EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 21st day of November,
1996, by and between NAVARRE CORPORATION, a Minnesota corporation
(the "Company"), and XXX X. XXXXXXX, a resident of the State of Minnesota
("Executive").
W I T N E S S E T H:
WHEREAS, it is the desire of the parties to enter into this employment
agreement on the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and obligations of this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
I. Employment. Subject to all of the terms and conditions of this
Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment with the Company, as its Chief Operating Officer.
I. Duties as Chief Operating Officer. The services of Executive are
exclusive to the Company. Executive will devote substantially all of his
business hours to, and make the best use of his energy, knowledge and
training in, performing his duties as Chief Operating Officer of the
Company within the general guidelines established by the Chief Executive
Officer of the Company as the same may, from time to time, be modified by
the Company's Board of Directors. Executive will always report to the
Chief Executive Officer of the Company and have all the duties normally
subscribed to the Chief Operating Officer. Notwithstanding anything in this
Agreement to the contrary, the duties of Executive under this Agreement do
not (i) require Executive to relocate his principal office or residence from
the Minneapolis/St. Xxxx, Minnesota metropolitan area without the prior
written consent of Executive, or (ii) prevent Executive from owning,
directly or indirectly, securities of, or otherwise participating in the
ownership of, any publicly-owned business, trade, industry or venture.
Executive will perform his duties in a competent and professional manner,
consistent with that expected of a chief operations officer of the Company.
I. Term. Subject only to earlier termination in accordance with Section
5 of this Agreement, Executive's term of employment shall commence on
the date hereof and continue for a period of one (1) year (the "Initial
Term"). Upon the expiration
of the Initial Term, this Agreement shall be automatically renewed for
successive additional one (1)-year terms unless this Agreement is
terminated in writing by either party hereto at least sixty (60) days prior to
the expiration of the Initial Term or any subsequent renewal term. The
Initial Term and any subsequent renewal terms shall be referred to
collectively herein as the "Employment Period."
I. Compensation. As compensation for all of Executive's services
under this Agreement, the Company agrees to pay Executive during the
Employment Period and on retirement, and Executive agrees to accept the
following:
A. Base Salary. A base salary of $195,000 per annum
(the "Base Salary"), payable in accordance with the Company's
standard payroll practices. On each anniversary of this Agreement,
the Base Salary shall be adjusted by the Chief Executive Officer
based upon the level of performance by Executive.
A. Performance Bonus. As additional compensation for
Executive, Executive shall be eligible to receive a bonus determined
by the Chief Executive Officer based on a mutually agreed upon
MBO program, with a maximum bonus (the "Bonus") equal to 60%
of the Base Salary of Executive. Executive's Bonus shall be paid
semi-annually not later than 45 days after March 31 and September
30 of each year.
A. Stock Options. As outlined in Addendum 1.
A. Benefits.
1. Expenses. The Company shall reimburse
Executive for any and all ordinary, necessary and reasonable
business expenses that Executive incurs in connection with
the performance of his duties under this Agreement, including
entertainment, telephone, travel and miscellaneous expenses,
provided that Executive provides the Company with
documentation for such expenses in a form sufficient to
sustain the Company's deduction for such expenses under
Section 162 of the Internal Revenue Code of 1986, as
amended.
1. Medical and Disability Insurance. The
Company shall provide Executive with the same medical,
dental and disability insurance coverage provided to other
officers of the Company.
1. Life Insurance. Subject to passing the
physical examination required by the Company's insurance
carrier, the Company shall provide Executive with a $250,000
term life insurance policy insuring Executive's life during the
term of Executive's employment with the Company and the
Company shall pay all premiums thereon. Such policy shall
be owned by the Executive and shall be payable to such
beneficiary or beneficiaries as Executive directs by written
instrument delivered to the Company or the insurer under the
life insurance policy.
1. Vacation; Sick Leave. Executive shall
be entitled to a paid vacation period of four (4) weeks each
year, which may be taken at any time subject to the
Company's business needs, plus nine paid holidays per year.
Executive shall have sick leave of six days per year accruing
at the rate of one-half day per month.
1. Automobile Expenses. The Company
agrees to provide Executive an automobile allowance of $750
per month to be applied towards Executive's purchase or lease
of a car. In addition, the Company will pay or reimburse the
Executive for all reasonable costs of licensing, sales taxes,
property taxes, maintenance, repair, oil, gasoline and
insurance for such automobile. Executive agrees that he shall
operate any automobile provided by the Company with
"reasonable care". In addition, Executive agrees that his use
of any automobile provided hereunder is subject to the
Company's business use policy, as such policy may from time
to time be determined by the Board of Directors of the
Company, and that Executive shall be responsible for gas, oil
and any taxes with respect to his personal use of any
automobile provided hereunder.
1. Benefit Changes. No reference in this
Agreement to any policy or any employee benefit plan
established or maintained by the Company shall preclude the
Company from changing any such policies or amending or
terminating any such benefit plans if a substantially similar
benefit is provided to Executive by the Company.
1. Other Plans. Nothing contained herein
is intended to or shall be deemed to be granted to Executive
in lieu of any rights or privileges which Executive may be
entitled to as an employee of the Company under any other
policies or benefit plans that are currently in effect or that
may hereafter be adopted. Executive shall be entitled to
participate in any other employee benefit plans of the
Company generally applicable to officers of the Company, its
divisions or subsidiaries, occupying similar positions as
Executive, including, but not limited to, any profit sharing,
401(k), pension, stock option, stock appreciation rights, stock
ownership, health, medical, dental, vacation, insurance or
other employee benefit plans.
I. Termination. This Agreement may not be terminated prior to the
end of the Employment Period except as follows:
A. By the Company for Company Cause. The
Company may terminate this Agreement for Company Cause upon
Executive's material breach of this Agreement. Except as to
subparagraph (iii) below, the Company shall give Executive thirty
(30) days' advance written notice of such termination, which notice
shall be via registered mail, return receipt requested, and which shall
describe in detail the acts or omissions which the Company believes
constitute such breach. The Company shall not be allowed to
terminate this Agreement pursuant to this Section 5(a) if Executive is
able to cure such breach within thirty (30) days following delivery of
such notice. However, in no event shall a breach of the provisions of
Sections 5(a)(iii) or 7 be subject to cure. Acts or omissions which
constitute a material breach of this Agreement constituting
"Company Cause" shall be limited strictly to the following:
1. Any material breach by Executive of his
obligations under this Agreement;
1. Gross misconduct of Executive which is
manifestly injurious to Company; and
1. Any fraud, theft or embezzlement by
Executive of the Company's assets, or any other unlawful or
criminal act which is punishable as a felony.
A. Death. Subject to the provisions of Section 6, this
Agreement shall terminate upon Executive's death.
A. Disability. This Agreement shall terminate upon
Executive's total and/or permanent Disability which renders him
incapable of performing his duties hereunder for a period of six (6)
months or more.
A. By Executive for Executive Cause. Executive shall have the
right to terminate this Agreement upon thirty (30) days' written
notice to the Company upon the occurrence, without Executive's
express written consent, of any one or more of the following events,
provided that Executive shall not have the right to terminate this
Agreement if the Company is able to cure such event within thirty
(30) days following delivery of such notice:
1. The Company is in material breach of this Agreement;
1. Executive is removed without his written consent as
the Chief Operating Officer of the Company and such
removal is not pursuant to Section 5(a) hereof;
1. The Company's requiring Executive to be based
anywhere other than the Minneapolis/St. Xxxx, Minnesota
metropolitan statistical area, except for required travel on the
Company's business to an extent substantially consistent with
the business travel obligations which Executive has typically
undertaken on behalf of the Company prior to the date of this
Agreement; or
1. Any purported termination by the Company of this
Agreement or the employment of Executive by Company
which is not expressly authorized by this Agreement or any
breach of this Agreement by the Company which is not
remedied by the Company within thirty (30) days after the
Company's receipt of notice thereof from Executive.
I. Payments Upon Termination.
A. Death. In the event that this Agreement is terminated due to
Executive's death, Executive's estate shall be paid (i) his Base Salary
and prorated Bonus through the end of the month in which his death
occurred, (ii) his accrued but unpaid vacation pay for the year in
which his death occurred, pro rated to the date of his death, and (iii)
any unpaid expense reimbursement.
A. Disability. In the event that this Agreement is terminated due
to Executive's Disability, Executive shall be paid (i) his Base Salary
and prorated Bonus through the end of the 6th month which defines
the disability period (ii) his accrued but unpaid vacation pay for the
year in which such Disability occurred, pro rated to the date of such
Disability, and (iii) any unpaid expense reimbursement.
A. Termination for Cause. If Executive is terminated pursuant
to Section 5(a) hereof or he terminates his own employment to
accept another position, the Company shall pay to Executive (i) his
Base Salary through the termination date after receiving the written
notice as required herein and (ii) any unpaid expense reimbursement.
A. Termination Without Company Cause. In addition to any
other rights granted Executive hereunder, if the Company should
terminate this Agreement other than in accordance with Section 5(a),
5(b) or 5(c) hereof, the Company shall pay to Executive an
additional amount equal to his Base Salary for twelve (12) months,
according to the current standard payroll practice or until Executive
becomes re-employed.
A. Change of Control And Ownership. In the event that (i)
Executive's employment with the Company is terminated by the
Company other than in accordance with Sections 5(a), (b), or (c)
hereof during the Employment Period and (ii) such termination
occurs after a Change in Control (as defined hereinbelow), Company
shall pay Executive a cash bonus ("Severance Payment") in an
amount equal to Executive's Average Annual Compensation (as
defined hereinbelow).
For purposes of this Agreement, "Change in Control" shall mean (i)
the sale of all or substantially all of the assets of the Company, (ii)
the acquisition by any means of more than fifty percent (50%) of the
issued and outstanding voting stock of the Company by any entity,
person or group of persons acting in concert, or (iii) the merger of
the Company with, or the consolidation of the Company into,
another corporation or entity.
For purposes of this Agreement, "Average Annual Compensation"
shall mean the average of all taxable compensation and fringe
benefits paid to or on behalf of Executive by Company, based on the
five (5) most recent calendar years (or the entire length of
Executive's employment if less than five (5) years). Amounts
payable pursuant to this Section 6(e) shall be in addition to, and not
in lieu of, all other compensation, rights and benefits accruing or
afforded to Executive pursuant to this Agreement.
I. Ownership of Properties; Confidentiality; Exclusivity;
Investments.
A. Ownership of Properties. The Company, as employer, shall
own, and Executive hereby transfers and assigns to the Company, all
rights in and to any material and/or ideas written, suggested or
submitted by Executive during the Employment Period and all other
results and proceeds of his services under this Agreement (the
"Properties"). Without limiting the generality of the foregoing, these
rights shall include all motion picture, television, radio, dramatic,
musical, publication and other rights in and to the Properties,
including the sole and exclusive right to photograph and record the
same with or without dialogue, music and other sounds
synchronously recorded, and to perform, exhibit, distribute,
reproduce, transmit, broadcast or otherwise communicate the same
and/or motion picture, dramatic or other versions or adaptations
thereof, theatrically, nontheatrically and/or by means of television,
radio, the legitimate stage and/or any other means now known or
hereafter devised and to manufacture, publish, or vend printed and/or
recorded versions or adaptations thereof, either publicly or privately
and for profit or otherwise. The Company and its licensees and
assigns shall have the right to adapt, change, revise, delete from, add
to and/or rearrange the Properties or any part thereof written or
submitted by Executive and to combine the same with other works to
any extent, and to change or substitute the title thereof and in this
connection Executive hereby waives any so-called "moral rights" of
authors. Executive agrees to execute and deliver to the Company
such releases, assignments or other instruments as the Company may
require from time to time to evidence its ownership of the results and
proceeds of Executive's services hereunder' provided, however, that
nothing in this Section 7(a) shall be deemed in any manner to restrict
or qualify Executive's ownership or right to exploit Executive's
personal memoirs.
The requirements of this Section 7(a) do not apply to Properties for
which no equipment, facility or confidential information of the
Company was used and which were developed entirely on
Executive's own time, and which (i) do not relate directly to the
Company's business or to the Company's actual research or
development, or (ii) do not result from any work Executive
performed for the Company. Except as previously disclosed to the
Company in writing, Executive does not have and will not assert any
claims to or rights under any Properties as having been made,
conceived, authored or acquired by Executive prior to his
employment by the Company.
A. Confidentiality. Executive acknowledges that his services
will, throughout the Employment Period, bring Executive in close
contact with many confidential affairs of the Company and its
affiliates, including information about costs, profits, financial data,
markets, trade secrets, sales, products, computer programs, key
personnel, pricing policies, customer lists, development projects,
operational methods, technical processes, plans for future
development, business affairs and methods and other information not
readily available to the public. Executive further acknowledges that
the businesses of the Company and its affiliates are international in
scope, that their products are marketed throughout the world, that the
Company and its affiliates compete in nearly all of their business
activities with other organizations which are or could be located in
nearly any part of the world and that the nature of Executive's
services, position and expertise are such that he is capable of
competing with the Company and its affiliates from nearly any
location in the world. In recognition of the foregoing Executive
covenants and agrees:
1. that Executive will keep secret all material confidential
matters of the Company and its affiliates which are not
otherwise in the public domain and will not disclose them to
anyone outside of the Company or its affiliates, either during
or after the Employment Period, except with the Company's
written consent and except for such disclosure as is necessary
in the performance of Executive's duties during the
Employment Period; and
1. that Executive will deliver promptly to the Company
on termination of his employment with the Company or at any
other time the Company may so request, at the Company's
expense, all confidential memoranda, notes, records, reports
and other documents (and all copies thereof) relating to the
Company's and its affiliates' business, which Executive
obtained while employed by, or otherwise serving or acting
on behalf of, the Company or which the Executive may then
possess or have under his control.
A. Exclusivity. Executive agrees that during his employment
with the Company, he will not alone, or in any capacity with another
entity or person, (i) engage in any commercial activity that competes
with the Company's business, as it is conducted during the
Employment Period, within any state of the United States, (ii) in any
way interfere or attempt to interfere with the Company's
relationships with any of its current or potential customers, or (iii)
attempt to employ any of the Company's then employees on behalf
of any other entities competing with the Company. Executive
further acknowledges that all services of Executive shall be
exclusive to the Company, and that Executive's performances and
services hereunder are of a special, unique, unusual, extraordinary
and intellectual character which gives them peculiar value, the loss
of which cannot be reasonably or adequately compensated in an
action at law for damages and that a breach by Executive of the
terms hereof (including without limitation this Section 7) will cause
the Company irreparable injury. Executive agrees that the Company
is entitled to injunctive and other equitable relief to prevent a breach
or threatened breach of this Agreement, which shall be in addition to
any other rights or remedies to which the Company may be entitled.
For purposes of this Section 7(c), the term "Company" shall include
the Company, its successors, assigns and affiliates.
A. Investments. Notwithstanding anything contained herein to
the contrary, during the Employment Period Executive may acquire
and/or retain, solely as an investment, and take customary actions to
maintain and preserve Executive's ownership of:
1. securities of any corporation which are
registered under Sections 12(b) or 12(g) of the Securities
Exchange Act of 1934 and which are publicly traded, so long
as Executive is not part of any control group of such
corporation; and
1. any securities of a partnership, trust, corporation,
limited liability company or other entity so long as (i)
Executive remains a passive investor in that entity and does
not become part of any control group thereof (except in a
passive capacity) and (ii) such entity is not, directly or
indirectly, in competition with the Company or its affiliates,
regardless of whether Executive is a passive investor or part
of any control group thereof.
I. Remedies. The parties hereto recognize and agree that, because the
material breach of this Agreement or any part hereof would result in
damages difficult to ascertain, upon any allegation of material breach of this
Agreement, either party hereto shall be entitled:
A. Proceedings. To institute proceedings in a court located in
the State of Minnesota to enjoin the breach, termination, or
threatened termination of this Agreement. Such injunctive remedy
shall be in addition to and not in lieu of any right to recover money
damages for any such breach.
A. Costs and Expenses. The successful party in any action
brought concerning the breach or termination of this Agreement shall
be entitled to recover all costs and expenses, including attorney's fees
incurred or associated with the enforcement of any covenant of this
Agreement.
I. Miscellaneous.
A. Successors and Assigns. This Agreement is binding on and
inures to the benefit of the Company's successors and assigns,
provided, however, that this Agreement may not be assigned by any
of the parties hereto without the prior written consent of each of the
parties hereto. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company, and any such successor
shall absolutely and unconditionally assume all of the Company's
obligations hereunder.
A. Offsets. Amounts payable to Executive pursuant to this
Agreement may reduced for purposes of offsetting, either directly or
indirectly, any indebtedness or liability of Executive to Company.
A. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same
instrument.
A. Construction. Wherever possible, each provision of this
Agreement will be interpreted so that it is valid under the applicable
law. If any provision of this Agreement is to any extent invalid
under the applicable law, that provision will still be effective to the
extent it remains valid. The remainder of this Agreement also will
continue to be valid, and the entire Agreement will continue to be
valid in other jurisdictions.
A. Waivers. No failure or delay by either the Company or
Executive in exercising any right or remedy under this Agreement
will waive any provision of this Agreement, nor will any single or
partial exercise by either the Company or Executive of any right or
remedy under this Agreement preclude either of them from
otherwise or further exercising these rights or remedies, or any other
rights or remedies granted by any law or any related document.
A. Captions. The headings in this Agreement are for
convenience of reference only and do not affect the interpretation of
this Agreement.
A. Modification/Entire Agreement. This Agreement may not
be altered, modified or amended except by an instrument in writing
signed by all of the parties hereto. No person, whether or not an
officer, agent, employee or representative of any party, has made or
has any authority to make for or on behalf of that party any
agreement, representation, warranty, statement, promise,
arrangement or understanding not expressly set forth in this
Agreement or in any other document executed by the parties
concurrently herewith. This Agreement and all other documents
executed by the parties concurrently herewith constitute the entire
agreement between the parties and supersede all express or implied,
prior or concurrent, with respect to the subject matter hereof.
A. Governing Law. The laws of the State of Minnesota shall
govern the validity, construction and performance of this Agreement.
Any legal proceeding related to this Agreement shall be brought in
an appropriate Minnesota court, and each of the parties hereto hereby
consents to the exclusive jurisdiction of the courts of the State of
Minnesota for this purpose.
A. Notices. All notices and other communications required or
permitted under this Agreement shall be in writing and sent by
registered first class mail, postage prepaid, and shall be deemed
received five (5) days after mailing to the addresses stated below:
If to the Company:
Navarre Corporation
0000 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Winthrop & Weinstine, P.A.
0000 Xxxx Xxxxxxxx Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
If to Executive:
Xxx X. Xxxxxxx
______________________________
______________________________
A. Survival. Notwithstanding the termination of this Agreement
or Executive's employment with the Company, the terms of this
Agreement concerning rights and remedies of the parties shall
survive such termination and shall govern in perpetuity all rights,
disputes, claims or causes of action arising out of or in any way
related to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NAVARRE CORPORATION
By: ______________________________
______________________________
XXX X. XXXXXXX
Its ___________________________
Addendum 1 to Marsala Employment Agreement
Xxx Xxxxxxx will receive a 1-year stock option for 100,000 shares of Navarre
Common Stock. The option price will be based on the closing price of Navarre's
stock on the NASDAQ exchange on the day Xxx Xxxxxxx received the offer from
Navarre Corporation, October 18, 1996.
After the completion of a successful fiscal year, Xxx Xxxxxxx will receive an
additional 5-year stock option for 100,000 shares of Navarre Common Stock.
Such options shall be issued pursuant to the Company's standard stock option
plan, with pricing and other terms of the options determined in accordance with
such plan.
