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EXHIBIT 10.36
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Agreement") is dated as of the 2nd day of December, 1999, by and between
ValueVision International, Inc., a Minnesota corporation ("Employer"), and Gene
McCaffery ("Employee").
WITNESSETH:
WHEREAS, Employer and Employee previously have entered into
that Employment Agreement, dated as of March 30, 1998 (the "Original
Agreement"), pursuant to which Employer currently employs Employee pursuant to
the terms and conditions of the Original Agreement;
WHEREAS, Employer and Employee each have determined that it
would be to the advantage and best interest of Employer and Employee to enter
into this Agreement and modify certain of Employee's and Employer's obligations
and responsibilities under the Original Agreement; and
WHEREAS, this Agreement amends and restates the Original
Agreement in its entirety and shall supersede the Original Agreement in all
respects, except that Section 4.e. of the Original Agreement, which granted to
Employee options to acquire 800,000 shares of common stock of Employer (the
"Original Options"), shall not be superseded by this Agreement and shall be in
effect as provided in the Original Agreement, such Original Options being
heretofore vested for all purposes of Section 4.e. of the Original Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
promises contained in this Agreement, the parties hereto agree as follows:
1. Employment. Employer hereby agrees to employ Employee, and Employee
hereby agrees to be employed by Employer, on the terms and conditions set forth
herein.
2. Term. Employee's employment under this Agreement in lieu of the
Original Agreement shall commence on the date of this Agreement and shall
continue on a full-time basis through March 31, 2001 (the "Term"), unless
earlier terminated as hereinafter provided. 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 the President and Chief Executive
Officer of Employer, and Employee shall serve as a member of the Board of
Directors of Employer (the "Board") during the Employment Period, provided that
if Employee's employment with Employer is earlier terminated in accordance with
the provisions herein, Employee shall immediately resign from the Board upon
request by Employer. Employee shall perform the duties as assigned by the Board
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
the Board. As President and Chief Executive Officer, Employee's duties shall
include, without limitation, making recommendations to the Compensation
Committee of Employer with respect to awards
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made under Employer's incentive stock option plans. The executive officers of
Employer shall report directly to Employee, as President and Chief Executive
Officer. 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 to other senior executives of Employer.
4. Compensation. During the Employment Period, Employee's compensation
for the services performed under this Agreement shall be as follows:
a. Base Salary. Employee shall receive a base salary of Seven
Hundred Fifty Thousand and no/100 Dollars ($750,000), payable in accordance with
Employer's normal payment schedule for its executive employees (the "Base
Salary").
b. Signing Bonus. Upon the execution of this Agreement,
Employee shall receive a payment of Three Hundred Thousand and no/100 Dollars
($300,000) (the "Signing Bonus").
c. Bonus Salary. Employee may receive bonus salary with
respect to any year in an aggregate amount not to exceed 100% of the Base Salary
applicable with respect to such year (the "Bonus Salary"). Until Employer and
Employee mutually agree upon a new bonus plan for the senior executives of
Employer, the Bonus Salary shall be calculated as follows:
(i) Up to 50% of the applicable Base Salary (the "50%
Goal"), if Employer's Operating Income (as defined below) equals 1% of
Employer's Net Sales (as defined below), then Employee shall receive a bonus
payment equal to 25% of the 50% Goal, which payment shall increase on a pro rata
basis to 100% of the 50% Goal if the Operating Income equals or exceeds 3% of
Employer's Net Sales (the "Operating Income Bonus"). As used in this Agreement,
"Operating Income" shall mean earnings before interest, taxes and unusual items,
and "Net Sales" shall mean gross sales, net of returns and related reserves, and
excludes shipping, handling, sales taxes and insurance revenues, each as
determined with respect to any fiscal year and pursuant to generally accepted
accounting principles by Employer, consistently applied.
(ii) Up to 30% of the applicable Base Salary (the
"30% Goal") if the Average Price (defined as the greater of (a) the average
closing price of Employer's common stock for 20 consecutive trading days
immediately prior to the last day of Employer's fiscal year or (b) the average
daily closing price for the final four months of Employer's fiscal year) meets
the following target prices (the "Stock Price Bonus"):
If (A) the Average Price increases at least 25% but
not 50% over the Base Price (defined as $4.40 with respect to the fiscal year of
the Company ended on January 31, 1999, which Base Price shall be adjusted at the
end of each succeeding fiscal year to the Average Price with respect to such
fiscal year, provided that in no event shall the Base Price, as adjusted, exceed
133% of the Base Price of the previous fiscal year), the Stock Price Bonus shall
be equal to 25% of the 30% Goal, (B) the Average Price increases at least 50%
but not 75% over the Base Price, the Stock Price Bonus shall be equal to
one-half of the 30% Goal, (C) the Average Price increases at least 75% but not
100% over the Base Price, the Stock Price Bonus shall be equal to
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three-quarters of the 30% Goal, and (D) the Average Price increases 100% or more
over the Base Price, the Stock Price Bonus shall be equal to 200% of the 30%
Goal.
(iii) Up to 20% of the applicable Base Salary (the
"20% Goal"), if Employer has positive Operating Income and Employer's Net Sales
(exclusive of sales of any acquisitions during the then current fiscal year)
increases over the prior fiscal year's Net Sales ("Base Sales") as follows (the
"Sales Bonus"):
If (A) Employer's Net Sales for any fiscal year
increase at least 4% but less than 5% over the Base Sales, the Sales Bonus shall
be equal to one-quarter of the 20% Goal, (B) Employer's Net Sales increase at
least 5% but not 6% over the Base Sales, the Sales Bonus shall be equal to
one-half of the 20% Goal, (C) Employer's Net Sales increase at least 6% but not
7% over the Base Sales, the Sales Bonus shall be equal to three-quarters of the
20% Goal, and (D) Employer's Net Sales increase at least 7% over the Base Sales,
the Sales Bonus shall be equal to 100% of the 20% Goal.
In the event any new bonus plan is adopted by Employer for its
senior executives and approved by the stockholders of Employer, then the Bonus
Salary provisions in this Section 4.c. shall no longer apply and Employee shall
be subject to the terms of the new bonus plan adopted by Employer.
d. Automobile Allowance. Employer shall pay Employee a monthly
automobile allowance of $600.00 per month ("Auto Allowance").
e. Stock Options.
(i) As of the date hereof, Employer shall grant to
Employee, employee stock options to purchase an aggregate of 100,000 shares of
the common stock, par value $.01 per share (the "Common Stock"), of Employer
(collectively, the "Options"). The Options shall be granted under an option
agreement between Employer and Employee dated as of the date hereof, which
option agreement shall be on terms consistent with the terms of this Agreement.
The Options shall have a term of ten years, provided that upon the termination
of Employee's employment with Employer, Employee shall have six months from the
date of such termination to exercise any such Options. The Options shall have a
per share exercise price equal to Forty and Five Thousand Six Hundred
Twenty-Five Ten-Thousandths Dollars ($40.5625). The Options shall be immediately
and fully vested and exercisable as of the date hereof.
(ii) On the date Employee exercises any of such
Options, Employer shall register in the name of Employee the number of shares of
Common Stock to be acquired by Employee upon his exercise of such Options (the
"Shares"); provided that Employer may retain possession of certificates relating
to such Shares and any other shares of Common Stock or other securities that
shall be pledged, as necessary, by Employee to Employer as security for the Loan
(as defined below) on the terms and conditions set forth in Section 4.g. herein.
f. Retention Bonus. As an additional incentive to retain
Employee, Employer shall pay Employee an additional amount equal to One Million
and no/100 Dollars ($1,000,000) (the "Retention Bonus") if (i) Employee remains
employed with Employer through the last day
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of the Term, (ii) Employee is discharged without Cause pursuant to Sections 6.f.
or 6.g., (iii) Employee resigns following a Change of Control pursuant to
Section 6.f., or (iv) Employee resigns for Employer cause pursuant to Section
6.e.
g. Loan. During the Employment Period, Employer shall grant to
Employee a line of credit in the principal amount of Five Million and no/100
Dollars ($5,000,000) (the "Loan"). Any amounts borrowed by Employee shall be due
and payable on the fifth anniversary of the date hereof; provided, however, that
if Employee's employment with Employer is terminated for any reason, any amounts
borrowed shall become due and payable 60 days following the date of termination
of Employee's employment. Employee's obligation to repay the Loan shall be
evidenced by a promissory note and pledge in such form agreed to by Employer and
Employee, with interest to accrue on the outstanding Loan amount at the minimum
rate of interest required in order to avoid imputed interest under the Code (as
defined below), compounded annually. To secure payment of the principal and all
interest on the Loan, Executive shall assign, pledge and grant a security
interest in the Shares and in shares of Common Stock subject to acquisition by
Employee upon exercise of the Original Options (and/or in other equity
securities of the Company owned by Employee) (collectively, the "Pledged
Shares"), and such Pledged Shares evidencing the security interest shall at all
times have a fair market value of at least 150% of the outstanding Loan amount.
On the last day of each quarter of the Employment Period, an adjustment shall be
made by Employer and Employee either increasing or reducing the number of
Pledged Shares pledged by Employee to maintain the security interest value
requirement for the Loan provided in the foregoing sentence. Certificates
evidencing the Shares and any additional Pledged Shares shall remain in the
physical custody of Employer or its designee at all times until payment in full
of all principal and interest on the Loan. The Loan shall constitute a full
recourse obligation of Employee.
h. Section 162(m). Anything to the contrary contained herein
notwithstanding, if the aggregate compensation payable to Employee under this
Agreement exceeds the amount that is deductible under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), then any such excess
amount shall be deferred and credited by Employer to an account for the benefit
of Employee, which shall be paid to Employee, with interest at a per annum rate
equal to 1.5% plus the prime rate (as announced by Employer's primary financial
lender from time to time), compounded annually, at such time within five (5)
days after the first date on which Employee no longer constitutes a "covered
employee" within the meaning of Section 162(m) of the Code. Notwithstanding the
foregoing, neither the Retention Bonus nor the Signing Bonus shall be subject to
any deferral for purposes of Section 162(m) of the Code.
5. Other Benefits During the Employment Period. During the Employment
Period, Employer shall provide Employee with the following benefits:
a. Employee shall receive all 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,
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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, the Employment
Period 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.
Employer shall provide Employee with a term life insurance policy (of which
Employee shall be the owner) for $1.0 million at standard rates applicable to a
person of Employee's age who is in good health at the time of application for
such a policy. In addition, Employee's estate shall be entitled to receive any
payments or Benefits provided herein that have accrued (but have not been paid)
prior to the date of Employee's 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 the Employment Period,
provided that a physical to be selected by Employer, subject to the reasonable
satisfaction of Employee, shall have determined the existence of such
disability. Upon the date of such termination, Employee shall then cease to
receive Base Salary, Bonus Salary, Auto Allowance, and all other Benefits, on
the date this Agreement 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. In addition, Employee shall be entitled to receive
any payments or Benefits provided in this Agreement that have accrued (but have
not been paid) prior to the date of such termination.
c. Voluntary Termination. In the event that Employee
voluntarily terminates his employment other than pursuant to Section 6.c. or
Section 6.f., the Employment Period shall terminate and Employee shall cease to
receive Base Salary, Bonus Salary, Auto Allowance, and all other Benefits as of
the date of such termination. Employee shall be entitled to receive any payments
or Benefits provided herein that have accrued (but have not been paid) prior to
the date of such termination.
d. Termination With Cause. Employer shall be entitled to
terminate the Employment Period and Employee's employment hereunder for Cause
(as defined below), 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. For purposes of this
Agreement, "Cause" shall mean: (i) a material improper 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) material violation by Employee of any material policy,
regulation or practice of Employer; (iii) conviction of a felony; or (iv)
habitual intoxication, drug use or chemical substance abuse by any
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intoxicating or chemical substance. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated for Cause unless and until (A)
Employee has received thirty (30) days' prior written notice (a "Dismissal
Notice") of such termination and (B) if such "Cause" event is capable of being
cured, Employee has not cured such "Cause" event within ten (10) days following
delivery of such notice. 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. Employee shall be entitled to receive any payments or Benefits
provided herein that have accrued (but have not been paid) prior to the date of
such termination.
e. By Employee for Employer Cause. Employee may terminate the
Employment Period upon thirty (30) days' written notice to Employer (the
"Employee Notice") upon the occurrence, 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 the Employment Period 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;
(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; or
(iii) Any purported termination of this Agreement by
Employer not effected in accordance with the provisions set forth herein.
In the event of a termination of Employee's employment with Employer under this
Section 6.e., Employee shall be entitled to receive the payments and Benefits as
set forth in Section 6.g.
f. Termination After Change of Control. If Employee is
terminated by Employer without Cause within one year after the consummation of a
transaction constituting a Change of Control, Employee shall receive a payment
in an amount equal to Base Salary and Bonus Salary (based upon the last paid
Bonus Salary received in the previous year, if any, and pro rated for the number
of remaining months until the end of the Term) which would otherwise be payable
until the end of the Term. Any payments made by Employer to Employee under this
Section 6.f. shall be paid on a pro rata basis over the remaining portion of the
Noncompetition Period (as defined below). In addition, during the 30 day period
immediately following the second month anniversary of the consummation of a
transaction constituting a Change of Control, Employee may terminate this
Agreement for any reason by providing written notice to Employer and receive the
benefits provided in the first sentence of this paragraph, and any such
termination by Employee under this Section 6.f. shall not also be deemed to be a
termination by Employee under Section 6.c. In the event that Employee's
employment with Employer is terminated by either Employer or Employee pursuant
to this Section 6.f., Employee shall be entitled to any payments or Benefits
provided in this Agreement that have accrued (but have not been paid) prior to
the date of such termination. Notwithstanding the foregoing, the consummation of
the transactions to date between Employer and GE Capital Equity Investments,
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Inc., General Electric Capital Corporation, General Electric Capital Services,
Inc., General Electric Company, National Broadcasting Company, Inc., and
National Broadcasting Company Holding, Inc. (the "Companies") and any further
acquisitions of Employer's securities by the Companies which the Companies are
entitled to acquire as of the date hereof by written agreement between Employer
and the Companies, subject to the limitation that the total voting power of the
voting stock of Employer acquired by the Companies shall not exceed 50% of the
total voting power of the voting stock of Employer (the "Transaction"), shall
not be deemed a Change of Control for purposes of this Section 6.f.
g. Other Termination. Employer reserves the right to terminate
the Employment Period and Employee's employment hereunder at any time (and
without Cause), in its sole and absolute discretion. If Employer terminates the
Employment Period under this Section 6.g. 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 which would
otherwise be payable until the end of the Term (the "Severance Payment"),
provided that if such remaining Term exceeds 12 months, the Severance Payment
attributable to the last twelve months of the Term shall not be included in the
lump sum payment and instead shall be paid over the remaining portion of the
Noncompetition Period on a pro rata basis in accordance with Employer's normal
payment schedule for its executive employees. In addition, Employer shall
continue to provide Employee with Benefits until the end of the Term. Employee
shall be entitled to receive any payments or Benefits provided herein that have
accrued (but have not been paid) prior to the date of such termination.
h. 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 in any city in which Employer's corporate executive offices are
located for arbitration of the dispute, the costs thereof (including legal fees
and expenses) to be shared equally by 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, except with
respect to enforcement of the agreements contained in Sections 7 and 9 of this
Agreement if either party seeks injunctive relief, 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, pans, 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
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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 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 reasonable requested by Employer to establish and confirm
such ownership.
9. Noncompete and Related Agreements.
a. Employee agrees that during the Noncompetition Period, 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 (a) the
television home shopping business, or (b) subject to the limitation set forth in
the next sentence, any business in which Employer competes as of the date of
termination of the Employment Period or in which Employer (upon authorization of
its Board) has invested significant research and development funds or resources
and contemplates entering into during the following twelve (12) months (the
"Restricted Business"), in any country that Employer or any of its affiliates
operates during the term of this Agreement (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 any and 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 affiliate 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
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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, a "Restricted
Business" shall not include an Internet- or e-commerce-related business that is
not also engaged in the television home shopping business. In addition, for
purposes of this Agreement, the "Noncompetition Period" shall commence as of the
date hereof and end on the last day of the period that is equal to six (6)
months following the date on which Employee's employment is terminated under
this Agreement for any reason.
b. If, at the time of enforcement of any provisions of this
Section 9, a court of competent jurisdiction holds that the restrictions stated
herein 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, effective as of
the date hereof, and except as may be provided in the third "Whereas" clause
above, 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
capital stock, or substantially all of the capital 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 shall 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. Change of Control. For purposes of this Agreement, a "Change of
Control" shall mean an event as a result of which: (i) any "person" (for the
purposes of this Section 13, 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" (for the purposes of this Section 13, as defined in Rule
13d-3 under the Exchange Act, except that a person shall be deemed for such
purposes to have "beneficial ownership" of all securities that such person has a
right to acquire,
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whether such right is exercisable immediately or only after the passage of time
or upon the satisfaction of performance criteria or other conditions), directly
or indirectly, of more than 50% of the total voting power of the voting stock of
Employer (or its successors and assigns); (ii) Employer consolidates with, or
mergers 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 or 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 50% of the voting power of the voting stock of the surviving
corporation immediately after such transaction; (iii) any person or group, other
than the stockholders of Employer as a whole, has a right to designate or has
designated the majority of the Board or the designees/affiliates of such person
or group constitute a majority of the Board, (iv) Employer is liquidated or
dissolved or adopts a plan of liquidation; (v) the Companies and their
affiliates (collectively, the "GE Entities") sell, assign, pledge or otherwise
transfer beneficial ownership of more than 75% of the total voting power of the
voting stock of Employer beneficially owned by the GE Entities as of the date
hereof to any person or entity other than one or more other GE Entities; (vi)
individuals designated for membership on the Board by the GE Entities pursuant
to either (A) the Shareholder Agreement dated as of April 15, 1999 among the
Company, GE Capital Equity Investments, Inc. and National Broadcasting Company,
Inc. (the "Shareholder Agreement") or (B) the Certificate of Designation
creating the Company's Series A Redeemable Convertible Preferred Stock (the
"Certificate of Designation") shall constitute more than either (x) two
individuals or (y) 30% of the entire authorized membership of the Board (such
authorized number of members not being reduced for a period of 60 days by any
vacancy arising from the resignation, retirement, death, removal or similar
departure from the Board of any individual Board member); (vii) the GE Entities
assign to a person or entity that is not a GE Entity their right pursuant to the
Shareholder Agreement or the Certificate of Designation to designate two
individuals for membership on the Board, and two individuals so designated by
such person join the Board as members; or (viii) the GE Entities (A) sell,
assign, pledge or otherwise transfer beneficial ownership of more than 25% of
the total voting power of the voting stock of Employer (or its successors and
assigns) to any person or entity other than one or more other GE Entities, and
(B) assign to such person or entity the right pursuant to the Shareholder
Agreement or the Certificate of Designation to designate a single individual for
membership on the Board, and one individual so designated by such person or
entity joins the Board as a member. Notwithstanding anything to the contrary
herein, the Transactions shall not constitute a Change of Control.
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 and 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.
16. Indemnification. Employee shall be entitled to indemnification to
the fullest extent permitted under the laws of the State of Minnesota.
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 that such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provisions as to make it valid, reasonable and
enforceable.
19. Amendment. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
20. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against Employee's heirs,
beneficiaries and legal representatives. It is agreed that the rights and
obligations of Employee may not be delegated or assigned except as specifically
set forth in this Agreement.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota.
[Signature Page Follows]
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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/ Marshall Geller
--------------------------------------------------
Name: MARSHALL GELLER
Its: Board Member, Authorized Representative and
Chairman of the Compensation Commission
EMPLOYEE: /s/ Gene McCaffery
--------------------------------------------------
GENE MCCAFFERY
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