EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 22nd day of May, 2000, by and between
ValueVision International, Inc., a Minnesota corporation (hereinafter referred
to as "Employer"), and Howard Fox (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 May 21, 2003
(the "Term"). The "Employment Period" for purposes of this Agreement
shall be the period beginning on the date hereof and ending at the time
Employee shall cease to act as an employee of Employer.
3. Duties. Employee shall serve as Senior Vice President of Operations and
Polo Project Manager of Employer reporting to Employer's President of
TV Home Shopping Operations and shall perform the duties as assigned by
Employer, from time to time, and shall faithfully, and to the best of
his ability, perform such reasonable duties and services of an active,
executive, administrative and managerial nature as shall be specified
and designated, from time to time, by Employer. Employee agrees to
devote his full time and skills to such employment while he is so
employed, subject to a vacation allowance of not less than four (4)
weeks during each year of the Term except for two (2) weeks during
calendar year 2000, or such additional vacation allowance as may be
granted in the sole discretion of Employer. Employer's President of TV
Home Shopping Network shall provide Employee with a performance review
at least annually.
4. Compensation. Employee's compensation for the services performed under
this Agreement shall be as follows:
a) Base Salary. Employee shall receive a base salary of at least
Two Hundred Forty Thousand and No/100 Dollars ($240,000.00)
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 the end of each of Employer's
fiscal years during the Term of this Agreement of up to
$100,000 based on the following calculation: $25,000 if
ValueVision obtains an operating profit equal to at least 1%
of net sales, an additional $25,000 if ValueVision obtains a
net operating profit of at least 2% of net sales, an
additional $25,000 if ValueVision obtains a net operating
profit of at least 3% of net sales, and an additional $25,000
if ValueVision obtains a net operating profit of at least 4%
of net sales, unless prior to the date of payment, Employee's
employment shall be terminated pursuant to Sections 6.c. or
6.d. hereof. The first $25,000 of the Bonus Salary shall be
guaranteed for each year during the Term. In addition,
Employee shall be entitled to a signing bonus of $25,000 once
he has commenced working for Employer.
c) Automobile Allowance. Employer shall pay Employee a monthly
automobile allowance of $550.00 per month ("Auto Allowance").
d) Moving Expenses. Employer shall pay for the normal household
moving expenses associated with Employee's move to Minneapolis
from California ("Moving Expenses") in accordance with
Employer's relocation expense policy previously provided to
Employee.
5. Other Benefits During the Employment Period.
a) Employee shall receive all other benefits made available to
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, 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 initial 12 months of the Term), the Moving Expenses.
d) Termination With Cause. Employer shall be entitled to
terminate this Agreement and Employee's employment hereunder
for Cause (as herein defined), and in the event that Employer
elects to do so, Employee shall cease to receive Base Salary,
Bonus Salary, Auto Allowance, and Benefits as of the date of
such termination specified by Employer. In addition, Employee
shall repay Employer on a pro-rata basis (calculated based on
the initial 12 months of the Term), the Moving Expenses. For
purposes of this Agreement, "Cause" shall mean: (i) a material
act or act of fraud which results in or is intended to result
in Employee's personal enrichment at the direct expense of
Employer, including without limitation, theft or embezzlement
from Employer; (ii) public conduct by Employee substantially
detrimental to the reputation of Employer, (iii) material
violation by Employee of any Employer policy, regulation or
practice; (iv) conviction of a felony; or (v) habitual
intoxication, drug use or chemical substance use by any
intoxicating or chemical substance. Notwithstanding the
forgoing, Employee shall not be deemed to have been terminated
for Cause unless and until Employee has received thirty (30)
days' prior written notice (a "Dismissal Notice") of such
termination. In the event Employee does not dispute such
determination within thirty (30) days after receipt of the
Dismissal Notice, Employee shall not have the remedies
provided pursuant to Section 6.g. of this Agreement. In
addition, Employee shall repay Employer on a pro-rata basis
(calculated based on the initial 12 months of the Term), the
Moving Expenses.
e) By Employee for Employer Cause. Employee may terminate this
Agreement upon thirty (30) days written notice to Employer
(the "Employee Notice") upon the occurrences without
Employee's express written consent of any one or more of the
following events, provided, however, that Employee shall not
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have the right to terminate this Agreement if Employer is able
to cure such event within thirty (30) days (ten (10) days with
regard to Subsection (ii) hereof) following delivery of such
notice:
(i) Employer substantially diminishes Employee's duties
such that they are no longer of an executive nature
as contemplated by Section 3 hereof or
(ii) Employer materially breaches its obligations to pay
Employee as provided for herein and such failure to
pay is not a result of a good faith dispute between
Employer and Employee.
f) Other. If Employer terminates this Agreement for any reason
other than as set forth in Section 6.a, 6.b., 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 the greater of (i) one year's Base
Salary, Auto Allowance, and Bonus Salary, or (ii) all Base
Salary, Bonus Salary and Auto Allowance which would otherwise
be payable until the end of the Term (collectively, the
"Severance Payment"). In addition, Employer shall continue to
provide Employee with Benefits until the end of the Term. For
purposes of calculating Bonus Salary payable pursuant to this
Section 6.f., Employee shall receive Bonus Salary equal to the
last Bonus Salary actually paid the Employee, prorated for the
number of months to be covered by the Severance Payment (if
terminated before the end of the first fiscal year of
Employer, the Bonus Salary shall equal the Bonus Salary
objective stated in 4.b, prorated as aforesaid).
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
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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 his
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 (as
herein defined), he will not: (i) directly or indirectly own,
manage, control, participate in, lend his name to, act as
consultant or advisor to or render services alone or in
association with any other person, firm, corporation or other
business organization for any other person or entity engaged
in the television home shopping and infomercial business, any
mail order or internet business that directly competes with
Employer or any of its affiliates by selling merchandise
primarily of the type offered in and using a similar theme as
any of Employer's or its affiliates' catalogs or internet
sites during the Term of this Agreement or any business which
Employer (upon authorization of its board of directors) has
invested significant research and development funds or
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resources and contemplates entering into during the next
twelve (12) months (the "Restricted Business"), anywhere that
Employer or any of its affiliates operates during the Term of
this Agreement within the continental United States (the
"Restricted Area"); (ii) have any interest directly or
indirectly in any business engaged in the Restricted Business
in the Restricted Area other than Employer (provided that
nothing herein will prevent Employee from owning in the
aggregate not more than one percent (1%) of the outstanding
stock of any class of a corporation engaged in the Restricted
Business in the Restricted Area which is publicly traded, so
long as Employee has no participation in the management or
conduct of business of such corporation), (iii) induce or
attempt to induce any employee of Employer or any entity
related to Employer to leave his, her or their employ, or in
any other way interfere with the relationship between Employer
or any entity related to Employer and any other employee of
Employer or any entity related to Employer, or (iv) induce or
attempt to induce any customer, supplier, franchisee,
licensee, other business relation of any member of Employer or
any entity related to Employer to cease doing business with
Employer or any entity related to Employer, or in any way
interfere with the relationship between any customer,
franchisee or other business relation and Employer or any
entity related to Employer, without the prior written consent
of Employer. For purposes of this Agreement, "Noncompetition
Period" shall mean the period commencing as of the date of
this Agreement and ending on either (i) the date on which
Employee ceases to be employed, if no Severance is paid
(except in the case of a voluntary departure by Employee), or
(ii) the last day of the sixth (6th) month following either
the date on which the Employee voluntarily departs or the date
on which Employee is terminated during the Term of this
Agreement if Severance is paid.
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
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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 parry, money damages
would be inadequate and the nonbreaching party would have no adequate
remedy at law. Accordingly, in the event of any controversy concerning
the rights or obligations under this Agreement, such rights or
obligations shall be enforceable in a court of equity by a decree of
specific performance. Such remedy, however, shall be cumulative and
nonexclusive and shall be in addition to any other remedy to which the
parties may be entitled.
12. Sale, Consolidation or Merger. In the event of a sale of the stock, or
substantially all of the stock, of Employer, or consolidation or merger
of Employer with or into another corporation or entity, or the sale of
substantially all of the operating assets of Employer to another
corporation, entity or individual, Employer may assign its rights and
obligations under this Agreement to its successor-in-interest and such
successor-in-interest shall be deemed to have acquired all rights and
assumed all obligations of Employer hereunder.
13. Stock Options. Employee shall be granted incentive stock options in
accordance with the 1990 Stock Option Plan of Employer (the "Plan") for
150,000 shares of ValueVision International, Inc. common stock ("Stock
Options") with an exercise price per share to be determined at the date
of grant, 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 vest in
equal amounts as follows: one-third on the date of grant, one-third on
the first anniversary of the date of grant, and one-third on the second
anniversary of the date of grant. All such Stock Options shall
automatically vest upon a termination of this Agreement prior to the
end of the Term (unless pursuant to Sections 6.c or 6.d.).
14. No Offset - No Mitigation. Employee shall not be required to mitigate
damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement,
including welfare benefits shall not be reduced by any compensation or
benefits earned by or provided to Employee as the result of employment
by another employer.
15. Waiver. The failure of either party to insist, in any one or more
instances, upon performance of the terms or conditions of this
Agreement shall not be construed as a
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waiver or relinquishment of any right granted hereunder or of the
future performance of any such term, covenant or condition.
16. Attorney's Fees. In the event of any action for breach of, to enforce
the provisions of, or otherwise arising out of or in connection with
this Agreement, the prevailing party in such action, as determined by a
court of competent jurisdiction in such action, shall be entitled to
receive its reasonable attorney fees and costs from the other party. If
a party voluntarily dismisses an action it has brought hereunder, it
shall pay to the other party its reasonable attorney fees and costs.
17. Notices. Any notice to be given hereunder shall be deemed sufficient if
addressed in writing, and delivered by registered or certified mail or
delivered personally: (i) in the case of Employer, to Employer's
principal business office; and (ii) in the case of Employee, to his
address appearing on the records of Employer, or to such other address
as he may designate in writing to Employer.
18. Severability. In the event that any provision shall be held to be
invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of
this Agreement and the remaining covenants, restrictions and provisions
hereof shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provisions as to make it
valid, reasonable and enforceable.
19. Amendment. This Agreement may be amended only by an agreement in
writing signed by the parties hereto.
20. Benefit. This Agreement shall be binding upon and inure to the benefit
of and shall be enforceable by and against Employee's heirs,
beneficiaries and legal representatives. It is agreed that the rights
and obligations of Employee may not be delegated or assigned except as
specifically set forth in this Agreement.
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.
By: /s/ Steve Jackel
--------------------------------
Steve Jackel
Its:President - TV Home Shopping Operations
EMPLOYEE:
By: /s/ Howard Fox
--------------------------------
Howard Fox
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