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EMPLOYMENT AGREEMENT

Employee Retention Agreement

EMPLOYMENT AGREEMENT | Document Parties: Napster, Inc | Puma Cat Acquisition Corp You are currently viewing:
This Employee Retention Agreement involves

Napster, Inc | Puma Cat Acquisition Corp

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Title: EMPLOYMENT AGREEMENT
Governing Law: Minnesota     Date: 9/15/2008
Industry: Software and Programming     Sector: Technology

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EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “ Agreement ”) is dated and effective as of September 14, 2008, by and between Napster, Inc., a Delaware corporation, (“ Employer ”) and Wm. Christopher Gorog, an individual resident of the State of California (“ Employee ”).

 

RECITALS:

 

A.   Best Buy Co., Inc., a Minnesota corporation (“ Best Buy ”), Puma Cat Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Best Buy (“ Merger Sub ”) and Employer have entered into an Agreement and Plan of Merger, dated as of even date herewith (the “ Merger Agreement ”), pursuant to which Best Buy will acquire Employer by merging Merger Sub with and into Employer, with Employer continuing as the surviving corporation and a wholly-owned subsidiary of Best Buy (the “ Merger ”).

 

B.   Following the closing of the Merger, Best Buy and Employer desire to continue to employ Employee, and Employee desires to continue his employment with Employer, all in accordance with the terms hereof.

 

C.   Employer and Employee are entering into this Agreement, which provides for the terms and conditions of Employee’s employment and replaces and supersedes in all respects Employee’s Existing Agreement (as defined below), expressly subject to, and effective solely upon, the closing of the Merger.

 

NOW, THEREFORE , in consideration of the foregoing and the mutual agreements herein contained, Employer and Employee agree as follows:

 

1.

Definitions .

 

 

1.1.

Affiliate ” means any present or future entity that controls, is controlled by, or is under common control with Employer as of the applicable time. For purposes of this Agreement, Affiliate includes Best Buy, and any action that can or may be taken by Employer or Employer’s Board of Directors may also be taken by Best Buy, whether or not so expressly stated, and Best Buy is an intended third party beneficiary of, and will be entitled to enforce the provisions of, this Agreement.

 

 

1.2.

Cause ” for termination of Employee’s employment with Employer means the occurrence of one or more of the following events:

 

 

1.2.1.

Dishonesty in the performance of Employee’s duties for Employer or its Affiliates;

 

 

1.2.2.

Knowing and material violation of Employer’s policies and procedures in effect from time to time which results in a material adverse effect on Employer and which, to the extent a cure is reasonably possible, remains uncured ten (10) days after written notice of such violation is given to Employee;

 

 

1.2.3.

Willful and continued failure to satisfactorily perform, or gross negligence in the performance of, Employee’s duties after receipt of written notice that specifically identifies the areas in which Employee’s performance is deficient and which remains uncured thirty (30) days after such written notice is given to Employee;

 


 

 

1.2.4.

Willful actions (or willful failures to act) in bad faith by Employee with respect to Employer that materially impair Employer’s business, goodwill or reputation;

 

 

1.2.5.

Employee’s conviction of a felony or any crime involving an act of dishonesty, moral turpitude, deceit or fraud, or the commission of acts that would reasonably be expected to result in such conviction;

 

 

1.2.6.

Employee’s current use of illegal substances; or

 

 

1.2.7.

any material violation by Employee of any agreement to which Employee and Employer or any Affiliate of Employer are parties which remains uncured ten (10) days after written notice of such violation is given to Employee.

 

In the event that there exists Cause (as defined above) for termination of Employee’s employment, Employer may terminate Employee’s employment and this Agreement immediately, upon written notification of such termination for Cause, given to Employee by Employer or by any individual or individuals Employer authorizes to act on its behalf.

 

 

1.3.

Code ” means the U.S. Internal Revenue Code of 1986, as amended.

 

 

1.4.

Disability ” shall have the same meaning as ascribed to such term in Employer’s disability income insurance program, as the same may be amended or modified from time to time. The determination of whether a Disability exists shall be made by the same entity as has been designated in said program to make such determinations for purposes of said program.

 

 

1.5.

Effective Date ” means the date of the closing of the Merger.

 

 

1.6.

Existing Agreement ” means that certain Amended and Restated Employment Agreement, dated as of May 12, 2008, by and between Employer and Employee, including all exhibits, agreements and plans referred to therein.

 

 

1.7.

Good Reason ” for Employee’s resignation from employment with Employer means:

 

 

1.7.1.

a forced relocation of the place for Employee’s performance of duties reasonably requiring a move in Employee’s residence;

 

 

1.7.2.

a material breach by Employer or its Affiliates of this Agreement or any other agreement under which Employee provides services to Employer or its Affiliates;

 

 

1.7.3.

conduct by Employer that could reasonably be expected to expose Employee to material personal liability or other material adverse legal consequences; or

 

 

1.7.4.

a material diminution of Employee’s base compensation or of the nature or scope of Employee’s duties, authority or responsibilities with respect to the business conducted by Employer, as set forth in Schedule 1.7.4 hereto, whether Employer remains a separate corporation, is combined with Best Buy or one of its Affiliates, or becomes an operating division of Best Buy or one of its Affiliates.

 

Notwithstanding the foregoing, however, any condition or conditions otherwise set forth in this Section 1.7 shall not constitute Good Reason for termination unless both (a) Employee provides written notice to Employer of the condition claimed to constitute grounds for Good Reason within ninety (90) days of the initial existence of such condition, and (b) the condition is not remedied within thirty (30) days of such notice. In addition, in all events the termination of Employee’s employment shall not constitute a termination for Good Reason unless such termination occurs less than one (1) year following the initial existence of the condition claimed to constitute grounds for Good Reason.

 

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1.8.

Invention ” means any invention, discovery, improvement, concept or idea, whether or not patentable or copyrightable, including but not limited to computer software and hardware, technology, machines, devices, processes, methods, techniques and formulae, generated, conceived or reduced to practice by Employee alone or in conjunction with others, relating to the business of Employer or its Affiliates, during or after working hours, while employed by Employer.

 

 

1.9.

Willful ” means all dishonest, willful, deliberate, or intentional acts or omissions; provided , however , that no act, or failure to act, on Employee’s part shall be considered Willful unless done, or omitted to be done, by Employee in bad faith and without reasonable belief that Employee’s action or omission was in, or not opposed to, the best interest of Employer or its Affiliates.

 

2.

Employment . Subject to the closing of the Merger and effective as of the Effective Date, Employer hereby employs Employee as Chief Executive Officer, Napster, and Employee accepts such employment and agrees to perform services for Employer and its Affiliates for the period and upon the other terms and conditions set forth in this Agreement.

 

3.

Term . The term of this Agreement shall commence on the Effective Date and, unless terminated at an earlier date in accordance with Section 9 hereof, shall continue thereafter for a period ending March 3, 2012. Thereafter, the term of this Agreement may be extended only upon written agreement of Employee and Employer. Unless otherwise provided herein, the terms of Sections 6 , 7.2 (only with respect to Inventions conceived or made by Employee during the period of his employment with Employer or its Affiliates), 8 , 9 , and 10 hereof shall survive the expiration or termination of this Agreement for any reason.

 

4.

Duties .

 

 

4.1.

Employee shall serve Employer and its Affiliates faithfully and to the best of his ability, and devote his full business time attention and efforts to the business and affairs of Employer and its Affiliates during normal business hours (and outside normal business hours as reasonably required) during the term of this Agreement, subject to holidays, leave and other paid time off taken in accordance with Employer’s plans and programs and to outside directorships permitted under Best Buy’s policy on outside directorships. The duties of Employee shall primarily consist of, but shall not be limited to, the management, operation and oversight of Employer’s business, including without limitation all responsibilities historically associated with Employee’s role as Chief Executive Officer of Employer.

 

 

4.2.

In addition, Employee shall have such duties consistent with Employee’s position as are reasonably assigned Employee pursuant to Employer’s annual goal setting and appraisal processes, as such processes may be amended from time to time.

 

 

4.3.

Employee shall comply with all written policies of Employer, or of Best Buy generally applicable to executives of Best Buy, that are not inconsistent with this Agreement.

 

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4.4.

During the term of this Agreement, and except for services with respect to charitable or non-profit organizations that do not unreasonably interfere with Employee’s duties and/or responsibilities to Employer and its Affiliates, Employee shall not perform services for, or take an active management role in, or become a member of the board of directors or similar body for, any other corporation, firm, entity or person without the prior written approval of Employer (which approval of Employer shall not be unreasonably withheld if Employee requests to become a member of the board of directors or similar body of a company that does not compete with Employer, Best Buy, or any of their respective Affiliates).

 

5.

Compensation .

 

 

5.1.

Base Salary . As compensation for the services to be rendered by Employee under this Agreement, Employer shall pay to Employee an annual base salary of $400,000.00, which salary shall be paid in accordance with Employer’s normal payroll procedures and policies, but not less frequently than in biweekly installments. Employee’s salary shall be subject to review by Employer in accordance with Employer’s salary review procedures as in effect from time to time and not less frequently than on an annual basis; provided that Employer may not decrease Employee’s base salary.

 

 

5.2.

Short-Term Incentive Compensation . Employee shall be eligible for short-term incentive compensation with an incentive target of 45% of base salary and a maximum incentive payout of two times the target (90% of base salary). With respect to the short-term incentive compensation opportunity for the remainder of fiscal year 2009 (the fiscal year ending February 28, 2009), (a) the incentive formula will be based on Best Buy enterprise financial performance goals currently in effect for peer executives employed by Best Buy or any of its subsidiaries, provided that the short-term incentive compensation amount on which any short-term compensation payment for fiscal year 2009 is based shall not be less than 35% of base salary, (b) the short-term incentive compensation amount will be pro rated from the Acceptance Date with respect to the Offer under the Merger Agreement (as such terms are defined in the Merger Agreement) to February 28, 2009, and (c) such compensation will be payable only if the Acceptance Date is on or before December 31, 2008. With respect to the short-term incentive compensation opportunity for fiscal year 2010 (March 1, 2009 to February 27, 2010) and any subsequent fiscal year covered by this Agreement, (x) the incentive formula will be based on Employer financial performance goals (i.e., revenue growth and operating income or free cash flow actual results against fiscal year targets) and on Employee performance goals (against individual objectives) as reasonably established by David Morrish, EVP of Best Buy, in consultation with Employer’s Chief Executive Officer and Advisory Board, and (y) the short-term incentive compensation amount on which any short-term compensation payment for fiscal year 2010 or any subsequent fiscal year covered by this Agreement is based shall not be less than 35% of base salary. Future short term incentive goals and targets shall be reasonably established such that target levels of performance are reasonably attainable. To be entitled to any short-term incentive compensation amounts, Employee must be employed by Employer on the last day of the fiscal year to which such compensation relates. Any short-term incentive compensation amounts actually payable to Employee for a particular fiscal year shall be paid to Employee within 2 ½ months following the end of the Employer’s fiscal year to which such compensation relates, whether or not Employee is employed on the payment date.

 

 

5.3.

Special Incentive Award . Contingent upon approval by the Compensation Committee of the Best Buy Board of Directors, Best Buy will grant to Employee a Special Incentive Award as described in Schedule 5.3 hereto, to be evidenced by an Award Agreement substantially in the form attached as Exhibit B hereto. If such approval is not obtained by February 28, 2009, Employee may terminate this Agreement, with immediate effect, for “Good Reason.”

 

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5.4.

Stock Option Award . Contingent upon approval by the Compensation Committee of the Best Buy Board of Directors, Best Buy will grant to Employee an option or options to purchase an aggregate 8,500 shares of Best Buy common stock, to be evidenced by a Stock Option Award Agreement substantially in the form attached as Exhibit C hereto. These stock options will be granted under Best Buy’s 2004 Omnibus Stock and Incentive Plan and will be subject to all of the terms and conditions of such Plan and the applicable Stock Option Award Agreement. The first vesting period of such options will be no later than the first anniversary of the date of grant by the Compensation Committee with all subsequent vesting dates measured from such date of grant, all as approved by the Compensation Committee of the Best Buy Board of Directors. If any approval of the Compensation Committee required under this Section 5.4 is not obtained by February 28, 2009, Employee may terminate this Agreement, with immediate effect, for “Good Reason.”

 

 

5.5.

Participation in Benefit Plans . Employee will be entitled to participate in such benefit plans and programs as are established by Best Buy or Employer, from time to time, to the extent that his position, title, tenure, salary, age, health and other qualifications make him eligible to participate and at a level which is commensurate with peer executives employed by Best Buy or any of its subsidiaries; provided that for a period of twelve (12) months from the Effective Date, any such plans and programs shall, in the aggregate, provide benefits to Employee that are not less favorable in the aggregate to Employee than the benefits in effect with respect to Employee immediately prior to the Merger, it being understood that the foregoing shall not require Employer to maintain any particular employee benefit plan, and that Employer shall not be required to maintain the same stock option or employee stock purchase plans as Employer maintained prior to the Merger. Employee’s participation in any benefit plans or programs shall be subject to the provisions, contributions, rules and laws applicable thereto.

 

 

5.6.

Expenses . Employer shall pay or reimburse Employee for all travel and other out-of-pocket expenses reasonably incurred by him in the performance of his duties under this Agreement, subject to Best Buy’s usual and customary documentation policies for reimbursement of business expenses.

 

 

5.7.

Perquisites . Employee shall be entitled to perquisites generally provided by Best Buy from time to time, to the extent that his position, title, tenure, salary and other qualifications make him eligible to participate and at a level which is commensurate with peer executives employed by Best Buy. Employee shall be entitled to travel business class (first class when business class is not available) when in Employee’s judgment such class of travel is appropriate due to the length of the travel, type of aircraft and Employee’s physical condition at the time.

 

6.

Confidential Information .

 

 

6.1.

Employee shall not divulge, furnish or make accessible to anyone or use in any way (other than for the business of Employer or any of its Affiliates) any confidential or secret knowledge or information of Employer or any of its Affiliates which Employee has acquired or become acquainted with or shall acquire or become acquainted with prior to the termination of the period of his employment by Employer (including employment by Employer or any of its Affiliates), whether developed by himself or by others, including, without limitation, any trade secrets, confidential or secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) of Employer or any of its Affiliates, financial results or condition, business plans or projections of Employer or any of its Affiliates, any confidential customer lists of Employer or any of its Affiliates, any confidential or secret development or research work of Employer or any of its Affiliates, any lists of potential investments or acquisitions contemplated by Employer or any of its Affiliates, any plans, proposals or strategies of Employer or its Affiliates to expand, merge or engage in a business combination or relationship or any other confidential or secret aspects of the business of Employer or any of its Affiliates. Employee acknowledges that the above-described knowledge or information constitutes a unique and valuable asset of Employer and its Affiliates, as the case may be, acquired at great time and expense by Employer, its predecessors and its Affiliates, as the case may be, and that any disclosure or other use of such knowledge or information other than for the sole benefit of Employer or any of its Affiliates would be wrongful and could cause irreparable harm to Employer and its Affiliates, as the case may be.

 

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6.2.

The foregoing obligations of confidentiality, however, shall not apply to any knowledge or information which (i) is now publicly known or which, through no act or omission of Employee, becomes publicly known, (ii) Employee rightfully possessed without an obligation of confidentiality before the date of this Agreement, or (iii) Employee divulges, furnishes or discloses in a truthful response to a lawful and valid subpoena or other legal process.

 

 

6.3.

The confidentiality obligation of Employee shall remain in effect as long as the knowledge or information retains its confidential or secret nature.

 

7.

Ventures; Assignment of Inventions .

 

 

7.1.

Ventures . If, during the term of this Agreement, Employee is engaged in or associated with the planning or implementing of any project, event, publication, program or venture involving Employer or any of its Affiliates, or their respective trademarks or intellectual property, and a third party or parties, all rights in the project, event, publication, program or venture, to the extent that such rights may be claimed by Employee or Employer or any of its Affiliates, shall belong to Employer or its Affiliates, as the case may be. Except as approved by Employer’s Board of Directors, Employee shall not be entitled to any interest in such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith other than the compensation to be paid to Employee as provided in this Agreement.

 

 

7.2.

Assignment of Inventions .

 

 

7.2.1.

Employee agrees that all Inventions made during his employment by Employer are the exclusive property of Employer.

 

 

7.2.2.

Employee further agrees that he will:

 

 

7.2.2.1.

promptly and fully disclose and describe all Inventions in writing to an officer of, or other person designated by, Employer and such disclosure shall include, if requested, a detailed report of the procedures employed and the results achieved by Employee; and

 

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7.2.2.2.

give Employer and its Affiliates all assistance they require to perfect, protect and use its worldwide rights to Inventions, including, but not limited to, signing all documents, doing all things and supplying all information that Employer may deem necessary or desirable to: (i) transfer or record the transfer of Employee’s entire right, title and interest in Inventions to Employer; and (ii) enable Employer and its Affiliates to obtain and maintain patent, copyright or trademark protection for Inventions anywhere in the world.

 

 

7.2.3.

Notwithstanding anything to the contrary in this Section 7.2 , Employee and Employer agree that the provisions of this Section 7.2 requiring assignment of Inventions to Employer do not apply to any Invention that was developed by Employee entirely on Employee’s own time and without use of equipment, supplies, facilities or trade secret information of Employer or any of its Affiliates, unless (a) the Invention relates (i) directly to the business of Employer or any of its Affiliates, or (ii) to Employer’s or any of its Affiliates actual or demonstrably anticipated research or development or (b) the Invention results from any work performed by Employee for Employer or any of its Affiliates.

 

 

7.3.

Copyrights . Employee agrees that Employer will own all copyrightable works created by Employee relating to the business of Employer and its Affiliates developed during his employment as “ works made for hire ” to the full extent provided for under U.S. or foreign law. To the extent any work of Employee does not qualify as a “ work made for hire ”, Employee agrees to assign all U.S. and foreign trademark, copyright, mask work registration, and other registrations and rights pertaining to that work to Employer.

 

8.

Non-Solicitation . Throughout the term of Employee’s employment by Employer or its Affiliates and for a period of twelve (12) months following the termination of Employee’s employment, Employee will not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other person, firm or corporation that they employ or solicit for employment any employee of Employer or any of its Affiliates. The parties hereto agree that Employer may suffer irreparable harm from a breach by Employee of the covenants or agreements contained in this Section 8 , and that monetary damages may be inadequate to compensate Employer for any such breach. Accordingly, Employee agrees that in the event of any breach by Employee of this Section 8 , Employer or its Affiliates, successors or assigns shall be entitled to temporary and permanent injunctive relief to enforce or prevent any violations of this Section 8 and that such relief may be granted without the necessity of proving actual damages. Such injunctive or equitable relief shall be in addition to and not in lieu of any right to recover money damages for any such breach.

 

9.

Termination .

 

 

9.1.

Death, Disability . This Agreement shall terminate prior to the expiration of the term set forth in Section 3 hereof or of any extension thereof:

 

 

9.1.1.

Immediately upon the date of Employee’s death; or

 

 

9.1.2.

Immediately upon the date that Employee is unable to perform his duties hereunder due to a Disability.

 

 

9.2.

Termination Without Cause or Resignation for Good Reason . This Agreement shall terminate prior to the expiration of the term set forth in Section 3 hereof or of any extension thereof if Employee’s employment is terminated by Employer without Cause or Employee resigns for Good Reason.

 

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9.3.

Resignation Without Good Reason . This Agreement shall terminate prior to the expiration of the term set forth in Section 3 hereof or of any extension thereof if Employee resigns for any reason other than Good Reason. Any resignation pursuant to this Section 9.3 shall be effective thirty (30) days after Employee provides written notice to Employer of Employee’s intention to resign. Any resignation in accordance with this Section 9.3 shall not be deemed a breach by Employee of this Agreement.

 

 

9.4.

Termination For Cause . This Agreement shall terminate prior to the expiration of the term set forth in Section 3 hereof or of any extension thereof if Employee is terminated by Employer for Cause. Any termination pursuant to this Section 9.4 shall be effective immediately upon written notice from Employer to Employee.

 

 

9.5.

Effect of Termination .

 

 

9.5.1.

In the event Employee’s employment is terminated for any reason prior to or upon expiration of the term of this Agreement provided in Section 3 hereof or any extension thereof, Employer shall be obligated to pay Employee his salary, accrued and unpaid vacation, and benefits through the date of termination (including any notice periods), and unreimbursed expenses incurred prior to the date of termination in accordance with Section 5.7 hereof.

 

 

9.5.2.

In the event Employee’s employment is terminated by Employer without Cause or Employee resigns for Good Reason pursuant to Section 9.2 , then in addition to any amounts that may be due pursuant to Section 9.5.1 hereof:

 

 

9.5.2.1.

Employer will continue to pay Employee’s salary for a period of eighteen (18) months after such termination of employment in substantially equal installments on Employer’s normal payroll dates; provided , however , that notwithstanding anything to the contrary in this Section 9.5.2.1 , if Employee’s termination of employment is not a separation from service within the meaning of Section 409A of the Code and the regulations and other published guidance thereunder (including §1.409A-1(h)), then, if required in order to comply with the provisions of Section 409A of the Code and avoid the imputation of any tax, penalty or interest thereunder, payment of the continued salary benefits shall be delayed until such a separation from service occurs and the severance period shall commence on the date of such separation from service;

 

 

9.5.2.2.

Until a separation from service occurs, Employee shall be entitled to participate in benefit plans and programs as provided in Section 5.5 hereof. If Employee elects, following a separation from service, to continue his health insurance coverage under COBRA, Employer will reimburse Employee for the cost of the premiums during the first twelve (12) months of such coverage; and any period of Employee’s COBRA continuation coverage for which the cost is reimbursed by Employer will count toward the eighteen (18) month duration of available continuation coverage, as provided under Federal law, and any similar coverage under applicable State law;

 

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9.5.2.3.

Employer will be obligated to pay Employee within thirty (30) days following such termination of employment (or if later, the date of Employee’s separation from service) a lump-sum amount equal to the greater of (i) the incentive target under the short-term incentive plan described in Section 5.2 hereof for the year in which such termination occurs, pro rated to the date of termination, or (ii) Employer’s reasonable estimate at the time of termination of employment of the actual amount payable under the short-term incentive plan described in Section 5.2 hereof for the year in which such termination occurs, pro rated to the date of termination;

 

 

9.5.2.4.

the terms of the Special Incentive Award described in Section 5.3 hereof (including the Award Agreement) shall govern whether any compensation shall be payable upon such termination; and

 

 

9.5.2.5.

the terms of the stock option award described in Section 5.4 hereof (including the terms of Best Buy’s 2004 Omnibus Stock and Incentive Plan and Employee’s Stock Option Award Agreement thereunder) shall govern whether any portion of such award shall be exercisable upon such termination.

 

 

9.5.2.6.

As a condition to the severance benefits described in this Section 9.5.2 , Employee will enter into an agreement releasing all claims against Employer and its Affiliates, in the form attached as Exhibit A hereto, and all applicable rescission periods shall have expired without exercise. Employer’s obligations under this Section 9.5.2 immediately shall cease if Employee materially breaches any of the covenants in Sections 6 , 7 , 8 and 9.7 hereof.

 

 

9.5.3.

In the event Employee’s employment is terminated prior to or upon expiration of the term of this Agreement provided in Section 3 hereof or any extension thereof, other than a termination described in Section 9.5.2 hereof, then in addition to any amounts that may be due pursuant to Section 9.5.1 hereof:

 

 

9.5.3.1.

the terms of the short-term incentive plan described in Section 5.2 hereof shall govern whether any incentive shall be payable in the year of termination;

 

 

9.5.3.2.

the terms of the Special Incentive Award described in Section 5.3 hereof (including the Award Agreement) shall govern whether any compensation shall be payable upon such termination;

 

 

9.5.3.3.

the terms of the stock option award described in Section 5.4 hereof (including the terms of Best Buy’s 2004 Omnibus Stock and Incentive Plan and Employee’s Stock Option Award Agreement thereunder) shall govern whether any portion of such award shall be exercisable upon such termination; and

 

 

9.5.3.4.

thereafter, no salary, incentive, or any other benefits or amounts shall be payable or extended by Employer to Employee, except as required by Federal or State law or to the extent the Employee’s rights to such benefits or amounts were earned on the date of termination.

 

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9.5.4.

All amounts payable to Employee pursuant to Section 9.5.1 , Section 9.5.2 and Section 9.5.3 shall be paid without regard to whether Employee has taken or takes actions to mitigate damages.

 

 

9.6.

Limitation on Payments . In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Employee (i) constitute “ parachute payments ” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then Employee’s benefits under this Agreement or otherwise payable to Employee shall be either delivered in full (without Employer paying any portion of the Excise Tax due upon such payment), or delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless Employer and Employee otherwise agree in writing, any determination required under this Section 9.6 shall be made in writing by Employer’s or an Affiliate’s independent public accountants (the “ Accountants ”), whose determination shall be conclusive and binding upon Employee and Employer for all purposes. For purposes of making the calculations required by this Section 9.6 , the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. Employer and Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 9.6 . Employer shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 9.6 .

 

 

9.7.

Surrender of Records and Property . Upon termination of his employment for any reason, Employee shall deliver promptly to Employer all records, manuals, books, blank forms, documents, letters, manuscripts, letter head, business cards, memoranda, notes, notebooks, reports, data, tables, calculations, computers/PDAs, security/ID cards, keys, computer files, cell phones, pagers, parking permits, company credit cards, financial statements or records, budgets or business plans or copies thereof, that are the property of Employer or any of its Affiliates and all other property, trade secrets and confidential information of Employer or any of its Affiliates, including, but not limited to, all documents which in whole or in part contain any trade secrets or confidential information of Employer or any of its Affiliates, which in any of these cases are in his possession or under his control, provided , however , that Employee may retain his personal rolodex, address books, information relating to Employee’s compensation or benefits or relating to reimbursement of expenses and any agreement relating to the terms of Employee’s employment with Employer.

 

10.

Miscellaneous .

 

 

10.1.

Governing Law . Recognizing that Employer is a wholly-owned subsidiary of Best Buy, this Agreement shall be governed by and interpreted under the laws of the State of Minnesota without regard to its or any other jurisdiction’s conflict of laws provisions, except to the extent any of the provisions of California Labor Code are applicable. The parties hereby expressly consent and submit to the exclusive jurisdiction of either the federal or state district courts located in Minneapolis, Minnesota.

 

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10.2.

Entire Agreement . Once the Effective Date occurs, this Agreement, in conjunction with any exhibits, schedules, addenda, amendments, or other attachments hereto, contains the entire agreement between the parties and supersedes all prior agreements, negotiations, oral understandings, representations, warranties, and courses of conduct and dealing with respect to the subject matter hereof and shall control any conflicting similar provision in any other agreement, plan or program to which Employee may previously have been a party or participant in connection with his employment, except that all of Employee’s existing rights to indemnification with respect to any action or omission to act occurring or allegedly occurring prior to the Effective Date shall remain unaffected and undiminished as a result of the execution of this Agreement. Subject to the occurrence of the Effective Date, this Agreement supersedes and replaces in its entirety the Existing Agreement, which shall be of no further force and effect, and Employer shall have no liability or obligations thereunder. In the event the Merger Agreement is terminated and the Effective Date therefore does not occur, this Agreement will be void and will create no rights and impose no liabilities or obligations on Employer or Employee.

 

 

10.3.

Withholding Taxes . Employer may withhold from any benefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.

 

 

10.4.

Code Section 409A . Notwithstanding any provision of this Agreement to the contrary, if the Employee is a “specified employee” as defined in Section 409A of the Code, the Employee shall not be entitled to any payments upon a termination of Employee’s employment until the earlier of (i) the date which is six (6) months after Employee’s separation from service (as such term is defined in Section 409A of the Code and the regulations and other published guidance thereunder) for any reason other than death, or (ii) the date of the Employee’s death. Any amounts otherwise payable to the Employee following a termination of employment that are not so paid by reason of this Section 10.4 shall be paid as soon as practicable, and in any event within thirty (30) days, after the date that is six (6) months after Employee’s separation from service (or, if earlier, the date of Employee’s death). The provisions of this Section 10.4 shall only apply if, and to the extent, required to comply with Section 409A of the Code. To the extent that any reimbursements pursuant to Section 5.6 or Section 9.5.2.2 are taxable to Employee, any reimbursement payment due to Employee pursuant to such provisions shall be paid to Employee on or before the last day of the Employee’s taxable year following the taxable year in which the related expense was incurred. The reimbursements pursuant to Section 5.6 or Section 9.5.2.2 are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that Employee receives in one taxable year shall not affect the amount of such reimbursements that Employee receives in any other taxable year.

 

 

10.5.

Amendments . This Agreement, or any provisions hereof, may not be amended, supplemented, waived, or modified in any way, except by a written instrument signed by individuals authorized by the parties hereto.

 

 

10.6.

Assignment . This Agreement may not be assigned, delegated, or subcontracted in whole or in part by either party without first obtaining the other party’s express written consent; provided , however , that Employer may assign, delegate, or subcontract this Agreement in whole or in part to a present or future Affiliate without obtaining Employee’s express written consent, provided that such present or future Affiliate expressly assumes the obligations of Employer under this Agreement, and provided   further , that in the event of a sale or other transfer of all or substantially all of the assets or business of Employer with or to any other individual(s) or entity that is not an Affiliate, this Agreement shall be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of Employer hereunder. Any assignment, delegation, or subcontract not complying with the terms of this Section 10.6 shall be null and void. In the event of a proper assignment, delegation, or subcontract, this Agreement shall inure to the benefit of and be binding upon each of the parties and their respective successors, assigns, heirs, executors, administrators, trustees, legal representatives, delegatees, and subcontractees.

 

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10.7.

Waiver . Failure by either party to this Agreement to enforce or insist upon compliance with any provision of this Agreement shall not be construed as a waiver of its right to enforce or insist upon compliance with such provision, or other provisions in the future. A waiver by either party of a breach of any of the provisions of this Agreement shall not be construed as a waiver of any subsequent breach by either party. Neither party shall be deemed to have waived any of its rights, powers, or remedies pursuant to this Agreement unless such waiver is contained in a written instrument signed by Employee or an authorized officer of Employer, as applicable.

 

 

10.8.

Injunctive Relief . Employee agrees that it would be difficult to compensate Employer fully for damages for any violation of the provisions of Sections 6 , 7 , and 8 of this Agreement. Accordingly, Employee specifically agrees that Employer may be entitled to temporary and permanent injunctive relief to enforce such provisions of this Agreement. This provision with respect to injunctive relief shall not, however, diminish the right of Employer to claim and recover damages in addition to injunctive relief.

 

 

10.9.

Severability . To the extent any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should the duration or geographical extent of, or business activities covered by, any provision


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