1
EXHIBIT 10.45
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 30th day of December, 1998, by and
between ValueVision International, Inc., a Minnesota corporation (hereinafter
referred to as "Employer"), and Xxx Xxxx (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 March 30,
2001 (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 Merchandising
Manager of Employer reporting to Employer's Executive Vice President
General Manager ValueVision Television 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 Executive Vice President General Manager ValueVision
Television 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 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 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 $105,000 based on the following
calculation: $35,000 if ValueVision obtains an operating profit equal
to at least 1% of net sales, an additional $35,000 if ValueVision
obtains a net operating profit
2
of at least 2% of net sales, and an additional $35,000 if ValueVision
obtains a net operating profit of at least 3% of net sales, unless
prior to such date, Employee's employment shall be terminated pursuant
to Sections 6.c. or 6.d. hereof. No Bonus shall be payable if
ValueVision's net operating profit is less than 1% of net sales.
c. Automobile Allowance. Employer shall pay Employee a monthly
automobile allowance of $450.00 per month ("Auto Allowance").
d. Moving and Living Expenses. Employer shall pay for the
normal household moving expenses associated with Employee's move to
Minneapolis from Arizona and up to $18,000 in documented loss on the
sale of Employee's primary residence in Arizona ("Moving Expenses").
Such moving expenses shall be the lowest of three bids to be presented
to Employer. Employer further agrees to pay Employee's reasonable
temporary housing expenses in the Minneapolis area from the date hereof
until the earlier of three months thereafter or Employee's relocation
to Minnesota ("Housing Expenses"), unless prior to such date,
Employee's employment shall be terminated pursuant to Sections 6.c. or
6.d. hereof.
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, Housing Expenses (if any) and Benefits as of
the date on which his death occurs, except that, Employee shall receive
Bonus Salary prorated for the number of months to date of death.
b. Disability. If Employee becomes disabled such that Employee
cannot perform the essential functions of his job, and the disability
shall have continued for a period of more than one hundred twenty (120)
consecutive days, then Employer may, in its sole discretion, terminate
this Agreement and Employee shall then cease to receive Base Salary,
Bonus Salary, 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
2
3
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 remaining months in 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 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 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.
3
4
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 and 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
4
5
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 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 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.
5
6
b. If, at the time of enforcement of any provisions of Section
9, a court of competent jurisdiction holds that the restrictions stated
therein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substituted for the stated
period, scope or area.
c. Employee agrees that the covenants made in this Section 9
shall be construed as an agreement independent of any other provision
of this Agreement and shall survive the termination of this Agreement.
d. Employee represents and warrants to Employer that he is not
subject to any existing noncompetition or confidentiality agreements
which would in any way limit him from working in the television home
shopping, catalog, infomercial or internet businesses, or from
performing his duties hereunder or subject Employer to any liability as
a result of his employment hereunder. Employee agrees to indemnify and
hold Employer and its affiliates harmless from and against any and all
claims, liabilities, losses, costs, damages and expenses (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.
6
7
13. STOCK OPTIONS. Employee has previously been granted incentive stock
options on November 20, 1998 in accordance with the 1990 Stock Option
Plan of Employer (the "Plan") for 45,000 shares and 100,000,
respectively, of ValueVision International, Inc. common stock ("Stock
Options"), each with an exercise price of $4.25 per share, 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 for the 45,000 shares 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. The Stock Options for the
100,000 share xxxxx xxxx only if a significant transaction (as defined
in the Stock Option Agreement) is consummated within 150 days of the
date of grant. The Stock Options for 45,000 (but not the Stock Options
for 100,000 shares) 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.) or upon a Change of Control provided they have not terminated
according to their terms.
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 Employer (or its successors and assigns); (ii)
Employer consolidates with, or merges with or into another unaffiliated
corporation or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person, or
any unaffiliated 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, following
consummation of the Transactions, 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, respectively, then in office, or
(iv) Employer is liquidated or dissolved or adopts a plan of
liquidation.
7
8
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 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.
8
9
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
------------------------------------
Xxxx XxXxxxxxx
Its: Chief Executive Officer
EMPLOYEE: /s/ Xxx X. Xxxx
--------------------------------------
Xxx Xxxx
9
