similar to those which Executive is entitled to receive under such
plans and programs. Executive shall also remain eligible to participate in the
Company's Employee Bonus Plan through the Termination Date.
10.2 In the event that Executive is entitled to receive
severance in accordance with subparagraph 10.1(ii) hereof, such severance shall
be paid to Executive in accordance with the Company's normal payroll practices
in effect from time to time as if Executive was employed by the Company through
the Termination Date; provided, however, that in the event that Executive
violates the Covenant Not to Compete contained in Paragraph 8 hereof, in
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addition to all other rights and remedies which the Company may have, the
foregoing severance shall only be payable through the date of such violation
and the Company shall be entitled to cease providing Executive with the benefits
to which he would otherwise be entitled.
10.3 No Mitigation. Executive shall not be required to
mitigate the amount of any payments provided for in subparagraph 10.1 above by
seeking other employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned as a result of
employment by another employer.
11. Change in Control. Within thirty (30) days following a
Change in Control, as hereinafter defined, notwithstanding anything in this
Agreement to the contrary, Employee may terminate this Agreement by giving the
Company at least thirty (30) days' prior written notice of the effective date of
such termination and upon such termination, all of the terms and provisions of
this Agreement (including the provisions contained in Paragraph 8 hereunder)
shall terminate and be of no further force and effect. As used in this Paragraph
11, a "Change in Control" shall be deemed to have occurred if (a) any person or
group (as such term is defined in Section 13(d)(3) of the Securities Exchange
Act of 1934) acquires direct or indirect control over the voting power of the
voting stock of National Media in a transaction not approved by the Company's
Board of Directors or (b) a majority of the members of the Board of Directors of
National Media cease being "Continuing Directors". A "Continuing Director" shall
be deemed to be a member of the National Media Board of Directors who either is
a National Media director on the date of this Agreement or is hereafter
nominated for election or appointed to the National Media Board of Directors by
the affirmative vote of a majority of the Continuing Directors who were members
of such Board at the time of such nomination or appointment.
12. Arbitration. In the event of a dispute hereunder, both
parties agree to resolve such dispute according to the policies and procedures
of the American Arbitration Association ("AAA"). Within fifteen (15) days of
notice of such dispute, the Executive or the Company, as the case may be, shall,
in accordance with the Rules of AAA, file a petition with the AAA for
arbitration of the dispute, in the City of Philadelphia, Pennsylvania, the costs
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thereof to be shared equally by Executive and the Company unless an order of the
AAA provides otherwise and each party shall be responsible for his or its legal
fees. Such proceeding shall also determine all other disputes between the
parties relating to Executive's employment. The parties covenant and agree that
the decision of the AAA shall be final and binding and hereby waive their rights
to appeal therefrom.
13. Counsel Fees and Indemnification.
(a) In the event that it shall be necessary or desirable for
the Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of his rights under this
Agreement, including participation in any proceeding contesting the validity or
enforceability of this Agreement and any arbitration proceeding pursuant to
Paragraph 12 of this Agreement, the Executive shall be entitled to recover from
the Company his reasonable attorneys' fees and costs and expenses in connection
with the enforcement of his rights. No fees shall be payable if the Company is
successful on the merits.
(b) The Company shall indemnify and hold Executive harmless to
the maximum extent permitted by law against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees incurred by
Executive, in connection with the defense of, or as a result of, any action or
proceeding (or any appeal from any action or proceeding) in which Executive is
made or is threatened to be made a party by reason of any act or omission of
Executive in his capacity as an officer, director or employee of the Company,
regardless of whether such action or proceeding is one brought by or in the
right of the Company, to procure a judgment in its favor. Expenses (including
attorneys' fees) incurred by Executive in defending any civil, criminal,
administrative, or investigative action, suit or proceeding shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of Executive to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Company as authorized in this subparagraph 13(b).
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(c) The provisions of this Paragraph 13 shall survive
termination of this Agreement and shall survive indefinitely with respect to any
cost or liability incurred by Executive on account of any actual or alleged act,
omission, or decision by Executive during the Term.
14. Notices. Unless either party notifies the other to the
contrary, any notice required hereunder shall be duly given if delivered in
person or by registered first class mail or recognized overnight mail carrier:
If to the Company, to:
DirectAmerica Corporation
c/o National Media Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: President
If to National Media, to:
National Media Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: President
If to Executive, to:
Xxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
15. General Provisions.
15.1 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the Company and its successors and assigns and
Executive, his designees, and his estate. Neither Executive, his designees, nor
his estate shall commute, pledge, encumber, sell or otherwise dispose of the
rights to receive the payments provided in this Agreement, which payments and
the rights thereto are expressly declared to be nontransferable and
nonassignable (except by death or otherwise by operation of law).
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15.2 Set-Off. Executive hereby acknowledges and agrees that
the Company shall have the right to set-off against any amounts payable by the
Company to Executive under this Agreement all amounts payable to the Company by
Executive under the Agreement and Plan of Merger and Reorganization by and among
National Media and the Company's predecessors, et. al., dated as of October 24,
1995 (including, without limitation, Article 8 thereof (other than Section
8.2(b) thereof)).
15.3 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware from time to time in effect.
15.4 Entire Agreement. This Agreement represents the entire
agreement between Executive and the Company with respect to the subject matter
hereof. This Agreement may not be amended or modified except by a writing signed
by the parties hereto. Any written amendment, waiver or termination hereof
executed by the Company and Executive (or his estate) shall be binding upon them
and upon all persons, without the necessity of securing the consent of any other
person and no person shall be deemed to be a third party beneficiary under this
Agreement.
15.5 Third Party Beneficiaries. Except as provided in this
Agreement, each of Executive and the Company intends that this Agreement shall
not benefit or create any right or cause of action in or on behalf of any person
other than Executive and the Company. Notwithstanding the foregoing, Executive
and the Company acknowledge that National Media shall receive the benefits of,
and be entitled to enforce, all of the Company's rights contained in this
Agreement.
15.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same Agreement.
15.7 No Waiver. Except as otherwise expressly set forth
herein, no failure on the part of either party hereto to exercise and no delay
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
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15.8 Headings. The headings of the paragraphs of this
Agreement have been inserted for convenience of reference only and shall in no
way restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
ATTEST: DIRECTAMERICA CORPORATION
Xxxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------ ---------------------------
(SEAL) Name: Xxxx X. Xxxxxxxxx
Title: President
/s/ Xxxx X. Xxxxx
---------------------------
XXXX X. XXXXX
National Media hereby guarantees the obligations of the
Company to Executive hereunder and agrees, in the event the Company is unable to
fulfill its obligations to Executive pursuant to the terms hereof, to make such
payments and provide such benefits to Executive in accordance with the terms of
this Agreement.
ATTEST: NATIONAL MEDIA CORPORATION
Xxxxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxxx
------------------------- ----------------------------
(SEAL) Name: Xxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
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