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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 19th day of October, 1999, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Xxxxxxx 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 until the third
anniversary of the date hereof (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 Chief Financial
Officer 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 four (4) weeks during each year of
the Term, or such additional vacation allowance as may be granted in
the sole discretion of Employer.
4. Compensation. Employee's compensation for the services performed under
this Agreement shall be as follows:
1. Base Salary. Employee shall receive a base salary of at
least Two Hundred Forty Thousand and No/100 Dollars ($240,000.00) per
year for the Term of this Agreement ("Base Salary"). A performance
review will be conducted annually.
2. 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 $200,000 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
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operating profit of at least 2% of net sales, an additional $50,000 if
ValueVision obtains a net operating profit of at least 3% of net sales,
and an additional $50,000 if ValueVision obtains a net operating profit
of at least 4% 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
each year during the Term. Notwithstanding the foregoing, for
Employer's fiscal year ending January 31, 2000, no Bonus Salary shall
be payable. In addition, Employee shall be entitled to a signing bonus
of $50,000 once he has commenced working for Employer (the "Signing
Bonus").
c. Automobile Allowance. Employer shall pay Employee a
monthly automobile allowance of $500.00 per month ("Auto Allowance").
d. Moving Expenses. Employer shall pay for the normal
household moving expenses associated with Employee's move to
Minneapolis ("Moving Expenses") in accordance with Employer's
relocation expense policy previously provided to Employee.
5. Other Benefits During the Employment Period.
1. 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.
2. 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.
3. 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.
1. 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.
2. 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
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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.
3. 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 voluntarily terminates
his employment during the first six months of the Term (the "Signing
Bonus Term"), Employee shall repay Employer on a pro-rata basis
(calculated based on the remaining months in the Signing Bonus Term),
the Signing Bonus.
4. 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 remaining months in 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 remaining
months in 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 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.
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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, 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.
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 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
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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.
1. 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 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 twelfth (12th) month following the Employment Period.
2. 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
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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.
3. 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.
4. 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 (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 is being granted non-qualified stock options
for 200,000 shares of ValueVision International, Inc. common stock
("Stock Options") with an exercise price equal to the per share closing
price of Employer's common stock on the last trading date immediately
preceeding 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
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(the "Stock Option Agreement"). The Stock Options vest in equal amounts
as follows: one-third on the date of grant, one-third on the first
anniversary of the date of grant, and one-third on the second
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.
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.
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21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota.
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/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
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