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EXHIBIT 10.39
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 12th day of January, 1998, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Xxxxxxx Xxxxxx (hereinafter referred to as "Employee").
WITNESSETH:
WHEREAS, Employee and Employer have fully discussed to the satisfaction
of Employee the transactions (the "Transactions") contemplated by that certain
Agreement and Plan of Reorganization and Merger (the "Merger Agreement"), dated
January 5, 1998, by and among Employer, National Media Corporation ("NMC") and
X-X Holdings, Corp. ("Holdings Corp."), whereby Employer and NMC shall each
become wholly-owned subsidiaries of Holdings Corp.;
WHEREAS, Employer desires to obtain the services of Employee and
Employee desires to be employed by Employer as an employee on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained in this Agreement, the parties hereto agree as follows:
A. EMPLOYMENT. Employer agrees to employ Employee and Employee agrees to
be employed by Employer on the terms and conditions set forth in this
Agreement.
B. TERM. The term of Employee's employment hereunder shall commence on the
date hereof and shall continue on a full-time basis for a period of
twenty-four (24) months (the "Term"). The "Employment Period" for
purposes of this Agreement shall be the period beginning on the date
hereof and ending at the time Employee shall cease to act as an
employee of Employer.
C. DUTIES. Employee shall serve as Executive Vice President General
Manager ValueVision Television of Employer and shall perform the duties
as assigned by Employer, from time to time, and shall faithfully, and
to the best of his ability, perform such reasonable duties and services
of an active, executive, administrative and managerial nature as shall
be specified and designated, from time to time, by Employer. Employee
agrees to devote his full time and skills to such employment while he
is so employed, subject to a vacation allowance of not less than three
(3) weeks during each year of the term, or such additional vacation
allowance as may be granted in the sole discretion of Employer.
Employer's Chief Executive Officer shall provide Employee with a
performance review at least annually.
D. COMPENSATION. Employee's compensation for the services performed under
this Agreement shall be as follows:
1. Base Salary. Employee shall receive a base salary of One
Hundred Ninety Thousand and No/100 Dollars ($190,000.00) per year for
the first twelve months of the term of this Agreement and Two Hundred
Ten Thousand and No/100 Dollars ($210,000.00) per year for the second
twelve months of the term of this Agreement ("Base Salary").
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2. Bonus Salary. Employee may receive bonus salary ("Bonus
Salary"), based upon Employee's job performance and the criteria set
forth on Exhibit A hereto.
c. Automobile Allowance. Employer shall pay Employee a
monthly automobile allowance of $450.00 per month ("Auto Allowance").
d. Initial Bonus. Employer shall pay Employee an initial bonus
(the "Initial Bonus") equal to Twenty Thousand and No/100 Dollars
($20,000.00) on the ninetieth (90th) day following the date hereof,
unless prior to such date, Employee's employment shall be terminated
pursuant to Sections 6.c. or 6.d. hereof.
e. Moving and Living Expenses. Employer shall pay for the
normal household moving expenses associated with Employee's move to
Minneapolis from California ("Moving Expenses"), including moving two
automobiles. Such moving expenses shall be the lowest of three bids to
be presented to Employer. Employer further agrees to pay Employee's
reasonable temporary housing expenses in the Minneapolis area from the
date hereof through April 1, 1998 ("Housing Expenses"), unless prior to
such date, Employee's employment shall be terminated pursuant to
Sections 6.c. or 6.d. hereof.
E. OTHER BENEFITS DURING THE EMPLOYMENT PERIOD.
1. Employee shall receive all other benefits made available to
executive officers of Employer, from time to time, at its discretion
("Benefits"). It is understood and agreed that Employer may terminate
such Benefits or change any benefit programs at its sole discretion, as
they are not contractual for the term hereof.
2. Employer shall reimburse Employee for all reasonable and
necessary out-of-pocket business expenses incurred during the regular
performance of services for Employer, including, but not limited to,
entertainment and related expenses so long as Employer has received
proper documentation of such expenses from Employee.
3. Employer shall furnish Employee with such working
facilities and other services as are suitable to Employee's position
with Employer and adequate to the performance of his duties under this
Agreement.
F. TERMINATION OF EMPLOYMENT.
1. Death. In the event of Employee's death, this Agreement
shall terminate and Employee shall cease to receive Base Salary, Bonus
Salary, Auto Allowance, Housing Expenses (if any) and Benefits as of
the date on which his death occurs, except that, Employee shall receive
Bonus Salary prorated for the number of months to date of death.
2. Disability. If Employee becomes disabled such that Employee
cannot perform the essential functions of his job, and the disability
shall have continued for a period of more than one hundred twenty (120)
consecutive days, then Employer may, in its sole discretion, terminate
this Agreement and Employee shall then cease to receive Base Salary,
Bonus Salary, Auto Allowance, and all other Benefits, on the date this
Agreement is so terminated except that, Employee shall
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receive Bonus Salary prorated for the number of months to date of
disability; provided however, Employee shall then be entitled to such
disability, medical, life insurance, and other benefits as may be
provided generally for disabled employees of Employer when payments and
benefits hereunder ceases.
3. Voluntary Termination. In the event that Employee
voluntarily terminates his employment, he shall cease to receive Base
Salary, Bonus Salary, Auto Allowance, and all other Benefits as of the
date of such termination. In addition, Employee shall repay Employer on
a pro-rata basis (calculated based on the remaining months in the
Term), the Moving Expenses.
4. Termination With Cause. Employer shall be entitled to
terminate this Agreement and Employee's employment hereunder for Cause
(as herein defined), and in the event that Employer elects to do so,
Employee shall cease to receive Base Salary, Bonus Salary, Auto
Allowance, and Benefits as of the date of such termination specified by
Employer. For purposes of this Agreement, "Cause" shall mean: (I) a
material act or act of fraud which results in or is intended to result
in Employee's personal enrichment at the direct expense of Employer,
including without limitation, theft or embezzlement from Employer; (ii)
public conduct by Employee substantially detrimental to the reputation
of Employer, (iii) material violation by Employee of any Employer
policy, regulation or practice; (iv) conviction of a felony; or (v)
habitual intoxication, drug use or chemical substance use by any
intoxicating or chemical substance. Notwithstanding the forgoing,
Employee shall not be deemed to have been terminated for Cause unless
and until Employee has received thirty (30) days' prior written notice
(a "Dismissal Notice") of such termination. In the event Employee does
not dispute such determination within thirty (30) days after receipt of
the Dismissal Notice, Employee shall not have the remedies provided
pursuant to Section 6.g. of this Agreement. In addition, Employee shall
repay Employer on a pro-rata basis (calculated based on the remaining
months in the Term), the Moving Expenses.
e. By Employee for Employer Cause. Employee may terminate this
Agreement upon thirty (30) days written notice to Employer (the
"Employee Notice") upon the occurrences without Employee's express
written consent, of any one or more of the following events, provided,
however, that Employee shall not have the right to terminate this
Agreement if Employer is able to cure such event within thirty (30)
days (ten (10) days with regard to Subsection (ii) hereof) following
delivery of such notice:
(I) Employer substantially diminishes Employee's
duties such that they are no longer of an executive nature as
contemplated by Section 3 hereof or
(ii) Employer materially breaches its obligations to
pay Employee as provided for herein and such failure to pay is not a
result of a good faith dispute between Employer and Employee.
f. Other. If Employer terminates this Agreement for any reason
other than as set forth in Sections 6.a, 6.b., 6.c or 6.d. above, or if
Employee terminates this Agreement pursuant to Section 6.e. above,
Employer shall immediately pay Employee in a lump sum payment, an
amount equal to Base Salary, Bonus Salary and Auto Allowance and which
would otherwise be payable until the end of the Term (collectively, the
"Severance Payment"). In addition, Employer shall continue to provide
Employee with Benefits until the end of the Term. For purposes of
calculating Bonus Salary payable pursuant to this Section 6.f.,
Employee shall receive Bonus Salary equal to the last Bonus Salary
actually paid the Employee, prorated for the number of months to be
covered by the Severance Payment. Notwithstanding
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the foregoing, following a Change of Control (as hereinafter defined),
the number of months upon which the calculation of the Severance
Payment shall be based and for which Employer shall be obligated to
provide Employee with the Benefits pursuant to this Section 6.f. shall
be the greater of (I) the remaining number of months left in the Term
and (ii) eight (8) months.
g. Arbitration. In the event that Employee disputes a
determination that Cause exists for terminating his employment pursuant
to Section 6.d. of this Agreement, or Employer disputes the
determination that cause exists for Employee's termination of his
employment pursuant to Section 6.e of this Agreement, either such
disputing party may, in accordance with the Rules of the American
Arbitration Association ("AAA"), and within 30 days of receiving a
Dismissal Notice or Employee Notice, as applicable, file a petition
with the AAA for arbitration of the dispute, the costs thereof
(including legal fees and expenses) to be shared equally by the
Employer and Employee unless an order of the AAA provides otherwise.
Such proceeding shall also determine all other items then in dispute
between the parties relating to this Agreement, and the parties
covenant and agree that the decision of the AAA shall be final and
binding and hereby waive their rights to appeal thereof.
G. CONFIDENTIAL INFORMATION. Employee acknowledges that the confidential
information and data obtained by him during the course of his
performance under this Agreement concerning the business or affairs of
Employer, or any entity related thereto, are the property of Employer
and will be confidential to Employer. Such confidential information may
include, but is not limited to, specifications, designs, and processes,
product formulae, manufacturing, distributing, marketing or selling
processes, systems, procedures, plans, know-how, services or material,
trade secrets, devices (whether or not patented or patentable),
customer or supplier lists, price lists, financial information
including, without limitation, costs of materials, manufacturing
processes and distribution costs, business plans, prospects or
opportunities, and software and development or research work, but does
not include Employee's general business or direct marketing knowledge
(the "Confidential Information"). All the Confidential Information
shall remain the property of Employer and Employee agrees that he will
not disclose to any unauthorized persons or use for his own account or
for the benefit of any third party any of the Confidential Information
without Employer's written consent. Employee agrees to deliver to
Employer at the termination of this employment, all memoranda, notes,
plans, records, reports, video and audio tapes and any and all other
documentation (and copies thereof) relating to the business of
Employer, or any entity related thereto, which he may then possess or
have under his direct or indirect control. Notwithstanding any
provision herein to the contrary, the Confidential Information shall
specifically exclude information which is publicly available to
Employee and others by proper means, readily ascertainable from public
sources known to Employee at the time the information was disclosed or
which is rightfully obtained from a third party, information required
to be disclosed by law provided Employee provides notice to Employer to
seek a protective order, or information disclosed by Employee to his
attorney regarding litigation with Employer.
H. INVENTIONS AND PATENTS. Employee agrees that all inventions,
innovations or improvements in the method of conducting Employer's
business or otherwise related to Employer's business (including new
contributions, improvements, ideas and discoveries, whether patentable
or not) conceived or made by him during the Employment Period belong to
Employer. Employee will promptly disclose such inventions, innovations
and improvements to Employer and perform all actions reasonably
requested by Employer to establish and confirm such ownership.
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I. NONCOMPETE AND RELATED AGREEMENTS.
1. Employee agrees that during the Noncompetition Period (as
herein defined), he will not: (I) directly or indirectly own, manage,
control, participate in, lend his name to, act as consultant or advisor
to or render services alone or in association with any other person,
firm, corporation or other business organization for any other person
or entity engaged in the television home shopping and infomercial
business, any mail order business that directly competes with Employer
or any of its affiliates by selling merchandise primarily of the type
offered in and using a similar theme as any of Employer's or its
affiliates' catalogs during the term of this Agreement or any business
which Employer (upon authorization of its board of directors) has
invested significant research and development funds or resources and
contemplates entering into during the next twelve (12) months (the
"Restricted Business"), anywhere that Employer or any of its affiliates
(including without limitation, Holdings) operates during the term of
this Agreement within the continental United States (the "Restricted
Area"); (ii) have any interest directly or indirectly in any business
engaged in the Restricted Business in the Restricted Area other than
Employer (provided that nothing herein will prevent Employee from
owning in the aggregate not more than one percent (1%) of the
outstanding stock of any class of a corporation engaged in the
Restricted Business in the Restricted Area which is publicly traded, so
long as Employee has no participation in the management or conduct of
business of such corporation), (iii) induce or attempt to induce any
employee of Employer or any entity related to Employer to leave his,
her or their employ, or in any other way interfere with the
relationship between Employer or any entity related to Employer and any
other employee of Employer or any entity related to Employer, or (iv)
induce or attempt to induce any customer, supplier, franchisee,
licensee, other business relation of any member of Employer or any
entity related to Employer to cease doing business with Employer or any
entity related to Employer, or in any way interfere with the
relationship between any customer, franchisee or other business
relation and Employer or any entity related to Employer, without the
prior written consent of Employer. For purposes of this Agreement,
"Noncompetition Period" shall mean the period commencing as of the
Closing Date and ending on the last day of the sixth (6th) month
following the date on which Employee is terminated during the term of
this Agreement.
2. If, at the time of enforcement of any provisions of Section
9, a court of competent jurisdiction holds that the restrictions stated
therein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substituted for the stated
period, scope or area.
3. Employee agrees that the covenants made in this Section 9
shall be construed as an agreement independent of any other provision
of this Agreement and shall survive the termination of this Agreement.
4. Employee represents and warrants to Employer that he is not
subject to any existing noncompetition or confidentiality agreements
which would in any way limit him from working in the television home
shopping, catalog or infomercial businesses, or from performing his
duties hereunder or subject Employer or Holdings to any liability as a
result of his employment hereunder, including following consummation of
the Transactions. Employee agrees to indemnify and hold Employer,
Holdings and their affiliates harmless from and against any and all
claims, liabilities, losses, costs, damages and expenses (including
reasonable attorneys' fees) arising as a result of any noncompete or
confidentiality agreements applicable to Employee.
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J. TERMINATION OF EXISTING AGREEMENTS. This Agreement supersedes and
preempts any prior understandings, agreements or representations,
written or oral, by or between Employee and Employer, which may have
related to the employment of Employee, Employee's Agreement Not to
Compete with Employer, or the payment of salary or other compensation
by Employer to Employee, and upon this Agreement becoming effective,
all such understandings, agreements and representations shall terminate
and shall be of no further force or effect.
K. SPECIFIC PERFORMANCE. Employee and Employer acknowledge that in the
event of a breach of this Agreement by either party, money damages
would be inadequate and the nonbreaching party would have no adequate
remedy at law. Accordingly, in the event of any controversy concerning
the rights or obligations under this Agreement, such rights or
obligations shall be enforceable in a court of equity by a decree of
specific performance. Such remedy, however, shall be cumulative and
nonexclusive and shall be in addition to any other remedy to which the
parties may be entitled.
L. SALE, CONSOLIDATION OR MERGER. In the event of a sale of the stock, or
substantially all of the stock, of Employer or Holdings Corp., or
consolidation or merger of Employer or Holdings Corp. with or into
another corporation or entity, or the sale of substantially all of the
operating assets of Employer or Holdings Corp. to another corporation,
entity or individual, Employer may assign its rights and obligations
under this Agreement to its successor-in-interest and such
successor-in-interest shall be deemed to have acquired all rights and
assumed all obligations of Employer hereunder.
M. STOCK OPTIONS. Employee shall be granted incentive stock options in
accordance with the 1994 Executive Stock Option and Compensation Plan
of Employer (the "Plan") for 100,000 shares of ValueVision
International, Inc. common stock ("Stock Options") subject to the
provisions thereof and exercisable at the time or times established by
the stock option agreement representing the Stock Options (the "Stock
Option Agreement"). The Stock Options shall vest in equal amounts,
one-seventh each, for the next successive seven (7) years as measured
from the anniversary of the date hereof, or such earlier date in the
sole discretion of the Employer's Chief Executive Officer. All such
Stock Options shall automatically vest upon a termination of this
Agreement prior to the end of the Term (unless pursuant to Sections 6.c
or 6.d.) or upon a Change of Control. Notwithstanding the forgoing or
anything contained in the Plan or the Stock Option Agreement, the
consummation of the Transactions shall not be deemed a Change of
Control for purposes of vesting of the Stock Options, although any
transaction in the future similar to the Transactions involving either
Employer or Holdings Corp. shall constitute a Change of Control.
N. CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean an event as a result of which: (I) any 'person" (as
such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934 (the "Exchange Act")), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has a right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 20% of the total voting power of
the voting stock of either Employer or Holdings Corp. (or their
successors and assigns); (ii) Employer or Holdings Corp. consolidates
with, or merges with or into another unaffiliated corporation or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person, or any unaffiliated
corporation consolidates with, or merges with or into, Employer or
Holdings Corp., in any such event pursuant to a transaction in which
the outstanding voting stock of Employer or Holdings Corp. is changed
into or exchanged for cash, securities or other property, other than
any such transaction where (A) the outstanding voting stock of Employer
or Holdings Corp. is changed into or
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exchanged for (x) voting stock of the surviving or transferee
corporation or (y) cash, securities (whether or not including voting
stock) or other property, and (B) the holders of the voting stock of
Employer or Holdings Corp. immediately prior to such transaction own,
directly or indirectly, not less than 80% of the voting power of the
voting stock of the surviving corporation immediately after such
transaction; or (iii) during any period of two consecutive years,
following consummation of the Transactions, individuals who at the
beginning of such period constituted the Board of Directors of Employer
or Holdings Corp. (together with any new directors whose election by
such Board or whose nomination for election by the stockholders of
Employer or Holdings Corp. was approved by a vote of 66-2/3% of the
directors then still in office who were either directors at the
beginning of such period or whose election ro nomination for election
was previously so approved) cease for any reason to constitute a
majority of the Board of Employer or Holdings Corp., respectively, then
in office, or (iv) Employer or Holdings Corp. is liquidated or
dissolved or adopts a plan of liquidation.
O. NO OFFSET - NO MITIGATION. Employee shall not be required to mitigate
damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement,
including welfare benefits, shall not be reduced by any compensation or
benefits earned by or provided to Employee as the result of employment
by another employer.
P. WAIVER. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a waiver or relinquishment of any
right granted hereunder or of the future performance of any such term,
covenant or condition.
Q. ATTORNEY'S FEES. In the event of any action for breach of, to enforce
the provisions of, or otherwise arising out of or in connection with
this Agreement, the prevailing party in such action, as determined by a
court of competent jurisdiction in such action, shall be entitled to
receive its reasonable attorney fees and costs from the other party. If
a party voluntarily dismisses an action it has brought hereunder, it
shall pay to the other party its reasonable attorney fees and costs.
R. NOTICES. Any notice to be given hereunder shall be deemed sufficient if
addressed in writing, and delivered by registered or certified mail or
delivered personally: (I) in the case of Employer, to Employer's
principal business office; and (ii) in the case of Employee, to his
address appearing on the records of Employer, or to such other address
as he may designate in writing to Employer.
S. SEVERABILITY. In the event that any provision shall be held to be
invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of
this Agreement and the remaining covenants, restrictions and provisions
hereof shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
T. AMENDMENT. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
U. BENEFIT. This Agreement shall be binding upon and inure to the benefit
of and shall be enforceable by and against Employee's heirs,
beneficiaries and legal representatives. It is agreed that the rights
and obligations of Employee may not be delegated or assigned except as
specifically set forth in this Agreement.
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V. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
EMPLOYER: VALUEVISION INTERNATIONAL, INC.
By /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
EMPLOYEE: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
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