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Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT made effective as of the 1st day of May, 1998, by and
between ValueVision International, Inc., a Minnesota corporation (hereinafter
referred to as "Employer"), and Xxxxx X. Xxxxxx (hereinafter referred to as
"Employee").
WITNESSETH:
WHEREAS, Employer desires to assure itself of the services of Employee
on the terms and conditions set forth below; and
WHEREAS, Employee desires to remain employed by Employer pursuant to
the terms and conditions set forth below, which Employee acknowledges to
constitute an increase in Employee's existing compensation package; and
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 continue to employ Employee and Employee
agrees to the continuation of his employment with 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 a period of
twenty-four (24) months (the "Term"). The "Employment Period" for
purposes of this Agreement shall be the period beginning on the date
hereof and ending at the time Employee shall cease to act as an
employee of Employer.
3. DUTIES. Employee shall serve as Vice President, General Counsel and
Secretary of Employer and shall perform the duties as assigned by
Employer, from time to time, and shall faithfully, and to the best of
his ability, perform such reasonable duties and services of an active,
executive, administrative and managerial nature as shall be specified
and designated, from time to time, by Employer. Employee agrees to
devote his full time and skills to such employment while he is so
employed, subject to a vacation allowance of not less than four (4)
weeks during each year of the term, or such additional vacation
allowance as may be granted in the sole discretion of Employer.
Employer's Chief Executive Officer shall provide Employee with a
performance review at least annually.
4. COMPENSATION. Employee's compensation for the services performed under
this Agreement shall be as follows:
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a. Base Salary. Employee shall receive a base salary of at least One
Hundred Seventy- Five Thousand and No/100 Dollars ($175,000.00) per
year for the term of this Agreement ("Base Salary").
b. Bonus Salary. Employee may receive bonus salary ("Bonus Salary"),
from time to time, based upon Employee's job performance. Employer's
Chief Executive Officer and Employee shall establish job performance
criteria for Employee at least annually, which shall be the basis of
such Bonus Salary.
c. Automobile Allowance. Employer shall pay Employee a monthly
automobile allowance of $450.00 per month ("Auto Allowance").
d. Professional Fees. Employer shall pay all of Employee's
professional fees, including without limitation, professional
association fees and memberships, and all of Employee's continuing
legal education fees and expenses, up to $5,000 annually ("Professional
Fees").
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, Auto Allowance, Professional Fees and Benefits as of the date
on which his death occurs.
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, Professional Fees and all other Benefits,
on the date this Agreement
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is so terminated; 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, Professional Fees and all other Benefits as of
the date of such termination.
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,
Professional Fees 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 Employer requires Employee to
relocate his offices and perform his duties hereunder more than 25
miles from Employer's current corporate offices located at 0000 Xxxxx
Xxx Xxxx, Xxxx Xxxxxxx, Xxxxxxxxx 00000 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 or Employee's
employment during the Employment Period for any reason other than as
set forth in Sections 6.a, 6.b., 6.c
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or 6.d. above, or if Employee terminates this Agreement or his
employment during the Employment Period pursuant to Section 6.e. above,
Employer shall immediately pay Employee in a lump sum payment, an
amount equal to Base Salary, Bonus Salary, Auto Allowance and
Professional Fees for twelve months (collectively, the "Severance
Payment"). In addition, Employer shall continue to provide Employee
with Benefits during the twelve months following such termination. 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. Notwithstanding the foregoing,
following a Change in Control (as defined below), the number of months
upon which the calculation of the Severance Payment shall be based and
for which Employer shall be obligated to provide Employee with the
Benefits pursuant to this Section 6.f. shall be the greater of (i) the
remaining number of months left in the Term and (ii) twelve (12)
months.
g. Arbitration. In the event that Employee disputes a
determination that Cause exists for terminating his employment pursuant
to Section 6.d. of this Agreement, or Employer disputes the
determination that cause exists for Employee's termination of his
employment pursuant to Section 6.e of this Agreement, either such
disputing party may, in accordance with the Rules of the American
Arbitration Association ("AAA"), and within 30 days of receiving a
Dismissal Notice or Employee Notice, as applicable, file a petition
with the AAA for arbitration of the dispute, the costs thereof
(including legal fees and expenses) to be shared equally by the
Employer and Employee unless an order of the AAA provides otherwise.
Such proceeding shall also determine all other items then in dispute
between the parties relating to this Agreement, and the parties
covenant and agree that the decision of the AAA shall be final and
binding and hereby waive their rights to appeal thereof.
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
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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; provided however, that the
parties hereto agree that this provision may not be used to prohibit
employee for working for an law firm which so provides such services,
so long as Employee does not specifically provide legal services to a
Restricted Business as defined herein) for any other person or entity
engaged in the television home shopping business, any mail order
business that directly competes with Employer or any of its affiliates
by selling merchandise primarily of the type offered in and using a
similar theme as any of Employer's or its affiliates' catalogs during
the term of this Agreement or any business which Employer (upon
authorization of its board of directors) has invested significant
research and development funds or resources and contemplates entering
into during the next twelve (12) months (the "Restricted Business"),
anywhere that Employer or any of its affiliates 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
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or any entity related to Employer to cease doing business with Employer
or any entity related to Employer, or in any way interfere with the
relationship between any customer, franchisee or other business
relation and Employer or any entity related to Employer, without the
prior written consent of Employer. For purposes of this Agreement,
"Noncompetition Period" shall mean the period commencing as of the
Closing Date and ending on the last day of the sixth (6th) month
following the date on which Employee is terminated during the term of
this Agreement.
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.
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 Holdings Corp., or
consolidation or merger of Employer or Holdings Corp. with or into
another corporation or entity, or the sale of substantially all of the
operating assets of Employer or Holdings Corp. to another corporation,
entity or individual, Employer may assign its rights and obligations
under this Agreement to its successor-in-interest and such
successor-in-interest shall be deemed to have acquired all rights and
assumed all obligations of Employer hereunder.
13. STOCK OPTIONS. Employee shall be granted incentive stock options in
accordance with the Second Amended 1990 Stock Option Plan of Employer
(the "Plan") for 75,000 shares of ValueVision International, Inc.
common stock ("Stock Options") subject to the provisions
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thereof and exercisable at the time or times established by the Stock
Option Agreement. The Stock Options shall vest in equal amounts,
one-third each, on the date hereof, the first anniversary of the date
hereof and the second anniversary of the date hereof, or such earlier
date in the sole discretion of the Employer's Chief Executive Officer.
All such Stock Options, together with any other stock options of
Employer issued to Employee, shall automatically vest upon a
termination of Employee's employment during the Employment Period
(unless pursuant to Sections 6.c or 6.d.) or upon a Change of Control.
14. CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean an event as a result of which: (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities and
Exchange Act of 1934 (the "Exchange Act")), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person shall be deemed to have "beneficial ownership" of
all securities that such person has a right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 20% of the total voting power of
the voting stock of either Employer (or its successors and assigns);
(ii) Employer consolidates with, or merges with or into another
corporation or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person, or
any corporation consolidates with, or merges with or into Employer, in
any such event pursuant to a transaction in which the outstanding
voting stock of Employer is changed into or exchanged for cash,
securities or other property, other than any such transaction where (A)
the outstanding voting stock of Employer is changed into or exchanged
for (x) voting stock of the surviving or transferee corporation or (y)
cash, securities (whether or not including voting stock) or other
property, and (B) the holders of the voting stock of Employer
immediately prior to such transaction own, directly or indirectly, not
less than 80% of the voting power of the voting stock of the surviving
corporation immediately after such transaction; or (iii) during any
period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Employer (together
with any new directors whose election by such Board or whose nomination
for election by the stockholders of Employer was approved by a vote of
66-2/3% of the directors then still in office who were either directors
at the beginning of such period or whose election ro nomination for
election was previously so approved) cease for any reason to constitute
a majority of the Board of Employer then in office, or (iv) Xxxx
XxXxxxxxx is no longer Chief Executive Officer of Employer, or (v)
Employer is liquidated or dissolved or adopts a plan of liquidation.
15. 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.
16. 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
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relinquishment of any right granted hereunder or of the future
performance of any such term, covenant or condition.
17. 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.
18. 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.
19. 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.
20. AMENDMENT. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
21. 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.
22. 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: /s/ Xxxxx X.Xxxxxx
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Xxxxx X. Xxxxxx
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