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:
1. 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.
2. 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.
3. 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."
4. 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.
(b) 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.
(c) STOCK OPTIONS. As outlined in Addendum 1.
(d) BENEFITS.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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.
5. 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:
(i) Any material breach by Executive of his obligations
under this Agreement;
(ii) Gross misconduct of Executive which is manifestly
injurious to Company; and
(iii) 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.
(b) DEATH. Subject to the provisions of Section 6, this Agreement
shall terminate upon Executive's death.
(c) 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.
(d) 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:
(i) The Company is in material breach of this Agreement;
(ii) 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;
(iii) 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
(iv) 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.
6. 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.
(b) 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.
(c) 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.
(d) 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 and prorated
Bonus for twelve (12) months, according to the current
standard payroll practice.
(e) 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.
7. 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, non-theatrically 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.
(b) 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:
(i) 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
(ii) 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.
(c) 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.
Executive understands that the Company may be 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.
(d) 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:
(i) 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
(ii) 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.
8. 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.
(b) COSTS AND EXPENSES. The parties in any action brought
concerning the breach or termination of this Agreement shall
be solely responsible for their own costs and expenses,
including attorney's fees incurred or associated with the
enforcement of any covenant of this Agreement.
9. 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) CAPTIONS. The headings in this Agreement are for convenience
of reference only and do not affect the interpretation of this
Agreement.
(g) 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.
(h) 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.
(i) 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
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
(j) 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: /s/ Xxxx X. Xxxxxxx /s/ Xxx X. Xxxxxxx
----------------------------------- -----------------------------------
Its President XXX X. XXXXXXX
-------------------------------
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, November 11, 1996.
After the completion of a successful fiscal year, Xxx Xxxxxxx will receive an
additional 5-year stock option for no less than 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.
ADDENDUM 2 TO MARSALA EMPLOYMENT AGREEMENT
6.(d) Termination Without Company Cause. For the duration of the severance
period or until suitable new employment is obtained, Executive will continue to
be eligible for all current benefits as well as executive outplacement
assistance at the local company of his choice.
GMM (illegible)
11/21/96 11/24/96
