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Exhibit 10.43
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of July,
1997, by and between SHOP AT HOME, INC. (the "Corporation"), a Tennessee
corporation, and XXXX X. XXXXXX ("Employee"), an individual residing in the
State of Georgia;
W I T N E S S E T H:
WHEREAS, the Corporation engages in the business of the retail sale of
merchandise by sales presentations broadcast directly to potential customers by
cable, broadcast and satellite television transmissions commonly known as the
"shop at home business," and in the business of the ownership and operation of
television stations;
WHEREAS, Employee is currently the President and Chief Executive
Officer of the Corporation, pursuant to the Employment Agreement dated September
20, 1993, as amended;
WHEREAS, the Corporation recognizes that the Employee is a valuable
employee of the Corporation who is directly responsible for the Corporation's
growth and financial success; and
WHEREAS, the parties hereto desire to enter into a newly negotiated
agreement for the Corporation's employment of Employee on the terms and
conditions hereinafter stated, with the intention to replace all previous
employment agreements in their entirety.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Employment and Term. The Corporation hereby employs Employee as its
President and Chief Executive Officer to perform such services and duties as the
Board of Directors of the Corporation may from time to time designate during the
term hereof, and Employee accepts such employment, all subject to the terms and
conditions of this Agreement. Employee's employment shall commence on the date
hereof and shall be for a term of five (5) years (the "Term"). Employee's
employment under this Agreement shall be extended automatically for successive
additional two (2) year terms after the initial term unless either party gives
written notice to the contrary to the other at least ninety (90) days prior to
commencement of any such renewal term.
2. Termination. The Corporation may terminate Employee's employment
under this Agreement at any time during the Term (a) for Cause (as hereinafter
defined) or (b) if Employee becomes Completely Disabled (as hereinafter
defined). This Agreement shall terminate automatically upon the death of the
Employee. Upon proper termination of the Employee, except as provided in
subsections 4(c)-(d), Employee shall not be entitled to receive any further
compensation or benefits from the Corporation, and except in the case of the
death of the Employee, the Corporation shall continue to pay to the Employee's
estate or personal representative his Base Salary for a period of six (6)
months.
3. Duties. Employee, during the term of this Agreement, will devote his
full-time attention and energies to the diligent performance of his duties as an
employee of the
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Corporation. During the term of this Agreement, Employee will not accept
employment with any other Person, or engage in any venture for profit which the
Corporation may consider to be in conflict with its best interest or to be in
competition with its business or which may interfere with Employee's performance
of his duties hereunder.
4. Compensation.[1] The Corporation will pay to Employee as
compensation for the services to be performed by him hereunder an annual salary
of $190,000.00 (the "Base Salary"), payable in equal installments, subject to
increase from time to time by the mutual agreement of the parties hereto.
[2] As additional compensation, the Corporation will pay to
Employee an annual bonus paid on a quarter basis within sixty (60) days of the
end of each fiscal quarter, and provided that his employment has not been
terminated by Employee or by Employer in accordance with Section 2 hereof prior
to the last day of the fiscal quarter. Each quarterly bonus shall be equal to
the greater of (i) ten percent (10%) of the increase of the Corporation's net
operating profit, after taxes, over the same quarter of the previous fiscal
year, or (ii) five percent (5%) of the Total Cash Flow (as defined below) for
such quarter. For these purposes, Total Cash Flow shall be the net operating
profit, after taxes, plus the depreciation accrued by the Corporation for its
broadcast station properties. The parties agree that the Corporation's quarterly
financial statements as filed on Form 10-Q with the Securities and Exchange
Commission shall be used as the basis upon which to determine the amount of any
additional compensation under this subsection. In the event that the Corporation
later elects or is required to revise its quarterly financial statements, the
parties agree to cooperate to make any necessary adjustments in the additional
compensation, with the intention being to finally balance such additional
compensation against the annual financial statements prepared by the
Corporation's accountants in accordance with generally accepted accounting
practices. Such annual financial statements shall be conclusive as to the total
amount, if any, of such quarterly bonuses due.
[3] If, within 12 months after the occurrence of a Change of
Control, the Corporation elects to terminate Employee's employment hereunder for
any reason, or if the Employee elects to terminate this Agreement by
resignation, the Corporation shall continue to pay Employee an amount equal to
the total amount of cash compensation paid to Employee during the 12 month
period immediately prior to the date of termination. This payment shall be paid
in a lump sum payment within thirty (30) days after the date of the Employee's
termination.
[4] In the event the Corporation terminates for Cause as
defined in Section 8.2(c), the Corporation shall continue to pay Employee's Base
Salary and car allowance in the amount and manner herein provided for a period
of 12 months from the date of termination.
5. Other Benefits. [1] In the event the Employee relocates his primary
residence from the Atlanta area in connection with his duties with the
Corporation, the Corporation shall pay or reimburse the Employee for his
reasonable moving and related expenses. In the event it is determined that the
payment or reimbursement of these expenses will result in taxable income to the
Employee, the Corporation shall pay an additional amount to Employee necessary
to reimburse him for the federal taxes incurred on such income.
[2] The duties to be performed by Employee under this
Agreement will require the regular use of an automobile, and the parties agree
that Employer shall, in lieu of furnishing
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Employee with a company car or reimbursing Employee for expenses incurred for
use of his personal automobile, pay Employee a monthly automobile allowance of
$1,000.00. Neither the payments to Employee nor any other terms of this
Agreement are intended or shall make Employee the owner, bailee, or lessee of
any automobile utilized by Employee.
[3] The Corporation will reimburse Employee for all expenses
incurred (other than for automobile use) in the course and scope of the
Corporation's business, upon the presentation by Employee, from time to time, of
an account of such expenditures, setting forth the purposes for which incurred,
and the amounts thereof, together with such receipts showing payments as
Employee has reasonably been able to retain.
[4] The Corporation shall provide Employee with health, life
and disability insurance pursuant to its group insurance plan as now or
hereafter in effect. In addition, Employee shall receive vacation and holiday
benefits in accordance with the Corporation's policies as now or hereafter in
effect.
[5] The Corporation will pay the reasonable cost of a country
club membership and the recurring periodic fees for the Employee.
6. Stock Options. The Corporation will grant to Employee a
non-qualified (as defined by the Internal Revenue Code) option to purchase up to
50,000 shares of the Corporation's Common Stock, $.0025 par value, at an
exercise price of $2.875 per share. These options will vest on June 30, 2001,
and shall expire on June 30, 2006, if not exercised on or prior to that date.
The form of such options shall be in accordance with the typical form of such
options previously granted by the Corporation to Employee. In the event Employee
resigns, or the Corporation terminates Employee for Cause, Complete Disability,
or death, all of Employee's rights with respect to such options not yet vested
shall terminate. In the event the Employee resigns within twelve (12) months of
the occurrence of a Change of Control, or the Corporation terminates Employee at
any time for any reason other than for Cause, Complete Disability, or death, all
of Employee's rights with respect to options not yet vested, shall vest as of
the date of termination.
7. Employee Loan. In the event that the Employee relocates his primary
residence, the Corporation agrees to extend a loan to the Employee in the amount
of $800,000. Of this amount, $300,000 shall be advanced upon Employee's
execution of a contract to purchase the residence, and the remaining $500,000
shall be advanced at the closing of such purchase. This loan shall be evidenced
by a promissory note with a final maturity date (the "Maturity Date") of the
earlier of (i) the date of the termination of the employment of the Employee, or
(ii) June 30, 2002. The note shall not bear interest. Employee shall repay the
loan by paying to the Corporation an amount equal to 10% of any amounts paid to
the Employee as additional compensation under Section 4(b) hereof, with the
entire amount of the remaining balance being due and payable on the Maturity
Date. The note shall be secured by a second mortgage deed of trust on the
residence, which deed of trust shall be subordinate to a first mortgage deed of
trust securing a loan to the Employee, from a lender and in an amount determined
by the Employee, the proceeds of which are also used to acquire the residence.
8. Definitions. For purposes of this Agreement the following terms
shall have the meanings specified below:
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A. "Accounts" - All Persons to whom any employee or agent of
the Corporation (including Employee) has heretofore offered or sold or hereafter
offers or sells any of the Corporation's products or services, or with whom any
such employee or agent has developed a relationship relating to the Corporation
Business at any time during the two-year period preceding termination or
expiration of Employee's employment. For purposes of this Agreement, an Account
shall be deemed to be located at the address of the Account with which the
Corporation regularly deals.
B. "Cause" shall mean any one of the following:
[1] The Employee commits an act of dishonesty, embezzlement
or fraud against the Corporation.
[2] The Employee competes, in a manner prohibited by this
Agreement, with the Corporation.
[3] The Employee fails to use his best efforts on behalf of
the Corporation, or conducts himself in a manner substantially detrimental to
the Corporation, including without limitation, if the Employee breaches any of
his obligations under this Agreement and fails or refuses to comply with the
provisions of this Agreement within five (5) days after receipt of written
notice from the Corporation by Employee detailing such failure or refusal and
the steps necessary to remedy that failure.
[4] Employee is convicted of a misdemeanor involving
dishonesty, breach of trust or moral turpitude, or is convicted of any felony.
[5] Employee engages in the illegal use of any drug.
[6] Any state or federal regulatory agency or court of
competent jurisdiction issues an order requiring the Employee's removal from any
duties or responsibilities for the Corporation.
C. A "Change of Control" shall be an event (i) that results in
any person, including its affiliates, owning or otherwise having voting control
with respect to directors of the Corporation, of more of the issued and
outstanding stock of the Corporation or any successor entity than SAH Holdings,
L.P. and its affiliates (Global Network Television, Inc. or X.X. Xxxxxxx) or
(ii) X.X. Xxxxxxx or his designee is not elected to, or is removed from, the
Board of Directors of the Corporation (other than by the mutual decision of X.X.
Xxxxxxx and Employee).
D. "Corporation Business" - shall mean the business of retail
sales of merchandise by sales presentations broadcast directly to potential
customers over broadcast stations, by cable and by satellite television
transmissions commonly known as the "shop at home business," and shall also
include the ownership or operation of one or more television broadcast stations.
E. The "Corporation's Territory" shall be deemed to be North
America.
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F. "Complete Disability" - Employee's inability, due to
illness, accident or any other physical or mental incapacity, to perform the
duties provided for herein for an aggregate of 90 days within any period of 240
consecutive days.
G. "Confidential Information" - Names, addresses, telephone
numbers, contact persons and other identifying information relating to Accounts
and information with respect to the needs and requirements of Accounts for the
Corporation's products and services; rate and price information on products and
services provided by the Corporation to its Accounts; all business records and
personnel data relating to the Corporation's employees, including compensation
arrangements of such employees; any trade secrets or other confidential
information licensed to, obtained, developed or purchased or otherwise possessed
by the Corporation or licensed by the Corporation to others; any other trade
secrets or confidential information used or obtained by Employee in the course
of his employment hereunder from any officer, employee, agent or representative
of the Corporation or any division, subsidiary or affiliate of the Corporation
or otherwise, information contained in any confidential documents prepared by or
for the Corporation and its employees or agents at the Corporation's expense, on
Corporation time or otherwise in furtherance of the Corporation Business, and
other confidential information used or obtained by Employee in the course of his
employment with the Corporation; financial information with respect to the
Corporation Business; and information with respect to the Corporation's
suppliers, and the source and availability of the supplies, equipment and
materials used in the Corporation Business; provided, however, that Confidential
Information shall not include: (i) any information that shall become generally
known to the industry through no fault of Employee; (ii) any information that
shall be disclosed to Employee by a third party (other than an officer,
employee, agent or representative of the Corporation or any division, subsidiary
or affiliate of the Corporation) having legitimate and unrestricted possession
thereof and the unrestricted right to make such disclosure; or (iii) any
information that Employee can demonstrate was within his legitimate and
unrestricted possession prior to the time of his employment by the Corporation.
All Confidential Information shall be contractually subject to protection under
this Agreement whether such information would otherwise be regarded or legally
considered "confidential" and without regard to whether such information
constitutes a trade secret under applicable law or is separately protectable at
law or in equity as a trade secret.
H. "Person" - Any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, governmental authority or other entity.
9. Covenants Against Unfair Post-Termination Competition.
A. Covenant Against Disclosure or Use of Confidential
Information. In consideration of his employment hereunder, Employee agrees that,
for a period of two (2) years immediately after the termination or expiration of
his employment hereunder, he will not:
[a] disclose to any Person,
[b] use in soliciting the patronage of any Person for
the purpose of providing products or services of
the kind provided in the Corporation Business, or
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[c] otherwise use for his own purposes,
any Confidential Information obtained by Employee while employed by the
Corporation; provided, however, that Employee may make disclosures required by a
valid order or subpoena issued by a court or administrative agency of competent
jurisdiction. In such event, Employee will promptly notify the Corporation of
such order or subpoena to provide the Corporation an opportunity to protect its
interest. Employee shall not be bound by this Section if the payments and
benefits described in Section 4(c) or (d) to which Employee shall be entitled
are not current; the Employee has notified the Corporation of that default, and
the Corporation has not cured that default within thirty (30) days from the date
of notice.
B. Covenant Against Post-Termination Competition. In
consideration of Employee's employment by the Corporation, Employee agrees that,
for a period of two (2) years immediately after the termination or expiration of
his employment hereunder, he will not, directly or indirectly, individually or
on behalf of any Person:
[a] solicit any Account for the purpose of selling
or providing to the Account products or services
of the same kind as provided by the Corporation
during Employee's employment by the Corporation;
or
[b] provide services of the type provided by Employee
to the Corporation to any Person which is then
engaged in the Corporation Business; or
(iii) enter into the employ of or render any service
to or act in concert with any person,
partnership, corporation or other entity engaged
in the Corporation Business within the
Corporation's Territory; or
(iv) become interested in the Corporation Business, as
a proprietor, partner, shareholder, director,
officer, principal, agent, employee, consultant
or in any other relationship or capacity;
provided, that Employee may own up to 5% of the
outstanding shares of any company which is a
reporting company with the U.S. Securities
and Exchange Commission.
This Section shall survive the expiration or termination of this
Agreement for any reason.
Notwithstanding any of the preceding provisions, the agreement of the
Employee not to compete with the Corporation after his termination shall be void
and unenforceable after the occurrence of a Change of Control.
10. Inventions, Discoveries and Improvements.
A. Disclosure to Corporation. Employee will promptly disclose
in writing to the Corporation any and all inventions, discoveries and
improvements, directly or indirectly related to the Corporation Business,
whether conceived or made solely by Employee or jointly
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with others during the period of Employee's employment hereunder. All of
Employee's right, title and interest n and to all such inventions, discoveries
and improvements developed or conceived by Employee during the period of his
employment shall be the sole property of the Corporation.
B. Documents of Assignment. At the Corporation's request and
expense, both during and subsequent to Employee's employment hereunder, Employee
will promptly execute a specific assignment of title to the Corporation of each
invention, discovery or improvement belonging to the Corporation and will
perform all other acts reasonably necessary to enable the Corporation to secure
a patent therefor in the United States and in foreign countries, and to
maintain, defend and assert such patents. This Section shall survive the
expiration or termination of this Agreement.
C. Prior Inventions. Any inventions, discoveries or
improvements, patented or unpatented, that Employee can demonstrate were
conceived or made by him prior to the date hereof shall be excluded from the
provisions of this Section.
11. Return of Client Lists, Other Documents and Equipment. Upon the
termination or expiration of his employment hereunder, Employee shall deliver
promptly to the Corporation all Corporation files, customer lists, memoranda,
research, drawings, blueprints, Corporation forms and other documents supplied
to or created by him in connection with his employment hereunder (including all
copies of the foregoing) in his possession or control and all of the Corporation
equipment and other materials in his possession or control. Employee
acknowledges that all items described in this Section are and will remain at all
times the sole and exclusive property of the Corporation.
12. Survival of Restrictions. Notwithstanding the breach of any of the
provisions of this Agreement by either party hereto, all of the provisions of
Sections 9, 10 and 11 of this Agreement shall survive the termination or
expiration of Employee's employment with the Corporation and shall continue in
full force and effect in the same manner and to the same extent as if they were
set forth in a separate agreement between the Corporation and Employee, and all
of such provisions shall be binding on the heirs, legatees and legal
representative(s) of Employee.
13. Hold Harmless. Employee and the Corporation covenant and agree that
they will indemnify and hold harmless the other from (i) any and all losses,
damages, liabilities, expenses of claims resulting from or arising out of any
nonfulfillment by the defaulting party of any material provision of this
Agreement, and (ii) any and all losses or damages resulting from the defaulting
party's malfeasance or gross negligence.
14. Contract Nonassignable. The parties acknowledge that this Agreement
has been entered into due to, among other things, the special skills of
Employee, and agree that this Agreement may not be assigned or transferred by
Employee, in whole or in part, without the prior written consent of the
Corporation. This Agreement shall be binding and shall inure to the benefit of
the Corporation and its successors and assigns.
15. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or mailed, first class, certified mail, postage
prepaid:
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To Corporation:
Shop At Home, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
To Employee:
Xx. Xxxx Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
16. Cumulative and Severable Nature of Rights and Agreements. Employee
acknowledges and agrees that the Corporation's various rights and remedies in
this Agreement are cumulative and nonexclusive of one another and that
Employee's several undertakings and agreements contained herein, including,
without limitation, those contained in Sections 9.1, 9.2, 10 and 11 of this
Agreement, are severable covenants independent of one another and of any other
provision or covenant of this Agreement. Employee agrees that the existence of
any claim by him against the Corporation, whether predicated on this Agreement
or otherwise, shall not constitute a defense to enforcement by the Corporation
of any or all of such provisions or covenants. If any provision or covenant, or
any part thereof, of this Agreement should be held by any court to be invalid,
illegal or unenforceable, either in whole or in part, such invalidity,
illegality or unenforceability of the remaining provisions or covenants, or any
part thereof, of this Agreement, all of which shall remain in full force and
effect.
17. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.
18. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by both parties hereto.
19. Execution to Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.
20. Headings. The headings set out in this Agreement are for
convenience of reference and shall not be deemed a part of this Agreement and
shall not affect the meaning or construction of any of the provisions her
21. Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
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22. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Tennessee without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Tennessee or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Tennessee.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EMPLOYER:
SHOP AT HOME, INC.
By: /s/ X.X. Xxxxxxx
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X.X. XXXXXXX,
Chairman
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
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