Exhibit (10)(v)
1998 EMPLOYMENT AND NONCOMPETITION AGREEMENT
This Employment and Noncompetition Agreement (the "Agreement") is made
this 13th ______day of March _____, 1998 by and between XXXXXX
COMMUNICATIONS, INC., a Minnesota corporation, its heirs, assigns,
successors, or surviving corporation that results from a merger ("Company")
and E. XXXXX XXXXXXXX, an individual who currently resides in Seattle,
Washington (hereinafter referred to as the "Employee").
RECITALS
WHEREAS, the Employee is the founder of the present day Company and on
the date hereof holds the position of Chief Executive Officer and Chairman of
the Board of Directors of the Company; and
WHEREAS, the Company desires to retain the services of the Employee in
order to assure continuity of management and to assist the Company in
operating the business, and the Employee desires to be retained by the
Company for such purposes upon the terms and conditions set forth in this
Agreement; and
WHEREAS, in consideration of, and as an inducement to, the Company
agreeing to enter into this Agreement, which the Employee agrees is
beneficial to him as it provides substantial additional rights to the
Employee, including but not limited to, the right to receive severance
payments, the Employee agrees not to compete with the Company in accordance
with the terms and conditions set forth in this Agreement; and
WHEREAS, the Employee acknowledges and agrees that he has been advised
by the Company to have this Agreement reviewed by legal counsel of his own
choosing, and that he has consulted and conferred with such legal counsel to
the extent he deems advisable before signing this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the promises and
mutual covenants set forth in this Agreement, the Company and the Employee agree
and contract as follows:
1. EMPLOYMENT SERVICES. The Company hereby employs the Employee to serve
as Chief Executive Officer with responsibility for managing all of the Company's
businesses (the "Services"). It is understood that regardless of whether the
Company shall continue as a separate corporate entity or through acquisition,
merger or other transaction no longer be a separate legal entity, that Employee
as to these businesses, shall have the duties, responsibilities and authority
substantially the same as those of a Chief Executive Officer of a business
corporation pursuant to the Minnesota Business Corporations Act except as may be
determined by provisions of this Agreement. It is further understood that the
particular businesses of the Company managed by Employee as Chief Executive
Officer may change from time to time, and Company and Employee agree that such
changes may occur, as long as the duties, responsibilities and authority are
substantially equivalent to those described herein, or Employee consents in
writing to such new duties, responsibilities and authority, which consent
Employee will not unreasonably withhold. Employee hereby agrees to provide, and
to hold himself available to provide the Services as his full-time occupation to
the exclusion of other full or part time services to any other party during the
term of this Agreement. The Employee hereby accepts such employment and shall
in good faith perform, for and on behalf and in the best interests of the
Company, the Services during the term of this Agreement.
2. TERM. Except as provided in Section 4 hereof the initial term of this
Agreement shall be three (3) years commencing on the effective date hereof,
April 1, 1998 (the "Effective Date"), and thereafter beginning with the third
anniversary of the Effective Date, will
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automatically renew each year on the anniversary of that date for additional
one (1) year terms, unless 90 days preceding such third anniversary date and
each subsequent anniversary date for successive one-year terms, either party
gives written notice to the other of nonrenewal, in which case no further
automatic extensions shall occur.
3. COMPENSATION/BENEFITS. During the initial and subsequent renewal
terms of this Agreement, the Employee shall receive compensation from the
Company for the Services set forth in Section 1 as follows:
(a) BASE SALARY COMPENSATION. In consideration of Employee's
services, Employee will be paid, during the initial term of this Agreement,
no less than the following: $200,000 for calendar year 1998 (the
"Salary"). The Salary will be payable in accordance with the Company's
customary payroll practices for its executive officers, but not less than
monthly. The Employee's Salary shall be reviewed by the Company and the
Employee at least annually for increase in a manner consistent with general
compensation changes Company-wide and applicable to the executive officers
as a group.
(b) CAR. The Company agrees to provide the Employee with and pay the
expense for an appropriate car for his business and other use.
(c) BONUS. The Company will continue to offer Employee a bonus
compensation program substantially in parity with that offered to all other
senior executives of the Company, and including the use of substantially
similar percentage of salary, minimum, target and maximum bonus amounts, or
performance, achievement, and other standards.
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(d) STOCK OPTIONS. The Employee shall be entitled to receive such
stock options as are available and offered from time to time to other
senior executives of the Company consistent with Company policy.
(e) EXPENSE REIMBURSEMENT. The Company agrees to reimburse the
Employee for all reasonable and necessary business expenses incurred by the
Employee during the performance of his Services pursuant to this Agreement.
The Employee agrees to provide to the Company reasonable and customary
documentation of any expenses for which the Employee seeks reimbursement
from the Company pursuant to this Agreement.
(f) OTHER BENEFITS. The Employee shall be entitled to participate in
such compensation and retirement plans and receive such insurance,
vacation, profit sharing, retirement, and other benefits ("Other Benefits")
as are available to senior executives of the Company consistent with
Company policy, provided however, during Employee's employment under this
Agreement, Employee shall be provided and receive at least such other
benefits as he is provided and receives as of the Effective Date, or in
lieu thereof such substitute plans and benefits as provide him with
substantially equivalent Other Benefits.
4. TERMINATION. This Agreement and the Employee's employment with the
Company may be terminated only on the terms and conditions specified in this
Section upon the prior written notice to the other party as specified below. In
the event of the termination of this Agreement and the Employee's employment
with the Company, the Employee shall be entitled to compensation in accordance
with the following provisions.
(a) TERMINATION BY COMPANY FOR CAUSE. The Company may terminate this
Agreement and the Employee's employment with the Company for "Cause," as
defined
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below, immediately upon written notice to Employee, and upon such
termination for Cause, Employee shall cease to provide Services hereunder
as directed by the Board of Directors upon receipt of notice of
termination, unless the matter must first be determined by arbitration or
is subject to cure by the Employee. "Cause" shall be defined as (i) a
breach by the Employee of the noncompetition provisions set forth in
Section 5 hereof or the restrictions on use of Confidential Information set
forth in Section 6 hereof or substandard performance of a material part of
the Services as required in Section 1 hereof, as determined by a panel of
three arbitrators of the American Arbitration Association in Minneapolis,
Minnesota mutually chosen by Employee and Company and after written notice
of such alleged breach by Company to Employee and Employee's failure to
cure such alleged breach or alleged substandard performance within 30 days
thereof (if such alleged breach is subject to cure), or (ii) willful and
gross theft by the Employee from the Company, or (iii) conviction of the
Employee of any crime punishable as a felony.
(b) TERMINATION BY COMPANY OTHER THAN FOR CAUSE OR NON-RENEWAL BY THE
COMPANY. The Company may terminate this Agreement and the Employee's
employment with the Company upon ninety (90) days' written notice to the
Employee. In the event the Company terminates this Agreement and the
Employee's employment with the Company under this Section 4(b), or the
Company does not renew this Agreement at the end of its initial term or any
renewal term, the Company will pay as a severance consideration payable
monthly at the rate in effect prior to termination all of the following:
(i) all Salary for the unexpired initial or renewal term of the Agreement,
as the case may be, in accordance with the provisions of Section 3(a)
above; (ii) the expenses for continued use of a car for the unexpired
initial or renewal term of the Agreement, as the case may be, in
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accordance with the provisions of Section 3(b) above; (iii) a bonus
equal to one-fortyeighth (1/48) of the sum of the bonus payouts made in
the preceding three (3) years plus bonus due at the end of the year in
which termination occurs, estimated during the year and adjusted at year
end, times the number of months remaining between the prior fiscal year
end and the unexpired initial or renewal term of the Agreement, as the
case may be; (iv) as a lump sum, all expense reimbursements due the
Employee or submitted by the Employee to the Company within 45 days
after the notice of termination in accordance with the provisions of
Section 3(e) above; (v) a severance payment which, when added to 4(b)(i)
above, will equal three year's salary at the salary rate in effect on
the date of termination; (vi) continuance of medical insurance coverage
in force on the date of termination (or comparable medical insurance
coverage if the Company is not able to continue the Employee's coverage
under the Company's medical insurance plan in force on the date of
termination) until the later of the date the Employee is provided
medical insurance by a new employer or three years after the date of
termination; and (vii) all granted but unvested stock options shall
immediately become fully vested and exercisable through the expiration
date of such options. The Company agrees to recommend to the
Compensation Committee of the Board of Directors that they take all
appropriate action to amend the terms of stock option agreements with
the Employee to reflect the provisions of Sections 4(b)(vii) and
4(c)(vii). The Company has no reason to believe that its recommendation
will not be followed by the Compensation Committee.
(c) TERMINATION BY EMPLOYEE FOR GOOD REASON. The Employee may
terminate this Agreement and his employment with the Company for "Good
Reasons," as defined below, upon ninety (90) days' written notice to the
Company. In the event Employee
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terminates this Agreement and his employment with the Company for "Good
Reason," the Company will pay monthly at the rate paid prior to
termination all of the following: (i) all Salary for the unexpired
initial or renewal term of the Agreement, as the case may be, in
accordance with the provisions of Section 3(a) above; (ii) the expenses
for continued use of the car for the unexpired initial or renewal term
of the Agreement, as the case may be, in accordance with the provisions
of Section 3(b) above; (iii) a bonus in accordance with the provisions
of Section 4(b)(iii) above; (iv) all expense reimbursements due the
Employee or submitted by the Employee to the Company within 45 days
after the notice of termination in accordance with the provisions of
Section 3(e) above; (v) a severance payment which, when added to 4(c)(i)
above, will equal three year's salary at the salary rate in effect on
the date of termination; (vi) continuance of medical insurance coverage
in force on the date of termination (or comparable medical insurance
coverage if the Company is not able to continue the Employee's coverage
under the Company's medical insurance plan in force on the date of
termination) until the later of the date the Employee is provided
medical insurance by a new employer or three years after the date of
termination; and (vii) immediate vesting of all stock options in
accordance with the provisions of Section 4(b)(vii) above. As used
herein, "Good Reason" shall be defined as: (vii) a diminishment of
Employee's responsibilities, duties and authority as provided in this
Agreement; (viii) a reduction in the Employee's Salary or Bonus as
provided this Agreement; (ix) the failure by the Company to provide
Employee with all plans, programs or other benefits of the Company in
accordance with Section 3(b), (d), (e) and (f); (x) failure of any
successors, assigns, or surviving corporation or entity to assume and
faithfully perform all of the obligations of the Company under this
Agreement as provided
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in Section 7(h) hereof; (xi) the Company commission of any other
material breach of this Agreement, which is not remedied by the Company
in a reasonable period (but not less than ninety (90) days) after its
receipt of written notice thereof from Employee; or (xii) Employee's
resignation as an employee of the Company within one year of a "change
of control". As used in this Agreement, a "change of control" shall be
deemed to have occurred if (xiii) any "person" other than the Employee,
(as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Company representing 20% or more of the
combined voting power (with respect to the election of directors) of the
Company's then outstanding securities; (ixv) at any time after the
execution of this Agreement, individuals who as of the date of the
execution of this Agreement constitute the Board (and any new director
whose election to the Board or nomination for election to the Board by
the Company's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office) cease for any reason to
constitute a majority of the Board; (xv) the consummation of a merger or
consolidation of the Company with or into any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 70%
of the combined voting power (with respect to the election of directors)
of the securities of the Company or of such surviving entity outstanding
immediately after such merger or consolidation; or (xvi) the
consummation of
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a plan of complete liquidation of the Company or of an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's business or assets.
(d) TERMINATION FOR DISABILITY OF EMPLOYEE. In the event that the
Employee becomes totally disabled, the Company may terminate this Agreement
and the Employee's employment with the Company, and the Employee shall
receive all of the Compensation and Benefits described in Section 3 hereof
for one year after notice of termination is delivered to Employee.
(e) TERMINATION FOR DEATH OF EMPLOYEE. In the event of the death of
the Employee, this Agreement will automatically terminate thirty (30) days'
from the date of death and no compensation will be paid after the date of
termination except that expense reimbursements and earned but unpaid bonus
compensation will be paid to the Employee's estate. Provisions of the
Restated and Amended Stock Put Redemption Agreement dated June 24, 1992
between the Company and the Employee will be determined separately from
this Agreement.
(f) TERMINATION BY EMPLOYEE FOR OTHER THAN GOOD REASON. The Employee
may terminate this Agreement and his employment with the Company upon sixty
(60) days' written notice to the Company. Compensation provided under
Section 3 above will cease upon such termination.
(g) TERMINATION NOT TO AFFECT NONCOMPETITION AND CONFIDENTIALITY
PROVISIONS. The termination of this Agreement and the Employee's
employment with the Company, by either party hereto, shall not affect the
prohibition on competition by Employee set forth in Section 5 hereof or the
confidentiality obligation of Employee set forth in Section 6 hereof.
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5. NONCOMPETITION.
(a) NONCOMPETE. Employee agrees that, during the term of this
Agreement and his employment with the Company and the five (5) year period
following the termination of this Agreement and his employment with the
Company, the Employee will not directly or indirectly, alone or as partner,
officer, director, advisor, consultant, or employee of any other company or
entity, engage in any, commercial activity in competition with any part of
the Company's business (which currently involves videotape duplication,
compact disc replication and duplication and diskette duplication services
to corporations, publishers, religious and educational companies and other
institutional entities and the manufacture and sale of gift products and
collectibles to retailers) in those states in which the Company conducted
business during the term of this Agreement or as of the date of such
termination of this Agreement and his employment with the Company, or with
any part of the Company's contemplated business with respect to which the
Employee has Confidential Information as defined below and governed by
Section 6 hereof. In addition, the Employee recognizes that the Company's
work force constitutes an important and vital aspect of its business. The
Employee agrees that during the term of this Agreement and his employment
with the Company and for the five (5) year period following the expiration
or termination of this Agreement and his employment with the Company
(whether terminated early, whether for cause or not for cause), he shall
not solicit, or assist anyone else in the solicitation of any of the
Company's then current employees to terminate their employment with the
Company and to become employed by any other business enterprise.
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(b) NONCOMPLIANCE. The Company shall not be required to make
payments to the Employee pursuant to Sections 4(b) or 4(c) while the
Company has, in its sole discretion, a good faith basis to believe that the
Employee is competing with the Company in violation of Section 5(a). Any
payments due during the period of competition mentioned above shall be made
to the Company to be held by the Company in a segregated account and not
paid over to the Employee until the earlier of the date the Employee
resumes compliance (whether voluntarily, by court order or otherwise) with
the noncompete provision set forth in Section 5(a) or the expiration date
of the noncompete provision set forth in Section 5(a). No interest shall
accrue on payments held by the Company pursuant to this Section 5(b). Good
faith compliance with the payment provisions of this Section 5(b) by any
party to this Agreement shall not be construed as a breach of this
Agreement by such party.
(c) REMEDIES. It is agreed that it would be difficult or impossible
to ascertain the measure of damages to the Company resulting from any
breach of Section 5(a), and that injury to the Company from any such breach
may be irremediable, and that money damages therefor may be an inadequate
remedy. Notwithstanding anything to the contrary in this Agreement, in the
event of a breach or threatened breach by the Employee of the provisions of
Section 5(a), the Company shall be entitled to specific performance of
Section 5(a) and may seek a temporary or permanent injunction to enjoin the
Employee from breaching Section 5(a), in addition to any other rights or
remedies that the Company may have available under applicable law for such
breach or threatened breach, including the recovery of damages.
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6. CONFIDENTIAL INFORMATION. The Employee will not, during or following
the termination of this Agreement and his employment with the Company, for any
reason use or disclose, other than in connection with rendering of Services
hereunder on behalf of the Company, any Confidential Information to any person
not employed by the Company or not authorized by the Company to receive such
Confidential Information, without the prior written consent of the Company.
"Confidential Information" means information that is proprietary to the Company
or proprietary to others and entrusted to the Company. Confidential Information
includes, but is not limited to, customer lists, information relating to
business plans and to business that is conducted or anticipated to be conducted,
and to past or current or anticipated products. Confidential Information also
includes, without limitation, information concerning research, development,
purchasing, accounting, computer software, selling, and services. The Employee
will use reasonable and prudent care in following written Company procedures or
instructions furnished to Employee to safeguard and protect and prevent the
unauthorized use and disclosure of Confidential Information. The obligations
under this Section 6 will not apply to (i) any Confidential Information that is
now or becomes available to the public through no breach of the Employees'
obligation of confidentiality; or (ii) the Employee's disclosure of any
Confidential Information required by law or judicial or administrative process.
Subject to the requirements of the Securities Exchange Act of 1934, nothing
herein shall create a contractual restriction of Employee's ability to sell,
purchase, or effect transactions in the Company's securities.
7. MISCELLANEOUS
(a) MODIFICATION. This Agreement supersedes all prior agreements and
understandings between the parties relating to the subject matter herein.
Notwithstanding the foregoing, the Company and the Employee acknowledge and
agree that the Amended
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and Restated Stock Put Redemption Agreement dated June 24, 1992 between
the Company and the Employee remains in full force and effect. No
modification, termination or attempted waiver of any provision of this
Agreement shall be valid unless in writing signed by the party against
whom enforcement is sought.
(b) ENFORCEABILITY AND SEVERABILITY. If any term of this Agreement
is adjudicated to be void, voidable, invalid or unenforceable for any
reason, such term shall be automatically severed from all other terms of
this Agreement, which will continue in full force and effect. In the event
any term is adjudicated to be overbroad as written, such term shall be
automatically amended to narrow its application to the extent necessary to
make such term enforceable, and such term shall be enforced as so amended.
(c) GOVERNING LAW. This Agreement and all remedies at law or in
equity shall be construed and enforced in accordance with the laws of the
State of Minnesota.
(d) PREVAILING PARTY. The prevailing party in any suit, proceeding
or hearing shall be entitled to recover from the non-prevailing party all
costs that the prevailing party has incurred as a result of the suit,
proceeding, or hearing, including, without limitation, reasonable
attorneys' fees, filing fees, arbitrator's fees, expert witness fees,
travels costs, and all other reasonable costs and expenses incurred in the
enforcement of this Agreement. In the event that neither party shall
prevail on all of its claims or all of its defenses, then such costs and
expenses shall be allocated and awarded between the parties as determined
by the arbitrator or the court.
(e) NOTICES. Any Notice or other communication required or permitted
under this Agreement shall, in order to be effective, be in writing and be
given by personal service or by prepaid, certified United States Mail or
Federal Express Courier, return
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receipt requested, addressed to the applicable party at the address for
such party set forth on the signature page of this Agreement. Notice by
service is effective upon service and notice by mail or courier is
effective upon mailing. Either party may change the address to which
notices for such party are to be sent by so notifying the other party in
the manner set forth above.
(f) CAPTIONS. The captions and headings contained in this Agreement
are for convenience only and do not define, limit, construe, or give full
notice of the contents of the provisions of this Agreement.
(g) ARBITRATION. Any controversy or claim arising out of this
Agreement, or any breach thereof shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award may be entered in any
court having jurisdiction. Any such arbitration shall be in the State of
Minnesota in the seven-county Twin Cities' metropolitan area. In the event
the Company shall dispute and submit to arbitration hereunder the
Employee's claims regarding the renewal of this Agreement pursuant to
Section 2 hereof or the termination of this Agreement pursuant to Section 4
hereof, or the amounts to be received by the Employee under Section 4
hereof, and the Company shall withhold from Employee the payments or
benefits provided under Section 4 hereof, the Company shall continue to
provide Employee with all compensation and benefits, at his then current
level, until an award in arbitration is rendered, and if requested by the
Board of Directors, the Employee shall be obligated to continue his
employment, perform any services for, and be present at the Company.
Notwithstanding the foregoing, any party to this Agreement may seek and
obtain injunctive or other appropriate equitable relief from a court of
competent
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jurisdiction to prevent or end a violation of this Agreement that would
cause irreparable harm to such party and for which it would be difficult
or impossible to determine damages that would arise from such violation
or the continuance thereof; provided, however, that the substance of any
dispute is to be resolved through arbitration as provided in this
Section 7(g) and that the course of equitable relief may include an
order compelling such arbitration.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company, its successors and assigns, and any corporation or entity with
which the Company may be merged or by which its assets, stock, operations,
business, ownership or control are acquired, and any such corporation or
entity, as a condition to the completion of such transaction with the
Company, shall absolutely, unconditionally and expressly in writing assume
all of the Company's obligations to faithfully perform this Agreement, and
the Employee shall be provided with a copy of such written assumption
agreement. This Agreement shall not be assignable by the Employee without
the prior written consent of the Company All obligations and agreements of
the Employee under this Agreement shall be binding upon and enforceable
against the Employee and his executors, representatives, heirs, successors
or permitted assignees.
(i) ACKNOWLEDGMENT OF REPRESENTATION. The Company and the Employee
hereby acknowledge that Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A. ("GPM")
represents the Company only, and no other person or entity a party to this
Agreement. The Company and the Employee hereby acknowledge that the
Employee, as an individual, has chosen either to represent himself, or has
reviewed this Agreement with legal counsel other than GPM.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the date first set forth above.
XXXXXX COMMUNICATIONS, INC. EMPLOYEE
By /S/ M. Xxxxxxx Xxxxxxxx /S/ E/ Xxxxx Xxxxxxxx
---------------------------- ---------------------------
Its Chief Financial Officer E. Xxxxx Xxxxxxxx
-------------------------- 0000 Xxxxxxxxxx Xxxxxx
0000 Xxxx 00xx Xxxxxx Xxxxxxx, XX 00000
Xxxxxxxxxxx, XX 00000
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