Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 5th day of November, 2003 (the
"Commencement Date"), by and between BCI Eclipse Company, LLC, a Minnesota
limited liability company (the "Company") and Xxxxxx X. Xxxxx, a resident of the
State of California ("Executive").
WITNESSETH:
WHEREAS, the Company is a subsidiary of Navarre Corporation, a Minnesota
corporation ("Navarre");
WHEREAS, pursuant to that certain Asset Purchase Agreement dated November 5th,
2003 (the "Asset Purchase Agreement"), the Company purchased substantially all
of the assets of BCI Eclipse, LLC, a New York limited liability company ("BCI");
WHEREAS, Executive is a minority owner of BCI and was previously employed as
the Executive Vice President of BCI and therefore has a unique knowledge of the
business of BCI as acquired by the Company, and has special expertise in the
management and future planning of its affairs; and
WHEREAS, the Company believes that Executive's continued involvement in the
management and affairs of the business of the Company are essential to its
continued success.
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 President.
2. DUTIES. 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
President of the Company within the general guidelines established by the Board
of Directors of the Company as the same may, from time to time, be modified by
the Company's Board of Directors. Executive will report to the Board of
Directors of the Company and have all the duties normally subscribed to the
President. Executive will perform his duties in a competent and professional
manner, consistent with that expected of a president of the Company.
Executive shall also have the authority, upon consultation and
agreement with the Company's Board of Directors, to determine which distribution
company shall provide fulfillment services to the Company during the Initial
Term, provided that it is understood by the parties hereto that such services
shall be provided by Advantage Media Service, Inc. through May 31, 2004.
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3. TERM. Subject only to earlier termination in accordance with Section
5 of this Agreement, Executive's term of employment shall commence on the
Commencement Date and continue for a period of three (3) years (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 ninety (90)
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 $200,000 per annum (the
"Base Salary"), payable in accordance with the Company's standard
payroll practices. On each anniversary of Commencement Date, the Base
Salary shall be reviewed by the Company's Board of Directors and may be
adjusted upwards based upon Executive's level of performance.
(b) PERFORMANCE BONUS. As additional compensation for
Executive, Executive shall be eligible to receive an annual bonus up to
40% of Executive's Base Salary for each fiscal year (the "Bonus"),
based upon criteria determined by the Board of Directors of the
Company. Executive's Bonus shall be paid annually not later than 45
days after the completion of the Company's fiscal year-end audit. The
Bonus shall be pro-rated for the period commencing on the Commencement
Date and ending on March 31, 2004.
(c) STOCK OPTIONS. The Company shall cause Navarre to grant to
Executive an option to purchase 50,000 shares of Navarre common stock.
The exercise price of the option shall be equal to the closing price of
Navarre common stock on the business day prior to the Commencement
Date. In addition, so long as this Agreement has not been terminated by
the Company under Section 5(a) or by Executive, the Company shall cause
Navarre to grant to Executive an additional option to purchase 25,000
shares of Navarre common stock on each of the first and second
anniversaries of the Commencement Date, for which the exercise price
will be the closing price of Navarre common stock on the business day
prior to the date of grant of the option. The specific terms of the
first option are set forth in the Stock Option Agreement attached
hereto as Exhibit A. Each additional option grant shall be on terms and
conditions substantially similar to those contained in Exhibit A
hereto.
(d) 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.
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(e) MEDICAL, DISABILITY, LIFE INSURANCE AND OTHER PLANS.
Executive shall be entitled to participate in any life insurance,
health insurance, dental insurance, disability insurance, or retirement
plan or any other fringe benefit which the Company may from time to
time make available to its executives as a group. Any additional fringe
benefits to Executive shall be determined and approved by the Board of
Directors of the Company in amounts that are commensurate with services
rendered.
(f) VACATION. Executive shall be entitled to a paid vacation
period of three (3) weeks each year, which may be taken at any time
subject to the Company's business needs.
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 as such term is defined
below. Except as to subparagraph (iii) below, the Company shall give
Executive thirty (30) days' advance written notice of such termination,
and which shall describe in detail the acts or omissions which the
Company believes constitute Company Cause. 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 "Company Cause" shall mean the following:
i. Any material breach by Executive of his
obligations under Section 7 of this Agreement;
ii. Gross misconduct of Executive which is manifestly
injurious to Company, or habitual failure or inability of
Executive to perform his duties under this Agreement; 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. Subject to the provisions of Section 6, this
Agreement shall terminate upon Executive's Disability. As used herein,
the term "Disability" shall mean Executive becoming substantially
incapable of performing his duties hereunder for a period of six (6)
months or more.
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6. PAYMENTS UPON TERMINATION.
(a) DEATH. Upon Executive's death during the Employment
Period, the heirs or legal representatives of Executive shall be
entitled to receive (i) Executive's Base Salary through the date of
Executive's death, (ii) any payments owing to Executive pursuant to
Section 4(b) hereof for the fiscal year prior to the year of
termination (to the extent any such payments were unpaid on the date of
termination), and all bonuses to which Executive would have been
entitled for the fiscal year in which such death occurred, prorated to
the date of death, (iii) a sum equivalent to any accrued but unpaid
vacation for the year in which Executive died, and (iv) 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 following the date of such Disability until Executive begins
receiving benefits under the Company's disability benefits plan, (ii)
any payments owing to Executive pursuant to Section 4(b) hereof for the
fiscal year prior to the year of termination (to the extent any such
payments were unpaid on the date of termination), and all bonuses to
which Executive would have been entitled for the fiscal year in which
such Disability occurred, prorated to the date of Disability, (iii) his
accrued but unpaid vacation pay for the year in which such Disability
occurred, and (iv) any unpaid expense reimbursement.
(c) TERMINATION BY COMPANY FOR COMPANY CAUSE OR BY EXECUTIVE.
If Executive is terminated pursuant to Section 5(a) hereof, or
Executive terminates this Agreement, the Company shall pay to Executive
(i) his Base Salary through the date written notice is properly mailed
to Executive pursuant to Section 5(a) hereof, or the date that
Executive resigns, as applicable, (ii) any payments owing to Executive
pursuant to Section 4(b) hereof for the fiscal year prior to the year
of termination (to the extent any such payments were unpaid on the date
of termination); iii) his accrued but unpaid vacation pay for the year
in which such termination occurred, and (iv) 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)
hereof, the Company shall pay to Executive (i) his Base Salary through
the end of the term of this Agreement, (ii) any payments owing to
Executive pursuant to Section 4(b) hereof for the fiscal year prior to
the year of termination (to the extent any such payments were unpaid on
the date of termination) as well as for the current year, (iii) a sum
equivalent to any accrued but unpaid vacation for the year in which he
is terminated, and (iv) any unpaid expense reimbursement.
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7. CONFIDENTIALITY; NON-COMPETE; NON-SOLICITATION; NON-DISPARAGEMENT.
(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, but not limited to, information about costs,
profits, financial data, markets, trade secrets, sales, products, 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.
Notwithstanding the provisions of paragraph i. hereof, the
Company acknowledges that Executive may have knowledge of certain
matters which would be considered confidential information of the
Company, but that were known by Executive prior to Executive's
employment with the Company. The Company acknowledges that Executive
shall have the right to use or disclose such previously-known
information after termination of Executive's employment with the
Company.
(b) NON-COMPETE; NON-SOLICITATION. Executive agrees that
during his employment with the Company, and for a period of one (1)
year thereafter, 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 at the time of
Executive's termination of employment with the Company, 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 suppliers or customers, or (iii) induce or attempt to induce
any
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representative or employee of the Company to do any of the foregoing or
to terminate or alter his, her, or its relationship 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(b), the term "Company" shall include the Company, its
successors, assigns and affiliates.
(c) NON-DISPARAGEMENT. Executive agrees that both during and
after the Employment Period, he shall not disparage or defame the
Company, it successors, assigns and affiliates, or any of their
directors, senior officers and managers in any respect. The Company
agrees that both during and after the Employment Period, neither it nor
any of its directors, senior officers or managers shall disparage or
defame Executive in any respect.
8. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement is freely
assignable by the Company and shall be binding on and inure to the
benefit of the Company's successors and assigns. This Agreement may not
be assigned by Executive.
(b) 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.
(c) 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.
(d) 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.
(d) CAPTIONS. The headings in this Agreement are for
convenience of reference only and do not affect the interpretation of
this Agreement.
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(f) 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 ("Parol
Agreements"). 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,
Parol Agreements and prior written agreements with respect to the
subject matter hereof. The parties acknowledge that in entering into
this Agreement, they have not relied and will not in any way rely upon
any Parol Agreements.
(g) GOVERNING LAW; VENUE. The laws of the State of Minnesota
shall govern the validity, construction and performance of this
Agreement, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law. 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.
(h) 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:
BCI Eclipse Company, LLC
0000 - 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: CEO
With a copy to:
Navarre Corporation
0000 - 00xx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Corporate Counsel
If to Executive:
Xxxxxx X. Xxxxx
000 Xxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
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(i) SURVIVAL. Notwithstanding the termination of this
Agreement or Executive's employment with the Company, the parties shall
be required to carry out any provisions hereof which contemplate
performance subsequent to such termination; and such termination shall
not affect any liability or other obligation which shall have accrued
prior to such termination, including, but not limited to, any liability
for loss or damage on account of a prior default, and any terms
concerning rights and remedies of the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
BCI ECLIPSE COMPANY, LLC
By:
-------------------------------- ----------------------------
Xxxxx Xxxxxxxxxx Xxxxxx X. Xxxxx
Its Chief Executive Officer
The undersigned hereby executes this Agreement solely for the purpose of
agreeing to be bound by the terms and provisions of Section 4(c) of this
Agreement:
NAVARRE CORPORATION
By:
--------------------------------
Its:
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