EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 12th day of February, 2001, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Xxxxxx Xxxxxxxxx (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 until February 11 2004
(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 Senior Vice President and General
Merchandise Manager of Employer reporting to Employer's President of TV
Home Shopping Operations 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 President of TV Home Shopping
Network shall provide Employee with a performance review at least annually.
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 and Eighty Thousand and No/100 Dollars ($280,000.00) per year
for the Term of this Agreement ("Base Salary").
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b) Bonus Salary. Employee shall receive bonus salary ("Bonus Salary")
within 90 days after the end of each of Employer's fiscal years during
the Term of this Agreement (beginning with the fiscal year ending
January 31, 2002) of up to $150,000 based on the following
calculation: $37,500 if ValueVision obtains an operating profit equal
to at least 1% of net sales, an additional $37,500 if ValueVision
obtains a net operating profit of at least 2% of net sales, an
additional $37,500 if ValueVision obtains a net operating profit of at
least 3% of net sales; and an additional $37,500 if ValueVision
obtains a net operating profit of at least 4% of net sales, unless
prior to the date of payment, 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 during the
Term (i.e., the fiscal year ending January 31, 2002).
c) Automobile Allowance. Employer shall pay Employee a monthly automobile
allowance of $550.00 per month ("Auto Allowance").
d) Moving Expenses. Employer shall pay for the normal household moving
expenses associated with Employee's move to Minneapolis from Maryland
("Moving Expenses") in accordance with Employer's relocation expense
policy previously provided to Employee.
5. Other Benefits During the Employment Period.
a) Employee shall receive all other benefits made available to 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, 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.
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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, 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, 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 initial 12 months of the
Term), the Moving Expenses.
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, Auto Allowance, and
Benefits as of the date of such termination specified by Employer. In
addition, Employee shall repay Employer on a pro-rata basis
(calculated based on the initial 12 months of the Term), the Moving
Expenses. 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
initial 12 months of 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
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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 the greater of (i) one year's Base Salary, Auto
Allowance, and Bonus Salary, or (ii) all Base Salary, Bonus Salary and
Auto Allowance 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 (if terminated before
the end of the first fiscal year of Employer, the Bonus Salary shall
equal the Bonus Salary objective stated in 4.b, prorated as
aforesaid).
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.
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
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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 his
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, 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
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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 of this Agreement and
ending on either (i) the date on which Employee ceases to be
"employed; if no Severance is paid (except in the case of a voluntary
departure by Employee); or (ii) the last day of the sixth (6th) month
following either the date on which the Employee voluntarily departs or
the date on which Employee is terminated during the Term of this
Agreement if Severance is paid.
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
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expenses (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, 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 shall be granted incentive stock options in
accordance with the 1990 Stock Option Plan of Employer (the "Plan") for
150,000 shares of ValueVision International, Inc. common stock ("Stock
Options") with an exercise price per share to be determined at the date of
grant, 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-third on the first anniversary of the date of
grant, one-third on the second anniversary of the date of grant, and
one-third on the third anniversary of the date of grant. 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.
22. Obligation to Former Employer. The Employer shall pay to Employee's former
employer promptly after the date of this Agreement a lump-sum cash payment
in the approximate amount of $65,000 in satisfaction of a retention
incentive liability that would otherwise be owing from Employee to such
former employer.
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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/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
President -- TV Home Shopping Operations
EMPLOYEE:
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Xxxxxx Xxxxxxxxx
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