Exhibit 10.44
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of September 16, 1996, by and
between K-TEL INTERNATIONAL, INC., a Minnesota corporation (the "Company"), and
XXXXX XXXXXX, a California resident ("Executive"),
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and Executive is
willing to accept employment on the terms and conditions hereinafter set forth,
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and agreements hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Employment. The Company hereby employs Executive as President, to
perform the duties and have the responsibilities set forth in Schedule 1
attached hereto, together with such other duties and responsibilities consistent
with Executive's position as President as may be directed by the Chairman and
Chief Executive Officer or the Board of Directors of the Company may, from time
to time, assign to Executive and Executive hereby accepts such employment on the
terms and conditions set forth in this Agreement. The Executive shall report to
the Chairman and Chief Executive Officer of the Company and shall be subject to
his direction and supervision and the direction and supervision of the Board of
Directors.
2. Duties. Executive hereby agrees to devote his full time, attention
and best efforts to the performance of his duties hereunder and to the business
affairs of the Company, including its subsidiaries, and to perform his duties in
an efficient, trustworthy and business-like manner. During the term of this
Agreement, Executive shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit or other
pecuniary advantage except with the prior written consent of the Company which
the Company may withhold in its sole discretion and except for several hours
each month for Executive's involvement with Crossroads School.
3. Compensation. While Executive is employed by the Company under this
Agreement, Executive shall receive as full compensation for his services to the
Company the following:
(a) Base Salary. Executive will be paid a base salary at the rate of
Two Hundred Thousand and no/100 Dollars ($200,000.00) per annum for the
first year of the Term (as defined below), payable consistent with the
customary payroll practices of the Company. The base salary shall be
increased on each anniversary date of Executive's employment by five
percent (5%) or, if the Company's Board of Directors determines a
greater percentage increase is warranted based on Executive's
performance, such greater percentage.
(b) Annual Bonus. Executive will participate in the annual management
incentive plan based on the targeted operating income of the Company as
established by the Company's Board of Directors for each fiscal year
(excluding the results of operations in United Kingdom and Finland and
the consumer products division for the fiscal year ended June 30,
1997). The amount of annual bonus will be 40% of base salary earned for
the respective fiscal year if the maximum performance target (after
taking into account all bonuses earned and excluding any extraordinary
income items, including litigation proceeds or sales of assets outside
the ordinary course of business, and excluding any expenses associated
with such extraordinary items) is achieved and, if the maximum
performance target is exceeded, such bonus amount plus 2% of the
operating income (after taking into account all bonuses earned and
excluding any extraordinary income items, including litigation proceeds
or sales of assets outside the ordinary course of business) in excess
of the maximum performance target for operating income. The annual
bonus shall be paid on November 1st following the end of the fiscal
year if Executive is employed on such payment date, except for the
fiscal year ended June 30, 1999 and for such fiscal year Executive
shall only be required to be employed by the Company through the end of
the term of this Agreement to receive the bonus for such fiscal year on
November 1, 1999.
(c) Non-Qualified Stock Option. The Company will, upon execution of
this Agreement, grant Executive a non-qualified option covering 200,000
shares of the Company's common stock pursuant to the Non-Qualified
Stock Option Agreement attached hereto as Exhibit A.
(d) Benefits. The Company will provide Executive such fringe benefits
as the Company from time to time provides generally to its management
employees, such as vacation, health and life insurance. In determining
the length of employment with the Company for the purpose of
calculating the amount of vacation to which Executive is entitled, the
period of the prior service of Executive as an employee of the Company
shall be included. In addition, the Company will provide Executive the
following additional benefits: (i) domestic travel will be coach class
with upgrades when possible and international travel will be business
class, (ii) a utility type vehicle will be leased for Executive's use
in Minneapolis, Minnesota at a cost to the Company not to exceed $500
per month, and (iii) the Company will lease an apartment for
Executive's use in Minneapolis, Minnesota during the first six months
of the Term at a cost to the Company not to exceed $1,000 per month.
4. Term. The employment (the "Term") of Executive under this Agreement
shall commence on the date hereof and shall continue for a period of three years
from the date hereof unless the Executive's employment is sooner terminated as
follows:
(a) The death of Executive or the disability of the Executive which
prevents Executive from performing his duties for a period of sixty
days.
(b) The voluntary termination of employment by Executive upon thirty
(30) days prior written notice to the Company or such shorter period as
the Company may determine after receiving such voluntary termination
notice.
(c) The termination of employment by the Company for "Cause" upon
written notice to Executive. The term "Cause" shall mean: (i) an act or
acts of personal dishonesty taken by the Executive and intended to
result in substantial personal enrichment of the Executive at the
expense of the Company, (ii) repeated violations by the Executive of
the Executive's obligations under paragraph 2 of this Agreement which
are demonstrably willful and deliberate on the Executive's part and
which are not remedied in a reasonable period of time after receipt of
written notice from the Company, or (iii) the conviction of the
Executive of a felony.
(d) The termination of Executive's employment by the Company without
Cause upon written notice by the Company.
In the event that the Executive's employment is terminated for any reason, the
Executive shall be entitled to his accrued base salary and vacation pay through
the date of termination. The Executive shall also be entitled to the annual
bonus under paragraph 3(b) with respect to any fiscal year of the Company if
such termination occurs after the end of such year and before the payment of
such annual bonus. In addition, in the event of a termination under paragraph
4(d), then the Executive shall also be entitled to a continuation of his base
salary from the date of termination of his employment through the third
anniversary of the date hereof.
5. Confidentiality. The Executive agrees that, at all times, both
during and after his employment with the Company, he will not disclose any
confidential or proprietary information obtained by him as a result of his
employment with the Company or any of its subsidiaries other than as required to
other employees in the normal operation of the Company's business. The Executive
agrees that upon the termination of his employment, regardless of the reason
therefor, all records and other information pertaining to the Company or its
subsidiaries, including any computer disks or files, customer lists and other
confidential or proprietary information in his possession, shall be returned to
the Company, whether those records were prepared by Executive or by others.
6. Patent Rights and Inventions. The Executive shall immediately
disclose to the Company any and all improvements and inventions that he may
conceive and/or reduce to practice solely or jointly or commonly with others,
either while employed by the Company, or within a period one year from the
termination of such employment, with respect to (a) any methods, processes or
apparatus concerned with the use or production of any type of goods or materials
sold or used by the Company and (b) any type of products, goods or materials
sold or used by the Company. The Executive shall also immediately assign,
transfer and set over to the Company his entire right, title and interest in and
to any and all of such inventions as are specified in this paragraph 6 and in
and to any and all applications for letters patent that may be filed on such
inventions and in and to all letters patent that may issue, or be issued, upon
such applications. In connection therewith and for no additional consideration,
the Executive agrees:
(a) to sign any and all instruments deemed necessary by the Company for
the filing and prosecution of any applications for letters patent of
the United States or of any foreign country that the Company may desire
to file upon such inventions as are specified in this paragraph 6;
(b) to sign all instruments necessary for filing and prosecuting any
divisional, continuation, continuation-in-part or reissue applications
that the Company may desire upon such applications for letters patent;
and
(c) to sign all instruments deemed necessary by the Company for
reviving, re-examining or renewing any of such applications for letters
patent.
Section 181.79 of the Minnesota Statutes provides that the agreement of
Executive contained in this paragraph 6 does not apply, and written notification
is hereby given to the Executive that this paragraph 6 does not apply to an
invention for which no equipment, supplies, facility or trade secret information
of the Company was used and which was developed entirely on Executive's own
time, and (i) which does not relate (A) directly to the business of the Company,
or (B) to the Company's actual or demonstrably anticipated research or
development, or (ii) which does not result from any work performed by the
Executive for the Company.
7. No Hiring or Soliciting of Executives. For a period of two years
after termination of Executive's employment for any reason, the Executive shall
not directly or indirectly employ, solicit or otherwise seek to hire, whether on
his behalf or on the behalf of another person, any person employed by the
Company or any of its subsidiaries.
8. Covenant Not to Compete. While Executive is employed by the Company
and, in the event of a termination of employment other than a termination by the
Company without Cause pursuant to paragraph 4(d), for a period of one year after
such termination of the Executive's employment, the Executive agrees that he
will not directly or indirectly compete with the Company or any of its
subsidiaries. The Executive shall be deemed to be competing with the Company or
any of its subsidiaries if, without the prior written approval of the Board of
Directors of the Company, he becomes an officer, employee, agent, partner,
director, consultant, investor or lender to or of any person or entity engaged
in or otherwise provides any services or advice to any person or entity engaged
in either (i) the direct response marketing or distribution for retail sale of
pre-recorded music products or (ii) any consumer convenience products which the
Company or its subsidiaries has marketed during the period of Executive's
employment, within the United States, Canada, United Kingdom, Germany or any
other foreign country in which the Company or any of its subsidiaries has
conducted such business during the period of Executive's employment with the
Company. In addition, in the event of a termination by the Company without
Cause, of employee under paragraph 4(d), Executive shall be bound by the
provisions of this paragraph 8 for a period of one year following such
termination if the Company agrees in writing at the time such termination to pay
Executive the sum of $100,000 in addition to any other amounts due to Executive
which sum shall be payable in twelve equal consecutive monthly installments
commencing on the date of termination of Executive's employment.
9. Severability. Should any covenant, term or condition contained in
this Agreement or portion thereof, become or be declared invalid or
unenforceable by a court of competent jurisdiction, the parties request that
such court judicially modify such unenforceable provision consistent with the
intent of this paragraph so that it shall be enforceable to the fullest extent
possible, and in any event the invalidity of any provision of this Agreement
shall not affect the validity of any other provision elsewhere in this
agreement.
10. Specific Enforcement. The Executive understands and agrees that a
breach by him of any provisions contained in paragraphs 5, 6, 7 or 8 of this
Agreement may cause the Company irreparable injury and damage which cannot be
compensable by receipt of money damages. The Executive, therefore, expressly
agrees that the Company shall be entitled, in addition to any other remedies
legally available, to injunctive and/or other equitable relief or prevent a
breach of this Agreement or any part hereof.
11. Modification and Construction. This Agreement supersedes any prior
agreements relating to Executive's employment by the Company, whether oral or in
writing, and any such agreements are hereby terminated and revoked, except that
Executive's consulting arrangement with Dominion Vertriebs, a subsidiary of the
Company, will continue until an aggregate of $25,000 has been paid to Executive
thereunder. This Agreement may only be changed or modified in a writing signed
by both parties. The failure by any party to insist upon strict compliance by
the other party with respect to any of the terms or conditions hereof shall not
be deemed a waiver of any of such terms or conditions nor shall any waiver or
relinquishment of any right or power hereunder at one or more times be deemed a
waiver or relinquishment of such right or power at any other time or times.
12. Assignment. The rights and obligations of the parties hereof shall
inure to the benefit of the other and shall be binding upon their respective
successors and assigns or heirs and legal representatives, except that the
Executive may not assign his obligations hereunder.
13. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret the provisions
of this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and all other costs and expenses of litigation from the other
party, which amounts may be set by the court in the trial of such action or may
be enforced in a separate action brought for that purpose, and which amounts
shall be in addition to any other relief which may be awarded.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
K-TEL INTERNATIONAL, INC.
By: /S/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Chairman and
Chief Executive Officer
/S/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Schedule 1
Description of Duties and Responsibilities
Executive shall be the President of the Company. Executive shall report
directly to the Chairman of the Board/Chief Executive Officer. All managers in
all divisions, domestic and international operations shall report directly to
the Executive. Executive shall be responsible for the day to day management of
the operations of the Company's businesses and shall have the authority to
delegate management responsibilities in Executive's prudent business judgment,
subject to the ultimate direction of Company's business affairs remaining with
the Chairman of the Board/Chief Executive Officer and the Board of Directors.
The Executive shall have full power and authority to hire and fire all employees
of the Company subject to the approval of the Chairman of the Board/Chief
Executive Officer if such decisions affect any employee or prospective employee
whose annual savings are reasonably expected to exceed $100,000 and to manage
and conduct all the business of Company subject to expenditure and other
strategic policies set by the Chairman of the Board/Chief Executive Officer or
the Company's Board of Directors.
Executive's duties, responsibilities and authorities shall be
commensurate with such duties, responsibilities and authorities generally given
to a president of like-size companies. Subject to policies set by the Board of
Directors, Executive's duties and responsibilities shall include, but not be
limited to the following:
* The Executive shall provide strategic and tactical direction
to increase the Company's profitability and business growth,
including maximization of shareholder value.
* Executive shall provide leadership to senior management team,
including international managers in developing new markets and
business opportunities for the company's products and to
either phase out, restructure and/or dispose of businesses
that do not meet Company's profitability targets and/or do not
fit strategically with Company's core business, provided that
any major decisions having a potential long term effect shall
be approved by the Chairman of the Board/Chief Executive
Officer.
* The Executive shall plan, direct and coordinate the marketing
of the company's products and services, assuring that products
are marketed in accordance with budgeted objectives to obtain
maximum profitability and volume in relation to preset
standards and to general and specific trends within the
industry and economy.
It is understood that Executive may perform his duties from Los
Angeles, California for up to five working days a month to be used with
discretion.
