Exhibit 10.41
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement"), dated as of March 1, 1999, between Value
America, Inc., a Virginia corporation (the "Company") and Xxxx X. Xxxxx (the
"Executive").
The Company and the Executive agree as follows:
1. Position; Term of Employment. The Company agrees to employ the
Executive, and the Executive agrees to serve the Company, as its Senior Vice
President and President - Technology Products Division. The parties intend that
the Executive shall continue to so serve in the aforesaid capacity throughout
the Term (as such term is defined below).
Subject to earlier termination under the provisions of Paragraph 4 below,
the term of Executive's employment by the Company hereunder shall commence on
March 1, 1999 and shall continue through December 31, 2003 and then renew for an
additional one year term on January 1, 2004 and each subsequent annual
anniversary thereof unless at least 3 months prior to January 1, 2004 or a
subsequent annual anniversary thereof either Executive or Company gives to the
other written notice that the term shall not be renewed at such annual
anniversary, in which case the term shall expire on December 31, 2003 or the day
before such subsequent anniversary, as the case may be (the "Term").
2. Duties. The Executive throughout the Term shall devote his full time
and undivided attention during normal business hours to the business and affairs
of the Company and its affiliates, if any ("Affiliates"), except for holidays
and vacations consistent with applicable Company policy and except for illness
or incapacity, but nothing in this Agreement shall preclude the Executive from
serving as a director or a member of an advisory committee of any organization
involving no conflict of interest with the Company (subject to prior approval of
his appointment to such position in certain cases as provided in the next to
last sentence of this Paragraph 2), from engaging in charitable and community
activities, and from managing his personal investments, provided that such
activities do not materially interfere with the performance of his duties and
responsibilities under this Agreement. The Executive shall not accept any
proposed appointment to serve as a director, trustee or the equivalent of any
business organization of which the Executive is not a director, trustee, or the
equivalent on the date hereof, without the prior approval of the Chairman of the
Company's Board. The Executive shall report directly to the President, or in his
or her absence, the Board.
3. Compensation.
(a) Salary. During the Term, the Company shall pay to the Executive a
salary at the minimum rate of $280,000 per year until December 31, 1999, payable
in equal installments not less frequently than monthly. Such salary shall be
reviewed by the Compensation Committee of the Board at least annually, with any
increases taking into account, among other factors, corporate and individual
performance and increases, if any, in relevant cost of living indices.
(b) Bonus. During the Term, the Executive shall be entitled to
participate in such bonus programs as the Compensation Committee of the Board
from time to time shall approve. Notwithstanding the foregoing, for each
calendar year during the Term, Executive shall be entitled to a bonus per full
calendar quarter of employment hereunder in such amounts and based upon
achievement of such corporate and individual performance and other criteria as
shall be established by the Compensation Committee of the Board from time to
time, considering among other items input from the Chairman of the Board, the
Executive and, if considered appropriate by the Committee, a compensation
consultant (provided that the minimum bonus potential for each such calendar
year shall be at least $100,000), which bonus shall be paid within 10 days after
the end of the calendar quarter provided Executive is employed hereunder on the
last day of such quarter.
(c) Benefit Plans. During the Term, the Executive shall be entitled to
participate in all retirement and employment benefit plans of the Company that
are generally available to senior executives of the Company. Such participation
shall be pursuant to the terms and conditions of such plans, as the same shall
be amended from time to time. The Executive shall be entitled to no less than
three weeks' paid vacation per year.
(d) Business Expenses. During the Term, the Company shall, in
accordance with policies then in effect with respect to payments of expenses,
pay or reimburse the Executive for all reasonable out-of-pocket travel and other
expenses (other than ordinary commuting expenses) incurred by the Executive in
performing services hereunder. All such expenses shall be accounted for in such
reasonable detail as the Company may require.
(e) Indemnity. As an officer of Company, Executive shall be entitled
to indemnity as provided in the Company's Articles of Incorporation, as the same
shall be amended from time to time.
4. Termination.
(a) Death. In the event of the death of the Executive during the Term,
his employment shall be terminated as of the date of death and his salary for
the month in which his death occurs shall be paid to his designated beneficiary,
or in the absence of such designation, to the estate or other legal
representative of the Executive. Except in accordance with the terms of the
Company's benefit programs and plans then in effect, after his date of death,
Executive shall not be entitled to any other compensation or benefits from the
Company or hereunder.
(b) Disability. In the event of the Executive's Disability, as
hereinafter defined, the employment of the Executive may be terminated by the
Company. After termination of employment for Disability, except in accordance
with the Company's benefit programs and plans then in effect, Executive shall
not be entitled to any compensation or benefits from the Company or hereunder.
"Disability," for purposes of this Agreement, shall mean the
Executive's incapacity due to physical or mental illness causing his complete
and full-time absence from his duties, as defined in Paragraph 2, for either a
consecutive period of more than six months or at least 180 days within any
270-day period. Any determination of the Executive's Disability made in good
faith by the Board shall be conclusive and binding on the Executive, unless
within 10 days after written notice to Executive of such determination,
Executive elects by written notice to Company to challenge such determination,
in which case the determination of Disability shall be made by arbitration
pursuant to Section 13 below.
(c) Termination by the Company for Due Cause. Nothing herein shall
prevent the Company from terminating the Executive's employment for Due Cause.
The Executive shall continue to receive the salary provided for in this
Agreement only through the period ending with the date of such termination. Any
rights and benefits he may have under employee benefit plans and programs of the
Company shall be determined in accordance with the terms of such plans and
programs. Except as provided in the two immediately preceding sentences, after
termination of employment for Due Cause, Executive shall not be entitled to any
compensation or benefits from the Company or hereunder.
The term "Due Cause," as used herein, shall mean (i) repeated
material violation by the Executive of the Executive's obligations hereunder,
the DNN Agreement (as defined in Paragraph 10 below) or a written directive from
either the Chairman of the Board, President or the Board (1) which are willful
and deliberate on the Executive's part, (2) which are not due to the Disability
of the Executive (within the meaning of Paragraph 4(b) but without regard to the
requirement that it continue for more than six months or 180 days within a
270-day period) and (3) which have not been cured by the Executive within 15
business days after written notice to the Executive specifying the nature of
such violations, (ii) an act or acts of dishonesty on the Executive's part which
are intended to or do result in either the Executive's personal enrichment or
material adverse affect upon the Company's assets, business, prospects or
reputation, or (iii) conviction of a felony or a misdemeanor involving fraud,
breach of trust, or misappropriation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Due Cause without (1)
written notice to the Executive setting forth the reasons for the Company's
intention to terminate for Due Cause, (2) an opportunity for the Executive,
together with his counsel, to be heard before the Board, and (3) delivery to the
Executive of a Notice of Termination from the Board finding that in the good
faith opinion of at least three-quarters (3/4) of the Board (not counting the
Executive in either the numerator or the denominator), the Executive was guilty
of conduct set forth above in clause (i), (ii) or (iii) hereof, and specifying
the particulars thereof in detail.
(d) Termination by the Company Other than for Due Cause. The foregoing
notwithstanding, the Company may terminate the Executive's employment for
whatever reasons it deems appropriate; provided, however, that in the event such
termination is not due to death, Disability or Due Cause, the Executive shall
(i) be entitled to a Termination Payment as hereinafter defined and (ii) be sent
written notice stating the termination is not due to death, Disability or Due
Cause. The term "Termination Payment" shall mean a cash payment equal to the sum
of (i) his annual salary, as in effect immediately prior to such termination,
and (ii) a pro rata portion of any bonus that would have been payable to
Executive under 3(b) for such calendar year if he had been employed for the full
calendar year, provided the criteria for such bonus other than Executive's
continued employment are satisfied. Such Termination Payment shall be payable in
12 equal monthly installments beginning 30 days after the date of termination.
Following the Executive's termination of employment under this Paragraph 4(d),
the Executive will have no further obligation to provide services to the Company
pursuant to Paragraphs 1 and 2. Except for the Termination Payment and as
otherwise provided in accordance with the terms of the Company's benefit
programs and plans then in effect, after termination by the Company of
employment for other than death, Disability or Due Cause, Executive shall not be
entitled to any other compensation or benefits from the Company or hereunder.
(e) Constructive Termination of Employment by the Company Without Due
Cause. Termination by the Company without Due Cause under Paragraph 4 (d) shall
be deemed to have occurred if the Executive elects to terminate his employment
as a result of a material breach by the Company of Section 3 of this Agreement
(which breach is not cured within 10 days after written notice thereof by
Executive to each of the Directors of the Company, which notice shall
specifically describe such alleged breach).
(f) Voluntary Termination. In the event that the Executive terminates
his employment at his own volition prior to the expiration of the Term (except
as provided in Paragraph 4(e) above), such termination shall constitute a
"Voluntary Termination" and in such event the Executive shall be limited to the
same rights and benefits as provided in connection with a termination for Due
Cause under Paragraph 4 (c) above.
(g) Election Not to Renew. An election by either Company or Executive
pursuant to Paragraph 1 above not to renew the Term shall not be deemed a
termination of employment by either party. After the expiration of the Term
because of either Company's or Executive's election not to renew, except in
accordance with the terms of the Company's benefit plans and programs then in
effect, Executive shall not be entitled to any other compensation or benefits
from the Company or hereunder.
(h) Notice of Termination, Resignation and Release. Any termination
under Section 4(c) by the Company for Due Cause or Section 4(b) for Disability
or by the Executive pursuant to a constructive termination under Section 4(e)
shall be communicated by Notice of Termination to the other party thereto given
in accordance with Paragraph 12. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if the
termination date is other than the date of receipt of such Notice, specifies the
termination date (which date shall not be prior to the date of such notice or
more than 15 days after the giving of such Notice).
Notwithstanding anything in this Agreement to the contrary, in
order to be eligible to receive any payments or benefits hereunder as a result
of the termination of the Executive's employment, in addition to fulfilling all
other conditions precedent to such receipt, the Executive (if he has the legal
capacity to do so and if not, his legal representative) must within 10 days
after the termination date (i) resign as a member of the Board, if applicable,
and as an officer and employee of the Company and its Affiliates and (ii) on
behalf of the Executive and his estate, heirs and representatives, execute a
release in form and substance reasonably satisfactory to the Company and its
legal counsel releasing the Company, its Affiliates and each of the Company's
and such Affiliate's respective officers, Directors, employees, members,
managers, agents, independent contractors, representatives, shareholders,
successors and assigns (all of which persons and entities shall be third party
beneficiaries of such release with full power to enforce the provisions thereof)
from any and all claims related to any payments or benefits under Section 3 or 4
of this Agreement related to the termination of Executive's employment.
(i) Earned and Accrued Payments. The foregoing notwithstanding, upon
the termination of the Executive's employment at any time, for any reason, the
Executive shall be paid all amounts that had already been earned and accrued as
of the time of termination, including but not limited to (i) pay for any accrued
and unused vacation; (ii) any bonus that had been earned but not yet paid; and
(iii) reimbursement for any business expenses accrued in accordance with Section
3(d).
5. Non-Compete and Non-Solicitation. The Executive agrees that during the
Term which he is employed by the Company, and during the period ending two years
after a Voluntary Termination, a termination by the Company for Disability or
Due Cause or an expiration of the Term because either Executive or Company
elects not to renew pursuant to Paragraph 1 above (the "Non-Compete Period"), he
shall not:
(a) compete with any business that is conducted by the Company or any
of its Affiliates at any time during the two years immediately preceding and the
6 months after the date of termination or expiration of the Term. For purposes
of this Agreement, the term "compete" shall mean engaging in an activity on
behalf of himself or as a more than 5% equity holder, an officer, a director, an
employee, a partner, a member, a manager, an agent, a consultant, a sole
proprietor, or any other individual or representative capacity if (i) it
involves a business which sells or distributes consumer and business products
primarily (more than 50%) through the Internet or which develops or distributes
convergence technology products or which uses interactive multimedia to sell its
products and (ii) the location in which the Executive conducts such activities
is within 50 miles of Charlottesville, Virginia.
(b) on behalf of himself or any other person or entity solicit for
employment any employee of Company or its Affiliates who was such at any time
during the two years immediately preceding and the 6 months after the date of
termination or expiration of the Term or cause such an employee to terminate him
or his employment by the Company or its Affiliates; or
(c) intentionally cause any vendor of the Company who was such at any
time during the two years immediately preceding and within six months after the
date of termination or expiration of the Term to cease doing business with or
decrease the amount of business done with the Company.
In the event the restrictions contained in this Paragraph 5 shall
be determined by any court of competent jurisdiction to be unenforceable by
reason of extending for too great a period of time or over too great a
geographic area or by reason of being too extensive in any other respect, such
restrictions shall be interpreted to extend only over the maximum period of time
for which they may be enforceable, and over the maximum geographic area as to
which they may be enforceable and to the maximum extent in all other respects as
to which they may be enforceable, all as determined by such court in such
action.
6. Protection of Confidential Information, Etc. The Executive
acknowledges that his employment by the Company will, throughout the Term of
this Agreement, bring him into close contact with many confidential affairs of
the Company, including information about costs, profits, markets, sales,
products, key personnel, pricing policies, operational methods, technical
processes and know-how and other business affairs and methods and other
information not readily available to the public, and plans for future
developments. The Executive further acknowledges that the services to be
performed under this Agreement are of a special and unique character. In
recognition of the foregoing, the Executive covenants and agrees that except as
required in connection with enforcing or defending any rights or claims in a
legal proceeding or arbitration pursuant to Section 13 below related to his
employment by the Company, this Agreement or any other agreement between the
Executive and the Company:
(i) during the Term which the Executive is employed
by the Company and thereafter, regardless of the reasons for
termination of employment, the Executive shall not, without
the prior written consent of the Board or a person authorized
thereby, disclose to any person other than as required by law
or court order, or other than to an employee of the Company or
its Affiliates, or to a person to which disclosure is
appropriate in connection with the performance by the
Executive of his duties as an executive of the Company (e.g.,
disclosure to the Company's outside lawyers, accountants or
bankers of financial data properly requested by such persons)
any confidential information obtained by him while in the
employ of the Company with respect to any of the Company's
products, services, customers, suppliers, marketing
techniques, methods, or future plans, the disclosure of which
will be damaging to the Company; provided, however, that
confidential information known generally to the public (other
than as a result of unauthorized disclosure by the Executive)
shall not be subject to the provisions of this Section 6 (i)
after the time it becomes generally known to the public;
(ii) he will deliver promptly to the Company on
termination of his employment, or at any other time the
Company may reasonably so request, at its expense, all
memoranda, notes, records, reports, and other documents (and
all copies thereof) relating to the Company's business, which
he may possess or have under his control other than any
agreements or plans related to the Executive's employment by
the Company; and
(iii) he will transfer and assign to the Company, all
rights of every kind and character, in perpetuity, in and to
any material and/or ideas written, suggested or submitted by
the Executive which relate to the business of the Company and
all other results and proceeds of the Executive's service
hereunder. The Executive agrees to execute and deliver to the
Company such assignments or other instruments as the Company
may require from time to time to evidence its ownership of the
results and proceeds of the Executive's service.
7. Injunctive Relief. The Executive acknowledges that a breach of the
restrictions against engaging in a competitive activity contained in Paragraph 5
and the disclosure of confidential information contained in Paragraph 6 will
cause irreparable damage to the Company, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such breach will be
inadequate. Accordingly, the Executive and the Company agree that if the
Executive breaches the restrictions on engaging in a competitive activity, on
solicitations, on the disclosure of confidential information or on any other
matter or action contained in Paragraphs 5 and 6, then the Company shall be
entitled to injunctive relief, without posting bond or other security.
8. Successors and Assigns.
(a) Assignment by the Company. This Agreement shall be binding upon
and inure to the benefit of the Company or any corporation or other entity to
which the Company may transfer all or substantially all of its assets and
business and to which the Company may assign this Agreement, in which case the
term "Company," as used herein, shall mean such corporation or other entity,
provided that no such assignment shall relieve the Company from any obligations
hereunder, whether arising prior to or after such assignment.
(b) Assignment by the Executive. The Executive may not assign this
Agreement or any part hereof without the prior written consent of the Company;
provided, however, that nothing herein shall preclude the Executive from
designating one or more beneficiaries to receive any amount that may be payable
following occurrence of his legal incompetency or his death and shall not
preclude the legal representative of his estate from assigning any right
hereunder to the person or persons entitled thereto under his will or, in the
case of intestacy, to the person or persons entitled thereto under the laws of
intestacy applicable to his estate. The term "beneficiaries," as used in this
Agreement, shall mean a beneficiary or beneficiaries so designated to receive
any such amount or, if no beneficiary has been so designated, the legal
representative of the Executive (in the event of his incompetency) or the
Executive's estate.
9. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia.
10. Entire Agreement. This Agreement and the Developments, Noncompete,
Nondisclosure Agreement between Executive and Company dated March 1, 1999 (the
"DNN Agreement") contain all of the understandings and representations between
the parties hereto pertaining to the matters referred to herein, and supersede
all undertakings and agreements, whether oral or in writing, previously entered
into by them with respect thereto, including, without limitation, the Prior
Agreement. This Agreement may only be modified by an instrument in writing. The
terms of this Agreement and the DNN Agreement shall be interpreted to be
independent agreements such that Executive must comply with the terms of each
such agreement (provided that effective upon execution of this Agreement,
Section 6 of the DNN Agreement shall be of no further force and effect and
Section 5 of this Agreement shall supersede any conflicting provision of the DNN
Agreement). To the extent such terms are deemed to be inconsistent in any given
circumstance, Executive may request in writing a determination by the Board as
to how such inconsistency shall be resolved.
11. Waiver of Breach. The waiver by any party of a breach of any
condition or provision of this Agreement to be performed by such other party
shall not operate or be construed to be a waiver of a similar or dissimilar
provision or condition at the same or any prior or subsequent time.
12. Notices. Any notice to be given hereunder shall be in writing and
delivered personally, or sent by certified mail, postage prepaid, return
receipt requested, addressed to the party concerned at the address indicated
below or to such other address as such party may subsequently give notice of
hereunder in writing:
If to the Company:
Value America, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Corporate Secretary
With a copy to:
Xxxx X. XxXxxxx, Esquire
XxXxxxx Xxxx, A Professional Corporation
000 X. Xxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
If to the Executive:
Xxxx X. Xxxxx
0000 XxXxxx Xxxxx
Xxxxx, Xxxxx 00000
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association then in effect
in the Commonwealth of Virginia and judgment upon such award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The board
of arbitrators shall consist of one arbitrator to be appointed by the Company,
one by the Executive, and one by the two arbitrators so chosen. The arbitration
shall be held at such place as may be agreed upon at the time by the parties to
the arbitration. The cost of arbitration as determined by the arbitrators.
14. Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or his estate or
beneficiaries shall be subject to the withholding of such amounts relating to
taxes as the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company may, in its sole discretion, accept other provisions for
payment of taxes and withholdings as required by law, provided it is satisfied
that all requirements of law affecting its responsibilities to withhold have
been satisfied.
15. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
16. Titles. Titles to the paragraphs in this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any paragraph.
17. Legal Fees. Company agrees to pay the reasonable fees and expenses of
Executive's legal counsel in connection with the negotiation and execution of
this Agreement, not to exceed $1,000.
18. Counsel. This Agreement has been prepared by XxXxxxx Xxxx, A
Professional Corporation, as counsel to the Company ("Counsel"), after full
disclosure of its representation of the Company and with the consent and
direction of the Company and the Executive. The Executive has reviewed the
contents of this Agreement and fully understands its terms. The Executive
acknowledges that he is fully aware of his right to the advice of counsel
independent from that of the Company, that Counsel has advised him of such right
and disclosed to him the risks in not seeking such independent advice, and that
he fully understands the potentially adverse interests of the parties with
respect to this Agreement. The Executive further acknowledges that neither the
Company nor its Counsel has made representations or given any advice with
respect to the tax or other consequences of this Agreement or any transactions
contemplated by this Agreement to him, that he has been advised of the
importance of seeking independent counsel with respect to such consequences, and
that he had obtained independent counsel with respect to such consequences. By
executing this Agreement, the Executive represents that he has, after being
advised of the potential conflicts between him and the Company with respect to
the future consequences of this Agreement, either consulted independent legal
counsel or elected, notwithstanding the advisability of seeking such independent
legal counsel, not to consult with such independent legal counsel.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
VALUE AMERICA, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------
Its:Executive Vice President
/s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx
