Exhibit 10.40
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement"), dated as of March 1, 1999, between Value
America, Inc., a Virginia corporation (the "Company"), and Xxx Xxxxxx (the
"Executive").
The Company and the Executive agree as follows:
1. Position; Term OF Employment. The Company agrees to employ the
Executive, and the Executive agrees to serve the Company, as its Chief Executive
Officer. The parties intend that the Executive shall continue to so serve in the
aforesaid capacity throughout the Term (as such term is defined below).
Subject to earlier termination under the provisions of Paragraph 4 below,
the term of Executive's employment by the Company hereunder shall commence on
March 1, 1999 and shall continue through December 31, 2004 and then renew for an
additional one year term on January 1, 2005 and each subsequent annual
anniversary thereof unless not more than 6 and at least 3 months prior to
January 1, 2005 or a subsequent annual anniversary thereof either Executive or
Company gives to the other written notice that the term shall not be renewed at
such annual anniversary, in which case the term shall expire on December 31,
2004 or the day before such subsequent anniversary, as the case may be (the
"Term").
2. Duties. The Executive throughout the Term shall devote his full time and
undivided professional attention during normal business hours to the business
and affairs of the Company and its affiliates, if any ("Affiliates"), except for
holidays and vacations consistent with applicable Company policy and except for
illness or incapacity, but nothing in this Agreement shall preclude the
Executive from serving as a director or a member of an advisory committee of any
organization involving no conflict of interest with the Company (subject to
prior approval of his appointment to such position in certain cases as provided
in the next to last sentence of this Paragraph 2), from engaging in charitable
and community activities, and from managing his personal investments, provided
that such activities do not materially interfere with the performance of his
duties and responsibilities under this Agreement. The Executive shall not accept
any proposed appointment to serve as a director, trustee or the equivalent of
any for-profit business organization of which the Executive is not a director,
trustee, or the equivalent on the date hereof, without the prior approval of the
Chairman of the Company's Board, which approval shall not be unreasonably
withheld. The Executive shall report directly to the Chairman of the Board, or
in his absence, the Board.
3. Compensation.
(a) Salary. During the Term, the Company shall pay to the Executive a
salary of $395,000 ($495,000 beginning on the date that is 75 days following the
closing date of the Company's initial public offering, if any), per annum
payable in equal installments not less frequently than monthly. Such salary
shall be reviewed by the Compensation Committee of the Board at least annually,
with any increases taking into account, among other factors, corporate and
individual performance and increases, if any, in relevant cost of living
indices.
(b) BONUS. During the Term, the Executive shall be entitled to
participate in such bonus programs as the Compensation Committee of the Board
from time to time shall approve. Notwithstanding the foregoing, for the period
beginning on (i) the date hereof and ending June 30, 1999, Executive shall be
entitled to a guaranteed bonus of $66,667, which bonus shall be paid no later
than July 10, 1999, provided, Executive is employed hereunder on June 30, 1999,
and (ii) for each calendar quarter beginning on or after July 1, 1999, Executive
shall be entitled to a bonus per full calendar quarter of employment hereunder
in such amounts and based upon achievement of such corporate and individual
performance and other criteria as shall be established by the Compensation
Committee of the Board from time to time, considering among other items input
from the Chairman of the Board, the Executive and, if considered appropriate by
the Committee, a compensation consultant (provided that the minimum bonus
potential for the calendar years ending December 31, 1999 and December 31, 2000
shall be at least $166,667 (including the $66,667 guaranteed amount referred to
above) and $200,000, respectively), which bonus shall be paid within 10 days
after the end of the applicable calendar quarter provided Executive is employed
hereunder on the last day of such quarter
(c) Cash Incentive Bonus. Provided the Executive's employment hereunder
by the Company is not terminated pursuant to Section 4(c) by the Company for Due
Cause or pursuant to Section 4(f) by the Executive as a Voluntary Termination
prior to the earlier of March 1, 2000 or the date of a Change of Control (as
such term is defined below), the Company shall also pay to the Executive a cash
incentive bonus equal to (i) if the Company completes an initial public offering
while Executive is employed by Company hereunder and prior to March 1, 2000, the
lesser of (A) $1,000,000 or (B) an amount equal to the product of (1) the amount
by which the Aggregate Market Capitalization (as such term is defined below) of
the Company at the close of business on the earliest of the date that is the
first anniversary (the "Anniversary Date") of the day following the closing of
the Company's initial public offering (the "Post-IPO Date"), the date of a
Change of Control (as such term is defined below) or the date of termination of
Executive's employment hereunder pursuant to Section 4(a) for death, Section
4(b) for Disability, or Section 4(d) or 4(e) by the Company without Due Cause
exceeds the Aggregate Market Capitalization of the Company at the close of
business on the Post-IPO Date and (2) 1%, or (ii) if the Company does not
complete an initial public offering while Executive is employed by Company
hereunder and prior to March 1, 2000, the lesser of (A) $1,000,000 or (B) an
amount equal to the product of (1) the amount by which the Aggregate Valuation
(as such term is defined below) of Company's Common Stock on the earliest of
March 1, 2000, the date of a Change of Control (as such term is defined below)
or the date of termination of Executive's employment hereunder pursuant to
Section 4(a) for death, Section 4(b) for Disability, or Section 4(d) or 4(e) by
the Company without Due Cause exceeds $600,000,000 and (2) 1%. Notwithstanding
anything to the contrary in this Section 3(c), if, after the Post-IPO Date, and
prior to the earliest of the Anniversary Date, the date of a Change of Control
or the date of termination of Executive's employment hereunder pursuant to
Section 4(a) for death, Section 4(b) for Disability or Section 4(d) or 4(e) by
the Company without Due Cause, the Company either (i) completes a leveraged
recapitalization in which its leverage ratio (which is the ratio of total
indebtedness to either cash flow or EBITDA (as defined in its bank credit
agreement)), is increased to more than 3-to-1, or (ii) repurchases at least 10%
of its outstanding shares of Common Stock, then for purposes of determining the
increase in the Company's Aggregate Market Capitalization since the Post-IPO
Date, the "ending" Aggregate Market Capitalization shall be the greater of the
Company's Aggregate Market Capitalization on (x) the day that is the last
business day prior to the date of completion of the leveraged recapitalization
or the first repurchase of shares, as applicable, or (y) the earliest of the
Anniversary Date, the date of a Change of Control or the date of termination of
Executive's employment hereunder pursuant to Section 4(a) for death, Section
4(b) for Disability or Section 4(d) or 4(e) by the Company without Due Cause.
For the purposes of this Section 3 (c), the "Aggregate Valuation" shall be
determined in good faith by the Board of Directors based upon a written
independent evaluation provided by a nationally recognized investment banking
firm. A "Change of Control" shall mean (i) a disposition by the Company of
substantially all of its assets or (ii) the transfer by security holders of the
Company as of the date hereof (whether by sale, exchange, merger or otherwise)
of more than 50% of the shares of capital stock then outstanding on a fully
diluted basis to a person or entity not a shareholder (or an affiliate of a
shareholder) of the Company on the date hereof. "Aggregate Market
Capitalization" on a given date shall mean an amount equal to the product of (i)
the number of the then outstanding shares of Company Common Stock and (ii) the
Market Price on such day. "Market Price" at any date shall be deemed to be the
last reported sale price of the Company Common Stock on such day, or, in case no
such reported sales takes place on such day, the average of the last reported
sale prices for the previous three trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or as reported on the NASDAQ National Market
System, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the NASDAQ National Market System, the
average closing bid price as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or similar organization if NASDAQ is no longer
reporting such information, or if the Common Stock is not quoted on NASDAQ, as
determined in good faith by resolution of the Board of Directors of Company,
based on the best information available to it.
(d) Benefit Plans. During the Term, the Executive shall be entitled to
participate in all retirement and employment benefit plans of the Company that
are generally available to senior executives of the Company. Such participation
shall be pursuant to the terms and conditions of such plans, as the same shall
be amended from time to time. Executive shall be entitled to 20 days of paid
vacation per full calendar year, which shall accrue ratably throughout the year.
Unused vacation shall not be carried over from one calendar year to another and
Executive shall not be entitled to a cash payment for any unused vacation. In
addition, Company shall pay to Executive as additional compensation each month
(i) $_________, which Executive will use to pay the premium on term life
insurance covering his life (provided that $2,000,000 of the proceeds payable
under such policy shall be payable to the Company) and (ii) $________, which
Executive will use to pay the premiums on disability insurance covering him.
(e) Relocation Expenses. The Company will reimburse the Executive for the
reasonable out-of-pocket expenses incurred by Executive for (i) moving van
expenses to Charlottesville, Virginia and (ii) living expenses in
Charlottesville, Virginia for a reasonable period of time prior to the Executive
moving to Charlottesville, Virginia.
(f) Business Expenses. During the Term, the Company shall, in accordance
with policies then in effect with respect to payments of expenses, pay or
reimburse the Executive for all reasonable out-of-pocket travel and other
expenses (other than ordinary commuting expenses) incurred by the Executive in
performing services hereunder. All such expenses shall be accounted for in such
reasonable detail as the Company may require.
(g) Indemnity. As an officer of Company, Executive shall be entitled to
indemnity as provided in the Company's Articles of Incorporation, as the same
shall be amended from time to time.
4. Termination.
(a) DEATH. In the event of the death of the Executive during the Term,
his employment shall be terminated as of the date of death and his salary for
the month in which his death occurs shall be paid to his designated beneficiary,
or in the absence of such designation, to the estate or other legal
representative of the Executive. Except in accordance with the terms of the
Company's benefit programs and plans then in effect, after his date of death,
Executive shall not be entitled to any other compensation or benefits from the
Company or hereunder.
(b) Disability. In the event of the Executive's Disability as hereinafter
defined, the employment of the Executive may be terminated by the Company,
effective upon the Disability Termination Date (as defined below). After the
Disability Termination Date, except in accordance with the Company's benefit
programs and plans then in effect, Executive shall not be entitled to any
compensation or benefits from the Company or hereunder.
"Disability," for purposes of this Agreement, shall mean the
Executive's incapacity due to physical or mental illness causing his complete
and full-time absence from his duties, as defined in Paragraph 2, for either a
consecutive period of more than six months or at least 180 days within any
270-day period. Any determination of the Executive's Disability made in good
faith by the Board shall be conclusive and binding on the Executive, unless
within 10 days after written notice to Executive of such determination,
Executive elects by written notice to Company to challenge such determination,
in which case the determination of Disability shall be made by arbitration
pursuant to Section 13 below (provided that Company shall not be required to
provide Executive any compensation or benefits after the determination by the
Board unless the arbitration results in a determination that Executive is not
disabled, in which case the Company shall pay to Executive within 10 days after
such arbitration decision all compensation due through the date of such
arbitration decision, and further provided that Company shall not be deemed to
have breached its obligations related to such compensation and benefits under
this Agreement if it makes such payment within 10 days after such arbitration
decision). The Disability Termination Date shall be the date on which the Board
makes such determination of Executive's Disability unless the arbitration, if
any, results in a determination that Executive is not disabled.
(c) Termination by the Company for Due Cause. Nothing herein shall
prevent the Company from terminating the Executive's employment for Due Cause.
The Executive shall continue to receive the salary provided for in this
Agreement only through the period ending with the date of such termination. Any
rights and benefits he may have under employee benefit plans and programs of the
Company shall be determined in accordance with the terms of such plans and
programs. Except as provided in the two immediately preceding sentences, after
termination of employment for Due Cause, Executive shall not be entitled to any
compensation or benefits from the Company or hereunder.
The term "Due Cause," as used herein, shall mean (i) repeated
material violation by the Executive of the Executive's obligations hereunder,
the DNN Agreement (as defined in Paragraph 10 below) or a written directive from
either the Chairman of the Board or the Board (1) which are willful and
deliberate on the Executive's part, (2) which are not due to the Disability of
the Executive (within the meaning of Paragraph 4(b) but without regard to the
requirement that it continue for more than six months or 180 days within a
270-day period) and (3) which have not been cured by the Executive within 15
business days after written notice to the Executive specifying the nature of
such violations, (ii) an act or acts of dishonesty on the Executive's part which
are intended to or do result in either the Executive's personal enrichment or
material adverse affect upon the Company's assets, business, prospects or
reputation, or (iii) conviction of a felony or a misdemeanor involving fraud,
breach of trust, or misappropriation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Due Cause without (1)
written notice to the Executive setting forth the reasons for the Company's
intention to terminate for Due Cause, (2) an opportunity for the Executive,
together with his counsel, to be heard before the Board, and (3) delivery to the
Executive of a Notice of Termination from the Board finding that in the good
faith opinion of at least three-quarters (3/4) of the Board (not counting the
Executive in either the numerator or the denominator), the Executive was guilty
of conduct set forth above in clause (i), (ii) or (iii) hereof, and specifying
the particulars thereof in detail.
(d) Termination by the Company Other than for Due Cause. The foregoing
notwithstanding, the Company may terminate the Executive's employment for
whatever reasons it deems appropriate; provided, however, that in the event such
termination is not due to death, Disability or Due Cause, the Executive shall
(i) be entitled to a Termination Payment as hereinafter defined and (ii) be sent
written notice stating the termination is not due to death, Disability or Due
Cause. If the Company terminates the Executive's employment for other than
death, Disability or Due Cause prior to March 1, 2001, the term "Termination
Payment" shall mean a cash payment equal to the sum of (i) an amount equal to
twice his annual salary, as in effect immediately prior to such termination, and
(ii) a pro rata portion of any bonus that would have been payable to the
Executive under Paragraph 3(b) for such calendar year if he had been employed
for the full calendar year, provided the criteria for such bonus other than the
Executive's continued employment are satisfied. If the Company terminates the
Executive's employment for other than death, Disability or Due Cause during the
Term and after March 1, 2001, the term "Termination Payment" shall mean a cash
payment equal to the sum of (i) an amount equal to his annual salary, as in
effect immediately prior to such termination, and (ii) a pro rata portion of any
bonus that would have been payable to the Executive under Paragraph 3(b) for
such calendar year if he had been employed for the full calendar year, provided
the criteria for such bonus other than the Executive's continued employment are
satisfied. Such Termination Payment shall be payable in 12 equal monthly
installments beginning 30 days after the date of termination. In addition, the
Company will pay the premium cost for the Executive to receive any group health
coverage that the Company provides under Section 4980B of the Internal Revenue
Code of 1986 ("COBRA Coverage") for the period in which the Executive is
eligible for such COBRA coverage. Following the Executive's termination of
employment under this Paragraph 4(d), the Executive will have no further
obligation to provide services to the Company pursuant to Paragraphs 1 and 2.
Except for the Termination Payment and as otherwise provided in accordance with
the terms of the Company's benefit programs and plans then in effect, after
termination by the Company of employment for other than death, Disability or Due
Cause, Executive shall not be entitled to any other compensation or benefits
from the Company or hereunder.
(e) Constructive Termination of employment by the Company Without Due
Cause. Termination by the Company without Due Cause under Paragraph 4 (d) shall
be deemed to have occurred if the Executive elects to terminate his employment
as a result of a material breach by the Company of Section 3 of this Agreement
(which breach is not cured within 10 days after written notice thereof by
Executive to each of the Directors of the Company, which notice shall
specifically describe such alleged breach).
(f) Voluntary Termination. In the event that the Executive terminates his
employment at his own volition prior to the expiration of the Term (except as
provided in Paragraph 4(e) above), such termination shall constitute a
"Voluntary Termination" and in such event the Executive shall be limited to the
same rights and benefits as provided in connection with a termination for Due
Cause under Paragraph 4 (c) above, provided that Executive shall be entitled to
a pro-rata portion of any bonus that would have been payable to the Executive
under Paragraph 3(b) for such calendar year if he had been employed for the full
calendar year, provided that the criteria for such bonus other than the
Executive's continued employment are satisfied.
(g) Election Not to Renew. An election by either Company or Executive
pursuant to Paragraph 1 above not to renew the Term shall not be deemed a
termination of employment by either party. After the expiration of the Term
because of either Company's or Executive's election not to renew, except in
accordance with the terms of the Company's benefit plans and programs then in
effect and as provided in the next sentence, Executive shall not be entitled to
any other compensation or benefits from the Company or hereunder. If the Company
elects not to renew, the Company shall continue to pay Executive his then
current salary for thirteen months following the date of such election, provided
that Executive may terminate his employment hereunder at any time after such
election upon 30 days prior written notice to the Company.
(h) Notice of Termination, Resignation and Release. Any termination under
Section 4(c) by the Company for Due Cause or Section 4(b) for Disability or by
the Executive pursuant to a constructive termination under Section 4(e) shall be
communicated by Notice of Termination to the other party thereto given in
accordance with Paragraph 12. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the
termination date is other than the date of receipt of such Notice, specifies the
termination date (which date shall not be prior to the date of such notice or
more than 15 days after the giving of such Notice).
Notwithstanding anything in this Agreement to the contrary, in order
to be eligible to receive any payments or benefits hereunder as a result of the
termination or expiration of the Executive's employment, in addition to
fulfilling all other conditions precedent to such receipt, the Executive (if he
has the legal capacity to do so and if not, his legal representative) must
within 10 days after the termination date (i) resign as a member of the Board,
if applicable, and as an officer and employee of the Company and its Affiliates
and (ii) on behalf of the Executive and his estate, heirs and representatives,
execute a release in form and substance reasonably satisfactory to the Company
and its legal counsel releasing the Company, its Affiliates and each of the
Company's and such Affiliate's respective officers, Directors, employees,
members, managers, agents, independent contractors, representatives,
shareholders, successors and assigns (all of which persons and entities shall be
third party beneficiaries of such release with full power to enforce the
provisions thereof) from any and all claims related to any payments or benefits
under Section 3 or 4 of this Agreement related to the termination of Executive's
employment (provided that Executive's post-termination of employment obligations
under Section 5 shall cease upon the Company's failure to make any such payments
when due if within 15 days after written notice of such failure, Company does
not make the required payment).
(i) Earned and Accrued Payments. The foregoing notwithstanding,
upon the termination of the Executive's employment at any time, for any reason,
the Executive shall be paid all amounts that had already been earned and accrued
as of the time of termination, including but not limited to (i) pay for any
accrued and unused vacation; (ii) any bonus that had been earned but not yet
paid; and (iii) reimbursement for any business expenses accrued in accordance
with Section 3(d).
5. Non-Compete and Non-Solicitation. The Executive agrees that during the
Term which he is employed by the Company, and during the period ending two years
(one year in the event of an expiration resulting from the Company's election
not to renew) after a Voluntary Termination, a termination by the Company for
Disability or Due Cause or an expiration of the Term because either Executive or
Company elects not to renew pursuant to Paragraph 1 above (the "Non-Compete
Period"), he shall not:
(a) compete with any business that is conducted by the Company or
any of its Affiliates at any time during the two years immediately preceding and
the 6 months after the date of termination or expiration of the Term, excluding
any business that the Company ceased to conduct more than 6 months prior to
termination or expiration. For purposes of this Agreement, the term "compete"
shall mean engaging in an activity on behalf of himself or as a more than 5%
equity holder, an officer, a director, an employee, a partner, a member, a
manager, an agent, a consultant, a sole proprietor, or any other individual or
representative capacity if (i) it involves a business which sells or distributes
consumer and business products primarily (more than 50%) through the Internet or
which develops or distributes convergence technology products or which uses
interactive multimedia to sell its products and (ii) the location in which the
Executive conducts such activities is within 50 miles of Charlottesville,
Virginia;
(b) on behalf of himself or any other person or entity solicit for
employment any employee of Company or its Affiliates who was such at any time
during the 6 months immediately preceding and the 6 months after the date of
termination or expiration of the Term or cause such an employee to terminate him
or his employment by the Company or its Affiliates; or
(c) intentionally cause any vendor of the Company who was such at
any time during the two years immediately preceding and within six months after
the date of termination or expiration of the Term to cease doing business with
or materially decrease the amount of business done with the Company.
In the event the restrictions contained in this Paragraph 5 shall
be determined by any court of competent jurisdiction to be unenforceable by
reason of extending for too great a period of time or over too great a
geographic area or by reason of being too extensive in any other respect, such
restrictions shall be interpreted to extend only over the maximum period of time
for which they may be enforceable, and over the maximum geographic area as to
which they may be enforceable and to the maximum extent in all other respects as
to which they may be enforceable, all as determined by such court in such
action.
6. Protection of Confidential Information, Etc. The Executive acknowledges
that his employment by the Company will, throughout the Term of this Agreement,
bring him into close contact with many confidential affairs of the Company,
including information about costs, profits, markets, sales, products, key
personnel, pricing policies, operational methods, technical processes and
know-how and other business affairs and methods and other information not
readily available to the public, and plans for future developments. The
Executive further acknowledges that the services to be performed under this
Agreement are of a special and unique character. In recognition of the
foregoing, the Executive covenants and agrees that except as required in
connection with enforcing or defending any rights or claims in a legal
proceeding or arbitration pursuant to Section 13 below related to his employment
by the Company, this Agreement or any other agreement between the Executive and
the Company:
(i) during the Term which the Executive is employed by the
Company and thereafter, regardless of the reasons for termination
of employment, the Executive shall not, without the prior written
consent of the Board or a person authorized thereby, disclose to
any person other than as required by law, court order or
administrative or other governmental compulsory process, or other
than to an employee of the Company or its Affiliates, or to a
person to which disclosure is appropriate in connection with the
performance by the Executive of his duties as an executive of the
Company (e.g., disclosure to the Company's outside consultants,
independent contractors, lawyers, accountants or bankers of
financial data properly requested by such persons) any
confidential information obtained by him while in the employ of
the Company with respect to any of the Company's products,
services, customers, suppliers, marketing techniques, methods, or
future plans, the disclosure of which will be damaging to the
Company; provided, however, that confidential information known
generally to the public (other than as a result of unauthorized
disclosure by the Executive) shall not be subject to the
provisions of this Section 6 (i) after the time it becomes
generally known to the public;
(ii) he will deliver promptly to the Company on
termination of his employment, or at any other time the Company
may reasonably so request, at its expense, all memoranda, notes,
records, reports, and other documents (and all copies thereof)
relating to the Company's business, which he may possess or have
under his control other than any agreements or plans related to
the Executive's employment by the Company; and
(iii) he will transfer and assign to the Company, all
rights of every kind and character, in perpetuity, in and to any
material and/or ideas written, suggested or submitted by the
Executive which relate to the business of the Company and all
other results and proceeds of the Executive's service hereunder.
The Executive agrees to execute and deliver to the Company such
assignments or other instruments as the Company may require from
time to time to evidence its ownership of the results and
proceeds of the Executive's service.
7. Injunctive Relief. The Executive acknowledges that a breach of the
restrictions against engaging in a competitive activity contained in Paragraph 5
and the disclosure of confidential information contained in Paragraph 6 will
cause irreparable damage to the Company, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Executive and the Company agree that if the
Executive breaches the restrictions on engaging in a competitive activity, on
solicitations, on the disclosure of confidential information or on any other
matter or action contained in Paragraphs 5 and 6, then the Company shall be
entitled to injunctive relief.
8. Successors and Assigns.
(a) Assignment by the Company. This Agreement shall be binding
upon and inure to the benefit of the Company or any corporation or other entity
to which the Company may transfer all or substantially all of its assets and
business and to which the Company may assign this Agreement, in which case the
term "Company," as used herein, shall mean such corporation or other entity,
provided that no such assignment shall relieve the Company from any obligations
hereunder, whether arising prior to or after such assignment.
(b) Assignment by the Executive. The Executive may not assign this
Agreement or any part hereof without the prior written consent of the Company;
provided, however, that nothing herein shall preclude the Executive from
designating one or more beneficiaries to receive any amount that may be payable
following occurrence of his legal incompetency or his death and shall not
preclude the legal representative of his estate from assigning any right
hereunder to the person or persons entitled thereto under his will or, in the
case of intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries," as used in this
Agreement, shall mean a beneficiary or beneficiaries so designated to receive
any such amount or, if no beneficiary has been so designated, the legal
representative of the Executive (in the event of his incompetency) or the
Executive's estate.
9. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia.
10. Entire Agreement. This Agreement and the Developments, Noncompete,
Nondisclosure Agreement between Executive and Company dated March 1, 1999 (the
"DNN Agreement") contain all of the understandings and representations between
the parties hereto pertaining to the matters referred to herein, and supersede
all undertakings and agreements, whether oral or in writing, previously entered
into by them with respect thereto. This Agreement may only be modified by an
instrument in writing. The terms of this Agreement and the DNN Agreement shall
be interpreted to be independent agreements such that Executive must comply with
the terms of each such agreement (provided that effective upon execution of this
Agreement, Section 6 of the DNN Agreement shall be of no further force and
effect and Section 5 of this Agreement shall supersede any conflicting provision
of the DNN Agreement). To the extent such terms are deemed to be inconsistent in
any given circumstance, Executive may request in writing a determination by the
Board as to how such inconsistency shall be resolved.
11. Waiver of Breach. The waiver by any party of a breach of any condition
or provision of this Agreement to be performed by such other party shall not
operate or be construed to be a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.
12. Notices. Any notice to be given hereunder shall be in writing and
delivered personally, or sent by certified mail, postage prepaid, return receipt
requested, addressed to the party concerned at the address indicated below or to
such other address as such party may subsequently give notice of hereunder in
writing:
If to the Company:
Value America, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Corporate Secretary
With a copy to:
Xxxx X. XxXxxxx, Esquire
XxXxxxx Xxxx, A Professional Corporation
000 X. Xxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxx Xxxxxx
---------------------
---------------------
13. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect in the
Commonwealth of Virginia and judgment upon such award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The board
of arbitrators shall consist of one arbitrator to be appointed by the Company,
one by the Executive, and one by the two arbitrators so chosen. The arbitration
shall be held at such place as may be agreed upon at the time by the parties to
the arbitration. The cost of arbitration shall be borne as determined by the
arbitrators.
14. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts relating to
taxes as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company may, in its sole discretion, accept other provisions for
payment of taxes and withholdings as required by law, provided it is satisfied
that all requirements of law affecting its responsibilities to withhold have
been satisfied.
15. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
16. Titles. Titles to the paragraphs in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any paragraph.
17. Legal Fees. Company agrees to pay the reasonable fees and expenses of
Executive's legal counsel in connection with the negotiation and execution of
this Agreement, not to exceed $1,000.
18. Counsel. This Agreement has been prepared by XxXxxxx Xxxx, A
Professional Corporation, as counsel to the Company ("Counsel"), after full
disclosure of its representation of the Company and with the consent and
direction of the Company and the Executive. The Executive has reviewed the
contents of this Agreement and fully understands its terms. The Executive
acknowledges that he is fully aware of his right to the advice of counsel
independent from that of the Company, that Counsel has advised him of such right
and disclosed to him the risks in not seeking such independent advice, and that
he fully understands the potentially adverse interests of the parties with
respect to this Agreement. The Executive further acknowledges that neither the
Company nor its Counsel has made representations or given any advice with
respect to the tax or other consequences of this Agreement or any transactions
contemplated by this Agreement to him, that he has been advised of the
importance of seeking independent counsel with respect to such consequences, and
that he had obtained independent counsel with respect to such consequences. By
executing this Agreement, the Executive represents that he has, after being
advised of the potential conflicts between him and the Company with respect to
the future consequences of this Agreement, either consulted independent legal
counsel or elected, notwithstanding the advisability of seeking such independent
legal counsel, not to consult with such independent legal counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
VALUE AMERICA, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Its:Executive Vice President
/s/ Xxx Xxxxxx
----------------------------------
Xxx Xxxxxx
