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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 28th day of July, 1999, by and among
ValueVision International, Inc., a Minnesota corporation ("Employer") and Stuart
Goldfarb ("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 of this Agreement and shall continue on a full-time basis for
a period of three (3) years (such period, 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 Vice Chairman of Employer,
responsible for New Business and Programming Development, Internet
Commerce and Cable Affiliations. Employee shall continue to be
nominated by the Board to serve as a member of the Board of Directors
of Employer (the "Board") during the Term, which nomination shall be
subject to approval by the shareholders of Employer at its annual
meetings of shareholders held subsequent to the date hereof, provided
that if Employee's employment with Employer is earlier terminated,
Employee shall immediately resign from the Board upon request by
Employer. Employee shall report to the Chief Executive Officer of the
Employer (the "CEO") and shall perform the duties as assigned by the
CEO and 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 CEO and the Board. Employee
agrees to devote his full time and skills to such employment while he
is so employed (spending approximately 4.5 days each week in Employer's
corporate headquarters or traveling on Employer's business), 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.
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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 at least Four
Hundred Fifty Thousand and No/100 Dollars ($450,000.00) per year for
the for the first year of the Term, Five Hundred Thousand and No/100
Dollars ($500,000.00) per year for the second year of the Term, and
Five Hundred Fifty Thousand and No/100 Dollars ($550,000.00) per year
for the last year of the Term (the "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 $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 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. No Bonus Salary shall be payable if
ValueVision's net operating profit is less than 1% of net sales.
c. Apartment and Automobile. Employer shall provide Employee with an
automobile and apartment to use in Minnesota during the Term
("Apartment and Auto Allowance").
d. Stock Options. As of the date hereof, Employer shall grant
to Employee, employee stock options to purchase an aggregate of 550,000
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 vest
one-third upon issuance, one-third on the first anniversary of their
date of grant and one-third on the second anniversary of their date of
grant. The Options shall have a per share exercise price equal to the
closing price of one share of common stock of Employer as of the date
immediately preceeding the date of grant. All such 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.
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.
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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, the Employment Period
shall terminate and Employee shall cease to receive Base Salary, Bonus
Salary, Apartment and Auto Allowance, and Benefits as of the date on
which his death occurs.
b. Disability. If Employee becomes disabled such that Employee cannot
perform the essential functions of his job, and the disability shall
have continued for a period of more than one hundred twenty (120)
consecutive days, then Employer may, in its sole discretion, terminate
the Employment Period, provided that a physician 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, Apartment and 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.
c. Voluntary Termination. In the event that Employee voluntarily
terminates his employment other than pursuant to Section 6.e, the
Employment Period shall terminate and Employee shall cease to receive
Base Salary, Bonus Salary, Apartment and 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 (but no
unvested Options shall accelerate as a result 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, Apartment
and 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 or Employer; (iii) conviction
of a felony; or (iv) habitual intoxication, drug use or chemical
substance abuse by any intoxicating or chemical substance.
Notwithstanding the forgoing, Employee shall not
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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 (but no unvested Options shall accelerate as a result 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 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 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 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.
(iii) Any purported termination of this Agreement by Employer
not effected in accordance with the provisions set forth herein,
provided that Employee has delivered thirty (30) days' prior written
notice of such termination and Employer has not cured such event within
thirty (30) days following delivery of such notice by Employee.
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 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 or accrued for 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 Non-Competition Period (as defined
below). In addition, during the 30 day period immediately following the
six month
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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 immediately preceding sentence, provided that 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,
provided that any acceleration of any unvested Options shall be in
accordance with the provisions of Section 4.d).
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 Noncompetition Period (as defined below) 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 (including the acceleration of any unvested Options
pursuant to Section 4.d).
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 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.
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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 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, 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
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entity engaged in (a) the television home shopping business, (b) 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 businesses during the term of this
Agreement or (c) 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"), 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 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 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 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, the
"Noncompetition Period" shall commence as of the date hereof and end on
the last day of the period that is equal to twelve (12) 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, supersedes and preempts any prior understandings,
agreements or representations, written or oral, by or between Employee
and Employer.
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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. 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"), but excluding Snyder Capital
Management, L.P.), 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 their
successors and assigns), provided, however, that in the case of General
Electric Company, G.E. Capital Equity Investments, Inc., National
Broadcasting Company, Inc., or any wholly-owned affiliate of any of the
foregoing (the "GE Entities"), the threashold shall be 50% of the total
voting power of the voting stock of Employer (or their successors and
assigns), provided further, that for purposes of calculating beneficial
ownership, the beneficial ownership of the GE Entities shall not be
aggregated with any non-wholly owned affiliate of the GE Entitites, nor
shall the beneficial ownership of any non-wholly owned affiliate of the
GE Entities be aggregated with the GE Entities; (ii) Employer
consolidates with, or merges with or into another corporation or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or any corporation
consolidates with, or merges with or into, Employer, in any such event
pursuant to a transaction in which the outstanding voting stock of
Employer is changed into or exchanged for cash, securities or other
property, other than any such transaction where (A) the outstanding
voting stock of Employer is changed into or exchanged for (x) voting
stock of the surviving or transferee corporation or (y) cash,
securities (whether or not including voting stock) or other property,
and (B) the holders of the voting
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stock of Employer immediately prior to such transaction own, directly
or indirectly, not less than 80% of the voting power of the voting
stock of the surviving corporation immediately after such transaction;
or (iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of
Employer (together with any new directors whose election by such Board
or whose nomination for election by the stockholders of Employer was
approved by a vote of 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Employer then in
office, or (iv) Employer is liquidated or dissolved or adopts a plan of
liquidation or (v) Gene McCaffery is no longer the CEO and Employee
does not report to the Board.
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. 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 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.
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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.
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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.
/s/ Edwin Pohlmann
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Edwin Pohlmann, Executive Vice President
EMPLOYEE: /s/ Stuart Goldfarb
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Stuart Goldfarb
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