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EXHIBIT 10.44
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 6th day of January, 1999, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Xxxxx Xxxxxxxx (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"). If prior to September 1, 2000 Employer has not
delivered to Employee notice of its intent not to extend the term, the
Term shall be automatically extended for one additional 12-month period
beyond its then current ending date. Employee shall be entitled to only
one such extension. 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 Operations 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 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 Chief Executive shall
provide Employee with a responsibility and salary review on or about
the sixth month anniversary of this Agreement and 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 Twenty-Five Thousand and No/100 Dollars
($225,000.00) 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 each of Employers's fiscal years during
the term of this Agreement of up to $150,000 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 operating profit of at least 2% of net sales, and an
additional $50,000 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. $25,000
of the Bonus Salary (the "Guaranteed Bonus") shall be guaranteed and
paid monthly during Employer's fiscal year. Other than the Guaranteed
Bonus, no Bonus Salary 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 California and assume the obligations of Employee's
existing lease in California attached as Exhibit A ("Moving Expenses").
The 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 purchase or
rental of permanent housing in 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.
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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 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, if Employee is terminated for Cause during the
first twelve months of the term, Employee shall repay Employer on a
pro-rata basis (calculated based on the remaining months left during
the twelve month period), 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.
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 diminishes his title to a
non-executive officer position of Employer 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
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(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 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
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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/or infomercial
business, any 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' 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
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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.
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
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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 incentive stock options in
accordance with the 1990 Stock Option Plan of Employer (the "Plan")
for 155,000 shares of ValueVision International, Inc. common stock
("Stock Options"), with an exercise price of $6.50 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 shall 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 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.
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
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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.
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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. Xxxxxxxx
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Xxxxx Xxxxxxxx
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