Document:

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                                                                  Exhibit 10.20

                             EMPLOYMENT AGREEMENT

   This EMPLOYMENT AGREEMENT is entered into as of April 16, 2001 by and
between Valley Media, Inc., a Delaware corporation (the "Company") and John
Gennari ("Executive").

   For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

                             ARTICLE 1. EMPLOYMENT

   1.1. Employment. The Company hereby employs Executive, and Executive agrees
to be employed by the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof for an initial term of
one year, automatically extended from month to month thereafter, unless
terminated as provided in Section 1.6 ("Term").

   1.2. Positions and Duties.

   (a) During the Employment Period, Executive shall serve as Executive Vice
President, Sales (Executive VP, Sales) at its headquarters, and under the
supervision and direction of the Company's Chief Executive Officer (CEO).

   (b) Executive shall carry out the responsibilities of the position of
Executive Vice President, Sales as described in the position description for
this job. The position responsibility includes the total sales function, which
may include customer service and order fulfillment, for all areas of business
except Distribution North America.

   (c) Executive shall devote his best efforts and full business time and
attention (except for permitted vacation periods and periods of illness or
other incapacity as provided for herein) to the business and affairs of the
Company and its subsidiaries. Executive shall perform the duties and
responsibilities of his position to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.

   (d) Executive will provide his services, when requested, necessary or
appropriate, to negotiate with prospective investors, vendors, employees,
strategic partners and service providers.

   1.3. Salary, Bonus, Options and Benefits.

   (a) During the Employment Period, Executive's base salary (the "Base
Salary") shall initially be $250,000.00 per annum, which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices as in place from time to time. Any adjustment in Executive's
compensation shall be determined by the Compensation Committee of the Board
(the "Compensation Committee") in its sole discretion. The Compensation
Committee shall determine, within three months of the signing of this
agreement, an appropriate bonus for Executive's first full year of employment
based upon Company's profits in excess of approximately One Million Dollars
($1,000,000.00) for fiscal year 2002, as detailed in Company's annual budget.
Executive's bonuses for subsequent years of employment will be negotiated in
advance of each year between the CEO and Executive, based upon Company's
profitability, net sales levels, industry standards, Company's attainment of
its business objectives, and amounts payable to other executive personnel of
Company.

   (b) Subject to approval of the Company's Board of Directors, Executive will
be awarded Incentive Stock Options (ISOs) under Section 422 of the Internal
Revenue Code of to acquire 50,000 shares of Company's common stock at an
option exercise price equal to the market closing price on the date of grant.
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   (c) All stock options shall expire if not exercised on or before April 30,
2011, except as provided in Section 1.6 (c), (d), (e), and (f). All stock to
be issued to Executive shall be restricted stock, salable and tradeable only
in limited circumstances as provided in Rules 144 and 701 under the Securities
And Exchange Act of 1933.

   ISOs granted hereunder shall be subject to the terms and conditions of
Company's ISO Plan, any amendments thereto, and the Company's corresponding
grant to Executive, to the extent not inconsistent herewith.

   All options granted to Executive shall vest and be granted at the following
times and in the following amounts: Options to acquire one thousand forty two
(1,042) shares shall vest and be granted on the first day of the calendar
month following the execution of this agreement, and on the first day of each
calendar month thereafter.

   (d) During the Employment Period, Executive shall be entitled to
participate in all of the Company's employee benefit programs for which senior
executive employees of the Company are generally eligible as in effect from
time to time. Executive shall be entitled to three weeks of paid vacation per
year in accordance with the Company's policies. Any payments of benefits
payable to Executive hereunder in respect of any calendar year during which
Executive is employed by the Company for less than the entire such year shall,
unless otherwise provided in the applicable plan or arrangement or required by
applicable law, be prorated in accordance with the number of days in such
calendar year during which Executive is employed.

   (e) All payments of compensation hereunder shall be subject to federal,
state and other withholding taxes as required by applicable law and the
Company's general payroll policies as in effect from time to time.

   1.4. Relocation Expenses. The company shall pay to Executive the following
expenses in connection with Executive's relocation from Executive's current
residence in Westerville, Ohio, to the Sacramento area:

   (a) Transportation, fares, meals and lodging for Executive and his family
from Executive's present residence to any new residence located near the new
principal place of work.

   (b) Moving of Executive's household goods and personal effects of Executive
and Executive's family from Executive's present residence to the new
residence, and up to 30 days of storage, as necessary;

   (c) Lodging and meals for Executive and Executive's family for a reasonable
period while occupying temporary living quarters located near the new
principal place of work, plus round-trip travel to Ohio at such times as will
not interfere with Executive's job performance, as reasonably determined by
Executive and CEO, during the time prior to the sale of Executive's Ohio
house.

   (d) Round-trip travel, meals and lodging expense for Executive and
Executive's family for a reasonable number of house-hunting trips to locate a
new residence.

   (e) Direct transactional expenses in connection with the sale of
Executive's residence, including realtor fees, mortgage pre-payment penalties,
termite inspector's fees, title insurance policy and revenue stamps, escrow
fees, fees for preparing documents, state and local taxes, mortgage discount
points, and seller's attorneys' fees, if any. The term "residence" shall mean
the property occupied by executive as his principal residence at the time of
the transfer and does not include vacation homes, houseboats, boats or
airplanes. All such payments made hereunder shall be paid on a gross-up basis
with the Company paying to Executive an amount equal to any income tax
liability arising from Company's payment hereunder.

   (f) Reasonable loan origination fees for the purchase of a new primary
residence.

   (g) In the event Executive's employment is terminated for any reason other
than for Cause as defined herein or by Executive's resignation, the Company
will provide relocation expenses for Executive and his family back to
Westerville, Ohio only, in the amount of the actual cost of movement of
Executive's household goods

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from Westerville, Ohio to Sacramento, plus direct transactional costs incurred
in selling Executive's home in Sacramento. Should Executive desire to relocate
to any other location, the Company will not make any contribution toward
moving expenses.

   1.5. Automobile. The Company shall provide to Executive a leased automobile
of Executive's choice, with a value not to exceed manufacturer's suggested
retail price of $45,000. The Company shall additionally provide all
maintenance and operating costs.

   1.6. Term.

   (a) The commitment by Executive to be employed under this Employment
Agreement and the Company's commitment to employ Executive subject to Section
1 commences with the execution of this Agreement.

   (b) The Employment Period shall end on the first anniversary of the
commencement date (the "Initial Employment Period"), subject to earlier
termination (1) by reason of Executive's death or disability (as defined
below), (2) for Cause (as defined herein), (3) without Cause, or (4) by
written resignation of the Executive. The commencement of the mutual
commitment to employ and to be employed shall be the date of the execution of
this Employment Agreement, subject to the expiration provisions stated above.

   (c) If the Employment Period is terminated without Cause, the Company shall
continue to pay Executive's salary for six (6) months from the date of the
termination. Executive will not continue to accrue vacation or sick leave. For
a period of six (6) months, Executive will continue to receive medical and
dental benefits in the same manner and with the same co-payment requirements
as during his term of employment. Executive shall be entitled, for thirty (30)
days following that termination, to exercise any previously unexercised vested
stock options Executive shall hold as of the date of termination. Any options
not so exercised shall lapse.

   (d) If Executive elects to terminate his employment with the Company or its
successor within six (6) months of a Change of Control, as defined herein,
Company or its successor shall continue to pay Executive's salary and medical
and dental benefits for six (6) months. Executive shall be entitled, for
thirty (30) days following that termination, to exercise any previously
unexercised vested stock options Executive shall hold as of the date of
termination. Any options not so exercised shall lapse.

   (e) If Executive is terminated for Cause, as defined herein, his salary and
benefits will terminate immediately. Any vested but unexercised stock options
that Executive shall hold as of the date of termination shall lapse.

   (f) If Executive resigns, his salary and benefits will terminate
immediately as of the effective date of the resignation. Executive shall be
entitled, for thirty (30) days following that effective date of resignation,
to exercise any vested but previously unexercised stock options Executive
shall hold as of the date of resignation. Any options not so exercised shall
lapse.

   (h) Except as expressly set forth in this Section 1.4, all other
compensation and other benefits shall cease to accrue upon termination of
employment.

   (i) Automatic Renewal; Renewal Options. Notwithstanding the expiry of the
Initial Employment Period, the employment Period shall automatically renew
from month to month unless terminated by Company or Executive upon thirty (30)
days written notice prior to such renewal period, or terminated by the Company
at any time during any renewal term with or without cause.

   (j) Resignations Upon Termination. Upon termination of the Executive,
Executive shall resign from all corporate offices and directorships, if any,
then held with the Company or any of its subsidiaries or other affiliates.

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   1.7. Confidential Information; Company Property. Executive acknowledges
that the information, observations and data obtained by him while employed by
the Company and its subsidiaries concerning the product, efforts, business and
affairs of the Company, its subsidiaries and any predecessor to the business
of the Company that are not generally available to the public other than as a
result of breach of this Agreement by Executive ("Confidential Information")
are the property of the Company and its subsidiaries. Executive agrees that he
shall not disclose to any unauthorized person or use for his own account any
Confidential Information without the prior written consent of the Company
unless, and in such case only to the extent that, such matters become
generally know to and available for use by the public other than as a result
of Executive's acts or omissions to act. Notwithstanding the foregoing, in the
event Executive becomes legally compelled to disclose Confidential Information
pursuant to judicial or administrative subpoena or process or other legal
obligation, Executive may make such disclosure only to the extent required, in
the opinion of counsel for Executive, to comply with such subpoena, process or
other obligation. Executive shall, as promptly as possible and in any event
prior to the making of such disclosure, notify the Company of any such
subpoena, process or obligation and shall cooperate with the Company in
seeking a protective order or other means of protecting the confidentiality of
the Company Information. Executive shall deliver to the Company at the
termination of the Employment Period, or at any time the Company may
reasonably request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies hereof)
containing, relating to, or derived from the Confidential Information or the
business of the Company or its subsidiaries which he may then possess or have
under his control. Executive agrees that he will not retain after the
termination of the Employment Period any copies of any Confidential
Information including, without limitation, any software, documents or other
materials originating with and/or belonging to the Company or any subsidiary
of the Company.

   1.8. Non-Compete; Non-Solicitation.

   (a) Executive acknowledges that in the course of his employment with the
Company he will become familiar with the Company's trade secrets and with
other confidential information concerning the Company and its predecessors and
that his services have been and will be of special, unique and extraordinary
value to the Company. Executive agrees that, during the period in which
Executive is receiving compensation hereunder (the "Non-Compete Period"), he
shall not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in any business in the
United States that is engaged in the sale and/or distribution of audio or
video recordings, irrespective of format. Nothing herein shall prohibit
Executive from being a passive owner of not more than 1% of the outstanding
stock of another corporation, so long as Executive has no active participation
in the management or the business of such corporation. Executive acknowledges
that the Company plans to rapidly expand its business and conduct such
business throughout the United States and ultimately throughout the world.

   (b) Executive shall not directly or indirectly (1) induce or attempt to
induce any employee of the Company or any subsidiary of the Company to leave
the employ of the Company or such subsidiary, or in any way interfere with the
relationship between the Company or any such subsidiary and any employee
thereof; (2) induce or attempt to induce any customer, supplier, licensee or
other business relationship of the Company or any subsidiary of the Company to
cease doing business with the Company or such subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee
or business relationship and the Company or any such subsidiary; or (3) make
an oral or written disparaging statement, comment or remark about the Company
or any of its subsidiaries to any employee, customer, supplier, licensee or
other business relationship of the Company or any of its subsidiaries or to or
for the intended use of any member of the press.

   1.9. Employment-At-Will. This Agreement constitutes employment-at-will and
that notwithstanding (i) any general or specific policies (whether written or
oral) of the Company relating to the employment or termination of its
employees, (ii) any statements made to Executive, whether made orally or
contained in any document, pertaining to Employee's relationship with the
Company, or (iii) assignment of Cause by the Company, the Company reserves the
right to terminate the employment of Executive by the Company in which

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event Executive's sole remedy shall be to receive certain payments and other
benefits upon the terms and subject to the conditions provided for herein,
from the date of termination to the date of the end of the Employment Period,
as extended.

                   ARTICLE 2. REPRESENTATIONS AND WARRANTIES

   2.1. Representations and Warranties of Executive. Executive represents and
warrants to the Company that:

   (a) this Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance with the terms, and the execution,
delivery and performance of this Agreement by Executive does not and will not
conflict with, violate or cause a breach of or default under any agreement,
contract or instrument, order, judgment or decree to which Executive is a
party or by which he is bound, and

   (b) Executive is not a party to or bound by any employment agreement or
non-compete agreement with any other person or entity.

   2.2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Executive that the execution, delivery and
performance of this Agreement by the Company does not and will not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Company is a party or by which
it is bound.

                            ARTICLE 3. DEFINITIONS

   As used in this Agreement, the following terms shall have the definitions
set forth below:

   (a) For purposes of the foregoing, "Cause" shall mean (1) indictment or
conviction of any felony or of any crime involving dishonesty; or (ii)
participation in any fraud against the Company.

   (b) "Disability" shall mean Executive's inability by reason of physical or
mental condition, to substantially perform his normal duties hereunder for one
(1) month or more during any twelve (12) month period determined in good faith
by the Board.

   (c) "Subsidiary" of an entity shall mean any corporation or other business
organization of which the securities having majority of the normal voting
power in electing the board of directors or similar governing body entity are,
at the time of determination, owned by such entity directly or indirectly
through one or more subsidiaries.

   (d) "Change of Control" shall mean (1) the Company shall sell substantially
all of its operating assets, (2) the Company is a party to a corporate merger
or acquisition in which the Company is not the surviving corporation, or (3)
beneficial ownership of a majority of Corporation's issued and outstanding
stock changes in a single transaction or a series of related transactions.

                         ARTICLE 4. GENERAL PROVISIONS

   4.1. Enforcement. It is the express intention of the parties that this
Agreement be enforced to the fullest extent permitted by applicable law in
order to give full effect to the agreements reached herein. Accordingly, if at
the time of enforcement of Sections 1.6 or 1.7, a court holds that the
restrictions stated herein are unreasonable under the circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area. Because Executive's services are unique and
because Executive has access to Confidential Information, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement. In the event of a

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breach or threatened breach of this Agreement, the Company, its subsidiaries
and their respective successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violation of, the provisions hereof (without
posting a bond or other security).

   4.2. Survival. Sections 1.7 and 1.8 and this Article 4 shall survive and
continue in full force and effect in accordance with their terms
notwithstanding any termination of employment.

   4.3. Notices. All notices or other communication to be given or delivered
under or by reason of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally, one (1) business
day following when sent via a nationally recognized overnight courier, or when
sent via facsimile confirmed in writing to the recipient. Such notices and
other communications will be sent to the addresses indicated below:

   To the Company:

       Valley Media, Inc.
       1280 Santa Anita Court
       Woodland, California 95776

   To Executive:

       John Gennari
       6600 Highland Lakes Place
       Westerville, Ohio 43082

   4.4. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

   4.5. Entire Agreement. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

   4.6. Amendments and Waivers. Any provision of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive.

   4.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

   4.8. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.

   4.9. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement or of any term or provision hereof.

   4.10. Conflict. In the event of any conflict between the provisions of this
Agreement and the policies and practices of the Company, the provisions of
this Agreement shall govern.

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   4.11. Negotiation of Agreement. Each of the parties acknowledge that it has
been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it
has executed the same with consent and upon the advice of said independent
counsel. Each party of its counsel cooperated in the drafting and preparation
of this Agreement and the documents referred to herein, and any and all drafts
relating thereto shall be deemed the work product of the parties and may not
be construed against any party by reason of its preparation. Accordingly, any
rule of law, or any legal decision that would require interpretation of any
ambiguities in this Agreement against the part that drafted it, is of no
application and is hereby expressly waived.

   4.12. Parties in Interest; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
permitted successors, assigns, heirs, and/or personal representatives, except
that neither this Agreement nor any interest herein shall be assigned or
assignable by operation of law or otherwise, by Executive without the prior
written consent of the Company, which such consent the Company may grant or
withhold in its sole discretion. The Company may, without the consent of
Executive, assign this Agreement or any interest herein, by operation of law
or otherwise, to (i) any successor to all or substantially all of its stock,
assets or business by dissolution, merger, consolidation, transfer or assets,
or otherwise, or (ii) any direct or indirect subsidiary, affiliate or division
of the Company or of any such successor referred in (a) hereof. Nothing in
this Agreement, expressed or implied, is intended to confer on any person
other than the parties and their respective successors and permitted assigns
any rights or remedies under or by reason of this Agreement.

   4.13. Dispute Resolution Process. The parties hereby agree that, in order
to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement (or any other agreement contemplated by or related to
this Agreement or any other agreement between the Company and Executive),
including without limitation, any claim based on contract, tort or statute, or
the arbitrability of any claim hereunder (a "Claim"), (but excluding actions
for injunctive relief for violations of Section 1.7 or 1.8 which may be
brought in any court having jurisdiction), shall be settled at the request of
any part of this Agreement, by final and binding arbitration conducted in
Sacramento, California.

   4.14. Full Understanding. Executive represents and agrees that he fully
understands his right to discuss all aspects of this Agreement with his
private attorney, and that to the extent, if any, that he desired, he availed
himself of such right. Executive further represents that he has carefully read
and fully understands all of the provisions of this Agreement (including the
non-compete provisions of Section 1.8), that he is competent to execute this
Agreement, that his agreement to execute this Agreement has not been obtained
by any duress and that he freely and voluntarily enters into it, and that he
has read this document in its entirety and fully understands the meaning,
intent and consequences of this document.

   IN WITNESS WHEREOF, this Agreement has been signed and sealed the day first
above written.

COMPANY:

Valley Media, Inc.

By: _________________________________
         /s/ Peter R. Berger              Date: April 16, 2001
           Peter R. Berger

       Chief Executive Officer

                                          Date: April 16, 2001
EXECUTIVE:

By: _________________________________
          /s/ John Gennari
            John Gennari

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                                                                  EXHIBIT 10.21

                             EMPLOYMENT AGREEMENT

   This Agreement is made and entered into effective February 8, 2001, by and
between Valley Media, Inc. (the "Company") and Don Rose ("Employee").

   1. Employment.

   1.1 The Company agrees to employ Employee on the terms and conditions of
this Agreement commencing on the above date and continuing until terminated as
provided in Sections 6 or 7 below.

   1.2 The Company and Employee acknowledge that Employee's job title, duties
and compensation may be changed by the Company from time to time as determined
by the Company in its sole discretion. The Company and Employee acknowledge
that neither this Agreement, nor the Company's Employee Handbook ("Handbook"),
nor any of the Company's other policies, procedures or practices, nor any
statement or representation by any other employee of the Company shall be
construed as a contract of employment for a specified position or specified
term.

   2. Duties of Employee.

   2.1 Employee agrees to accept employment on the terms set forth in this
Agreement. Employee will be the Vice President, Finance, and will perform all
services customarily required for such a position.

   2.2 Employee will consult with and secure the approval of the Company's
President prior to the hiring or termination of employment of any personnel.
Employee agrees to keep the Company informed of the activities of Employee's
department and the status of all research, business efforts and other
activities being developed, conducted or monitored by that department.
Employee acknowledges and agrees that performance of Employee's duties will
require travel at such times and for such periods as may be necessary or
appropriate.

   2.3 Employee agrees to devote Employee's full time, attention, skill, and
efforts to the performance of duties for the Company, its parent,
subsidiaries, and affiliates. Employee shall perform such additional duties as
the Company may assign during the term of this Agreement, including services
for any subsidiary or affiliated entities.

   2.4 Employment during the term of this Agreement shall be on a full-time
basis. Employee will not enter into any employment or independent contractor
relationship with any other person or entity without the advance written
consent of the Company's President.

   3. Compensation.

   3.1 Salary. Company shall pay to Employee, in full consideration of all
services to be rendered by Employee, compensation at the rate of Four
Thousand, Six Hundred Fifteen Dollars and Thirty-Eight Cents ($4,615.38),
commencing as of the date of this Agreement, payable biweekly, in accordance
with the Company's normal pay practices, and subject to such withholding as
may be required by law, prorated for any partial employment period.

   3.2 Bonus. A guaranteed bonus of Fifteen Thousand Dollars ($15,000.00) will
be paid on April 1st, 2001. For fiscal year 2002 (April 2001 through March
2002) Employee will be eligible for a bonus to be determined at the discretion
of the Compensation Committee and the Board of Directors.

   3.3 Stock Options. Upon execution of this Agreement, and under the
Company's Amended and Restated 1997 Stock Option Plan (the "Plan"), Employee
shall be granted an option to purchase 15,000 shares of the Company's Common
Stock at $0.875 per share.

   4. Unfair Competitive Practices.

   4.1 Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate
officer, director, or in any other individual or representative capacity,

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engage in or participate in any business that is in competition in any manner
whatsoever with the business of the Company, its parent, subsidiaries, or
affiliates.

   4.2 Employee will not at any time during or after Employee's employment,
solicit or take away, directly or indirectly, any person, entity or business
that is a customer or prospective customer of the Company or any of its
affiliates or subsidiaries.

   4.3 During the term of this Agreement and after termination of this
Agreement, Employee agrees that Employee will not, directly or indirectly,
solicit, induce or influence any person employed or engaged by the Company to
terminate such employment or engagement.

   4.4 During the term of this Agreement, Employee will not undertake planning
for, or the organization of, any business activity competitive with the
Company's business or combine or conspire with other employees or
representatives of the Company's business with the purpose of organizing any
such competitive activity.

   4.5 During the term of this Agreement and after termination of this
Agreement, Employee will not make any disparaging or defamatory comments to
any third party regarding the Company, its parent, subsidiaries or affiliates
concerning its or their officers, directors, employees or agents, or
concerning its or their services or methods of doing business. Further,
Employee will not at any time during or after Employee's employment do
anything that could affect to the Company's detriment any relationship of the
Company with any current, future, or prospective customer, supplier, or
Company employee, or which could cause any current, future, or prospective
client or customer to refrain from entrusting business or additional business
to the Company.

   4.6 Employee agrees that, where applicable, the provisions of this section
shall survive the termination of Employee's employment.

   5. Trade Secrets.

   5.1 Employee acknowledges that during the term of this Agreement, Employee
will have access to, and become acquainted with, proprietary trade secret
information belonging to the Company, its parent, subsidiaries, affiliates,
clients, and customers, including, without limitation, information concerning
their organization, business and affairs, their client lists, supplier lists,
pricing information, profit margins, referral source lists, client
presentations (actual and proposed), sales and financing projections, budget
information and procedures, computer software, techniques of operation,
employee compensation and financial structure, future promotion plans and
strategies of any kind or nature, (hereinafter referred to as "Confidential
Information"). Employee acknowledges that information may be Confidential
Information even though not expressly stamped or identified as such, and that
Employee will treat all information in the general categories identified above
as Confidential Information. Employee further acknowledges that Confidential
Information is highly confidential, a valuable trade secret, and the sole
property of the Company and its parent, subsidiaries, affiliates, clients, and
customers, as the case may be, and that the protection and preservation of
Confidential Information by Employee is absolutely vital to the continued
success of the promotion and marketing business of the Company, and the
preservation of the trust of its clients. Accordingly, Employee shall not
disclose, reveal, or divulge to any person any Confidential Information or
other trade secrets, directly or indirectly, or use them in any way, except as
required in the course of Employee's employment under this Agreement.

   5.2 Upon termination of employment with the Company for any reason, or at
any other time the Company demands, Employee shall deliver promptly to the
Company all material and documentation relating to the Company, including
without limitation, all memoranda, notes, records, reports, manuals, drawings,
blueprints, employee lists, customer lists, referral source lists, vendor
service lists, software programs, and any other documents, whether or not of a
confidential nature, belonging to the Company, including all copies of such
materials which Employee may then possess or have under Employee's control.
Employee further agrees that upon termination of employment, Employee shall
not retain any document, data, or other materials containing or pertaining to
the Confidential Information.

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   5.3 Employee agrees and acknowledges that a breach of the provisions of
paragraphs 4 or 5 will result in damage or loss to the Company which cannot be
reasonably or adequately compensated in damages and will cause the Company
irreparable injury. Employee expressly agrees that the Company shall be
entitled to injunctive and other equitable relief to prevent a breach of
paragraphs 5 or 6 of this Agreement, without the need for the posting of any
bond or other security. Resort to such equitable relief shall not be construed
to be a waiver of any other rights or remedies the Company may have for
damages or otherwise.

   5.4 Employee agrees that the provisions of this section shall survive
termination of Employee's employment.

   6. Termination. This Agreement may be terminated prior to the expiration of
the Term as follows:

   6.1 Upon Disability or Death. If during the Term, the Employee shall become
physically or mentally disabled, whether totally or partially, either
permanently or so that the Employee, in the good faith judgment of the
Company, is unable substantially and competently to perform his duties
hereunder for a period of Ninety (90) consecutive days or for Ninety (90) days
during any six (6) month period during the Term (a "Disability"), the Company
may terminate the Employee's employment hereunder. In order to assist the
Company in making that determination, the Employee shall, as reasonably
requested by the Company,

     (i) make himself available for medical examinations by one or more
  physicians chosen by the Company, and

     (ii) grant to the Company and any such physicians access to all relevant
  medical information concerning him, arrange to furnish copies of his
  medical records to the Company and use his best efforts to cause his own
  physicians to be available to discuss his health with the Company.

   If the Employee dies during the Term, this Agreement shall automatically
terminate as of the close of business on the date of his death. Upon
termination for Disability or death, the Company shall not be obligated to
make any salary or other payments or provide any benefits under this Agreement
(other than salary payments for services already rendered, bonus payments for
fiscal years that have ended, and reimbursements for expenses incurred,
through the date of termination).

   6.2 For Cause. This Agreement may be terminated at any time by the Company,
effective immediately upon written notice to the Employee for Cause and all of
the Employee's rights to payments (other than salary payment for services
already rendered, bonus payments for fiscal years that have ended, and
reimbursements for expenses incurred, through the date of such termination)
and any other benefits otherwise due hereunder shall cease immediately. The
Company shall have "Cause" for termination of the Employee if any of the
following has occurred:

     (a) Employee continues to fail to perform substantially his duties
  hereunder (other than as a result of a Disability) following a written
  demand therefore by the Company not less than thirty (30) days prior to the
  effective date of termination, provided that a policy disagreement that
  does not involve a failure to substantially perform requested duties shall
  not constitute "Cause" hereunder;

     (b) Employee is engaged in dishonesty or gross negligence in the
  performance of Executive's duties hereunder;

     (c) Employee commits an act or acts constituting a felony under the laws
  of the United States or any state thereof;

     (d) Employee commits a willful act or omission (other than a lawful
  business decision, or an act or omission in furtherance thereof, that is
  within the scope of Employee's authority hereunder) which is materially
  injurious to the financial condition or business reputation of the Company
  or any of its subsidiaries; or

     (e) Employee breaches any provision or covenant contained in this
  Agreement, including, without limitation, the covenants contained in
  Sections 5 and 6, or any other part of this Agreement.

                                       3
<PAGE>

   7. Change in Control.

   For the purposes of this Agreement "Change in Control" means the occurrence
of one or more of the following events without the approval of the Board:

     (a) The Company sells substantially all of its assets to a single
  purchaser or a group of associated purchasers;

     (b) At least fifty percent (50%) of the outstanding corporate shares of
  the Company are sold, exchanged or otherwise disposed of in one
  transaction; or

     (c) There is a merger or consolidation of the Company in a transaction
  in which the Company's shareholders receive less than fifty percent (50%)
  of the outstanding voting shares of the new or continuing corporation.

   7.1 In the event of a "Change in Control" as defined above where the
Employee's employment is terminated without cause, the Company shall continue
to pay Employee's salary for six (6) months from the date of termination.
Employee will not continue to accrue vacation or sick leave. For a period of
six (6) months, Employee will continue to receive medical and dental benefits.

   7.2 If Employee elects to terminate his employment with the Company or its
successor within six (6) months of a "Change in Control" (as defined above),
Company or its successor shall continue to pay Employee's salary and medical
and dental benefits for six (6) months.

   8. Assignment.

   Employee may not, without the prior written consent of the Company, assign
this Agreement or any rights or obligations hereunder. The Company may assign
this Agreement and delegate any of its rights and duties, without the consent
of Employee, to any of its subsidiaries or affiliates or to any person or
entity who purchases the assets or stock of the Company.

   9. Ownership of Materials.

   All memoranda, reports, drawings, designs, programs, promotions, software
and other materials or documents, whether or not confidential, created or
developed by Employee pursuant to Employee's employment (whether alone or in
conjunction with any other person), or which Employee may disclose to the
Company during the term hereof shall be the sole and absolute property of the
Company for any and all purposes whatsoever, and Employee agrees that Employee
does not have, and will not claim to have, any right, title or interest of any
kind or nature whatsoever in or to such materials. Employee further agrees to
execute any and all documents reasonably required by Company in order to
evidence or perfect Company's ownership of such materials.

   Employee agrees that the provisions of this section shall survive
termination of Employee's employment.

   10. Miscellaneous.

   10.1 This Agreement supersedes any and all other agreements, either oral or
in writing, between the parties hereto with respect to the employment of
Employee by the Company, and contains all of the covenants and agreements
between the parties with respect to such employment in any manner whatsoever.
Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been made by any
party or anyone acting on behalf of any party which are not expressly
contained herein.

   10.2 This Agreement may not be amended, supplemented, or modified or
extended except by a written agreement which expressly refers to this
Agreement and which is signed by each of the parties hereto.

   10.3 This Agreement is made in and shall be governed by the laws of
California.

   10.4 In the event that any provision of this Agreement is determined to be
illegal, invalid, or void for any reason, the remaining provisions hereof
shall continue in full force and effect.

                                       4
<PAGE>

   10.5 To the extent that any portion of this Agreement is deemed
unenforceable by virtue of its scope in terms of area, business activity
prohibited and/or length of time, but could be enforceable by reducing the
scope of area, business activity prohibited and/or length of time, Employee
and the Company agree that same shall be enforced to the fullest extent
permissible under the laws and public policies applied in the jurisdiction in
which enforcement is sought, and that the Company shall have the right, in its
sole discretion, to modify such invalid or unenforceable provision to the
extent required to be valid and enforceable. Employee agrees to be bound by
any promise or covenant imposing the maximum duty permitted by law which is
subsumed within the terms of any provision hereof, as though it were
separately articulated in and made a part of this Agreement, that may result
from striking or modifying any of the provisions hereof.

   10.6 Employee agrees to abide by the terms of the Handbook and any other
Company policies, procedures and directives. Employee understands and
acknowledges that the terms of the Handbook, and other Company policies,
procedures and directives may be amended, supplemented or modified from time
to time by the Company, with or without prior notice to the Employee. In the
event of any conflict between the terms of the Handbook, or any other
policies, procedures or directives, and the provisions of this Agreement, the
provisions of this Agreement shall govern.

   10.7 Employee represents and warrants to the Company that there is no
restriction or limitation, by reason of any agreement or otherwise, upon
Employee's right or ability to enter into this Agreement and fulfill the
obligations under this Agreement.

   10.8 Employee acknowledges, represents and agrees that Employee is not
relying on any inducement, representation, promise, or other statement not
expressly set forth herein in entering into this Agreement and accepting
employment with the Company, including without limitation any representation
regarding the term of employment or any right to continued employment, other
than what is described in this Agreement.

   10.9 The Company and Employee agree that claims or controversies arising
between them concerning this Agreement, Employee's employment or the
termination of such employment shall be resolved by binding arbitration in
accordance with the provisions of Exhibit A, except as otherwise provided
therein.

                                                   /s/ Donald E. Rose
                                          ____________________________________
                                                   Don Rose, EMPLOYEE

DATED: March 30, 2001

                                          VALLEY MEDIA, INC.

                                                   /s/ James P. Miller
                                          By: ________________________________
                                           James P. Miller, PRESIDENT and COO

DATED: April 2, 2001

                                       5

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