CONSULTING AGREEMENT
THIS AGREEMENT, made as of September 1, 1998, by and between
XXXXXXX XXXXX, of Minneapolis, Minnesota ("Consultant") and NORSTAN, INC., a
Minnesota corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, Consultant has been employed by the Company on a
full-time basis for a period in excess of 20 years in various executive
management positions; and
WHEREAS, the continued availability of Consultant's experience
and knowledge are considered to be important to the continued success of the
Company's business; and
WHEREAS, the Company wishes to retain the services of
Consultant as an adviser and consultant to the Company and to restrict his right
to compete with the Company, for the term of the agreement, and Consultant is
willing to provide such services and to agree to such restrictions on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and of the
mutual covenants hereinafter set forth, the parties do hereby agree as follows:
1. CONSULTING PERIOD. The Company agrees to retain the
services of Consultant and Consultant agrees to provide the services hereinafter
described, for the period beginning on September 1, 1998 and ending on August
31, 2001 (the "Consulting Period") provided that on August 31, 1999 and on each
August 31 thereafter (the "Renewal Date"), the Consulting Period shall be
extended upon satisfactory completion of the annual objectives by Consultant and
the mutual written agreement of the parties to a date which is 36 months after
the Renewal Date. Notwithstanding, in no event shall the Consulting Period
extend beyond April 30, 2004 under this agreement.
2. DUTIES.
a. CONSULTING SERVICES. During the Consulting Period,
Consultant shall hold himself available to consult with and advise the officers,
directors, and other representatives of the Company concerning such matters
relating to the operations of the Company based upon mutually agreed upon annual
objectives and as the Board of Directors of the Company shall otherwise
determine. Consultant shall make himself available to render such services at
all reasonable times by telephone or letter and, upon reasonable advance notice,
in person; provided, that Consultant shall not be required to perform consulting
or advisory services for more than 1000 hours during any annual period during
the Consulting Period and shall not be required to perform consulting or
advisory services during any period in which he is precluded from doing so by
reason of incapacity or ill health.
b. SERVICES AS A DIRECTOR. Consultant shall continue to
serve as a
Director of the Company until the expiration of his current term, whereupon
the Company agrees, except for due cause, to have him included among
management's nominees for election to its Board of Directors for each
succeeding term ending not later than one year after the expiration of the
Consulting Period. Consultant agrees that, except insofar as he may be unable
to do so by reason of incapacity or ill health, he shall serve as a Director
of the Company and of any of its subsidiaries during any part of the
Consulting Period for which he may be elected to such a position. Consultant
shall be entitled to standard Director's fees for any period during which he
is serving as a Director of the Company, which fees shall be in addition to
any compensation payable to Consultant pursuant to this Agreement.
3. COMPENSATION. During the Consulting Period,
Consultant shall be compensated as follows:
a. RETAINER. During the Consulting Period, Consultant
shall be paid a retainer at the rate of $150,000 per year, payable in equal
monthly installments of $12,500.00 with the first payment due on September 30,
1998.
b. FACILITIES. During the Consulting Period, Company
shall have no obligation to provide office space or any facilities or services
on behalf of Consultant and Consultant acknowledges that he shall be solely
responsible to provide such facilities and services.
c. TRAVEL EXPENSES. Consultant shall be reimbursed by
the Company for all reasonable travel expenses incurred by him at the request of
the Company in the performance of his duties pursuant to this Agreement, to the
extent such expenses are substantiated and are consistent with the general
policies of the Company relating to the reimbursement of such expenses.
d. FRINGE BENEFITS. Consultant shall not be entitled to
participate in any of the pension, profit sharing, or other employee benefit
plans or fringe benefit programs which are from time to time maintained by the
Company for its employees.
e. STOCK OPTIONS/GRANTS. Consultant's current
outstanding stock options and g rants shall continue to be maintained pursuant
to the terms and conditions of the applicable stock option and restricted stock
agreements.
4. DEATH. If Consultant shall die during the Consulting
Period, the Company's obligation to pay the retainer under section 3.a. shall
cease except for amounts unpaid for prior service.
5. COMPETITION.
a. Consultant covenants and agrees that during the
Consulting Period, he will not, except with the express written consent of the
Board of Directors of the Company, engage directly or indirectly in, or permit
his name to be used in connection with, any competitive business in the
geographic area serviced by the Company or its subsidiaries.
b. For the purposes of this paragraph 5: (i) the phrase,
"engage directly or indirectly in" shall encompass: (A) all of Consultant's
activities whether on his own account or as an employee, director, officer,
agent, consultant, independent contractor, or partner of or in any person, firm,
or corporation (other than the Company and its subsidiaries), and (B)
Consultant's ownership of more than 10% of the voting stock of any corporation,
5% or more of the gross income of which is derived from any business or
businesses in which Consultant may not then engage; and (ii) the phrase
"competitive business shall mean: (A) the sale of telephone, telecommunications,
data, network or similar equipment, (B) sale of consulting and/or maintenance
services, and (C) any other business in which the Company or its subsidiaries is
then engaged.
6. ENFORCEMENT. If, at the time of enforcement of any
provision of paragraph 5, a court shall hold that the period, scope, or
geographical area restrictions stated therein are unreasonable under
circumstances then existing, the maximum period, scope, or geographical area
reasonable under the circumstances shall be substituted for the stated period,
scope, or area. In the event of a breach by Consultant of any of the provisions
of paragraph 5, the Company may, in addition to any other rights and remedies
existing in its favor: (a) discontinue the payment of any amounts, or the
provision of any benefits, required to be paid or provided to Consultant
pursuant to this Agreement; and (b) apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce or prevent any violations of the provisions hereof.
7. STATUS OF CONSULTANT. During the Consulting Period,
Consultant's relationship to the Company shall be solely that of an independent
contractor. Subject to the provisions of paragraph 5 hereof, Consultant shall be
free to dispose of such portion of his time during normal business hours as he
is not obligated to devote to the Company hereunder in such manner, and to such
persons, firms, and corporations, as he sees fit. Consultant agrees that he will
not take any position inconsistent with his status as an independent contractor
hereunder in any federal, state, or local income or other tax return.
8. SUCCESSORS.
a. OF THE COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would have been required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as herein before defined, and any successor to
the business and/or assets of the Company which executes and delivers the
agreement provided for in this paragraph 8 or which otherwise becomes bound by
all the terms and provisions of this Agreement as a matter of law.
b. OF CONSULTANT. This Agreement shall inure to the
benefit of and shall be enforceable by Consultant, his legal representative, or
other successors in interest.
9. GENERAL PROVISIONS.
a. ASSIGNMENT. It is agreed that neither Consultant nor
any beneficiary shall have any right to commute, sell, assign, transfer, or
otherwise convey the right to receive any payment or other benefit hereunder,
which payments and benefits, and the rights thereto, are expressly declared to
be non-assignable and nontransferable. Except as provided in paragraph 8.a., the
Company shall have no right to assign or transfer its rights or obligations
under this Agreement, and of any beneficiary or Consultant, shall be solely
those of an unsecured creditor of the Company. Any asset acquired by the
Company, in connection with the liabilities assumed by it under this Agreement
shall not be deemed to be held under any trust for the benefit of the Consultant
or his beneficiaries or to be considered security for the performance of the
obligations of the Company, but shall be, and remain, a general, un-pledged,
unrestricted asset of the Company.
c. CUT-HEADINGS. The headings of all of the paragraphs
and subparagraphs of this Agreement are inserted for convenience of reference
only, and shall not affect the construction or interpretation of this Agreement.
d. MODIFICATION, AMENDMENT, WAIVER. No modification,
amendment, or waiver of any provision of this Agreement shall be effective
unless approved in writing by both parties. The failure at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of either party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
e. SEVERABILITY. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
f. NO STRICT CONSTRUCTION. The language used in this
Agreement shall be deemed to be the language chosen by the parties thereto to
express their mutual intent, and no rule of strict construction shall be applied
against any person.
g. APPLICABLE LAW. All questions concerning the
construction, validity, and interpretation of this Agreement shall be governed
by the laws of the State of Minnesota.
h. NOTICES. Any notice to be served under this Agreement
shall be in writing and shall be mailed by registered or certified mail,
registry or certification fee and postage prepaid and return receipt requested,
addressed:
If to the Company, to:
Norstan, Inc.
000 Xxxxx Xxxxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Board of Directors; or
If to Consultant, to:
Xxxxxxx Xxxxx
0000 Xxxx Xxxxx
Xxxxx, Xxxxxxxxx 00000;
or to such other place as either party may specify in writing, delivered in
accordance with the provisions of this subparagraph.
i. SURVIVAL. The rights and obligations of the
parties shall survive the term of the Consulting
Period to the extent that any performance is required
under this Agreement after the expiration or
termination of such term.
j. ENTIRE AGREEMENT. This Agreement dated September 1,
1998 constitutes the entire agreement of the parties with respect to the subject
matter thereof, and supersedes all previous agreements between the parties
relating to the same subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
NORSTAN, INC.
By /s/ Xxxxx Xxxxxxx
--------------------------------
Chief Executive Officer
By /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
