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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 4th day of June, 1999, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Xxxxx Xxxxxx (hereinafter referred to as "Employee").
WITNESSETH:
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:
1. EMPLOYMENT. Employer agrees to employ Employee and Employee agrees to
be employed by Employer on the terms and conditions set forth in this
Agreement.
2. TERM. The term of Employee's employment hereunder shall commence on the
date hereof and shall continue on a full-time basis for two years (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.
3. DUTIES. Employee shall serve as Executive Vice President/General
Manager of Employer reporting to Employer's Chief Executive Officer 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 the Term, or such
additional vacation allowance as may be granted in the sole discretion
of Employer. Employee agrees to spend four and one-half (4.5) days each
week during the Term at Employer's corporate offices.
4. COMPENSATION. Employee's compensation for the services performed under
this Agreement shall be as follows:
a. Base Salary. Employee shall receive a base salary of at
least Two Hundred Thousand and No/100 Dollars ($200,000.00) per year
for the Term of this Agreement and Two Hundred Fifty Thousand and
No/100 Dollars ($250,000) per year ("Base Salary").
b. Bonus Salary. Employee shall receive bonus salary ("Bonus
Salary") within 90 days after each of Employers's fiscal years during
the Term of this Agreement of up to $150,000 based on the following
calculation: $50,000 if ValueVision obtains an operating profit equal
to at least 1% of net sales, an additional $50,000 if ValueVision
obtains a net operating profit of at least 2% of net sales, and an
additional $50,000 if ValueVision obtains a net operating
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profit of at least 3% of net sales, unless prior to such date,
Employee's employment shall be terminated pursuant to Sections 6.c. or
6.d. hereof. The first $50,000 of the Bonus Salary shall be guaranteed
for the first year of the Term and the second year of the Term.
c. Apartment and Automobile. Employer shall provide Employee
with an automobile and apartment to use in Minnesota during the Term
("Apartment and Auto Allowance").
5. OTHER BENEFITS DURING THE EMPLOYMENT PERIOD.
a. 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.
b. 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.
c. 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.
6. TERMINATION OF EMPLOYMENT.
a. Death. In the event of Employee's death, this Agreement
shall terminate and Employee shall cease to receive Base Salary, Bonus
Salary, Apartment and Auto Allowance, 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.
b. 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, Apartment and Auto Allowance, and all other Benefits, on
the date this Agreement is so terminated except that, Employee shall
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.
c. Voluntary Termination. In the event that Employee
voluntarily terminates his employment, he shall cease to receive Base
Salary, Bonus Salary, Apartment and Auto Allowance, and all other
Benefits as of the date of such termination.
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d. 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, Apartment
and 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.
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 and Bonus Salary 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 the Bonus Salary earned through the date of
termination.
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
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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.
7. 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.
8. 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.
9. NONCOMPETE AND RELATED AGREEMENTS.
a. 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,
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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 or internet
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 or
internet sites 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
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 date
hereof and ending on the last day of the sixth (6th) month following
the Employment Period.
b. 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.
c. 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.
d. 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, infomercial or internet businesses,
or from performing his duties hereunder or subject Employer to any
liability as a result of his employment hereunder. Employee agrees to
indemnify and hold Employer and its affiliates harmless from and
against any and all claims, liabilities, losses, costs, damages and
expenses
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(including reasonable attorneys' fees) arising as a result of any
noncompete or confidentiality agreements applicable to Employee.
10. 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 (including, but not limited to, that certain
agreement dated April 16, 1999, and upon this Agreement becoming
effective, all such understandings, agreements and representations
shall terminate and shall be of no further force or effect.
11. 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.
12. SALE, CONSOLIDATION OR MERGER. In the event of a sale of the stock, or
substantially all of the stock, of Employer, or consolidation or merger
of Employer. with or into another corporation or entity, or the sale of
substantially all of the operating assets of Employer 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.
13. STOCK OPTIONS. Employee is being granted incentive stock options in
accordance with the 1990 Stock Option Plan of Employer (the "Plan")
for 50,000 shares of ValueVision International, Inc. common stock
("Stock Options") with an exercise price equal to the last sale price
per share on the last trading day immediately prior to the date
hereof, 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 vest
in equal amounts as follows: one-half on the first anniversary of the
date of grant, and one-half on the second anniversary of the date of
grant provided Employee remains an employee of Employer on the vesting
date. 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.).
14. 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.
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15. 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.
16. 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.
17. 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.
18. 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.
19. AMENDMENT. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
20. 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.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota
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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/ Xxxx XxXxxxxxx
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Xxxx XxXxxxxxx
Its: Chief Executive Officer
EMPLOYEE:
By /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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